kotou is one of the most successful

hedge funds of the last two

decades the largest startup Fund in the

world right

now they are very

discreet started with $50 million and

now you're managing roughly 50 billion

from C to Thomas

leant what separates the truly

exceptional companies is to realize that

actually sales and product are different

sides of the same coin there was a

Confluence of trends that made us feel

like we needed to be president the

valley the reason we decided to kind of

get into this business is to find great

entrepreneurs and find great

[Music]

companies all right thank you everybody

um so my name is Thomas I work at CO2

I've been a day one listener of the

all-in podcast so when they called me

and they said would you be willing to

present I said you know absolutely tell

me

when then they told me well you're going

to have the graveyard shift the absolute

last slot I said I can handle it no

problem then they said by the way we are

going to put Mark Benny off the goat of

enterprise software right before

you the return of TK and some guy who

figured out how to fix

aging I still got

it and the reason is because what I know

is that to me the besties are a

band and they have what all great bands

have which is number one is they have

talent but number two they have

chemistry and you can't teach either but

you need both to be great and they're

great but also like all bands we know

they like to have new albums and

experiment with new producers in a new

sound so I think we've heard a lot about

the new sound it could be geopolitics or

free speech and look I know those are

important

issues but being a day one listener I

love the old album the first tracks we

ever

heard to me those are the ones that Will

Go On The Greatest Hit album and so I

knew that if I came I would bring you

back to the old days and to me

um I love the new stuff too don't get me

wrong but it's fun to play some of the

classics and what I love so much is

listening to each bestie give their

point of view about Venture Capital

about IPOs about technology and

so what I aim to do here is a bit kind

of level set on the conversation and

they'll join me afterwards and lucky me

I get to jam with the band for a bit so

um all right so let's dive in I hope

that this presentation kind of informs a

little bit about what we see in the

Unicorn economy so let's start at the

top let's just look kind of at funding

and what we can see in this slide is

that funding is still actually pretty

healthy now it's normalized post a covid

bubble but it's still if you compare it

to historical averages it's still quite

healthy but if we look at exits which is

Define of the cash that's returned we

see a bit of a different story where

actually we're at pre

levels Without Really any substantial

increases since all of the capital that

went into during

Co and one of the main reasons for that

is that the three kind of traditional

exits for companies are blocked

today so if you look at private equity

for example very um sensitive to

interest rates and so there's been kind

of fewer buyouts despite record amounts

of dry powder for that asset

class if we look at IPOs well we're

going to dig deeper into that peel the

onion a little bit so I'll talk about

IPOs in a minute and since um your know

political issues have been so present

here we know that regulator has had a

major impact on company's ability to buy

other

companies ironically and I think

somewhat perversely one of the

byproducts of constraining big companies

from buying small companies is it hurts

small companies

first of all it makes them less valuable

because if an investor you think that

big companies can't buy small companies

anymore you may adjust what you think

that company's

worth but to me even more importantly

small companies can create a true sense

of urgency in big companies if you're

sitting at Amazon or Google and you're

meeting these small companies now you

don't have to worry about your

competitor buying that company because

you know that the government will make

it really hard that gives you time

and we think that urgency is really

important so we certainly hope that

whoever wins uh the election they will

rethink this strategy because we think

it's really important to have a healthy

ecosystem and m&a is a really big part

of

that so if you put all of that together

you see that in fact you wouldn't be

surprised by this chart which shows that

the distributions from VCS back to their

investors are essentially at alltime

lows

almost back to um Financial kind of

Crisis

levels so if you think about our

industry is a business now and we looked

at the cash flow statement of the

Venture Capital industry it probably

wouldn't look too

good we've raised a lot of

money and we've given very little back

we are bleeding cash as an industry and

it's ironic because many of us as

investors have told on companies they

need to get fit they need to generate

cash

but we as an industry haven't done that

yet so what's left well what's left

actually is still a very substantial

economy what we call kind of the Unicorn

economy there's about 1,500

companies by our count that are private

