Dan speaks with GGV Capital Managing Partner Jeff Richards about when investors may return to risk-on mode (2:59), why Jeff would keep buying Amazon stock despite the bear market (10:33), VC legend Bill Gurley's take on the current investment cycle (16:11), how startups are adapting to valuation resets (20:25), and deglobalization's rude awakening to the markets (28:42). Later, Dan talks to Katie Stanton & Alex Roetter of Moxxie Ventures about Katie joining Yahoo's board of directors (42:15), whether Twitter can re-accelerate growth if Elon Musk actually buys it (45:12), how it's a great time for early-stage investors amid a murky outlook for startups (52:11), and why they're bullish on climate tech (58:27).
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NewsTranscript
00:00:00 Hey listeners, it's Dan here.
00:00:01 I want to tell you about a company that I'm really excited about.
00:00:04 It's called Current.
00:00:05 It's a fintech company that's completely disrupting traditional banking.
00:00:08 I'm a new Current customer and it's already helping me and my entire family manage our
00:00:12 finances all from one easy to use app.
00:00:15 So try Current for yourself and get the app by going to Current.com/ok.
00:00:20 That's Current.com/ok.
00:00:23 Current is a financial technology company, not a bank.
00:00:26 Banking services provided by and Visa debit card issued by Choice Financial Group, member
00:00:30 FDIC, pursuant to a license from Visa USA, Inc. and can be used everywhere Visa debit
00:00:35 cards are accepted.
00:00:37 Okay, welcome to OK Computer.
00:00:40 I am Dan Nathan.
00:00:41 Later in the back half of this program, I'm going to be joined by Katie Stanton and Alex
00:00:45 Redder, general partners at Moxie Ventures in Boulder, Colorado.
00:00:49 But first, someone who needs, I think, little introduction, Jeff Richards, GGV Capital.
00:00:55 Jeff, you have been a prolific, I'm going to call you a contributor of OK Computer this
00:01:01 year.
00:01:02 We really have appreciated all your insights.
00:01:04 And I've said this to you time and time again, that one of the things that I find so unique
00:01:09 about your perspectives is your handle on both private markets where you practice specifically
00:01:15 in technology, but also your handle on public markets and kind of the intersection of the
00:01:22 two.
00:01:23 So I really appreciate you coming on.
00:01:24 It seems like every month, it can't be just for the Como Tequila, can it be?
00:01:30 It's amazing.
00:01:31 I should have a bumper sticker that says, "We'll podcast for tequila."
00:01:34 There you go.
00:01:35 And you found a nice home.
00:01:36 So we really appreciate it.
00:01:37 And just shout out, I really enjoyed your Unscripted that you do with the GGV community.
00:01:43 It's a great pod.
00:01:44 And what's the frequency in which that drops?
00:01:46 Once a month or so?
00:01:47 I try to do them once a week, but it ends up being probably once every other week.
00:01:50 And it's on YouTube.
00:01:51 I just tried it on YouTube under GGV Capital Unscripted.
00:01:55 And really the goal there is to give people, it's a video chat, a 30-minute video chat.
00:01:59 So it's short.
00:02:00 Try to make it kind of hard hitting and kind of give people more of the unprepped, no notes,
00:02:07 off the cuff thoughts with people that are leaders in tech.
00:02:09 So founders, I did one with Austin Allred from Bloom Tech last week.
00:02:13 I did one with Erica Schultz, who's the CRO at Confluent a couple of weeks ago.
00:02:17 I did one with Dick Costolo, the former CEO of Twitter, who you know.
00:02:21 I love the format.
00:02:22 I think it's really good.
00:02:23 I think, listen, you do a lot of content.
00:02:24 You pop up.
00:02:25 You're one of those guys, you never need to know the topics ahead of time.
00:02:28 And I think it's kind of fun that way.
00:02:30 And that's also the way that I kind of came into media is on live TV.
00:02:35 And you don't get too much heads up there.
00:02:37 So listen, I appreciate you popping in.
00:02:39 Rick and you have some unfinished business.
00:02:41 I think it had something to do with a Warriors Celtics bet, but I'm going to leave that to
00:02:45 the next time.
00:02:46 Congratulations to your Golden State Warriors.
00:02:49 What a heck of a season and wait around it out.
00:02:51 So I'm happy for you.
00:02:53 He was puffing his chest out when it was 2-2.
00:02:55 So I got to circle back and make sure I collect on whatever the bet was for.
00:02:59 We'll go back and listen and we'll make sure he's not a welter, that guy.
00:03:02 All right, let's talk first a little bit about what's going on in public markets.
00:03:06 That is kind of my wheelhouse.
00:03:07 And then we'll extrapolate it.
00:03:09 We have a bunch of tweets that I'd love to run by you and get your takes on.
00:03:13 But one of the things that's really interesting is that sentiment, it just seems to be getting
00:03:17 worse and worse every week as it relates to publicly traded risk assets.
00:03:20 And we're going to hit some stuff on the private markets here.
00:03:23 And obviously you and Rick and Katie and a lot of our co-hosts and guests over the course
00:03:27 of this year have kind of been indicating you're kind of not being defensive the whole
00:03:32 way down.
00:03:33 You're trying to be really constructive and seeing what the market conditions are and
00:03:36 how based on your experience where you see this stuff going.
00:03:39 And it's much harder to do, obviously, in private markets given the illiquidity and
00:03:44 the transparency and that sort of stuff.
00:03:46 But in public markets, it's funny.
00:03:47 You hear that expression all the time.
00:03:49 History doesn't always repeat, but it certainly does rhyme.
00:03:53 And pattern recognition is a really important sort of thing.
00:03:56 And so last week we had the Fed meeting.
00:03:58 They surprised to the upside as far as 75 basis point hike versus what was priced in
00:04:03 at 50 just a week earlier.
00:04:05 And investors had no idea what to make of it.
00:04:08 And originally they rallied and then they sold off and then they sold off really, really
00:04:11 hard.
00:04:12 A lot of people think about what are some signs of capitulation?
00:04:15 How close are we getting to a bottom after a really long period?
00:04:18 And again, none of these situations are going to be totally comparable.
00:04:23 But today, after a long weekend, we're recording this Tuesday afternoon into the close.
00:04:27 We're getting a nice bounce.
00:04:28 The S&P is up about two and a half percent.
00:04:31 The Nasdaq is up a little less than three percent.
00:04:34 But I got to tell you, Jeff, there's some things that I find troubling.
00:04:37 All this squeezy stuff, the stuff that's down 50 percent of the year, down 60, 70 percent,
00:04:42 they're up a lot.
00:04:43 But things like Meta, which is Facebook, which was one of the largest tech companies
00:04:47 in the world six months ago when the Nasdaq was at its highs, it was trading near a trillion
00:04:51 dollar market cap.
00:04:52 It's down four percent today.
00:04:54 It's making new 52-week lows.
00:04:55 It's down 60 percent from those highs.
00:04:57 And so help me think about this.
00:05:00 When you see that sort of price action, you can say, "Well, that's just one stock."
00:05:03 You know what I mean?
00:05:04 But if the market's trying to find a bottom, I'm just curious how you think about that
00:05:07 because you own some of these big names.
00:05:09 You don't look at a mark to market every day.
00:05:11 Give me a sense of how you're feeling about where we are in this downdraft.
00:05:16 I guess, and this is related to the way we've been coaching CEOs in the private markets
00:05:20 as well, so much of what's happening in the public market right now is disconnected from
00:05:26 performance and upside from here.
00:05:28 And to me, what I've been telling people is, "Look, until people have a reason to be positive,
00:05:33 they're going to be negative."
00:05:34 And we just keep getting negative signals, right?
00:05:36 We don't know when the Fed's going to stop raising rates.
00:05:38 We don't know when inflation's...
00:05:39 We're paying over $7 a gallon for gas here in California.
00:05:42 Until you start to see those trends turn the other way and we have some chatter that maybe
00:05:48 we won't keep raising rates in the next stratosphere, I just don't think people are going to be
00:05:52 in risk-on mode.
00:05:53 I mean, today, you know more about this than I do.
00:05:55 Why the short-term bump today after so much negativity last week and you've still got
00:05:59 so many names that are down 70%, 80%?
00:06:01 I mean, you mentioned meta.
00:06:02 Well, Google's down a third as well.
00:06:03 Google's not going anywhere.
00:06:04 I like Google, Amazon, Apple in terms of big tech, Microsoft better than I do Facebook
00:06:09 just because to me, Facebook has a real regulatory issue, number one.
00:06:12 And number two, their bet on VR, which is where Mark wants to take the company, to me,
00:06:18 feels squishy.
00:06:19 I don't know that that market is as real as he thinks it is.
00:06:21 Whereas I know where GCP, Azure, AWS...
00:06:25 The reason you want to own Amazon is because of AWS.
00:06:29 We know where that market's going.
00:06:30 People are going to continue to consume cloud computing.
00:06:32 The usage there is going to keep going up.
00:06:33 They're going to want more Snowflake.
00:06:35 They're going to want more Confluent.
00:06:36 They're going to want more GitLab, HashiCorp, Databricks.
00:06:39 The infrastructure layer for tech, to me, I can keep buying that with a lot of confidence
00:06:44 even in a bear market like the one we're in because I know the upside three to five years
00:06:47 down the road.
00:06:48 To me, names like meta are a little squishier.
00:06:50 And so I don't own meta.
00:06:51 I famously owned it right after the IPO.
00:06:53 I doubled my money and sold it and then missed the rest of the run.
00:06:56 So I feel stupid about that one.
00:06:58 But I just think right now we've got so much negativity in the market and we haven't really
00:07:01 seen other than the Fed raising rates three quarters of a point, we haven't really seen
00:07:06 much action to try and combat it.
00:07:08 Our president is calling out big companies for price gouging, which doesn't really seem
00:07:13 to be the root of the problem.
00:07:14 We've got labor shortages.
00:07:16 I was just reading an article today.
00:07:17 People were asking why are we having so many problems with the airlines this summer?
00:07:20 Well, there were 45,000 less people working for airlines at the end of last year than
00:07:24 there were at the beginning of the year.
00:07:26 So we've got labor shortages.
00:07:27 We've got a supply shortage and we still continue to have excess demand, which is now cooling.
00:07:33 Obviously you're seeing it in the housing market.
