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Speaker 1: Hello, and welcome to another episode of the Odd Lots podcast.

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Speaker 1: I'm Joe Wisenthal and I'm Tracy Alloway. Tracy, we've been

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Speaker 1: talking a lot about tech startups VC, but you know,

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Speaker 1: this space is so big and it's so opaque because

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Speaker 1: we don't really know what's going on with VC fund

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Speaker 1: of performance. They don't really know what's going on with

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Speaker 1: startup earnings or most likely startup losses, that I feel

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Speaker 1: like it can never hurt to get more perspective. Yeah,

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Speaker 1: we've had this conversation before. You know, it's easy enough

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Speaker 1: for a publicly listed stock. You just look at a

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Speaker 1: line on a screen and you get some sense of

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Speaker 1: how things are going much much harder in venture capital world.

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Speaker 1: And then, just to add to that, you also have

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Speaker 1: this really interesting culture and dynamic around VC and angel

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Speaker 1: investing where it seems like everyone is incentivized to pour

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Speaker 1: more money into stuff and to get the valuations up.

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Speaker 1: And then the question is what happens when that dynamic

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Speaker 1: starts to go away or at least becomes a little

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Speaker 1: bit more challenged, which is what has happened over the

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Speaker 1: past few months. Right, all kinds of interesting dynamics publicly

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Speaker 1: listed companies like Amazon or Facebook. They might come on

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Speaker 1: struggling times, but I don't think anyone really doubts the

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Speaker 1: viability of the business with startups. Of course, some of

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Speaker 1: these companies may just not have business models that work.

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Speaker 1: They may be a long way from anything resembling profitability,

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Speaker 1: and have might have to make tough decisions about growth

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Speaker 1: for survival. All kinds of sort of tricky questions arise

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Speaker 1: in the private tech world that you just don't see

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Speaker 1: when we're talking about public stocks exactly. So let's talk

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Speaker 1: about it more. I want to jump right in. We

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Speaker 1: have a big guest today. We're gonna be speaking with

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Speaker 1: Jason Kellacanis. He is a popular podcaster on the All

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Speaker 1: In podcast. He is an author, he's an angel investor

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Speaker 1: who has done over three deals over eleven years, very

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Speaker 1: outspoken on former journalist, former journalist, former blogger specifically over

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Speaker 1: many years, and he's going to talk to us about

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Speaker 1: the state of the world. Jason, thank you so much

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Speaker 1: for coming on. Odd lots O big fan of the show.

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Speaker 1: Thanks for having me. You know I d M do

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Speaker 1: you you know a while back about having you on,

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Speaker 1: and then I looked in our d M history. We

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Speaker 1: haven't really talked to much, but I saw like in

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Speaker 1: like two thousand nine, You're like, Hey, I'm going to

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Speaker 1: be in New York and meeting some people for dim sum.

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Speaker 1: Do you want to come? And I don't think I

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Speaker 1: responded or I definitely didn't go. But I should have

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Speaker 1: because you've had like a pretty great like thirteen years

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Speaker 1: or ten years since then, so I should have been

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Speaker 1: this such a humble brag. I was too busy to

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Speaker 1: respond to the big angel investors m me to grab line.

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Speaker 1: I blew it because you've you know, I'm here, but

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Speaker 1: you've had a good This is uh, this is my

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Speaker 1: credo as an angel investor. Actually, I have twenty or

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Speaker 1: so people in my investment company, Launch and the syndicate

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Speaker 1: dot com. Yeah. The first thing I teach new investors

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Speaker 1: is never underestimate anyone, because we will see people from

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Speaker 1: you know, a random assortment of beginnings and weird products

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Speaker 1: and terrible ideas and and uh, all of a sudden

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Speaker 1: they changed the world. And so you know, if you

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Speaker 1: if you look at the first version of like uber

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Speaker 1: the app, Travis hated it, and I was like, really ugly,

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Speaker 1: and you know, he was just beside himself at it

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Speaker 1: Wash you invested in it. I think that round was

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Speaker 1: four and a half million dollars. Yeah, five million dollars

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Speaker 1: something like that. In Calm dot com was worth five

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Speaker 1: million dollars. When we invested, Density was around four million dollars.

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Speaker 1: Density dot ioh that's another unicorn we invested in so

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Speaker 1: and that cohort. When I started angel investing was right

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Speaker 1: after the Great Financial Crisis two thousand nine, two thousand

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Speaker 1: and ten. What happened was I um was running a

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Speaker 1: company called Mahalow dot com which is now called inside

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Speaker 1: dot com. It's still running to millions of dollars a

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Speaker 1: year in revenue. And Sequoia rule off Botha, who was

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Speaker 1: the latest partner there. He was he had just started

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Speaker 1: as a partner there, working with Michael Murritz and Doug Leoni.

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Speaker 1: And they said, you know, you introduced us to all

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Speaker 1: these really cool companies. Would you be a scout for us?

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Speaker 1: And I said, how did that? How would that work?

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Speaker 1: And they said, well, we'll give you money and then

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Speaker 1: we'll split the returns. And I said, well, don't you

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Speaker 1: get and two percent? Like management? Vie said, oh, we

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Speaker 1: get more than that. We you know, we're pretty good

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Speaker 1: at this but this is gonna be small potatoes. So

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Speaker 1: we're just gonna ask you and uh Sam Altman and

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Speaker 1: you know this other person to be Scouts for us.

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Speaker 1: And Sam famously did Stripe as an investment in the

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Speaker 1: Scouts program, and I did Uber and Thumbtack and a

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Speaker 1: couple of others, and three of the first seven deals

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Speaker 1: I did became unicorns. So you mentioned Credo at the

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Speaker 1: very beginning, and before we had this conversation, I was

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Speaker 1: looking on your Twitter account and you tweeted something that

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Speaker 1: intrigued me. You referred to a basic technique that you've

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Speaker 1: learned in the dot com era. Trust the founder, but

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Speaker 1: believe the product and customers. What did you mean by

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Speaker 1: that and how is it relevant? Now? That's a great question.

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Speaker 1: So you know, when you're journalist, which is where I

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Speaker 1: started in the nineties, when I was coming to the

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Speaker 1: dot com era, people were really well media trained. They

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Speaker 1: were spinning, you know, really crazy yarns, and I was

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Speaker 1: just trying to figure out, like, is Scott Karnet from

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Speaker 1: About dot Com the real deal? And is you know,

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Speaker 1: this woman from my village the real deal? Or are

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Speaker 1: they you know, Charlottean's and you know, is this double

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Speaker 1: click thing that Kevin O'Connor is doing, is it real?

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Speaker 1: You know? That was kind of the job of a

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Speaker 1: journalists asked questions and then maybe when we actually used

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Speaker 1: the products and when we actually talked to customers or

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Speaker 1: we talked to employees, we actually then got the ground truth.

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Speaker 1: And so it was that skills that I learned as

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Speaker 1: a journalist doing Silicon Only Reporter, my second magazine when

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Speaker 1: I was in my twenties in New York in the nineties,

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Speaker 1: which was awesome New York in the nineties was fantastic

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Speaker 1: um and so got a very similar conversation on all thoughts.

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Speaker 1: Just recently about clubbing, we had the Globe dot Com

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Speaker 1: CEO Stephen patter Not. Yeah, I got some good stories

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Speaker 1: about those guy, do not I covered them. I'll tell

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Speaker 1: you that for in a second. But anyway, you have

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Speaker 1: to look at the reality of what a startup is.

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Speaker 1: A startup is a group of people a founder plus

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Speaker 1: whoever they can recruit, building a product that then has

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Speaker 1: some contact with customers. And when evaluating startups, it's important

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Speaker 1: to meet great founders and hear what they have to say.

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Speaker 1: I would argue it's more important to use the product

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Speaker 1: and talk to the customers. And that has been something

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Speaker 1: that in crypto as one example, or the dot com

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Speaker 1: era as another example, or in a boom market that

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Speaker 1: people forget and so you know you can trust but

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Speaker 1: verify as a really good management philosophy. And this is

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Speaker 1: my philosophy of startups, which is, yeah, sure, talk to

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Speaker 1: the founder, but don't forget to talk to the customers,

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Speaker 1: and don't forget to use the product. Can I ask

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Speaker 1: a question about now that you've seen several cycles of

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Speaker 1: booms and bus and participated them, and if my memory

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Speaker 1: is correct, and tell me if I'm wrong. My memory

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Speaker 1: is that your Tech magazine in the late nineties either

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Speaker 1: you held onto it too long. You didn't sell at

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Speaker 1: the top, and so you had a chance to make

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Speaker 1: the same amount of money, but you held on too

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Speaker 1: long and then it went to zero. And then you

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Speaker 1: did another media thing in the early two thousand's weblogs, Inc.

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Speaker 1: Which kind of competed with Gawker. And I kind of felt,

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Speaker 1: like Mimi felt was at the time you sold too early,

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Speaker 1: or that you overcorrected from the magazine experience because you're like, well,

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Speaker 1: I just gotta get some Is that correct? And sort

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Speaker 1: of like, what did you learn about climb and bus

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Speaker 1: from those experiences? Yeah, as many um folks who have

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Speaker 1: gotten rich said, you know, like how did you get rich?

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Speaker 1: Selling too soon? Uh? Is like a really good credo

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Speaker 1: as well. You learn these heuristics over time. And so

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Speaker 1: Alan Meckler had offered me twenty million dollars for selicon

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Speaker 1: HOI Reporter, you know before the boss. I didn't take it.

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Speaker 1: I was just a poor kid from Brooklyn. But you know,

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Speaker 1: I still like in our report it was at eleven

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Speaker 1: million dollars in revenue at seventy five employees, and I

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Speaker 1: built it off my credit cards. So I was kind

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Speaker 1: of on a rush. I had done New York, you know,

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Speaker 1: to the nines, like you know, it was on Charlie Rose,

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Speaker 1: had a ten thousand word New Yorker profile. I mean

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Speaker 1: I had checked every box in terms of you know,

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Speaker 1: feeling my oats as a you know, the next media mogul.

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Speaker 1: You know, I felt pretty good about things. And then

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Speaker 1: the dot com bust happened, and I wound up selling

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Speaker 1: the assets of Silicon Reporter to dal Jones and got

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Speaker 1: two years of salary. They fired me a week after

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Speaker 1: I sold it. To them and paid out my two

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Speaker 1: year contract because they didn't want me there because there's

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Speaker 1: too much of a too much trouble. And then I

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Speaker 1: started weblogs, Inc. And when I started weblogs, Inc. The

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Speaker 1: goal was to create a hundred blogs and put ads

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Speaker 1: on them. And the idea of putting ads on blogs was,

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Speaker 1: you know, antithetical to the concept, and people like Dave

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Speaker 1: Winer and other folks were like, Hey, you can't have

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Speaker 1: ads on blogs, and I was like, I think we

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Speaker 1: could on a weblog have ads. And Nick Denton and

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Speaker 1: I started going at it, competing against each other, and

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Speaker 1: a O L offered me thirty million dollars for an

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Speaker 1: eighteen month old company, and I was like, well, that's

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Speaker 1: ten million more than I was going to get for

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Speaker 1: Silicon Reporters. So and I only have one investor, Mark Cuban,

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Speaker 1: and I was like, yeah, I'm going to secure the

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Speaker 1: bag and uh, you know, that's how I got my

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Speaker 1: first chip and it was one of the greatest trades

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Speaker 1: I ever did. Now Denton wound up selling for a

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Speaker 1: hundred fifty million, but then gave it all to UH

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Speaker 1: Computer Tel And I would guess via, I'm going to

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Speaker 1: guess that Nick and I did about the same on

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Speaker 1: exits for that, except he spent ten years of his

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Speaker 1: life on it in two years on a trial, and

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Speaker 1: I did it for eighteen months. So there's also the

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Speaker 1: value of time. What was the transition like from journalists

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Speaker 1: to angel investor? Because I imagine journalism probably gives you

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Speaker 1: a decent set of skill sets to do due diligence

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Speaker 1: on a company and do your research and you know,

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Speaker 1: go out and meet and talk to people. But on

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Speaker 1: the other hand, I imagine there's quite a bit of

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Speaker 1: maybe culture clash between really cynical journalists yeah, and optimistic

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Speaker 1: changing the world Silicon Valley types, or at least that's

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Speaker 1: how I imagine it. That is actually the perfect summary.

