00:00:00
Everybody wants access to these private
00:00:02
markets. Joining [music]
00:00:02
>> us right now to discuss all of this is
00:00:04
Kelly Rodriguez. He's a Forge CEO. We
00:00:06
see a world where the [music] private
00:00:08
market opens up and is accessible to any
00:00:11
US and global investor. There's 19
00:00:14
companies in the private market AI
00:00:16
basket. These companies have grown on
00:00:18
average 300%.
00:00:20
>> Please join us in welcoming Gavin Baker,
00:00:22
managing partner and CIO of Atrades. The
00:00:24
ROI on AI has
00:00:27
empirically, factually, unambiguously
00:00:30
been positive. Investing is the search
00:00:32
for truth. We welcome in Brad Gersonner.
00:00:34
It's good to be back with you. You have
00:00:36
a program called Invest America.
00:00:38
>> I think we have a historic moment right
00:00:40
now to get [music] everybody into the
00:00:43
game of capitalism.
00:00:46
>> Do we have a few slides from Brad to
00:00:48
kick this off?
00:00:49
>> You know, let's startic like old times.
00:00:53
like old times. This uh this panel I I
00:00:56
actually was backstage. I said, "Gavin,
00:00:57
do you know we're talking about
00:00:58
secondaries?" He's like, "What do you
00:01:00
mean?" And I said, "Okay, so here, let's
00:01:03
just set this up for everybody. The
00:01:04
room's full of people who are
00:01:05
allocators. People are looking for
00:01:07
distributions. So this is um secondary
00:01:10
markets over the course of the last
00:01:12
decade. This is the amount of money
00:01:14
going into VC each year, the amount of
00:01:16
money coming out of VC each year. The
00:01:18
red line represents the net effect of
00:01:20
that. So Jamath, we're in like 5 years,
00:01:23
right, where a lot more is going in
00:01:24
than's coming out. But the secondary
00:01:27
market is at record volume. So this is,
00:01:30
you know, I call these companies quasi
00:01:32
public companies. These are these later
00:01:34
stage companies. There's buying and
00:01:36
selling that's going on every day. Look
00:01:38
at that, Jason. Relative to the 21 peak.
00:01:40
We thought that was crazy at the end of
00:01:42
21. We're double that now in terms of
00:01:45
secondary transactions. This is the
00:01:47
amount of employee secondary. So this is
00:01:49
people buying into Anderal, Anthropic,
00:01:53
SpaceX now represents 31% of all primary
00:01:56
venture activity is buying into these
00:01:59
secondaries in 2025.
00:02:02
Secondaries are now competing with IPOs
00:02:05
and acquisitions as the principal way
00:02:08
that these guys are exiting. So, I
00:02:10
thought that was a decent setup to start
00:02:14
the conversation this morning just to
00:02:16
level set how important secondaries
00:02:18
[clears throat] have become. And then
00:02:19
the final one is secondaries over the
00:02:21
last couple years were trading at a
00:02:23
discount to market. So, if we wanted to
00:02:25
sell shares in one of our companies,
00:02:28
right, to buyers out there, they were
00:02:29
willing to give us 80 cents on the
00:02:31
dollar in order for us to get liquid so
00:02:33
that we could send DPI back to our LPS.
00:02:35
Today it's at 106. Uh uh so a premium in
00:02:40
the market as a coupon.
00:02:41
>> And this doesn't include some of the
00:02:43
wild west of SPVS that have been
00:02:46
unraveled recently.
00:02:48
>> People charging 10% loadin fees, double
00:02:52
carry and a lot of gray market offmarket
00:02:55
stuff. This is also having a profound
00:02:58
impact, Gavin, on employees at these
00:03:01
companies that I want to hear about
00:03:02
because you've seen it up close and
00:03:04
personal with SpaceX and they have a
00:03:05
very orderly process here. So, why don't
00:03:08
we start there? What impact is this
00:03:10
having on the employees, Gavin? And then
00:03:14
on the market, how orderly is this? And
00:03:18
and who are the buyers? Are the buyers
00:03:20
the sucker at the table? are these
00:03:22
family offices, high netw worth
00:03:24
individuals who keep hearing us talk
00:03:26
about Anthropic or SpaceX or Andril and
00:03:30
they just say I have to own the name and
00:03:31
they're not discerning. So Gavin, maybe
00:03:34
you can start about the impact on the
00:03:35
SpaceX employees you saw firsthand, etc.