companies with a last round of greater

than a

billion Gavin Baker who's another great

investor who I follow actually came out

with a statistic that said there's more

private companies in

Tech that are worth more than a billion

than public

ones which is kind of an incredible

statement to kind of think

about on top of that if we just kind of

look at um employee growth which I kind

of think is a decent proxy for how this

ecosystem is doing we can see that there

has been a significant slowdown post

the digital uh transformation of Co and

you can see that employee growth and by

the way this is

xai um which is an important statement

and we'll get to AI in a bit but you can

see that basically the lowest levels of

employee growth for this cohort um you

know in almost 15

years that obviously also impacts their

financing so if you look at the average

company in kind of a um preco era they

would tend to raise around generally

less than 600 days and Bridge rounds and

down rounds were about 30% of the total

rounds well in today's market you can

see something very different you can see

that it's now greater than 100 days and

you can see that the mix of down rounds

and Bridge rounds as a percent of total

rounds is up to almost

63% so even when they do get a financing

the financing

look very

different and so if you look at what

that means on a cohort basis and this is

one of my favorite charts because I

think it kind of tells the story of this

era in one slide you can see that the

2016 cohort the way to interpret this is

the 2016 cohort which is the top slide

the green line after about 13 quarters

80% had either raised the new round or

exited

so

80% you can see that in the 2021 cohort

that number is down almost in

half so significantly below and if you

see at the 22 cohort which is the most

recent cohort that we track because

obviously you need to give companies at

least a year to make the analysis useful

you can see that those companies are

tracking even below the 21

cohort now we can't BL blame the public

markets you know the NASDAQ is at almost

an all-time

high the NASDAQ has had a

massive uh

performance but the index doesn't tell

the whole story and I think we need to

kind of go one layer below to really

kind of understand what's going

on so if you look at the recovery which

is the piece that I kind of focus on

since Co you can see that the index

actually had very strong performance

right up almost

122% right since

2019 but if you look at the two buckets

that I've

highlighted which I've kind of created

two unprofitable Tech is one and SAS is

the other the reason that I chose those

two is I think that they best mirror

potentially the Unicorn economy in the

private markets you can see actually

that those are down the most from the co

high and have recovered the least since

20

2019 significantly kind of trailing the

index now you might say look this is a

bunch of really bad companies so it

makes sense my argument to you was be

there's incredible companies in this

cohort and I've just picked

three but let's look at these three door

Dash block and Shopify three incredible

entrepreneurs Tony from door Dash Jack

from block and Toby from Shopify you can

see that these companies have incredible

scale if you just look at the um the gmv

and the

revenues you can see that over this

period of time they got significantly

more

profitable but you can see that on a PE

basis the multiple shrank

significantly and the growth just wasn't

fast

enough to kind of offset the lower

multiple now if we look at IPOs this

chart basically one way to look at it is

of all of the IPOs since

2020 if you look at the value created or

destroyed from their IPO price you can

see it as as a

cohort we've destroyed almost 225

billion in market cap offset by the

value creation of 84 so net negative as

a

cohort this slide every time I look at

it I still quite can't believe what it

says so we had to quadruple

the facts but it is the fact is that

since

2022 both in 22 23 and 24 we had fewer

IPOs than in 2008 and 2009 the depths of

the financial crisis in 2001 and 2002

post the

greatest bubble in history in

Tech I mean I remember in 2008 you know

sitting at my desk and we would get

reports that Morgan Stanley and Goldman

Sachs were going out of business that's

how dire those times were there were

still more IPOs in that environment than

in today's

environment so I was talking yesterday

to um a late stage uh

founder very large valuation a very kind

of well-known company and he was asking

for the difference between private

investors and public investors and what

I told them is I said by and large your

private investors only compare you to

companies that are very similar to Yours

by which I mean if you're a venture

investor you look at a Silicon Valley um

uh named fund back company and you

compare it probably to another company

backed by another Silicon Valley fund

Etc and you try and pick the best as you

see fit from those types of

companies very similar to

yours but the public markets work really

differently and it's really important to

understand for CEOs that public markets

have

options those investors may look at the

