SPEAKER_00: This Week in Startups is brought to you by LinkedIn Marketing. To redeem a $100 LinkedIn ad credit and launch your first campaign, go to linkedin.com slash thisweekinstartups and Drata. Don't let requests for SOC2 compliance reports slow down your business. Go to drata.com slash twist for 15% off.

SPEAKER_02: Beth Kendig and Knox Ridley are here to talk about stocks. They are analysts, investors, and the IO fund.

SPEAKER_05: Welcome to the program, Beth and Knox. Thanks for having me again, Jason.

SPEAKER_04: Good to be here.

David Friedberg: Okay, so I wanted to talk to you about what's going on in the public markets, especially through the lens of startups, which when I started 11 years ago

SPEAKER_07: investing in private market companies like Thumbtack, Robinhood, and Uber, they kind of were staying private longer.

David Friedberg: Stay private longer. Stay private longer was what everybody was saying. The private markets are more efficient than the public markets.

SPEAKER_07: Something changed along the way. What changed, Beth, and what is changing today even more with SPACs

David Friedberg: and companies going public, kind of when we would be investing them in private markets before they even have product market fit?

SPEAKER_12: Yeah, SPACs are an opportunity for investors to, you know, get into early-stage tech. I mean, you know, I cover tech, so for me it's early-stage tech. And I think there comes, you know, some pros and cons to that. So, you know, the positives are what you said, which is that, you know, the pricing is much better because it's so much earlier. By the time that Robinhood or Coinbase or some of these other ones go to the public markets, a lot of, you know, the returns are taken by the private markets and then, of course, the institutions. And so, you know, SPACs are an interesting opportunity because now you have individual investors that can get in very, very early into stories. But with that comes a new skill set because usually by the time, you know, some of the companies I mentioned, DoorDash or whatever it might be, go public, their financials have a very steady story that you can analyze. When it comes to SPACs, it's very, very messy. You see, probably like you said, you started to invest 11 years ago. When you see these early-stage rounds, your, you know, seed or your Series A, you're not dealing with perfect financials typically. I mean, a lot of investors will go after that growth. So you have to rely on a different set of skills. And I think that you need to be really careful about those that have a lot of forward growth that they are banking on because what we've seen is that some of them have missed those, you know, estimates and the stock sells off, you know, 50, 60, 70%. So, you know, it's a different skill set. And I would almost say like the reason why I want to put it in the bucket of early-stage tech is because startups are also early-stage tech. And when you bucket it correctly, you know what level of risk you're looking at. You're really looking at like a seed or a Series A level of risk with SPACs.

SPEAKER_14: But again, like as stated, the returns can be much bigger as well if you know what you're doing.

David Friedberg: Yeah, I think that is a really interesting way to look at it. I never heard anybody say that. But when you look at a company like a Nikola doing electric vehicles and becoming worth $30 or $40 billion, and I'm looking at it and there's a group of public market investors who are looking at this and comparing it to Tesla, and I'm comparing it to a Series A company that has proven very little other than they have an idea and a business plan, Knox. When you see companies going public like that and you see either retail investors, and I think it's retail investors maybe who are embracing these, what is your thinking of how they need to change their thinking?

SPEAKER_02: Which Beth kept saying like, hey, you got to maybe develop a different skill set. What do you think that skill set is? And should they even be touching those?

SPEAKER_19: I wouldn't say you shouldn't be touching them. I think, you know, for me, what I do is, you know, I've been in the public markets in equities since 2007. So that's what I know. That's what I, that's the skill set to bring to the table. And there were some strong winners for the time being in the SPAC market. Still are some good names. So to ignore that completely, I think could fall on the trap that I see a lot of people do in finances. They'll look at valuations and they'll say, this is insane. It makes no sense. I'm staying away. And they miss out on one of the most epic bull markets. Um, uh, I mean, arguably in history. Um, yeah. And so SPACs being a part of that, um, you know, I think the, the main thing I would say is you have to, when you're investing in something with very little price data to analyze, and that is an untested, um, that is an untested, uh, product in the public markets. Is, is you have to have some kind of risk management plan. You have to have some kind of exit strategy, um, when doing something like that. I mean, that's how we, uh, approach the SPAC market is, um, you know, we found some stories that we liked, uh, we played some momentum, uh, some price setups that we liked, and we had an exit strategy.

SPEAKER_23: And when it got triggered, we stepped away.

David Friedberg: Oh, interesting. So give me an example, either one of you of like an interesting SPAC story that you embraced and either stuck with, or just decided, wow, this is getting overvalued and decided to just take that win.

SPEAKER_12: I can give you the one that we liked that we are, uh, the IO fund is still invested in, it's called STEM, um, it's batteries, but it's also software that, um, optimizes how the battery is used because the statistics are about 40% of solar energy or any, whatever it might be, uh, renewable energy is wasted because of the lack of optimization. When should you be on a generator? When should you be relying on a battery? Um, so it's called Athena software. And the reason why we liked STEM is that they had already met their full year revenue guidance and they had no debt. So that combination puts them in a little bit of a different category than one that might turn around and raise really quickly, uh, dilute shareholders and, or is projecting some number that they cannot meet.

SPEAKER_31: Um, and then we also-

SPEAKER_02: That's really interesting. Just as a follow up there, uh, that stock traded, I guess, like all SPACs at $10 while they were looking for it, then popped up as high.

SPEAKER_25: As it looks like, uh, well, 50 bucks a share. And then now it's trading at 23.

David Friedberg: So you doubled your money if you bought into that story early, but it's one you want to stick with. And if I read into it, they have a product that they have customers for and they're paying for it.

SPEAKER_35: So you've checked a couple of boxes. They're a paying customer and a real product or two of them. Am I correct?

SPEAKER_36: Yeah, that's always helpful. Yeah.

SPEAKER_39: I mean, I say that, and it sounds so stupid when I say it, but then you look at Nicola as the opposite. And I don't know if you were involved in that train wreck. Um, no, no, not at all. Okay, great. Yeah. Because I had that dip on the pod. And when he explained the product to me, there were so many red flags going off for me as a private market investor.

David Friedberg: Cause he's like, well, we're going after these like hydrogen stuff and I can do it 10 times cheaper. I said, how do you do a 10 times cheaper?

SPEAKER_39: And he couldn't answer the question. And then he said, well, I'm also going to do electric and do a badger thing.

David Friedberg: And I just thought to myself, wow, I watched Elon and other people suffer just pursuing one electrical new energy model. He's going to pursue, this person's going to pursue two simultaneously and it's worth 40 billion now and they haven't, they don't have a car on the road. So this is a really important lesson for people. No customers, no product, no revenue is a really different class of business. Is it not?

SPEAKER_12: Yes. I would even extend that to say Lucid Motors, which I think one day could be a quality company.

SPEAKER_14: But today as a stock investor, there's not much I can do with that company because they haven't put cars on the road and it seems very hard to get the first car on the road.

SPEAKER_46: I mean, right.

SPEAKER_14: Yeah. Right.

SPEAKER_19: They created, I mean, it's a, it's a, it's a tough business model, just, just, just auto companies.

SPEAKER_53: I mean, historically have been some of the worst, uh, I mean, aside from Tesla, obviously, but, uh, some of the worst industries to invest in. And so once you get past the high growth, uh, tech store, you then have to deal with the auto industry nightmare. I don't know any other way to put it from just a financial standpoint.

SPEAKER_02: Literally the worst companies we look at as private market investors that we get the most concerned about anybody going into healthcare, higher education, cars.

David Friedberg: You're just like, and the music industry. Cause the, it's a combination of incumbents and regulation and just how in some cases dogged it is in cars fall into that. Um, this is a company that has a market cap of $32 billion today at 20 bucks a share. And it was as high as $64. So if I'm correct, doing my math here, I'm no genius. It was a close to a hundred billion dollar company.

SPEAKER_56: What do you attribute that kind of insanity to at this moment in time?

SPEAKER_14: Actually, Knox is a great person to ask because his trait, I mean, his talent is that he tracks sentiment in the markets. And, um, so that's actually the perfect person for that.

SPEAKER_19: So I think, I think, um, one of the most interesting, uh, hurdles we've had to address, and I'll tie this into your question was how this market is not like 1999. I think 1999, I mean, uh, is still, uh, earmarked in a lot of people's minds. And so people will look at these valuations and look at the growth and they'll say, oh, this is a bubble.