00:03:38
Well, maybe broadening it beyond SpaceX,
00:03:40
I do just think if companies are going
00:03:42
to be staying private longer, this is
00:03:45
absolutely necessary. There I think
00:03:48
there are a lot of people who are very
00:03:50
um very wealthy on paper but actually
00:03:54
cash poor and if you're making
00:03:56
tremendous sacrifices
00:03:59
uh because you know you work for a
00:04:00
company that you really believe in and
00:04:03
you're contributing a lot to that
00:04:04
company. It's hard if you can't buy a
00:04:07
nice house for your family. It's hard if
00:04:10
you can't afford to do nice things,
00:04:12
>> especially in year seven, eight or nine
00:04:14
of working at the company and you tell
00:04:16
your spouse we're worth 10 million on
00:04:17
paper, 30 million on paper and you don't
00:04:19
own your home.
00:04:20
>> Yeah. Or year 15. And so I think this is
00:04:23
necessary and important and you know
00:04:26
whether it is good or bad, I think it is
00:04:28
very clear that companies um are going
00:04:30
to stay private for longer.
00:04:32
>> What's the reason to stay private
00:04:34
longer? Truly
00:04:36
>> I I I don't think there is actually a
00:04:40
good reason to stay private longer
00:04:42
>> here. Here
00:04:43
>> and
00:04:43
>> I completely agree with you too.
00:04:44
>> Yeah. And I
00:04:45
>> Why has it happened? This is founders
00:04:47
don't want let's just call it what it
00:04:48
is. Founders don't want to be under a
00:04:51
microscope. They want to build and enjoy
00:04:53
life and have it easier than being on
00:04:55
the public market microscoped.
00:04:56
>> Yeah. I think there is a perception that
00:04:58
life as a private company is easier and
00:05:00
you have more freedom and you can think
00:05:02
long term.
00:05:03
I don't agree with this. I always think
00:05:05
about um Mark Zuckerberg's commentary
00:05:08
that had he been public. So just you
00:05:12
know Facebook um I won't call it a
00:05:15
near-death experience but long ago it's
00:05:18
difficult to believe but I don't 10 112
00:05:22
um Facebook did not believe in apps they
00:05:25
believed in something called HTML 6
00:05:28
>> and HTML 5
00:05:29
>> HTML 5 HTML 5 Yes. You you you you were
00:05:32
the actual
00:05:33
>> it was the cataclysmic debate and it was
00:05:36
me and Brett Taylor. Me versus Brett. I
00:05:38
was like apps I want to go build a
00:05:39
phone. Brett was like HTML 5. Zuck
00:05:41
picked Brett. Spent the next three years
00:05:44
unwinding that decision.
00:05:46
>> Absolutely. And Mark Zuckerberg and
00:05:47
basically the idea was you know the
00:05:49
iPhone comes out and initially there was
00:05:52
not a big app app ecosystem and there
00:05:56
was a thought that hey there's no need
00:05:57
for apps. you're just going to use the
00:05:59
web browser on your phone and HTML 5 was
00:06:02
a way of look of making websites look
00:06:06
mobile native
00:06:07
>> dynamic.
00:06:08
>> Yeah. And this seemed like kind of the
00:06:10
future to a lot of very smart people
00:06:11
including Google, Facebook. Um but it
00:06:14
was not the future. Um it was wrong. And
00:06:17
what Mark Darker has said, I think
00:06:20
several times in public is he profoundly
00:06:22
believes that had he been a public
00:06:24
company
00:06:25
um when you know there was this internal
00:06:28
debate between the and the detail was
00:06:31
actually I went to Zuck and I said I
00:06:32
need a billion dollars to build this
00:06:34
phone and we are in this moment in 2010
00:06:37
where we can have the third leg of the
00:06:38
stool. there's Android, there's iPhone,
00:06:40
neither have really taken off yet.
00:06:44
And and he's like, we don't have a
00:06:45
billion. And I said, but the public
00:06:47
markets will give us a billion. And he
00:06:50
said, no, but then we went public a year
00:06:52
later,
00:06:53
>> but that year made all the difference.