risk-free rate 5% to be able to earn

with literally no risk

whatsoever they may look at depending on

how you want to bucket it the

Magnificent 6 or seven these are the

largest companies in the world

incredible businesses with cosos like

Mark Zuckerberg and you get to own that

cohort at a pretty cheap earnings

multiple for companies that even at the

trillion dollar scale are growing in

excess of

15% pretty

amazing oh and on top of that there's a

new type of company the AI

company and those companies are growing

at incredible scale and they're growing

sometimes at 50 60 or

100% And you get to back a Founder like

Jensen at Nvidia who many people don't

know but is the longest tenear founder

CEO in Silicon

Valley and I can also buy those

companies at pretty reasonable earnings

multiples and finally just in case you

think oh I'm only talking about big

companies you actually get to buy also

an incredible set of smaller companies

we just had Travis on from Uber but

whether it's door Das or instacart or

block you can see that even great new

companies like those are available at

pretty reasonable multiples

so it's really important for CEOs to

understand who is the competition for

the capital that you're trying to

raise and the public market can be tough

and this is one of those moments where

the public market is tough because what

essentially the public market is telling

you is that we want it

all we want you to be profitable we

talked about that

already we want you to grow so you have

to be in a big market and have a big

Trend but by the way we also want you to

have

scale that's a lot to ask

for but the good news is within this

cohort of unicorns we've already

identified a good list of companies

we're lucky to be investors I think in

about eight or nine of them that match

that

criteria and I think all of these

companies on this slide will one day

make for incredible public

companies so what it make of all this

well I kind of wanted to end uh I only

have two charts left but I wanted to

kind of end on this chart um this chart

is from Andrew McAfee who has an

incredible substack which I encourage

all of you to

follow what this chart looks at is it

looks at the average

age of the top 50 US public

companies weighted by market

cap okay so average age of the top 50 US

companies by market cap so what do we

see in this chart and by the way he goes

back to 1926 it's hard to get data that

goes back to 1926 believe me we

tried so what this shows actually is you

can look from 1926 through to almost the

late 80s

the biggest companies are the oldest

companies and they keep getting older

which means that the biggest chance of

you becoming a big company was to have

been a big company in the

past so you can see that that kind of

can

atrophy but it doesn't take a

mathematician which I'm not to see that

something kind of happens in the let's

call it mid

90s the average age starts to reverse

what happened

technology

happened technology is the great

resetter of the business World it can

take an incredible company and turn it

into dust just ask Blackberry or Nokia

or other companies that have been on the

wrong side of a

trend and what you see in this chart is

you can see that actually the past 25

years have been really good for young

companies which is why another inverse

way of looking at it is what is the

average founder year of that cohort of

companies and you can see that that

cohort of companies is getting

younger so the reason why I'm still an

incredible optimist about our industry

and about technology is because

technology is still the most disruptive

force and we haven't even talked about

Ai and robots and all of the incredible

things that are kind of

happening so I kind of wanted to put it

all together and kind of use the

concrete examples um this is one of my

favorite charts what this shows is the

valuation of two companies that are kind

of competing with each

other um their Enterprise data companies

they make essentially a way to store

data in the

cloud so you can see the blue line is

snowflake it's a public company today

and you can see that the red line is

data

bricks and it's kind of interesting to

see what do we take from this chart

while we can see okay a lot of

volatility in the public markets

valuation going up then down kind of a

rise in the private

Market but there's other ways to kind of

look at this you can see that data

bricks there's been a lot of talk of

founder mode right the the besties

talked about it on the podcast last week

data bricks is a founder-led company

snowflake was more of a managerial Le

company maybe that's one way to kind of

interpret what happened maybe another is

to say if you're a public company and

you need to be profitable for your

shareholders and your biggest competitor

is private and can incinerate and burn a

lot of money maybe makes a difference

though when I mentioned to Ali the co of

data breaks that I was um using this

chart he told me please remind the

audience that I'm growing in excess of

60% so I put

that that while I'm burning money I'm

actually getting much more efficient so

I said that I would obviously say that

