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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. So, Tracy, there's

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Speaker 1: obviously a lot going on these days in the world

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Speaker 1: of macro and markets, but one thing that we've seen distinctly,

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Speaker 1: particularly since the middle of November, is tech stocks have

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Speaker 1: just been getting absolutely hammered. Yeah, so I was actually

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Speaker 1: away last week. I guess we should say we're recording

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Speaker 1: this on February seven. Uh, And apparently I missed a

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Speaker 1: massive sell off in tech and then a little bit

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Speaker 1: of a rebound. Is that what happened? Yeah, I think that.

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Speaker 1: I think that's fair to say. I think he was

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Speaker 1: last Monday. I'm started losing track of the days. We've

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Speaker 1: had some really brutal sessions, and we had weakness in

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Speaker 1: I think it was like two Mondays ago or something

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Speaker 1: like that textor just got killed anyway, but we've had

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Speaker 1: some brutal sessions. Everything that's sort of like growthy, like

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Speaker 1: people like betting on the future Big Time got hammered.

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Speaker 1: Also had some specific names like Netflix really got wrecked

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Speaker 1: after earning his Facebook and a lot of trouble like

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Speaker 1: and a striking fact that I saw from Bank of

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Speaker 1: America is that in January, like so called value stocks

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Speaker 1: had their best outperformance relative to growth since two thousand

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Speaker 1: and one. So we're talking like two decades, a two

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Speaker 1: decade historical reversal here. Yeah. So the thing I find

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Speaker 1: weird about all of this is this is kind of

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Speaker 1: what everyone predicted would happen. Right, For many, many years,

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Speaker 1: everyone complained about valuation of tex stalks, and once interest

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Speaker 1: rates start going up, you know the air is going

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Speaker 1: to get kicked out of their tires. And that seems

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Speaker 1: to be exactly what's been happening. But part of me

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Speaker 1: also thinks the explanation can't be that simple. Well, the

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Speaker 1: other thing is like, okay, you can predict it, because

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Speaker 1: it doesn't you know good. You could say like, oh,

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Speaker 1: look at all these overvalued text talks and look at

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Speaker 1: the multiples, etcetera. But meanwhile you're like stuck in value

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Speaker 1: for three years and all your clients have deserted you,

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Speaker 1: and then finally January two comes across. But what good

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Speaker 1: did that do you? And I don't think anyone has

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Speaker 1: some like great way of like timing these things, So

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Speaker 1: what good did these predictions? Absolutely right? So anyway I'm

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Speaker 1: very interested in what exactly happened, whether this is the

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Speaker 1: end of a sort of era like for years, anything cloud, anything,

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Speaker 1: software as a service, anything, growth just absolutely crushed it.

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Speaker 1: So hey, I'm curious whether this is the end of

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Speaker 1: that for the time being, or whether it was a

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Speaker 1: blip and be what is happening on the private side,

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Speaker 1: because we know that you know, it's like would you

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Speaker 1: pay as much for a late stage round or or

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Speaker 1: even in early stage round if the I p O

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Speaker 1: window is much worse? And we know that recent I

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Speaker 1: p O s got killed, We got a lot of

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Speaker 1: SPACs that de spac one got killed. And so also

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Speaker 1: what is I mean for private markets in growth and VC,

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Speaker 1: etcetera when we see such ructions in the public market. Yeah,

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Speaker 1: it might be a situation where you know, an ill

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Speaker 1: liquid asset like a private share turns out being like

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Speaker 1: a better bet in this environment, just because it's harder

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Speaker 1: to get out of whereas you can press a button

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Speaker 1: and sell down you know Google or Facebook, Slash Meta

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Speaker 1: or whatever, but it's harder to get out of a

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Speaker 1: private company. So yeah, I'm curious to see what's going

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Speaker 1: on with valuations there. I love that and It's totally true,

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Speaker 1: this idea of like the illiquidity premium, because you can't,

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Speaker 1: you can't. The psychology, the psychological impulse to sell doesn't exist. Anyway.

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Speaker 1: I'm very excited about our guest. He is an active

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Speaker 1: investor in public markets and private markets. He's an entrepreneur.

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Speaker 1: We've had them on before, and he knows everything that's

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Speaker 1: going on this world. He's all the all the conversations

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Speaker 1: with all the movers and shakers and can tell us

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Speaker 1: what's up. We're gonna be speaking with Howard Linson, who

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Speaker 1: is the general partner at Social Leverage. He's the fun

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Speaker 1: or of stock Twits, a crossover investor of public and

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Speaker 1: private market. Always has a finger on the pulse. Howard,

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Speaker 1: thank you for coming back on oud. Luck Hey kids,

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Speaker 1: how are you? We're doing great? So what happened Let's

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Speaker 1: start like what happened over the last month. What happened

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Speaker 1: in January? In your view, what happened in January is

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Speaker 1: obviously prices went down. But what like what Tracy was saying,

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Speaker 1: this is the most other than two designated the most

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Speaker 1: predicted hold back in history, right, I mean, if we

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Speaker 1: really look, it's easy in hindsight and I play an

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Speaker 1: incredible corp dead person on Twitter. Three. I do free

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Speaker 1: corporate deav work for every tech company. I think there's

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Speaker 1: a couple of private market let's call him big Bang.

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Speaker 1: And in the first one was obviously that we work

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Speaker 1: soft Pink Big Bang And you know, you know, it's

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Speaker 1: kind of like the in Ron thing, like when you

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Speaker 1: work in soft Bank. When that imploded, right, I think

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Speaker 1: a lot of us, including myself, if I'm gonna made

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Speaker 1: one prediction, it would have been, Okay, that is the

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Speaker 1: that's the end. People will will take stock. You know.

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Speaker 1: It's kind of like a warning like our end run,

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Speaker 1: you know what I mean. It was like no one's

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Speaker 1: really watching. It is a great idea, and I still

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Speaker 1: pick it up what went on. You know, we know

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Speaker 1: soft Bank has been slopping in the past, and so

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Speaker 1: if you had asked me, if you had told me

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Speaker 1: there'd be twenty soft Banks as a result of soft

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Speaker 1: Bank we work, that's just not wouldn't have been on

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Speaker 1: my Bingo card. And so you've got from Andresen to

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Speaker 1: Tiger to co to two D one to soft Bank.

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Speaker 1: Everybody now is in a race to index the private markets,

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Speaker 1: not at the seed level, but you know, if you

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Speaker 1: can take two and twenty and hoard all the money

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Speaker 1: at the late stage market, I mean that's a pretty

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Speaker 1: good market to corral versus Vanguard charge and quarter basis

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Speaker 1: point right. So you know the macro environment of money printing,

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Speaker 1: the the tech mantra, Look, if you're not in tech,

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Speaker 1: you're stupid. Combined with then COVID, which like just push

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Speaker 1: forward this digital everything's digital, Like oh my god, like

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Speaker 1: we you know, you're in an accident, you touch yourself.

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Speaker 1: I've been in bike accidents. You touch your stuff. I

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Speaker 1: can't believe I lived. And I think that's the way

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Speaker 1: we were in May and June and July of everybody

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Speaker 1: called their companies. You know, I was calling all our

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Speaker 1: companies and we were like going remote. People were laying

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Speaker 1: up of their staff no matter what in the in

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Speaker 1: the because because you were allowed to. And things started

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Speaker 1: going upward to the right if you were a digital

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Speaker 1: first business, from healthcare to to finance. Obviously with the

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Speaker 1: Robin Hoods and crypto and so everybody just as we do,

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Speaker 1: started projecting things in this new ramp. You know, here

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Speaker 1: we are November of last year, right, start creeping up

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Speaker 1: and valuations now are coming down. The difference this time

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Speaker 1: is a supply and I've been writing about the supply

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Speaker 1: for the last year. You covered it with SPACs, you know,

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Speaker 1: and we covered it with I p o s and

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Speaker 1: direct listings. You have all this supply coming at a

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Speaker 1: time where no where you're going to dump it. And

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Speaker 1: we've seen what's happened in the public markets with anything

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Speaker 1: new there's just no bid. And so if you're a

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Speaker 1: public company that is not index in February of there's

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Speaker 1: no bid because there's too much supply coming into time

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Speaker 1: when all the all the crossover funds went left into

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Speaker 1: private markets the public markets, if you're not index, just

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Speaker 1: there's no natural buyers, it seems right now, especially in

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Speaker 1: a rising interest rate environments, you kind of had a

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Speaker 1: perfect storm. You can't look at one thing you have,

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Speaker 1: but this perfect storm that led to the last four months.

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Speaker 1: We hear that term perfect storm quite a lot on

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Speaker 1: the show, I feel like recently. But if I could

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Speaker 1: ask a really basic question, because I think it's one

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Speaker 1: of those things we all assume but we don't necessarily

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Speaker 1: think that much about the mechanics of it. But can

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Speaker 1: you walk us through why exactly are rising interest rates

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Speaker 1: bad for text stocks, and you know, particularly text stalks

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Speaker 1: at very very high valuations. You can probably blame it

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Speaker 1: on Excel. I mean, if everybody was still it would

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Speaker 1: take a few months for people to update their spreadsheets.

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Speaker 1: You know, there's no textbooks for crypto. There's a textbook

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Speaker 1: for for stocks, and then the stock textbook world. You

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Speaker 1: plug in a higher interest right, and you pulled back

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Speaker 1: cash flows and their lower and that's basically it. I mean,

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Speaker 1: we can argue about everything else, but there's a textbook, Joe.

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Speaker 1: Does that make sense to you? Trace? I don't know

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Speaker 1: another reason, Tracy, what's your answering? I mean, I guess

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Speaker 1: like cash flows, opportunity cost maybe. I just think it's

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Speaker 1: we have a system of analysts. Obviously spreadsheets. It's easy

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Speaker 1: to update spreadsheets, send them around. People look at the

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Speaker 1: numbers and go slap, and they slap you know, a

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Speaker 1: discount on it, and then look at the sector and go,

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Speaker 1: you know, we're taking this from sixty times sales to

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Speaker 1: thirty times sales. That's really and it's just one person

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Speaker 1: tips and then slowly tips and it's the way markets work.

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Speaker 1: I mean, this is a complete evaluation adjustment. I don't like.

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Speaker 1: I just don't see the software stocks not growing. They're

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Speaker 1: just not much has changed other than just how people

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Speaker 1: are feeling about the future. And in the public markets,

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Speaker 1: this happens really quick. I used to think it would

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Speaker 1: happen much quicker in the private markets. The private markets

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Speaker 1: are very crowded, and I can sit on my hands

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Speaker 1: as a scene investor. Now we have a large sheet

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Speaker 1: funds and we've been doing this a long time. But

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Speaker 1: if I sit on my hands, the best companies are

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Speaker 1: still going to get funded. They'll get funded at higher

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Speaker 1: evaluations and the and the returns won't be as good

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Speaker 1: along the line for all the people writing those checks.

