SPEAKER_00: so i guess that would make one wonder why do this when you could create a private fund with these private individuals and take 20 carry if you had the 20 gain or even a 10 gain on a hundred million if that does turn into a billion dollars in shares you would get 10 of the 900 million gain

SPEAKER_01: to be 90 million dollars so why go through all this to not get carried and going through the

SPEAKER_04: process to actually bring this to market i was reminded of that fact many times because it hasn't been an easy journey with you know the regulatory process with all the nuance of running a registered fund and now a publicly traded fund we take on a lot more overhead than your average private fund or private vc i would think so for less reward in terms of why we did this i'm a little stubborn but i really wanted to see this exist in the world this week in startups is brought

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SPEAKER_01: today all right welcome back to this week in startups today we're going to talk about pre-ipo tech companies everybody is interested in owning tech companies before they go public don't i know it i'm an angel investor in hundreds of companies and i frequently have people say hey how do i get in on spacex how do i get in on uber or airbnb before they went public well uh the answer is it's very difficult only about six percent of people in the united states are accredited investors so it's been incredibly hard for the other 94 percent to get access to private companies why because the sec the securities exchange commission wants you to be an accredited investor which means you have a lot of money two hundred thousand dollars a year in revenue income or a million dollars in net worth there's a little bit of a higher standard as well called qualified purchaser that's five million dollars

SPEAKER_00: in liquid net worth putting all that aside if you were a professor at myu teaching economics and

SPEAKER_18: venture capital or the economics of venture capital and you made a hundred and fifty thousand

SPEAKER_01: dollars a year you would be unqualified to buy spacex shares let's say or another private company

SPEAKER_18: stripe that's very popular but if you had a trust fund and your parents gave you a million bucks or

SPEAKER_01: you inherited an apartment in manhattan across from this professor and you were a complete degenerate idiot you could buy shares in companies why does this exist well we'll talk about it today with our guest who has a publicly traded stock that you may have heard of in the news it's called destiny and you

SPEAKER_21: can look at the ticker symbol it's a dxyz and his name is sohal prasad welcome to the program

SPEAKER_18: thank you for having me jason okay i saw you on cnbc earlier this week the stock has caught a little

SPEAKER_01: bit of attention but i want to talk not about the sensationalistic stuff and it's been up and down and maybe it's caught a little bit of that meme heat that stocks sometimes do on the reddit wall street bet board or social media let's start from basics what have you created with destiny 100 i think you i've heard you refer to it as destiny destiny 100 dxyz so tell us about the name of the fund and the

SPEAKER_27: structure and why you created it so the fund is called destiny tech 100 and we created it because

SPEAKER_28: i really wanted this to exist for my dad my friends everyone else in the world stepping back i moved to silicon valley when i was 18 and i got to participate in building companies and

SPEAKER_04: investing in companies like you and along the way i realized when my dad asked me he said what should i invest in and this was uh about five years ago and you know it was this moment where he realized i wasn't full of it and i had no good answer for him i told him you know spy or qqq because i didn't know how to recommend an angel investment or late stage secondary stock and the idea that kind of came to mind is why isn't there an spy or qqq for private tech and what would it take to make that exist and so that's really what we set out to create is a vehicle by which anyone with a brokerage account from the convenience of their brokerage account can invest in the companies they know and love the companies

SPEAKER_29: that are shaping the future across industries and that are not yet public just to be not yet public

SPEAKER_01: these are private companies uh and so you're gonna put a hundred names in there you've i think i

SPEAKER_33: understand put maybe bought about 25 or so yeah 23 right now um and we'll be growing that over time to

SPEAKER_00: 100. okay so what is this type of vehicle called i've heard closed end fund i've heard a couple of

SPEAKER_01: different names for it what is this structure called and then how does it work to set one of these up and go public we've heard of specs we've heard of direct listings we've heard of the traditional ipo somehow you've ipo'd and you're able to trade these shares on the market through your robinhood account or your e-trade account so tell us about this structure and how you found out about

SPEAKER_05: it and is it common because this is the first i've ever heard of it yeah so the technical name for the