00:07:34 Glenn Kelman was on CNBC this morning saying that a quarter of the homes on Redfin now
00:07:38 are seeing markdown.
00:07:39 So maybe we're at the beginnings of a two or three month window where we might get some
00:07:44 positive news, but until we do, it's tough to be a buyer.
00:07:47 As far as your experience, you were an operator in the 90s and obviously in the 2000s, you've
00:07:53 been an investor, both public and private markets now for maybe two decades or so.
00:07:58 From my experience, and I'm curious what you think, is like you're much more in tune with
00:08:02 operations of businesses and what they should be solving for and all different sorts of
00:08:06 economic environments.
00:08:07 But in my career, most of these sorts of hiccups when they happen, they're much more than one
00:08:13 quarter fixes.
00:08:14 And that's the one thing that I think it makes sense to be a little bit patient here.
00:08:18 When you just mentioned that Amazon example, the company that does a half a trillion dollars
00:08:23 in sales.
00:08:24 And so you tell me what percentage of that is AWS.
00:08:27 And I know the margins on AWS and I know that what accounts for the profitability of that
00:08:32 whole company.
00:08:33 The stock is being punished, having nothing to do with a part of the business that you
00:08:37 love about it.
00:08:39 It's being punished because of the spend on the retail business.
00:08:42 You can tell me over the last 20 years, that's always been a pillar of the bear case when
00:08:47 they spend on prime or they spend on last mile or whatever the heck it is.
00:08:53 And that hurts those margins of AWS, which have been around now for 10, 12, 13 years
00:08:59 or so.
00:09:00 But at this point, the stock is being punished for the retail over expansion.
00:09:04 Now, I just make one point, though.
00:09:06 If all of these companies that have been built with VC capital and zero interest rates over
00:09:13 the last call it five, six, seven years, if a lot of them slow down on their spending,
00:09:19 which they are doing and you're advising companies to do that in the private markets, if a bunch
00:09:23 of them go away, you know, Amazon's AWS and Microsoft's Azure and Google's Cloud, they're
00:09:29 all going to see meaningful deceleration.
00:09:32 And that just gives bears another reason to be negative, despite the fact of trading at
00:09:37 a relative multiple that you might like.
00:09:40 But if the whole market's being re-rated, we're going to be in a period that might go
00:09:43 longer than we think.
00:09:44 So that's the way I kind of think of it.
00:09:46 I think that's fair.
00:09:47 You could see some decrease in consumption.
00:09:49 And obviously, that's why some of these names have traded lower.
00:09:51 You're going to also see that in seat-based software.
00:09:53 So as a lot of the buyers of software, the aggressive buyers of software and infrastructure
00:09:57 are other tech companies, if they reduce headcount, which many have been, then you would see less
00:10:02 spending on seat-based software.
00:10:04 And we're starting to see some of our CEOs come to us and say, "Hey, we don't expect
00:10:07 as much in terms of upsells this year for seat-based licenses."
00:10:11 I guess the thing I think you have to ask yourself, again, is am I a trader or am I
00:10:14 an investor?
00:10:15 If I'm an investor, that trend over the long run, that trend line will be consistently
00:10:20 up and to the right.
00:10:21 And so you may have a down quarter or two on cloud spending, but it's going to be up
00:10:25 and to the right over the next three to five years.
00:10:27 And so as painful as it is to be watching these names go down, I've certainly been a
00:10:31 buyer on the way down and I'm continuing to buy.
00:10:34 But you know that trend line goes up over the long run.
00:10:36 You talk about Amazon, you look at Amazon right now, if you place a valuation of AWS
00:10:41 at about 13 times 2023 revenue, which is not crazy, it might be a little aggressive for
00:10:48 where the market is today, assuming 25% year over year growth, you basically are valuing
00:10:53 the non-AWS part of Amazon at zero.
00:10:56 I'm using math from the last Goldman Sachs report in April.
00:10:59 So I'm not saying the retail businesses were zero, but I think the combined retail...
00:11:04 By the way, let's also remember logistics.
00:11:06 Amazon is building a killer logistics business, right?
00:11:08 You see all those Amazon vans driving around your neighborhood, they're building their
00:11:10 own infrastructure to do delivery and you're basically paying the 1.1 trillion for AWS
00:11:16 and getting the rest for free.
00:11:17 So I just think we're going to look back at this window in time and say, gosh, similar
00:11:20 to the way we looked at '08, '09 and similar to the way we looked at March of 2020, there
00:11:25 were some historic buying opportunities.
00:11:27 It feels very painful in the moment, but I think we'll look back at this as a very solid
00:11:31 buying opportunity.
00:11:32 Just to get all up in your grill for a second though, when you just said 13 times a very
00:11:36 mature business for that AWS, if I said to you seven, then where should this $1.1 trillion
00:11:43 market cap trade if we could all agree that the market is not going to value that retail
00:11:48 business much more than it currently is?
00:11:50 So that's the downside scenario again.
00:11:53 And I think those sorts of expectations, they take time.
00:11:56 We can't bottom in public markets until we all agree that 13 times sales for a mature
00:12:03 business is not appropriate.
00:12:05 So that's kind of my take on it.
00:12:07 I mean, listen, I look at days like today and we do a call at midday with the Fast Money
00:12:12 panelists, our producers and the host, and we all kind of kick around some ideas and
00:12:16 this and that, whatever.
00:12:17 And oftentimes on big movement days like this, they'll say, all right guys, higher or lower
00:12:21 by the close or by the time you're seeing us.
00:12:22 And it's really funny.
00:12:23 I look at a day like today and I see a lot of stuff bouncing because the pessimism was
00:12:27 so bad last week or the last few weeks or so, but I don't see a lot of great action
00:12:32 in general here.
00:12:33 One other thing I would just mention, we had a lot of companies go public in 2020 and 21.
00:12:40 And so you've got a hangover as well of the lockups coming off of those companies.
00:12:44 So even if you took the companies that went public in 2020, six months out, the lockup
00:12:49 expires, the insiders in those companies who typically own 60, 70, 80% of the company,
00:12:53 it takes them years to get out of those names.
00:12:55 So I think you've also got a little bit of a hangover with liquidity from existing investors
00:13:01 pushing shares into the market.
00:13:03 You're starting with a relatively small float on a newly public name where maybe 15 or 20%
00:13:06 of it's public.
00:13:08 When that goes to 30 or 40% and it's more sellers than buyers, that I think has also
00:13:12 been some of the downward pressure on newly public names.
00:13:15 That makes sense to me.
00:13:16 And the last thing, last time we checked in and we had just gotten through Salesforce
00:13:21 and Workday and ServiceNow, some earnings that were off cycle.
00:13:25 And really there wasn't much to indicate that there was just a pullback in demand from their
00:13:31 customers.
00:13:32 So I'm just curious if there's anything anecdotal over the last few weeks that you picked up.
00:13:36 We're getting into quarter end.
00:13:37 We know that Microsoft had that pre-announcement on FX and a lot of people thought that was
00:13:42 kind of weird.
00:13:43 Just curious your thoughts, at least as far as what we might hear about demand as we get
00:13:48 into the end of the quarter, because we might see some pre-announcements early in July before
00:13:52 earnings season starts.
00:13:54 And the only other thing I'd say about that is in really funky macro environments that
00:13:58 we're in right now, yeah, you run the risk if you're overly conservative with your guidance
00:14:03 and your commentary of absolutely getting pummeled.
00:14:06 But by the same token, until we see some of that capitulation, at least on Outlooks, but
00:14:11 also on price where now things are set up to beat going forward, sometimes it's hard
00:14:18 to bottom.
00:14:19 So I'm just curious.
00:14:20 I'm of the opinion that the commentary is going to be bad because you have cover for
00:14:25 it to be bad, but then guidance is going to like slowly get ratcheted down across the
00:14:30 board, even from big cap tech.
00:14:32 And that's how we start to come out of this thing at some point, thinking past 2022 numbers
00:14:38 and really thinking about 2023.
00:14:40 I think that's right.
00:14:41 I think you'll see a lot of public companies caution on second half of the year because
00:14:44 they don't know what's coming.
00:14:46 There's not a lot of upside in guiding high and then missing.
00:14:49 And anybody that's in seed-based software in particular is looking at the trend in terms
00:14:55 of hiring and saying, "Gosh, if people aren't adding 10, 20% to their workforce or they're
00:15:00 declining then I better not guide more aggressively for the back half of the year."
00:15:04 But then they're also setting themselves up for a stronger 2023 because they know that
00:15:08 the long-term demand in most of these categories, whether it's cloud infrastructure, low code,
00:15:13 no code, even the FinTech players who've just gotten absolutely murdered.
00:15:16 We haven't talked much about that, but the FinTech category has just gotten obliterated.
00:15:20 Those markets aren't going away.
00:15:22 And particularly when you look at the players, I love some of the players who play outside
00:15:25 of the US, companies like Square, Adyen, D-Lo, those emerging market economies are still
00:15:30 in their infancy in terms of the market opportunity that those players are going after.
00:15:34 It's going to take them a while to grow into the TAM and to generate real profits in those
00:15:38 markets, but those markets aren't going anywhere.
00:15:41 It's interesting that you mentioned some of the FinTech.
00:15:43 I think I mentioned to you last week that in May, I bought a little PayPal.
00:15:46 The stock had traded $310 in the summer of 2021 at its highs, and now it's trading at
00:15:53 72 bucks.
00:15:54 And I look at a company's valuation now is probably cheap, but could get cheaper.
00:15:59 And the stock's down today.
00:16:00 The stock is down today in a NASDAQ that's up 2.5% and it's down from where I bought
00:16:05 it too.
00:16:06 But it's another example where the expectations aren't low enough for a lot of these companies
00:16:11 that overshot to the upside on valuation.
00:16:14 I want to hit a few tweets here.
00:16:15 Here was one from Bill Gurley of Benchmark Ventures.
00:16:18 I would call him a peer of yours.
00:16:20 You'd probably call him the GOAT as it relates to early stage VC investing, but he had a
00:16:25 tweet thread.
00:16:26 I think it caught a lot of steam last week.
00:16:28 I want to get your take on this.
00:16:30 So it starts out by saying, "Having survived two previous market resets, '01 and '09,
00:16:35 people frequently ask me how 2022 market reset is different and how it's the same.