SPEAKER_53: And so what followed that bubble was just a terrifying, awful multi-year bear market, you know?

SPEAKER_62: And so you lived through that and I'm not sure how old you are, but I lived through that.

SPEAKER_53: I wasn't investing during that. I started, I got licensed in 2007. So I got to start out basically in, you know, a multi-year bear market. That was absolutely horrifying, you know? And, and I mean, that was 12 years ago. And so, so many investors today think that a bear market was what happened last year, you know, just no, no big deal, you know, and they're, they're very big deals. They're, they're awful deals to go through. Um, so my point being is that you had this bubble, it didn't make sense. It was irrational, it was momentum driven. It was human psychology followed by a bear market. And think of all the bubbles that we've seen in the last few years.

SPEAKER_19: I mean, I can round off, we just saw a bubble in lumber, for example, you know, that popped. And so bubbles don't mean bear markets. Um, it definitely means there's an excess of liquidity.

SPEAKER_53: Um, and it definitely means that there's an exuberance in the market, but, um, what leads to bear markets and recessions typically is central bank policy, which is incredibly loose right now. Uh, they're stuck in there. They have backed themselves into a corner and they just told us a few weeks ago that they're, they're going to let the party go on a little bit, a little bit longer.

SPEAKER_68: Every startup founder and marketer needs high quality leads. Well, with 30 million companies on LinkedIn, they can help you take your startup's growth to the next level.

SPEAKER_05: We've used LinkedIn marketing before here at this week in startups and launch our investment firms. It's really an amazing platform, as you know, because you've been using it for over a decade. LinkedIn offers seamless tools for lead generation and brand building. First, you might want people to just become aware of your brand. Maybe you want them to read a blog post or follow your company on LinkedIn. That's great for building your brand, but you may at some point want that lead gen and you may want to get their email and set up a demo of your software product or your marketplace. You understand the difference between these things. You're sophisticated and you know, you can target and reach people down to their job titles, the company name and location, engaging customers by account, allowing you to build relationships with your most important acquisition targets. Where they live and where they're ready to do business. And that's LinkedIn. So LinkedIn's advertising capabilities will allow you to acquire those new customers and to grow existing accounts so that your business is set up to maximize its potential. Here is an amazing offer from our friends at LinkedIn. They're offering a hundred dollars in advertising credits so that you can get started today. Learn how to connect with customers on LinkedIn's dime.

SPEAKER_07: Visit linkedin.com slash this week in startups. And you got to spell this all out with no spaces and no dashes, linkedin.com slash this week in startups to claim your credit terms and conditions do apply because they're giving you a hundred.

SPEAKER_02: When we look at a company like that, Lucid Motors, if I'm interpreting correctly, there are real companies in the world like Netflix or Disney or whatever, Airbnb, Uber, Stripe that are printing money.

David Friedberg: They have customers and products people love. And then you can have this mixture that occurs in an up market because there's so much liquidity where people will conflate one with the other or the potential of the reality of a Tesla because they see Tesla's everywhere. And they'll conflate that with the speculation of a Lucid or a Nikola and they're not thinking straight.

SPEAKER_73: Look at the altcoin market, for example.

SPEAKER_19: I mean, many of the altcoins I think a lot of investors are invested in don't really know what they are, where they came from, the story behind them. They just know they're up a thousand percent and want to participate in that. And so when you start seeing these big moves, it just, you know, gains are magnets to people to try and get more gains.

SPEAKER_53: It's just human cycle. We've seen it all throughout history and it goes back hundreds of years and it's never going to change.

David Friedberg: So something goes up, therefore it's worthy of investing in because it went up and that can make it go up and become self-fulfilling prophecy until somebody is left holding the bag. Yes. Which happened to Nikola or in this case, you know, somebody got three times. So I like kind of where we're going with this. Beth, you had another company you wanted to bring up as an example in the SPAC space that either you stuck with or sold.

SPEAKER_12: Yeah, we actually invested, well, I think the, the, the, the, the buzz that was going on was a lot of renewables.

SPEAKER_14: And I think one that we stopped out on was Proterra, which they do electric vehicle buses or electric buses.

SPEAKER_12: And I think that space can be really tough because there's 30 competitors there, but we liked the, you know, we liked the management and there were a few other things that we had liked, but we did not write that one down. And that's where risk management really comes into play. And back to what you both were talking about, I would say too, that when you look at Nikola or some of these other, you know, unexplainable run-ups with stock prices, 80% of the market right now is machines. So what machines will do is they will tell, they can tell that there's a tipping point of exuberance, if you will. And they'll push that so that retail pile in and then they'll pull the rug out because machines can move very quickly. So, yeah, so I think that as a market, this has changed drastically over the last five years as to how, and I think that's some of the exuberance you've seen. So when there was limit down in March, you know, I had been writing a lot of that was really, you know, some of it was coming from the machines was that they were like exiting so quickly. And just to realize that you're not up against another human right now, typically, so machines can tell when there's sentiment is running high and it'll pile in and then it can get back out very quickly. So for the most part, I would say as an individual who wants to beat the market, we call it long-term buy and hold, making sure that you are invested in very high quality companies. That piece you cannot beat even as a machine because they're going in and going out so much, but if you can determine these quality companies and just remain, you know, invested long-term, your gains often exceed those who are trying to get in and out very quickly.

SPEAKER_25: The getting in and out and trying to be a day trader, uh, as a retail investor is a sucker's game today, right? Because of these bots and because of the quants and high speed trading, our frequency trading, this kind of stuff makes it impossible for a retail investor to compete writ large.

SPEAKER_12: Yeah, it's very tough, uh, Knox is, you know, considers himself a trader. Uh, I do not, I'm, I'm writing, you know, in-depth analysis that I don't budge on for years. I mean, that's kind of my, you know, my niche is that, uh, if I'm writing about the company. I'm ready to go to bat for it. I'm ready to take on the market. Like, I know the market is going to come for me and they're, it's going to tell me I'm wrong. And my thesis is this, you know, in price and price movement. So, you know, uh, we've, you know, I've held personally, and then the IO fund has also held companies that had 50 to 60% drawdowns. I mean, one of our, you know, classic calls was Roku at $30 and it looks like a darling today, but there were many times that Roku was down. I think three times, uh, in the last three years, Roku is down 60%.

SPEAKER_07: Yeah. Roku seems like the most impossible bet to me, to me as a venture investor, because you have Apple TV as an incumbent, you have Google as an incumbent, and then you have these other big streaming services who, you know, maybe they don't have hardware yet, but maybe they could buy something. And so walk me through how you have the audacity when something like Roku is trading at 30 bucks a share, you know, whatever, a couple of years ago to say that company can compete against the duopoly, Google and Apple, and then Amazon, all three of them, well, actually two out of the three do not care about margin on hardware. The only one who cares about margin on hardware is Apple, so you're up against three giants who don't care about money and Roku does the same thing.

SPEAKER_87: How do they win? I think that's a great question.

SPEAKER_12: And it, the audacity is a great word for it because, um, the wall street will always make you think that you're wrong. And so you gotta be really firm on why you might be right. And so all of this has been carefully written about, but a, I would call Roku technically the incumbent here because they were the first to market. And then, you know, they, they actually came out around the same time as Reed Hastings Netflix. So, um, it just took this long for ad supported, um, to come out a VOD, uh, versus subscription video on demand, uh, to be picked up specifically not by the cord cutters, you and I, but by the brand advertisers. And so the other thing is that they own the whole stack, which, uh, Google owned the whole stack and Amazon eventually got into, but they had designed an operating system that was flawless for very cheap. And it fits well into low cost, um, television sets or smart TVs. Um, all that is great because they have this hardware and they have the operating system that they can, um, do very well with. But ultimately Roku's path to a lot of wall street gains still is today is that they are an ad, uh, platform. So we are moving into a world where brand advertisers, which are on, you know, pay TV, you know, linear pay TV are moving on to, um, uh, they're, they're cutting, you know, they're moving towards the cord cutters. So they're going over to OTT. So Budweiser for the first time did not advertise in the Superbowl. Um, they are moving over to Roku. I mean, you know, Roku and its competitors, those brand dollars are actually worth as much as mobile. Um, pay TV ad dollars have been a Holy grail for some time. So you're talking your Pizza Hut's Pizza Hut can't really advertise on Facebook as effectively as they can advertise on a television screen. And if you can add in the data that comes from you viewing OTT, uh, set top box or smart TV, Roku's, uh, you know, Android, Google, that data is now informing your Pizza Hut ads, your Budweiser ads, whatever it might be.