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Speaker 1: But you know, that is what's created this private market

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Speaker 1: that seems to be ignoring for now what's happening in

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Speaker 1: the public markets. Used to be Sequoia would write a

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Speaker 1: letter or somebody would write a letter saying, after the

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Speaker 1: stock market movement, say winter rest in peace. Private markets

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Speaker 1: here we are in two thousand two. No one's writing

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Speaker 1: that letter, but the letters being written by the public market.

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Speaker 1: You know, I want to go back to how you

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Speaker 1: characterize the and recent Horwitz is the code twos and

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Speaker 1: the soft banks. I thought that and the Tiger globals.

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Speaker 1: I thought that that was really fascinating. This character is

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Speaker 1: ation is essentially like, how can we become the index

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Speaker 1: fund so to speak, of private markets? And if you

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Speaker 1: can capture that late stage market at at enough breadth,

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Speaker 1: you can more or less kind of have a public portfolio,

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Speaker 1: but with much better fees than anyone can for an

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Speaker 1: actual public Talk a little bit more about that, because

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Speaker 1: I don't know, like I don't think I like appreciated

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Speaker 1: the degree to which that is what they've been aiming

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Speaker 1: to accomplish. But that feels like very interesting. Talk a

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Speaker 1: little bit more about like what you see as their

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Speaker 1: real goal here. I mean these are opinions, strongly strong

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Speaker 1: opinions loosely how but you can see it happening, right,

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Speaker 1: Like it goes back to we work, like the fact

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Speaker 1: that they didn't die and the tigers looked at themselves

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Speaker 1: like those idiots can do this. We can do this,

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Speaker 1: and we can do it with like a better research.

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Speaker 1: You know, soft Bank was made fun of at the

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Speaker 1: time for like going you know, it was a mess,

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Speaker 1: and everybody I called I wrote about it because everybody

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Speaker 1: had soft Bank in their in their funds. Right, we

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Speaker 1: were in a company called Wag. We write the first

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Speaker 1: child dog walking app, which is now doing this back.

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Speaker 1: But we invest in the company at a four million valuation,

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Speaker 1: which is what seed investors supposed to do in like

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Speaker 1: two fifteen. Right. It's a hard idea of the uber

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Speaker 1: of dog walker. You know everything the way it works

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Speaker 1: at this age level. But that made sense. You take risk.

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Speaker 1: You know you've got Google Maps, you've got all the

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Speaker 1: app developers. You can build a dog walking app, no problem.

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Speaker 1: But then shot Bank comes in like a year later

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Speaker 1: and goes, we'll give you three hundred million at whatever valuation,

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Speaker 1: and if you don't take it, won't give it to

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Speaker 1: Rover down the street. Right, and that and people already

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Speaker 1: forget that, But that was going on. Soft Bank was

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Speaker 1: just trying to take the market. It was genius, evil

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Speaker 1: and flawed, Right, depends if your moss. It's not flawed

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Speaker 1: at all because you know the end game, but it's

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Speaker 1: it's flawed for guys like us or people of gus

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Speaker 1: at the seed stage, who now are locked into a

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Speaker 1: cap table that's got a buying areau comes. So if

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Speaker 1: a young company takes three million very early on in

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Speaker 1: their valuation, the steed investors only outcome if they're not

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Speaker 1: allowed to sell it, and we weren't at that price

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Speaker 1: because that's what they do, They lock up the cap table.

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Speaker 1: Is I p O or zero? And so for seed investors,

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Speaker 1: I hated it. I wrote about it. I hated the

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Speaker 1: whole idea that we were being held hostage, right, and

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Speaker 1: I wrote stuff like there should be a softbag clause

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Speaker 1: and we see uh deals that says the SoftBank comes

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Speaker 1: under your cap table later we get to sell right,

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Speaker 1: Like this stuff wasn't doesn't get talked about because the

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Speaker 1: press doesn't want to cover it. But those are the

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Speaker 1: things that we're blogging about and talking about, like what

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Speaker 1: did they do to our cap table? Where we were

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Speaker 1: going along nicely building a business. SoftBank comes in and

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Speaker 1: slaps three hundred million with like an ultimatum that if

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Speaker 1: you don't take it, it it goes to the competitor, and

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Speaker 1: now I'm locked in to this company forever or ride

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Speaker 1: it back down to zero. And so it's very rare

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Speaker 1: that a company like WAG can then go clean it

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Speaker 1: up like they bought out soft Bank. They fired a

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Speaker 1: bunch of management after they pissed through a lot of

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Speaker 1: the money So if you had told me that there'll

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Speaker 1: be twenty of these now invading cap tables, this is

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Speaker 1: what I warned about or other people like Fred I'm

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Speaker 1: sure talked about quietly, but just weren't writing about it

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Speaker 1: because you don't want to piss off the late stage investors,

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Speaker 1: right and you don't want your entrepreneurs to hate you

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Speaker 1: because you're telling the truth. But there was no real

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Speaker 1: risk to SoftBank and doing this. So if soft Bank,

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Speaker 1: so everybody copying the same playbook, and what's the real

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Speaker 1: risk to Tiger um if they're wrong on ten of

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Speaker 1: these that they put a hundred or two hundred million

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Speaker 1: in two not really much risk. Here's why. If I'm

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Speaker 1: Tiger and a company goes sideways for a few years

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Speaker 1: and then needs capital later, they're going to rewrite the

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Speaker 1: cap tables, So who loses the early investors? So I think,

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Speaker 1: and not enough speed investors have really thought through the

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Speaker 1: mechanics of what could happen even if you take this

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Speaker 1: late stage money from a code to do you one

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Speaker 1: soft Bank of what could happen in five years even

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Speaker 1: though your company is doing well when they need more money.

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Speaker 1: So that's why I've been sitting on my hands just

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Speaker 1: trying to figure out which founders really can appreciate that.

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Speaker 1: And so there's gonna be a lot of great companies

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Speaker 1: that take money from these index late stage bcs that

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Speaker 1: that that they're good business. It's not, but they're not

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Speaker 1: good enough. And maybe the public market isn't ready for

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Speaker 1: these not good enough businesses, as we're seeing from All

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Speaker 1: Birds to nerd Wallet. Are they really meant to be

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Speaker 1: public so young? And so you have this perfect strom

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Speaker 1: of a lot of supply high valuations and the private

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Speaker 1: markets are liquid, but only at certain levels. Can you

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Speaker 1: talk to us a little bit about how the dynamic

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Speaker 1: that you just described actually impacts valuations of private companies

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Speaker 1: because I imagine, I mean, you have the big players

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Speaker 1: out there, like a soft bank, basically a big whale.

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Speaker 1: They come in make a big injection at a large valuation,

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Speaker 1: and that squeezes prices higher, and I guess they're able

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Speaker 1: to book higher prices as well. But maybe just walk

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Speaker 1: us through like the details of that process and what

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Speaker 1: does it take to actually get a knock back on

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Speaker 1: private valuations when you have these big players squeezing things higher. Yeah,

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Speaker 1: it's good, and it's the ultimate question that I have

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Speaker 1: to think about because when we write a seed check.

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Speaker 1: When I was a kid, seed stage was one of three,

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Speaker 1: you know, and Joe knows this because we were seed

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Speaker 1: investors and Alley Insider and and and Henry Blodgett at

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Speaker 1: the time got a good valuation which was like a

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Speaker 1: six million pre money at the time. That was like

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Speaker 1: double what was normal. But that was a great entrepreneur

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Speaker 1: was like, you know, the world was different. So the

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Speaker 1: biggest the biggest thing I can think of, and this

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Speaker 1: is just from my own eyes and ears, Tracy and

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Speaker 1: and Joe's in two thousand seven running around the text

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Speaker 1: stars and why Combinator, and there were a hundred seed funds,

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Speaker 1: you know, from Jeff clad Fred Wilson, Rob Ehremberg, Patrickoff.

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Speaker 1: There was like you knew the seed investor right, and

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Speaker 1: there were a thousand companies a year, let's say, and

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Speaker 1: you flash forward too, there's a thousand seed funds out

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Speaker 1: raising capital right now and a hundred thousand companies a year.

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Speaker 1: So really, you know, the tech booms just you know,

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Speaker 1: the cloud and software, you know, the in the deflation

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Speaker 1: and starting a company has created this this market where

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Speaker 1: you have and then you have COVID, which distributes all

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Speaker 1: the talent around the world in different weird ways that

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Speaker 1: will be feeling forever. And so you have and then

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Speaker 1: you have sub stack, which create everybody thinks they can

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Speaker 1: be a venture capitalist. And then you have market and

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Speaker 1: greesm Uh and all these smart people that have been

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Speaker 1: in the industry for so long working the system, and

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Speaker 1: you have this incredible change in the market where the

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Speaker 1: seed investors are the new startups right, And and we've

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Speaker 1: what we've done, and I can only tell you what

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Speaker 1: we've done. I can't tell you factually what's going on.

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Speaker 1: The data is in my in our eyes and years

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Speaker 1: of social leverage what we've done and said we were

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Speaker 1: good seat investors, and maybe maybe we weren't so good.

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Speaker 1: It was just there wasn't a lot of supply. The network,

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Speaker 1: though big was contained. You read Fred Wilson's blogger, you

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Speaker 1: read tech Meme and you read tech Crunch, and you

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Speaker 1: were in the know and everything with Silicon Valley or

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Speaker 1: New York or maybe Berlin, uh and Beijing was still

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Speaker 1: working back then, so you could you could structure your

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Speaker 1: business in that way. Along comes covid and all this

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Speaker 1: money and now and some stack and Twitter and TikTok,

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Speaker 1: and everybody wants to be a venture capitals. You know,

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Speaker 1: there's thousands of employees that have there's thousands of employees

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Speaker 1: that have left Uber, Pinterest, Snap, Twitter, Postmates, you know

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Speaker 1: like door Dash, that have experience, that have five million

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Speaker 1: in the bank. They don't want to go work for

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Speaker 1: another startup because of COVID. They set up a sub steck,

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Speaker 1: they use the network, they go raise three to four

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Speaker 1: million dollars, they set up an angel list syndicate, and

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Speaker 1: they're in business as a fund manager and no one's

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Speaker 1: they've had no mentoring, they've had no idea what cap

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Speaker 1: tables look like, or they know what cap tables look

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Speaker 1: like from their from their very narrow experience of Uber

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Speaker 1: or wherever they were at. And they think there's infinite growth,

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Speaker 1: and they write checks that make no sense because you're

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Speaker 1: you know, seaed investors are holding for for ten years.

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Speaker 1: Robin Hood did great and it was eight years to

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Speaker 1: get public. So so I don't and so an interest

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Speaker 1: rates just take up a little bit. In the old world,

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Speaker 1: when they were only a hundred of US seed investors,

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Speaker 1: we could call each other and go uh, not collued,

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Speaker 1: but just say these prices are silly, and now who

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Speaker 1: are you gonna call? Everybody's right and checks from every

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Speaker 1: corner of the earth at every angle, whether you've left

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Speaker 1: Plaid or all these fintech companies now Square and PayPal,

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Speaker 1: there's just thousands of people that think they can write check.