00:06:54
>> Made all the difference. And he said
00:06:56
that had I had the constant pressure
00:06:59
testing from public market investors,
00:07:02
you there's a dynamic. I was I was
00:07:04
talking to another CEO here this
00:07:05
morning. When you're the CEO of a
00:07:07
private company, you are the most
00:07:09
special flower to all of your investors.
00:07:11
[laughter] You're like, you are as
00:07:13
important to your board members,
00:07:15
particularly if you're really
00:07:16
successful. You know, maybe as the board
00:07:18
members families or parents, you know,
00:07:21
the board members think about you a lot.
00:07:23
Um, once you're public, you're one of
00:07:26
thousands of companies. Um, and that's
00:07:28
its own dynamic. But the consequence of
00:07:31
this is is that private investors are
00:07:33
often selling to management teams. And
00:07:35
at some level that can mean telling
00:07:37
management teams what they need to hear
00:07:40
because you want to be able to keep
00:07:41
participating in the rounds. Once a
00:07:43
company's public, you can buy or sell as
00:07:45
you wish. And this means that investors
00:07:47
feel freer to give companies management
00:07:49
teams. And Zuckerberg Zuckerberg said,
00:07:51
"Had I been public, had I been getting
00:07:54
rigorous, detailed questions from really
00:07:57
smart public equity investors, I think I
00:08:00
would have, you know, by the way, the
00:08:02
second unwritten story of that, which
00:08:03
has never been said, he called me. He's
00:08:06
like, "Hey, man, what the is going on
00:08:07
over there?" Uh, and I was like, "Yeah,
00:08:10
I know." Cuz I had just left and then we
00:08:13
wrote a deck
00:08:15
and I walked over to Zuck and I'm like,
00:08:17
"Here's the deck of what you need to
00:08:18
do." Yeah,
00:08:19
>> do these things. Well, this is a key
00:08:22
point. I think Gavin is when you're
00:08:24
private, you do not get clean
00:08:27
information as the CEO and the
00:08:29
management team because people want
00:08:31
access and once you give the truth or
00:08:34
you ask the hard questions, you might
00:08:35
lose access
00:08:36
>> 100%.
00:08:37
>> The sickopantic nature of private
00:08:38
markets is real.
00:08:40
>> Now, an exceptional CEO
00:08:42
>> Elon
00:08:44
>> seeks out negative feedback. looking for
00:08:46
that.
00:08:47
>> But not many and actively discards, but
00:08:50
not many CEOs maybe are are wired that
00:08:53
way. And by the way, I do think we have
00:08:54
to give Brad credit. That was a very
00:08:56
good deck. You said back in 2012.
00:08:58
>> No, cuz he did a second one. He had
00:08:59
>> when he did the second one, he did the
00:09:01
open letter to Zuckerberg at the end of
00:09:03
Was that at the end of 22?
00:09:06
>> October 22.
00:09:07
>> Why don't you call it? Get fit. What was
00:09:08
the uh time to get fit?
00:09:10
>> Time to get fit. That was an impact.
00:09:12
Those are two very impactful.
00:09:13
>> Okay. So look, there's you're you're
00:09:16
hearing the bulls on going public, but
00:09:17
Kelly, take the red team the other side
00:09:19
because you're on the other side. You
00:09:20
built a private business, you sold it to
00:09:21
Schwab, so clearly one of the largest
00:09:23
financial institutions now is going to
00:09:25
ram its way into this market. But then
00:09:27
you're seeing a lot of push back.
00:09:29
Anthropic is like, "Hey, uh, dissolve
00:09:31
these SPVS." OpenAI, I think, was saying
00:09:34
today now, dissolve these SPVS.
00:09:39
Should we dissolve the SPVS? Where are
00:09:41
they coming from? And why are you on the
00:09:44
right side of history?
00:09:45
>> And and have you had to dissolve any of
00:09:47
the ones on your marketplace?
00:09:49
>> No.