SPEAKER_92: That's a big deal for pay TV advertisers who did not budge and did not spend on mobile very much. Um, so it's a budget migration.

SPEAKER_25: Yeah.

David Friedberg: It takes a really deep analysis of that because what you're also realizing in all of this is okay. Sure. Hardware is a commodity, but audience is not right. And the ability to aggregate an audience together like that, even though you can commodify the hardware, there was another trend going on, which is, I don't know if you've had this experience, but with my NBA league pass, there's an option to turn off ads. Hulu, I can turn off ads, HBO Max, no ads, Netflix, no ads, Disney Plus, no ads. So I'm looking at consumers and thinking, wait a second, the highest end consumers are opting out of advertising, uh, you know, across some of these top platforms. Like when's the last time you saw an ad?

SPEAKER_25: Right. And I, oh, I actually pay for YouTube. I don't know if you do this. Do you pay for the YouTube premium service that takes ads out? I'm curious if either of you pay for that. Oh my God. It's the greatest bargain in the history of media. You, you don't know how many YouTube ads you're watching, but my Lord, just not having to click, skip the ad after five seconds, 20 times a week or a day or however long you're on there. It's incredible. So where do those advertising dollars go?

SPEAKER_35: Roku, right? Yeah. It's a really interesting, uh, funneling there of consumers. Hmm. Yeah.

SPEAKER_12: Yeah. And I guess, uh, the other way to reframe it is that technically Roku has always had the biggest audience by a, a small lead, but how did, how were they able to do that for so long with Google and Amazon chasing them?

SPEAKER_14: And Apple is, TV is, I'm, I'm not even sure if they're still, are they producing much for that anymore? I, I don't even know. They didn't do well. It's known to have not done well.

David Friedberg: I always thought I, this is a very weird thing about Apple, you know, like for them to do content always seemed like strange to me because they're not willing to do the content that a lot of people would want, which is adult fare, FX, HBO, Sopranos, Game of Thrones just wouldn't work on their platform because they're unwilling to show sex or violence to that level, right?

SPEAKER_07: They want Ted Lasso stuff.

SPEAKER_106: So I, I don't understand Apple's mission there, I guess.

SPEAKER_107: They have to do something with that money.

SPEAKER_106: Let's talk about that.

SPEAKER_07: You have these giant war chests. What is the story with these? How do you value companies and their usage of capital in relation to M and A and putting it to work? Because I mean, beats was a completely uninspiring acquisition. Is Tim cook a great CEO for not acquiring companies and staying focused and making sure everything's built there?

SPEAKER_109: Or is this a huge mistake? How do you think about that with Apple specifically? I'm curious.

Jason Calacanis: The price keeps marching higher.

SPEAKER_14: So regardless, I guess, of what I think Apple has done very well with Tim cook. Yeah. But if you were to, you know, ask me casually, what do I think of Tim cook?

SPEAKER_12: And I'm not a big fan. I have never, it's really important to always stick to your thesis as a investor, which means like I don't, I need, you know, someone just put on Twitter the other day, you know, Peter Lynch, like you've got to be able to sit back and watch other people make money on what you passed on and I'm okay with passing on Apple, even with the gains, because I couldn't find the growth market for the company. I mean, I get it. iPhones, you know, you know, high dollar average sales price, et cetera, but great margins cash machine.

SPEAKER_14: I mean, this company is a cash machine. I just can't find the growth market and that's my investing style. So I, even with all of that cash, I don't know the growth markets that Apple is going into in the near term. And that's why I stayed away recently.

SPEAKER_68: In today's startup landscape, committing to security and compliance is vital for growth and proof of your company security posture has never been more important. As you scale, you might start to receive more SOC 2 requests from customers. And that's where Drada comes in. Drada is an advanced automation platform used by some of the world's leading chief information security officers or CISOs. Drada will help you successfully meet requirements, support enterprise deal flow, and continually track compliance. Drada also helps customers easily prepare for and clear SOC 2 and other audits. So you can go from zero to audit ready in a matter of weeks. Need more? Take it from Philip Martin, chief security officer at Coinbase. And here's his quote. It became clear to me right away that Drada is an engineering powerhouse. The solution they've developed is well ahead of other market players. Their approach to deep native integrations provides users with the most advanced automation available. So check out Drada's five-star reviews on G2 and see why companies like Clearco, Smart Recruiter, and the Good Face Project work with Drada for their compliance needs. Twist listeners can get 15% off and waived implementation fees at drada.com slash twist.

SPEAKER_05: Drata.com slash twist. Drata.com slash twist. Nox, what do you think about the sort of cash hoarding that's going on and the deployment

SPEAKER_25: of that cash, especially in the, let's pivot a little bit here and talk about regulation. Lena Khan, I believe it's her name now, is maybe going to be putting the kibosh on acquisitions. How is this going to affect the Amazons of the worlds and as well as the smaller companies and by extension, all of us as investors in these companies, because maybe exits aren't going to happen as much. And what do you think that does?

SPEAKER_19: That's a good question.

SPEAKER_53: And I mean, the, the sandbox we play in is we're trying to identify the apples in 2009 and the Amazons in 2011, you know, a very intriguing study.

SPEAKER_19: That seems, it seems difficult to wrap your head around right now, considering how dominant these companies are.

SPEAKER_53: But, um, a, uh, analyst, whether Robert or not did a study called the top dog thesis, which he looked at the top 10 companies in the S&P 500 going back every single decade. And they all change all of them. Every decade they rotate out. GE was in there for a couple of decades. GE is now out of the Dow. Microsoft has stayed in there for 20 years. Apple has as well. But the likelihood that they're just going to stay in the top 10, um, becomes unlikely

SPEAKER_19: based off his, just based off history and studying history and how companies grow and become so big that they're unable to really compete with innovative, nimble companies. Um, so I think apples is a phenomenal place to be if you're managing billions and you have a charter that says you have to put your money somewhere. But if you're looking for high growth, um, we just don't see that.

SPEAKER_53: They're not really giving us evidence right now that, um, that they're going to compete

SPEAKER_120: in the high growth arena as some other companies that we're looking in right now.

David Friedberg: Uh, so then when you're, it's very interesting because I, I wonder if, um, the app, I don't

SPEAKER_25: know if you said the news that Apple was going to let Spotify link out and, you know, maybe you could sign up that then manage your subscriptions, you know, without, you know, around the app store and maybe they're loosening their grip there.

David Friedberg: Seems like maybe they realize regulation is coming. Um, what would you think of Amazon spinning out AWS? Maybe a Google, or I'm sorry, Alphabet spinning out YouTube.

SPEAKER_25: Would that be accretive to shareholders? Would the combined entities be worth more than, would the combined entities be worth more?

SPEAKER_122: Or would the separated entities combined be worth more?

SPEAKER_12: I think it'd be helpful because one of the challenges, uh, for a growth investor, like myself, looking at Amazon is you're looking really at two different businesses. And if I wanna invest in, you know, the cloud infrastructure as a service segment, you know, I have to accept the e-commerce and vice versa. Um, and then I think with alphabet even better would be, can you spin out the AI, um, projects that they have, you know, cause that would allow people to invest in AI without having, or maybe you're a little more, uh, less risk, lower risk. Ad tech is a great place to be. So, uh, it's very cash efficient, low R and D typically things like that. So, um, in that case, you're not having to choose between the two because it may be different profiles. So I think for these companies, they could do better if they were split off, um, open up more investors.

David Friedberg: The interesting thing about, you mentioned DeepMind. Um, Larry and Elon were both, I think on the board of DeepMind, both were big investors in it.

SPEAKER_25: The DeepMind crew has been trying unsuccessfully to spin themselves out from Google. And I think they had like a little bit of a revolt in there. Um, and I know Elon has been very public about, he wanted them to, uh, keep going independently.