00:16:40 The obvious similarity is the valuation multiples have collapsed.
00:16:43 We went from a glass, a very full mindset to one with many concerns."
00:16:47 Jeff, give it to me.
00:16:49 I know that you liked this thread and you've talked about a lot of these themes with myself
00:16:53 and Rick and Guy over the course of this year.
00:16:56 Give me your takeaways on this thread in general.
00:16:58 I loved it and I do think Bill clearly is one of the greatest investors of our generation
00:17:03 and I hope to emulate his success.
00:17:05 I think what was great about it is he encapsulated a bunch of points.
00:17:09 One, expecting people to not participate in the run-up and build companies aggressively
00:17:13 and quickly and raise capital is silly.
00:17:15 They were playing the hand that they were dealt.
00:17:17 But the shock of the shift has also caught people by surprise and it's caught their employees
00:17:23 by surprise.
00:17:24 And so he hits a bunch of sub points that are really important for people to understand.
00:17:28 The point that anybody who's of our generation, I would say in their 40s, 50s, who was here
00:17:32 for the dot-com bubble, who was here for '08, '09, I was just talking with Ryan Dennehy
00:17:37 from Electric, who you know, this morning.
00:17:39 And I said, "Look, the thing we all know is we will come out of this.
00:17:42 We are in a very difficult period right now.
00:17:44 We need to navigate it.
00:17:45 You will come out of it if you're running a company that has capital, has runway, and
00:17:49 is well run."
00:17:50 The people that take longer to acknowledge the shift in the market and the analogy that
00:17:54 I've been using for folks because it's kind of visually you understand is, imagine you
00:17:58 were driving a race car at 230 miles an hour for the last five years on a straightaway.
00:18:02 And all of a sudden there's a turn.
00:18:04 If you keep going 230 miles an hour through that turn, you will fly off the racetrack
00:18:08 and you will die.
00:18:10 And so you have to adjust course.
00:18:11 It's not fun, but you got to adjust course.
00:18:13 You got to make that turn.
00:18:14 You got to slow down.
00:18:15 The best founders started making those changes in December, January, February.
00:18:19 Folks are still making those changes today.
00:18:21 And there's a lot of folks on Twitter who sort of make fun of Phil's tweets and others,
00:18:25 but all he's trying to do and all I've been trying to do and all others are trying to
00:18:27 do is say, "Look, you don't have to put your hand on the stove and learn this the hard
00:18:31 way.
00:18:32 We've already learned this.
00:18:33 Just listen to some of the OGs who've been through a few of these cycles.
00:18:37 We can save you a lot of pain and a lot of heartache."
00:18:39 I did my unscripted chat with Austin Allred from Bloom Tech the other day.
00:18:42 He said to me the other day, he said, "Knowing what I know now, I could have built this company
00:18:46 in half the time with half the capital."
00:18:48 And so, so much of what you're doing as a founder or CEO is learning on the fly.
00:18:52 And a lot of what folks are trying to do with social media and elsewhere is to share lessons
00:18:56 learned so that we can save folks the time and heartache of learning those lessons painfully.
00:19:00 But look, we don't know how long this is going to last.
00:19:02 Like you just said, we could be coming into a scenario in the fall where rates are flat
00:19:06 or dropping and things are looking better and inflation is going down and people are
00:19:09 optimistic about 2023.
00:19:11 Or we could be in a more challenging situation.
00:19:13 And the only thing you can do as a CEO, make sure you're running a well-run company.
00:19:16 Make sure you've got plenty of capital.
00:19:18 Hopefully you've got good board members around you to give you honest and objective advice.
00:19:22 Another funny conversation I had with a CEO the other day, a CEO of a private company,
00:19:26 I was telling him about a public company that's trading at about three and a half times ARR.
00:19:30 And he said, "Well, man, I'm glad I'm not in their shoes."
00:19:33 And I said, "You are, you just don't know it."
00:19:36 The public market gets weighed every day.
00:19:39 And in the private markets, we tend to think people only have to weigh themselves once
00:19:43 a year or every 18 months when they pop their heads up to raise money.
00:19:45 But I think what everybody's realizing and what we all have realized is how quickly those
00:19:49 public market valuations impact private market valuations than they have and they're coming
00:19:53 all the way down to series A and C.
00:19:55 But again, as a founder, I started my first company in '97 and I lived through the dot
00:19:58 com bubble.
00:19:59 It was brutal.
00:20:00 And then I started my second company in 2003.
00:20:02 There isn't a minute I look back and say, "Gosh, I wish I'd raised money at a different
00:20:06 price."
00:20:07 Like you move on, you build your company, you live the rest of your life and we will
00:20:10 power through this.
00:20:11 The other tweet Bill had was talking about some of the epic companies that come out of
00:20:14 '08-'09, Snapchat, Square, Stripe, Meta, who you mentioned, Twilio, all these companies
00:20:20 that were founded in that generation.
00:20:22 We're going to see the same thing happen again here.
00:20:24 There are going to be some really great companies that get built out of here.
00:20:26 It's just humbling time for investors and it's a humbling time for founders to have
00:20:29 to do the reset.
00:20:30 Yeah.
00:20:31 Well, talk to me about that because if you think about a lot of really genius people
00:20:34 who worked at some of these huge incumbents and now you see the stocks get cut in half
00:20:39 and maybe their options are underwater and maybe they start laying people off and just
00:20:43 the vibe changes, right?
00:20:45 It's just a thing that happens and downturns.
00:20:47 There's going to be some exceptional people leaving these places to solve big problems.
00:20:53 Talk to me a little bit about the mindset of an investor like you.
00:20:56 You guys go from early stage to much later stage sort of stuff.
00:21:00 Bill also had a tweet about dating back to '08.
00:21:03 Somebody quote tweeted something that he had written and just saying that while a lot of
00:21:06 their peers were cowering, Benchmark was open for business and he's like, "We're still
00:21:10 open for business.
00:21:12 Don't smash it."
00:21:13 Does it just have to do with valuation at this point?
00:21:15 You're still looking to back great founders who are looking to solve big problems.
00:21:19 How early do you feel like we are in that sort of reset where you as an investor want
00:21:26 to reevaluate your strategy given the change in the macro environment?
00:21:29 Yeah, and it was Eric Vistria who's a partner at Benchmark who tweeted out and mentioned
00:21:33 Twitter 2009, Instagram 2011, Uber 2011, WeWork 2012, Elastic 2012, Snapchat 2013.
00:21:41 We're not making this up when we say that there were some epic companies built in the
00:21:44 immediate period after the GFC.
00:21:46 I think we're still in the second or third inning of the reset, of the valuation reset.
00:21:52 We have to sort of get to the point where some of the companies that we really want
00:21:55 to be investors in and we have any given time we're tracking, call it 50 to 100 companies
00:21:59 in the US alone, we're meeting several thousand per year.
00:22:03 We're narrowing that down to a list of 50 to 100 that we really want to be investors
00:22:07 in.
00:22:08 Then you're just trying to get alignment between at what price would I want to be an investor
00:22:12 in that company and can I reasonably forecast out the kind of venture type returns that
00:22:17 we want to see, which we always think of as like 10X or more from that valuation.
00:22:22 If the founder is still at 1.2 billion on 10 million of ARR, I may have a hard time
00:22:26 getting there on that map.
00:22:28 But if that founder six months later is coming in and saying, "Gosh, Jeff, we've really enjoyed
00:22:31 building the relationship with you for the last two years.
00:22:34 We love the fact that you guys know our category.
00:22:36 You've got a bunch of relevant investments in our space.
00:22:38 At what valuation would it make sense for you to invest because I'm open and I'm considering
00:22:42 taking in new capital?"
00:22:43 Then we'll get into a rational conversation about where it makes sense.
00:22:48 We are absolutely telling our team, "Guys, we are going to make some of the best investments
00:22:52 in the next five years in the next six to nine months because we have companies we've
00:22:55 been tracking who are going to want capital and they're going to want investors that are
00:22:58 rational long-term players and we think we fit that profile."
00:23:02 I think back to your point, the industry has changed a lot.
00:23:05 When I got into venture capital in 2008, you had early stage, you had growth stage, and
00:23:09 then you had crossover.
00:23:10 Today, what you see with most of the larger funds, where it's Sequoia, Andreessen, GGV,
00:23:15 Bessemer, etc., we have a $650 million fund dedicated just for C&A.
00:23:19 So valuations below $100, we've got $650 million to invest with those folks and then another
00:23:25 $1.8 billion to invest in Series A through IPO.
00:23:28 The theory there being, if we meet a great founding team in a category we love, we want
00:23:33 to be able to put capital to work in that company throughout the life of that company.
00:23:36 So you look at a company like HashiCorp, which went public last year, we first invested in
00:23:41 the Series A and invested in multiple rounds for that company.
00:23:45 Most venture capital investors have adopted that model and I think it's a really good
00:23:49 one to maintain ownership and put more of our LP capital to work into companies where
00:23:53 we have a bit of an unfair advantage.
00:23:55 We're on the board, we know the company, we know the teams that tend to have capacity
00:24:00 to exceed their forecast, which then I think back to your point about looking at both public
00:24:05 and private markets also gives us a little bit of an advantage when a company does go
00:24:09 public because we know the companies and the teams that tend to under-promise and over-deliver.
00:24:15 You see that today.
00:24:16 I mean, one of Bill's tweets, he also said, "Listen to this podcast with Frank Slootman.
00:24:19 You want to go toe-to-toe with Frank Slootman?
00:24:21 He doesn't care about the macro.
00:24:23 That guy's one of the hardest charging people in tech and he is going to be powering through
00:24:26 the growth of Snowflake and that's why one of the reasons I think you want to be a shareholder
00:24:29 of Snowflake."
00:24:30 Let me ask you about this.
00:24:32 You've talked about Slootman and I've heard him speak and he's just revered by the investment
00:24:36 community, both public and private.
00:24:39 My question to you is that, who is it on?
00:24:42 Was it on the company?
00:24:43 Was it on their expectations?
00:24:44 I mean, at its highs, Snowflake, which is not profitable on a gap basis, was trading
00:24:49 at north of like 50 times sales in the public markets, right?
00:24:54 Here's a company that's going to do, I don't know, like 2 billion this year, 3 billion
00:24:59 next.
00:25:00 So you can think about 4 billion the year after that.
