SPEAKER_00: Hey, everybody. We've got an amazing show for you today. Friend of the pod, Alex Wilhelm is with us from TechCrunch in his sixth appearance. And we're going to cover Tesla's unbelievable Q4 earnings. And the IPO window is a closing opening.

Jason Calacanis: And then finally, since we have Alex, we break down all of the most hotly anticipated IPOs of 2022. We talk about whether they're going to happen, how they're going to go, what our favorites are, and what we think is going to be in the dumpster.

SPEAKER_02: And those specifically are?

SPEAKER_05: Well, we can't give it away now. No, no, but we should tell them what companies we're going to go over with that.

SPEAKER_07: Oh, yeah, yeah, totally. So we're going to talk about the potential IPOs of Stripe, Discord, Reddit, Impossible, Instacart, GoPuff, and Chime. Who we think is going to win, who we think is going to lose, who we think is just going to bail on IPO completely. It's going to be an amazing show.

SPEAKER_02: Stick with us.

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Jason Calacanis: All right, everybody. We have Alex Wilhelm, senior editor at TechCrunch, host of the Equity Podcast. And I would say not even just a friend of the pod, more like a fave of the pod. Sixth appearance on Twist. There is nobody better to break down the financials. The man is an S1 wizard and the master of IPO dissection. So we brought him on to talk about, obviously, Tesla earnings, an amazing quarter, an amazing year for the company.

SPEAKER_17: Welcome, Alex.

SPEAKER_16: Thank you for having me back on. I didn't know this was my sixth time showing up.

SPEAKER_18: I think it just goes to show that I say yes to Jason whenever he asks. Maybe I should tighten up my rules a little bit.

SPEAKER_24: I think we're going to talk to my team, but I would like to have the blazers. I would like to send people a blazer or a quarter zip with, like, fifth appearance, you know, twist five, and then, like, a twist ten.

SPEAKER_25: I just think it would be cool.

Jason Calacanis: I think so, too. I was just thinking about, like, Saturday Night Live. They have the five-time, like, the smoking jacket. Yeah.

SPEAKER_27: I think that would be hilarious. A smoking jacket would be even funnier.

SPEAKER_18: I was going to actually wear my usual tank top, but I figured for you two, I would dress up and wear sleeves. So this is my attempt.

SPEAKER_28: It's a good quote. We don't get the adult label on our content.

SPEAKER_24: Yeah, we don't want to show any shoulders here. Thank you. And everybody follow Alex, of course, on Twitter. Part of the first name club, Alex.

SPEAKER_29: So Tesla, I guess, is the big news. An amazing company, obviously, and an amazing quarter.

SPEAKER_32: 2021 full year revenue, $53 billion, up 71% year over here. That's just bonkers.

SPEAKER_35: Q4 was a juggernaut. $17 billion, up 65% year over year.

SPEAKER_38: This was driven by their 71% increase in total deliveries. Model SX production was down 19% year over year.

SPEAKER_24: I think that is because they're so busy building the other cars. Because everybody I know who's put down deposits for their S and X plaid, you know, this, like, with the yoke, is telling me they have, like, six months to a year wait time.

SPEAKER_29: Wow. So I think my guess is I don't have inside information. I always got to do that little disclaimer.

SPEAKER_40: Well, look at the chart. I mean, Model 3 and Y production up 79%.

SPEAKER_18: Yeah. What you really need to pay attention to there is they moved, essentially, their production over to the Model 3, and they actually still had expanding automotive gross margins. That's insane to me. I thought when they moved to the cheaper cars, they were going to have, ah, so, um, you buy a Model S, you pay a lot of money for it. You buy a Model X, you're paying a lot, a lot of money for it. Generally speaking, more expensive items have higher gross margins. They're kind of higher quality revenue. And so I thought when Tesla moved to more Model 3s, their revenue quality would go down as their volume went up. Um, but if you actually take a look at the numbers, if I recall, uh, when I read through this last night, their automotive gross margins are actually better.

SPEAKER_44: And so that to me is just a coup for the business and just goes to show how well it's run. It's very, very impressive. I'm kind of blown away, frankly.

SPEAKER_07: How do you do that? What is the efficiency that you could do to make sure that those margins stay the same? Is that a manufacturing efficiency? Is it a hiring efficiency? Like, how do you pull that off?

SPEAKER_44: I think it's manufacturing and sourcing a lot.

SPEAKER_18: Um, and I think Tesla has shown that with scale, they will improve. I mean, that's the concept of operating leverage that VCs like y'all love to see in businesses that their profitability increases as their revenue scales.

SPEAKER_48: Uh, I, I just thought it was going to struggle when they moved to cheaper cars, but you know, Tesla has been a shocker.

SPEAKER_49: You, you have, uh, nailed it.

SPEAKER_24: Um, I remember visiting the factory when they were first building some of them and there was this tension of like, what in the car would be built by Tesla and then what would be sourced. And I've had many conversations, Elon, about this. He likes to build the stuff himself. He's a bit of a builder, if you haven't noticed. And so you look at their monitors, you look at their HVAC unit as just one, they have built their own essential HVAC.

SPEAKER_52: What, what puts the heat and the cooling in the car is their design now. And if you watch the guy, what's his name? Monroe, who breaks down the cars and rips them apart. When he did the breakdown for the X and the Y, he started looking at what they're building versus what they're sourcing. And when you build everything yourself, that's incredibly expensive, requires factories, and you have a couple of years of iterating on it. Well, all of that iteration from the last decade of Elon saying, like, we can build a better HVAC unit for this. We could build better wiring harnesses. We could build a better display. All of that now has come to fruition because it's the same monitor now in all the cars.

SPEAKER_24: So when they did the refresh on the model S and the X, they took that landscape monitor, no, I'm sorry, the portrait monitor, and they flipped it landscape, right? And so you're, that's exactly what you're seeing here. And then, of course, the big story is batteries. And the fact that they make their own battery packs and they have the Gigafactory, if they can just make the batteries a couple of percentage points cheaper every year, they can expand the range. And then they make them more efficient with software and science, that's going to be the killer thing. And I think the big news here, which isn't anywhere in any of this reporting is, what happens when they have the $25,000 car? If they can show this level of efficiency, what happens when there's a, what is the cheapest car you could buy now?

SPEAKER_54: Like, is it a Fit, Honda Fit, or a Ford Focus? Or is that, I don't know this category very well.

SPEAKER_55: It's probably in the Honda Fit range, don't you think? I mean, that's not the cheap. 25K?

SPEAKER_58: No, it's cheaper than that. Honda Fit, I'm just going to go over this.

SPEAKER_07: Oh, Honda Fit is $18,000, $17,000. I happen to be in a long-term relationship with a Honda Fit fanatic.

SPEAKER_62: $16,160. I'm weirdly familiar. That's incredible. There's a $16,000 car. It's not a lot of car.

SPEAKER_63: I know people who've spent $16,000 on Uber every month.

SPEAKER_66: No, it's like mysteriously gigantic on the inside. This is Honda's magic thing is those cars are like a TARDIS. They're bigger on the inside than they are on the outside.

SPEAKER_68: It's the weirdest phenomenon. Anyway, we're slightly off track.

SPEAKER_01: If you put a little bit of features into it, I see it quickly goes up to $25,000.

Jason Calacanis: The real question, though, I want to know is like, what is the cost of a Chevy Bolt, right? Because that's where, like right now, you've got the Leaf, you've got the Chevy Bolt. Like you do have cheaper EV options that have less range and less infrastructure. And if price is your consideration, you're probably still going to make that trade-off. Or the Kia Niro is a really popular one that I think maybe now has an all-electric, but is a popular hybrid.

SPEAKER_71: 2022 Chevy Bolt starts at $31,500. That's cheap. That's cheap. That is super cheap.

SPEAKER_75: Nobody's buying them, right?

SPEAKER_74: They're not popular.

SPEAKER_75: Oh, I see them everywhere. Really? Yeah.

SPEAKER_77: I see Teslas. I mean, so my rule of thumb is-

SPEAKER_75: I see a lot of Bolts.

SPEAKER_18: Well, if it makes it to Rhode Island, I consider it kind of mass market. And I see a lot of Teslas and I see a handful of Bolts at most or Bolts, whatever.

SPEAKER_84: 2021 sales for Q3 in the US, 25,000 total for the Bolt EV and the Bolt EUV.

SPEAKER_40: 22,000 of them are in Oakland, San Francisco.

SPEAKER_86: Yeah, I think they're all in East Bay.