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Speaker 1: And I is just talking to Molly what about that

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Speaker 1: today because she just did this transition. So I would say,

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Speaker 1: if you're a good journalist, like you know, really good

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Speaker 1: journalist who knows has answered questions, knows how to understand

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Speaker 1: a story, triangulate the truth by talking to multiple sources,

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Speaker 1: I think you start on second base. I think you're

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Speaker 1: basically of the way there, and if you have a network,

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Speaker 1: you might be six of the way there. If you

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Speaker 1: had a brand, you might be sixty of the way there.

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Speaker 1: So the only thing you have to learn it you're

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Speaker 1: exactly correct. As journalists, we're telling stories, and yeah, we

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Speaker 1: want to be cynical. We want to really assume that

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Speaker 1: what's being told to us is some percentage of the truth.

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Speaker 1: But Raschaman style, like the Kurosawa film, there's usually three

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Speaker 1: versions of the truth, yours mind and the actual truth,

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Speaker 1: or there could be even more versions in a story

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Speaker 1: that's super complicated, like say their nose or whatever. So

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Speaker 1: you start triangulating the truth and that goes back to,

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Speaker 1: you know, the tweet that you quoted earlier, which is, hey,

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Speaker 1: for me, there's really three things here. There's the team,

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Speaker 1: there's the product as customers that it can also be

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Speaker 1: compared letters in there. So you start triangulating around those things.

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Speaker 1: You do have to switch from and it happens organical

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Speaker 1: because when you start working with founders and backing them,

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Speaker 1: you then put yourself in a position of power. You

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Speaker 1: put yourself in a position to be the person who

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Speaker 1: is not telling their story but enabling their story, and

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Speaker 1: then you move from the sort of cynical approach to

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Speaker 1: this optimistic approach. Now, the fact is half of the

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Speaker 1: founders you'll meet will be some version of incompetent, not ready,

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Speaker 1: you know, delusional, or you know, in some small percentage

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Speaker 1: of the cases, you know, frauds, crooks, Charlatan's, and then

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Speaker 1: the top half will be earnest, qualified and you know,

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Speaker 1: ready to change the world. And so your job is

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Speaker 1: to figure out which which group you're betting on and

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Speaker 1: making sure that you invest in the right group. And

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Speaker 1: you're not gonna get it right every time, but you

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Speaker 1: do have to come to it with a radical optimism.

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Speaker 1: And so you are basically making a long list of

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Speaker 1: things that can go wrong in a business, and then

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Speaker 1: a short list of things that can go right. And

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Speaker 1: then if you're really trying to go for an outli

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Speaker 1: or success a meditation app or you know, a cab company,

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Speaker 1: which were my two biggest hits to date, you're going

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Speaker 1: to have to say, Okay, I'm gonna rip up the

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Speaker 1: list of what could go wrong and just assume the

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Speaker 1: founder will figure out ways to navigate that with their team,

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Speaker 1: and then look at what could go right. And if

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Speaker 1: you figure out what can go right, then you could

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Speaker 1: hit a hundred x a thousand x two thousand x

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Speaker 1: investment and that power law is what venture is about.

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Speaker 1: You mentioned power law distribution, and this is something that

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Speaker 1: has come up a number of times when we've been

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Speaker 1: talking about VC lately, this idea that the model basically

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Speaker 1: rests on. You know, you throw money at a bunch

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Speaker 1: of companies and you're really hoping that one of them

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Speaker 1: will hit it out of the park. And I guess

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Speaker 1: my question is, given the current dynamics, you know, it

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Speaker 1: seems like some of the froth is going out of

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Speaker 1: the market. Is that sustainable, Like should you always be

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Speaker 1: aiming for the biggest company or could it make sense

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Speaker 1: in VC land to maybe aim for not unit horns,

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Speaker 1: but like nice looking horses with medium growth trajectories that

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Speaker 1: do well but aren't necessarily superstars. Yeah, it's just not

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Speaker 1: possible to make the single and double concept work. Um.

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Speaker 1: Single and doubles is what public market investors do or

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Speaker 1: late stage investors do, and all the frauth's out of

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Speaker 1: the market, and we've we've now cut into the we're

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Speaker 1: now pouring out the cappuccino. So it's really been quite

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Speaker 1: a contraction. Now. It's it is unbelievable how hard this

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Speaker 1: has fallen for certain companies and how far it's corrected,

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Speaker 1: and that's the best time to invest. So absolutely, I'm

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Speaker 1: I'm not happy about a downturn, obviously, but I am

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Speaker 1: extraordinarily optimistic about the returns will see on the companies

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Speaker 1: we invest in over the next three years. This is

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Speaker 1: going to be the best possible time to put money

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Speaker 1: to work, and I'm I'm redoubling my efforts trying to

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Speaker 1: invest in twice as many companies in the coming years

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Speaker 1: because valuations have come back down to reality. And I'd

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Speaker 1: say two out of three companies I wanted to invest

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Speaker 1: sent over the last two or three years. If I

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Speaker 1: didn't invest, the number one reason I didn't invest was

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Speaker 1: because of valuation. The companies just the math didn't make

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Speaker 1: sense to invest in a company that has no product

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Speaker 1: in market at a fifty million dollar valuation, or if

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Speaker 1: it's crypto, it might be a hundred to a billion

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Speaker 1: dollar valuation, which just defies logic. And you know, I

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Speaker 1: grew up with mentors like Michael Mritz, Doug Leoni, Bill Gurly,

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Speaker 1: you know, George Zachary, people who had been in the

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Speaker 1: game for a long time. And then my contemporaries and

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Speaker 1: I chum up David Sachs, etcetera. You know who who

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Speaker 1: grew up investing together. Over the last decade, we all

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Speaker 1: looked at revenue and customers and try to build models.

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Speaker 1: And the last two years people throw that out the

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Speaker 1: window and it just didn't make sense to a lot

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Speaker 1: of us. So I spent the last two years raising

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Speaker 1: money for my existing portfolio and selling positions and existing

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Speaker 1: companies largely and mean still investing in the earliest stages.

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Speaker 1: But now I'm it's young um time. All right, I

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Speaker 1: have a thousand questions, But since you mentioned cham, I'm

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Speaker 1: going to ask you a question that's kind of about him,

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Speaker 1: but it's actually much more about a lot of investors

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Speaker 1: these days. And I think you've even talked about it

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Speaker 1: on one of the All In episodes. But we're in

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Speaker 1: a moment where, thanks to crypto and I guess thanks

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Speaker 1: to SPACs as well in the case of Chama, a

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Speaker 1: lot of vcs are invested in publicly liquid assets. Cryptocurrencies

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Speaker 1: are the most common. But of course, you know, Cham

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Speaker 1: for much of one brought all these spacts, would talk

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Speaker 1: about them, They've all done basically terribly in many cases vcs.

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Speaker 1: You know, throughout history, vcs were invested in companies that

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Speaker 1: public retail just didn't have access to for several years.

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Speaker 1: Now in any of them are invested in cryptocurrencies that

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Speaker 1: the public can trade. Do you think this is a

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Speaker 1: problem that so many investors historically VC type investors are

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Speaker 1: basically either tacitly or explicitly pumping their bags on social

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Speaker 1: media for retail. Good question, Yeah, it's a great question. Um,

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Speaker 1: it's really two different groups. So I'd say SPACs and

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Speaker 1: crypto are very different, and I'll explain why. So let

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Speaker 1: me start with crypto because that's where the problem is.

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Speaker 1: So crypto has created an entire shadow, in my mind,

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Speaker 1: illegal stack um that is skirting securities regulations. I believe

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Speaker 1: the overwhelming majority of tokens are securities, but they're being

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Speaker 1: dumped onto retail investors, and this is being done explicitly

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Speaker 1: by venture firms. I won't mention any names who are

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Speaker 1: buying into companies early getting into tokens, and then those

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Speaker 1: tokens are being listed on exchanges and the public can

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Speaker 1: buy into them. The public is buying into them a

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Speaker 1: common enterprise in order to get a financial gain. They

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Speaker 1: have no interest in using those tokens for any utility.

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Speaker 1: These are not Chuck e Cheese tokens. They're not United Miles.

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Speaker 1: We all know what's going on here, and to then

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Speaker 1: liquidate your position in the second or third year of

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Speaker 1: the crypto company. I'm not going to mention any specific

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Speaker 1: companies here or firms, but you don't need to be

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Speaker 1: a genius to just look at the activity out there.

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Speaker 1: This is going to blow up in the faces of

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Speaker 1: the venture community. Regulators are very permissive in our country.

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Speaker 1: Our country, generally, our legal system is you're innocent until

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Speaker 1: proving guilty. But I think there's a lot of guilty

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Speaker 1: parties that you know, flipped securities and called them tokens.

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Speaker 1: And I think the sec Justice Department is in the

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Speaker 1: first inning of taking action against these companies. And sure

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Speaker 1: it would be better if they had given us clear guidelines.

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Speaker 1: But having been in the room for these discussions over

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Speaker 1: the past five years, people suspended disbelief. They shopped for

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Speaker 1: attorneys who told them what they wanted to believe about

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Speaker 1: tokens and the how we test that. You know, listen,

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Speaker 1: I'm no lawyer. Don't take advice for me. I'm just

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Speaker 1: a kid from Brooklyn. This was actually the ultimate irony,

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Speaker 1: which was that like, if you went to a regulator

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Speaker 1: and asked permission, they would often tell you know, but

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Speaker 1: if you just went ahead and launched it after doing

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Speaker 1: your own legal study, they usually wouldn't say anything. Yeah,

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Speaker 1: so people knew Tracy that what they were doing was fughazi.

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Speaker 1: They knew that this was a grift. I have no

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Speaker 1: sympathy on anybody who gets their risk lapped or gets

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Speaker 1: a speeding ticket or worse, because I would like to

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Speaker 1: see accreditation laws be changed so that people can take

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Speaker 1: a test just like a driver's test or in the

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Speaker 1: few states that have gun owner test gun permit tests.

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Speaker 1: We could just educate people. Maybe it take a three

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Speaker 1: our course, you take a fifty question tests, doesn't have

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Speaker 1: to be a series seven. But hey, this is diversification. Hey,

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Speaker 1: these are risky assets, these are non liquid assets. This

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Speaker 1: is preferred shares, these are common shares. You know, here's

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Speaker 1: how governance works, here's how boards work. Just so you know,

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Speaker 1: a normal person who's not in the top six percent

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Speaker 1: of the country who are credit investors, could participate in this.