00:25:03 I'm just looking at consensus estimates here and it still trades at 19 times sales this
00:25:08 year and again, unprofitable.
00:25:10 Well, let me ask you a question.
00:25:11 The guidance that they've officially given is for fiscal year '29, which again is seven
00:25:16 years out, revenue guide of 10 billion.
00:25:19 So one of the fastest growing companies in history, which it is the fastest growing software
00:25:24 company in history, but they've guided to 10 billion in fiscal year '29.
00:25:27 So if it trades at 19 times this year, what is it trading at?
00:25:30 And are you willing to hold the stock for that period of time or do you have other things
00:25:34 you want to go own?
00:25:35 I think that's the question.
00:25:37 Is there something else I'd rather own?
00:25:39 For example, you know I love Blackstone.
00:25:40 I bought some more Blackstone down at $90 a share.
00:25:43 Why?
00:25:44 It's paying a 6% dividend.
00:25:45 I want to own both of those because they're giving me sort of two ends of the spectrum.
00:25:48 But I think that's the question.
00:25:50 When you look at the reason people have traded out of Snowflake, I don't think it's because
00:25:53 they doubt the long-term prospects of the company.
00:25:55 I think it's just that they're saying, "Gosh, it looks expensive versus something else I
00:25:59 can go own in the market today."
00:26:01 Whether it's, I don't know what it is.
00:26:03 What is it?
00:26:04 Shake Shack, United Airlines?
00:26:05 What are they buying?
00:26:06 But that sounds like an eternity, 2029.
00:26:08 I mean, Slootman, let's be frank, won't be there any longer and he won't be on the hook
00:26:12 for that long-term guidance.
00:26:14 And the company, even five years out, is expected on a gap basis not to be profitable.
00:26:18 So you tell me, are those 70% gross margins going up or down between now and then?
00:26:23 And I guess these are the things that I like.
00:26:25 People maybe look at me and say, "Okay, well, you're just glass half empty."
00:26:29 I look at it and say, "Okay, well, here's a stock that's down 65% of the year.
00:26:33 It's down a lot more from its highs."
00:26:35 I don't blame the company.
00:26:36 I mean, they put out guidance and it's not like it's Elon Musk guiding to this stuff.
00:26:41 I mean, he's obviously demonstrated during different market cycles on many different
00:26:45 companies.
00:26:46 So he deserves all the trust you're willing to give him.
00:26:48 But again, this is not on the company that it trades at 20 times sales down 75% from
00:26:53 its all-time highs.
00:26:54 To me, maybe it's a combination of some bankers and some VCs and who knows?
00:26:59 You know what I'm saying?
00:27:00 The market changed, right?
00:27:01 I mean, the weather changed.
00:27:02 We were sitting on the beach, 90 degrees out, and everybody was putting on suntan lotion.
00:27:06 It went from 90 degrees to 45 degrees.
00:27:08 I don't think as a public company CEO, you can shift on a dime based on the way the market
00:27:14 views your company.
00:27:15 So to your point, this is a company that has been built and there are a bunch of these
00:27:19 companies.
00:27:20 A lot of the high-growth tech companies that are growing, a lot of the cloud and software
00:27:24 names that are growing at a faster clip than we've ever seen companies grow at in history.
00:27:28 As you know, companies used to go public and their growth rate slowed down.
00:27:31 What's been happening in the last few years is companies have been accelerating.
00:27:34 A lot of those companies have been built in an era where you were incentivized to grow
00:27:39 as fast as you could and take as much market share as you can.
00:27:42 What I think is a really good question is, have we permanently moved away from that?
00:27:47 Or is this just a blip and we're going to go back to a mode where people say, "No, gosh,
00:27:51 I want those big TAM high-growth rate companies because I believe the long-term margins and
00:27:55 cash flow are going to be really strong"?
00:27:57 Or have we just gone into a five-year bear market for tech?
00:28:01 I think it's the former.
00:28:02 I think we will go back to a market where people do want to own these names.
00:28:06 I just don't know what point in time that's going to be because right now they're moving
00:28:09 their dollars and their capital into less risky assets.
00:28:13 I don't blame them.
00:28:14 To me, I think it's a little of both.
00:28:16 What's really changed is the inflation equation, which also means interest rates, which cost
00:28:21 a capital, and the amount of money that was flowing into VC out the risk curve, if you
00:28:27 will, by some traditional asset pools.
00:28:30 That's had a lot to do with it too.
00:28:31 I really do think that a lot of what we learn about how sovereigns deal with all of this
00:28:37 debt with a period of very low interest rates and really a series of black swan events,
00:28:44 which have exasperated a lot of this sort of stuff.
00:28:46 A lot of people weren't modeling in a global pandemic and what another round of quantitative
00:28:52 easing would mean for risk assets.
00:28:55 Again, that's all going to work itself out.
00:28:57 A really interesting question is what happens if Russia doesn't attack Ukraine?
00:29:01 That was a Molotov cocktail on the cake.
00:29:04 Now, we had a bunch of layers to the cake that were already built with supply chain
00:29:07 constraints, labor constraints, and rising inflation.
00:29:09 But I think that Russia attacking Ukraine, increasing fuel prices, it's going to have
00:29:14 an impact on food.
00:29:15 Those have been significant.
00:29:16 But just going back to the point about what is in favor and what's out of favor, I love
00:29:20 this because it's such a stark narrative.
00:29:22 There's no one on the planet who can make the argument that the upside for IBM over
00:29:26 the next five years is greater than Snowflake.
00:29:28 And yet, if you look at IBM stock has gone nowhere for a decade.
00:29:31 It has been a terrible stock to own.
00:29:34 And yet, IBM is up 1.3% on the year and Snowflake's down, what is it down?
00:29:38 40%, 50%.
00:29:39 That tells you everything you know right now.
00:29:41 People have shifted out of high growth, high risk assets.
00:29:44 They've shifted into things that look safe, but don't have any upside.
00:29:48 IBM is not going to give you any upside over the next five to 10 years.
00:29:51 I just don't know how you could make the bull case for IBM.
00:29:54 They're nowhere on innovation.
00:29:55 Their marketing is complete BS.
00:29:57 And so we will see a phase where people will start to feel like these valuations are rational
00:30:02 for tech.
00:30:03 One of the other challenges, you know, right now, a lot of major tech hedge funds are down.
00:30:07 They're down big.
00:30:08 The big folks that were moving a lot of the markets in tech were hedge funds.
00:30:13 Those funds were down last year.
00:30:14 They left the S&P last year and they're down this year.
00:30:17 And so as you've got existing investors moving out of recent IPOs, there isn't a real strong
00:30:23 buyer base other than maybe your big mutual funds like T. Rowe and Fidelity.
00:30:26 And so until those tech hedge funds get off their heels and can start to be a buyer of
00:30:30 tech again, I think it's going to be a little rough sailing.
00:30:32 Well, listen, they're going to do things differently.
00:30:34 Tiger Global being down 52% off of peak assets, that changes the behavior a lot of those asset
00:30:39 pools going forward in a lot of the strategies.
00:30:41 And that's just something we learned after the financial crisis.
00:30:44 And that is not a one or two quarter fix.
00:30:48 Last thing, maybe this will be a little more fun.
00:30:50 Dan Loeb of Third Point, he is a, used to be an activist, but a prolific public markets
00:30:56 investor.
00:30:57 I know they do plenty of stuff in privates too, but he tweeted this the other day and
00:31:00 I think you and I both kind of appreciated this.
00:31:02 Maybe that's something to do with the gray hair we have.
00:31:05 But he said, I think we are about to hear a change in the sneering of OK Boomer to reflect
00:31:10 a change of meaning from you're too old to understand.
00:31:14 I'm too busy to explain it to you out of respect.
00:31:17 OK Boomer, thank you for sharing your wisdom.
00:31:20 I had no idea issuing stock should be treated like an expense and appreciate your movie
00:31:25 recommendations, especially Enter the Dragon and Godfather 1 and 2.
00:31:30 Give me your take on that because it's really kind of funny.
00:31:33 We were wearing that OK Boomer thing as the badge of honor and we are certainly not boomers,
00:31:38 but we would hear stuff like that and they just did not want to hear our movie recommendation.
00:31:42 What's up with that?
00:31:43 The good news is most people appreciate classic rock.
00:31:46 I find even the younger generation appreciates Led Zeppelin and Aerosmith.
00:31:50 One of the things that I was having a conversation with one of our LPs when COVID hit in February
00:31:55 March of 2020 and I said to her, I said, you know, it's at moments like this where I really
00:32:00 value the experience in our firm.
00:32:02 We have people who've been through several market cycles, the ups, the downs, and that
00:32:06 ability to remain calm when the shit hits the fan.
00:32:11 There's almost no other way to learn it than from experience.
00:32:14 So I think he obviously was being snarky and probably alluding to some of the things that
00:32:18 have gone on in crypto and elsewhere.
00:32:20 But I do think in moments when the seas get choppy, people value experience.
00:32:24 And I have certainly seen a lot of wisdom dispensed from around the boardroom and it
00:32:29 tends to be coming from people who've been through a few cycles.
00:32:33 And a lot of advice to founders to remain calm, to raise capital early, to reduce heads
00:32:38 sooner rather than later.
00:32:40 I just think in moments like this, we all value experience.
00:32:43 I thought it was funny.
00:32:44 And we've been in an era where the world sort of lost its mind on low rates for the last
00:32:48 five years.
00:32:49 We're probably going back to a mode where we will be in a much more rational environment.
00:32:54 But some people have a really hard time digesting that.
00:32:56 I mean, Gurley's tweet made that point as well.
00:32:58 You can ignore it, you can ignore it, you can ignore it until finally you wake up and
00:33:01 realize that you're sitting on the beach and it's 40 degrees out.
00:33:04 The environment has changed and it's just hard to acknowledge it unless you've been
00:33:06 through a few.
00:33:07 Yeah, it's funny.
00:33:08 I would just say the analog to public markets is not too different.
00:33:12 For all of those years with unusually low rates after the financial crisis, there were
00:33:16 fits and starts.
00:33:17 There were periods where global growth was waning here and this central bank was going
00:33:21 to do that and this outbreak over here.
00:33:23 I mean, a lot of the similar stuff that all got mushed together over the last couple of
00:33:28 years.