SPEAKER_04: structure is a listed closed end fund um but effectively it's an exchange traded fund so it's listed on the new york stock exchange like another equity security maybe common stock in uber and anyone can buy or sell it from their brokerage account in terms of kind of where it fits in to this ecosystem a lot of what people traditionally know as etfs are open-ended funds where and there's a slight nuance in terms of ours being closed ended as we brought it to market and we looked at what are the different structures people can create if we want to enable this there have been folks in the past um like kathy woods arc ventures that have created what's known as an interval fund and that was pitched to us by many lawyers and uh what it's also a form of registered fund the challenge is it doesn't have real liquidity it has what i call fake liquidity um so you can they price a net asset value every day you can invest you know every single day but if you wanted to sell that stock that you can actually

SPEAKER_38: only sell once a quarter when they generally do a repurchase offer for about five percent um and so

SPEAKER_01: you know when i was thinking about it called an interval fund that's called an interval funds yeah i remember kathy wood raised one and so you've raised a closed end fund so you went out and you went

SPEAKER_00: to private individuals to endowments who gave you the money and then how does it become a public stock

SPEAKER_04: is the step i'm curious about here yeah so we went out a few years ago to a number of individuals actually solely individuals over 200 of them and they were primarily founders of unicorn companies founders of successful companies there were a number of vcs personally rather than on behalf of their funds figures in sports and media and entertainment and they were all as you described earlier qualified purchasers and they have made money in tech they've made money investing and when we were talking to them uh we asked like this is the world we see a world where everyone can participate in these companies do you want to see that exist and they all voted with their dollars um so we raised just under a hundred million and set out to actually go and list this publicly um that second part yeah that's the piece

SPEAKER_00: i'm sort of interested in okay you get 200 people to put on average 500k in you get about a hundred

SPEAKER_01: million now they owned a hundred percent of the shares in the company so if there were there's a hundred let's just round it up to a hundred million if there was a hundred million and there were a hundred million shares they'd be trading at a dollar each or something to that effect

SPEAKER_47: am i am i ballpark correct roughly this works yep yeah then take us to the next part yeah and how this

SPEAKER_48: works yeah so to actually then list that uh we did something really interesting you know in our

SPEAKER_04: listing we actually had zero banks or financial institutions involved as underwriters or financial advisors and we almost took a diy approach um and we went and we figured out okay this is what we need to do to get our registration paperwork out there this is the process with the sec we spent um over a year almost a year and a half in that process with the sec going through registration we worked with the nysc who's been a great partner and then you know one day after we got approval uh it started trading and kind of went out with no fanfare it went out a few people heard about it and over the last three weeks uh that it's been trading uh as people discovered that this is possible for the first

SPEAKER_51: time um for most people um it's kind of taken on a life of its own one thing that drives me crazy is

SPEAKER_54: when i want to buy something on a website but there's too much friction when i go to checkout right i want to make the impulse purchase i'll be totally honest i see something i like i got these new reader glasses you know what it was so easy because there was no friction that's what i want i want to be able to have a smooth and easy payment experience but it's gotta be safe and secure right i don't want people hacking my credit card and i like to have many different ways to pay i want to use my digital wallet obviously and then you know other people might be in the buy now pay later period of their life no judgments there if you want to be on a payment plan that might be a good idea for you if you're a merchant you got to be able to offer alternative payment methods apms this is critical and you know who's the best at this that's right our friends at squarespace squarespace payments makes it easy for customers to make purchases which equates to more revenue for your business super easy to set up and it's going to keep your revenue growth going up and to the right so check out squarespace.com twist for a free trial squarespace.com twist you get a free trial when you're ready to launch you just go to squarespace.com twist and you get 10 off your first website or domain purchase squarespace has the best design they constantly release great features like squarespace payments they study their customers you and i and they ask you hey how can we make this better and when they make it better they give it to you and it's for the same price that's what i love about squarespace every day i wake up with new features in that same affordable price squarespace.com twist for a free trial

SPEAKER_58: so you uh pull together this pool of capital those people own shares in it now it goes public those

SPEAKER_05: individuals who put up on average let's say 500k each they can then sell their shares in this entity

SPEAKER_61: correct exactly so it looks like a direct listing um that you mentioned earlier and so that was the