and he also gave me a a non-public data

point around his Cloud business which is

now 500 million of a RR which was almost

zero a few years

ago so I kind of Lent to in on that

because I think that um what I love the

most about technology and markets is you

can't be

complacent you always have to stay on

the um on your toes and part of why I

love the podcast so much is it always

makes me rethink my assumptions and I'm

really grateful um to the besties for

that so with that I think they'll come

on and we'll chat about this and I think

all the other topics that you guys want

to talk

about wow

thank you so much for that that was

amazing than con gra you thanks brother

that was great thank you J moth uh sent

someone to Sax's house to steal

Wine Not Ste did you go to which seller

did you go to the secret seller or the

the seller the main seller the main

seller or the house seller which one

they they know not to go to any other

seller but the the Reser the real seller

the real seller I think probably the

best moment that you and sax had around

wine was

he poured a wine at a poker game that

you did not like and I kid you not Troth

took his

glass it and went like this and poured

it on the floor in David Sax's house

when was that really we weren't outside

on the lawn this was in Sax's living

room honestly stop stop the that

happen or not I'm going to get from Nat

for that story it was in my basement

poker basement and it was not we're it

was not an in is not a typical basement

you shouldn't use that term but there

was no rug this was a marble floor to be

clear not true wherever m is it could be

clean it was more like okay Thomas let

me ask you a question

um actually after that oh my God stop

thas what happened after guys we got we

got on Jam raided my wine seller and

found all the latash oh he did that's

right oh my God that is true and then I

yeah CU you hit it I think they went

through uh a case lash yeah start to

come out don't stop on my behalf sit

here all day let's talk let's talk to

Tom just so if you invested in the cues

in the NASDAQ and held it for 10 years

you make

7.5x um this is a couple months old if

you invest in the top 10 by market cap

companies in the queue you make 8.7 so

9x if you invest in the S&P over 10

years you make

3.2x um and sorry sorry if you invested

in the um yeah I'm sorry that was

incorrect if you invest in the top 10 of

the cues you make 8.7x and if you invest

in the cues you make 5.2 so 5x 9x why

would I invest in Venture at all as an

Institutional Investor is and is that

going to shift because you have to be in

basically the

top two funds five funds to beat the

returns you make just by buying an index

of the NASDAQ and how how do

institutional investors rationalize

investing in Venture funds at all given

how much much value is acing to public

companies in technology versus the

private companies have you tried the

mtet

Thomas just te up a softy for me right

to to te me off

um first I ask myself that question all

the time right and because we sit in

both public and private markets we bit

have this unique ability to kind of look

at both and try and use one to make

better decisions than the other I think

what's implicit in your question is is

what happen has happened over the next

decade going to happen over the next one

yes right because I also remember a time

where um and I think this was roughly

call it the 2010 period where Google was

like flat for seven or eight years right

um from like 07 to I think the next

seven or eight years right and that's

how the market was digesting Facebook

and kind of things like that so I think

the question you have to ask yourself is

we have now multiple multi-trillion doll

companies right um three trillion doll

companies with app and Nvidia are those

companies going to 10

trillion um and so you know to me it's

not necess as obvious maybe it was

obvious you know 10 years ago and we all

should not have invested in Venture 10

years ago because we should have just

owned Apple and Google and meta and

others you know the question is as

investors we get paid to think about the

next decade right and so I think the

question for you know all of us and is

well what do we think's going to happen

in the next decade

and to me it's not as clear just because

those big companies are so big now right

um is are we going to see the same

pattern occur I mean sometimes law of

large numbers and other things like that

would say no there's another I think

part of this which is when you

invest you have to get some risk premium

for where you're investing and you know

the the complicated thing with Ventures

when I started my business I think when

David and Jason started his actually

also when you started

um your investment

business we typically thought 7 to 10

years were going to get out of these

businesses and return Capital to

shareholders and then all of a sudden

it's doubled and now to your point you

have wars in Europe you have wars in the

Middle East you have this potential

thing sort of Damocles hanging over us

in China and Taiwan there's risk

everywhere and theoretically what is

supposed to happen is you're supposed to