SPEAKER_07: Uh, of course you do have open AI and some other folks, uh, pursuing, uh, this stuff, but I mean, AWS as a standalone company would be a juggernaut and you would be a pure play and YouTube. I mean, what, what would YouTube be worth now? 500 billion. I mean, and if they could then pursue their own product stream that might actually interfere with some things happening at Nest or the Google pixel, you know, they can make their own cameras, whatever it is that Susan would reject you. That Susan Wojcicki could come up with could be extraordinary. No.

SPEAKER_133: Yeah.

SPEAKER_12: I mean, video was projected to be the top segment in ad tech a few years back and it certainly became that top segment. So, uh, YouTube was able to, you know, capitalize a lot on that. Um, we have, I'd say at our fund, we tend to have a little bit of a limit because growth, you know, you know, it's the law of big numbers. Um, which is, you know, on such a large base, it's harder to have, you know, a hundred percent growth or 80% growth. Um, so for us, we're typically looking for a slightly different profile. Um, we like 40% or above minimum. Uh, so that would just the, the law of large numbers would start to disqualify a lot of the thing. And then 40% year over year growth.

SPEAKER_138: Yeah.

SPEAKER_12: I'd like to start with that baseline. I mean, it's not firm, but yeah, that that's where we like to target minimum.

SPEAKER_25: And what is it about that to you that signals a better bet than say, you know, the, you know, slow growth of 10 or 20% that you're seeing in the fangs or something.

SPEAKER_12: It's really hard to re accelerate, uh, beyond the 10 to 20%. There just seems to be a line. Uh, whereas you can see companies hover in the 32, they'll go up to 48 and that's a really nice move to catch. Uh, but when it comes to the others, I mean, if you're looking at, you're ultimately investing in the growth of the company. So regardless of what price does, like people really get hung up on earnings. They get hung up on news headlines. Ultimately, if I put my money into a company and it's growing 40%, I should be able to see 40% return over time. So, uh, you know, the 10 to 20% with the risk that tech can often, um, carry is not enough for my profile. If that makes sense. NVIDIA falls into that for you.

SPEAKER_142: I take it. Yes.

SPEAKER_12: I'm very bullish on NVIDIA. I think the reason is, is that we haven't even begun to tap into its real market, its real micro trend, which is of course, AI. Uh, a lot of people are looking at, you know, gaming. They talk a lot about gaming. They talk a lot about crypto mining. Forget it. Forget about that. Uh, this is a data center, AI accelerator play. Um, everywhere that the economies worldwide go or industries, or it doesn't matter if you're an SMB or enterprise, all of it.

SPEAKER_92: In my opinion, let's say 90% of it will be run on NVIDIA. And that's a big statement.

SPEAKER_12: I mean, that's something that I have, you know, researched very well and looked into and been writing about for, for years. Um, so I think we're starting to see some movement there that, uh, it stands out, especially compared to the thing. Uh, it's had, you know, two to three X returns, uh, since I started covering it compared to Fang. And I think that will continue.

SPEAKER_05: What is it in terms of the product though, offering that differentiates it from their competitors and who is their real competitor at this point? Yeah.

SPEAKER_12: I mean, it's GPUs. It's a parallel processing that can happen with GPUs that serendipitously, it can also be used for AI, uh, and, and training. Um, and basically they recently combined training and inference onto a single chip. So they continue to iterate to a level where for, you know, machine learning, training, uh, models and AI inference, it, it's really hard to beat.

SPEAKER_14: And it's because just like Amazon had the AWS serendipitous, look, we've got all these servers, let's run them out. Oh my gosh, we just stumbled upon an even bigger market than our e-commerce.

SPEAKER_12: It's exactly kind of a similar path is that Jensen Wang and NVIDIA were doing GPUs for gaming. And whoops, look, GPUs happen to be the strongest chip or the best general purpose chip for AI. There are more specific chips.

SPEAKER_14: They call them ASICs, um, that come out of Google and Microsoft, uh, Google, actually not Microsoft. They use, um, field programmable, but, uh, Microsoft does, but basically ASICs are a very specialized chip that can be harder for software developers to learn. So it's very common for software developers to learn CUDA, the CUDA platform and how to program GPUs.

SPEAKER_12: So it just serendipitously occurred for them that their gaming exposure doubled up well for AI.

SPEAKER_25: I mean, it is one of the amazing things about technology is like William Gibson said, the street finds its own use, uh, for technology, right? Like, okay, this graphics card is great. Okay. Yeah, let's put 10 of them in and we'll solve some AI problems. And all of a sudden here we are, they just discover a whole market or somebody who's selling books is like, you know what? We racked a lot of servers. If we can make this a profit center as opposed to a cost center, man, the company would grow faster. So let's just flip the, the, the model here.

David Friedberg: One theory I have on increased regulation and maybe breaking up big tech or pausing, uh, large acquisitions by big tech, which I think would be more likely.

SPEAKER_25: I don't know how easy it's going to be to break them up. If they do break up, my theory is they do it because they want to unlock shareholder value, or maybe just make peace with Washington so they don't get over-regulated.

David Friedberg: But here's the theory I have, and I'm, I'm curious what you think. This is going to be amazing for us as investors because founders who have the opportunity to sell like Slack did to Salesforce. If Slack was getting bought by Salesforce today, you know, or under Lena Khan and like a new administration, would that pass or not?

SPEAKER_07: Maybe not. Would they even try to buy it? Well, Salesforce isn't that big, so maybe they would. But boy, does this seem like a way for us to ride our winners longer? In other words, you know, Airbnb and Uber, Lyft, DoorDash, these have, these would have been takeout targets by Amazon and other folks, Google, who want to maybe open up and get into commerce or some new market.

SPEAKER_109: But can they even think about that now? What do you think about my theory?

SPEAKER_12: Yeah, I think that as far, uh, one thing I like your theory a lot, you get to run your winners longer. Um, I would also say that it may allow more emerging tech to succeed. Um, so you wouldn't have so much of this concern. This is an example, but you wouldn't have so much of a concern over like Microsoft Teams versus Slack. Um, you would just be able to ride out Slack until it became its full potential. Um, where I think, I guess, let's put it this way. Big tech tends to buy its way to success these days. Um, I mean, we haven't really seen much from Facebook outside of acquisitions. And people are always like, what if Facebook, you know, I remember Facebook's getting into dating and match, match, uh, stock plummeted or Facebook's getting into stable coins and like crypto, you know, had a bad couple days. Yeah. It's like, I don't know, like, is Facebook, is Facebook really, uh, you know, that great at going into anything?

David Friedberg: Innovating? Innovating, yes. I can answer that question. I mean, I've known Slack from the beginning. He was, he's a mememic machine. He's great at copying other people's innovations and scaling them faster. Yeah. I mean, that is his core skill set. I mean, and some people might consider that an insult. Other people might consider it a compliment. I mean, I think he's just like the world's best photocopy machine. If you think about when he came in and did Facebook, uh, you had Friendster and MySpace couldn't keep their servers up and running. So of course, everybody went over to Facebook. It was stable. It was up and running.

SPEAKER_25: Uh, and then he just copied everything and bought everything, but he, they're not gonna let him buy anything now. I mean, that's, those days are over. Um, so let's talk about Robin Hood for a second.

David Friedberg: I was an angel investor before they launched, yada, yada. I'm curious about how you view a company with 22 million active members. Um, and then what extensions they could put on it.

SPEAKER_25: I'm very long the company. My position is I'm not selling this share. My same position with Uber, which is, I believe the story before it launched. And I believe it more now. I believe that there's no reason Robin Hood couldn't have a hundred million members. And I don't know any finance company that's ever hit that number. Just like Netflix and, you know, hit a number that nobody ever believed could was possible for a subscription service. I think Robin Hood could be the equivalent and Uber. I think they had 50 cents a ride. So I want to get, I want you who to tell me if my, if I'm crazy with my two DC, the side that I'm holding both those stocks for 10 years. So start with Robin Hood.

SPEAKER_39: Do you think this is a great company that will 10 years from now have a hundred million or 200 million members?

SPEAKER_12: Retail is really tough. Uh, you know, we actually work in a similar market and I think it's a great company.

SPEAKER_14: I think you have to really win their loyalty and have a lot of integrity. And right now that's being questioned. So until Robin Hood can clear that up, I think they may have some roadblocks.