SPEAKER_04: means effectively we have these shares in this closed down fund they start trading on the nysc you have early investors who are subject to a staggered lockup who can sell some of their shares um you have uh members of the public my dad actually finally closing the loop on the story he got to buy in in the open market and so that's kind of our journey there and so it's been trading

SPEAKER_00: um at a pretty high market cap when compared to the actual holdings so you raised just under 100

SPEAKER_01: million so let's say it's 95 million you bought um how much in private company stock these 23 companies equal 50 million 25 million something like that um between 70 and 80 million i believe and then you still have cash reserves left i understand yeah we have some cash yep so it becomes public now it's become how many shares are outstanding ballpark and it's trading at so the the ballpark valuation

SPEAKER_04: they're about uh 10.87 million shares outstanding got it and you know i haven't looked at the closing

SPEAKER_01: price today but it's been 43 bucks so if it's at 40 bucks that's 400 million exactly so it's trading at about four times and it was trading at more i think when it people started finding out about it so it's trading at about four times the book value of those private companies and you would

SPEAKER_05: attribute that towards enthusiasm and the pent-up demand to own spacex and whatever else is in there

SPEAKER_28: yeah so uh one of the important things to note there is that we actually mark the net asset value

SPEAKER_04: on a quarterly basis so okay given how private tech um has uh you know suffered a brief pricing over the last few years sure we were investing through 2022 2023 and so a number of our positions have been marked down um and so the net asset value is actually as of december 31st 4.84 cents a share

SPEAKER_01: got it so it's trading at 10 times almost almost sometimes or ballpark and again because this is not invested advice we're doing some back of the envelope here math so that means there's a lot of pent-up demand here for those and then people um who put the original money and they must be selling yeah

SPEAKER_00: so they must be taking some chips off the table having had made such a great investment

SPEAKER_76: uh i'm sure uh we don't have direct visibility but um that is the kind of free market at work

SPEAKER_00: so what happens now with you know this asset trading can you it's a closed-end fund so that sounds like it's kind of done but could you sell secondary do another offering and say hey this

SPEAKER_01: thing's worth whatever it is 400 million in terms of the market cap of it and we're going to just raise uh another 100 million and issue another i don't know 25 of shares so we're going to go to 12 million 500 shares or 13 million shares whatever it is and then we'll have some more capital to go then deploy in the next set of companies is is that the plan here or is that a possibility exactly it's

SPEAKER_28: actually very timely earlier on uh tuesday april 16th i posted a tweet about us filing a registration

SPEAKER_04: statement uh with the sec for a shelf offering um that once approved and if effective um would allow us to raise up to a billion dollars through a series of transactions got it so you could raise by issuing

SPEAKER_01: more shares to the public and then or you could do it i guess through private institutions and then you go uh look for companies to purchase uh that are private and add to this exactly now you make money my understanding is you don't get it like i do as a venture capitalist other venture capitalists get 20 harry uh you just get two and a half percent every year of the value of the holdings is am i correct

SPEAKER_04: something to that effect that's correct we um we have a management fee you know ours is two and a

SPEAKER_51: half percent annual management fee no carry versus traditional venture like you pointed out is traditionally a two percent management fee and 20 carry so where does that two and a half come from

SPEAKER_00: i'm curious do you issue more shares or do you have the cash raised ahead of time because if you

SPEAKER_01: raised a hundred million if you had enough cash for two and a half percent you that would be 25 million be 25 percent of the principal that you deployed so where does that two and a half come from uh

SPEAKER_28: because you're obviously not charging shareholders right yeah it's similar to other exchange traded funds in that the uh fees are coming from the net assets of the fund every quarter so every quarter you

SPEAKER_62: get some amount of the shares you either sell them or not shares uh it's paid in cash so it's just

SPEAKER_04: a management fee from the available cash um helped by the fund so you have to in order to get that two and a half sell some shares every year uh we generally aren't uh necessarily selling shares for that purpose we have you know cash and so based on whether it's exits based on the available cash um just like paying for audit costs uh things like that that's one of the expenses of the fund