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Speaker 1: And by the way, maybe they should. I'm just saying,

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Speaker 1: so the end has not been written here. It's just

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Speaker 1: we have this new private market that's not digesting the

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Speaker 1: public market information. There's a lot of young people in

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Speaker 1: the private markets that have never traded a stock, and

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Speaker 1: so they don't even care what the multiples are in

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Speaker 1: the public markets. They're not thinking about that because they've

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Speaker 1: never had to connect the dots. I find it's totally fair.

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Speaker 1: There are already so many like interesting dynamics that you've

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Speaker 1: teased out for us. So obviously there is the incredible

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Speaker 1: like supply boom on public markets last year with all

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Speaker 1: the I p O S inspects, including yours, which I

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Speaker 1: wanna get to and find out what's going on there.

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Speaker 1: There's the dominance of the late stage funds that are

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Speaker 1: essentially trying to create index funds more or less for

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Speaker 1: private markets. And then as you've just described this explosion

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Speaker 1: of people who are ready to write seed checks and

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Speaker 1: you just see them on Twitter. I feel like everyone

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Speaker 1: I follow in the last year and a half became

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Speaker 1: an angel investor. I was like, I didn't even know.

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Speaker 1: We were disappointed an odd lots stuffesn't have a seed

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Speaker 1: fund that I already would have written the check one day,

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Speaker 1: one day, one day. So I want to like, there's

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Speaker 1: so many different angles here that I want to explore.

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Speaker 1: But one thing I'm very curious about it is like

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Speaker 1: when COVID hit in March and then very soon there

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Speaker 1: after stocks started going up into the right, but people

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Speaker 1: were talking about like these so called like COVID winners,

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Speaker 1: like these things. Okay, the world is going to change

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Speaker 1: and there are some winners, and like Zoom Video, for example,

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Speaker 1: was a COVID winner and its stock went to the moon,

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Speaker 1: and we're like all gonna be working from all around

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Speaker 1: the world and people are going to use zoom and

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Speaker 1: it's gonna except the Zoom video is now like it's

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Speaker 1: gave up, given up all of it. Right, It's not

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Speaker 1: just like giving up a bunch, it's given up all

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Speaker 1: of it. And for whatever reason, despite all the work

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Speaker 1: from home, etcetera. Would have been to like the COVID

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Speaker 1: winners thesis, because it turns out that in retrospect a

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Speaker 1: lot of these like so called winners, the stocks actually

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Speaker 1: are now like acting like COVID never happened. And some

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Speaker 1: of the big winners are actually like brick and mortar

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Speaker 1: places that we were sort of gave up for. What

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Speaker 1: happened to that trade? Yeah, I call it the great

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Speaker 1: round trip. I've been writing about this for a couple

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Speaker 1: of months where I've just been plotting slowly all these

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Speaker 1: companies are doing what we this crazy thing on a chart,

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Speaker 1: you know that the analysts quickly we're describing as a

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Speaker 1: new mobile digital revolution. Everything was pulled forward. That was

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Speaker 1: the famous term. And by twenty everything was pulled forward.

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Speaker 1: And so from Shopify to PayPal, to Square to robin

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Speaker 1: Hood to all the clones, to docusigned to Zoom to Peloton.

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Speaker 1: And now we've got to go back and look at

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Speaker 1: those humps or those sell it right and up in

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Speaker 1: the quick getbacks. We've gone up and come right back down.

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Speaker 1: And this is how markets work. But there are companies

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Speaker 1: like Zoom. You and I were all the three of

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Speaker 1: us around a Zoom right now there are companies that

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Speaker 1: have those margins because business will not go and the

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Speaker 1: stark just got ahead of itself. And there are those

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Speaker 1: businesses like Peloton who started to believe their own or

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Speaker 1: whatever we want to call it. And they were great

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Speaker 1: founders and great teams that saw growth that was just

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Speaker 1: like and even I rominant like. There was just this

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Speaker 1: growth that they had to deal with. And you also

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Speaker 1: had this moment of growth where companies that were built

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Speaker 1: in the physical world had to go remote. And now

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Speaker 1: that's becoming a pain because they piled on all this

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Speaker 1: growth and all these new people by zoom. But they

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Speaker 1: weren't built for a remote world. They were built for

430
00:23:31,200 --> 00:23:34,720
Speaker 1: a trans They were built for this transition. And now

431
00:23:34,760 --> 00:23:36,679
Speaker 1: that growth may not be there and one of all

432
00:23:36,720 --> 00:23:40,719
Speaker 1: these people on these distributed zoom chains supposed to be

433
00:23:40,760 --> 00:23:43,399
Speaker 1: doing all day. So now you're going to have to

434
00:23:43,400 --> 00:23:45,400
Speaker 1: see which companies. And that's the way the markets work.

435
00:23:45,440 --> 00:23:47,399
Speaker 1: They overshoot to the upside and do the downside. And

436
00:23:47,480 --> 00:23:50,720
Speaker 1: I think from this great rotate left from this great

437
00:23:50,760 --> 00:23:54,720
Speaker 1: giftback that I talked about, there will be some winners. Peloton, No,

438
00:23:54,920 --> 00:23:56,840
Speaker 1: we'll not go back to one six people. Let's not

439
00:23:56,880 --> 00:23:59,439
Speaker 1: kid ourselves, but Kozoom hit all time highs if they

440
00:23:59,480 --> 00:24:03,280
Speaker 1: can solve dealing with Microsoft and Google. Yes, so you've

441
00:24:03,280 --> 00:24:05,359
Speaker 1: got to find the brands and the margins and the

442
00:24:05,440 --> 00:24:09,080
Speaker 1: companies and and the growth that will you know, get

443
00:24:09,160 --> 00:24:12,639
Speaker 1: back on you know, some kind of semblance. And so

444
00:24:12,720 --> 00:24:15,400
Speaker 1: there will be future winners here. And you're seeing traders

445
00:24:15,480 --> 00:24:18,439
Speaker 1: lean against certain things because they're new at this or

446
00:24:18,480 --> 00:24:21,399
Speaker 1: they're having fun and they think everything's going to zero.

447
00:24:21,440 --> 00:24:23,600
Speaker 1: And you see it with Snapchat, where not every stock

448
00:24:23,680 --> 00:24:27,159
Speaker 1: is the same and not every management's the same, and

449
00:24:27,280 --> 00:24:30,960
Speaker 1: some companies will do fine going forward. So there's from

450
00:24:31,040 --> 00:24:33,960
Speaker 1: the from this volatility comes great opportunity. Not all these

451
00:24:34,240 --> 00:24:37,040
Speaker 1: all the charts that look the same, Square, PayPal, Docu,

452
00:24:37,119 --> 00:24:41,480
Speaker 1: sign Zoom, robin Hood, they all look the same, but

453
00:24:41,600 --> 00:24:44,600
Speaker 1: they won't look the same going forward because everything is

454
00:24:44,600 --> 00:24:47,280
Speaker 1: being lumped together because by the way, we're doing this

455
00:24:47,359 --> 00:24:49,200
Speaker 1: at a time where analysts have been cut to bare

456
00:24:49,200 --> 00:24:51,600
Speaker 1: bones too at the bank, so there's no uncovering these stuff.

457
00:24:52,080 --> 00:24:55,080
Speaker 1: So that's another part of this perfect storm is wall

458
00:24:55,119 --> 00:24:58,440
Speaker 1: streets thin, and they love having profits, and no one

459
00:24:58,520 --> 00:25:03,160
Speaker 1: likes the research anyways, so onto doing research. So this

460
00:25:03,240 --> 00:25:05,960
Speaker 1: was going to be my next question. Actually you mentioned

461
00:25:06,000 --> 00:25:08,320
Speaker 1: the idea of all the stocks sort of getting or

462
00:25:08,359 --> 00:25:10,480
Speaker 1: a bunch of the tech stocks getting ahead of themselves

463
00:25:10,640 --> 00:25:14,119
Speaker 1: in and all kind of moving together as one. But

464
00:25:14,480 --> 00:25:16,400
Speaker 1: can you dig into that a little bit more? Why

465
00:25:16,480 --> 00:25:19,720
Speaker 1: why did that happen? Did did people actually believe these

466
00:25:19,800 --> 00:25:23,080
Speaker 1: valuations were justified? I've never heard anyone actually say that,

467
00:25:23,480 --> 00:25:26,000
Speaker 1: but you know, and if if they didn't, like why

468
00:25:26,200 --> 00:25:30,000
Speaker 1: was everyone comfortable with the run up last year and

469
00:25:30,000 --> 00:25:33,399
Speaker 1: they're not comfortable this year? Was it purely getting on

470
00:25:33,440 --> 00:25:38,400
Speaker 1: board with momentum? Yeah, I think when there's group think

471
00:25:38,520 --> 00:25:42,560
Speaker 1: and everybody's you know, watching the same thing or listening

472
00:25:42,560 --> 00:25:47,919
Speaker 1: to the same people in watching the same stocks, Definitely,

473
00:25:48,280 --> 00:25:51,160
Speaker 1: it's just herd mentality in a different way of digital

474
00:25:51,200 --> 00:25:54,240
Speaker 1: heard mentality. The first time we've seen it and then

475
00:25:54,240 --> 00:25:56,920
Speaker 1: you had I don't want to overthink it because you

476
00:25:56,960 --> 00:25:59,399
Speaker 1: can just look at the charts in Hindsteining. That's what happened.

477
00:25:59,440 --> 00:26:01,280
Speaker 1: I know that what happened and what's going to look.

478
00:26:01,760 --> 00:26:04,360
Speaker 1: You've now got to go back through the the squares

479
00:26:04,400 --> 00:26:07,840
Speaker 1: and paypals and robin hoods in docu signs and zooms

480
00:26:08,000 --> 00:26:11,080
Speaker 1: and all the round trippers from COVID and say, wait

481
00:26:11,119 --> 00:26:13,520
Speaker 1: a minute, Okay, now there's opportunity here. There's some of

482
00:26:13,520 --> 00:26:15,920
Speaker 1: these that will be around for thirty years with reasonable

483
00:26:15,960 --> 00:26:19,399
Speaker 1: growth rates that are being thrown out. The people that

484
00:26:19,480 --> 00:26:22,239
Speaker 1: do the work here will make some some money. But

485
00:26:22,359 --> 00:26:27,040
Speaker 1: it was kind of like everybody was given money at

486
00:26:27,040 --> 00:26:31,400
Speaker 1: the same time with the same apps, with the same voice,

487
00:26:32,119 --> 00:26:34,720
Speaker 1: and it worked. It was a lot of fun, and

488
00:26:34,880 --> 00:26:37,199
Speaker 1: you couldn't have predicted when it would end. But you know,

489
00:26:37,240 --> 00:26:39,600
Speaker 1: in hindsight they all look the same. So it's very

490
00:26:39,680 --> 00:26:42,000
Speaker 1: much sounding like you're talking in past tense, like something

491
00:26:42,040 --> 00:26:44,760
Speaker 1: has changed, but I want yeah, so let's I woant

492
00:26:44,800 --> 00:26:47,040
Speaker 1: have drilled into that more, and like what actually you're

493
00:26:47,040 --> 00:26:50,159
Speaker 1: seeing private markets because okay, we have the public market

494
00:26:50,400 --> 00:26:53,600
Speaker 1: sell off that it implicitly is going to affect the

495
00:26:53,680 --> 00:26:56,720
Speaker 1: late stage index funds, and soft Bank has publicly traded.