SPEAKER_12: Um, but, and it's specifically because retail goes into this space already not trusting much. I mean, they get on CNBC and they're like, oh gosh, you know, how much should they pay you to talk about Apple today? You know, or like how much Apple are you holding to tell me more about Apple? I mean, you know, so it's like, I think the trust piece with retail is going to be essential for Robin Hood.

SPEAKER_162: Yeah. It's going to be essential because they're in the retail market.

SPEAKER_25: Do you think it's a fundamental flaw that they do payment for order flow versus a subscription like a Netflix and that they should eventually move over to that model over time?

SPEAKER_165: Have people pay 10 bucks, 20 bucks a month to be a Robin Hood member?

SPEAKER_53: I mean, I've, I've, um, I, I know that there was some red flags that came up just from my perspective. Like I know there were issues with them being FDIC insured or SBIC insured. And then when it came out that they were selling order flows so that, you know, bigger, bigger players can front run them. You know, I, I kind of lean with Beth on that.

SPEAKER_169: I mean, I think, um, I'm not even sure if retail is aware of that predominantly, you know, I really don't think so.

SPEAKER_171: I think they're getting free trades and that's great.

SPEAKER_165: Free trades are worth whatever pennies they lose on that. And they're holding it for years. It doesn't matter.

SPEAKER_53: Right. And so I think if you were to go to the average investor who's in Robin Hood and let them know, hey, this is what's happening is they're taking your order flows and giving that to bigger institutions so they can get in before you.

SPEAKER_19: Um, or, you know, do whatever they want with that information. There's a lot you can do with that information, actually. Um, I'm not sure how they would feel about that, you know? So I, it's interesting what they did because it really changed the game across the board.

SPEAKER_53: You saw E trade and Charles Schwab having to go to like zero commission.

SPEAKER_19: So it changed the situation in a very drastic way. It forced competition that was actually beneficial to retail from like a price perspective, but it's pushing more people into the market. So I think it's going to have a very interesting, um, climax, if you will.

SPEAKER_53: Yeah. Um, so we'll have to see how it goes after that climax. I think that's going to be the real tell.

David Friedberg: I feel like in some ways, Facebook users are like, oh yeah, I know that I'm the product here. I'm, you know, my data makes money in ads or whatever.

SPEAKER_25: So, but I'm cool with getting sharing photos for free with my family. It's all good. But I do think when they add those next three services and get your Roth IRA or your 401k or your 529 built into your Robinhood account as those 25 year olds turn to 35 year olds have a baby set up a 529.

David Friedberg: And I think it's gonna, I just love the fact that there's financial literacy at these young ages. I mean, net net, do we like all these retail investors embracing the markets?

SPEAKER_20: We think this is a good thing, right? Yeah. We do.

SPEAKER_12: Yes. And just my, about my comment about trust. Like, you know, we have noticed that a lot of people will put their portfolio returns out screenshots, things like that. So we took it to the next level and we actually get audited by an accountant and we are coming out with our audited results again, which are very good. Uh, actually next week. Thank you. Yes. And so what I'm trying to say is like, we constantly have to say, like, how can we get retail? To trust, to trust us. Like that is something I would say that that's, um, central to our brand. And the reason why I bring it up with Robinhood is I think we share a similar audience.

SPEAKER_14: And so I would say like our mission is trust, integrity, transparency. And I think it has to be, I think that that's the way that you went over, uh, retail.

SPEAKER_12: And I'm, I think retail should be involved in the markets. That is why we do what we do.

SPEAKER_14: Uh, I think they need to be very careful as to who they listen to, who they follow. It's, it's funny.

SPEAKER_12: Cause like, if you have an electrician come into your house, you want only a licensed electrician. You want somebody who's actually done this. They will invite anyone into their portfolios, anyone into their retirement, people who have not qualified themselves, who are on Twitter, who just started to tweet about it randomly. And it's like, you, you want to put more emphasis on it than like a home repair, you know? Yeah. And, and they put less emphasis.

SPEAKER_14: And I think that, you know, you should put your, you know, whatever analysts you're following, whatever, uh, financial advisors you follow, make sure that they're super quality.

SPEAKER_177: And that's something that retail struggles to do.

SPEAKER_19: Yeah.

SPEAKER_53: And one thing I want to say about the Robin hood thing, just kind of backtracking on that was, I think we saw kind of a flaw in the system not too long ago with the GameStop situation. I know that the, uh, the folk story is that retail took on big institutions. But if you look at the data, it was institutions taking on institutions. You saw big money seeing that the institutions were way over, over leveraged into the short position with GameStop. And then they just raised the price just to force them to squeeze. And then they actually went into the stocks that they're going to have to cover in order to meet their demands. And so you can see that order flow going on.

SPEAKER_19: And so it's an institutional battle and retail jumped on board to make, just to exacerbate the problem. And so one of the biggest, you know, one of the bigger, uh, clients of Robin hood, I believe from the money end from the institutional end, um, was in GameStop.

SPEAKER_53: And then Robin comes out and says, Oh, to protect our investors, we're going to prevent them from selling GameStop or buying GameStop. And that, you know, that was obvious.

SPEAKER_19: It was really obvious what they were doing. You know, I have friends who are invested in Robin hood. They were trying to get out because of that. They're like, this is messed up, you know? So that to me was a pretty big crack in the system that could, um, continue in such a, in such an economy that has such liquidity, just, just basically flooded everywhere.

SPEAKER_53: So that would be something I would want to watch.

David Friedberg: We're basically stress testing in a lot of ways, what the system is capable of handling, putting 20 million more participants who have social media as a communication mechanism. It's sort of like dictatorships dealing with their citizens coordinating on WhatsApp. And all of a sudden, you know, you're in Egypt and there's, you know, a hundred thousand people in a square. And then it's, you know, a million people. And you're like, Holy cow, there's a revolution going on. You'd even see it coming. Yeah. Um, let's talk a little bit about Chinese stocks in China. This has been pretty crazy and unprecedented. I was on CNBC years ago and they're like, Hey, what do you think of these Chinese stocks? And I said, I would never touch any Chinese stocks because they could be cooking the books. And we would never know. It's an authoritarian country. And someday they could just say, you can't trade our socks. And they looked at me like I was crazy. And I was like, well, I mean, if this was Saudi Arabia or Iran or North Korea, wouldn't we think the same thing? Have we been in a delusion that this is a democratic country and that they're following the rules? And do you touch Chinese stocks?

SPEAKER_07: And how do you think about them with this black box? And now Xi Jinping just saying like Jack Ma going on vacation, go paint some oil paintings.

SPEAKER_109: Yeah.

SPEAKER_187: Lot, lot, lot in that question. I know. I just had a big iced coffee.

SPEAKER_42: Well, that was very astute of you to say that a few years ago, for sure. Especially when Tencent and Baidu and people were pretty bowling up on that.

SPEAKER_12: We do have some exposure, but it's kind of more unique and they are quality. Like they're not, you know, we don't think they're cooking the books.

SPEAKER_14: We have the EV exposure in China. We have an EV stock and we also have a cloud infrastructure stock.

SPEAKER_12: That's more of a 100% pure play. So we stayed in those markets because the one thing that, you know, I try to wrap my head around is 1.3 billion people. You know, a lot of them making decent money. So that's a lot of people. And when you start to think about EV selling into a $1.3 billion market subsidized by the Chinese government or, you know, cloud infrastructure, they're supposedly going to rival us on AI. Well, how's that going to happen with such a small, you know, cloud footprint? Right now they have a pretty small cloud footprint. So we've strategically played in that market. If I were to be on podcasts such as this, I would say it's a tough one.

SPEAKER_133: So it's only if you're really doing it every day.

SPEAKER_194: Nox, you're going to add something in. Yeah.

SPEAKER_53: I mean, just just the investment thesis of China.

SPEAKER_19: I don't know if you'll ever see something like that in our lifetime with so many people just being plugged in. I mean, I mean, there are cities in China that are the size of LA that no one even knows the name of multiple cities like that who are basically getting plugged in. And so the investment thesis is phenomenal, but the political risk is quite high. And what I what I what I find fascinating is just the human psychology around this. You see this every single time whenever there is an asset class that is just hated. Nobody wants to own it. And everyone that's sold has sold. There's only one way that it will go. And that's up. And a great example of that was, I'd say, French stocks. Who was investing in France last year? Yeah. No one. I mean, I said, hey, I wasn't sure any of the companies in France were publicly traded.