SPEAKER_00: so i guess that would make one wonder why do this when you could create a private fund with these private individuals and take 20 carry or maybe they in a secondary fund would only pay 10 let's say um one in ten so you could get one percent which is not different than the two and a half

SPEAKER_01: a million or two million a year whatever it happens to be probably not going to change your

SPEAKER_00: life or your team's life but if you had the 20 gain or even a 10 gain on a hundred million if that does turn into a billion dollars in shares you would get 10 of the 900 million gain

SPEAKER_01: to be 90 million dollars so why go through all this to not get carried i guess i actually started

SPEAKER_28: destiny almost four and a half years ago and in going through the process to actually bring this to

SPEAKER_04: market i was reminded of that fact many times because it hasn't been an easy journey with you know the regulatory process with all the nuance of running a registered fund and now a publicly traded fund um we take on a lot more overhead than your average private fund or private vc i would think so for less reward and in terms of why we did this um i'm a little stubborn but i really wanted to see this exist in the world and i actually do believe that regardless of us existing this would have been how the world goes towards uh it might have taken another five or seven years and we've kind of drove that and brought it forward but i believe you know over the last decade people have thought of different ways to uh let people invest in privates you've seen crowdfunding and equity crowdfunding style approaches syndicates as you're well familiar with yeah you've seen you've seen um you know ico's you've even seen specs um yeah when you think about a spec uh it's not necessarily a dream product in my personal perspective you know you you find uh someone influential uh give them a bucket of money um and then you say hey i hope you go find a good deal um and take a good chunk of fees while doing it you know we saw the huge boom 2019 2021 and my view is a lot of people were investing in those because they recognize that by the time you're waiting until a company goes public as an individual investor you're last in line and so the notion of a spec is okay there's an attractive deal potentially that the spec sponsor can go and find and by investing in the spec i'm getting to move forward one step and so that drove a lot of demand but you know as we've seen shake out um there are a lot of challenges with the model and i'm totally biased but i think if destiny tech 100 had existed that is actually the product i think a lot of people have been looking for listen a strong sales team can make

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SPEAKER_00: thousand dollars off your sock two well you would get diversification uh exactly into it because you're doing a hundred or even if you just did ten you would get diversification and you are not just buying one company i mean if you look and obviously my french mouth did a bunch of these spacs some of them turned out great some of them didn't and some of the companies we had i think two companies of

SPEAKER_01: ours go uh buy spac one of them desktop metal we love the company but maybe it was a little too early for it to be publicly traded and my fear became realized which was hey private companies you got to really take a five ten year view of them if you're a seed stage investor you're taking a 10 15 year view if you're a late stage investor you're probably taking a five year view and if you're somewhere in between you might be taking a 10 year view people started buying the spacks looking to flip them and trade them you know far too frequently you know day by day and became more like gambling like jobe vertical takeoff and landing desktop metal 3d printed metal these are great ideas these are really amazing venture investments if you can sit on them and you've got 10 years of patience man if 3d printing of metal and you know other materials and vertical takeoff and landing vehicles these are great but

SPEAKER_47: i agree maybe people would like to have a little bit of diversification yeah that's the main reason

SPEAKER_28: to to do it in your format exactly and so you get to have a broader exposure and also you know 25 years

SPEAKER_04: ago technology meant internet primarily uh today and some of the companies you just mentioned it is across vertical so it doesn't matter if it's ai or aerospace uh enterprise sass or healthcare or finance they're all impacted by and shaped by technology and so now venture-backed tech very much is driving a lot of growth across all industries and so part of destiny existing is okay with people who are whether it's ride sharing or delivery or um many of these companies that people use every single day you know you might use figma every single day or you might use um another tool how do you actually you believe in the company you know it you love it how do you actually own a piece of these companies

SPEAKER_62: that are shaping the future that's really what it comes down to yeah and it's been pretty hard um i

SPEAKER_01: think there should be just a sophisticated investor test then you could let people prove that they understand the risks associated with these things let's talk a little bit about what it's like to have the stock um not follow maybe logic or you know the the valuation and what that's doing to your day-to-day because i don't think anybody who's doing something like you're doing here wants to see it

SPEAKER_00: appreciate that quickly and then come down and have 20 30 swings that's what's happened the last couple