00:33:29 But you know what the kids were saying, BTFD, buy the fucking dip, right?
00:33:32 And it worked until it didn't.
00:33:34 And then it worked again during COVID.
00:33:36 I don't know if you saw this Bill Maher thing from the other night.
00:33:39 He was kind of mansplaining this woman on his show when she said the market crashed
00:33:44 during COVID.
00:33:45 And he's like, "The market didn't crash."
00:33:47 What's really funny is the stock market sold off the fastest it had ever dropped,
00:33:52 35% from an all-time high, but he missed it.
00:33:55 And I'm not blaming him because it only lasted for a few months.
00:33:58 You know why?
00:33:59 Because the Fed threw trillions of dollars at it.
00:34:01 The Treasury threw trillions of dollars at it.
00:34:03 Risk assets just ballooned and it didn't feel like anything.
00:34:07 Take the COVID blip from February to April out of the S&P chart and it looks bottom left,
00:34:12 upper right, 45 degrees.
00:34:13 So to me, I think that that mentality is gone.
00:34:17 That's out.
00:34:18 And so I think the one thing that I keep saying, what's similar going back to past cycles
00:34:23 of the financial crisis and the dot-com, when the NASDAQ corrected 87% from its all-time
00:34:29 highs in March of 2000 to its lows in '02, it didn't make a new high for a decade.
00:34:35 And so the idea that it's all going to be like what we saw in early 2020 or any of those
00:34:40 times you BTFD'd since the financial crisis, that's probably what's different.
00:34:45 So it's going to take a different mindset.
00:34:48 It's going to take a different level of patience.
00:34:50 It's going to take maybe even a different return environment, like you're kind of resetting
00:34:55 your own returns.
00:34:56 So some of those venture returns might look really different with rates where they are
00:35:00 and access to capital, what it is.
00:35:02 I just want to add one thing to that.
00:35:03 I mean, look at the returns.
00:35:05 S&P 500 was up 18.4% in 2020, 31% in 2019, down 4% in '18, up 21% in '17.
00:35:14 I grew up in an era where a 5% to 10% up year was considered exceptional.
00:35:19 And so we just were in a very interesting time period.
00:35:22 I mean, the reason hedge funds were created back in the day was people wanted to outperform
00:35:27 the 5% to 10% return.
00:35:29 It's been tough for them the last few years because the S&P and the NASDAQ were ripping
00:35:33 on their own.
00:35:34 But I just think we're going to be into a little bit more normal environment.
00:35:37 It's probably going to be a better stock pickers environment.
00:35:38 You actually have to do some work and find companies that can outperform.
00:35:41 And we certainly are bullish in terms of our investment strategy for the next 12 months.
00:35:46 I think everybody's been humbled.
00:35:48 I mean, the smartest investors in the world who should have seen we were at the top were
00:35:52 buying.
00:35:53 Everybody's been humbled.
00:35:54 And so we've all been reminded that the market is efficient and rates do matter.
00:35:58 I think some of this was unprecedented.
00:36:00 I mean, did we all see COVID creating a labor shortage and a supply chain shortage and the
00:36:05 geopolitical issues, Russia, Ukraine?
00:36:08 Man, that would have been hard to forecast that Molotov cocktail all coming together
00:36:11 over the last 18 months.
00:36:12 So we've got to play through it.
00:36:14 I think the most important message for founders who listen to your podcast is don't let all
00:36:18 that distract you.
00:36:19 Go build a great company.
00:36:20 And if you do that, the rest will take care of itself.
00:36:23 And that's the beauty of conversations like these.
00:36:25 If I'm a talented builder, go build.
00:36:28 The macro environment shouldn't really matter that much.
00:36:30 I mean, the cost of the capital is actually the big differentiator.
00:36:34 And I'll just say this about S&P returns, what you just mentioned.
00:36:37 In 2020, when the market crashed and we're in the middle of a global pandemic, the stock
00:36:41 market didn't close down.
00:36:43 If you want to take it back to the inflating of the tech bubble, in 1995, the S&P was up
00:36:48 37 percent.
00:36:49 In '96, it was up 23 percent.
00:36:51 In 1997, it was up 33 percent.
00:36:54 In '98, 28 percent.
00:36:56 In '99, 21 percent.
00:36:58 So during those periods, we had long-term capital.
00:37:01 We had an Asia crisis.
00:37:02 We had a Russian sovereign debt.
00:37:04 It was not an easy trip.
00:37:05 Everybody knew that was an insane period of return, but it got corrected.
00:37:09 2000 was down about 10 percent.
00:37:12 2001, down about 12 percent.
00:37:13 NASDAQ down much more.
00:37:15 And 2002, down 22 percent.
00:37:17 The third year of that bear market was the gut punch.
00:37:20 And then we had these sorts of returns.
00:37:22 We had a ricochet in '03, up 29 percent, but then the returns were kind of not great.
00:37:27 '04, '05, '06, and '07, they were between 5 and let's call it, I don't know, 15 percent
00:37:34 or so.
00:37:35 And then obviously the financial crisis.
00:37:36 So when you just think about some of those returns, we pulled forward a lot of return
00:37:41 where rates were and the access to capital and just kind of the YOLO investment environment.
00:37:46 I'll just leave you with that, Jeff.
00:37:49 No, I think it's important context.
00:37:51 A lot of people weren't here for that.
00:37:53 I'm a little more optimistic just because we had like 250 million internet users in
00:37:57 the world in 2000.
00:37:59 The market opportunities that tech companies were going after were a fraction of what they
00:38:03 are today.
00:38:04 And so the optimist in me says that this will be shorter lived because the market opportunities
00:38:08 are so big and they're global in nature.
00:38:10 And even if you look at categories like FinTech where the penetration is so low, I think '23,
00:38:15 '24, '25 are going to be very exciting years.
00:38:17 I don't know how the market's going to value those companies.
00:38:20 The best thing you can do as a founder or CEO, just go execute.
00:38:23 Eventually value gets created.
00:38:24 I mean, there are so many moments in time where Amazon, Microsoft, Google, people doubted
00:38:28 the future of those companies and they're trillion dollar companies.
00:38:31 It does work itself out over time, but it could be a rough year.
00:38:35 Well hopefully you'll continue to come back for the tequila.
00:38:38 I mean, you'll continue to come back for the conversation here, man.
00:38:41 I learn every single time.
00:38:43 So thank you, Jeff, for joining us on OK Computer.
00:38:46 I appreciate it, bud.
00:38:47 Thanks for having me, man.
00:38:48 All right.
00:38:49 Next up on the show, we have Katie Stanton and Alex Redder from Moxie Ventures.
00:38:53 Hey, Dan.
00:38:56 What up, guy?
00:38:57 You're into this FinTech.
00:38:58 What's all this I'm hearing about Current?
00:39:00 You're going to like this guy.
00:39:01 Current is a FinTech company that's completely disrupting traditional banking.
00:39:05 Wait a second.
00:39:06 Does that mean I don't have to drive to the bank anymore?
00:39:08 Yeah, exactly.
00:39:10 I'm a new Current customer and I manage all of my finances from one easy to use app.
00:39:14 Well, I got to get this app, but where can I learn more?
00:39:17 It's super easy.
00:39:18 Go to Current.com/OK, OK-A-Y, and download the app.
00:39:22 That's Current.com/OK.
00:39:25 Current is a financial technology company, not a bank.
00:39:28 Banking services provided by and Visa debit card issued by Choice Financial Group, member
00:39:32 FDIC, pursuant to a license from Visa USA Inc., and can be used everywhere Visa debit
00:39:37 cards are accepted.
00:39:38 Hey, it's Dan here.
00:39:39 I'm excited to tell you about a $1 billion app that's disrupting the way people like
00:39:43 you and me invest.
00:39:44 It's called Masterworks.
00:39:46 They offer investors access to an estimated $1.7 trillion alternative asset that was once
00:39:51 only accessible by the ultra wealthy.
00:39:54 I'm talking about blue chip art.
00:39:56 Blue chip art has seen price appreciation that's outpaced the S&P 500 by 164% from
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00:41:14 Okay, and we're back.
00:41:17 Okay, computer, I'm here with Katie Stanton.
00:41:21 You guys know Katie.
00:41:22 She is a co-host of this fine podcast and her partner, Alex Redder of Moxie Ventures.
00:41:28 He is a returning guest.
00:41:30 How are you guys?
00:41:31 We're great.
00:41:32 Thanks for having us.
00:41:33 Hey, Dan.
00:41:34 Thanks for having us.
00:41:35 I was supposed to do this IRL, as the kids say here, in Boulder this past weekend, and
00:41:40 I was unable to make it.
00:41:41 But Katie, you tweeted something I thought was really interesting.
00:41:44 You said you fulfilled your final requirement towards Boulder residency.
00:41:48 What did you do this past weekend, Katie?
00:41:50 Yeah, well, thanks to you, I went to my very first Dead show, and it felt like the best
00:41:55 place to go in Boulder, Colorado.
00:41:58 And I got to go with your brother and your two sisters.
00:42:00 It was the best thing ever.
00:42:02 And Alex, you're actually a proper Dead fan, aren't you?
00:42:05 And you didn't make it, and you're hometown of Folsom.
00:42:07 I didn't make it this time.
00:42:09 I've been to that show at Folsom Field before.
00:42:11 It's super fun.
00:42:12 I was leaving town for 10 days, and it kind of all went to pieces with family logistics
00:42:16 stuff.
00:42:17 But I can hear the show from my house, so that's cool, too.
00:42:19 It's kind of the mecca for, I guess, hippies, wouldn't you say there, Katie?
00:42:22 And the picture that you tweeted out with Bob Weir in all of his glory with the flat
00:42:27 irons behind it at Folsom Field is pretty amazing.
00:42:29 I'm kind of bummed I missed it.
00:42:31 Well, let's get to it, people, because, A, I want to definitely hear what's going on
00:42:35 with the Moxie portfolio and just talk a little bit about the macro.
00:42:38 And I know that you guys are generally early stage, and I think some of the things that
00:42:42 some of your peers in VC are focused on right now as it relates to the macro are probably
00:42:48 more sensitive to their portfolios than some of the things that you guys are thinking about,
00:42:53 invested in, advising companies on.
00:42:54 But it's definitely something that I think needs to be on everyone's radar here as far
00:42:58 as how quickly things are moving as it relates to the economy here.