SPEAKER_199: I'll be honest.

SPEAKER_53: I mean, you can buy you can buy the French Broad Market Index ETF.

SPEAKER_19: But anyway, they announced that they're going into their second lockdown. And what do you think French stocks did? They were up 25% a month later, up 25%. And the reason being is because everyone that sold has sold and there's only one direction for it to go. And that's up. And so I think that that will inevitably and eventually happen with China. We're seeing evidence of that. One of the positions we're holding right now is showing technically pretty strong signs that it's bottomed and looking to go back up. Huh. So, yeah, you know, we'll see what happens. We're definitely not adding to it. The relative strength right now is quite awful. We tend to add to winners. And so that's a portion of our portfolio that's quite low.

SPEAKER_203: And if it starts showing strength, they may look at maybe the capitulation trade, like just everybody has just given up on. Yeah, trying to and then we'll see what happens.

SPEAKER_25: It is really fascinating to me how this is going to play out just with Taiwan as well.

David Friedberg: And the chips there and just geopolitically, it seems like a very it's I don't think anybody could have predicted that they would be starting to opt out or want to tamp down the price of their own. The price of their own stocks. Yeah.

SPEAKER_02: Anybody have any game theory here of what's going on? Is it just a pure power play by Xi Jinping? Like is he just doesn't want rivals?

SPEAKER_208: It is very odd.

SPEAKER_53: You know, it's hard to really wrap your head around what the rationale is of that. And you're starting to see them trying. You're trying to see backtracking on saying, hey, you know, we're not we're not really going to go after, you know, because I can't remember when that was. That was about a month ago. CCP came out and said, no, you know, there's still great investments here. We're just doing very strategic, targeted, you know, you know, regular regulatory, you know, oversight of certain companies.

SPEAKER_19: So we'll see. We'll see what happens. I mean, the markets tend to force the hands of people, you know, so if they keep getting sold off and it's probably unlikely that you will see them continue down this path.

SPEAKER_53: But who knows? Who really knows?

SPEAKER_214: So let's wrap up with what we're seeing in the almost post pandemic world, the never ending pandemic world, Beth, 10 million open jobs.

David Friedberg: People don't want to go back to work. I think some people are deciding maybe I'll make a life change. Obviously, a lot of people retired early, they're like, yeah, I was going to retire anyway. So I'll just get out of the job market. Other people are like, you know what, I'm going to live somewhere. I've been living somewhere at a lower cost basis. Therefore, I don't need to take that job. Or one of us can maybe raise the kids and or we'll both work part time gig economy. It feels like this is seismic and could be a permanent change in how people look at employment and maybe consumption even. So what do you think this is going to look like? Let's assume we get through Delta and the pandemic goes away. City is going to come back or employees going to come back to work because they I don't know if you saw today. Amazon is like offering free bachelor's degrees to their employees. They just desperately need employees. I'm having a hard time. I'm hiring a lot of people in Canada right now. I'm having an easier time hiring talent in Canada than the United States because a lot of people in the United States are like, yeah, I'll come work for you if I can work two days a week and go to Coachella. Like, what do you think?

SPEAKER_12: I'm very bullish on hybrid work from home. And I think it's really interesting the way the market has started to question that. I think that's just part of why I do what I do. I've been covering tech for 10 years in depth reports, and I feel like one of the reasons why I really like working in the public markets is that the realities don't always match. And that's an opportunity for me to cover the what I'm seeing not match. And I feel like the tech industry and your gardeners and your foresters and I think everybody's really clear like hybrid is the way of the future. 60% of companies are going to be embracing hybrid no matter what happens with the coronavirus at any given time over the next five years. That's up from about 20%. So that place is very investable. I like that place as an investor. I like it when the public markets are very confused over whether we're going back to work or not. To me, I think the chances of us going back to the way things were pretty low.

SPEAKER_14: The other thing that I find really interesting that we've been tracking is there was the digital transformation, as you've seen in Azure, AWS, Google Cloud revenue, and we're starting to track some movement in data analytics, databases, data warehouses. Obviously, Snowflake is a big story, but there's others where we're starting to see that trickle down effect, which is like, okay, everyone moved over.

SPEAKER_12: Now I need hybrid and cloud native, you know, tools, solutions, databases, et cetera, platforms.

SPEAKER_14: So we think we're revving up for that piece of the stack where, you know, maybe it was just everyone was just trying to get migrated.

SPEAKER_12: And now we're going to be moving into databases and data analytics and things like that. So there's other stories beyond Snowflake that we've been tracking and we hope do well long term that if you had asked me a few years ago, could have been plateauing slightly because it needed those companies that were on-prem to move on to the cloud.

SPEAKER_133: And now there's all these enterprises on the cloud. And I think there's some opportunity there.

SPEAKER_25: I think you're 100% right. It feels to me like the office space market loses cities and those stores beneath them, you know, whether that's retail or sweet cream. I don't know who's in those retail spaces that might have, you know, Starbucks, whatever below, you know, the Soma office spaces, because the top talent are working from home.

David Friedberg: And then the other thing I'm seeing, which I would be interested in your interpretation on the public markets, if a large amount of talent learned during the pandemic, how to be a free agent and or start their own side hustle company. And instead of making 100 or 200,000 working at Facebook, they figured out a way to make two or 300,000 on their own terms, being their own micro entrepreneur, what wired and other people called freelance nation back in the day, that everybody would have their computer and their server and incorporate. I actually see that happening now, where people who I would have hired or who used to work for me, started their own little business, and they're doing better, you know, they're making 20% more or double more. How does that make its way into public markets?

SPEAKER_07: And what do you think of that thesis? Either of you or both?

Jason Calacanis: Yeah, Fiverr's done, Fiverr did well for a stretch. It's, you know, it has tougher comps.

SPEAKER_12: It's just like what happened with Zoom. It's what happened with a lot of these companies where they had such an explosive year last year that the year over year needs time to recoup. But Fiverr was a company that moved from having, I mean, $5 gigs, which is crazy to think about where they began and where they're at now. And now they're starting to do subscription services to where, you know, it's monetized a little more consistently for public markets and Upwork has struggled. So, you know, I know there's TopTel and the private markets, the developer recruiting. Yeah, that one's kind of interesting. We haven't had our big public market, darling.

SPEAKER_14: If I were to have to put my money somewhere, I would definitely say Fiverr just because they did execute very well.

SPEAKER_02: They do have a corporate plan now.

David Friedberg: One of the things they realized was a lot of corporations are saying, hey, if you can manage the freelancers for us and, you know, it's less of a marketplace but more of a concierge, I'll do a lot more with you.

SPEAKER_25: And so that concierge service works because they just skim the top talent like TopTel does. I wonder if they ever converted their notes. I don't know if you know that crazy story, but they were on a safe, which is a way to give debt to a company that doesn't have a conversion date as opposed to a convertible note and they never converted. And the founder just took all the profits for themselves and never converted anybody and they never had equity.

David Friedberg: So there's no recourse. And the whole concept behind the Y Combinator safe was like, well, that'll never happen because there'll be a liquidation event. And the founder there was like, yeah, I just take all the profits for myself.

SPEAKER_25: None of the employees and none of the investors ever got money from it. It's been like a crazy outlier case here in Silicon Valley. It's gnarly. Wow. It's gnarly. And so since that time, I just went to my attorneys.

David Friedberg: I was like, hey, Wilson, can we put a date on this safe for when it automatically converts? They're like, we don't see why not. I was like, okay, let's do it. And so people were like, oh, you have to sign our safe. And we're like, yeah, we'll sign the safe. Just put in that conversion date. They're like, why do you need a conversion date? And I just point them to the episode of TopTel.

SPEAKER_35: I'm like, watch this episode where the employees revolt because they never got stock options.

David Friedberg: Like really gnarly, but it's only happened once at scale here. Nox, what do you think about this never ending pandemic slash coming, you know, post pandemic world? Let's assume we have some ability to keep society going, which I think we all will.

SPEAKER_35: So what do you think this looks like in 2022 post pandemic?

SPEAKER_53: Um, I think the, the movement is, is to open up. I mean, we can see what people, what the economies want.