SPEAKER_01: of weeks so let's talk about the swinging nature of this and what's happening with it and then you know what your plan is to kind of get to normalcy here um and is that kind of a goal to have it be appropriately valued or do you just think hey if people want to overvalue it a bit where they get

SPEAKER_47: super aggressive that's just the market um or are you concerned about hey maybe people are getting

SPEAKER_28: ahead of themselves here yeah it's a good question you know people have been telling me over the last

SPEAKER_04: few weeks that oh this is very timely what you're doing or they look at it oh it's a sign of the times it's a sign of excess or froth in the market and um you know i always smile when i hear that because in my perspective i've been working on this for a decade you know i founded a company called forge which is the largest secondary market uh for private tech shares um you know destiny we started four and almost four and a half years ago and so this wasn't about oh today is a very opportune time to list this is about kind of seeing a longer term view on how i want the world to look uh what kinds of products should be out there and working hard to create it so when i zoom into the last three weeks i still think it's just a market discovery you know two years ago most people hadn't heard of destiny today many more people have um two years from now even more people will have and so we take a very long-term view on you know what does the world look like whether it's for the tech 100 and what we need

SPEAKER_51: to do to achieve the goals there or more broadly um and how do we go and shape and create them yeah i

SPEAKER_00: mean this is one of the aspects of having a democratized financial system is that people can make bets um without doing any research they can make bets with doing tons of research they can miss things

SPEAKER_01: they can catch things they can they can figure out their own stories and we've seen this happen many times with you know gamestop gamestop and amc and here you know the majority of the fund is in spacex i

SPEAKER_47: think that's the big winner yeah so i think maybe people who want access to spacex this is just a

SPEAKER_04: convenient way to get in there correct so when we brought this to market we had a really important decision which is okay we have this idea of destiny tech 100 existing i believe it can be done from everything i've seen in the market and and help drive in terms of private market liquidity now we've raised the capital but as we go through that process are we going to go and list this publicly with an idea and zero companies in the portfolio then you might you know we might be having this conversation you would say hey it looks kind of like a spac but for a hundred companies not one on the flip side if we'd waited until we had all 100 then by the time individual investors and the public were able to participate they would in effect to be last in line again and so we had uh you know this tough decision to make and what we decided to do is okay let's get 20 to 25 uh companies in the portfolio to start in our case 23 let's go bring this to market and list it and let's build the rest in public while we're public and so that does mean that even our portfolio composition you reference spacex as one of the portfolio companies but that's going to shift and change over time as we keep building out the portfolio um so it's not meant to be um anything more than a point in time representation of the portfolio and it also means you know as investors are learning more about private markets and late stage venture capital as they're learning more about destiny and the destiny tech 100 they're going to kind of watch how we build it in public and uh you know for some people it might be the right investment for them today again not investment advice uh for others it might be something to watch and follow and learn about and track over a year or two or five um because we have a long way

SPEAKER_00: to go to deliver on the ultimate vision yeah it does seem to me you know if it's trading at 10 times whatever the book value is it's probably not a great idea but if it was trading at two times or three times you didn't have access to it hey maybe make the case for it but you have to do your own

SPEAKER_01: math as chamath always says do your own underwriting and the price and the entry price is super important there were people you know who uh didn't want to invest in uber when it was a 300 million dollar company they thought that was a ridiculous valuation it turned out it was an okay valuation to get in at the series b uh shout out to sherman who did that okay one complicated issue here and you i guess when you were doing forge face this and second market face it a bunch of people private companies sometimes don't like people buying their shares and doing stuff with them uh now elon and spacex um according to my understanding of it which is public knowledge um they have like an orderly process

SPEAKER_00: every six months people buy and sell shares but i do think they approve them i did read that there were some people maybe who weren't happy with you buying some of their shares and putting them into

SPEAKER_01: the destiny 100 maybe you could speak to the laws around and the you know the uh what manners around manners might be around i wouldn't say ethics but manners like hey i want to buy your shares and then put them into this and essentially you become a proxy to a certain extent on some percentage for their shares trading publicly so maybe you could talk a little bit about how you acquire the shares and then

SPEAKER_05: when people get upset how you manage that and then any legal issues around it sure uh a number of