get paid a risk premium to be IL liquid

and not be able to get out over periods

of time where any of that stuff could

happen right so how does that start to

play into the mindset of the investor

that was giving all this money in the

first place how does that change you

know it's a great question I was talking

to one of the partners of a leading

seriesa firm a brand name that that all

of you would know and what was

interesting about their business is that

buying large their average funds were

were doing the same but the problem is

at the time liquidity had doubled and so

if if you just think about it on an irr

basis all of a sudden I'm down half half

right yeah so that's a huge problem and

I think part of the reason I kind of

wanted to to to bring this up is I do

think it's a problem that we need to

kind of address as an industry and I

think it starts with boards and it

starts with Founders right and investors

I was chatting with Bill Gurley um you

know in the green room before and he he

told me he said well look Thomas you

know you're you guys are part of the

problem kind of doing this and I said

you're right you're absolutely right we

contributed to it interrupt what what

did he mean by that that we were giving

liquidity to uh secondaries and Founders

and you know companies that should be

public by giving them private Capital we

were essentially enabling them to stay

private longer making the problem worse

correct is that true yes but if that

were true wouldn't wouldn't value

creation acre to those private companies

and the performance of can I just go

back and just add a Nuance to that but I

said Bill realize that also you guys are

also part of the problem because you're

on the boards that are also letting this

kind of happen right so we have as an

ecosystem right I don't think like to me

the IPO chart is kind of an existential

one for our industry right I mean if we

don't get these companies to go

public um in my

opinion we are um as an industry going

to have to face really hard questions

with the ultimate funders of of our

industry who by the way are not our

funds but are the investors in our funds

right and eventually they are going to

demand from us right um Capital back

well sorry Tom and Thomas just to build

on your point it's actually not even

those nameless faceless people because

so much of that money for example in

Sovereign wealth funds and Pension funds

theoretically come from these citizens

who will at some point need the money

because all of these other existential

issues that they're dealing with and so

these these pension systems and others

will really have to just

justify um while you know they say I'm

going to swing for the fences here to

make up for my deficits but with those

deficits aren't actually made up and

you've paid 2% a year for 13 years and

you burned through a quarter of your

capital in fees and you have nothing to

show for it the jig is going to be up I

think I mean that's totally right and

look I think it's going to be um my

biggest other fear you guys can tell I

have a lot of fears so um but my other

one good investor yes

is that we're creating a worst cohort of

companies because of this right because

at the end of the day I do believe that

you guys all sit on a tons of boards

right I do think that it can be I think

part of why the all-in podcast got so

popular is there was a sense that you

guys were saying to uh the public what

people were afraid to say in public or

what actually you were saying Behind

Closed do right and I think it can be

very difficult in boards to go against a

founder or a CEO even just propose

something a different path right you

know the high school I went to San high

school in Brooklyn had a a sign above

the the door when we walked in every

morning the truth shall make you free

and I think a big part of what we have

to realize in an industry is staying

private and giving the founders massive

amounts of secondary not modest modest

we all agree um and keeping these P

companies public too long um and then

private too long uh

you know it's just bad hygiene and bad

discipline allowing Founders or telling

Founders the VCS are the enemies like

Paul Graham essentially does um saying

governance isn't cool um you know most

of the companies I've invested when they

fail and they don't have governance say

to me if only somebody cared enough to

help us solve our problems and I say

well remember I said would you like to

start board meetings quarterly for one

hour and I'll come to it and they said

yeah and we got advice from people don't

have board Mee me ings you know at some

point we have to have discipline and we

have to accept the truth and the truth

is you know on a on a societal level 40%

of the country does not own equities and

they believe that everybody's getting

rich but them and they're voting for

socialism and they're voting to not let

these companies merge and grow which is

now going to freeze the system and if

the system freezes because of Lina KH

who was picked on a strictly political

basis because she's anti-tech and

because that gets votes from a bunch of

socialist voters uh who feel

disenfranchised now we got to solve the