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Jason Calacanis: I mean, listen, like when I was, I was like, I need to buy an EV stat for my How We Survive podcast. I was like, I got it. Like it's part of the story in the whatever. What am I going to get? And I was like, oh, I'm totally going to get the Bolt. And then I was like, wait, I need range and infrastructure. And that brings me back to Tesla's earnings, actually, because when you look at another area of growth, the silent, like the secret deadly weapon of the Tesla in the Tesla universe is this supercharger stations up 36% year over year. Supercharger connectors up 35% year over year. Uh, the number went from in Q4, 2020, Q3, 2021, 29,281 supercharger connectors, 3,254 stations up to 34,76 on stations and 31,498 connectors. That right there is why you, why Tesla cannot be beat right now, even if the cars are better. Yeah.

SPEAKER_21: And it did all of that while generating the max free cashflow that it ever has in data that we currently have available to us.

SPEAKER_97: So free cashflow in the last quarter was 2.8 billion. A year ago is 1.9, went down as far as to 293 million.

SPEAKER_48: So like this company is just, I, I don't know, I forget Jason, can we swear on the show? What are the rules?

SPEAKER_99: Yeah. Okay.

SPEAKER_48: I totally get it. It's so fun. I've been on some shows that, you know, anyways, Tesla is shitting gold all over the place while also managing to build out its supercharger network and drive to go back to my point from earlier, it's automotive course margin from 24.1% a year ago to 30.6% this year. That's 6% or 25% of its prior total. It's an enormous improvement in revenue quality. I, I, when does the dividend come? Is my next question for this company? Not will it survive?

SPEAKER_21: Like when does it have so much cash?

SPEAKER_24: Their default alive now. It would be horrible if they gave dividends. I would much rather see them, um, invest in that 25k car, maybe even not have great margins on it, but increase the number of those cars out there. And I'd like to see them keep doing the supercharger. The other thing people don't realize is they're going to have a subscription revenue business. I just turned on because I was at a charging station on the way to Tahoe two nights ago. And I realized, oh, my free high speed, you know, connection was over or whatever.

SPEAKER_106: Yeah.

SPEAKER_24: So that they have this premium service and I, you know, like I could connect it to my Verizon LTE, but I just don't want to deal with that because the connections are never great. So I was like 20 bucks a month, 240 a year. Sure. Here it is.

SPEAKER_52: And I just, in my app, just clicked. Okay. And they're like, we have your credit card already. Mr. Callaghanes. Boom. You now have that. And so I was watching book a Boba Fett while supercharging with my daughters in the car. And they were thrilled, right? And now think about that a million cars paying 20 bucks a month for connectivity. And then maybe there's going to be a 30 or $40 package where you could have the remote viewing of your camera. So it becomes like a security camera thing, like a remote dash cam. They could just keep charging upselling people. And maybe that becomes they have a million people someday subscribed to a 20 or $30 a month service. Yeah.

SPEAKER_18: But its stock is still really expensive. Like you have to buy into that entire growth story to make the, the multiples work out. Like Tesla is, is I think now you're right. Default alive. Great company. The proof is really in the pudding. It has consistently improved its overall business for, for so long. Now I'm kind of blown away, but I will say what I like take, if I, if you gave me like 10k

SPEAKER_48: and like pick a stock, I wouldn't, I wouldn't pick Tesla today. I feel like the upside is priced in because people are enthusiastic about the company and especially about Elon and that's fine, fine.

SPEAKER_110: It's not, no sweat off my back, but I mean, I'm not like, oh God, it's so cheap.

Jason Calacanis: But no, I think it's an and, and, and, and right. It's like, yes, they are killing it. Yes. They are default alive. Yes. Right now. If you are really looking for a, a, a day to day driver right this second, and that picture is going to start to change rapidly, right? Like every manufacturer is now legitimately in the EV game. I have started to drive a couple of them just to sort of see what the difference is between car makers who are switching to EVs and EV makers who are, you know, I mean, he's reinventing the car. Not everybody's going to want that. There's going to be a, there, I think the competitive landscape question is going to be really interesting over the next year or two, as it relates to that stock price.

SPEAKER_24: Uh, right now price to sales. Uh, so the price of the entire company and the sales 53 billion, uh, is 16.2, which is pretty rich and maybe five to 10 would be what you would, you know, expect. And then, uh, based on their price to earnings, 156, I think is right, 5 billion. So yeah, it's, it's fully, I would say fully valued would be a kind way of saying it. It's expensive is another way of saying it.

SPEAKER_55: Crazy expensive.

SPEAKER_48: Yeah, let's play a little game, uh, Jason and Molly, guess what GM's current price to sales ratio is on a trailing basis.

David Friedberg: I was just going to look that up and then, uh, trailing or forward trailing, I would say three or four, Jason, Molly.

SPEAKER_117: Ow, yeah. Jason stole my answer. I was going to say three. Okay. It's a M, uh, 0.7. Oh, dear God. Right.

SPEAKER_121: So, so that's where that company's probably saddled with debt, right? Okay. But well, what's Ford let's look at Ford, which has actually had a super strong, like series of EV announcements.

SPEAKER_122: I'm just going to become the, uh, the data sold out of the, that new pickup, you know,

SPEAKER_68: like they're going to have to delay. What does that new? The Raptor.

SPEAKER_59: Oh gosh, it's worse. It's 0.64.

SPEAKER_24: Yeah. I mean, basically people are looking at the, those companies have lots of debt and a lot of them, they, they lose money on most cars. They make money on trucks and they make money on their finance divisions. So one of the things that happens with these companies is they get so old that the way they kind of operate them is with this crazy debt structure and then this finance business. And I, I think that's part of the story here is that Tesla is a much cleaner cap table.

SPEAKER_127: Tesla doesn't not have a finance business though. Thank you. Yeah, right.

SPEAKER_130: But is that, is that finance, they will eventually carbon offset, the carbon credit sales business.

SPEAKER_129: So they will have a finance business.

SPEAKER_97: I'm sure the, the, the carbon credit sales is, is declining in importance. In fact, that's one of the things I've been checking for a long time is the regulatory credit income as a percentage of overall automotive revenue. And the last quarter was super modest. Like the company is no longer cheating to, to appear quote profitable. It just is profitable. And, uh, it's, this wasn't the case four years ago and everyone was still shouted at me on Twitter. Like, ah, Elon's going to do it. And I'm like, maybe, but not yet.

SPEAKER_137: And here we are at the yet point. And it worked out. Can you imagine you were part of Tesla queue? Like those crazy conspiracy there. So we're like, they're faking the deliveries and these cars are not, don't exist.

SPEAKER_138: And we're shorting the stock at a hundred dollars. Oh my Lord.

SPEAKER_97: Well, you don't hear from them because they all ran out of money and couldn't pay their Comcast bill. So whoops, oops, like, if you were going to pick a person to bet against early on,

Jason Calacanis: like, and we should give, frankly, we should give both credit and honesty to this. There was some weirdness, right?

SPEAKER_130: Like, be honest and say that Tesla was doing every goddamn tripping trick in the book to stay in business. There was, uh, three or four near death moments.

Jason Calacanis: Yes. And, and then there was a lot of cover up for that, not cover up in the like criminal sense. Right. But it was just like, just keep running, just keep running until you get where you want to go. And it is fair to say both that Tesla has gotten where it wants to go and probably will only continue to do that. And that for a while there, like it was a little bit of a house.

SPEAKER_35: A little bit. Model, model three almost took the company down. Yeah.

SPEAKER_148: Yeah.

SPEAKER_35: That was a distinct moment in time where if they didn't hit that 5,000 production a week

SPEAKER_149: and, you know, building the tent and stuff like that, and just getting those cars out.

SPEAKER_21: The tent and the quality issues that came from that still stick out in my mind because

SPEAKER_48: folks bought those cars that had some issues, but, um, most people don't have the guts. Oh, no, sorry. Molly.

SPEAKER_152: Oh, no, I have a, no, no, no. I have a why now that I have quality issues with. Ah, yeah.

SPEAKER_29: The pat, the gap panels were an issue. And then, you know, once in a while, like, I mean, if you're going at that speed, yeah,

SPEAKER_155: you're going to have some quality issues, but I think it's gotten a lot better.

SPEAKER_52: I see less and less of that because the people who do, you know, with social media, if people get a car, that's not good.

SPEAKER_157: They're just like every day, they tweeted every day that, you know, until their problem is solved and you, you heard a lot of that with the gap panels. Yeah.

SPEAKER_07: You know, I've considered tweeting about it, but it does not seem worth the, frankly, the transaction cost of tweeting about a Tesla at this point is just too high for me.

Jason Calacanis: Yeah.

SPEAKER_18: Please send all your tweets to at Molly wood. If you have comments for me, um, exactly, I think I'll just keep talking to the company

SPEAKER_159: about it.

SPEAKER_18: I don't need it on a, on a last note on this one.

SPEAKER_97: Um, I'm just going to say that I'm not going to buy a Tesla. I think I'm going to buy an XC 40 recharge from Volvo. Cause it's like the perfect mini SUV.