496
00:26:56,760 --> 00:26:58,960
Speaker 1: We've seen what happened to their stock, and we know

497
00:26:59,640 --> 00:27:02,320
Speaker 1: that I think it was Tiger had a pretty awful

498
00:27:02,880 --> 00:27:06,040
Speaker 1: last three months. Of course, none of it surprising. And

499
00:27:06,040 --> 00:27:08,800
Speaker 1: then you've all these employees and you mentioned like this

500
00:27:08,880 --> 00:27:12,240
Speaker 1: new wave of angels or seeds seed check writers who

501
00:27:12,280 --> 00:27:16,240
Speaker 1: came out of the shopifyes and squares and etcetera. They're

502
00:27:16,240 --> 00:27:18,560
Speaker 1: all have seen a big wealth hit, especially if they're

503
00:27:18,560 --> 00:27:20,919
Speaker 1: still employed or still on a lot of stock. So

504
00:27:20,960 --> 00:27:25,240
Speaker 1: what are you seeing today at the early stage level,

505
00:27:25,359 --> 00:27:28,200
Speaker 1: and what is or what isn't filtering through from those

506
00:27:28,200 --> 00:27:31,359
Speaker 1: public markets to like writing checks right now here in

507
00:27:31,400 --> 00:27:34,760
Speaker 1: February two, Well, I started seeing this in t I mean,

508
00:27:34,800 --> 00:27:36,439
Speaker 1: I just look at our data. I can only tell

509
00:27:36,480 --> 00:27:38,439
Speaker 1: you a social coverage. So Gary, Tom and I have

510
00:27:38,480 --> 00:27:41,080
Speaker 1: been writing a check a month for ten years, twelve years,

511
00:27:42,040 --> 00:27:44,399
Speaker 1: and we'd always say we can't, you know, in the

512
00:27:44,400 --> 00:27:46,280
Speaker 1: private markets. You know, I can only tell you what

513
00:27:46,320 --> 00:27:48,119
Speaker 1: we do. We would paddle and we would talk to

514
00:27:48,160 --> 00:27:50,680
Speaker 1: smart people, and we have smart LPs from Fred Wilson

515
00:27:50,680 --> 00:27:53,840
Speaker 1: to Roger Ainburg to Christian Like, we have smart LPs

516
00:27:53,880 --> 00:27:56,720
Speaker 1: that we can call on. And you know, I always

517
00:27:56,800 --> 00:27:58,600
Speaker 1: used to say, you know, you can at the seed

518
00:27:58,640 --> 00:28:01,719
Speaker 1: stage level at five great founders walk into your office

519
00:28:01,760 --> 00:28:03,639
Speaker 1: or you get pitched in a row. You can't like

520
00:28:03,960 --> 00:28:05,720
Speaker 1: time the market. You can't just say well, we just

521
00:28:05,760 --> 00:28:09,240
Speaker 1: wrote three checks, can't write two more. That's not the

522
00:28:09,280 --> 00:28:11,720
Speaker 1: way investing works, if you're even on the trend space.

523
00:28:11,760 --> 00:28:13,679
Speaker 1: This is why all stocks started looking the same if

524
00:28:13,680 --> 00:28:16,920
Speaker 1: you're a trend investor just got aboard and worried about

525
00:28:16,920 --> 00:28:19,120
Speaker 1: it later and use your money management to get you out.

526
00:28:19,160 --> 00:28:21,280
Speaker 1: In the private markets, you can't use money management. You're

527
00:28:21,320 --> 00:28:23,440
Speaker 1: in for ten years. So so I think that's what

528
00:28:23,560 --> 00:28:26,800
Speaker 1: we've lost. So we would always huddle every week and go, man,

529
00:28:26,840 --> 00:28:30,159
Speaker 1: shouldn't we slow down? But after ten years they just

530
00:28:30,280 --> 00:28:33,800
Speaker 1: always looked the same. We'd write twelve checks a year,

531
00:28:34,560 --> 00:28:38,640
Speaker 1: they'd come in batches or you know, equally distributed, and

532
00:28:38,680 --> 00:28:41,920
Speaker 1: then by like mid like when COVID hit, I was like,

533
00:28:41,960 --> 00:28:44,400
Speaker 1: I'm not writing to check pencils down like zoom on,

534
00:28:44,480 --> 00:28:46,480
Speaker 1: pencils down. I don't even know what. How do you

535
00:28:46,760 --> 00:28:49,680
Speaker 1: invest in a company without having met the founder? But

536
00:28:49,760 --> 00:28:53,040
Speaker 1: people started doing it. And as uncomfortable as I was

537
00:28:53,080 --> 00:28:56,120
Speaker 1: because I didn't write check through the first year of

538
00:28:56,200 --> 00:28:59,640
Speaker 1: COVID or the first six months, my partner Gary was

539
00:28:59,760 --> 00:29:02,480
Speaker 1: very comfortable doing it. He's younger and more native to

540
00:29:02,560 --> 00:29:04,680
Speaker 1: the web, and his network was such that he was

541
00:29:04,720 --> 00:29:07,320
Speaker 1: seeing stuff in the price that he was comfortable within,

542
00:29:07,360 --> 00:29:09,320
Speaker 1: companies that he was comfortable with, and he wrote a

543
00:29:09,320 --> 00:29:12,000
Speaker 1: bunch of checks and you to be incredible at the

544
00:29:12,080 --> 00:29:16,200
Speaker 1: early stages of COVID along came one when everybody felt

545
00:29:16,240 --> 00:29:19,600
Speaker 1: comfortable writing on Zoom, and the prices were such that

546
00:29:19,680 --> 00:29:21,680
Speaker 1: every time I got a call from a founder, I

547
00:29:21,720 --> 00:29:23,520
Speaker 1: was just sitting out. You know. We went from like

548
00:29:23,760 --> 00:29:26,880
Speaker 1: y CE ten million dollar valuations to like non y

549
00:29:26,960 --> 00:29:30,840
Speaker 1: C twenty and thirty million dollar valuations and just saying

550
00:29:30,880 --> 00:29:33,200
Speaker 1: no didn't mean a deal wouldn't get done. Deals are

551
00:29:33,200 --> 00:29:36,200
Speaker 1: getting done. So I look back at our numbers from

552
00:29:36,960 --> 00:29:39,800
Speaker 1: one and we wrote two checks. So there's a data

553
00:29:39,880 --> 00:29:44,000
Speaker 1: point from twelve years of It's not like I'm scared,

554
00:29:44,280 --> 00:29:47,160
Speaker 1: and it's not like I'm not looking as hard and

555
00:29:47,240 --> 00:29:50,160
Speaker 1: my network isn't as big. It's just nothing was lining

556
00:29:50,240 --> 00:29:53,320
Speaker 1: up for us. But that didn't mean deals weren't getting done.

557
00:29:53,360 --> 00:29:56,600
Speaker 1: It was a record year in venture capital. But so

558
00:29:56,640 --> 00:29:59,600
Speaker 1: I don't think we know yet. The long term repercussions

559
00:29:59,600 --> 00:30:02,240
Speaker 1: were just and I see it. If any Tiger check

560
00:30:02,880 --> 00:30:07,400
Speaker 1: infintech that was written last year's down, they may not

561
00:30:07,760 --> 00:30:10,719
Speaker 1: say that, but like, look at Square, look at PayPal,

562
00:30:10,840 --> 00:30:13,640
Speaker 1: look at Robin Hood, if YouTube, look at Tiger, look

563
00:30:13,640 --> 00:30:18,960
Speaker 1: at anything. So they're sitting on whatever. Vintage one was

564
00:30:19,000 --> 00:30:22,880
Speaker 1: a disaster right now, but it's early. But I think

565
00:30:22,920 --> 00:30:25,080
Speaker 1: the return is now going forward from all that, even

566
00:30:25,080 --> 00:30:28,760
Speaker 1: if these companies recover, you have to make back of

567
00:30:28,840 --> 00:30:32,440
Speaker 1: your money into these valuations. And this is what I

568
00:30:32,480 --> 00:30:34,400
Speaker 1: go to earlier. Maybe Tiger doesn't have to make it

569
00:30:34,400 --> 00:30:36,600
Speaker 1: back because they can put in more money later and

570
00:30:36,720 --> 00:30:39,600
Speaker 1: change the cap table, whereas the seat investors can. So

571
00:30:39,640 --> 00:30:44,600
Speaker 1: I don't think we've seen the true problem in private markets,

572
00:30:45,280 --> 00:30:48,520
Speaker 1: and that will be LPs finally saying, man, you know what,

573
00:30:48,680 --> 00:30:52,400
Speaker 1: concorder letters for four years and nothing's working, and so

574
00:30:52,560 --> 00:30:55,120
Speaker 1: could take a couple of years for LPs to finally

575
00:30:55,160 --> 00:30:58,440
Speaker 1: say I'm stuck here and I haven't seen any markups

576
00:30:58,520 --> 00:31:01,240
Speaker 1: or any returns of capital. So the lack could be

577
00:31:01,400 --> 00:31:04,880
Speaker 1: huge at the seeds. And you know, that's what I

578
00:31:04,920 --> 00:31:06,600
Speaker 1: have to worry about, what my partners and I have

579
00:31:06,680 --> 00:31:09,040
Speaker 1: to tell my helps. This is why we're not writing checks.

580
00:31:09,120 --> 00:31:12,320
Speaker 1: Just to writing checks just because you can. Is not

581
00:31:12,400 --> 00:31:16,000
Speaker 1: the business. You write checks into great founders with great

582
00:31:16,000 --> 00:31:20,120
Speaker 1: teams and good TAM just because of TAM's big is

583
00:31:20,160 --> 00:31:22,520
Speaker 1: not good enough. And I think we're seeing a lot

584
00:31:22,520 --> 00:31:27,120
Speaker 1: of investors in best on TAM. So two things here.

585
00:31:27,440 --> 00:31:29,640
Speaker 1: You sort of teased it just then, but like one,

586
00:31:30,000 --> 00:31:34,320
Speaker 1: how do you think venture capital behavior could change in

587
00:31:34,360 --> 00:31:39,640
Speaker 1: the future given this experience, and to how patient our

588
00:31:39,920 --> 00:31:42,960
Speaker 1: LPs when it comes to sitting out of the market

589
00:31:43,120 --> 00:31:46,280
Speaker 1: for you know, a year or part possibly a couple

590
00:31:46,320 --> 00:31:48,560
Speaker 1: of years. You know, Joe mentioned in the intro this

591
00:31:48,600 --> 00:31:52,640
Speaker 1: idea that well, everyone knew that publicly traded tech stocks

592
00:31:52,640 --> 00:31:55,760
Speaker 1: were overvalued and they would probably get hit when interest

593
00:31:55,800 --> 00:31:58,240
Speaker 1: rates started to rise. But on the other hand, you're

594
00:31:58,280 --> 00:32:00,720
Speaker 1: sort of forced into them because if you didn't buy,

595
00:32:00,760 --> 00:32:05,040
Speaker 1: then you missed out on years of performance. So is

596
00:32:05,080 --> 00:32:08,280
Speaker 1: it a similar story for venture capital or are people

597
00:32:08,560 --> 00:32:12,840
Speaker 1: more willing to um kind of wait it out. It's

598
00:32:12,840 --> 00:32:15,800
Speaker 1: a coyote in the road running right. The legs are

599
00:32:15,800 --> 00:32:18,719
Speaker 1: spinning over the cliff. We don't know if the cliff

600
00:32:18,840 --> 00:32:21,320
Speaker 1: how far, how far the clip is. It took forever

601
00:32:21,400 --> 00:32:25,120
Speaker 1: to get family offices and people comfortable, and then you

602
00:32:25,120 --> 00:32:28,000
Speaker 1: have the incredible angelist product, and you have some like

603
00:32:28,040 --> 00:32:30,280
Speaker 1: I said, you have Twitter and all these people networking

604
00:32:30,320 --> 00:32:33,520
Speaker 1: and thinking their deals are the best. People are the best.