disenfranchised problem um but we also

have to create jobs and we have to

create the next companies and I I

encourage people who maybe who are

anti-tech who are anti- capitalism to

imagine a world in which we didn't have

Google Apple Tesla Facebook Microsoft

Uber door Dash as our companies in our

country and you know what that looks

like that looks like Europe and that

looks incredibly slow growth and and it

looks like all the growth comes from

government ask question yeah and I know

but I mean we have to be adults in the

room here and tell the truth age I'd

like to ask Thomas a question

before I'm sorry it's the montet talking

clearly I mean it's amazing I think you

bring up something that again is

something that it's the quiet part said

out loud which is maybe we have this

cultural issue and I actually have a lot

of empathy for where this cultural issue

came from your seoa and you've done it a

certain way but then now you're andreon

or your Social Capital your craft you

have to decide how you're going to

disrupt and you say the thing that the

other person is not

saying but then it the it just gets out

of

control what do we do to fix the problem

um how do we collectively identify a set

of solutions what do we do I I think to

me the the most obvious is we have to

take our companies public because to

your point Jason the public market is

the great

disinfectant the public market doesn't

care that you're a CEO and you're going

to give a referral to the other investor

and so you have to become friends and

you know that whole thing or the brand

of your investor is X or your prior

company did y you know at the end of the

day the public market will look at your

business and so I think encouraging

entrepreneurs to go public is really

important right let me ask you a

question the traditional go model is an

IPO you raise capital and you list your

shares at the same time those are two

separate activities people don't realize

they're actually separate your Shares

are available for sale on a public

market and you're raising capital in the

process and you create demand through

the capital raising process such that

your shares will go up as they start to

trade the model of the direct listing is

you just list your shares they start

trading they're going to go up they're

going to go down we've seen a couple of

these in the past few years they're like

as soon as it hits the market it goes

down it goes up and but the market

values the company once the company's

been valued and the market stable maybe

then you raise Capital at whatever the

market tells you the valuation is

however there is a very big aversion to

direct listings in Silicon Valley and it

seems like there's either a failure of

the business or it's one of these

businesses that are such an outlier of

success that it doesn't matter they're

like I don't care I'll just direct list

should direct listings become the kind

of deao model because otherwise everyone

talks about the IPO window being closed

the big institutional investors that

build the IPO book are all sitting on

the sidelines right now they're like I'm

not investing in any new stuff for a

quarter or two quarters so the IPO

windows closed and you can't go public

should we not kind of push all up

Silicon Valley that like this direct

listing might be a better model and I

know some have tried to motivate this

this transition but it's why isn't it

gotten legs and is it a better way so

what I would say to that and trath you

you kind of hit on this with some of the

work that you've done here but I do

think that the recipy to go public is

different first of all I can tell you is

i' you know we've looked at buying IPOs

over 20 years I mean probably thousands

of them we couldn't care less whether

it's a traditional IPO or whether it's

um a direct listing like we care about

the business and the price and the

mechanics are completely irrelevant to

us right um so that's kind of number one

but I do think Founders have to

understand that the public market itself

has changed okay being an active

investor in the public market over 20

years has been a really bad business we

are fighting the machines first of all

right so uh Ken Griff Citadel

Renaissance you know all of these you

know quants and algorithms and that's

number one we're fighting the indices

right massive move away from active

investing to passive so being in the

quote money management business I mean

just look at the chart of tro price and

others it's not been a great business so

the public business has changed and I

think why is this relevant to Founders

because I think there's another big

constituency that's really important as

an example retail

right and so if you can tap into a

retail investor base and convince a

retail base that your business is

worthwhile that's maybe something that

20 years ago you might have said I don't

think that's a good use of time I think

this year is a really good use of time

so going on podcasts right going on CNBC

going out and educating the public about

your business so that you're not just

relying on a frankly shrinking pool of

investors in the public market I

remember when I started in the late '