SPEAKER_160: Yeah. I know. I, it's, it's, it's gorgeous. Recharge.

SPEAKER_161: I will say, I'm going to give up my lease for the BMW. Huh?

Jason Calacanis: Ooh, really? Oh, hell yeah. Okay. A hundred percent. I mean, I'm a BMW girl all the way. The, the infrastructure thing still is an issue. Like when it's your only car, the, the ability to supercharge nearby, wherever you are really cannot be overstated. So like, I'm just waiting for, you know, the results of the infrastructure bill, some of that EV charging.

SPEAKER_164: To really have no choice, but to go with the Tesla. Now you do not want to get. Yeah.

SPEAKER_165: When I was shopping, I was like range infrastructure.

David Friedberg: Are you going to go on road trips, Alex or your road trippers?

SPEAKER_54: You like to go to New York. You like to go to the Cape.

David Friedberg: I mean, do I like to go to New York? No, because New York's full of people and people are icky.

SPEAKER_97: Um, I mean, gosh, I've been inside for two years, guys. I don't even know what I like to do anymore. I feel like my entire personality has changed.

SPEAKER_168: It's not as I know it's over for me.

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SPEAKER_29: If you get a car and you want a road trip, and you're going to have a baby hopefully soon, it'd be great. You're going to want a road trip. 150 miles an hour, and you need it to charge the full 150. Yeah. And there was, you know, not as many charges available. It was, it became like, you know, I'm talking to maybe seven to 10 years ago.

SPEAKER_00: Yeah. You really had to think things through. Now with the Tesla, you get in your Tesla, and you have no anxiety. You're just like, I'll drive in any direction until I hit the Atlantic Pacific or the Mexican

SPEAKER_24: border or Canada, and I'm good. Yeah.

SPEAKER_00: There is no, no doubt.

SPEAKER_07: But if you're a local driver, if it's your second car, for example, like I think second cars, you can get any EV you want and not have to stress about range.

Jason Calacanis: And, but if it's going to be your only car, that supercharger network is like, it's killer.

SPEAKER_176: So I didn't come on the show today to actually talk about the stock market.

SPEAKER_18: I came on the show to record a long segment convincing my spouse to not make us buy a Volvo XC40 recharge. So now thanks to this, I can get a Tesla. Thank you guys. I'm going to send her this place.

SPEAKER_177: No, I mean that Volvo is so pretty though. It's so gorgeous. It is. I'm looking at it now.

SPEAKER_24: It's actually, usually they make them so ugly. Like I think they seriously made the Bolt and the Volt and all those cars ugly because they didn't want them to be popular. They just wanted to. The i3, the BMW i3.

SPEAKER_00: They were like, let's just sell them. Well, they knew they couldn't, they knew they couldn't sell them profitably. So they didn't make the mainstream. They made them, they knew they were losing money on them. They had to do it for the, what was it? The cafe standards or whatever to kind of hit the number they needed to hit. So I think they purposely were just like, yeah, do something wacky. Who cares? But now you're seeing people who are making them indistinguishable from their existing product lines or better. That is a major turning point.

SPEAKER_166: That means they see this as the future.

SPEAKER_97: My counter argument to that is, do you remember the first Prius? It came out looking like a small pinched bug and that became a consumer hit.

SPEAKER_48: You know, they managed to make it less bugly over time. Yeah.

SPEAKER_185: True. And that was all about economics. It was all about price. Yeah.

SPEAKER_07: I mean, it was an inexpensive car that got, you know, killer gas mileage and people were like, okay, yeah, that's a win-win.

Jason Calacanis: I don't, and, and if I'm being completely honest and now I will get yelled at even more, it was for people who don't care that much about driving. Like, not like car people.

SPEAKER_157: No, they drove like a milk carton.

SPEAKER_121: It was not fun to drive.

SPEAKER_48: The gear shift was a little knob on the, on the, it was in the wrong, it was in the wrong spot.

SPEAKER_162: Like, I mean, it was, so we drive a, a Volvo sedan four cylinder manual because we're super cheap. Cause you're so cool. No, because we're just cheap. Um, but eventually we're going to swap it out.

SPEAKER_41: So I appreciate this, uh, this particular dialogue, my favorite back in the day.

SPEAKER_149: And I almost considered getting this when I moved to LA, uh, I wound up getting

SPEAKER_155: the, um, what did I get the mini Cooper? Like the second year of the mini Cooper and love that car. Um, but I almost got the Honda insight because I saw all these people online on message boards had the original Honda insight hybrid from like, I dunno, maybe 2000 to 2010 era, they were getting some of them like 60, 70, 80 miles to the

SPEAKER_52: gallon cause they learned how to drive it perfectly or behind a big SUV. It looked super weird, but they were like having these competitions to see how

SPEAKER_24: much gas they could save. And then gas became $2 a gallon again. Yeah. And people didn't care anymore about gas mileage. Um, it's interesting, none of these hypermiling hypermiling.

SPEAKER_191: Yeah. That sounds like it. Yeah. If not, it's a great term.

SPEAKER_48: Uh, I think that's what it's called when you're trying to get every single possible miles per gallon of a car, which to me just sounds like torture, like hard

SPEAKER_18: paths, I'd rather just work more and make more money and afford fuel than do.

SPEAKER_07: I mean, I, I do honestly, I find it kind of annoying that the Tesla's always like, um, your battery life will be way better if you go slower.

SPEAKER_194: I'm like, but I don't want, you're not made to go slow. I don't want to go slow.

SPEAKER_145: Why? Why would I have to go slow? All right. Should we stop car talk and move on to IPO talk?

SPEAKER_01: Yeah. Well, I like car talk. I like car talk.

SPEAKER_29: Me too. Uh, all right. You wrote a great story, Alex, the IPO window, uh, is it closing or not?

SPEAKER_24: And people forget because we've been in IPO frenzy land since I guess Uber and Airbnb went out. I think those were the two big ones everybody was waiting for. And now everybody in the founder community is like, yeah, of course you

SPEAKER_155: can go public anytime you want, not realizing that we have IPO windows that are

SPEAKER_52: shut, what maybe explain to the, the youngins in the startup community about the concept of IPO windows. And then what, what your premise of this piece was.

SPEAKER_18: Critically Jason just didn't include me in the youngin category, which is evidence that my hairline receding is accelerating as I age into my thirties.

SPEAKER_178: I mean, you are talking about buying a Volvo. So yeah, I, yeah, I mean, getting a Volvo.

SPEAKER_207: Yeah. Okay. Fair enough.

SPEAKER_209: It's this is, uh, this is middle age. It's been great so far.

SPEAKER_48: Um, it's fine here. Yeah, no, the water's great. Um, an IPO window, Jason's question is a period of time in which you can take a company public. And there are exceptions to this. People will say that you can always take a good company public and that's true, but most people care about when is a time period in which many companies can take their company public at a reasonable price and not get absolutely hammered by public investors. And essentially it's a moment in which you can translate a business from the private to the public markets with minimal intrigue and bull. And these come and go based on market conditions. Usually when the market is more risk on the IPO window is open. And when the market is more risk off, the IPO window is closed. So if the value of software stocks is at an all-time high, the IPO window is open last November.

SPEAKER_18: If the value of software stocks takes a huge dive now the IPO window closes. And so we have noticed through the JustWorks IPO and the WeTransfer IPO, both being delayed,

SPEAKER_97: kind of put off that the moment for taking companies public was actually last year and wrapped up around Christmas time.

Jason Calacanis: Wow, that's very definitive. Okay. So when you say wrapped up, what does that mean? Like, let's spin that out a little bit. You're a hot company or maybe a medium hot company. You're, you were considering a SPAC merger.

SPEAKER_42: What is this like, you know, lay out the ripples in the pond here for us.

SPEAKER_97: Yeah. So a lot of SPAC deals are being called off, um, because essentially companies were announcing a SPAC deal,

SPEAKER_18: you know, back in June, 2021, getting a lot of hype. And by the time the deal came together, uh, no one wanted the combined entity, a lot of redemptions on the cash that was going to go into the new business. And then they begin to trade and they drop like a rock, very few SPAC combinations of tech companies have performed well. And frankly, it's been pretty embarrassing for a lot of folks who were promoting these, um, in the media and the investing community. It's kind of, kind of dicey on the traditional IPO side. Um, if you're a medium hot unicorn, say let's say you're worth one and a half billion dollars. You've done pretty, pretty well. You probably got a lot of built in hype from your private investors who expected you to keep doing

SPEAKER_48: well, but if you're only kind of medium hot, you may struggle to match that same price. When you do go public, if the IPO window isn't wide open.