SPEAKER_27: questions there so to start with in terms of how we invest how we acquire the shares what we did is

SPEAKER_04: we set up a pretty flexible mandate and we view our mandate as for the fund and the end investors best execution um that means we're not tied to any one uh way to acquire the shares and so we participate in primary rounds uh of companies so imagine the later stage series whether it's cd efg and so on we've um participated and can participate in bridge financing convertible notes or other things that the company needs as part of their uh journey uh and growth uh we've done secondaries um from founders or management early employees we work directly with uh vcs or other early investors who might be looking to drive liquidity in some of their portfolio uh realize some of their markups uh we also buy through secondary marketplaces or brokers like forge and its competitors and so our goal is taking a look at the entire market and saying okay for the companies that we wish to have in our portfolio what are the best methods to access this what's the best prices what's the most effective efficient way to do this and then going and executing there and so that's super important because we're not just focused on primaries or secondaries and i think um you know it's one of the trends we're going to see over time in the next 10 years across venture as a whole it used to be either you're a vc or you're a secondary fund and now what you've seen already behind the scenes at many vcs and i think you'll see more of is no you're just an investor and you might buy some secondary whether it's a tender offer whether it's from an employee uh you might buy primary um and those kind of lines are getting blurred

SPEAKER_51: just in terms of people thinking about this as exposure into um the underlying company i totally

SPEAKER_00: understand that there are shares available in a company like stripe one of the founders might want

SPEAKER_01: to sell their shares doubt you're going to get them to do that they probably have their vcs on the board you know handling those transactions but there could be early employees or seed investors who maybe want to clear part of their position and then yeah you might have some company that's doing their series c or d and you could participate in it just like any other vc and i guess you just have to make them aware that you're going to do this that could be a priced round or it could be not a price round it could be convertible which means you don't actually own the shares just yet

SPEAKER_47: you have basically given a loan i don't think that has much of a a legal issue does it um owning convertibles convertible notes versus owning actual equity no as long as from from our side we have to

SPEAKER_04: disclose publicly and we have audited financials and everything else so the disclosure is super important but that's one of the benefits um of us being you know registered and listed is we do have these obligations to be transparent and our disclosures are reporting people can go and look you know what

SPEAKER_77: are the underlying holdings that we have okay cloud computing has revolutionized startups over

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SPEAKER_00: people who were upset who got upset about you owning the shares and and how do you manage that

SPEAKER_28: yeah this is the final piece of the puzzle yeah the story there it's it's an interesting one because

SPEAKER_04: it's never again just a point in time when you zoom out at the secondary markets as a whole right you had like you mentioned second market uh and this uh first era of secondary markets that were uh transacting and facebook and twitter and a number of the companies of that time then you had this low post facebook where uh secondaries were almost a bad word um in venture and um you know the deals that were done were done in back rooms kind of privately lawyered and negotiated agreements when i founded forge in january 2014 it still wasn't considered kosher to be talking about

SPEAKER_47: secondaries yeah that's a very good point i mean mark pincus uh with zynga and i remember some other companies uh we had invested we were investors in zynga they had actively started writing into their

SPEAKER_00: documents and into stock agreements that there couldn't be a secondary sale but your position is is hey you people should be able to buy and sell shares no matter what they do yeah i think our

SPEAKER_04: goal is to enable the companies but there's also reality when you think about companies that have been private now whether it's 8 10 12 14 22 years without naming any names yeah that is a very long time yeah they have obviously um you know controlled their capital stack and their investor base but they now have at least hundreds if not more employees thousands of employees who are shareholders you have um you know dozens if not hundreds of funds that are shareholders you've also seen spvs and other vehicles by which people get access and so what happens is these companies end up being pretty widely held so to go to your original question the sentiment has always been on a company by company basis some founders you know view it as something that they want the ultimate say over some are much more open to a liquid and a kind of price discovery happening in the market there's not one right answer but i do believe that the world is going towards a place where this is there's just more and more of this again you've seen it whether with spvs whether with secondary market transactions whether um any other type of transaction and so part of our job is educating companies and founders and vcs hey what does it mean if you're part of the destiny tech 100 what kind of obligations do you have does it mean that your financials are being disclosed publicly and i actually see it as a pretty exciting opportunity for us do they have to put their do