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Speaker 1: That's what the SEC needs to do. That's what our

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Speaker 1: government needs to do. Have a path for people to

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Speaker 1: be educated to participate in these things. What the country

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Speaker 1: doesn't need is for sophisticated investors to then create a

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Speaker 1: path for people to circumvent the securities law and then

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Speaker 1: flip tokens. I have spent the last five years being

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Speaker 1: criticized because I've said all along, you know, if you

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Speaker 1: can't use the product, if you can't talk to the customers,

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Speaker 1: you know, calling back to your asking me about that

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Speaker 1: tweet I did, and my experience as a journalist. If

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Speaker 1: you can't talk to the customers, you can't use the product,

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Speaker 1: then it's probably either a fraud where it's a pre

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Speaker 1: launch company. You and I think the majority of these

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Speaker 1: tokens that are being sold are either pre launched companies,

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Speaker 1: which would value them at three to ten million dollars,

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Speaker 1: or their frauds or they're run buying competence, or their

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Speaker 1: frauds run buying competence. It's some combination of those three buckets.

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Speaker 1: And I invest in the first bucket pre launched companies

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Speaker 1: or you know, about to launch m vps all the

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Speaker 1: time in my accelerator. But I don't take the shares

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Speaker 1: of those companies and put them on a listing and

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Speaker 1: tell people have fun staying poor if you don't buy

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Speaker 1: these tokens and you don't get it, okay, Boomer and

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Speaker 1: all this other bullshit that these very sophisticated investors did

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Speaker 1: to the public. So I don't have strong feelings on

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Speaker 1: a shoe, but it's a complete utter grift. Do you

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Speaker 1: think there's gonna be a criminal response in some cases? Certainly?

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Speaker 1: You see, you think the regulators are only in the

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Speaker 1: second ending, so that would imply that there's a lot

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Speaker 1: more coming, Like what is this? Look? Yeah, I mean

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Speaker 1: these it's just a little f t Alwa was flipping

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Speaker 1: and grifting, you know, property Justice and the Southern District

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Speaker 1: Company York and Florida's you know district attorneys, Like there's

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Speaker 1: a large group of district attorneys who would like nothing

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Speaker 1: more than to get the pelt of a crypto you know,

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Speaker 1: grifter and put it on their wall for when they

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Speaker 1: run for mayor or governor. And people have lost a

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Speaker 1: lot of money, so there's a lot of people. Wouldn't

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Speaker 1: have been a political appetite for, say, prosecutions, because people

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Speaker 1: like when the line goes up, but when the line

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Speaker 1: goes down, I assume people want to see someone pay well. Also,

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Speaker 1: you know, that's when somebody who's in your local jurisdiction says, hey,

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Speaker 1: my aunt took a second mortgage on our home and

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Speaker 1: bought this cryptocurrency and they lost their money. And three

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Speaker 1: of our friends also did it. And so now there's

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Speaker 1: an actual victim, as you're pointing out, Joe, because the

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Speaker 1: tide's gone out, and those people essentially got a free

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Speaker 1: option because you know the cynical view, but they got

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Speaker 1: to buy the cryptocurrency. If it was up, they could

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Speaker 1: sell it like these retail investors. And now that it's

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Speaker 1: gone down, since it was illegal, all of them can

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Speaker 1: now go after these companies. And so that's just starting.

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Speaker 1: And we're like two pitches into the first ending. We

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Speaker 1: are not even close to the second ending of this.

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Speaker 1: It is going to become five years. If if what

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Speaker 1: I learned from the dot com eraor is any guide,

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Speaker 1: it's going to be years of litigation and pain and suffering.

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Speaker 1: Now do people go to jail? We just had somebody

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Speaker 1: on the FBI's most wanted list who was the bitcoin queen.

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Speaker 1: So I don't remember a dot com person being on

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Speaker 1: the FBI's most wanted list. So if that might be

429
00:22:38,840 --> 00:22:41,080
Speaker 1: the canary in the coal mine. When the FBI's most

430
00:22:41,080 --> 00:22:43,399
Speaker 1: wanted list winds up being three or four crypto people,

431
00:22:43,400 --> 00:22:46,760
Speaker 1: I think you've got pete grift just on this topic.

432
00:22:46,880 --> 00:22:49,399
Speaker 1: You are invested in robin Hood, and robin hood is

433
00:22:49,400 --> 00:22:52,959
Speaker 1: pretty highly leveraged to crypto nowadays. At least did they

434
00:22:52,960 --> 00:22:55,960
Speaker 1: make a mistake, you know, I think it's fine for

435
00:22:55,960 --> 00:22:58,840
Speaker 1: people not speaking about robin Hood. I think it's fine

436
00:22:58,840 --> 00:23:02,680
Speaker 1: for people to participate in crypto if there are accredited

437
00:23:02,680 --> 00:23:06,920
Speaker 1: investors and if they're educated. I sincerely believe people should

438
00:23:06,920 --> 00:23:07,920
Speaker 1: be able to do what they want to do with

439
00:23:07,960 --> 00:23:09,680
Speaker 1: their money. They're allowed to go to Vegas, they should

440
00:23:09,680 --> 00:23:12,200
Speaker 1: be able to do that. So on the retail side,

441
00:23:12,400 --> 00:23:14,520
Speaker 1: I do think people should be able to buy tokens

442
00:23:14,600 --> 00:23:17,000
Speaker 1: or crypto. I just think it should all be regulated.

443
00:23:17,440 --> 00:23:20,040
Speaker 1: And I think you know what coin base and robin

444
00:23:20,080 --> 00:23:23,240
Speaker 1: Hood and all of these platforms really need to think about,

445
00:23:23,400 --> 00:23:26,959
Speaker 1: is you know, when they put these tokens up, who

446
00:23:27,040 --> 00:23:29,800
Speaker 1: should be buying them? And what knowledge base do they need?

447
00:23:29,920 --> 00:23:33,560
Speaker 1: And I think I'm a big fan of the freedom

448
00:23:33,600 --> 00:23:35,560
Speaker 1: for you to do with with your money what you want,

449
00:23:35,600 --> 00:23:37,800
Speaker 1: but I also think there's a responsibility of the people

450
00:23:37,840 --> 00:23:40,320
Speaker 1: creating the tokens to do it. And now what is

451
00:23:40,359 --> 00:23:44,120
Speaker 1: the liability for platforms. I think that's somewhere in between.

452
00:23:44,600 --> 00:23:47,119
Speaker 1: So you know, the people who are creating these things,

453
00:23:47,280 --> 00:23:50,840
Speaker 1: those are the people who are responsible. And those early investors,

454
00:23:50,880 --> 00:23:53,320
Speaker 1: I'd say, the platforms and other folks like they're one

455
00:23:53,320 --> 00:23:56,240
Speaker 1: percent responsible for this. Like people should be able to

456
00:23:56,280 --> 00:23:58,960
Speaker 1: buy and sell whatever's back, they should be able to gamble.

457
00:23:59,119 --> 00:24:01,359
Speaker 1: I'm a gambler. You us know that, So I feel

458
00:24:01,359 --> 00:24:05,320
Speaker 1: fine about that. But I also think that the silver

459
00:24:05,440 --> 00:24:08,080
Speaker 1: lining of all this is people are very critical of this,

460
00:24:08,200 --> 00:24:13,120
Speaker 1: you know, gen Z stocks, Robin Hood, Generation, Meme stocks, crypto.

461
00:24:13,400 --> 00:24:15,920
Speaker 1: I actually think what we've done is we've made one

462
00:24:15,960 --> 00:24:20,320
Speaker 1: of the most the most sophisticated generation financially that's ever

463
00:24:20,359 --> 00:24:23,600
Speaker 1: been created. What these twentiesome things have learned in their

464
00:24:23,640 --> 00:24:27,199
Speaker 1: first couple of years or decade of investing dwarfs, what

465
00:24:27,359 --> 00:24:29,439
Speaker 1: the generations before them knew. I know, young people who

466
00:24:29,440 --> 00:24:33,080
Speaker 1: are trading puts and calls and shorting socks and buying

467
00:24:33,119 --> 00:24:36,960
Speaker 1: crypto and alternative assets. So I think all that's really good,

468
00:24:37,000 --> 00:24:39,800
Speaker 1: and I think you'll learn by doing so, even if

469
00:24:39,800 --> 00:24:42,159
Speaker 1: people did, you know, get burned a little bit by

470
00:24:42,200 --> 00:24:46,080
Speaker 1: game stop. I am super permissive of young people and

471
00:24:46,480 --> 00:24:48,359
Speaker 1: retail investors being able to do what they want with

472
00:24:48,400 --> 00:24:50,720
Speaker 1: their money, and I do think they understand the risk

473
00:24:50,760 --> 00:24:53,240
Speaker 1: they're taking. So even the people who bought Crypto, I

474
00:24:53,359 --> 00:24:55,600
Speaker 1: think they knew what they were doing. They wanted to

475
00:24:55,680 --> 00:24:58,200
Speaker 1: make an absurd return in a short period of time,

476
00:24:58,240 --> 00:25:00,879
Speaker 1: and if they got burnt, that's on the It's like

477
00:25:00,960 --> 00:25:03,680
Speaker 1: going to Vegas and just putting all your money on

478
00:25:03,720 --> 00:25:06,200
Speaker 1: like one hand of blackjack. You knew what you were doing.

479
00:25:06,359 --> 00:25:08,639
Speaker 1: You knew it was stupid, bad, But you have the

480
00:25:08,680 --> 00:25:10,560
Speaker 1: freedom to do that, and you should have the freedom

481
00:25:10,600 --> 00:25:12,320
Speaker 1: to do it. That's my personal belief. All right, So

482
00:25:12,440 --> 00:25:17,160
Speaker 1: what do you think about your podcast co host and

483
00:25:17,480 --> 00:25:20,840
Speaker 1: uh say, this is my fintech that I'm taking um

484
00:25:21,160 --> 00:25:24,119
Speaker 1: public in aspect, it's to me what Geico was to

485
00:25:24,119 --> 00:25:29,400
Speaker 1: Warren Buffett and tweeting and posting about public companies. Okay,

486
00:25:29,440 --> 00:25:32,760
Speaker 1: so let me talk about SPACs generally so that I

487
00:25:32,800 --> 00:25:36,200
Speaker 1: don't get reaggregated and say, jakel through your mop under

488
00:25:36,200 --> 00:25:38,480
Speaker 1: the bus, that was gonna be, that was gonna be,

489
00:25:38,560 --> 00:25:42,480
Speaker 1: that was gonna Here's the thing about SPACs. If you

490
00:25:42,520 --> 00:25:45,600
Speaker 1: want to participate in SPACs. You've decided to do what

491
00:25:45,760 --> 00:25:49,400
Speaker 1: venture capitals do for a living, which is these companies

492
00:25:49,440 --> 00:25:56,600
Speaker 1: are highly, highly risky. You're deciding to invest in Amazon, Netflix,

493
00:25:56,800 --> 00:26:00,560
Speaker 1: I Village, double Click, you know, pick the company Facebook,

494
00:26:01,320 --> 00:26:04,520
Speaker 1: and then all the failed companies before they were traditionally

495
00:26:04,520 --> 00:26:07,399
Speaker 1: ready to go public. In other words, you know, in

496
00:26:08,000 --> 00:26:10,679
Speaker 1: recent years, people have had billions of dollars in revenue

497
00:26:10,680 --> 00:26:12,359
Speaker 1: in the public. If you want to invest in a

498
00:26:12,359 --> 00:26:14,919
Speaker 1: company with tens of millions of dollars or millions of

499
00:26:14,960 --> 00:26:17,480
Speaker 1: dollars or a hundred million dollars in revenue, you're now

500
00:26:17,480 --> 00:26:21,080
Speaker 1: playing the VC game. This is a high volatility game.