SPEAKER_18: So currently, because companies don't want to see their valuation declined in an IPO, which is messy for a bunch of reasons, they're just going to hold off and not go public. And, you know, at some point, uh, we're going to have to get some of these unicorns out. There's nearly a thousand now in the private markets and, uh, with a closed IPO window, that's only going to keep going up.

SPEAKER_97: And I'm really worried about, uh, uh, unicorn indigestion to pick a horrible metaphor there.

SPEAKER_221: It is, uh, exactly accurate. Um, if you look at what happened, uh, you know, so just to give you like from the insider view,

SPEAKER_24: um, it is, uh, the case that you'll have a private company. Somebody really wants to own shares in it. There's competition. So, you know, you have a bunch of competitors who want to make that last, let's call it the Yuri Milner, the Kleiner Perkins, the soft bank final bet before public.

SPEAKER_00: In other words, a large amount of money that you're pretty sure is going to double or go up 50% in the next two years. Like, uh, Yuri Milner famously did by overpaying for Facebook and Twitter. Kleiner overpaid for Twitter. It's kind of like a classic late stage bet.

SPEAKER_24: Now a bunch of people get in on that and you got other people and you got 10 people doing the same thing. Prices go up. So now maybe you're going to get 20% pop. You overpaid for the company. The IPO window is not great. The fundamentals of the business are not great. You go out by a SPAC. It doesn't perform. And now what was a $4 billion company in the private market shoots up to 10 billion in the public before crashing down to two. And you look at that as a private market investor like myself. I'm just like, why did we take this out? Why didn't we just quietly build without the distraction? I would have much rather certain companies that went out by these IPOs didn't. I don't need the liquidity. And, you know, desktop metals, perfect example. We had a small bet on that company. It went way up, way down. If you look at their stock price, I would have been totally fine with them not going public.

SPEAKER_00: And then the public markets don't understand how to be patient. The people buying SPACs were day traders. SPACs are earlier inventory. They're companies that are more nascent. So you have to have a venture or private market investor mindset or at least a public market mindset with a long term angle.

SPEAKER_52: And what did we get? We got day traders on it. The worst possible situation of who should not be trading a stock that is trying to figure out

SPEAKER_29: how to scale their revenue and what their exact product market fit is, which I said over and over again, like you really, as a private public market investor, want to be investing in Nikola, Rivian, you know, whatever company, Virgin Galactic, like, do you actually have the appetite

SPEAKER_155: to wait five or 10 years and then look at the stock price? You don't. That's the challenge here.

SPEAKER_28: If you are an accredited investor, you need to know about special purpose vehicles. Well, it's an investment vehicle that allows up to 250 investors to invest up to 10 million dollars in one entity on a founder or startup's cap table.

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SPEAKER_07: But so then why was there such a push? I mean, like, you're saying you don't need the liquidity. You might not.

Jason Calacanis: There may be other people in different positions. But also, it does feel like, nevertheless, there was a big push to put out.

SPEAKER_156: I have my own there, but I want to hear you two guesses. I know the answer, but I want to hear you two guess.

SPEAKER_150: Molly, I think you asked the question. So I think you should answer first. What?

SPEAKER_156: That's ridiculous.

Jason Calacanis: Why do you think everybody-

SPEAKER_150: That's not how this works it out.

Jason Calacanis: All right. I'll find- I mean, they just say they didn't make money, right? It was a hot market. There's a ton of money in the market. Why wouldn't you? Because there's a lot of day traders and retail investors and people making bad decisions. So like when there's blood in the streets by property, the corollary of that is like, if somebody is throwing money out the window, go toward the window. Yeah.

SPEAKER_18: Get a bag and collect it all. And I think that's exactly what happened. We saw the value for software revenues in particular scale dramatically in the back half of 2020 as the market realized that everyone wasn't going to stop buying software. And so startups and other tech companies were in a great position to essentially grow quickly. Well, their costs went down. You didn't need an office anymore. You could hire wherever you want. And so these companies really became not only a safe bet because, you know, they weren't like a consumer cyclical that was going to fall out of style. You know, people just kept putting money into them. It made startups look more valuable. It made public companies look more valuable. So why wouldn't you take your company out then? It was essentially a free pass to getting a great IPO pricing and therefore an enormous fundraise, a lot of hype. I mean, going public isn't just the bad stuff that Jason's talking about. You know, the day traders and the haters and so forth. I mean, you know, Tesla's public and that worked out great as a fundraising mechanism for the company. It was enormously important.

SPEAKER_97: So, you know, to me, timing, money, liquidity, many things came together. It's just now kind of behind us, if you will.

SPEAKER_24: Yeah, you guys got it perfectly. Um, we, if you remember just two years ago, Dave Portnoy was trading stocks and his rallying cry was stonks go up, stonks only go up. And if you literally are in a world where everybody's saying stonks go up, then why wouldn't you go public? Because stonks go up. It was just no realization that they could actually go down. And what would it be like to be trading at if your SPAC was at 10? What would your stomach be like at three? What would, you know, if Robin Hood was trading in the private markets at $30 a share before it went public and now it's trading at 12?

SPEAKER_155: How can people stomach that? You know, like I'm sitting here, I could have sold my Robin Hood shares in the public in the private market for probably 20 to $30. I'm sitting here with the $12 stock. I distribute them to my LPs and I tell them, listen, I'm holding. I'm in it for the long term.

SPEAKER_24: But you have to make your own decision. And I am in it for the long term. So this is like very complicated stuff. Um, and people just got a little greedy, you know?

SPEAKER_18: Yeah. One more thing to throw in there is how quickly this happened. So in December, we saw Reddit and Via both file privately. JustWorks was going to go out.

SPEAKER_48: It pulled this IPO only for nothing cents from anyone else. So this went from kind of hero to zero pretty quickly. And essentially it was what? 45 days of software stocks shedding value on the public markets that ended this. And so that means the liquidity cycle for 2022, I keep forgetting what year it is.

SPEAKER_18: Amazingly enough, um, for this year, it looks kind of crappy. And I, I'm worried about VCs who do need the liquidity, Jason, whose funds are closing and whose LPs are tired of paper returns and want some paper, if you will.

Jason Calacanis: We are going to, uh, this is a nice place to tease ahead to Sunday, to VC Sunday school, where we're going to talk a little bit about what this does mean for this industry. Um, but we want to run through because there is a nice little list here that our producers have compiled of the most anticipated IPOs for 2022. The nodies are already asking, what does this mean for some of these IPOs? And so let's run through this with Alex. Uh, let's start with Stripe. What do you think? I mean, it's. Hotly anticipated.

SPEAKER_18: Yeah. I mean, that's, that's exactly right. Stripe is, you've talked to VCs about Stripe who don't have money in it. They talk about it like the one that got away back in college. Like they are wistful at the success of this company. So to me, everyone knows that it's hot. Everyone knows that it's huge. Everyone knows that it's doing well. I just want to know if that's actually true. And so this IPO filing is the one that's going to really, I think, deobfuscate the business.

SPEAKER_48: And Stripe has been very aggressive in certain ways to control its market positioning. You could say. In a mafia way. I, I was trying to align the entire fiasco. Day three of the mafia. I'm thinking about Phoenix and Sequoia and that particular saga in which they kind of bullied

SPEAKER_18: one of the most legendary investors in the history of technology into giving up $21 million. Um, cool. Well done Stripe. But now I want to see the proof. And I feel like it's been, it's been in the wings for so long, Jason and Molly.

SPEAKER_48: They're like, it's about time. It's a huge company. They have been, it's not a startup at all. It's not even a unicorn. It's just a huge business.

SPEAKER_254: So.

SPEAKER_28: Yeah. And just to look at it, if they're at 7.4 billion in 2020, that was the number in the

SPEAKER_24: wall street journal, uh, let's say they either went up 40% year over year, be high growth company, but who knows? Maybe we saw, you know, other companies have grown faster, you know, and they hit 10 billion

SPEAKER_29: to get to the $231 billion market cap record of Alibaba.

SPEAKER_35: Uh, they'd have to be at 24 times their valuation, you know, sales to their valuation, which is pretty rich as we've seen.

SPEAKER_245: Well, it, that would have been rich for a payments company last year, actually. Yeah.

SPEAKER_18: Um, I think it's much harder this year, a question about this, going back to my favorite topics, I'm boring is gross margins and how high quality this revenue is because 7.4 billion at 40%, uh, is not nearly as good as 7.4 billion at 75%. And no one's given me hard numbers on their revenue quality. So I I'm curious, um, and it's not a cheap business to run. They've hired all the smart people they can get their hands on, which is expensive. So, so let's, let's pull a number out of 30% margin and they're making 10 billion.

SPEAKER_29: They got $3 billion in earnings, $3 billion in earnings times 50 price earning would be 150 million.

SPEAKER_262: Whoa, whoa, whoa, whoa, whoa, 30% gross margin. Sorry. 30% gross margins would be 3 billion in gross profit after which we would deduct operating costs.