SPEAKER_144: do you have access to their financials and do you have to pass those through if you own spacex or stripe uh

SPEAKER_04: i i we definitely don't pass along any company confidential information and so from our perspective one of the places we see ourselves is being able to bridge the private and the public capital markets got it so in working with founders and ceos and boards now there will be tens of thousands hundreds of thousands millions of individual investors who can be small beneficial owners in their company and that is an incredible audience to start engaging one two three four years before a company goes public start sharing their story not in the form of quarterly reports or earnings calls but in the form of here is our company this is our vision these are the kpis we feel are important one of the interesting things you saw in uh the late uh 2010s is you saw spot companies like spotify companies like uber actually voluntarily start to disclose yeah that was interesting in the lead up um to uh going public and that was completely voluntary and that's part of the maturation of a company and so again over time i just see this as being hugely beneficial to the companies and part of our job along the way is helping educate the companies on what that looks like for them yeah looking at it i mean you have

SPEAKER_00: superhuman we're investors in superhuman um and for me thinking hey you're trading some shares in superhuman you're explaining to people what superhuman is every time people talk about destiny if one of the 100 you picked was superhuman hey that's good for us as investors in superhuman and i'm sure you know maybe some people will try the software and if it works for them you know pay 30 bucks a month for

SPEAKER_01: it how do you deal with like selling positions have you sold any of the positions yet because i know some of us and i won't say which names but i know some of them have had a rough road and you mentioned

SPEAKER_28: that earlier how do you decide to exit a position yeah it's a good question so we have uh right now

SPEAKER_04: one of the first companies to list publicly was instacart from our portfolio and so that is now publicly traded and generally once a company goes public we will look to hold it for a while and then you know after a certain amount of its public existence start to systematically divest uh the position and then dividend um the uh resulting uh capital to shareholders and then some can choose to automatically reinvest it through a dividend reinvestment program others can keep the dividends but that's the kind of general idea with exits in the portfolio yeah over time one of the things on

SPEAKER_20: that one because that was a bit rough like they had 30 40 billion dollar valuation they went out at whatever seven eight billion that one didn't work out i take it yeah in the portfolio it's definitely

SPEAKER_28: one of the positions um that currently is below where we bought it but that's you know part of the

SPEAKER_47: uh like cycle from the last two years and it looks like it's only two percent of the portfolio so back

SPEAKER_01: to diversification here even if you lost two thirds on it you know it's it's overall if you if you lost 90 of it you'd still have you'd have lost 1.8 of the portfolio's deployed capital hopefully you make it up with some of the other investments and then top of the list 30 almost 35 in spacex yeah is that

SPEAKER_00: because it's appreciated in value so much or was that the initial investment was a third of the fund

SPEAKER_28: no it definitely has appreciated in value um especially over the last few years and so that's

SPEAKER_04: definitely part of uh how it became such a large part uh today um in the portfolio well listen i i

SPEAKER_01: think this is a really clever idea i wish you great success with it i'm fascinated by it um have you thought about buying there's a thing called strips buying strips or buying secondary in venture funds and so there's always been this tension like should a venture firm sequoia be a publicly traded

SPEAKER_18: company obviously that is not kind of how it works but it's kind of what you're doing so how do you think about the fact that you're going to be competing in some ways with late stage venture

SPEAKER_01: capitalists and then there are venture capitalists who might have some seed fund 100 million dollar fund and it's worth 500 million on paper they've got a bunch of equities in there they don't want to sell you the individual equities but you could buy a portion of a venture fund not asking for myself but you know that's our decision to do that but i could see you know a market for that as well where you said hey you know we put if you do raise the billion hey you know we put 100 million into these 10 venture funds just to get you know or even earlier access to the next cycle have you thought

SPEAKER_28: about that yeah we've definitely considered that there are regulatory restrictions around that in

SPEAKER_04: terms of what registered funds can do and how they can access it so uh i'd be remiss if i didn't point those out but you know over time with with our mission and vision of bringing public access to private tech doing so in as broad a way as possible we've thought about how are the what are the different tools we can use in terms of the regulations that exist today to be able to provide this kind of access and exposure across the board all right i have to ask you as we wrap