501
00:26:21,240 --> 00:26:25,399
Speaker 1: This is like playing pot limit Omaha. You know in Macau.

502
00:26:25,600 --> 00:26:27,800
Speaker 1: You're not playing in your Texas hold them game anymore

503
00:26:28,080 --> 00:26:30,960
Speaker 1: where it's predictable. You're playing a high variance game. And

504
00:26:31,000 --> 00:26:32,960
Speaker 1: so we were investors in the private market for a

505
00:26:32,960 --> 00:26:35,040
Speaker 1: company called Desktop Metal. We love this company, we love

506
00:26:35,080 --> 00:26:37,680
Speaker 1: the founders, we love everything about it. They decided to

507
00:26:37,720 --> 00:26:40,760
Speaker 1: do us back. Okay, great, Now we're at ten dollars

508
00:26:40,880 --> 00:26:43,199
Speaker 1: company's worth you know whatever, a billion more than it's

509
00:26:43,200 --> 00:26:45,600
Speaker 1: private market evaluation. And now it's trading at two dollars

510
00:26:45,640 --> 00:26:49,439
Speaker 1: and forty eight cents still a great company, bird, Joe B.

511
00:26:50,400 --> 00:26:52,080
Speaker 1: I'm not investors in those companies. I know people who

512
00:26:52,080 --> 00:26:54,320
Speaker 1: are investors in them. Those are all getting crushed too.

513
00:26:54,440 --> 00:26:57,800
Speaker 1: Why Because the big feature of being private when you're

514
00:26:58,000 --> 00:27:00,480
Speaker 1: nascent is you get to figure things out right and

515
00:27:00,480 --> 00:27:03,600
Speaker 1: you're you're not onto public scrutiny. These private companies go

516
00:27:03,680 --> 00:27:08,000
Speaker 1: through pivots. They have revenue you know, surge and then collapse,

517
00:27:08,119 --> 00:27:09,959
Speaker 1: and then they have competitors show up, and then they

518
00:27:09,960 --> 00:27:13,520
Speaker 1: have things break, they have regulations. The greatest feature of

519
00:27:13,680 --> 00:27:18,560
Speaker 1: Uber and Airbnb going public after ten years being private

520
00:27:18,640 --> 00:27:22,600
Speaker 1: was that these businesses were very stable relative to the

521
00:27:22,680 --> 00:27:26,480
Speaker 1: spack companies that are coming out. So again, do your homework.

522
00:27:26,520 --> 00:27:29,840
Speaker 1: If you want to play VC as a retail investor,

523
00:27:30,280 --> 00:27:32,240
Speaker 1: you better be in it for ten years. I invest

524
00:27:32,240 --> 00:27:35,520
Speaker 1: in companies in decade increments. I still own my robin

525
00:27:35,560 --> 00:27:37,600
Speaker 1: Hood share, still own a lot of my Uber shares,

526
00:27:37,920 --> 00:27:39,359
Speaker 1: and I decided to hold both of them for the

527
00:27:39,400 --> 00:27:42,840
Speaker 1: second decade. Right. That's the problem with SPACs is that

528
00:27:42,880 --> 00:27:46,320
Speaker 1: people came into them and thought these were very mature companies,

529
00:27:46,480 --> 00:27:49,000
Speaker 1: and if you looked at any of the data, you

530
00:27:49,080 --> 00:27:52,480
Speaker 1: knew these were private market companies. Going public earlier. Now,

531
00:27:52,600 --> 00:27:55,040
Speaker 1: this is how the market worked in the eighties. We

532
00:27:55,160 --> 00:27:57,479
Speaker 1: just haven't had it during our lifetimes. People who told me,

533
00:27:57,760 --> 00:28:00,879
Speaker 1: you know who were vcs in the eighties, the Microsoft's

534
00:28:00,880 --> 00:28:02,680
Speaker 1: and the Lotus of the world will go public in

535
00:28:02,760 --> 00:28:06,520
Speaker 1: years three, four, five, six, We decided to have companies

536
00:28:06,560 --> 00:28:10,440
Speaker 1: go public in years eight eleven, So, you know, recently

537
00:28:10,440 --> 00:28:12,520
Speaker 1: in our lifetimes as adults, you know, in the nineties

538
00:28:12,560 --> 00:28:15,320
Speaker 1: and two thousands. So I'm glad there's more inventory to

539
00:28:15,359 --> 00:28:17,280
Speaker 1: people to choose from. I think going into the spack

540
00:28:17,920 --> 00:28:21,440
Speaker 1: you know, disastrous companies and you know they've all lost

541
00:28:21,480 --> 00:28:25,480
Speaker 1: what collectively in some cases more, you know, go into

542
00:28:25,520 --> 00:28:27,640
Speaker 1: those and look for bargains. I think, I think you'll

543
00:28:27,640 --> 00:28:31,600
Speaker 1: find some there. But for somebody to take these electric

544
00:28:32,200 --> 00:28:36,080
Speaker 1: car companies that haven't delivered cars yet and then value

545
00:28:36,080 --> 00:28:38,600
Speaker 1: them at a hundred billion. I was on you know

546
00:28:38,680 --> 00:28:40,240
Speaker 1: all In and My in my other podcast this we

547
00:28:40,280 --> 00:28:45,080
Speaker 1: can start ups talking about how ridiculous these Lucid Rivan

548
00:28:45,120 --> 00:28:48,080
Speaker 1: whatever SPACs were. It was a whole cohord of them.

549
00:28:48,240 --> 00:28:51,280
Speaker 1: And so buy or beware if you're going to play VC.

550
00:28:52,080 --> 00:28:54,640
Speaker 1: The VC game is to get to know the founders,

551
00:28:55,120 --> 00:28:57,520
Speaker 1: to talk to the early customers. Nobody did that work.

552
00:28:57,720 --> 00:28:59,400
Speaker 1: You gotta do that work if you want to bet

553
00:28:59,440 --> 00:29:02,280
Speaker 1: that early. I was about to ask exactly this question,

554
00:29:02,320 --> 00:29:05,640
Speaker 1: because it feels like to me, with SPACs and the

555
00:29:05,760 --> 00:29:08,800
Speaker 1: VC space more broadly, to your point, it feels like

556
00:29:08,840 --> 00:29:10,240
Speaker 1: a lot of it comes down to whether or not

557
00:29:10,240 --> 00:29:12,640
Speaker 1: in the sponsors are acting in good faith, or whether

558
00:29:12,760 --> 00:29:14,360
Speaker 1: or not they just see this as a tool to

559
00:29:14,400 --> 00:29:16,800
Speaker 1: get a bunch of money. And you know, the money's there,

560
00:29:16,840 --> 00:29:18,960
Speaker 1: people are throwing it around. Why not start us back

561
00:29:19,000 --> 00:29:20,960
Speaker 1: and just get a piece of it and we can maybe,

562
00:29:21,040 --> 00:29:23,080
Speaker 1: you know, figure out what to do later, or maybe

563
00:29:23,080 --> 00:29:24,920
Speaker 1: that's not even part of their plan. How do you

564
00:29:24,960 --> 00:29:29,280
Speaker 1: actually go about, you know, evaluating founders or sponsors on

565
00:29:29,320 --> 00:29:31,320
Speaker 1: that basis, How do you figure out whether people are

566
00:29:31,320 --> 00:29:33,560
Speaker 1: in it for the right reasons? Yeah, I would just

567
00:29:33,600 --> 00:29:35,960
Speaker 1: look at the core business. Like so, let's take BuzzFeed

568
00:29:36,040 --> 00:29:38,080
Speaker 1: trading out of dollar sixty nine at the time recording

569
00:29:38,080 --> 00:29:42,960
Speaker 1: this two eight million dollars in market cap. That company

570
00:29:42,960 --> 00:29:45,360
Speaker 1: has three or four hundred million in revenue. I think

571
00:29:45,440 --> 00:29:47,080
Speaker 1: they're going to do four hundred million this year, and

572
00:29:47,120 --> 00:29:50,560
Speaker 1: their run rates about four million, so they're trading at

573
00:29:50,600 --> 00:29:54,080
Speaker 1: less than their run rate there there price to sales

574
00:29:54,160 --> 00:29:58,320
Speaker 1: ratio is like point six or something on point seven.

575
00:29:59,040 --> 00:30:00,840
Speaker 1: This is crazy, Like this company should never go on

576
00:30:00,880 --> 00:30:03,640
Speaker 1: public Media is a terrible business obviously, but you just

577
00:30:03,640 --> 00:30:04,920
Speaker 1: have to look at the revenue. You have to live

578
00:30:04,960 --> 00:30:08,000
Speaker 1: in growth. I don't, but I'm looking at it. I

579
00:30:08,040 --> 00:30:10,480
Speaker 1: know this sounds crazy. I have to look at the

580
00:30:10,520 --> 00:30:12,600
Speaker 1: growth rate and the spend. And I don't know if

581
00:30:12,680 --> 00:30:15,800
Speaker 1: Jonahs made massive layoffs over there, but if you laid

582
00:30:15,800 --> 00:30:17,719
Speaker 1: people off and this is a profitable company, well then

583
00:30:17,760 --> 00:30:20,000
Speaker 1: we'd start looking at and saying, Okay, I don't know.

584
00:30:20,040 --> 00:30:22,840
Speaker 1: If it starts growing twenty times earnings, fifteen times earnings,

585
00:30:22,840 --> 00:30:25,760
Speaker 1: ten times earnings, maybe two or three or four times

586
00:30:25,800 --> 00:30:28,280
Speaker 1: price of sales ratio, you could actually see it being

587
00:30:28,280 --> 00:30:32,040
Speaker 1: a takeout candidate for somebody. So and I'm not giving

588
00:30:32,040 --> 00:30:34,680
Speaker 1: financialized here, but I do look at Peloton. I do

589
00:30:34,760 --> 00:30:36,920
Speaker 1: look at you know, BuzzFeed and some of these that

590
00:30:36,920 --> 00:30:39,560
Speaker 1: have gotten really walloped and say huh, and how much

591
00:30:39,560 --> 00:30:41,720
Speaker 1: cash do they have? Like we're going to get to

592
00:30:41,720 --> 00:30:44,160
Speaker 1: the point, Joe, where like in the dot com era,

593
00:30:44,280 --> 00:30:47,640
Speaker 1: the company has more cash cash on hand and marketable

594
00:30:47,640 --> 00:30:50,440
Speaker 1: securities will be greater than their market cap, in which

595
00:30:50,440 --> 00:30:53,880
Speaker 1: case you could buy the company, sell the asset, and

596
00:30:53,920 --> 00:30:56,840
Speaker 1: then distribute the cash and make a killing. So I

597
00:30:56,880 --> 00:30:59,560
Speaker 1: think that's why Zendesk is being taken private. I don't

598
00:30:59,560 --> 00:31:01,040
Speaker 1: know if you saw. Have they got over a billion

599
00:31:01,080 --> 00:31:03,960
Speaker 1: dollars in revenue, over a billion dollars in cash? They're

600
00:31:03,960 --> 00:31:05,960
Speaker 1: getting sold for ten billion or something or going private

601
00:31:06,000 --> 00:31:08,240
Speaker 1: for ten billions. So that's when you know, you know,

602
00:31:08,240 --> 00:31:09,680
Speaker 1: we're bouncing on the bottle. But you just have to

603
00:31:09,880 --> 00:31:13,520
Speaker 1: again to your question, Tracy, look at the customers, look

604
00:31:13,520 --> 00:31:17,320
Speaker 1: at the product. They will tell you the truth. The promoters,

605
00:31:17,360 --> 00:31:23,640
Speaker 1: the the press, the analysts, the CEOs like, all of

606
00:31:23,680 --> 00:31:28,000
Speaker 1: that is secondary to the customers. Anybody who talks to

607
00:31:28,040 --> 00:31:31,720
Speaker 1: customers who own a Tesla or who are an Airbnb host,

608
00:31:31,880 --> 00:31:35,320
Speaker 1: or who are Uber drivers, or who take Uber or

609
00:31:35,360 --> 00:31:38,959
Speaker 1: take Lifter, use door Dash or Calm, they'll tell you

610
00:31:39,000 --> 00:31:41,800
Speaker 1: they love the product right or they love participating in

611
00:31:41,800 --> 00:31:44,320
Speaker 1: the marketplace. Or if you just look at how long

612
00:31:44,360 --> 00:31:46,160
Speaker 1: have they been an Uber driver, how many rides have

613
00:31:46,160 --> 00:31:48,120
Speaker 1: they done, how many door dish delivers have they done?