00:09:49
>> No. Look, I think that uh first of all,
00:09:53
being a private company CEO for most of
00:09:56
my career and then being a public
00:09:58
company CEO for three years, I recognize
00:10:00
the job is incredibly different. It's
00:10:03
much less fun. Uh you're not doing
00:10:06
>> Hold on. What do you mean when you say
00:10:07
much less fun? Turning into an
00:10:10
investment manager primarily as a public
00:10:13
company CEO
00:10:15
is a very different job than being a
00:10:19
visionary [clears throat]
00:10:20
product first uh first principles
00:10:23
business when you become a public
00:10:26
company CEO everything changes and I
00:10:30
would say in the world we're in now the
00:10:32
kind of capital you can raise the kind
00:10:34
of capital that was represented in the
00:10:36
very last discussion allows you to
00:10:38
extend extend your private life. SpaceX
00:10:41
private company for 24 years. Um but the
00:10:45
reality is these SPVS that are now
00:10:48
emerging because these companies are
00:10:49
getting so big is because a market's
00:10:52
trying to happen
00:10:54
and a company like SpaceX has done this
00:10:57
extraordinarily well. They've run
00:11:00
essentially liquidity programs for
00:11:03
almost a decade
00:11:05
because there's so much pent-up interest
00:11:08
in both being an investor and getting
00:11:10
liquidity for some of the reasons that
00:11:12
Gavin was mentioning. So I think what we
00:11:14
see now is the next phase of this this
00:11:17
Schwab deal with Forge basically says to
00:11:20
the world this is a real asset class.
00:11:23
It's more than just secondaries.
00:11:26
We're going to put these companies, the
00:11:29
company's equity into fund products into
00:11:34
very well-managed, regulated SPV
00:11:37
structures because they do serve a
00:11:39
purpose in the market.
00:11:40
>> Yeah. But if you're how do you convince
00:11:43
Elon specifically to give you access to
00:11:45
that when he wants to do it himself and
00:11:48
he has a team and every six months he
00:11:50
runs it himself? How do you get access
00:11:51
to that? What's your pitch to the next
00:11:53
Elon?
00:11:54
>> Here's the pitch. The pitch is you're
00:11:57
going to go from being a private company
00:11:59
eventually to a public company. What
00:12:02
Schwab represents is 46 million
00:12:04
investors and 12 trillion.
00:12:07
This will change capital access and the
00:12:10
way that you distribute your shares
00:12:13
moving from private to public.
00:12:15
>> How did that work when you pitched them
00:12:17
on that?
00:12:18
>> Were you Well, I'll tell you. We got our
00:12:20
first SPVS on SpaceX in 2018 and 2019.
00:12:24
Were they was he okay with it?
00:12:26
>> Absolutely. Totally permissioned. And
00:12:28
then as we got closer to the IPO, we
00:12:31
said, "Guess what? Um, we've got 30
00:12:34
million retail investors that would like
00:12:37
to have a $50,000 slice of SpaceX."
00:12:41
And and he went out [snorts] publicly
00:12:44
and talked about having broad-based
00:12:45
distribution
00:12:47
>> at the IPO price.
00:12:48
>> At the IPO price and Schwab was named
00:12:50
one of the IPO allocations.
00:12:52
>> Beautiful. I do think this is actually a
00:12:54
very effective pitch. I think a lot of
00:12:56
these CEOs, they're a little bit
00:12:58
ambivalent about, you know, and I think
00:13:00
they understand that maybe the
00:13:01
institutions who are investing in these
00:13:03
private rounds, you know, they may
00:13:05
represent, you know, unions, they may
00:13:07
represent retirement plans, but I do
00:13:10
think they like the idea of
00:13:11
democratizing access and if they're
00:13:14
building something that they think is
00:13:15
great, giving ordinary Americans an
00:13:19
opportunity to participate. I actually
00:13:20
think that's a very appealing story to
00:13:23
to a lot of these CEOs
00:13:24
>> because they're capitalists and and they
00:13:26
understand the power of equity. So Brad,
00:13:29
>> what is the downside then of cuz you're
00:13:32
part of the go direct movement now? BG2
00:13:35
pod officially fifth bestie. Gavin
00:13:37
officially sixth bestie. You [laughter]
00:13:38
got that's Gavin. That's new news. We
00:13:41
officially made you six bestie today.
00:13:42
>> But does that mean I'm definitively
00:13:44
behind Brad? Cuz [laughter] that that's
00:13:46
the real news.
00:13:46
>> I can You're standing behind Brad.
00:13:49
You're just giving him that big bear hug
00:13:51
right behind him.
00:13:52
>> Wow.
00:13:52
>> So, are you saying I'm the big spoon?
00:13:54
>> You're the big spoon now [laughter] in
00:13:56
the in the side draw with the extra
00:13:58
spoons.