00:43:03 But first things first, Katie, I saw a headline last week.
00:43:05 I think I kind of knew about it.
00:43:06 It was on the DL a little bit, but you joined Yahoo's board.
00:43:10 Now, a lot of people, and I made a joke on Twitter, maybe it wasn't great or not, I said
00:43:14 it was dusting off my Yahoo Finance message board avatar or whatever from the late '90s.
00:43:20 And I think that people new to this environment forget what a behemoth Yahoo was in the late
00:43:26 '90s.
00:43:27 It was really like the Apple computer of that period in a way as it relates to tech stocks
00:43:32 and being a poster child for it.
00:43:33 So you had said at the very first pod that we did last fall that Yahoo Finance was one
00:43:39 of your first jobs out of college, and it was one of the first jobs you actually loved.
00:43:44 Talk to me about coming full circle, joining this board.
00:43:47 It was just bought by Apollo out of Verizon Media.
00:43:52 Tell us a little bit about this because it's kind of amazing.
00:43:55 I'm not going to call it a bookend, but it seems like the new start of a journey with
00:43:59 Yahoo Finance.
00:44:00 Yeah, I'm super honored and really excited by it.
00:44:03 So as you know, I'd been actually a banker in New York, which was miserable and I hated
00:44:07 it.
00:44:08 And I remember I was working on a trading floor, I had Bloomberg at my disposal and
00:44:13 was like, "God, I got to get out of this job."
00:44:15 And I did a search on Yahoo, and this is in 1999, and Yahoo had just started putting out
00:44:20 a flicker of stock content.
00:44:22 So just like some stock quotes and a bunch of other pieces of information.
00:44:26 And I thought, "Oh man, how cool would it be to work at a company like Yahoo, something
00:44:30 called Yahoo."
00:44:31 And all of a sudden I was like, "Wait a minute, I understand a little bit about financial
00:44:35 markets and what if I could take all the content at my disposal with my Bloomberg terminal
00:44:40 and make that more accessible to retail investors?"
00:44:43 And started this whole process of pitching Yahoo why they should hire someone like me,
00:44:46 and they were just kind of like, "All right, lady, whatever."
00:44:49 And that became my path in Silicon Valley.
00:44:51 And so we moved out to California and it really was the first job I ever loved.
00:44:55 It taught me you could love your job, surrounded by all these smart, ambitious, optimistic,
00:45:01 talented people.
00:45:02 It was really the beginning of so much of the internet today.
00:45:06 And it taught me I could love all these things I was doing.
00:45:09 So anyway, fast forward to last, I think it was November, December, Jim Lanzone, who becomes
00:45:15 the CEO of the now private Yahoo owned by Apollo, reached out and he was like, "Hey,
00:45:21 any chance you want to join me on this new journey and the board?"
00:45:24 I was like, "Okay, I am way too busy and the last thing I need to do is join a board."
00:45:30 But I love Yahoo and I love Jim.
00:45:32 I think Jim is a phenomenal leader.
00:45:34 I've worked with Jim way back because after Yahoo went to Google and Jim was one of our
00:45:38 customers that asked, "Geez," and it was such a pain in the ass.
00:45:41 He asked so many hard questions that we never knew the answers to.
00:45:44 And I remember thinking at that time, "I never want to be on the opposite side of the table
00:45:48 as Jim Lanzone.
00:45:49 I want to be on the same team as Jim Lanzone."
00:45:51 Because that guy is smart, he's awesome, and he knows how to build and he knows how to
00:45:55 scale and he knows how to reimagine.
00:45:57 So I felt like I just had to do this.
00:45:59 I just had to make time.
00:46:00 And now that my kids are all gone to college and they don't need me as much, I'm like,
00:46:04 "Well, this can be my new special project."
00:46:06 It's been great.
00:46:07 Well, that's a good segue here.
00:46:08 Alex, you were on OK Computer in late April.
00:46:12 You also came on CNBC's Fast Money with me.
00:46:15 And we were talking about, at the time, Elon Musk and his bid to take Twitter private.
00:46:20 And again, I remind our listeners that you were the head of engineering over the last
00:46:24 – I don't know, you left Twitter in 2016, but you had hired the now or existing CEO,
00:46:30 Prag Agarwal.
00:46:31 And you made a very – I think you had a great case of why he's the guy to run that company
00:46:36 and fix that company and why Elon Musk, while he's probably got a lot of great ideas, they
00:46:40 seem to be really kind of focused in a way that the company is not currently positioned
00:46:44 to take on.
00:46:45 And I'm just curious how your thought processes evolved.
00:46:48 You also made a really good case as talented as Elon Musk is.
00:46:51 If he were to kind of focus his energy on some other big problems, it might be a better
00:46:57 use of his time.
00:46:58 I'm just curious.
00:46:59 You and I really haven't checked in since then.
00:47:00 How are you thinking about this and how it's playing out right now?
00:47:02 Yeah, so much has happened since then.
00:47:05 Feels like we talked three years ago, even though it was probably a couple of months
00:47:08 ago.
00:47:09 So maybe a good place to start is I watched his all hands with the employees the other
00:47:12 day.
00:47:13 And it was interesting.
00:47:14 I was describing this to a friend of mine who also is a former executive at Twitter.
00:47:18 And the way I put it was, it was like asking a bunch of freshman Harvard students some
00:47:24 big philosophical question like, "Hey, what's the role of government in a modern society?"
00:47:29 Elon is very smart.
00:47:31 Freshman Harvard students are very smart.
00:47:33 You get smart thoughts back, but they're naive and very general and not actionable.
00:47:40 And the thoughts, while not wrong, don't have the benefit of having read either all philosophers
00:47:47 throughout history or having understood the last 15 years of what the company has actually
00:47:52 been doing and trying and what they learned from every experiment.
00:47:56 So he's a brilliant guy, obviously, and extremely accomplished.
00:48:00 But I found it to be very simple thinking.
00:48:04 The good news is he's a fast learner.
00:48:06 So if anyone is going to ramp up and progress from philosophy 101 to philosophy 201, 301,
00:48:11 it's him.
00:48:12 But I just don't see a coherent plan that is specific enough to make a difference.
00:48:16 Like yes, of course, it would be great if Twitter was as successful as WeChat.
00:48:21 However, one, people have thought about that, or yes, we should be as successful as massive
00:48:26 companies.
00:48:27 Two, there are a ton of structural differences between WeChat and Twitter, not the least
00:48:31 of which are the support that you get from the government in the country where you're
00:48:34 primarily operating.
00:48:35 So how these general things like that, oh, one thing he mentioned, we should have free
00:48:39 speech but also protect people so they feel safe because if they don't feel safe, they
00:48:43 won't use the platform.
00:48:44 That's all very true.
00:48:45 I didn't hear anything that made me think this is going to translate into some magic
00:48:48 roadmap that is going to transform the future of the company.
00:48:51 So we'll see.
00:48:52 Well, it's funny, since then, over the last few weeks, he's been hedgy about under what
00:48:57 circumstances he would buy the company that he's actually already committed to buying
00:49:01 through an agreement that he's talked about, different levels of equity funding and securing
00:49:06 the debt funding from banks.
00:49:08 And he goes back and forth about this bot issue, which he had all the time in the world
00:49:12 to look into before he closed his agreement to buy them.
00:49:16 I do think it's interesting that this morning on Tuesday, he was speaking at some conference
00:49:19 that was in Qatar and he was doing it by Zoom or whatever.
00:49:22 And he said, ideally, I'd like to get 80% of North American and perhaps, I don't know,
00:49:27 half the world or something ultimately on Twitter in one form or another.
00:49:32 When you hear stuff like that, Alex, again, you were the head of engineering at this company
00:49:35 during a hyper growth phase, right?
00:49:37 You guys probably went from the time that you got there to the time that you left from
00:49:42 whatever your first, I don't know, 10, 20, 30 million users to north of 100 million or
00:49:48 something like that.
00:49:49 But the fact that the company or the platform has plateaued in whatever you want to call
00:49:53 it, daily monetizable use somewhere between like 200 and 300 million, it doesn't really
00:49:58 lend itself to the sort of hyper growth, no matter what the tweaks are to get to a billion.
00:50:03 I mean, we know that Facebook meta has what, two, three billion monthly active users.
00:50:08 We know that Google alphabet has multiple platforms with at least a billion users on
00:50:13 them.
00:50:14 What is the likelihood that you would ever get more than 50% of North America or a billion
00:50:19 users on this platform?
00:50:21 So typically, I think it's very low.
00:50:23 I mean, when you look at these growths, usually there is high percentage year over year growth
00:50:27 in the early stages and things plateau.
00:50:29 And if you're extremely lucky, you plateau above a billion users.
00:50:32 But after reaccelerating growth, changing the second derivative of your user graph,
00:50:37 I think is very, very unlikely.
00:50:39 It's not impossible.
00:50:40 And there are stories of companies that have been either left for dead or left for some
00:50:45 moderate size thing, reaccelerating and reinventing themselves.
00:50:47 But I think it's pretty hard.
00:50:49 I think, and we talked about this before, I think the biggest disservice to Twitter
00:50:53 has been the comparison of Twitter to Facebook.
00:50:56 People don't realize what a massive outlier Facebook is.
00:50:59 We used to talk about what are all the billion user clubs in the world.
00:51:03 And honestly, other than Facebook, they're all nationalities and religions.
00:51:09 It's like Instagram users and Catholics and citizens of China and Facebook users.
00:51:16 It's not this thing that any company that has a good idea will get a billion users.
00:51:20 That's just this massive bar.
00:51:22 And unfortunately, Twitter's always been compared to that.
00:51:26 And almost no companies are that size.
00:51:28 And I think that really hurts them.
00:51:29 And I think it gets in their head.
00:51:31 And yes, I mean, I agree with you, Lon.
00:51:33 It would be great if half the world used Twitter, but I don't see any new information that makes
00:51:38 that believable, that that could happen.
00:51:40 It brings me back to Katie's conversation about the opportunity that Yahoo has.
00:51:44 So it's lifted out of Verizon Media.
00:51:46 It's taking private here, and it's able to be retooled without being in the public eye
00:51:51 for all intents and purposes.
00:51:52 And they almost have the opposite situation where they have this huge user base.
00:51:56 They have a great brand.