605
00:32:34,080 --> 00:32:36,240
Speaker 1: So so it took an incredible amount of ton to

606
00:32:36,320 --> 00:32:39,080
Speaker 1: onboard all these people. It will take much longer than

607
00:32:39,120 --> 00:32:42,400
Speaker 1: people think for people to look at their statement and

608
00:32:42,440 --> 00:32:44,400
Speaker 1: say wait, Matt, this is stupid. I could have just

609
00:32:44,400 --> 00:32:47,760
Speaker 1: bought the q q Q or the spy and have

610
00:32:47,920 --> 00:32:50,120
Speaker 1: the quidity. I don't think what people are factored in

611
00:32:50,760 --> 00:32:55,200
Speaker 1: because they weren't public market investors until is how hard

612
00:32:55,280 --> 00:32:58,040
Speaker 1: it is to get q q Q type returns that

613
00:32:58,040 --> 00:33:00,560
Speaker 1: we've had the last ten years. Like the y Q cues.

614
00:33:00,640 --> 00:33:02,960
Speaker 1: You know, the triple cues have returned like twenty percent

615
00:33:03,000 --> 00:33:05,000
Speaker 1: a year for the last ten years. I mean, what

616
00:33:05,240 --> 00:33:07,880
Speaker 1: is wrong with that? Why are people like shutting that

617
00:33:08,120 --> 00:33:11,320
Speaker 1: at a time when I'm not saying make sure rushing

618
00:33:11,320 --> 00:33:13,880
Speaker 1: the QQQ, But I've always said, like, what's wrong with

619
00:33:13,960 --> 00:33:18,000
Speaker 1: twenty percent a year even with the volatility, because you

620
00:33:18,040 --> 00:33:21,960
Speaker 1: get the liquidity. Now people are like chasing twenty percent

621
00:33:22,000 --> 00:33:24,400
Speaker 1: a year in the private markets where you're locked up

622
00:33:24,400 --> 00:33:27,280
Speaker 1: for ten years. I mean, that just makes no sense

623
00:33:27,400 --> 00:33:29,760
Speaker 1: to me. And so I think it makes sense for Tiger,

624
00:33:29,800 --> 00:33:31,960
Speaker 1: who is saying, listen, we can go to our pensions

625
00:33:31,960 --> 00:33:35,120
Speaker 1: and offer them eighteen or twenty three percent a year,

626
00:33:36,040 --> 00:33:38,200
Speaker 1: you know what I mean to get latest and I

627
00:33:38,320 --> 00:33:40,680
Speaker 1: get that pitch, and that's the pitch. They're just going.

628
00:33:40,720 --> 00:33:42,920
Speaker 1: Look at the q q ques. If we could have

629
00:33:42,960 --> 00:33:44,840
Speaker 1: got you all the q q q s before they

630
00:33:44,880 --> 00:33:47,440
Speaker 1: went public, all these companies before they went public. By

631
00:33:47,480 --> 00:33:51,840
Speaker 1: two three years, isn't that end? You know, you can

632
00:33:51,880 --> 00:33:55,000
Speaker 1: sell them on the unsuspecting public and get liquidity in

633
00:33:55,040 --> 00:33:56,640
Speaker 1: two years. So you're only gonna be locked up for

634
00:33:56,640 --> 00:34:00,480
Speaker 1: two three years instead of ten. Everybody signed up for that,

635
00:34:00,920 --> 00:34:02,760
Speaker 1: and that will take a while for it to filter

636
00:34:02,840 --> 00:34:06,080
Speaker 1: back too, because it's not it's not like, Okay, so

637
00:34:06,120 --> 00:34:08,640
Speaker 1: I'm sitting on my hands because I've done well enough

638
00:34:08,680 --> 00:34:11,120
Speaker 1: and I've seen enough markets, but not enough people are

639
00:34:11,160 --> 00:34:13,799
Speaker 1: sitting on their hands and saying, guys, you've got to

640
00:34:13,840 --> 00:34:16,440
Speaker 1: pay me for this ten years that I'm your partner.

641
00:34:16,960 --> 00:34:19,759
Speaker 1: I'm not just tweeting about you. I'm I'm helping you hire,

642
00:34:19,760 --> 00:34:23,080
Speaker 1: I'm helping you recruit. I'm taking huge risk. I'm not

643
00:34:23,120 --> 00:34:25,480
Speaker 1: going to invest in your seed stage company unless I

644
00:34:25,520 --> 00:34:28,040
Speaker 1: have ten or fifteen percent. In two thousand and six,

645
00:34:28,120 --> 00:34:30,399
Speaker 1: it was like thirty percent to bc as we're taking

646
00:34:31,080 --> 00:34:33,359
Speaker 1: and now here we are in two and seed deals

647
00:34:33,400 --> 00:34:35,799
Speaker 1: are getting done for four percent, five percent, and that's

648
00:34:35,880 --> 00:34:38,680
Speaker 1: just too far the other way. So the pendulum's got

649
00:34:38,800 --> 00:34:42,680
Speaker 1: to swing back somewhere closer to you know, seed investors

650
00:34:42,760 --> 00:34:45,480
Speaker 1: get fifteen to twenty percent of the company, and we're

651
00:34:45,520 --> 00:35:02,520
Speaker 1: not close to that. You know, we've been talking a

652
00:35:02,560 --> 00:35:06,839
Speaker 1: lot about valuations and the behavior of markets and investors.

653
00:35:07,200 --> 00:35:11,320
Speaker 1: We haven't talked much about fundamentals. But I am curious,

654
00:35:11,600 --> 00:35:16,920
Speaker 1: like you know, all these cloud companies, how much has

655
00:35:17,040 --> 00:35:21,920
Speaker 1: the has their growth essentially or in part been essentially

656
00:35:22,080 --> 00:35:25,800
Speaker 1: their revenue is another startups costs. So it's like you

657
00:35:25,880 --> 00:35:28,839
Speaker 1: have the tons of new companies flooding the market all

658
00:35:28,880 --> 00:35:31,560
Speaker 1: the time, flush with cash from all these seed stage

659
00:35:31,680 --> 00:35:34,080
Speaker 1: checks and all these companies they launched, and then they

660
00:35:34,320 --> 00:35:36,520
Speaker 1: have to go out and like buy their like suite

661
00:35:36,680 --> 00:35:40,400
Speaker 1: of cloud products to operate the business. I think it's

662
00:35:40,440 --> 00:35:43,880
Speaker 1: sort of well known that like Y combinator companies, for example,

663
00:35:44,000 --> 00:35:47,640
Speaker 1: often otherwy combinator companies are their first set of customers.

664
00:35:48,440 --> 00:35:50,840
Speaker 1: Are you concerned that a sort of slowdown in market,

665
00:35:50,920 --> 00:35:55,120
Speaker 1: slowdown in financing actually does translate into a real world

666
00:35:55,440 --> 00:35:58,280
Speaker 1: You know what our tam or our trajectory of revenue

667
00:35:58,360 --> 00:36:00,239
Speaker 1: is not going to be what we what we thought

668
00:36:00,280 --> 00:36:04,440
Speaker 1: it was in this environment of a cooler activity. You know,

669
00:36:04,640 --> 00:36:08,000
Speaker 1: it's the question, right, you're trying to projective this is

670
00:36:10,080 --> 00:36:14,160
Speaker 1: that's right, that's right, um, and so we're all should

671
00:36:14,200 --> 00:36:17,040
Speaker 1: be thinking like that. But no, I mean, obviously it

672
00:36:17,080 --> 00:36:19,759
Speaker 1: can happen again. So I'm not saying, you know, take

673
00:36:19,840 --> 00:36:23,799
Speaker 1: my advice. I'm just saying I'm super bullish on the cloud.

674
00:36:23,880 --> 00:36:27,440
Speaker 1: Here's why, because you do have real effects from cold,

675
00:36:27,480 --> 00:36:30,160
Speaker 1: you do have distribution out of Silicon Valley and founders

676
00:36:30,239 --> 00:36:35,080
Speaker 1: moving across the globe, and they are not scared by failure.

677
00:36:35,360 --> 00:36:38,960
Speaker 1: That failure, that that that failure mentality to Silicon Valley

678
00:36:39,200 --> 00:36:42,480
Speaker 1: is something right, there is less shame and a startup

679
00:36:42,520 --> 00:36:45,160
Speaker 1: that fails as there should be, like we need progress.

680
00:36:45,760 --> 00:36:49,840
Speaker 1: So I'm not buying the scenario even if rates doubled

681
00:36:49,920 --> 00:36:54,320
Speaker 1: from here, I am buying valuation retracement because there's more supply.

682
00:36:54,640 --> 00:36:57,720
Speaker 1: You know, if you go from a hundred angel investors

683
00:36:57,800 --> 00:37:01,239
Speaker 1: to a thousand angel investors, is that just putting money

684
00:37:01,280 --> 00:37:05,040
Speaker 1: out there? So you're gonna have startups? I think, what

685
00:37:05,160 --> 00:37:07,439
Speaker 1: would you have to ask a question, what's gonna what's

686
00:37:07,480 --> 00:37:11,480
Speaker 1: gonna take for a bunch of Howard wins and social

687
00:37:11,560 --> 00:37:14,640
Speaker 1: leverages to sit on their hands? I don't know that yet.