SPEAKER_62: here you did a public tweet storm i mean it was a little bit spicy uh you did this back in january

SPEAKER_00: two months ago i fired my co-founder best friend his shares along with those of all minority

SPEAKER_01: shareholders of our startups were cashed out at fair value as determined by an independent third party through a process known as reverse forward stock split we built a two billion dollar company together made over 150 angel investments together and lived together for six years for most in tech this is the part you don't say out loud that's precisely why i didn't want to share and you i went on to detail you know this breakup what did you learn and uh from this process and is there a way to protect yourself against your founder basically phoning it in if that's you know how you felt about it i'm

SPEAKER_28: sure he might feel differently yeah it's really tough i think you know it's one of those things that

SPEAKER_04: i'm sure you as an investor in a number of companies and anyone who's been around the ecosystem has seen not just one or two but many examples of this because at the end of the day you're dealing with individuals and humans and for me it's been one of the most challenging personal and professional experiences i've ever been through um and likewise i'm sure it has been for uh my former co-founder as well and all of that said these things most people don't talk about usually somebody hears one side of a story um and so i felt it was an opportunity to actually you know make sure that it wasn't just a one-sided story that we could actually um you know transparently share um you know what happened um and how to protect against it i think it's really tough i think it's not any different than any other relationship personal or professional that we all enter into uh where you go in with the best of intentions um and you have to you know always make sure that you're trying to make the right decision do right by the other person um but it's something i still think about and grapple with if you have any solutions i'm all ears um but in a way when you start a company together you start a family together you do anything with somebody you're taking a risk you're taking a bet on that

SPEAKER_76: person um and that comes with uh you know everything around that and this is you know one of the

SPEAKER_117: challenges you have to incent a team with equity if somebody's got a large portion of equity and

SPEAKER_01: they're not working hard you know it's kind of demotivating for the rest of the team they're all working for this person i'm not saying in this case you know uh taking either side but in the hypothetical situation which i've seen many times yeah somebody is just you know they're not there they're not even showing up for work or they're phoning it in they're just an employee punching a clock you do have to figure out a way to incent the rest of the team to stay and keep growing typically people do that by maybe issuing more shares in this case you bought them off the cap table they were forced or did they participate and just say yeah i'm willing to sell my shares let's just get a valuation done here were they forced to do it or did they opt into doing it so in the details

SPEAKER_28: probably can't go in more than what i i wrote there um but um it is definitely something that

SPEAKER_04: you know it's just been a learning process a lot of people have accomplished um you know a lot of people have dealt with it in different ways um and so part of it was learning about you know how do we do what's best for the company drive it forward because you know as we're seeing now there is a ton of opportunity i have since day one believed in this mission and vision um day one of destiny they want to forge uh i don't know how my entire adult life has been spent kind of building the private markets um and so i feel like there's a lot left to be done and had to keep driving forward all right well listen

SPEAKER_01: i appreciate your candor on all these issues uh congratulations on getting this thing public buying some stock uh looks like it's going to be quite innovative and we'll be watching the stock ticker dxyz good luck uh i'm sure i'm going to see you on a cap table soon when one of our companies breaks

SPEAKER_47: out i'm sure you'll be buying some shares uh continued success and thanks for coming on the

SPEAKER_03: program thank you for having me jason and hopefully many cap tables one thing i forgot to ask you how many

SPEAKER_15: people does it take to run this are you just like a solo gp you're just you and you're all the service providers or do you have like some crazy team of people sitting there trying to make decisions on

SPEAKER_85: this because buying 100 tech companies that sounds like a job for one or two people so we we actually

SPEAKER_04: have a full-time team of six and supported by a great team of kind of partners and service providers and so uh trying to keep it super lean um but also we have a lot to do uh to grow the business and so it's not just about investing in 100 companies it's doing that well making sure we're getting into all of the top uh companies and opportunities making sure we're doing so at the best possible terms um and so we have you know a lot to get be done all right continued success and we'll see

SPEAKER_168: you next time on this week in startups bye bye