00:13:59
>> But Brad, it's getting very weird very
00:14:01
quick.
00:14:03
>> In all seriousness, with great power
00:14:05
comes great responsibility.
00:14:08
Sometimes the, you know, the enthusiasm
00:14:11
people can have can exceed reality.
00:14:15
>> Correct.
00:14:16
>> Going direct, you've become more
00:14:18
measured. I've noticed as your profile
00:14:21
has gone up.
00:14:22
>> I think all of us have to like just make
00:14:24
sure people don't blindly follow trades.
00:14:27
Don't
00:14:28
>> you were talking stuff down on CNBC a
00:14:31
couple of times saying, "Hey, I don't
00:14:33
think the average American needs to be
00:14:35
in some of these companies. There's
00:14:37
time."
00:14:38
>> I get worried. I get worried at this
00:14:41
point in the market stage, particularly
00:14:42
on CNBC where you're talking to retail
00:14:44
investors at home. Yes,
00:14:46
>> I was one of those retail guys looking
00:14:48
up to everybody on this stage, trusting
00:14:50
everybody on this stage. And when people
00:14:52
are telling you to yolo into right
00:14:55
double fee structure, SPVS and all this,
00:14:57
you know, like it's time to be careful,
00:15:00
to do your work, to be thoughtful. We're
00:15:02
in this because we want this to be
00:15:04
durable democratization for a long time.
00:15:07
Yeah.
00:15:07
>> We want to build trust among those who
00:15:10
feel left out and left behind in
00:15:13
capitalism. We all think that we need to
00:15:15
go public sooner. The reason I think we
00:15:18
it is destabilizing
00:15:20
when you're creating trillions of
00:15:22
dollars in private value and 80% of
00:15:25
America think it's a scam where they're
00:15:28
left out and left behind. That's
00:15:30
>> and then they come rushing in
00:15:32
>> and they could be
00:15:34
not so good cards,
00:15:35
>> right? So, all I'm saying, like I said
00:15:37
about they asked the question on CNBC
00:15:40
last week, if you had $100,000 of fresh
00:15:42
capital and you were sitting at home, is
00:15:44
today the day that you would shove it
00:15:46
all into the market? And I said, no, I
00:15:48
think about it in sizes, right? We just
00:15:51
had two of the biggest months in the
00:15:53
last 10 years in the public markets.
00:15:55
They've been big months. So, if I had a
00:15:57
stack of a hundred, I may put 30 to work
00:15:59
today. I'm never going to pick the
00:16:01
bottom. I'm never going to pick the top,
00:16:03
but I certainly wouldn't be putting it
00:16:05
all to work. And I'd say the same thing
00:16:06
about latestage privates, people who are
00:16:09
yoloing into this stuff, and then they
00:16:11
feel really disappointed. They're like,
00:16:13
"Hold on a second. I bought the SpaceX
00:16:15
IPO and it didn't go up 3x."
00:16:17
>> Let me ask you then.
00:16:18
>> Yeah.
00:16:18
>> Do you view this as exit liquidity for
00:16:21
you? Like, would you shape your
00:16:22
portfolio and returns and increasingly
00:16:25
say, "You know what? I don't know when
00:16:26
this guy's going to go public."
00:16:27
>> Yes.
00:16:28
>> Let me just pump the stuff out. Let me
00:16:30
get the distribution. and let me send it
00:16:31
to my LPs and just call it a day.
00:16:33
>> We we are selling into this.
00:16:35
>> You're selling into this,
00:16:36
>> right? So, I have LPs in this room who
00:16:39
say, "Listen, we invested in your VC5 or
00:16:42
VC6 7 or 8 years ago. If you can go sell
00:16:46
a slice of that at four or 5x and we get
00:16:50
DPI and it's priced really high, then go
00:16:54
sell some of it." And we often don't
00:16:56
talk about this in Venturland. Half of
00:16:58
what we do is in the public markets.