SPEAKER_19: Um, just based off the exodus from states and going into other states. And the other thing that I find fascinating and you were hitting on it is like this, uh, reshuffling. Um, of how markets work just based off innovation and innovation ingenuity. It's people are finding that with the new tools that tech has provided, they can actually, uh, make more money with more time on their own terms.

SPEAKER_53: And so it's just almost like, almost like a free market, natural redistribution of wealth, um, which is really shuffling the market in a very fascinating and I think a positive way.

David Friedberg: Pretty inspiring, right? Like markets work, there's a competition for entry level workers at a level that even the socialist crazy Bernie Sanders, Elizabeth Warren. They didn't even ask for this outcome of Uber drivers and DoorDash drivers making 30, 40 bucks and getting $1,000 signing bonuses.

SPEAKER_25: It closes whatever they were asking for.

SPEAKER_19: Yeah. It was the, um, it was just the, you know, the human mind can't imagine what the innovation of new technology will bring.

SPEAKER_53: It's just like all of a sudden the internet coming onto a cell phone can lead to anybody getting their own personal limousine driver at any time they want. You know, you couldn't really fathom that back in the nineties, but that's where technology led us naturally. And it's just doing it again. It's just doing it again. You know? Yeah. I find it to be pretty exciting.

SPEAKER_203: I I'm fascinated by real estate too. I know I gotta let you guys go, but it's so great talking to intelligent people who are considering and thinking about placing bets.

SPEAKER_07: I, you know, I, I was thinking about Airbnb and I realized I had this. It was, it was a great revelation I had about Uber at one point, which was Bill Gurley and I and others were talking about Uber.

SPEAKER_25: Uh, the early investors. He did the series that I did the seed with Chris Saka and he said, um, you know, uh, J cow. It's yeah. I don't know if you know the market for taxis is X, but Uber is doing X times three in this market. I'm the bad Bill Gurley impersonation, but, and then he's like, and then there's Hertz. And then there's car ownership. And then Saks was like, yeah, I got rid of my car. And I was like, what? He's like, yeah, I'm full Uber. I mean, I never heard that term before. He's like, yeah, it cost me three grand a month to, you know, uh, do full Uber. And it was costing me, you know, with my payments and insurance and parking 2,400 with my, you know, Porsche Cayana. And now I can work and I recaptured those. So I got all that time back for 600 more. It's like having a personal drivers better.

SPEAKER_07: I actually thought for Airbnb, it's actually a second home for people more than it's owning and going against people who are owning, uh, who are looking for hotels. And then I don't know if you saw this company Picasso and there's another one I'm having the founder on. They're making LLCs out of second homes. So the same way Uber made everybody a personal driver, imagine the three of us wanted to buy, you know, a ski condo in Park City. Okay. It's a million five. Okay. The three of us buy it. And we include three other people. We each take a sixth of it. We have an app. Picasso gives you an app to book it. Don't make us commercial Picasso. I'm not an investor, but I thought there's a fascinating concept of not time sharing. It's just they facilitate an LLC being done. And boy, that's crazy. When you think about it, housing is a crazy market right now.

SPEAKER_50: Are you guys betting on housing right now?

SPEAKER_42: I actually started my investing career actually almost 20 years ago, um, as a real estate investor. So about 15 years ago.

SPEAKER_12: So I've always been keen on real estate. My first real true investor hat. Yeah.

SPEAKER_239: I don't know how you publicly play that, but my God, it's like real estate is crazy. Redfin.

SPEAKER_243: A lot of people like Redfin. I had Glenn on.

SPEAKER_25: He's amazing as a founder. Yeah. He really innovates. He's embraced like on this stuff. Okay. Crypto.

SPEAKER_56: Just going to come apart at the seams here to stay both. You guys, you guys mess with crypto. Oh yeah.

SPEAKER_246: Yes.

SPEAKER_53: Okay. Um, but from a tech perspective, I mean, it has to, um, Beth, speak for Beth, but, uh,

SPEAKER_19: have like a place within the disruptive tech world. And so we don't really play momentum and all coins.

SPEAKER_53: If you're doing like a new, a better version of Bitcoin, that really doesn't matter to us because Bitcoin has done the unthinkable, which has become a, a true store of value, uh, on par with gold and with the dollar. Um, you, some people may question that, but you're just as likely to go to Ecuador, Peru, or Germany, just anywhere and pay for something in Bitcoin as you are in gold. You know what I mean? Yeah. It would certainly be easier. Quite unique. Yeah. It's done something quite unique. You'd be better off doing that than doing it with like, for example, you know, something, Tether or something like that, for example. Yeah.

SPEAKER_19: So, so it has to have like a real world disruptive quality for us to invest in it.

SPEAKER_53: And then we just run technicals on it and, you know, and, and ride the trend when it's there.

SPEAKER_25: Does it have to Beth have an actual reason to Etra? Like, does it have to have customers with the technology and actually be solving a problem in the world? Or are you okay, okay, investing when it's a project that might at some point potentially have users as opposed to speculators?

Jason Calacanis: That's a good question.

SPEAKER_12: I think that either has to have users or has to have quality partners that are adopting it, integrating with it and championing it, championing it for, you know, the blockchain infrastructure layer. I think the infrastructure layer is where a lot can be made, which is how do you take data that is off chain and bring it on chain? I mean, that's what the biggest problem is with blockchain today, which is it's supposed to be a very secure network. So how do you take weather data or how do you take whatever other kind of data you might want? You can even do health care data. How do you bring that on chain in a secure manner? That, for instance, is more of an infrastructure question. And so do they need to have a lot of customers right now? I think it's just important that they have a lot of partners that are working with the technology. And we're seeing some Ethereum competitors right now that I think are interesting because Ethereum has, even though it seems like it's cemented its place for decentralized apps, what the crypto market's communicating to us is that developers and whatnot have not fully decided yet if there will only be Ethereum or if there will be more for dApps.

SPEAKER_251: Fascinating.

SPEAKER_25: So it could be like a Betamax VHS, you know, one was there first, but who knows, maybe there's some better reason to go after it. I mean, Solana's had a pretty incredible run. I'm really interested in these oracles.

SPEAKER_203: And like, there's some data, talk about getting data onto the chain. Like, we want to place a bet or a wager, you know, and all this data is going to be able to do a smart contract and we can trust it. So we make some bet on the weather or the next game and the Oracle tells us who won. Kind of really fascinating to me. Oh, yeah.

Jason Calacanis: It's a big problem to solve. I even, you know, with all the genius of Ethereum and some of the other, you know, more operating system layer, if you will, blockchain geniuses, they have not figured that piece out yet.

SPEAKER_42: So it's a big piece to figure out.

David Friedberg: Yeah, my theory on it is like, this reminds me a lot of the dot com in early days of the internet in the 90s, where, and I don't know if this will be analogous, but, you know, a lot of people made a lot of noise and a lot of charlatans came in and talked a lot of bullshit.

SPEAKER_07: And then all of a sudden, you know, like, it was pretty easy to identify the bullshit. And then there were some things that were like, Oh, that's not going away. Or that actually, yeah, I like using that, or that's starting to work. And I know this sounds ridiculous. But I look at the NFT space. And even though I'm not a participant, and I think it's overheated. I'm like, you know what? Owning some object, a musical object or a photograph is interesting because I looked at a lot of these stock photo libraries. And I've looked deeply in rights management. And I've never found a great investment there. But I was like, you know, if somebody created a stock photo company, where you could take an image bath, I, you're an amateur photographer. And I say, you know what, I'll give you $100 for the rights to these 100 photos. And you're like, great, I get 100 bucks. And I'm like, and you get to keep 20% if anybody uses it. So you get a residual. And you're like, great, this idiot gave me 100 bucks for 100 pictures I took in Central Park this afternoon. And then Knox is the idiot who comes along and he's like, you know what, I'm going to put you on the cover of my magazine. I need an image and you have a beautiful image of Central Park. And I would have spent somebody, you know, $10,000 to do a photo shoot. I'll give you 1000. Now you get 200.

SPEAKER_85: I get the 800. Like that trickle down rights.

David Friedberg: My God, if somebody is building a company or wants to build this company, I will see it. But I just thought the, the, the smart contracts combined with the residuals, which I think if you buy these NFTs, you could keep making money, even if you're the artist and it's been sold 20 times, you're just making 10% each time.