614
00:31:48,320 --> 00:31:50,920
Speaker 1: That will tell you a better story than any promoter

615
00:31:51,480 --> 00:31:54,800
Speaker 1: or any CEO. And these promoters will live and die

616
00:31:54,800 --> 00:31:56,840
Speaker 1: with the track records. I think Trumath will have a

617
00:31:56,840 --> 00:31:58,240
Speaker 1: great track record at the end of the day. Now

618
00:31:58,240 --> 00:31:59,800
Speaker 1: he's my friend, I'm and I'm by I am as

619
00:32:00,040 --> 00:32:03,560
Speaker 1: proviased source. But I know he's very thoughtful. And you know,

620
00:32:04,320 --> 00:32:07,760
Speaker 1: people should understand if they're going with SPACs and they're

621
00:32:07,760 --> 00:32:11,840
Speaker 1: playing VC, you're playing a very high volatility game. It

622
00:32:11,880 --> 00:32:14,160
Speaker 1: should be counterbalanced. That should be the small portion of

623
00:32:14,160 --> 00:32:17,200
Speaker 1: your portfolio, and the rest of your portfolio should be

624
00:32:17,240 --> 00:32:22,000
Speaker 1: balanced with you know, index funds and you know blue

625
00:32:22,080 --> 00:32:24,520
Speaker 1: chip companies and bonds and real estate. Right, That's what's

626
00:32:24,520 --> 00:32:28,520
Speaker 1: getting lost here is you know these really high risk,

627
00:32:28,680 --> 00:32:33,320
Speaker 1: high reward companies and opportunities. What percentage of your portfolio

628
00:32:33,360 --> 00:32:35,720
Speaker 1: should they be. When people ask me about angel investing,

629
00:32:35,760 --> 00:32:38,160
Speaker 1: I'm like, if you really love doing this, low single

630
00:32:38,240 --> 00:32:40,040
Speaker 1: digits is what I would tell my mom or my

631
00:32:40,120 --> 00:32:42,479
Speaker 1: brother if they want to do the work and make

632
00:32:42,520 --> 00:32:44,360
Speaker 1: sure they can afford to lose the money. Same thing

633
00:32:44,400 --> 00:33:04,800
Speaker 1: with SPACs, same thing with crypto. So you mentioned, okay,

634
00:33:04,840 --> 00:33:07,400
Speaker 1: like in this back wreckage there might very well be

635
00:33:07,480 --> 00:33:10,000
Speaker 1: some diamonds in the rough that come out. And you

636
00:33:10,040 --> 00:33:12,280
Speaker 1: also mentioned in the very beginning that you think this

637
00:33:12,360 --> 00:33:15,480
Speaker 1: is like a great time to be investing in early

638
00:33:15,520 --> 00:33:17,800
Speaker 1: stage companies because valuations have come down so much? Do

639
00:33:17,920 --> 00:33:20,160
Speaker 1: you think this is a great time to get aggressive?

640
00:33:20,360 --> 00:33:23,560
Speaker 1: But let's talk about like the last few years. One

641
00:33:23,560 --> 00:33:25,240
Speaker 1: of the things that's come up on our show is

642
00:33:25,280 --> 00:33:27,200
Speaker 1: like the right like all these people who had like

643
00:33:27,520 --> 00:33:31,240
Speaker 1: sub stacks and rolling funds on Angel List suddenly getting

644
00:33:31,280 --> 00:33:33,480
Speaker 1: into the angel investing game over the last two years,

645
00:33:33,480 --> 00:33:37,280
Speaker 1: maybe starting in March COVID or a little bit before that.

646
00:33:37,440 --> 00:33:40,320
Speaker 1: Like how bad is the pain going to be of

647
00:33:40,400 --> 00:33:43,520
Speaker 1: all these different startups? Like what is the survival rate

648
00:33:43,560 --> 00:33:47,240
Speaker 1: going to be? And how prepared are these founders for

649
00:33:47,320 --> 00:33:49,920
Speaker 1: an actual downturn the likes of which maybe we haven't

650
00:33:49,920 --> 00:33:54,680
Speaker 1: seen in roughly twenty years. Yeah, startups die, you know,

651
00:33:56,120 --> 00:33:59,080
Speaker 1: so that's your starting point, right, um, And then you

652
00:33:59,120 --> 00:34:02,560
Speaker 1: know you're fund is tends to be you know, a

653
00:34:02,560 --> 00:34:07,000
Speaker 1: typical venture capitalist has thirty names and a fund thirty companies,

654
00:34:07,120 --> 00:34:10,400
Speaker 1: and you know the top two companies will be ninety

655
00:34:10,440 --> 00:34:13,120
Speaker 1: five of their return. So that's kind of par for

656
00:34:13,160 --> 00:34:15,839
Speaker 1: the course, right, that's what you expect. Now. A lot

657
00:34:15,880 --> 00:34:19,560
Speaker 1: of founders raised money when the market was hot, and

658
00:34:19,600 --> 00:34:23,240
Speaker 1: a lot of them were in denial and thought every

659
00:34:23,320 --> 00:34:26,000
Speaker 1: round of financing, we get easier, and why shouldn't they

660
00:34:26,000 --> 00:34:28,880
Speaker 1: think that. They got into an accelerator, they raised an

661
00:34:28,920 --> 00:34:31,879
Speaker 1: angel round, they did a pre Series A, they did

662
00:34:31,880 --> 00:34:35,160
Speaker 1: a Series A. All of that was pretty easy, and

663
00:34:35,160 --> 00:34:39,239
Speaker 1: it got easier each stage, and then Series B they

664
00:34:39,239 --> 00:34:41,840
Speaker 1: had people asking them to take their money, and then seriously,

665
00:34:41,920 --> 00:34:44,880
Speaker 1: they had people throwing money at them and not doing diligence.

666
00:34:45,320 --> 00:34:47,919
Speaker 1: So just imagine you're a founder, you're thirty five years old,

667
00:34:48,040 --> 00:34:51,000
Speaker 1: and that's the market you were born into. Okay, you're

668
00:34:51,000 --> 00:34:53,439
Speaker 1: going to think about the world a certain way. Okay, yeah,

669
00:34:53,480 --> 00:34:55,600
Speaker 1: it's gonna get harder, but how hard could it get?

670
00:34:55,840 --> 00:34:59,399
Speaker 1: Like every round of financing you've done to now has

671
00:34:59,440 --> 00:35:04,640
Speaker 1: been easier than the next round. So everything you've experienced

672
00:35:05,120 --> 00:35:07,400
Speaker 1: has been a complete head of age, and whatever you

673
00:35:07,560 --> 00:35:09,560
Speaker 1: learned up to this point is not going to service

674
00:35:09,600 --> 00:35:13,279
Speaker 1: you going forward. It's kind of like being like the

675
00:35:13,320 --> 00:35:15,759
Speaker 1: smartest kid in your school and then you wind up

676
00:35:15,800 --> 00:35:18,040
Speaker 1: going to Harvard and it's like, yep, you're a dime

677
00:35:18,040 --> 00:35:21,000
Speaker 1: a dozen where you are the most beautiful actor and

678
00:35:21,080 --> 00:35:25,000
Speaker 1: talented person in your you know, uh, summer stock and

679
00:35:25,080 --> 00:35:28,279
Speaker 1: your your high school musical and then you go to

680
00:35:28,320 --> 00:35:30,879
Speaker 1: Hollywood and it's like, Yep, you're just like everybody else.

681
00:35:30,880 --> 00:35:33,759
Speaker 1: There's nothing unique about you. Sorry. You know, that's what

682
00:35:33,840 --> 00:35:36,640
Speaker 1: the transition people have to go through now. And many

683
00:35:36,680 --> 00:35:38,960
Speaker 1: of the people who I watched up close and personal

684
00:35:39,040 --> 00:35:43,359
Speaker 1: became better at raising money from vcs thank getting money

685
00:35:43,400 --> 00:35:46,880
Speaker 1: from customers. That is the big red flag. You have

686
00:35:46,960 --> 00:35:51,160
Speaker 1: to be better at servicing your customers than servicing your investors.

687
00:35:51,520 --> 00:35:54,320
Speaker 1: It's important to be able to get investment, but ultimately

688
00:35:54,320 --> 00:35:56,720
Speaker 1: that investment is all in service of delighting a customer,

689
00:35:57,480 --> 00:36:00,480
Speaker 1: retaining a customer, and expanding the spend with the customer.

690
00:36:00,920 --> 00:36:03,200
Speaker 1: And that's, you know, the change people have to make.

691
00:36:03,440 --> 00:36:05,480
Speaker 1: I've seen a lot of people who thought they were

692
00:36:05,560 --> 00:36:08,239
Speaker 1: Jedi knights and all of a sudden they get into

693
00:36:08,239 --> 00:36:10,680
Speaker 1: a serious Jedi battle and they lose two or three limbs.

694
00:36:10,840 --> 00:36:13,880
Speaker 1: This is like serious Jedi ship. Like you think you

695
00:36:14,000 --> 00:36:15,680
Speaker 1: are a Jedi, You think you know how to use

696
00:36:15,719 --> 00:36:17,680
Speaker 1: a lightsaber, and then you come up against a Sith

697
00:36:17,760 --> 00:36:20,879
Speaker 1: board and you lose your hand, period, end of story.

698
00:36:21,000 --> 00:36:23,719
Speaker 1: Like that's what's happening here. People were pretending to be

699
00:36:24,040 --> 00:36:26,799
Speaker 1: Jedis they're pretending to be entrepreneurs and they are just

700
00:36:26,920 --> 00:36:29,440
Speaker 1: not cut out for you know, we've seen obviously the

701
00:36:29,440 --> 00:36:33,040
Speaker 1: announcements of layoffs, right we we know they're picking up,

702
00:36:33,040 --> 00:36:35,600
Speaker 1: and we've seen them are founders even today in July.