SPEAKER_48: So like. Sure. If it's 30%, they're, they're, they're, they're right.

SPEAKER_92: Okay. So let's, what, what would you guess they're turning when it comes to beating Alibaba?

SPEAKER_233: Oh, the latter. They're fine. Yeah. Um, okay. Got it.

SPEAKER_130: I, I want to at least 50% gross margins. Like 30% margin doesn't sound to me. Like I'm new here, but it seems fine.

SPEAKER_176: Well, if you want a 24 X sales ratio, that's. Yeah.

SPEAKER_93: Yeah. I mean, should we just assume though that at this point, beating that record is like, it's not the year for it. Like, sorry, Mr. Chance. Things turn around.

SPEAKER_48: Jason, I mean, think about March, 2020, how everything, everyone was, everyone decided in March, 2020, that the stock market was over. The economy was done. Venture capital was going to shut up shop for five. How long did that last? It's three weeks. Yeah.

David Friedberg: It was about three weeks.

SPEAKER_155: I think this time's different. I think this time is a fundamental repricing of assets that got out of control.

SPEAKER_54: And I think it's like a crash for some people, a correction for others, and then neutral for, you know, people with strong, predictable revenue.

SPEAKER_110: You, you, or index funds like I have.

SPEAKER_18: So yeah, I'm just going to keep on buying through the downturn here. Yeah.

SPEAKER_24: I mean, index funds are going to be least impacted and you can just keep, you know, it's, it's not about timing the market in that case. It's about time in market. Yes. I put their value. I'm going to take about, I'm going to set an over, under 135 billion. Uh, after one week of trading. So we'll take out a little spikiness. So on the five days, you know, whatever day they go public, the next week, you know, that day, $135 billion market cap at the close of business on the sixth day of trading. Uh, what do you got over or under Alex? Over.

SPEAKER_221: Okay, Molly.

Jason Calacanis: I keep, I mean, I, that long pauses me thinking about what Alex is saying, which is like, what's it going to look like when we really get a look behind the curtain, but like, look,

SPEAKER_93: the scuttlebutt around the valley is that they just print money. So I got to go over. I don't think it's not going to be a we work situation.

Chamath Palihapitiya: I should have set the line at 170. Then you guys would have had to work. Oh, that would have been a tough one.

SPEAKER_127: That would have been, yes. I might've taken the under on that. I set a bad line.

SPEAKER_155: I just thought if they're making 10, 13.5 times price to sales ratio after a week in a, in a choppy market, but who knows things could be better.

SPEAKER_108: All right. Discord is the next one. And you also have Reddit in this, but discord and Reddit are really enigmas, uh, as well to, to try to understand. We did see Microsoft wanted to buy discord for like 10 billion.

SPEAKER_39: That was the rumor, maybe 15 billion. Who knows? And their last private market valuation was 15 billion in September, 2021.

SPEAKER_243: Revenue in 2020 of 130 million. So tiny revenue, but a lot of users.

SPEAKER_149: So kind of like a Facebook story in the early days and Twitter story in the early days. And in fact, Google story in the early days, low high users, low revenue. What are you, what's your take on this company, Alex?

SPEAKER_18: Uh, I'm pretty bullish on discord in general. I don't know exactly how I would stock up its current valuation to its current revenue, but I will say as a, as a regular discord user, I'm amazed they haven't taken money from me yet. And frankly, I presume they will. And I presume there's a lot of folks out there like me who like to play video games, have friends, bring them together. And that demographic has money because we're buying stuff. And so to me, I can't believe they haven't said, Alex, come on, come on.

SPEAKER_48: Five bucks a month for high quality audio. Come on. And I'll, I would just say yes, instantly. I spent hours on discord. It's amazing.

Jason Calacanis: And discord has really become the messaging platform of choice for a lot of young people. A lot of gen Z's who are not necessarily even using it for games. Like maybe they got introduced via games, but now they're using it to talk about homework. I mean, that is really happening. And so you, they have built a pipeline, you know, for the same reason that like. Apple used to be in schools and Google and Microsoft now are they've built this pipeline of future paying customers that is super loyal and has an entire friend base and community existing there. Like, I do think that there's. It has a lot of value and growth potential as a product. I just wonder if it is in the category of a, what did I call a medium hot unicorn?

SPEAKER_93: Like in terms of it would discord risk and IPO this year.

SPEAKER_00: Massively under monetized. So lots of users, not a lot of revenue.

SPEAKER_24: If you've got 150 million monthly active users, but you're only making 150 million dollars a year. Exactly. What's going on here? Like 10 cents a year. I mean, what's.

SPEAKER_102: Yeah, 10 cents per user per month is insane for the amount of quality. What's going on here?

SPEAKER_24: You know, Facebook's making, you know, in the US, what? 75 dollars a year per user. I mean, it's massively monetized. Yeah. So that means a lot of upside. If the team can think of a business model and a lot of people are using it as their go

SPEAKER_29: to for like group chats, like, you know, as opposed to signal or Facebook messenger or whatever. So I wonder if it's more like Twitter in that they'll never be able to figure out the monetization or more like Facebook and Twitter's doing fine.

SPEAKER_306: Twitter's doing fine.

SPEAKER_307: I'm paying Twitter every month now. I'm on Twitter.

SPEAKER_308: I'm on that $3 blue.

Jason Calacanis: I don't necessarily like, I don't want to encourage this because discord has a lot of data and it would just be like, and it could get ugly in a hurry. But like, discord does not have ads, right? So it has this super, I mean, discord could literally turn on ads tomorrow.

SPEAKER_311: It would kill it and kind of kill it.

SPEAKER_149: Yeah. Can you imagine like the next Netflix or Disney movie or book of Boba Fett advertising on discord?

SPEAKER_54: I mean, it would kill it or like your new computer, you know, peripherals, Apple ads, it would kill. Yeah.

SPEAKER_176: That's the second mention of this. I'm sorry. What, what the hell is book of Boba Fett? Jason keeps dropping this. It's Boba Fett. Okay.

SPEAKER_221: Boba Fett was like a super fan. Wait, wait, I know how far, how basic do we have to go?

SPEAKER_28: Do you know who Boba Fett is? Had like three lines in the whole original trilogy. Yes.

SPEAKER_24: Boba Fett then became a nerd geek out, you know, enigma. Okay. And then they decided to do massive fan service and build out the concept of the Mandalorians, which is the armor he wears and build out his character arc. And so there's a new series after the Mandalorian. Jon Favreau is now building the world of Boba Fett post being a bounty hunter.

SPEAKER_29: And it's awesome.

SPEAKER_320: Is the Mandalorian origin story?

SPEAKER_29: The Mandalorian season two is coming.

SPEAKER_24: Mandalorian is a religion based on weapons and armor. Boba Fett is a Boba Fett is a bounty hunter who had acquired Mandalorian armor. Okay. You know, there's like an enigma and yes.

Jason Calacanis: Oh, they're, they're world building big time. Literally based on this like throwaway character who got built out in the clone wars. Yeah. And now it's like, we go from car talk to star wars nerdery.

SPEAKER_97: Like, yeah, I just want to say that there's worlds of science fiction out there that isn't trash. They're trying to recycle it to make money from Disney. So if you want to read something better, just hit me up for some book recs.

SPEAKER_288: Absolutely. Well, what's your best?

SPEAKER_324: What's your best sci fi book of the last five years? Most a memory called empire. Oh my God.

SPEAKER_331: That's what I was going to say. You stinker. I was like waiting for it to come around to me. So I could be like,

SPEAKER_332: I don't, I'm not even aware of this. And a desolation called peace.

SPEAKER_18: Yeah. Those are fantastic. Or the salvation sequence is tremendous. Um, Ada, Ada's, uh, terra incognita's, uh,

SPEAKER_21: This is all by an author named R.

SPEAKER_02: Hattie Martin.

SPEAKER_21: Hattie Martin. Yeah.

SPEAKER_340: She's a wizard. She's amazing.

SPEAKER_02: Wizard. These books are beautiful. They're like fascinating. I mean, Where would you put them?

SPEAKER_342: Are they Dune? Star Wars? Lord of the rings? Where do, where do they sit in the, It's more Dune-ish than Star Wars for sure.

SPEAKER_97: It involves a lot of discussion of culture in a, in a future context. And also the definition of civilization as it will evolve into the space age.

Jason Calacanis: Right. Because you have a, you have an empire that is colonizing planets and absorbing them, which is like kind of a classic, you know, classic thing in sci-fi. And, but the, these stories are told from the perspective of essentially an immigrant into that empire. Who's like in love with the empire and the culture that they've built, but also trying to maintain her own. I mean, it is, they are just so great. Good. Yeah.

SPEAKER_345: I, oh, wow. I'm, I'm in. So great.