688
00:37:15,120 --> 00:37:17,560
Speaker 1: Right right now, I'd like prices to come down, but

689
00:37:17,680 --> 00:37:20,000
Speaker 1: just because I would want them to come down doesn't

690
00:37:20,000 --> 00:37:22,840
Speaker 1: mean they will, you know, which is why we're investing

691
00:37:22,840 --> 00:37:24,880
Speaker 1: in other funds and social leverage, and we launched an

692
00:37:24,880 --> 00:37:28,080
Speaker 1: emerging manager fund in case we're wrong. Right, Like in

693
00:37:28,200 --> 00:37:32,800
Speaker 1: my religion, we called schmuck insurance. And in schmuck insurance language,

694
00:37:33,239 --> 00:37:35,520
Speaker 1: the hedges to the upside, meaning I'm trying to hedge

695
00:37:35,560 --> 00:37:40,000
Speaker 1: in case I'm wrong and too conservative. Right. Whereas you

696
00:37:40,160 --> 00:37:43,120
Speaker 1: in the old days with in a non cloud world,

697
00:37:43,200 --> 00:37:46,759
Speaker 1: in a land based world, hedges made more sense because

698
00:37:46,760 --> 00:37:50,120
Speaker 1: there wasn't infinite growth. Right To get your customers around

699
00:37:50,120 --> 00:37:51,680
Speaker 1: the world took a lot of phone calls, took a

700
00:37:51,760 --> 00:37:54,839
Speaker 1: lot of travel, took a lot of set up right,

701
00:37:54,920 --> 00:37:57,360
Speaker 1: just to set up an office. Today you're up and

702
00:37:57,360 --> 00:38:00,520
Speaker 1: arounding in forty countries overnight. If there's demand, the product

703
00:38:00,560 --> 00:38:04,560
Speaker 1: market fit so so you have to factor that stuff

704
00:38:04,600 --> 00:38:07,520
Speaker 1: in as well. So I don't think we're I think

705
00:38:07,560 --> 00:38:09,040
Speaker 1: we're in a place where there's just a lot of

706
00:38:09,080 --> 00:38:14,000
Speaker 1: good businesses. They're just priced wrong. Beyond clouds, where do

707
00:38:14,120 --> 00:38:19,640
Speaker 1: you see opportunities At the moment, there's opportunities everywhere. Stuff

708
00:38:19,719 --> 00:38:22,040
Speaker 1: is priced right. You have to you have to get

709
00:38:22,160 --> 00:38:26,120
Speaker 1: investors that say, okay, I can make money if you're

710
00:38:26,160 --> 00:38:28,759
Speaker 1: not new in the corn, meaning you know in the

711
00:38:28,840 --> 00:38:32,200
Speaker 1: old days. You know, we your investors in LifeLock, which

712
00:38:32,320 --> 00:38:33,920
Speaker 1: sounds like a great company, but in the end it

713
00:38:34,000 --> 00:38:35,600
Speaker 1: was bought for two billion dollars, but it was still

714
00:38:35,600 --> 00:38:38,000
Speaker 1: a home run for us. Or golf Now or or

715
00:38:38,360 --> 00:38:41,880
Speaker 1: or Buddy Media or Alley Insider, which were sold for

716
00:38:42,000 --> 00:38:44,920
Speaker 1: way less than a billion dollars but would help people

717
00:38:45,000 --> 00:38:49,720
Speaker 1: return their funds, you know. And now because of pricing,

718
00:38:49,880 --> 00:38:52,919
Speaker 1: you need decacorn for some of these seed funds, mathe

719
00:38:53,000 --> 00:38:54,600
Speaker 1: Matt and they're not doing the math, but I'm doing

720
00:38:54,640 --> 00:38:56,680
Speaker 1: the math for because I've seen the math in my

721
00:38:56,719 --> 00:39:00,120
Speaker 1: own portfolio for people to return their funds. So this

722
00:39:00,280 --> 00:39:01,920
Speaker 1: is still, like I said, going to come down to

723
00:39:02,160 --> 00:39:06,640
Speaker 1: LPs opening their statement and saying, well, I couldn't just

724
00:39:06,719 --> 00:39:08,840
Speaker 1: bought the q q Q or the slide, just like

725
00:39:08,960 --> 00:39:12,680
Speaker 1: investment buyers get fired now weekly because there's so many

726
00:39:12,840 --> 00:39:14,560
Speaker 1: r A s and there's so many people that can

727
00:39:14,719 --> 00:39:17,920
Speaker 1: offer indexing and asset allocation that people are moving their

728
00:39:17,920 --> 00:39:21,560
Speaker 1: accounts all the time, and that will venture and that

729
00:39:21,640 --> 00:39:23,840
Speaker 1: can't You can't just move your account if you're in

730
00:39:23,880 --> 00:39:27,520
Speaker 1: a fun seed fund you're stuck with the person, and

731
00:39:28,000 --> 00:39:29,879
Speaker 1: so that's going to create a lot of bad will

732
00:39:29,960 --> 00:39:36,320
Speaker 1: and a lot of tension that no one's really talking about. Howard,

733
00:39:36,520 --> 00:39:37,880
Speaker 1: last time we had you on, I think it was

734
00:39:37,920 --> 00:39:41,279
Speaker 1: like last summer, summer or maybe spring, and you were

735
00:39:41,280 --> 00:39:45,800
Speaker 1: doing a spec and we've seen every spec, most of

736
00:39:45,880 --> 00:39:50,120
Speaker 1: them anyway, get obliterated when the sell off. What's happening

737
00:39:50,160 --> 00:39:52,520
Speaker 1: with yours? What's what's what's happened, what happened with the

738
00:39:53,040 --> 00:39:56,200
Speaker 1: social leverage is what's the give us an update? I

739
00:39:56,239 --> 00:39:58,319
Speaker 1: don't think I can tell you. I mean, I'm really

740
00:39:58,440 --> 00:40:00,640
Speaker 1: glad we have a great team. When we sat on

741
00:40:00,719 --> 00:40:03,440
Speaker 1: our hand, we were just like, hey, you know, as

742
00:40:03,480 --> 00:40:05,080
Speaker 1: I talked about it on your show at the time,

743
00:40:05,200 --> 00:40:08,440
Speaker 1: it was so did you ever buy a company? We

744
00:40:08,680 --> 00:40:11,520
Speaker 1: had done a few offers, We've learned the route, and

745
00:40:12,760 --> 00:40:16,520
Speaker 1: I'm very excited about our team and what we're doing.

746
00:40:16,680 --> 00:40:19,400
Speaker 1: We have not won a deal in the past. We

747
00:40:19,480 --> 00:40:21,399
Speaker 1: still have a year ago, and we feel really good

748
00:40:21,400 --> 00:40:25,759
Speaker 1: about where the markets are because everybody, like I said,

749
00:40:25,800 --> 00:40:28,960
Speaker 1: it is excited to just sell spacts just because the

750
00:40:29,239 --> 00:40:33,120
Speaker 1: previous batch have been a disaster. So so the short

751
00:40:33,160 --> 00:40:36,160
Speaker 1: sellers are in control there's no bids. Just like I said,

752
00:40:36,200 --> 00:40:39,160
Speaker 1: if you're not index and you have a bad reputation

753
00:40:39,920 --> 00:40:42,759
Speaker 1: and people, you know, the mob has has no turned

754
00:40:42,760 --> 00:40:46,160
Speaker 1: against facts, you have a seller's market. So I think

755
00:40:46,719 --> 00:40:48,800
Speaker 1: part of our just like with our seed funds and

756
00:40:48,880 --> 00:40:51,200
Speaker 1: social leverage, we just sat on our hands last year

757
00:40:51,840 --> 00:40:56,879
Speaker 1: and we're very excited that the power has shifted. Right

758
00:40:56,960 --> 00:41:00,359
Speaker 1: if you're if you're a company that's growing, that needs

759
00:41:00,440 --> 00:41:03,200
Speaker 1: to be public, you know, to tell your story and

760
00:41:03,440 --> 00:41:07,120
Speaker 1: to raise capital in a different way. Now the market switches,

761
00:41:07,160 --> 00:41:10,920
Speaker 1: so those three billion dollar valuations become one billion because

762
00:41:11,719 --> 00:41:13,640
Speaker 1: you know, as much as we make fun of spacts,

763
00:41:13,719 --> 00:41:16,880
Speaker 1: now the spacts, you know, the good spacts have some power.

764
00:41:17,840 --> 00:41:20,360
Speaker 1: So I just think you're going to see some interesting

765
00:41:20,440 --> 00:41:22,440
Speaker 1: deals out of the rubble, is what I would say.

766
00:41:23,640 --> 00:41:25,759
Speaker 1: And not everybody should have a spact, just like not

767
00:41:25,880 --> 00:41:28,280
Speaker 1: everybody should have a seed fund, just like not everybody

768
00:41:28,400 --> 00:41:31,839
Speaker 1: should have a venture capital fund. I mean, it does

769
00:41:32,000 --> 00:41:35,000
Speaker 1: feel like much in the same way that very high

770
00:41:35,239 --> 00:41:39,000
Speaker 1: tech valuations have come down as everyone predicted. It does

771
00:41:39,080 --> 00:41:42,600
Speaker 1: seem like a lot of the criticism about SPACs over

772
00:41:42,680 --> 00:41:46,400
Speaker 1: the past year or two seems to have been born

773
00:41:46,480 --> 00:41:49,560
Speaker 1: out at least looking at, you know, the share price.

774
00:41:49,760 --> 00:41:52,640
Speaker 1: What do you say to two critics of SPACs or

775
00:41:52,719 --> 00:41:56,239
Speaker 1: people who say that, well, you know, the past year

776
00:41:56,400 --> 00:42:01,000
Speaker 1: kind of proves that these things are opportunist market vehicles

777
00:42:01,120 --> 00:42:06,400
Speaker 1: that are taking advantage of investors. Well, taking advantage of

778
00:42:06,480 --> 00:42:09,440
Speaker 1: investors is a bit of a comedy, you know. And

779
00:42:09,480 --> 00:42:11,360
Speaker 1: I'll say this because I'm on every side of the

780
00:42:11,400 --> 00:42:14,560
Speaker 1: table here and watching sports this weekend, and we can't

781
00:42:14,600 --> 00:42:16,600
Speaker 1: trade crypto in New York. You can't, you don't have

782
00:42:16,719 --> 00:42:18,560
Speaker 1: nobody can get a crypto license in New York. But

783
00:42:18,680 --> 00:42:21,640
Speaker 1: like DraftKings and Famduel are on all day talking about

784
00:42:21,719 --> 00:42:25,239
Speaker 1: thirty to one yolos to your college kids. So we

785
00:42:25,320 --> 00:42:28,000
Speaker 1: can't protect everybody. People at some point have to be

786
00:42:28,040 --> 00:42:31,040
Speaker 1: adults in this country, and we can't just fire everybody

787
00:42:31,200 --> 00:42:37,759
Speaker 1: and shame everybody and stop allowing people to invest. In

788
00:42:38,239 --> 00:42:41,960
Speaker 1: some cases, unfortunately blow the family nest egg. So I'm

789
00:42:42,239 --> 00:42:47,120
Speaker 1: very pro stack. It's a feature, not a bug. It

790
00:42:47,200 --> 00:42:51,440
Speaker 1: has become a bug because guess what COVID people were

791
00:42:51,520 --> 00:42:54,240
Speaker 1: Board banks needed to make their numbers. There's a thousand reasons.

792
00:42:54,280 --> 00:42:57,799
Speaker 1: It's not just Chamas fault or this person's fault. There's

793
00:42:57,840 --> 00:43:01,480
Speaker 1: bad behavior on every different leve from investors to syndicates,

794
00:43:01,520 --> 00:43:04,960
Speaker 1: to bankers to promoters, and the market just got too

795
00:43:05,080 --> 00:43:08,319
Speaker 1: much supply. That's facts will be around for a hundred years.