703
00:36:37,280 --> 00:36:42,319
Speaker 1: Have they sufficiently marked their mind to reality or are

704
00:36:42,320 --> 00:36:44,239
Speaker 1: they still Are there still many who are in a

705
00:36:44,280 --> 00:36:48,400
Speaker 1: state of denial. Most are still in denial. Sort of

706
00:36:48,400 --> 00:36:50,399
Speaker 1: related to this topic, there's been a lot of talk

707
00:36:50,520 --> 00:36:54,040
Speaker 1: recently about the end of the millennial subsidy, or I

708
00:36:54,040 --> 00:36:57,040
Speaker 1: guess like the urban lifestyle subsidy, the idea that all

709
00:36:57,080 --> 00:37:00,920
Speaker 1: these conveniences that people took for granted before, like ordering

710
00:37:00,960 --> 00:37:04,399
Speaker 1: a car through Uber or ordering food via grub Hub

711
00:37:04,440 --> 00:37:06,440
Speaker 1: and things like that, that the cost of those are

712
00:37:06,440 --> 00:37:08,680
Speaker 1: all going to have to go up as the company's

713
00:37:08,719 --> 00:37:11,399
Speaker 1: sort of pivot from spending lots of money to grow

714
00:37:11,400 --> 00:37:15,239
Speaker 1: their market share to actually making a profit or at

715
00:37:15,280 --> 00:37:17,960
Speaker 1: least trying to. Now, how is that playing out? Like,

716
00:37:18,040 --> 00:37:20,799
Speaker 1: do you see evidence of that in the companies that

717
00:37:21,120 --> 00:37:25,239
Speaker 1: you're either invested in or very very familiar with. Yeah,

718
00:37:25,239 --> 00:37:27,879
Speaker 1: I mean we would be the best example of it.

719
00:37:28,000 --> 00:37:31,000
Speaker 1: You know, they were losing a dollar a ride and

720
00:37:31,040 --> 00:37:33,680
Speaker 1: then they went down to losing sixty cents a ride,

721
00:37:33,680 --> 00:37:35,760
Speaker 1: and then twenty cents a ride, And so for anybody

722
00:37:35,760 --> 00:37:39,759
Speaker 1: who was an insider, it was abundantly clear that at

723
00:37:39,800 --> 00:37:42,799
Speaker 1: any point in time when the competition with lift and

724
00:37:42,880 --> 00:37:46,080
Speaker 1: other services, or door dash, for on the east side

725
00:37:46,080 --> 00:37:51,720
Speaker 1: of the business, when that competition abated and those second

726
00:37:51,880 --> 00:37:54,800
Speaker 1: third tier players ran out of money and stopped getting

727
00:37:55,000 --> 00:37:59,200
Speaker 1: free capital, then the network effects would benefit whoever was

728
00:37:59,560 --> 00:38:02,040
Speaker 1: in the leaded right, and so Uber clearly was in

729
00:38:02,080 --> 00:38:04,680
Speaker 1: the lead. And we actually see that manifesting itself over

730
00:38:04,719 --> 00:38:07,360
Speaker 1: the last couple of years, which is to say, drivers

731
00:38:07,360 --> 00:38:09,719
Speaker 1: are getting paid more money, drivers are drawn to the

732
00:38:09,800 --> 00:38:13,640
Speaker 1: Uber platform, the prices of ubers have gone up. Uber's

733
00:38:13,680 --> 00:38:16,120
Speaker 1: revenue has surged. And now what we'll see this year

734
00:38:16,200 --> 00:38:18,120
Speaker 1: I predict and and Dar has been pretty clear about

735
00:38:18,120 --> 00:38:20,759
Speaker 1: this is the money printing machine will turn on, just

736
00:38:20,800 --> 00:38:23,080
Speaker 1: like Amazon can do that. And I want to stop

737
00:38:23,160 --> 00:38:25,600
Speaker 1: right there real quickly, because when we recently had Jim

738
00:38:25,680 --> 00:38:27,479
Speaker 1: Chainos on the show and he said, you know, look

739
00:38:28,719 --> 00:38:31,279
Speaker 1: for many of these so called sharing economies, whether it's

740
00:38:31,280 --> 00:38:34,239
Speaker 1: door dash or grub hub or Uber or whatever like

741
00:38:34,480 --> 00:38:37,239
Speaker 1: that should have been the most amazing. Everyone was home

742
00:38:37,400 --> 00:38:40,799
Speaker 1: ordering stuff online with stimulus checks from the government and

743
00:38:40,840 --> 00:38:43,600
Speaker 1: they couldn't make money in and his lines like if

744
00:38:43,600 --> 00:38:46,960
Speaker 1: they can't make money in when when will they? And

745
00:38:47,040 --> 00:38:49,440
Speaker 1: so why do you think it's a way? Why do

746
00:38:49,440 --> 00:38:51,680
Speaker 1: you believe that? I mean you still hold your uber

747
00:38:51,800 --> 00:38:55,759
Speaker 1: shares or something. So why like what's you know you

748
00:38:55,800 --> 00:38:57,799
Speaker 1: think they're gonna that's doable, that they can turn the

749
00:38:57,840 --> 00:39:00,560
Speaker 1: corner and that they're there existing craziness. Are two things

750
00:39:00,560 --> 00:39:03,960
Speaker 1: to look at. Number One, stock based compensation is for

751
00:39:04,040 --> 00:39:06,360
Speaker 1: these companies has been a large portion of their losses

752
00:39:06,880 --> 00:39:09,920
Speaker 1: um and so if stock based compensation changes a little bit,

753
00:39:09,960 --> 00:39:12,680
Speaker 1: and that's been a big back channel in Silicon Valley

754
00:39:12,719 --> 00:39:16,560
Speaker 1: and with the large fund holders of private equities, is hey,

755
00:39:16,560 --> 00:39:19,439
Speaker 1: maybe we need to talk about stock based compensation now

756
00:39:19,520 --> 00:39:22,160
Speaker 1: that all these layoffs and hiring freezes have happened at

757
00:39:22,160 --> 00:39:26,680
Speaker 1: the fangs and you know, certainly layoffs and uh, salary

758
00:39:26,719 --> 00:39:28,879
Speaker 1: cuts even I think are going to start next. That's

759
00:39:28,920 --> 00:39:30,640
Speaker 1: going to be the true sign that we're in something

760
00:39:30,719 --> 00:39:33,480
Speaker 1: dark is when people's salaries get cut. Wait for that.

761
00:39:33,480 --> 00:39:39,319
Speaker 1: That will be the true time's coming down. I think

762
00:39:39,400 --> 00:39:41,160
Speaker 1: the way it works is and this is like the

763
00:39:41,160 --> 00:39:43,440
Speaker 1: cynical inside or stuff that people don't like to talk about.

764
00:39:43,520 --> 00:39:46,160
Speaker 1: But what people do is they lay off a bunch

765
00:39:46,200 --> 00:39:48,759
Speaker 1: of people. Then they reset the salaries and hire people

766
00:39:48,800 --> 00:39:52,600
Speaker 1: back at lower salaries. And so that's de facto a

767
00:39:52,640 --> 00:39:54,680
Speaker 1: salary cut, right. So if you lay off a third

768
00:39:54,680 --> 00:39:57,520
Speaker 1: of your staff and then you put the positions back out,

769
00:39:57,520 --> 00:39:59,120
Speaker 1: but they're at a lower price and people can work

770
00:39:59,160 --> 00:40:01,160
Speaker 1: from home and they can work from anywhere. That's the

771
00:40:01,200 --> 00:40:04,360
Speaker 1: way for like a Facebook or an Apple to reset

772
00:40:04,360 --> 00:40:07,160
Speaker 1: it without saying to the people who currently work with them, hey,

773
00:40:07,160 --> 00:40:09,920
Speaker 1: by the way, we're cutting your salary. They just say you.

774
00:40:10,200 --> 00:40:12,040
Speaker 1: Apple just says you have to come back to the office.

775
00:40:12,040 --> 00:40:14,120
Speaker 1: So you don't come back to the office. Okay, so

776
00:40:14,160 --> 00:40:16,440
Speaker 1: you don't want to work here anymore. You were overpaid.

777
00:40:16,719 --> 00:40:19,520
Speaker 1: Now we're going to put those salaries at a different number.

778
00:40:19,520 --> 00:40:21,839
Speaker 1: In some companies, if things get really dark, they might

779
00:40:21,840 --> 00:40:24,600
Speaker 1: just say, hey, we're the management team is taking cuts

780
00:40:24,600 --> 00:40:26,560
Speaker 1: and everybody else is taking ten and then they just

781
00:40:26,640 --> 00:40:29,399
Speaker 1: challenge people. If you don't like it, you can leave um.

782
00:40:29,440 --> 00:40:31,160
Speaker 1: And if things get really dark. I think it's a

783
00:40:31,200 --> 00:40:34,000
Speaker 1: fifty that we'll see this happened in the second half

784
00:40:34,000 --> 00:40:36,400
Speaker 1: of the year. You know, I've seen the layoff approach.

785
00:40:36,600 --> 00:40:40,600
Speaker 1: First it's a reorganization, then it's layoffs, then it's mass layoffs,

786
00:40:40,800 --> 00:40:43,160
Speaker 1: then it's pulling the offers that have been done. Remember

787
00:40:43,400 --> 00:40:44,960
Speaker 1: those were a lot of big headlines. Oh I had

788
00:40:45,000 --> 00:40:48,000
Speaker 1: an offer at this company, it got rescinded. The next

789
00:40:48,000 --> 00:40:51,600
Speaker 1: piece is the salary cuts, so that that's the true

790
00:40:51,640 --> 00:40:54,279
Speaker 1: bottom signed look for that. It's not guaranteed, but it

791
00:40:54,719 --> 00:40:59,600
Speaker 1: could happen. And so we got to this with you know, Uber,

792
00:40:59,719 --> 00:41:02,120
Speaker 1: and if they couldn't make it in twenty I think

793
00:41:02,160 --> 00:41:06,400
Speaker 1: a lot of these companies got too big. Facebook, Google, Uber,

794
00:41:06,560 --> 00:41:13,400
Speaker 1: Airbnb all could operate with less people and in a

795
00:41:13,520 --> 00:41:17,120
Speaker 1: market where the public markets want to see cash flow,

796
00:41:17,640 --> 00:41:19,880
Speaker 1: it's just time to shift gears and do that. Airbnb

797
00:41:20,000 --> 00:41:21,880
Speaker 1: like oh a third of people during the pandemic. I

798
00:41:21,920 --> 00:41:25,080
Speaker 1: think Uber did something similar. And so these companies were

799
00:41:25,080 --> 00:41:27,640
Speaker 1: getting rewarded in a low interest rate environment where they

800
00:41:27,680 --> 00:41:30,440
Speaker 1: could just keep raising capital for growth top line. Now

801
00:41:30,480 --> 00:41:32,920
Speaker 1: people want to see the bottom line. Uber is perfectly

802
00:41:32,960 --> 00:41:35,120
Speaker 1: positioned to do that. And what you have to do

803
00:41:35,160 --> 00:41:37,760
Speaker 1: if you're one of these rockets scientists is just say,

804
00:41:37,840 --> 00:41:40,600
Speaker 1: are you gonna take less Ubers or do less door

805
00:41:40,719 --> 00:41:43,680
Speaker 1: Dash or less uber eats, if it costs one dollar

806
00:41:43,800 --> 00:41:47,759
Speaker 1: or two dollar more, the answer for plus of use

807
00:41:47,800 --> 00:41:50,919
Speaker 1: cases is I'll absorb the one or two dollars. And

808
00:41:51,440 --> 00:41:54,200
Speaker 1: the proof of that is that's actually happened. Ubers have

809
00:41:54,280 --> 00:41:57,040
Speaker 1: become more than two or three dollars more expensive now

810
00:41:57,080 --> 00:41:59,120
Speaker 1: for uberpool, Will it make a difference if somebody was

811
00:41:59,120 --> 00:42:01,800
Speaker 1: paying six bucks and now they have to pay nine. Yeah,

812
00:42:01,840 --> 00:42:03,560
Speaker 1: there are some people who might say I'm going to

813
00:42:03,640 --> 00:42:06,560
Speaker 1: take the subway, but that's not the people who are

814
00:42:06,600 --> 00:42:08,400
Speaker 1: the profit anyway. And the prophet is in the whales

815
00:42:08,440 --> 00:42:09,920
Speaker 1: and the and the bigger rides and the and the

816
00:42:09,960 --> 00:42:13,439
Speaker 1: more luxurious rides, the Lincoln Town cars, etcetera. So yeah,

817
00:42:13,520 --> 00:42:16,520
Speaker 1: it's pretty easy to figure this out. If Uber charges

818
00:42:16,560 --> 00:42:19,520
Speaker 1: two dollars per ride or delivery or doorshus the same thing,

819
00:42:20,280 --> 00:42:23,279
Speaker 1: which they're all doing, and they cut their staff and

820
00:42:23,320 --> 00:42:26,760
Speaker 1: they cut stock based compensation, these things become money printing machines.