SPEAKER_130: I can't believe we recommended the same one. I'm so excited. I feel like nobody else knew about these books. Feels like we got a,

SPEAKER_24: feels like we got it this week in service book club. Uh, and, and then we can get the author on too. All right. So we did discord. We did stripe.

SPEAKER_221: Yes. Let's do Reddit because this is crazy. Uh, Reddit. Talk about patient capital up in here.

SPEAKER_24: Well, I mean, it was bought by Condé Nast for like a case of like peanut butter. And, uh, you know, like a couple of old VHS tapes of the Hobbit animated movie. And then they spun it out. And then it became a juggernaut revenues over 350 million from advertising, according to the information in 2021. It's one of the largest sites in the world, 430 monthly active users. Again, massively under monetized at that rate 430 million monthly active users.

SPEAKER_108: Again, according to the information. So the price to sales at 15 billion would be something like 42 X and it's business models ads, which adds is a tough business model. I can't believe they don't have like a, a better subscription revenue,

SPEAKER_155: but what, what do you think broad strokes about Reddit?

SPEAKER_122: Yeah, I I'm bullish on this one. I just looked up my Reddit account. I've been on since June of 2008.

SPEAKER_18: And, uh, actually I was a user before, but didn't sign up. So I've been on Reddit really since it was like the lesser dig. If you go back in time far enough.

SPEAKER_353: Sure. Yeah, absolutely.

SPEAKER_18: And what's amazing to me about Reddit is how much I still fricking love it. Now, to be clear, that's because I found communities that I'm a part of, like there's an, there's a progressive metal community on Reddit. That's fantastic. There's a stop drinking community that I've been on for years. And so to me, it has, it has managed to find a way to scale micro communities in a way that is inherently sticky. And they have been tinkering with different ways to make money off of advertisements, uh, Reddit gold. I gave them money when that first launched. Uh, now they've got other little coins you can give out. They're gonna figure it out. I, I, I'm just, they found a way to keep us.

SPEAKER_137: And that, that to me is their magic. Any crossover between, uh, the sober metal heads.

SPEAKER_221: Is there any opportunity there with those two? The sober metal show and not drink.

SPEAKER_360: It's the, it's the latter day straight edge. Remember that movie?

SPEAKER_48: Oh, guys, you're killing me. Sorry. I am the only guy at the metal show who can actually see more than four feet, but I will say that it's, it's okay.

SPEAKER_21: Cause I remember shows now, like I, the last time I saw Slayer, it's just a blur.

SPEAKER_104: Molly, you, are you down with the Reddit or are, you know, is it just too like toxic masculinity? I have said it before and I'll say it again.

SPEAKER_130: Reddit is the only news source I trust these days. You love it. Okay. I love Reddit.

Jason Calacanis: No, I like, I sincerely love Reddit. I think that Reddit has figured out so much of this, like, BS that's happening everywhere else. This whole conversation about like what moderation should look like. And yes, Reddit did step in and introduce more moderation than it had. But what it has is communities who moderate each other. And I think that that is. That is the magic. Phenomenal. And that's why Reddit and Wikipedia are literally my go-to. Yes. Are there errors? Sure. Are there mistakes? Absolutely. Is there virality that can like make things go awry? Absolutely. But for the most part, the community moderation on both of those sites makes them to me, fundamentally trustworthy. Yeah. And you're saying to agree, Alex.

SPEAKER_97: Yeah. Reddit is like public discord and discord is like private Reddit, if you will. So to me, Hold on a second. Say that again. Reddit is like public discord and discord is like private Reddit.

SPEAKER_48: And essentially what they've done is they've found a way to scale community in two different ways. But, um, we used to joke that content is king and that's still partially true.

SPEAKER_18: But I, I think community is king is a much more trendy thing to say. And if you want to think about who's actually built communities at scale and maintain them. Well, there's the, those two companies right there and they're great at it.

SPEAKER_48: So I don't know exactly.

Jason Calacanis: Can you make money on community has been the ongoing question of the internet, right? Like, and unfortunately the only one who's figured it out is Facebook so far. So I think there is an open, I think I am less bullish on discord and Reddit as long-term business plays. I think like discord, Microsoft probably should have bought it. Reddit. I don't know what happens if it goes public because it is hard to, because it's one, there's, there's the perception of toxicity that is real, right? Bad stuff exists like in humanity.

SPEAKER_372: They seem to have gotten control of that though, right? Like they got rid of some of the more extreme groups when Alan Powell was there. Oh, sure.

Jason Calacanis: But like perception drives markets. And so the question is like, do everyday investors want to be in this? Do pension funds want to be invested in Reddit with Reddit IPOs? And I think that's still kind of probably, probably a no.

SPEAKER_29: Probably. I think what Reddit represents is all of those people who buy stonks, who believe in it are now going to get to vote with their dollars to buy one

SPEAKER_108: to 10 shares of Reddit, and then put that on their profile. And then say they're a Reddit shareholder and you got 430 million users there. It could become the most diverse share base of any company. And I think Tesla and Apple are probably in that group of, you know, they just have a lot of fanboys, fangirls, fans of their products.

SPEAKER_52: Can you imagine if 10% of Reddit users or 5% decided we should own the stock to support the company? I mean, it could become like an AMC type situation for that reason.

SPEAKER_108: Of the first three companies, I think it's got the most upside, not because of fundamentals, but because of the crazy fan base.

SPEAKER_374: Maybe Reddit should ICO. Bring back the ICO.

SPEAKER_24: The coin offer. Yeah, no, it would be worth 10 trillion. It would literally be the number three traded cryptocurrency. It would be. I mean, think about it.

David Friedberg: What if Wikipedia went public? What would it be worth? Yeah, Reddit, make a token. A trillion dollar company, maybe. Make a token, bro.

SPEAKER_377: No, don't listen to Molly. Molly, put $5 in the bad idea jar. Token's ruin everything.

SPEAKER_18: Don't bring ICOs back. I can't take it.

SPEAKER_380: That was just one. So brutal. One ICO, a true unicorn in the oldest sense of the word.

SPEAKER_24: No, Alex was trying to do, I remember this. Alex was like, I like to look at the fundamentals. I like to know the numbers. Hey, show me these geeking out to the earnings, the quality of the revenue. And then they're like, Hey, somebody attack crunch or crunch base is like, Hey, Alex, can you tell us do the same thing for this?

SPEAKER_00: And he's like, this is a white paper with seven spelling errors per page. And there's no product. There's no employees. You can't do any fundamental analysis on a poorly written novella.

SPEAKER_24: Yeah. You can't even do textual analysis.

SPEAKER_77: It was brutal. I will say though, the ICO boom was hilarious. Sure.

SPEAKER_384: Like super entertaining.

SPEAKER_18: Super entertaining. So Jason, real talk, no BS, no hedging. Did you put any of your own money into ICOs in the 2017 ICO boom?

SPEAKER_385: 0.0 dollars. Hey, there you go. 0.0 dollars. I know a scam when I see it.

SPEAKER_24: And I just said, you know, show me every time I met with at least 25 for investment, because I was like, Alright, listen, if this is getting this popular, I have to do my diligence

SPEAKER_155: here. I said, Okay, can you show me the product? And they're like, Yeah, yeah, no, here's the white paper. I was like, Oh, yeah, that's the white paper. Where's the product? They're like, Oh, no, we're gonna raise a hundred, you know, Tezos. Oh, we're gonna raise 100 million. And then we'll build the product. And I had them on the podcast. I was like, this is crazy. It's like, we're giving everybody the IPO reward for writing a poor version of a potential

SPEAKER_52: prospectus. So that was the framework that I it just clicked in my head immediately. I was like, I saw this during the dotcom era, there was a company, there were company,

SPEAKER_155: there was one company that went public based on a plan to build 20 internet companies. I forgot the name of it will come to me. And then there were companies like, you know, in a capital group or something like that, and vertical net, and they became worth all this money because they were going to build a website in every category. And people just were like, Okay, well, that makes sense. So it's going to be like 100 IPOs in one. Here's $100 million. And when you give people the reward before they do the work, that happens, whether it's an NBA player who gets some huge contract, like, you know, Zion Williamson is like, you know, getting huge contracts and, you know, endorsement deals, but he hasn't done anything in the NBA yet. That's a really bad thing, because then the person gets fat and doesn't work hard and has no work ethic. That's what happened in ICOs. People got fat, no work ethic.

SPEAKER_18: If you're a New Orleans Pelicans fan and you don't agree with Jason's analysis there of NBA player weight movements. No, I don't think you're wrong in the large part. I mean, think back to the nineties.

SPEAKER_48: People would raise money to go really raise money and buy servers. And it was a really risky proposition. We've de-risked a lot of startup building because you can now with $48 in an Amazon account, build something, test it out, get some data. That's the magic of today's startup market. You can do so much more with so much less before you need to raise money.