00:51:57 There is brand affinity and the ability to kind of retool it to better monetize the users
00:52:02 that you do have.
00:52:03 That's the opportunity.
00:52:04 If you take something private, the whole idea is to take it back out public when you've
00:52:09 made it a much better business.
00:52:10 It doesn't have to be a much bigger business.
00:52:13 It just has to be a better business, in my opinion.
00:52:15 When you think about what Elon wants to do by taking on debt, by leveraging his own equity
00:52:21 holdings in Tesla that seem to be going down pretty quickly at a clip, there's a lot of
00:52:26 risk to just like you wouldn't take Twitter private with the intent of taking it back
00:52:30 out public a couple of years later for just a double.
00:52:33 And when you think about the valuations in this space based on per user, per employee,
00:52:38 whatever metric you want to look at, it's really hard to think about at the price that
00:52:42 he's paying for Twitter to get much more than a double.
00:52:45 And I'll just remind you that Snap at its recent all-time highs was probably north of
00:52:50 $70, $80 billion enterprise value.
00:52:53 And this is a company that has a similar revenue base.
00:52:55 So to me, a lot of things have to go right for this to be a successful transaction for
00:53:00 me.
00:53:01 I don't actually think it happens.
00:53:02 Let's segue a little bit because he mentioned in a lot of these discussions about turning
00:53:06 Twitter into a super app.
00:53:07 And I think it's interesting that founder of Snap, Evan Spiegel is in, I guess he's
00:53:12 in Cannes.
00:53:13 I'm surprised, Katie, why are you not in Cannes?
00:53:14 That seems like such in your wheelhouse.
00:53:16 - That's a great question.
00:53:18 I really should be there.
00:53:19 - Right?
00:53:20 So he endorsed Elon's plan.
00:53:23 He wants to make it a super app.
00:53:24 He wants to think about WeChat or something like that.
00:53:26 And I'm just curious from your time at Twitter here, is it just way too aspirational when
00:53:31 you think about, and Alex makes the great point.
00:53:33 You don't need to compare this to Facebook.
00:53:35 Facebook has lots of different levers to pull to kind of keep your attention.
00:53:39 They just need to do a couple things really well.
00:53:42 And when I think about Snap and I think about what Spiegel endorsing must view as a super
00:53:47 app, it sounds like he's got lots of levers to pull.
00:53:49 And you think about the demographic they have and the way that this demographic engages
00:53:54 with this app and how they use it, it seems like there could be payments.
00:53:57 There's just tons of content that could be monetized on that.
00:54:00 I'm just curious, was that something that you guys gave a whole heck of a lot of thought
00:54:04 to back in the day or you just try to build a user base and build the utility that will
00:54:08 keep people coming back to it?
00:54:09 Well, first of all, I do think Evan is brilliant and he's creative and Snap is very successful,
00:54:14 but Evan Spiegel isn't even on Twitter.
00:54:17 So I think him talking about Twitter being a super app is kind of silly.
00:54:21 And second of all, I mean, in terms of, I don't even know what Elon means by Twitter
00:54:24 being a super app, but I think Twitter is doing the best that it can be.
00:54:28 And I think my personal take is let the company build a product in the way that they see fit.
00:54:33 These are people that have chosen to work there, dedicate their portion of their lives
00:54:37 and their career building something that they believe in.
00:54:39 And it's such a mission-driven, a really talented employee base with awesome leadership.
00:54:44 I mean, they've got great leaders in place.
00:54:47 Leave them alone and electrify our homes and our houses.
00:54:52 We need more of that.
00:54:53 Climate change is our biggest challenge, our biggest opportunity.
00:54:55 I would love to see the brilliant minds in tech world focus there.
00:54:58 Alex, you made that case really well when we talked about this in late April.
00:55:02 I just say this as somebody who's watched public markets and these sorts of spats kind
00:55:06 of blow up, if you will, and it could be an activist investor, it could be a really hostile
00:55:11 sort of takeover situation.
00:55:12 I mean, throw it all in there.
00:55:14 And then you throw in the fact that Elon is not only the richest man in the world, he's
00:55:18 for some reason perceived to be like the smartest man on this planet or maybe in the universe
00:55:22 for that matter.
00:55:23 But he's also destroyed the culture of this company.
00:55:26 There's no way that this existing board and this existing management team survives.
00:55:31 Obviously, if he buys the company, but if he doesn't buy the company, they're toast.
00:55:36 It's over.
00:55:37 And so all of what you guys have had to say about some of these people that you know very
00:55:40 well who've been working really hard to push this culture and this product forward, it's
00:55:46 done.
00:55:47 I'm just telling you, however it shakes out.
00:55:49 And so to me, I think the company has two options right now.
00:55:53 They can either negotiate for a lower price and try to make nice with Elon and keep intact
00:55:59 everything that they have, or they basically have to find what looks to be a white knight.
00:56:04 And again, I would actually say this company right now has a $30 billion enterprise value,
00:56:09 which would be higher if they were forced to close at that 5420 valuation, which placed
00:56:14 it near 44 billion.
00:56:16 Right now, Snap has a $20 billion enterprise value.
00:56:20 I'd merge these two things and have Evan run it, have Brett Taylor be the chairman.
00:56:23 I'd bring you guys back, our friend out of Bain.
00:56:26 No thanks.
00:56:27 Respectfully declined.
00:56:28 I know, no thanks.
00:56:30 That's a really sad state of affairs.
00:56:32 This management team and this board and some of the best people there, they're gone no
00:56:36 matter what happens.
00:56:38 I don't think the culture is destroyed.
00:56:39 I think what's remarkable about Twitter, both as a product and a company, is that it's the
00:56:45 most resilient product company I've ever seen.
00:56:48 It can't be destroyed.
00:56:49 And I think the team, they just remain heads down and determined.
00:56:54 This is just a mega distraction.
00:56:55 And we'll see at the end of the day if it goes through.
00:56:57 I kind of believe you too.
00:56:59 I don't know if it goes through and then they can go through their next chapter.
00:57:03 But it's like, there's no accountability.
00:57:05 Here's somebody who's very rich and very powerful saying, "Yeah, I'm going to buy this.
00:57:09 And maybe I'm not."
00:57:10 And going back and forth and the public markets have to respond.
00:57:12 And there's no accountability.
00:57:13 Even if he decides not to do this, he gets away with it.
00:57:17 That's the annoying part to me.
00:57:18 So I've talked to a bunch of, not directly, Tandy, the bankers, but a bunch of people
00:57:22 who have talked to the bankers.
00:57:24 And hearing that perspective makes me actually think the deal is more likely to go through
00:57:29 than what I think otherwise, which is I'm kind of growing increasingly pessimistic.
00:57:33 Basically they say behind the scenes, all the people in suits are just doing the things
00:57:38 that it actually looks like a normal deal process.
00:57:40 And none of these tweets or random announcements or contradictions actually have any standing
00:57:45 in the actual process, which I think that's kind of interesting.
00:57:48 So there's a chance maybe it actually looks under the hood like a more normal plotting
00:57:52 M&A and process that just happens.
00:57:54 And the other thing that I've heard is short of the whole deal falling apart and inking
00:57:57 a new deal, there isn't really a mechanism to reprice this thing.
00:58:01 You go buy a house, then you have a mortgage contingency and an inspection contingency,
00:58:05 but you don't have random other contingencies if you decide you don't like the color of
00:58:08 the walls or whatever, that they have to change that for you.
00:58:11 And so maybe it is about the price and it falls apart and they have to redo a deal.
00:58:15 But from what I've heard from the bankers, there's not really a mechanism to do that.
00:58:18 So we'll see.
00:58:19 Maybe it has to blow up to get redone or maybe it doesn't get done at all.
00:58:22 I'm not sure.
00:58:23 I think blowing up is probably going to be really important over the next few weeks.
00:58:27 The company is either going to make a decision to pre-announce a quarter, a quarter that
00:58:30 snap had already pre-announced and it's not likely to be good.
00:58:33 And listen, you guys could put on a strong face for some of your old friends and they'll
00:58:37 say, well, they're just grinding away.
00:58:38 They're working hard.
00:58:39 There is no way when your company and your culture are being attacked at the way that
00:58:43 this guy is doing.
00:58:44 And this is probably a guy that people at Twitter had looked up to at one point.
00:58:48 And I'm not asking you guys to comment on it.
00:58:49 I find his alt-right turn very disturbing.
00:58:52 That's must.
00:58:53 So I suspect that the quarter is a disaster.
00:58:55 The guidance is going to be a disaster and he's looking for every opportunity to recut
00:59:00 this deal.
00:59:01 I think he probably wants to buy it, but at a price.
00:59:03 And aside from that, then he just draws it out and he continues to do what he's doing.
00:59:07 So I feel bad because I think they're screwed no matter which way it goes at this point.
00:59:12 But more importantly, we started this conversation by talking about you guys being in Boulder.
00:59:16 You're running Moxie Ventures.
00:59:18 You guys, I think some of our listeners are very familiar.
00:59:20 You're early stage and energy tech, health tech, some things that you're really trying
00:59:24 to be constructive and investing in some really early things.
00:59:28 I'd love to hear a little bit about what's going on because if you're on one of these
00:59:32 coasts, if you're on the East Coast, you're obsessed with the stock market crash.
00:59:36 If you're on the West Coast, you're obsessed with this Web3, crypto, Silicon Valley reckoning,
00:59:42 if you will.
00:59:43 And again, I'm not saying that this is like lights out.
00:59:46 We're like 2000 times, but this is really what's got most people's attention on in the
00:59:51 middle of this country where you guys are again, focused on builders and early stage
00:59:56 entrepreneurs in areas that you think are really important as it relates to tech.
00:59:59 I'm just curious, what's the vibe out there and are you giving the Heisman to some of
01:00:03 the stuff on the coast?
01:00:04 Yeah.
01:00:05 So just to recap, Moxie is an early stage venture fund.
01:00:07 We invest in software solutions to hard problems that help a lot of people.
01:00:11 And so we're generalist investors, but the three categories that we tend to gravitate
01:00:15 towards are climate tech, health tech, and FinTech.
01:00:19 And while the markets are super erratic in every asset class, and especially later stage,
01:00:24 the nice thing about being in seed where there's a lot of risk, you're usually at the beginning
01:00:27 of the journey, right?