821
00:42:27,600 --> 00:42:29,399
Speaker 1: Now I get Jim's point. Jim's point is like, why

822
00:42:29,400 --> 00:42:32,920
Speaker 1: didn't you do that before? Well, we weren't being rewarded

823
00:42:32,960 --> 00:42:35,000
Speaker 1: for that before the investment community told us to do

824
00:42:35,040 --> 00:42:37,919
Speaker 1: the other thing. And so when you saw Derek come back,

825
00:42:37,960 --> 00:42:39,600
Speaker 1: I think it was last year and he just said, listen,

826
00:42:39,840 --> 00:42:41,600
Speaker 1: I met with all of our large shareholders. They said

827
00:42:41,600 --> 00:42:43,719
Speaker 1: they want free cash flow, they want profits. I'll give

828
00:42:43,760 --> 00:42:46,680
Speaker 1: you that. He's pragmatic. Uh, you know, he's a dog.

829
00:42:46,880 --> 00:42:48,799
Speaker 1: You know, he knows what he's doing. He's not his

830
00:42:48,840 --> 00:42:51,160
Speaker 1: first time at the rodeo, and so he's willing to

831
00:42:51,200 --> 00:42:52,960
Speaker 1: make the cuts and raise the prices and and that's

832
00:42:52,960 --> 00:42:54,680
Speaker 1: what everybody's gonna do and they get rewarded for that,

833
00:42:54,680 --> 00:42:56,520
Speaker 1: and then you know what will happen. Everyone's gonna be like,

834
00:42:56,640 --> 00:42:58,880
Speaker 1: why aren't you growing faster? And something that's just the

835
00:42:58,880 --> 00:43:01,560
Speaker 1: pendulum of being a seat EEO and a board. They're like,

836
00:43:01,719 --> 00:43:04,719
Speaker 1: we want more than you're over your growth. Can we

837
00:43:04,760 --> 00:43:09,640
Speaker 1: get to So you gotta play the game as the

838
00:43:09,719 --> 00:43:11,640
Speaker 1: rules are saying, to play it on the field, you know,

839
00:43:11,760 --> 00:43:14,400
Speaker 1: And the rules of the game are now show us profits.

840
00:43:14,920 --> 00:43:17,640
Speaker 1: The companies that showed profits, you know, didn't get the

841
00:43:17,640 --> 00:43:22,960
Speaker 1: funding previously. What's your base case for how bad things

842
00:43:23,040 --> 00:43:25,799
Speaker 1: might get? And then secondly, you know you mentioned that

843
00:43:25,920 --> 00:43:28,319
Speaker 1: in the current down cycle, you're still taking a bunch

844
00:43:28,360 --> 00:43:31,879
Speaker 1: of meetings and there's still opportunities out there at an

845
00:43:31,880 --> 00:43:36,760
Speaker 1: even lower valuation. How much money is actually out there

846
00:43:36,800 --> 00:43:39,759
Speaker 1: on the sidelines and ready to get deployed in the

847
00:43:39,760 --> 00:43:42,920
Speaker 1: current cycle. And how much does that help. There's a

848
00:43:42,960 --> 00:43:46,520
Speaker 1: ton of what I call, you know, dead or boring money,

849
00:43:46,760 --> 00:43:50,799
Speaker 1: money in bonds or boring assets and safer assets, and

850
00:43:50,840 --> 00:43:53,839
Speaker 1: so yeah, people are scared right now. I think there's

851
00:43:53,880 --> 00:43:58,120
Speaker 1: a lot of existential and macro issues. We talked about

852
00:43:58,120 --> 00:44:00,640
Speaker 1: it on All In, you know, every week, and so

853
00:44:01,480 --> 00:44:04,320
Speaker 1: you know, some people like David Sacks is incredibly obsessed

854
00:44:04,320 --> 00:44:08,080
Speaker 1: with the Ukraine. It's like become his entire Twitter feed

855
00:44:08,120 --> 00:44:09,919
Speaker 1: and it's like I thought you were assass investor, David,

856
00:44:10,120 --> 00:44:13,520
Speaker 1: like you know, but this is a perfect example, Like

857
00:44:13,680 --> 00:44:16,120
Speaker 1: he is very scared about that escalating. He's a very

858
00:44:16,120 --> 00:44:18,000
Speaker 1: smart individual, one of smart people I've ever met in

859
00:44:18,000 --> 00:44:20,920
Speaker 1: my life. So smart people right now are very concerned.

860
00:44:20,960 --> 00:44:22,600
Speaker 1: Some of them are concerned about Taiwan someone they are

861
00:44:22,600 --> 00:44:25,439
Speaker 1: concerned about, you know, or they were concerned about COVID.

862
00:44:25,440 --> 00:44:28,239
Speaker 1: Everybody's got a different thing that makes them scared in

863
00:44:28,280 --> 00:44:32,200
Speaker 1: the world. I don't operate that way. I because I

864
00:44:32,239 --> 00:44:34,960
Speaker 1: get to invest in the early stages. I know, great

865
00:44:35,000 --> 00:44:38,640
Speaker 1: companies are built all the time, and great companies are

866
00:44:38,680 --> 00:44:40,680
Speaker 1: built when there's wars going on in the world, when

867
00:44:40,680 --> 00:44:42,919
Speaker 1: there's famines going on the world, all these terrible things

868
00:44:42,920 --> 00:44:46,520
Speaker 1: can occur. And Google and Uber and Facebook and robin

869
00:44:46,560 --> 00:44:49,719
Speaker 1: Hood and other great companies are gonna be made independent

870
00:44:49,800 --> 00:44:53,600
Speaker 1: of those things. Entrepreneurs are gonna keep creating. And in fact,

871
00:44:53,880 --> 00:44:58,759
Speaker 1: when the market is the most troubled, that's when your

872
00:44:58,760 --> 00:45:02,439
Speaker 1: selection gets easy. Year Because if you're creating a company

873
00:45:02,480 --> 00:45:04,320
Speaker 1: in two thousand and eight, two thousand nine, two thousand

874
00:45:04,320 --> 00:45:07,720
Speaker 1: and ten, well you have to be a true maniac.

875
00:45:07,880 --> 00:45:11,360
Speaker 1: I mean, you have to be a true mission driven

876
00:45:11,600 --> 00:45:14,239
Speaker 1: founder who is going to do this no matter what.

877
00:45:14,800 --> 00:45:16,799
Speaker 1: And I've just seen it so many times in my career.

878
00:45:16,840 --> 00:45:19,600
Speaker 1: People who were starting companies in the early nineties were maniacs.

879
00:45:19,880 --> 00:45:22,040
Speaker 1: People were starting them after the dot com bust at

880
00:45:22,080 --> 00:45:25,800
Speaker 1: nine eleven were complete utter maniacs, myself included. And people

881
00:45:25,800 --> 00:45:27,640
Speaker 1: who started them after two thousand and eight were complete

882
00:45:27,640 --> 00:45:31,400
Speaker 1: and utter maniacs. And that's when the great companies are formed,

883
00:45:31,440 --> 00:45:34,440
Speaker 1: and then they grow through the down and up markets consistently.

884
00:45:35,080 --> 00:45:36,839
Speaker 1: That's really what it's all about. So I don't worry

885
00:45:36,840 --> 00:45:39,640
Speaker 1: about these things. I do not live in fear like

886
00:45:39,680 --> 00:45:42,080
Speaker 1: a lot of my other contemporaries and get obsessed with

887
00:45:42,120 --> 00:45:44,800
Speaker 1: these things. I just like to focus on the founder

888
00:45:45,440 --> 00:45:48,279
Speaker 1: and the customer and the product. It's really you know,

889
00:45:48,440 --> 00:45:50,719
Speaker 1: it's one of the great things about just being a

890
00:45:50,800 --> 00:45:52,840
Speaker 1: simple kid from Brooklyn. I don't need to overthink this.

891
00:45:52,880 --> 00:45:55,160
Speaker 1: I don't got no Ivy League education. I didn't go

892
00:45:55,200 --> 00:45:58,000
Speaker 1: to Stanford, I didn't get perfect s A T S.

893
00:45:58,400 --> 00:46:00,319
Speaker 1: I just look at what the product does. I look

894
00:46:00,360 --> 00:46:02,120
Speaker 1: at what the customer thinks of the product, and I

895
00:46:02,160 --> 00:46:05,279
Speaker 1: placed my bets, and you know what, that's a better

896
00:46:05,280 --> 00:46:07,040
Speaker 1: way to do it. In my mind. It's simple. Just

897
00:46:07,040 --> 00:46:09,080
Speaker 1: put the ball in the basket, take a good shot,

898
00:46:09,200 --> 00:46:12,080
Speaker 1: rebound the basketball, and then on the other side, you know,

899
00:46:12,160 --> 00:46:13,560
Speaker 1: take a good shot and put the ball in the

900
00:46:13,560 --> 00:46:18,719
Speaker 1: basket and then yeah, fu, yeah, let's go. I mean,

901
00:46:18,760 --> 00:46:21,520
Speaker 1: that's what else would I do? No, I mean, I

902
00:46:21,560 --> 00:46:23,719
Speaker 1: just would like to see New York win a championship.

903
00:46:24,160 --> 00:46:27,040
Speaker 1: I did a little spreadsheet a year ago, during the pandemic.

904
00:46:27,080 --> 00:46:28,360
Speaker 1: I was kind of trying to figure out what I

905
00:46:28,360 --> 00:46:31,759
Speaker 1: would do with the last decade or two or three

906
00:46:31,800 --> 00:46:33,360
Speaker 1: of life I have left. When my friend Tony, she

907
00:46:33,600 --> 00:46:37,280
Speaker 1: died the day after my birthday, and kind of rocked

908
00:46:37,280 --> 00:46:40,480
Speaker 1: my world a little bit, and I just thought deeply

909
00:46:40,520 --> 00:46:43,080
Speaker 1: about what I want to do and what actually gives

910
00:46:43,080 --> 00:46:45,400
Speaker 1: me joy and fun. And yeah, I like skiing, and

911
00:46:45,440 --> 00:46:47,120
Speaker 1: I like hanging out with my friends and laughing and

912
00:46:47,120 --> 00:46:49,520
Speaker 1: doing podcasts and writing books and watching the Nick Game.