90s early 2000s you had small cap mutual

funds in Kansas City and other places

their whole business you may remember

was taking small companies and bringing

them to the public market those they're

gone today they're gone today there

there's none left right so we need to

adapt and I think those are the

conversations that we need to be having

I hope that some of the companies that

we listed right you guys know these

companies you're investors in a bunch of

them they're generational opportunities

I hope some of those kind of go public

right and that we kind of get the do

think I just want to build on this um it

is one of the most systematically broken

things and just even be more specific

what happens in Silicon Valley

boardrooms is you have folks that are

playing a very establishment Insider

game and whenever I see that I I just

get offended just at at a core level and

it's about a certain set of Banks and

it's about a certain set of Privileges

and conferences and it's a cabal of

and this is what convinces

these very impressionable people all

kinds of spirous data to say what it is

that they want which is not that the

company goes public or not public but

that they have ball control to help them

influence that decision and that's the

game and you can look at all the major

investment Banks and that's how the game

was played and every time there's been

an attempt at an innovation people push

back severely the the most impressive

one that I remember I mean I was part of

one version of that just a few years ago

with these backs they had a very

checkered obviously set of outcomes um

but it was courageous to try and the and

when I remember I worked with credit s

when I was launching this first one the

reason I picked credit s you know why

because they were the ones that were

totally blackballed in 2004 for doing

the Google listing and do you know why

what Google did they completely pushed

back on the IPO they completely restruct

red it from first principles they

decided how to do it and when I looked

at it and I read the filing documents I

was like this is courageous and

incredible because if other people

follow this it'll unlock money but what

happened to that whole model people put

it on the side and they were like if you

go to credit s this will happen that

will happen so the infrastructure pushes

back on you so I think part of what we

need to do is make people open to

realize direct listings work now for

example I went through a direct listing

with

slack what we did not learn is that the

best price is the day one price so if

you have investor pressure the thing

that I should have done it was a

probably a$ 1.2 billion $1.24 billion

mistake I know it because I distributed

too late I should have sold every

share I didn't know that it was very

hard to know that so I think the point

is that there is this system of weird

incentives that have everything to do

with what Barry Weiss yesterday called

prestige

and nothing to do with what you said

which is disinfecting a business and

just let it win or lose yeah

so very well said and then I I know you

um we'll move on after this but to me

Jason there's one other big thing which

is cosos need to understand that it's

okay for their valuation to go down

right there you know it's like this bet

Noir in the valley that my God if for

some reason your valuation goes down 10

or 15% it's the end of the world guess

what it isn't it's the craziest concept

I I public stock only goes up right it

doesn't like it's like so in Silicon

Valley if your Stock's not always going

up it's like it's a imature yeah it's so

immature yeah and there's these people

that perpetuate that because then they

have ball control and it's just

not who's in a relation who's married

okay we'll give it the final question

just okay how many have you been in a in

a marriage where at some point the

marriage was not always the best you

can't ask that and then ask people to

raise their

hands my point is relationships go up

and down correct friendships go up and

down businesses go up and down I mean

like this is real life well so just this

will be our last question yeah just just

to wrap things up so I really wanted

Thomas to give this speech because I

thought this is the nitty-gritty of what

we deal with in the Venture your slides

are incredible by the way we'll make

them available by the way to everyone so

so

this is really the Straight Dope on what

the Venture Capital industry is dealing

with because we had this massive bubble

in 2020 and 2021 especially the second

half of 2021 where you know we all know

that the FED cut interest rates to zero

and the federal government air dropped

trillions of dollars on the economy and

the way that affected the tech ecosystem

is we had a bubble like probably the

biggest bubble in 2021 that we had since

the do bubble and and since then 2022 23

24 we've been dealing with the Fallout

and The Hangover from that and I think

that's what your if I was to kind of TDR

your slides it's basically we had this

incredible bubble now we're in this sort

of workout period there's a lot of

facets that we double the payback period

that's a real problem yeah so that's so

and so there's more to work out at the

same time I think that we've heard at

this conference that some of these

emerging Tech Trends are are going to be

the biggest we've ever seen Benny off

talked about agents of the Enterprise

Elon talked about robots so at the same

time that I think the tech industry is

feeling this huge hangover and it's you

know frankly if you're like doing all

these workouts with the companies it's

pretty miserable but we're seeing these

upward trends that could be the biggest

yet D David and I said something

backstage I just curious what you think

of this we were looking at your slides

the one that said the 2022 cohort was

below the and uh the comment was and you

can just say yes or no but um that's

probably where the best companies are

going to emerge because they will have

the most darwinian risk of demise yeah

does that kind of counterintuitively

make sense to you or it's not and look

it fits within a framework that I really

believe which someone kind of told me in

the context of China but I think it's

appropriate which is you know um

dictatorships double down and democrac

is self-correct you know markets

self-correct right so I'm a big believer

in our ability as a market to kind of

self-correct it's kind of why I wanted

to show the the slide about the age of

companies right because it kind of

crystalized what we all believe which is

that technology is fundamentally

changing the world of of business and

markets and kind of I still really

believe that so David I 100% agree I

just hope like take the AI um Trend as

an example right part of also why like

talking about this stuff is so we don't

just repeat some of the same mistakes

right because I always you my role as an

investor first and foremost is a version

of the hypocritic oath just Do no harm

don't make things worse right um maybe

you can't help but at the very least

don't like make things worse right and

my one worry I kind of said it a little

bit before is that some of this stuff is

actually making things worse so let's

kind of stop doing what we think makes

things worse and let's try to focus on

again the incredible value creation that

will come we have the chart that shows

it over 30 years we know that technology

creates incredible new companies let's

just kind of let that process play out

ladies and gentlemen very much thank you

Thomas F thank you that awesome thank

you thank you