796
00:43:08,600 --> 00:43:12,240
Speaker 1: But we're definitely in a world where crypto now exists

797
00:43:12,840 --> 00:43:15,840
Speaker 1: and the new promoter sits in the discord room and

798
00:43:16,160 --> 00:43:18,719
Speaker 1: a person with a great network and monitorze with a

799
00:43:18,760 --> 00:43:22,480
Speaker 1: great financial network and monetized their network without doing this

800
00:43:22,719 --> 00:43:26,640
Speaker 1: back right, it just comes down to the economics, and

801
00:43:26,840 --> 00:43:30,720
Speaker 1: good deals will get done with great teams of great companies,

802
00:43:30,880 --> 00:43:32,440
Speaker 1: and these are the times they get done when no

803
00:43:32,520 --> 00:43:34,480
Speaker 1: one wants to do a deal, like good luck trying

804
00:43:34,520 --> 00:43:36,200
Speaker 1: to get a pipe done today. But that's when you're

805
00:43:36,200 --> 00:43:39,160
Speaker 1: supposed to do deals, because now prices come down to

806
00:43:39,200 --> 00:43:41,319
Speaker 1: a point where both sides of the tables sit down

807
00:43:41,360 --> 00:43:43,319
Speaker 1: and go as if we want to get this deal

808
00:43:43,400 --> 00:43:46,560
Speaker 1: done and we wanted to trade the above ten, why

809
00:43:46,600 --> 00:43:49,640
Speaker 1: are we having this discussion unless we are all allowing

810
00:43:49,760 --> 00:43:53,000
Speaker 1: to do that. So I think that that is needed

811
00:43:53,040 --> 00:43:56,200
Speaker 1: to happen, And there's always gonna be a certain percentage

812
00:43:56,239 --> 00:44:00,279
Speaker 1: of facts, a low percentage that work because to every

813
00:44:00,320 --> 00:44:03,560
Speaker 1: company can be a winner. Are you I mean you

814
00:44:03,680 --> 00:44:06,960
Speaker 1: said you bid for some deals, you didn't win them.

815
00:44:07,040 --> 00:44:10,800
Speaker 1: You're probably happy, huh that the winners cursed. I'm guessing

816
00:44:11,000 --> 00:44:14,440
Speaker 1: you have your price. The bid goes in and you're

817
00:44:14,480 --> 00:44:16,400
Speaker 1: like so far away, You're like, I don't even know

818
00:44:16,480 --> 00:44:19,000
Speaker 1: why we're doing this, and so you sit on your

819
00:44:19,040 --> 00:44:22,239
Speaker 1: hands and you risk losing this again. But people don't

820
00:44:22,320 --> 00:44:25,279
Speaker 1: understand the risk here, like we risk losing our eight

821
00:44:25,360 --> 00:44:27,680
Speaker 1: to ten million dollars that we put up as a syndicate.

822
00:44:28,160 --> 00:44:31,640
Speaker 1: Some people rushed because they're so want to save their

823
00:44:31,680 --> 00:44:34,040
Speaker 1: eight million or turn their eight million into fifty and

824
00:44:34,160 --> 00:44:37,040
Speaker 1: to do any deal. That's what happen. Those are the incentives,

825
00:44:37,400 --> 00:44:39,840
Speaker 1: but there is risk and hundreds of millions of dollars

826
00:44:39,960 --> 00:44:42,719
Speaker 1: could be lost if deals aren't done. And what investors

827
00:44:42,760 --> 00:44:46,520
Speaker 1: should do is talk to management. Look see the s

828
00:44:46,640 --> 00:44:48,880
Speaker 1: ones A man, how hard is this? You know what's

829
00:44:48,880 --> 00:44:51,359
Speaker 1: so funny is everybody's complaining, but there's never been an

830
00:44:51,400 --> 00:44:54,120
Speaker 1: easier time to do due diligence. So at the same

831
00:44:54,200 --> 00:44:56,400
Speaker 1: time as everybody's up on arms and want someone to

832
00:44:56,640 --> 00:44:59,880
Speaker 1: pay the price for all their mistakes, let's be honest,

833
00:45:00,280 --> 00:45:02,240
Speaker 1: Like Tracy, you and I can get on the phone

834
00:45:02,560 --> 00:45:06,640
Speaker 1: on Twitter on a zoom and really narrow in on

835
00:45:06,800 --> 00:45:09,120
Speaker 1: some things and then go do our due diligence and

836
00:45:09,200 --> 00:45:12,960
Speaker 1: get better due diligence and golden stacked. So there's no

837
00:45:13,080 --> 00:45:15,040
Speaker 1: reason why someone has to buy it. No one told

838
00:45:15,080 --> 00:45:17,120
Speaker 1: you to buy us back. And if that person told

839
00:45:17,160 --> 00:45:19,040
Speaker 1: you to buy us back, I mean, be careful of

840
00:45:19,120 --> 00:45:23,440
Speaker 1: that person. You were a pre I p O investor

841
00:45:23,520 --> 00:45:25,160
Speaker 1: in robin Hood and have talked about a long time

842
00:45:25,200 --> 00:45:28,560
Speaker 1: another I p O that's done. Uh, it was terribly

843
00:45:28,640 --> 00:45:31,480
Speaker 1: It's also like, you know, part of the zeitgeist in

844
00:45:31,520 --> 00:45:33,440
Speaker 1: a very big way over the last two years in

845
00:45:33,600 --> 00:45:37,520
Speaker 1: terms of retail investors, and so many retail investors have

846
00:45:37,680 --> 00:45:40,200
Speaker 1: now actually seen in a bear market in a way

847
00:45:40,280 --> 00:45:42,200
Speaker 1: that man for a while they hadn't seen a lot

848
00:45:42,239 --> 00:45:44,800
Speaker 1: of money. What is the future in your view? A

849
00:45:45,160 --> 00:45:47,440
Speaker 1: just real quickly, do you still own robin Hood since

850
00:45:47,480 --> 00:45:50,040
Speaker 1: we've been talking about it, But more importantly, what it's

851
00:45:50,080 --> 00:45:53,000
Speaker 1: going to become of this movement like or this this

852
00:45:53,480 --> 00:45:56,720
Speaker 1: this meme or this thing of like the retail mania,

853
00:45:56,760 --> 00:45:58,680
Speaker 1: Like where do you see it going now after the

854
00:45:58,760 --> 00:46:01,200
Speaker 1: pain of the last year basis? I mean, how much

855
00:46:01,239 --> 00:46:04,200
Speaker 1: time do you have you have to three hours? You

856
00:46:04,280 --> 00:46:05,759
Speaker 1: know you could you know you could take a few

857
00:46:05,800 --> 00:46:08,040
Speaker 1: minutes like what's going to happen or do you do

858
00:46:08,080 --> 00:46:10,920
Speaker 1: you own robin Hood still? Yeah, of course, so you know,

859
00:46:11,520 --> 00:46:15,640
Speaker 1: let me do full discover your seat ambassadors. Huge, huge,

860
00:46:16,040 --> 00:46:19,120
Speaker 1: This is everything that we wanted to see happen in

861
00:46:19,200 --> 00:46:21,520
Speaker 1: o A. You know, the goal was to disrupt with

862
00:46:21,600 --> 00:46:23,960
Speaker 1: Twitter and start to its because I always thought that

863
00:46:24,080 --> 00:46:28,120
Speaker 1: the trays and shrubs, we're going to be disrupted with better. Uy.

864
00:46:28,640 --> 00:46:31,320
Speaker 1: This is a UY thing. Right when the iPhone came along,

865
00:46:31,719 --> 00:46:35,480
Speaker 1: it took forever for robin Hood two fourteen. People like, like,

866
00:46:35,560 --> 00:46:38,239
Speaker 1: people need to realize Intact List is seven years behind.

867
00:46:38,320 --> 00:46:41,279
Speaker 1: Still KRYPTI was like a joke and even today you

868
00:46:41,320 --> 00:46:43,160
Speaker 1: can still call it a joke about most people do

869
00:46:43,360 --> 00:46:46,080
Speaker 1: not me. But so you it took seven years for

870
00:46:46,200 --> 00:46:49,480
Speaker 1: robin Hood to exist in an iPhone world, right, and

871
00:46:49,640 --> 00:46:52,440
Speaker 1: so we're at the beginning of the beginning of the beginning.

872
00:46:52,560 --> 00:46:54,239
Speaker 1: I'm not saying robin Hood is gonna win, but I

873
00:46:54,320 --> 00:46:57,320
Speaker 1: do own schmock Insurance, meaning I don't run the company,

874
00:46:57,440 --> 00:47:00,080
Speaker 1: not on the board, and no insights that are that

875
00:47:00,120 --> 00:47:03,160
Speaker 1: are going to blow people's minds here other than it's

876
00:47:03,160 --> 00:47:06,800
Speaker 1: still a twelve billion dollar company that was started in

877
00:47:06,920 --> 00:47:09,520
Speaker 1: two thousand and fourteen, and we can argue whether it's

878
00:47:09,560 --> 00:47:12,600
Speaker 1: worth twelve billion. I'm long so at twelve billion, I

879
00:47:13,440 --> 00:47:18,040
Speaker 1: know my consurances to the upside. But in full disclosure,

880
00:47:18,120 --> 00:47:20,000
Speaker 1: when it got to one bit, you know, we invested

881
00:47:20,040 --> 00:47:22,560
Speaker 1: a ten million valuation post money. When it got to

882
00:47:22,719 --> 00:47:24,880
Speaker 1: one billion, it was not hard for me to sell some,

883
00:47:25,560 --> 00:47:28,160
Speaker 1: and I think I stupid. I feel for that. And

884
00:47:28,239 --> 00:47:29,960
Speaker 1: then I got to five billion and we sold something.

885
00:47:30,080 --> 00:47:32,080
Speaker 1: It got to fifteen billion, and we sold some because

886
00:47:32,120 --> 00:47:35,040
Speaker 1: we're seed investors, right. And the great thing about this

887
00:47:35,120 --> 00:47:37,960
Speaker 1: bowl market is their liquidity down the food chain now,

888
00:47:38,040 --> 00:47:41,600
Speaker 1: but it's not being used properly and people are are

889
00:47:41,800 --> 00:47:45,320
Speaker 1: actually making mistakes with all this opportunity. But Social Leverage

890
00:47:45,360 --> 00:47:48,960
Speaker 1: was a seller into those rounds on the way up. Okay,

891
00:47:49,080 --> 00:47:51,360
Speaker 1: So we treated the product of markets like the public markets.

892
00:47:51,400 --> 00:47:54,200
Speaker 1: When you can sell, you should sell some, and when

893
00:47:54,239 --> 00:47:57,520
Speaker 1: the founders sell, you should definitely sell some. Literally, but

894
00:47:57,640 --> 00:47:59,919
Speaker 1: you know what I mean, and and so, and that's

895
00:48:00,000 --> 00:48:01,759
Speaker 1: why I get mad at the soft banks of the world.