SPEAKER_21: Um, the ICO boom was the inversion of that, uh, mixed with cocaine and it was hilarious. I miss it. Pretty entertaining.

SPEAKER_66: I'm just saying. Except for the part where everybody lost their money. Tidy it up, attach some fundamentals to it. Yeah. Reddit.

SPEAKER_379: Or, or have a fundamental, you know, just one, like, you know,

SPEAKER_162: have a fundamental, sorry for being boring. My job is to be a buzzkill Molly. Like that's you recently had that job.

SPEAKER_05: I mean, it is kind of fun to just basically be like, hi, I'm wildly irresponsible now. Uh, you know, there's, there is a balance between these two.

Jason Calacanis: Like we, if we have a world where we have specs, a world where we have NFTs and a world where you have Reddit and Reddit is literally the meeting point for all of those.

SPEAKER_397: And why would we ever expect Reddit to do a traditional IPO? Yeah.

SPEAKER_342: Yeah. But yet they are something cool.

SPEAKER_221: You're ready. No, no, no, no, no. Do Reddit, do the IPO.

SPEAKER_29: You've got 350 million in revenue. That's real money. You got 400 million people using the product. That's a real user base. Like just continue on.

SPEAKER_24: Um, but you know, in fairness, like Molly, we just had a discussion about a company and you were enthusiastic and I said, let's make, let's think about doing the investment when they have one customer we can talk to, just one, because that is like this incredible chasm to cross. Forget about zero to one, like in the Peter Thiel sense. I like zero to one in the customer sense, like a paying customer.

SPEAKER_155: The amount of work it takes to get one person to take a credit card out is phenomenal. The second and third is like 1% of the work. Once you get one person to pay for superhuman or slack, the second and third are like, oh, well,

SPEAKER_18: we've already proven somebody will pay for it. I, I still recall the one time I did that. Um, I, I built a little teeny company, but I was, uh, between high school and college with some friends and, uh, we launched a tech, which covered it ironically. And I recall the first time people gave us some money.

SPEAKER_48: I was like, oh, we did a thing. And I, I still remember that moment. It was, it was awesome.

SPEAKER_130: It's like putting your first dollar on the wall. And then you start to get that customer feedback that changes how you operate. Yeah. No, a hundred percent.

SPEAKER_108: That's why you get actually actionable feedback, like skin in the game, feedback is so much different than, you know, your cousins, fraternity brothers,

SPEAKER_149: feedback on some free software. And they're like, this is incredible. It's going to change the world. It's like, okay, give me 10 bucks a month. And they're like, yeah, no. Okay.

SPEAKER_07: Should we do, we've got a bunch of other, I mean, the IPO slate is full. Should we do like a lightning round? Like yes, no IPO.

SPEAKER_407: Yes, no IPO. Sure. All right. Yes, no IPO. Impossible foods. No.

SPEAKER_39: Beyond Meat is losing money. Impossible foods has to be losing money. Not the right time for them to go public.

SPEAKER_97: Also commodity business, overplayed market category.

SPEAKER_18: Everyone's going to pile into it. Like if, if they had pulled off a Tesla invented the category and also scaled the, and owned most of the market share, I might have more faith, but I mean, it's, it's, it's soy in a little package.

SPEAKER_193: It's not hard to redo. So not defensible. No.

SPEAKER_07: All right. So that's a solid no. Yes. No IPO. Instacart pandemic. Darling saved a lot of people's bacon pandemic. Save their bacon.

SPEAKER_340: It's gotta go public. It's going to be a mess.

SPEAKER_29: Yeah. I say no on this one. I know it has to go public because it's worth so much money and so much

SPEAKER_108: has been plowed into it, but Instacart versus Amazon go pop, uh, door dash, Uber eats and whole foods owned by Amazon. It's like, I don't think they own.

SPEAKER_149: I don't think there's any real value here to the company. Like what is their actual value? They just have relationships with stores and relationships with customers.

SPEAKER_150: And so what they're trying to do lately is move into, um, kind of like the, the blue apron space, which to me,

SPEAKER_414: the worst possible business you could be in. It's not great.

SPEAKER_07: Oh yeah.

Jason Calacanis: Um, does that make them okay? Well then corollary since our lightning round to slow down acquisition target?

SPEAKER_121: Oh, no.

David Friedberg: Who can afford that? Cause we're money in the Eiffel tower. When it collapses down to five to 10 billion.

SPEAKER_221: Yes. Acquisition target like Peloton.

SPEAKER_416: Oh, there we go.

SPEAKER_221: Like, right. Like, oh, no, no.

SPEAKER_24: I'm saying Peloton crash. Now you can, I got you. You can talk about that. Uber could, you know, just like, uh, DoorDash, uh, DoorDash bought. What's the European company? Oh, just eat, just eat. And then, uh, Uber bought Postmeets. Both of those were, you know, whatever. When you're number three, four, five, six, seven, your, your acquisition bait, when the valuation comes to reality.

SPEAKER_66: Yes, no, yes, no IPO. Go puff.

SPEAKER_286: Quick commerce, 15 minute deliveries of snacks, household goods, et cetera. We have an interview coming up.

SPEAKER_245: Okay. So when you get to that, ask them about their, their overall economics,

SPEAKER_18: because I love it as a consumer. So I hope it's a great business. So I'm going to go, yes, IPO, because I want them to keep bringing me Advil and orange juice when I'm sick. It's just amazing.

SPEAKER_424: It's so fast.

SPEAKER_38: Mm-hmm I, I'm going to say yes, because I think that they know how to

SPEAKER_24: pick categories that are profitable and markets that are profitable based

SPEAKER_427: on our interview that Molly and I did with the founder.

SPEAKER_29: I think they have discipline and they understand that they need to be convenience store margins, not grocery store margins, which is the opposite of

SPEAKER_24: Instacart. So it's the anti Instacart. I don't think they want to try to make money off of your cereal and bananas.

SPEAKER_427: I think they want to make money off your vodka and Advil. Yeah.

SPEAKER_97: And vodka and Advil are small, high margin, and you're going to pay for them when you want them, unlike oranges. Like you'll pay out the nose for vodka. If you run out. Yeah.

SPEAKER_380: Popkin Advil breakfast of champions. And finally, yes, no IPO chime.

SPEAKER_18: Uh, just for Hunter walk. I'm going to say yes. Okay, but what do you really think?

SPEAKER_431: They told me that they were EBITDA positive, like in 2020. And I was like, okay guys, we'll talk adjusted EBITDA or like big kid EBITDA.

SPEAKER_18: And they're like big kid EBITDA. So theoretically they have a history of material profitability.

Jason Calacanis: So Chime, if you are not familiar, by the way, is a neobank. So this is a hot space and neobank that offers no fee online banking services. It just, well, it means new, but it also means basically, let's be real,

SPEAKER_07: a fancy skin over somebody else's FDIC insured product. So neobank is not a real bank.

SPEAKER_437: You can't take the curtain down like that and show people the behind the scenes.

SPEAKER_29: So instead of neobank, instead of saying new or neobank, we could say faux bank. Sure. Facade bank. A banking facade.

Jason Calacanis: Yes. It makes banking nicer. Or it's actually just like the request for startup that we made vis-a-vis Amazon,

SPEAKER_130: like put a nicer, friendlier interface. And then they do nice things like, um, they'll give you a little bit of a payday loan. Yeah. Got it.

SPEAKER_443: Yeah. It's a banking front, if you will, if we're going to go down the facade analogy. That's a good way to put it.

David Friedberg: But it's not a front in the mafia sense, like Stripe is a mafia. Right. Exactly. Yes. Stripe is a mafia. Chime is a front.

SPEAKER_449: It's not a mafia.

SPEAKER_451: Chime is a-

SPEAKER_449: Oh, God. You're going to get some emails for this show. Sorry.

SPEAKER_108: I know, right? Of course. Who cares? We can have fun. So yeah, I don't know enough about Chime, except they have over 10 million account holders.

SPEAKER_155: That's kind of hard to fake. So when I look at an assess a startup, I look at what's hard to fake when I don't know enough about it.

SPEAKER_108: And I think faking, you know, whether it's, uh, you know, when you start to get into tens, millions to tens of millions of people using a product, it's just very hard to fake or manufacture. Uh, so especially when it's a paid product or it involves a deposit.

SPEAKER_155: So to open up a Coinbase account and actually trade something or, uh, a Robinhood account and trade something where Chime and make a deposit or Wealthfront, shout out, just got bought by UBS. Yum, yum.

SPEAKER_149: Uh, all of that stuff takes real work in the real world. And so I, I say, this is a yes for me. I say IPO. I say go. Did you own Wealthfront stock?