913
00:46:52,280 --> 00:46:54,520
Speaker 1: Yeah every week I felt. Yeah, we had him on

914
00:46:54,560 --> 00:46:57,879
Speaker 1: the show year ago. Yeah, it feels the best. I mean,

915
00:46:57,920 --> 00:47:01,040
Speaker 1: he's he's amazing, great human being. Uh. I mean, even

916
00:47:01,120 --> 00:47:04,319
Speaker 1: with all the outburst and craziness, which I thought when

917
00:47:04,360 --> 00:47:06,360
Speaker 1: I met him was for TV, and now I realized

918
00:47:06,400 --> 00:47:08,960
Speaker 1: he's just it really is truly who he is. I mean,

919
00:47:08,960 --> 00:47:11,640
Speaker 1: we've had some epic battles at our private poker game.

920
00:47:12,360 --> 00:47:15,680
Speaker 1: But when I had my little like existential fifty year old,

921
00:47:16,040 --> 00:47:20,640
Speaker 1: you know, Jacal crisis, I just thought, well, fuck, if

922
00:47:20,640 --> 00:47:22,759
Speaker 1: I keep infesting at this rate and I go up

923
00:47:23,520 --> 00:47:26,239
Speaker 1: or I double the number of dollars I invest every year, Yeah,

924
00:47:26,320 --> 00:47:29,160
Speaker 1: there's a chance I could be traced Commas and I

925
00:47:29,200 --> 00:47:32,240
Speaker 1: could buy the Knicks or make a run at them.

926
00:47:32,360 --> 00:47:34,600
Speaker 1: So why not create an outrageous goal. So my my

927
00:47:34,640 --> 00:47:37,520
Speaker 1: two outrageous goals are to you know, invest over the

928
00:47:37,560 --> 00:47:39,879
Speaker 1: next ten years and be one of the top five

929
00:47:39,920 --> 00:47:44,160
Speaker 1: investors in the history of Silicon Valley and have a

930
00:47:44,200 --> 00:47:46,840
Speaker 1: long shot chance of leading a syndicate. That's why I

931
00:47:46,880 --> 00:47:48,480
Speaker 1: bought the domain name the syndicate dot com, and I

932
00:47:48,520 --> 00:47:51,360
Speaker 1: invest in a hundred deals a year at the syndicate

933
00:47:52,080 --> 00:47:54,480
Speaker 1: with eleven thousand of credited investors, it's the largest one

934
00:47:54,520 --> 00:47:56,120
Speaker 1: in the world. If I keep doing that, I might

935
00:47:56,120 --> 00:47:58,200
Speaker 1: be able to lead a syndicate to buy the next someday,

936
00:47:58,239 --> 00:47:59,640
Speaker 1: and that would be a great thing to do in

937
00:47:59,680 --> 00:48:01,680
Speaker 1: my six these you get that or run for office.

938
00:48:01,800 --> 00:48:04,680
Speaker 1: So it's one of those two daughter. My daughter's in

939
00:48:04,800 --> 00:48:07,480
Speaker 1: Nicks fans, so hopefully you can turn them into winners.

940
00:48:07,640 --> 00:48:10,040
Speaker 1: Jason Calcannis, that was a lot of fun. Thank you

941
00:48:10,080 --> 00:48:12,279
Speaker 1: so hope that was entertaining. It was very entertaining. Thank

942
00:48:12,320 --> 00:48:16,560
Speaker 1: you so much for coming out in a lot my pleasure. Thanks. Hey,

943
00:48:16,560 --> 00:48:20,200
Speaker 1: don't forget to rate and subscribe everybody. Oh yeah, we

944
00:48:20,280 --> 00:48:21,920
Speaker 1: got it, we got I'm a podcaster. I gotta have

945
00:48:22,040 --> 00:48:36,520
Speaker 1: him to rate. Tell a friend about the pot. That

946
00:48:36,640 --> 00:48:42,120
Speaker 1: was fun. Yes, I'm thinking, sorry, I'm thinking. Do you

947
00:48:42,120 --> 00:48:45,880
Speaker 1: remember that Simpsons episode where like Homer Simpson goes to

948
00:48:45,920 --> 00:48:47,880
Speaker 1: work for Hank Scorpio and he wants to buy the

949
00:48:47,920 --> 00:48:50,360
Speaker 1: Dallas Cowboys. He confesses his dream is to buy the

950
00:48:50,400 --> 00:48:53,080
Speaker 1: Dallas Cowboys, and at the end of the episode, Hank

951
00:48:53,120 --> 00:48:56,600
Speaker 1: Scorpio buys him the Denver Broncos. No, I don't remember that.

952
00:48:57,080 --> 00:48:59,279
Speaker 1: I was thinking, you know what Simpson's episode, I think

953
00:48:59,280 --> 00:49:02,359
Speaker 1: I gonna reference, Well, you know, Jason was talked about

954
00:49:02,719 --> 00:49:04,400
Speaker 1: I just do this ten more years. I thought you

955
00:49:04,400 --> 00:49:07,440
Speaker 1: were gonna refer to the one where Homer bought um

956
00:49:07,480 --> 00:49:11,560
Speaker 1: Halloween pumpkins before Halloween and just thought that just keep holding,

957
00:49:11,680 --> 00:49:14,920
Speaker 1: just keep holding the pumpkins and draw a straight Actually,

958
00:49:15,840 --> 00:49:19,719
Speaker 1: actually that's not Yeah, that's not a bad episode too,

959
00:49:20,000 --> 00:49:22,320
Speaker 1: to reference. Because one thing that keeps coming up in

960
00:49:22,320 --> 00:49:24,960
Speaker 1: in all of our episodes lately is just the like

961
00:49:25,160 --> 00:49:29,080
Speaker 1: sicklick reality of human nature and this idea that for

962
00:49:29,239 --> 00:49:33,840
Speaker 1: years investors were comfortable with these companies growing market share,

963
00:49:34,080 --> 00:49:37,800
Speaker 1: spending money, raising more money um in public or private

964
00:49:37,840 --> 00:49:41,160
Speaker 1: markets in order to do that, and then suddenly it's like, oh, no, no,

965
00:49:41,400 --> 00:49:44,759
Speaker 1: you you really do have to return a profit. And then,

966
00:49:45,080 --> 00:49:46,920
Speaker 1: you know, I think Jason is right, at some point

967
00:49:46,960 --> 00:49:48,880
Speaker 1: in the cycle, people will come back and be like, no, no,

968
00:49:48,960 --> 00:49:51,120
Speaker 1: it's time to grow again. This is your opportunity. He

969
00:49:51,239 --> 00:49:55,000
Speaker 1: made about to the chainos point about like, oh, well,

970
00:49:55,040 --> 00:49:57,400
Speaker 1: why weren't they making money in twenty And it's like

971
00:49:57,520 --> 00:49:59,880
Speaker 1: market wasn't telling them to make money. The stocks were

972
00:49:59,880 --> 00:50:01,920
Speaker 1: going straight up. I hadn't really thought about that, but

973
00:50:01,960 --> 00:50:03,960
Speaker 1: you know, it's something that comes up. It comes up

974
00:50:03,960 --> 00:50:07,800
Speaker 1: on our energy episodes. It's like, what are investors rewarding

975
00:50:07,920 --> 00:50:11,799
Speaker 1: at a given time? And so if that on paper, yeah,

976
00:50:11,840 --> 00:50:14,760
Speaker 1: it's a good environment for some of these gig economy companies.

977
00:50:14,920 --> 00:50:17,239
Speaker 1: But if the market is still in that mode of no,

978
00:50:17,360 --> 00:50:19,200
Speaker 1: we're not going to reward you for cutting expending, We're

979
00:50:19,200 --> 00:50:21,160
Speaker 1: not going to reward you for slamming the brakes on

980
00:50:21,320 --> 00:50:24,640
Speaker 1: growth in the name of profitability, maybe I could see

981
00:50:24,640 --> 00:50:27,040
Speaker 1: how that's a counter argument for why weren't they profitable

982
00:50:27,040 --> 00:50:29,120
Speaker 1: at that time? Absolutely, it just feels like there's a

983
00:50:29,120 --> 00:50:32,560
Speaker 1: tendency for people to run too far in either direction,

984
00:50:33,160 --> 00:50:34,960
Speaker 1: and it's really hard to stamp out because to some

985
00:50:35,040 --> 00:50:37,680
Speaker 1: extent that's human nature. Right. Yeah, By the way, the

986
00:50:37,840 --> 00:50:44,800
Speaker 1: issue with all these legacy vcs getting into unregistered securities,

987
00:50:44,920 --> 00:50:48,799
Speaker 1: arguably with crypto tokens and then tweeting about them, and

988
00:50:48,840 --> 00:50:53,840
Speaker 1: then retail investors buying them on exchanges. I thought Jason's

989
00:50:53,920 --> 00:50:56,759
Speaker 1: comments were pretty pointed on that, and like, it does

990
00:50:56,840 --> 00:51:00,000
Speaker 1: seem to me like this could be lawsuit season or

991
00:51:00,040 --> 00:51:03,200
Speaker 1: investigation season. And I do wonder if any of these

992
00:51:03,200 --> 00:51:08,040
Speaker 1: sort of legacy vcs will regret pivoting towards talking about

993
00:51:08,080 --> 00:51:11,160
Speaker 1: publicly traded instruments as much as they did. I'm very

994
00:51:11,239 --> 00:51:14,120
Speaker 1: curious to see how it shakes out. I still think

995
00:51:14,440 --> 00:51:17,279
Speaker 1: the regulators should have been there from the beginning. I mean,

996
00:51:17,440 --> 00:51:22,120
Speaker 1: some of these tokens quite clearly resemble securities offerings you

997
00:51:22,239 --> 00:51:27,560
Speaker 1: vote and dividends can theoretically create. So that sounds yeah, absolutely,

998
00:51:27,600 --> 00:51:29,560
Speaker 1: so why not say that that's illegal or it should

999
00:51:29,560 --> 00:51:34,080
Speaker 1: be a registered security? And where were the regula whatever? Yeah?

1000
00:51:34,120 --> 00:51:36,600
Speaker 1: But yeah, I mean it does feel like some sort

1001
00:51:36,719 --> 00:51:40,680
Speaker 1: of shakeout or reckoning is coming, but I guess it's

1002
00:51:40,719 --> 00:51:43,600
Speaker 1: hard to predict. All right, Um, should we leave it there?

1003
00:51:43,640 --> 00:51:46,239
Speaker 1: Let's leave it there. This has been another episode of

1004
00:51:46,280 --> 00:51:48,920
Speaker 1: the All Thoughts Podcast. I'm Tracy Alloway. You can follow

1005
00:51:48,920 --> 00:51:51,560
Speaker 1: me on Twitter at Tracy Alloway and I'm Joe Why

1006
00:51:51,560 --> 00:51:53,759
Speaker 1: isn't all You kind of follow me on Twitter at

1007
00:51:53,800 --> 00:51:56,959
Speaker 1: the Stalwart follow our guest Jason callicanas On Twitter, He's

1008
00:51:57,080 --> 00:52:01,440
Speaker 1: at Jason, Follow our producer Kerman run Is at Carmen Arman,

1009
00:52:01,840 --> 00:52:05,160
Speaker 1: and follow all of the podcasts Bloomberg onto the handle

1010
00:52:05,520 --> 00:52:07,360
Speaker 1: at podcasts. Thanks for listening.