896
00:48:01,800 --> 00:48:04,080
Speaker 1: Now they pay the founders out some money, and the

897
00:48:04,239 --> 00:48:07,080
Speaker 1: and the sea investors can sell. So there's all these

898
00:48:07,280 --> 00:48:11,080
Speaker 1: like tricks that the later state vcs now have that

899
00:48:11,800 --> 00:48:14,120
Speaker 1: I think screwed the seat investor, and we've gotta be

900
00:48:14,200 --> 00:48:17,800
Speaker 1: really careful about that. So it's a public company. Was

901
00:48:17,960 --> 00:48:20,800
Speaker 1: Robin Herd worth fifty billion? I mean that should have

902
00:48:20,880 --> 00:48:23,040
Speaker 1: just been the discussion, Not like I hate Robin and

903
00:48:23,280 --> 00:48:25,759
Speaker 1: their evil. It's not their fault, it's the stuck with

904
00:48:25,920 --> 00:48:30,759
Speaker 1: fifty billion. That's the media fault, the public's fault, lack

905
00:48:30,800 --> 00:48:33,480
Speaker 1: of competition. But you know, we're an investor in a

906
00:48:33,520 --> 00:48:36,839
Speaker 1: company called Alpaco which is now powering the next Robin Hoods,

907
00:48:36,840 --> 00:48:39,359
Speaker 1: and I can tell you from their numbers that I'm

908
00:48:39,360 --> 00:48:41,520
Speaker 1: not going to share that there was going to be

909
00:48:41,600 --> 00:48:44,880
Speaker 1: a thousand Robin Hoods, right, just like there's a thousand

910
00:48:45,040 --> 00:48:48,320
Speaker 1: gambling apps. And in the next warm Buffet could be

911
00:48:48,400 --> 00:48:51,760
Speaker 1: in Eastern Asia or it could be in Brazil because

912
00:48:51,840 --> 00:48:54,920
Speaker 1: they're going to have access to the same markets that

913
00:48:55,040 --> 00:48:58,400
Speaker 1: warm Buffett had access to. So this is not a

914
00:48:59,239 --> 00:49:02,760
Speaker 1: not at all. Over the question is who's the winner?

915
00:49:02,960 --> 00:49:06,160
Speaker 1: And for me it's more a question is it with

916
00:49:06,320 --> 00:49:10,120
Speaker 1: Robin hood I always loved their attack on you know,

917
00:49:10,239 --> 00:49:13,120
Speaker 1: Gray means stop like the sec you know in China,

918
00:49:13,239 --> 00:49:16,080
Speaker 1: like Gray means go like, worry about it later. Guess what,

919
00:49:16,400 --> 00:49:18,839
Speaker 1: now they're worrying about it. In the US, Robin had

920
00:49:18,880 --> 00:49:21,560
Speaker 1: did what I think is the right thing and god

921
00:49:21,600 --> 00:49:24,560
Speaker 1: approval by the SEC. Now the SEC is showing how

922
00:49:24,719 --> 00:49:27,200
Speaker 1: awful it is because I can't make decisions and they're

923
00:49:27,239 --> 00:49:30,560
Speaker 1: holding out the one example whereas crypto doesn't ask for

924
00:49:30,600 --> 00:49:34,040
Speaker 1: a permission right and we'll beg for forgiveness. So if

925
00:49:34,080 --> 00:49:37,200
Speaker 1: you told me that it was easier for coin based

926
00:49:37,239 --> 00:49:39,080
Speaker 1: or f t X to become robin Hood than it

927
00:49:39,200 --> 00:49:42,800
Speaker 1: was for robin Hood to become Crypto, I wouldn't have

928
00:49:42,880 --> 00:49:47,399
Speaker 1: taken that bet three years ago. Today, my only thought

929
00:49:47,680 --> 00:49:50,759
Speaker 1: is coin base and ftx have done a much better

930
00:49:50,960 --> 00:49:53,080
Speaker 1: job in a world where it's easier for them to

931
00:49:53,160 --> 00:49:56,040
Speaker 1: become brokerages and it is for robin Hood to become crypto.

932
00:49:56,560 --> 00:49:58,719
Speaker 1: So that's the only change in my thinking is that

933
00:49:59,160 --> 00:50:01,480
Speaker 1: you know Base and that's why I owned some coin

934
00:50:01,520 --> 00:50:04,240
Speaker 1: based and some f t x is that it's easier

935
00:50:04,280 --> 00:50:06,640
Speaker 1: for them in a world of api s to become

936
00:50:06,760 --> 00:50:09,840
Speaker 1: robin and then vice versa, and so that is affecting valuation.

937
00:50:11,400 --> 00:50:14,920
Speaker 1: Howard is always a treat to speak to you, and

938
00:50:15,120 --> 00:50:17,440
Speaker 1: once again I feel like because you have your you

939
00:50:17,520 --> 00:50:20,319
Speaker 1: know so many different parts of the market is uh

940
00:50:21,040 --> 00:50:23,960
Speaker 1: unique insight, and uh, thank you so much for coming

941
00:50:24,000 --> 00:50:26,520
Speaker 1: back on odd Loves. I read about this every day

942
00:50:26,560 --> 00:50:29,239
Speaker 1: and bits and pieces, including about my cross statea on

943
00:50:29,320 --> 00:50:32,960
Speaker 1: my blog. But hopefully I won't get canceled. I think

944
00:50:32,960 --> 00:50:34,439
Speaker 1: I said a lot of I don't think I said

945
00:50:34,440 --> 00:50:37,520
Speaker 1: anything too crazy, didn't you didn't say anything bad? Thanks Howard,

946
00:50:38,160 --> 00:50:40,240
Speaker 1: Thank you Howard. That was great, all right, Thanks Tracy,

947
00:50:40,440 --> 00:50:57,360
Speaker 1: Thanks Joe, Tracy. Do it a lot there, you know,

948
00:50:57,920 --> 00:51:01,280
Speaker 1: just to start one thing is like I thought Howard's

949
00:51:01,440 --> 00:51:05,360
Speaker 1: point about how the trickle down effect from public markets

950
00:51:05,800 --> 00:51:08,800
Speaker 1: will probably hit, but it might take maybe even years

951
00:51:09,520 --> 00:51:12,600
Speaker 1: as LPs sort of slowly realized they're not getting the

952
00:51:12,640 --> 00:51:15,200
Speaker 1: return as they expected from a liquid investment. I thought

953
00:51:15,200 --> 00:51:17,320
Speaker 1: that was like a really interesting point. You sort of

954
00:51:17,360 --> 00:51:19,560
Speaker 1: like walk through the mechanics of like, you know, how

955
00:51:19,719 --> 00:51:23,280
Speaker 1: long the late stage investors can sort of keep things afloat,

956
00:51:23,840 --> 00:51:25,920
Speaker 1: but the you know, there's not that sort of like

957
00:51:26,120 --> 00:51:30,000
Speaker 1: instant feedback that would cause the selling. Kind of interesting

958
00:51:30,080 --> 00:51:32,759
Speaker 1: perspective on private markets that I hadn't really thought of

959
00:51:32,880 --> 00:51:36,319
Speaker 1: before totally, And I mean it is one of those

960
00:51:36,440 --> 00:51:41,520
Speaker 1: times when liquidity can actually be quite beneficial in some senses.

961
00:51:42,080 --> 00:51:44,800
Speaker 1: The other thing that struck me was the idea of

962
00:51:45,200 --> 00:51:48,719
Speaker 1: um or the impact of the big players coming in

963
00:51:49,080 --> 00:51:52,919
Speaker 1: and kind of squeezing the entire capital structure and valuations,

964
00:51:52,920 --> 00:51:56,480
Speaker 1: because again, that can be a source of strength for

965
00:51:56,640 --> 00:51:59,239
Speaker 1: a while if you have these big players like a

966
00:51:59,360 --> 00:52:01,879
Speaker 1: soft bank or a Tiger who are able to hold

967
00:52:01,960 --> 00:52:07,520
Speaker 1: on indefinitely at these really high valuations. But I guess

968
00:52:07,560 --> 00:52:10,560
Speaker 1: the big question mark is if something happens to one

969
00:52:10,640 --> 00:52:13,520
Speaker 1: of them, then things can change very very quickly. It

970
00:52:13,640 --> 00:52:15,880
Speaker 1: feels like no, exactly right, And you know some of

971
00:52:15,960 --> 00:52:18,040
Speaker 1: the things you pointed out about how like you know

972
00:52:18,320 --> 00:52:21,640
Speaker 1: they can create liquidity for the founder while not creating

973
00:52:22,120 --> 00:52:27,440
Speaker 1: liquidity for the seed stage investor. Super interesting just in general,

974
00:52:27,640 --> 00:52:31,359
Speaker 1: like also like I haven't really thought about that, even

975
00:52:31,400 --> 00:52:34,359
Speaker 1: though it's obvious in retrospect, like just the sheer number

976
00:52:34,440 --> 00:52:36,800
Speaker 1: of people like writing seed stage text and you do

977
00:52:37,000 --> 00:52:39,720
Speaker 1: see them like on Twitter subject, like so many people

978
00:52:40,320 --> 00:52:42,919
Speaker 1: there are investors in the way that I hadn't seen,

979
00:52:43,040 --> 00:52:47,520
Speaker 1: especially like pre covid totally. And I guess, well, we

980
00:52:47,600 --> 00:52:49,759
Speaker 1: know quite a few people, especially in the crypto space,

981
00:52:49,840 --> 00:52:53,960
Speaker 1: who keep getting offers and almost have to like fight

982
00:52:54,080 --> 00:52:59,040
Speaker 1: investors off. At this point, we should start an adjacent

983
00:52:59,160 --> 00:53:02,840
Speaker 1: fund somehow. Maybe a lot seed money coming soon. Yeah. No,

984
00:53:03,000 --> 00:53:06,520
Speaker 1: it's always great talking to uh Howard, great perspective and

985
00:53:07,000 --> 00:53:10,000
Speaker 1: um I learned a lot. Shall we leave it there,

986
00:53:10,360 --> 00:53:12,840
Speaker 1: Let's leave it there. This has been another episode of

987
00:53:13,000 --> 00:53:15,720
Speaker 1: the All Thoughts Podcast. I'm Tracy Alloway. You can follow

988
00:53:15,760 --> 00:53:18,880
Speaker 1: me on Twitter at Tracy Alloway and I'm Joe Why

989
00:53:18,920 --> 00:53:22,000
Speaker 1: Isn't All? You can follow me on Twitter at the Stalwart.

990
00:53:22,280 --> 00:53:24,600
Speaker 1: Be sure to follow our guest Howard Lindson. He's on

991
00:53:24,760 --> 00:53:29,439
Speaker 1: Twitter at Howard Lindson. Follow our producer Laura Carlson at Laura.

992
00:53:29,520 --> 00:53:32,840
Speaker 1: I'm Carlson, the Bloomberg head of podcast for Francesca Leavy

993
00:53:32,920 --> 00:53:36,279
Speaker 1: at Princestera Today, and check out all of our podcasts

994
00:53:36,719 --> 00:53:40,280
Speaker 1: on Twitter under the handle at podcasts. Thanks for listening.