01:00:28 So this is actually a great time for early stage investors like us to come in and back
01:00:34 really smart founders and again, starting like or solving really hard problems.
01:00:38 And so it's almost an evergreen opportunity for us at the early stage.
01:00:43 And while there's a lot of panic in the world and also in venture, I think for us, we're
01:00:48 pretty calm.
01:00:49 We're evaluating, we're reassessing, we're trying to support our portfolio and we still
01:00:54 are actively investing.
01:00:55 And someone had asked us like, "Oh, are you going to take the summer off?"
01:00:58 We're like, "Is that an option?"
01:00:59 Like, no.
01:01:00 It seems so funny, right?
01:01:01 Because over the past few years where prices were so high, people couldn't invest fast
01:01:05 enough and then all of a sudden prices are low, we're like, "Oh, I'm taking the summer
01:01:09 off."
01:01:10 We do think that this is a really good opportunity.
01:01:13 And what we're doing to our existing portfolio companies, we're encouraging them to just
01:01:18 be prepared, making sure that you have 18 to 24 months of runway, doing whatever it
01:01:23 takes to survive and make sure you do these things quickly.
01:01:26 And some of these things may be just cutting costs, conserving your cash, adding more runway
01:01:30 or top off to what you have, considering other alternative types of investments or capital,
01:01:35 if it's venture debt.
01:01:36 For some companies, it could be getting grants.
01:01:39 We talked to one company today that told their employee base what was going on and they all
01:01:43 needed to figure out something really clever.
01:01:45 And so almost the entire company decided to just pull down their salaries a bit.
01:01:50 And so they wouldn't have to lay anybody off.
01:01:53 And we thought that was a really clever way to think through this next chapter.
01:01:56 So we remain like, yes, things are, you have to be really careful, but we think it's still
01:02:01 a good time to invest and we're pretty positive.
01:02:05 We're not PE investors, late stage private investors looking at a mass spreadsheet and
01:02:09 figuring out multiples.
01:02:10 Obviously, that matters for the long term exit, but we're really looking at exceptional
01:02:14 founders tackling meaningful problems in large markets and wanting to build enduring companies.
01:02:20 Over the long term, once they do that, if the multiple is above historic averages or
01:02:25 is closer to the historic average, that of course affects our math ultimately, but it
01:02:29 doesn't affect the decisions we make right now around finding awesome founders in big
01:02:34 problems.
01:02:35 So we look at those problems, FinTech, health tech, climate tech, and other things.
01:02:38 But those are areas specifically where there are massive problems.
01:02:41 They're not going away.
01:02:43 The problems are not less important just because of what the public market is doing.
01:02:47 And one very encouraging trend is we see so many exceptional founders and entrepreneurs
01:02:52 and engineers and salespeople running into these really meaningful things and we're here
01:02:58 to support them.
01:02:59 One of the things that you see in really difficult times and periods of adversity, it doesn't
01:03:04 change who people are.
01:03:06 It just reveals it, right?
01:03:07 And so it's revealing who are the best founders who are in it for the right reasons.
01:03:12 And so, especially with a lot of these very important global challenges, climate change,
01:03:20 access to healthcare, these are recession proof.
01:03:22 The planet is burning.
01:03:23 I don't know what percentage of the globe today has extreme heat, but it's very, very
01:03:28 high.
01:03:29 We're in Colorado.
01:03:30 We've had three fires in the past year and a half.
01:03:33 And the last one was in December.
01:03:34 I mean, a wildfire in Colorado in December, that's not normal.
01:03:39 So we need to do a better job and have enough of these really talented founders step up
01:03:44 and meet the moment and find investors to back them.
01:03:47 And so it's one of the reasons why we're actually excited about this next period of time, because
01:03:52 the right founders are really stepping up to meet the moment and the tourists are leaving.
01:03:56 Well, talk to me a little bit about climate tech.
01:03:59 We've collectively talked about it here.
01:04:00 It's not an area that I know a whole heck of a lot about, but when I think about some
01:04:04 of the major inputs that are causing all of these palpitations in the global economy and
01:04:09 thus also in financial markets, inflationary pressure from energy is one of the biggest
01:04:15 drivers here.
01:04:16 And I have to think that in times like this, it just kind of makes it more evident that
01:04:21 there needs to be more investment.
01:04:23 And I'd also say this, when Joe Biden was running for office, they were pounding on
01:04:28 fossil fuel industry and ESG was doing what it was doing.
01:04:31 And it just seemed to be like the Dems were moving to one thing.
01:04:34 I'm not trying to make this political, but right now we have Joe Biden preparing for
01:04:38 a trip to go see MBS in Saudi Arabia.
01:04:41 We have Elon Musk tweeted a couple of months ago that we need to be drilling for more oil.
01:04:46 I mean, it seems like the whole world has been turned upside down on this issue.
01:04:52 I'm just curious how you guys are thinking about it.
01:04:54 And it must be a really unique time to invest in solutions for consistent solutions based
01:05:00 on technology for decades to come in the space.
01:05:03 I think it's a long-term versus a short-term issue.
01:05:06 It's hard if you're the president, to take that example, and you see gas going from whatever
01:05:10 it was historically two or three bucks a gallon up to over five, I think on average, it was
01:05:15 in the United States, maybe last week.
01:05:17 That really affects people's checkbooks and you have to do immediate things to deal with
01:05:21 that.
01:05:22 So I understand why that's happening.
01:05:23 You look at the long-term trend, it's going in exactly one direction.
01:05:26 There are fixed amount of dead dinosaurs that we can burn.
01:05:30 We've found all the ones that were easy to dig up.
01:05:33 And now the ones are harder to dig up.
01:05:35 Oil prices over the long term are only going one way.
01:05:38 There's going to be less of it.
01:05:40 And they're going to be more concentrated in places where there's a ton of risk to be
01:05:44 dependent on.
01:05:45 I mean, Russia, for just one example.
01:05:47 So this problem is not going away.
01:05:49 All the trends and the tailwinds behind addressing the climate still exist.
01:05:54 And so if you ignore the short-term political stuff, things you have to do to counter inflation,
01:05:58 or scarcity, or wars and things like that, there's only one way to go.
01:06:02 And that's, yeah, get off this resource, which is going to get increasingly expensive and
01:06:06 controlled by people that we don't want to give power to and give more money to.
01:06:10 So I'm really optimistic about this space.
01:06:12 I also think, especially in this country, where action on climate hasn't been at the
01:06:15 pace that is needed to solve this problem, I'm super optimistic about things that the
01:06:20 private sector is doing to jump in.
01:06:23 So there are a number of themes, at least in climate tech, that we've been spending
01:06:26 a lot of time on.
01:06:28 So electrification of transportation, removing carbon, decarbonizing the grid.
01:06:33 And there are a lot of sub-verticals that are going to be really important that will
01:06:37 help us get to net zero.
01:06:40 And just to give you one example, we invested in an electric bus company called BasiGo based
01:06:45 in Nairobi, Kenya.
01:06:47 And they introduced the first electric buses in Nairobi, in Kenya, and soon to be East
01:06:52 Africa.
01:06:53 And because of the current oil crisis and the rising prices, what we've seen with BasiGo
01:06:58 is that they can't keep up with demand.
01:07:00 And it's like, wait, the bus operators, we need faster, cheaper, more inexpensive and
01:07:05 cleaner buses.
01:07:06 And so what can we do to accelerate their growth?
01:07:09 So I think we're starting to see really positive outcomes.
01:07:12 And this is where the market is going, that we need to electrify transportation.
01:07:17 We need to move towards more modern and efficient solutions so we can protect our planet.
01:07:23 The one area where the market is not pulling back or pulling back less is in climate tech.
01:07:28 So I was just reading something this morning.
01:07:30 According to some accounting, there's something like $25 billion in dry powder from recently
01:07:36 raised climate specific funds.
01:07:38 That's up a third since just last quarter.
01:07:40 So this is an area where despite what's going on in the broader market, people are here
01:07:44 to invest.
01:07:45 And it's not just the government, NGO, grant making people, it's Silicon Valley style climate
01:07:51 specific VCs are still investing.
01:07:54 They're here to invest.
01:07:56 They're seeing our portfolio companies in climate, having an easier time raising than
01:08:00 other companies.
01:08:01 And that is really good.
01:08:02 I'm really excited about that.
01:08:03 We got to solve this problem by yesterday.
01:08:05 All right.
01:08:06 And you guys are obviously focused on health tech too.
01:08:09 And Katie, you said your mission is using software to inform better outcomes in different
01:08:13 areas.
01:08:14 Talk to me a little bit about some of the areas that you're focused in within health
01:08:17 tech.
01:08:18 Yeah, we have a couple of companies that we're really excited for.
01:08:20 One is called VistaPath that uses AI for pathology based in Cambridge.
01:08:25 We have another company that is super fun and unique because it's a father son team.
01:08:29 The dad is a dermatologist.
01:08:30 The son is a software engineer, they're based in Israel called MD Algorithms.
01:08:34 They're using AI for dermatology.
01:08:37 We have another company in Loom that is advancing women's health care based in Los Angeles.
01:08:42 Maternal health care in America is terrible.
01:08:45 And this is a great opportunity for us to just start with women trying to get pregnant,
01:08:50 are pregnant or in that newly motherhood phase.
01:08:53 So looking at supporting maternal outcomes there too.
01:08:57 So lots of great opportunities attacking our health care system, making things easier,
01:09:02 more accessible, and ultimately creating better outcomes for more people.
01:09:06 Well, listen, I took you guys down this kind of hard Elon Twitter path to start out here
01:09:11 because obviously I'm pretty fascinated with the whole thing.
01:09:14 But I think your insights are really valuable there to people who are trying to game it
01:09:17 and trying to figure out what's going on there.
01:09:19 But obviously more important are Moxie's focus on these areas like health and climate tech
01:09:25 here.
01:09:26 So we really appreciate you guys giving me an update.
01:09:28 I hope to get back out there to Boulder.
01:09:29 Maybe we'll do a show at Folsom.
01:09:31 We'll definitely see a football game in the fall here.
01:09:34 So thank you guys for joining us on OK Computer.
01:09:36 Thank you for having us.
01:09:37 It's always so fun.
01:09:39 Thanks again to our presenting sponsor Current and our supporters Masterworks and Taboola
01:09:43 for bringing you this episode of OK Computer.
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