SPEAKER_155: I tried to invest early on and they had closed around. I said, Hey, can I reopen? And they just like, how much you want to invest? And I told them the number and they're like, Jake, how are you? You're an advisor to the company. And they gave me the amount I tried to pay for this early in my career. When it was like a one year old company in equity. So free, I got a free roll.

SPEAKER_457: Uh, it's good to be.

SPEAKER_456: Yeah.

SPEAKER_459: You're, you're buying me lunch next time I see you, Jesus. Or more or more. You never know, Alex. You never know Alex. Lunch is good. I don't, I don't want to be any further.

SPEAKER_462: I'll take you to the same place. I took Molly to lunch for ramen.

SPEAKER_465: It has a tendency to expand the possibilities of a person.

SPEAKER_66: He's not going to throw you in the pool at the aria, but he is going to take you to this one special lunch and everything is going to change for you, my friend. Okay. As long as Clay Thompson is there to give me a hug.

SPEAKER_466: If ramen is for closers, I'll leave it at that.

SPEAKER_221: Ramen is for closers. All right. Listen, if you would repeat back to us, Molly, if you'd be so kind.

SPEAKER_24: Yes. To repeat back to us all the IPOs, we did yes, no IPOs. And then I just want to go around the horn and pick our most favorite,

SPEAKER_00: our wild card, and our least favorite. So most favorite, our wild card, one that we just love for some weird reason,

SPEAKER_470: and then our least favorite. All right.

SPEAKER_397: All right. So our list to recap is Stripe, Discord, Reddit, Impossible, Instacart, GoPuff, and

SPEAKER_17: Chime.

SPEAKER_427: Let's do least favorite first. I'm going with Instacart as my least favorite because the valuation doesn't match reality and competition headwinds. Least favorite, Instacart. All right, Alex, you're next.

SPEAKER_18: It's a tie between Instacart and Impossible Foods for the reasons that Jason outlined.

SPEAKER_97: And I just want to say that people kept telling me that everything was going to be different this time with low margin, high cost deliveries, and I never believed it.

SPEAKER_475: Yeah. This time it's going to be different. What do you got? My least favorite in the IPO department actually is Discord. What? What? Why?

SPEAKER_07: Discord is my favorite in many other ways. I just don't necessarily see Discord going public in a down market.

SPEAKER_108: Okay. All right. Okay. Yeah. Now let's go for our favorites. Our favorite in all of this, the company, I'll define our favorite is strongest IPO.

SPEAKER_149: And what do you got, Alex? Strongest IPO.

SPEAKER_97: If it's strongest IPO, not favorite, it's Stripe. If it's favorite, it's Discord, just to piss Molly off.

SPEAKER_24: So favorite would be, well, let me rephrase that. The one that will be the best investment if you hold it for 10 years. Oh, Stripe. Yeah.

SPEAKER_486: Okay. So I'll go with Stripe too.

SPEAKER_28: Yeah. It's kind of obvious. Right now we go with our wild card. The one we love for some weird reason. And for me, that's Reddit.

SPEAKER_24: And I gave my reason before, which was, I think that it is the slow juggernaut that just going to keep growing 10% a year. They never change the interface and it's under monetized and they could go buy things and expand with that currency. And I think the stock is going to run up ridiculously because of the stonks user base who know how to manipulate stocks.

SPEAKER_127: Okay.

Jason Calacanis: Reddit became my favorite when you said that, like it would have been my favorite anyway, because I absolutely adore Reddit. And I think the smartest people on the entire planet are on that platform.

SPEAKER_07: And I am grateful to have access to them, but also the idea that every single one of them might buy Reddit stock is just beautiful. Weird. Weird.

SPEAKER_162: I love it. All right. I'm going to go with go puff because don't forget it is called go puff.

SPEAKER_48: It is designed to take care of people who are consuming cannabis based products, which are becoming more and more illegal around the world. And there is no one more likely to order a bag of chips and pay an enormous delivery fee than someone who cannot move off the couch. And so I'm making a long-term bet on college students existing all around the nation stoned off their ass ordering from go puff. Also, it'd be cool to see a vision fund company do well. You know, one of them.

SPEAKER_497: Oh, very nice. Oh, nice wild card.

SPEAKER_162: Little, that's a little dig slash high five. They back to zoom, the pizza company that was going to make robot van pizzas. I'm allowed to make jokes about them.

SPEAKER_503: Give me that. I ate the robot pizza. I almost invested in the company. Was it good?

SPEAKER_155: And I ate the pizza was a six out of 10. I ate from the pizza truck one night at our poker game. The pizza truck came because one of my friends was going to invest. And they had a mobile delivery pizza truck. That was brilliant. Here's how it worked. There were 40 ovens in the back of like a tractor trailer, like big, big car.

SPEAKER_52: Each one of them had a pizza in it already.

SPEAKER_00: And I guess it was refrigerated or they were frozen. I didn't ever got an answer to this, but this was our concept. You order your pizza, Molly, and it's driving to your, you know, 100 main street

SPEAKER_24: and you order two pepperonis. And then Alex ordered and you're, he's at 500 main street. And he ordered, you know, two veggie lover delights.

SPEAKER_00: It now knows the GPS location of the truck. It fires off ovens six and seven with the pepperoni on the way to your house.

SPEAKER_52: And you're watching through a camera in the oven, getting shots of your pizza. And you see the GPS location. It gets to your house. They hand you the hot pizza. Alex is watching his veggie delight.

SPEAKER_155: And they could take the 30, 40, 50 minutes of pizza hut because it's mobile in a robotic thing down to whatever. That part I love. I hate that. Part of the making the pizza in the store with a robot. It wasn't that much different than what pizza huts are already doing. Mm hmm. And I like soup to nuts robots. Robots that can go from, you know, a hunt to 100% of the job. That's why I did cafe acts. It's a hundred percent of the job. The pizza and the burgers got somewhere between 40 and 60% of the job, which to me is like doing zero. Yeah. You gotta get a hundred percent done. You can't do 60% robotic. It's not helpful.

SPEAKER_209: When you play your private poker game with your friends, which we've talked about offline

SPEAKER_97: before, uh, I forget what, what, like what stakes do you guys play? Like 50, a hundred or like a hundred, 200 is the standard game.

SPEAKER_41: Oh yeah.

SPEAKER_29: I was going to, but I would drop it down to a $500 buying game and play 10, 20 or whatever. Uh, if we did a, a smaller game poker game are like currency.

SPEAKER_40: Uh, oh, I can't just come. Oh, I don't know.

SPEAKER_373: You would not believe the extent I have had people offer me. Like I'll pay for your buy-ins at the game.

SPEAKER_83: If you can get me into the game. And I'm like, yeah, no, I can pay for my own buy-ins. No, you're not paying for me. I'll give you a hug. If you let me come. That's all I'm ever gonna. Yeah. I'd like to host a smaller game.

SPEAKER_07: I've been here. I'd like to host. I've been here three and a half weeks and have gotten three emails requesting to be part of Jason's poker game. Yeah. Sorry.

SPEAKER_527: I'm like, oh, okay.

SPEAKER_523: I might put it in my Twitter bio. Like I cannot get you access to Jason.

SPEAKER_48: The seats don't come up. Yeah. I didn't say this. Molly, congrats on the, on the career move and so forth. I didn't. I should have said that at the absolute top. You're an absolute treasure.

SPEAKER_97: And it's a treat to get to hang out with you more. And I just want to say good luck on all things that are new. I'm really proud of you and excited.

SPEAKER_529: You're the best, Alex. Thank you.

SPEAKER_29: All right, everybody. Thanks for tuning in. Thanks to Alex. Thanks to Molly. Follow Alex at Alex. And then go ahead and go into your podcast player and search for equity tech crunch and subscribe to his podcast. It's amazing. You get more of what you got here today and a follow at Molly would follow at Jason, yada, yada, yada.

SPEAKER_427: We'll see you all next time. Bye. Bye. Bye. Bye.

SPEAKER_533: Hey guys. Rachel reporting here on February 14th and 15th. We'll be hosting a founder university intensive. This is a two day program for founders. Now this course is only open to women founders.

SPEAKER_535: We'll be hosting a course open to everyone on May 9th and 10th. You can apply for both at founder dot university and applications for the

SPEAKER_536: longer 12 week founder university program are due on February 14th.

SPEAKER_537: And you can also apply for those at founder dot university. Follow Jason and Molly on Twitter at Jason and at Molly would.

SPEAKER_533: If you're not a boomer and prefer TikTok search for this week in startups to find the fan account at this underscore week underscore in underscore startups and

SPEAKER_536: our official account at TWI startups. But honestly, the fan account is way better than ours.

SPEAKER_537: And if you're still not tired of hearing from Jason six days a week,

SPEAKER_539: you can hear him read his book angel at angel the book.com slash audible.