SPEAKER_261: It's brilliant.

SPEAKER_42: I don't know.

SPEAKER_12: And I, I think it's one of those spaces where it can, you will probably see a massive sell-off of some kind, everyone will doubt it. And I think that that is the sentiment, it's exuberance that can occur around these spaces where the chances that NFTs continue, you know, in a perfect, um, uptrend is pretty few. Yeah. So, um, I think there, uh, it's really interesting concept. I think it'll definitely have, um, its moment.

SPEAKER_14: Uh, and I think there will be moments of doubt too, which is a good time to capitalize on it. If you're interested in it, there's always opportunities. You just have to be patient.

SPEAKER_155: You're gonna add something there.

SPEAKER_164: Oh, no, I mean, it's, uh, yeah.

SPEAKER_53: I mean, I mean, it's, I was just thinking actually when you were saying that, um, cause I, I know a little bit of NFTs and hearing, hearing you talk about the trickle down residuals. I was just, just blown away at the innovation. I mean, it's just something you can't really wrap your head around just a couple of years ago.

SPEAKER_19: Right. That is now like a real possibility. And like even decentralization of like finances is something that it's really difficult to wrap your head around because the entire history of pretty much, you know, civilization has been centralized finances.

SPEAKER_53: And so, I mean, this is really, you can look at it from, oh, this is a bubble and something that's, you know, just gonna die away and go to zero. But then you look at it from the tech perspective and it's really doing something, I mean, immensely innovative and very fascinating.

SPEAKER_19: And the ramifications of where it will go, uh, and is going is also just incredibly fascinating. So we're, we're excited about the ones that were in for that, for that reason, however, like Beth was saying, I mean, we're seeing like Bitcoin, for example, just whether it, what a 50% drawdown. And that's nothing.

SPEAKER_53: I mean, one of the, one of the actual, uh, uh, coins that we're invested in, I mean, it would go down 30% in a few days and it's just like, don't you just shrug it off. And then it's back up 50% in a, you know, in a few more weeks.

SPEAKER_73: And so you're dealing with extreme volatility. So you got a position size.

SPEAKER_24: Well, what does that mean in English position size?

SPEAKER_19: Um, for example, when you're building a portfolio, um, uh, everybody, everybody looks at like, uh, the pie in the sky, how much I'm going to make.

SPEAKER_53: And people that put that first tend to go, uh, go under, they go under water, they go bankrupt. They get out saying investing is too hard, but whenever you, you approach investing the perspective of how can I not lose money, you know, and then just invest in the quality companies gains will come and you'll survive these downturns. So you want to overweight companies that have the lowest volatility, the lowest standard deviation.

SPEAKER_19: Um, and so we track that stuff, realize volatility is a good way of putting it. A good example. So the S&P 500 has a realized volatility of 9%.

SPEAKER_53: Um, one of the momentum plays that we did recently that was, uh, invested is a small, small cap company doing blockchain, had a realized volatility of about 120%. That's massive.

SPEAKER_19: You don't make that a core position. You will, you will fold. You will freak out. You will not sleep. So you just start off small and whenever it starts doing its thing and going up, if it does, then you start adding to it and you make sure you have an exit strategy.

SPEAKER_53: But a stock that's big, you know, Microsoft, I mean, it goes down 20%. It goes 50%. Yeah. That's painful, but you know, it's something that you can hang your head on.

SPEAKER_25: Yeah. And people are not throwing away windows or Xboxes or office or word or whatever those products are.

SPEAKER_272: Microsoft will be here in 10 years.

SPEAKER_203: The worst thing that ever happened to me was early in my poker career. For some reason, I played eight, five, and the board came down for six, seven, and I hit the nut straight and everybody poured their money in. I quadrupled up and then I was like, Oh yeah, eight, five is my favorite hand. That's I haven't won with it since.

SPEAKER_07: And, you know, later, but I do think that you're the I love the fact that regulation is coming to crypto. I know that crypto people hate it and it's big brother. But if you build that level of trust, what Jeremy Allaire is doing with USDC, I don't know if you saw he pegged it dollar to dollar and he's like, we're not going to do commercial paper or whatever. It's just going to be like really, really what tether was supposed to be. It's like actually I've been going to get people off the sidelines who are like, I don't want to play in a rig casino. And the loans are I think the tipping point. The reason why the SEC is really concerned about that Coinbase lend product. And if you saw that brouhaha is if you can make 6% and you're making 60 basis points or 25 basis points in your Bank of America account. Well, that's a reason enough for somebody with $100,000 to put it into their Coinbase app and loan their crypto out. Like or do it with 25 or $50,000.

David Friedberg: Like, I think people are going to start going, yeah, I just I want to get that return and I can't make that anywhere else.

SPEAKER_254: So I'll just I'll make it loaning my crypto and some regulation there would be pretty, pretty cool because it would make it feel safer if they had some FDIC or SPIC insurance.

SPEAKER_120: And yes, definitely. Otherwise, and I don't think people realize the risk.

SPEAKER_19: There's always a risk. Someone is getting paid. If you're not paying, then they're taking your asset and someone else is paying. And so there is counterparty risk.

SPEAKER_53: If Coinbase, I mean, I don't see it happening. But if Coinbase goes under, you're probably waiting in line with all the debtors to get your coins back and you're probably not going to get much of it back. And so that's the risk you take. I would love to see some kind of insurance on that nature within these within these exchanges.

SPEAKER_25: I had somebody on the program was talking about they they loan out only to hedge funds or whatever in crypto and for them to make short trades or whatever. And they're like, yeah, we can just liquidate that person's crypto if the market collapses and they don't pay. And so they have crypto on, I guess, you know, they have they have they have custodianship of their crypto, you know, as the as the collateral.

SPEAKER_239: So it's like, well, if smart contract, you just liquidate. Right. But I guess you can get underwater.

SPEAKER_53: Oh, well, it runs the risk. It's a store. It's a timeless story we've seen throughout American history. I mean, how many runs on the banks have you have we have basically led to FDIC insurance coming into play? If all of a sudden everybody wants their coins back at once, you know, you got a problem. You got a big problem. You know, that's when bankruptcies happen. That's when people start standing in line trying to get their money back and they can't get it back. So that is a very real risk. That's why, you know, you know, we look at that risk. We want our readers about that risk whenever investing or holding their coins at these exchanges.

SPEAKER_25: What would you put that risk at Beth? If you had to like, you're talking to a friend who, you know, the systematic risk that Bitcoin gets hacked. I mean, it hasn't happened. It seems impossible, but somehow it gets compromised. The coins become worth nothing.

SPEAKER_56: It's a 1% chance, a 0.1% chance, an unknowable, but a chance.

Jason Calacanis: Actually, I wrote about this. Bitcoin is more secure than 10,000 banks because of the hash rate right now because it just grew.

SPEAKER_12: The network grew. But if you're worried about it, you can put on cold storage, which is like a digital wallet. And then if you're really looking for an exchange that ensures coins, Gemini actually is one. There are some exchanges out there that will actually ensure it because they run more like a trust. So I think there's ways to make it even, you know, take risk off the table. But I would not, I would not let it prevent you from getting into the crypto market or Bitcoin. I'm talking like the top 10 crypto tokens. Who knows? It's a while. It's the wild west. After the top 10. Yeah. Okay.

SPEAKER_164: So. Coinbase, I think, I mean, they hold like 90 plus percent of all coins in cold storage, and they ensure the other part that's in, you know, hot storage that that could be hacked.

SPEAKER_53: So, I mean, that risk is become, it's not even really an issue anymore. I think when it comes to exchanges. Awesome.

SPEAKER_25: Listen, you guys have been amazing. Where can people follow you on the Twitter? Yep.

SPEAKER_12: Beth can dig on Twitter. IO fun.com. We publish a weekly newsletter. Very, very informative. We get free out free stock tips. We do macro market analysis on the free newsletter.

SPEAKER_230: Awesome. Knox, how about you? How can they find you?

SPEAKER_53: Knox Ridley on Twitter. There aren't, there aren't many of me out there. Yeah. You should be able to pretty, pretty easily.

SPEAKER_298: And yeah, I work with Beth on IO fun.

SPEAKER_221: Beautiful. All right. Thanks so much for coming on the program and we'll see you all next time on this. Thanks for having us. Bye bye.