00:17:00
Gavin and I get up every morning and we
00:17:02
think to ourselves, should we buy today
00:17:04
or should we sell today? Venture
00:17:06
capitalists don't think about the sell
00:17:08
part. They think about the buy part. So
00:17:12
one of if we're going to stay private
00:17:13
for longer and we're going to have
00:17:15
trillion dollar you know private
00:17:18
companies and data bricks at $200
00:17:19
billion you got to think about is today
00:17:22
a day we should be selling some and
00:17:24
returning it to our investors because
00:17:26
>> doesn't it create though as as what
00:17:28
Jason said these very complicated
00:17:31
personality dynamics where maybe you get
00:17:34
shut out of a new company maybe you get
00:17:35
shut out of an incremental round and you
00:17:38
know there's bad blood because you're a
00:17:40
credible investor And there's this
00:17:41
signaling risk. Whereas in the privates,
00:17:43
if you and Gavin decide to sell, nobody
00:17:45
knows.
00:17:47
>> Well, no. In the in in the private,
00:17:49
nobody knows.
00:17:50
>> Exactly. The public's they don't know
00:17:52
until our 13F comes out. Okay.
00:17:54
>> But in the private market, it's always a
00:17:57
conversation between me and the founder
00:17:59
to say, "Listen, we're we're going to
00:18:01
sell 30% of our position." They never
00:18:03
like it, Chimath. They're always like,
00:18:05
"We wish you wouldn't do that. They
00:18:07
don't want it known, etc." But my job as
00:18:10
a fiduciary to the LPs of this is to do
00:18:13
that.
00:18:14
>> It does feel Gavin like we have crossed
00:18:16
over for early stage venture to a point
00:18:20
in which there is a third way. Either
00:18:23
your company had M&A and we saw in the
00:18:25
presentation yesterday that during the
00:18:28
wrath of Lena there was no M&A and they
00:18:31
just froze the market. Now it's coming
00:18:32
back. IPOs we did have some freezing of
00:18:35
that market for certain periods. But
00:18:38
this third way is now fantastic. I can
00:18:41
tell you as the earliest of the early we
00:18:44
are now pari pursu selling into every
00:18:48
chance we get because our average
00:18:49
investment is at 10 to$20 million
00:18:51
valuations. When they hit 500 million I
00:18:53
tell the founder you're going to start
00:18:55
selling at 500 million. I'm going to
00:18:57
sell right alongside you so that I can
00:18:59
invest in the next you coming into the
00:19:01
market. Everybody's fine with it. I but
00:19:03
I can tell you six or seven years ago
00:19:05
when I did this with a company they
00:19:07
begged me to not participate when they
00:19:09
hit peak zerp 2021 they begged me Jay
00:19:12
Cal you have to be loyal to us you can't
00:19:14
sell paru and I said you you guys are
00:19:17
clearing 40 million of the $110 million
00:19:20
[clears throat] round I'm just asking to
00:19:21
be next to you same amount can I ask
00:19:24
Kelly a question how do you systematize
00:19:26
this so that it's like an exchange so
00:19:27
like if we just want to hit the bid we
00:19:29
can do it like what I don't like about
00:19:31
the secondary markets is, you know, I
00:19:33
ask my CFO, he calls five guys, then my
00:19:36
fun CFO, she calls like four. You know,
00:19:38
>> it's like ticket brokers. We get a bunch
00:19:40
of bids. None of it makes any sense. And
00:19:42
I'm like,
00:19:43
>> and I'm already dealing with, as Brad
00:19:45
said, the agit from the CEO.
00:19:48
>> It's got to be easier than this. Like,
00:19:49
>> yes. Yeah. Look, we 10 years ago, we
00:19:52
said there needs to be infrastructure to
00:19:54
pull this off. This can't just be a big
00:19:57
shadow market. We're sort of in this
00:19:59
tipping point now where we spent the
00:20:01
last 3 years building this brand new
00:20:03
platform so that a company could plug
00:20:06
into it the same way they could list on
00:20:08
an exchange and say we're going to offer
00:20:10
liquidity. And furthermore, if you're a
00:20:12
VC and you're on that cap structure for
00:20:14
10 years and you want to offer LP
00:20:16
liquidity, you can do it in
00:20:18
>> to be specific. What do you mean you're
00:20:20
like we would be plugging into Schwab's
00:20:24
30 million humans that are buying stuff
00:20:26
on? There's there's a platform. We
00:20:28
brought a a platform with about 3
00:20:30
million investors and now we're going to
00:20:31
add 46 million investors to them.
00:20:33
>> Yeah. But wait, hold on a second. Aren't
00:20:34
those are those accredited investors? Do
00:20:36
they need to be? Because we just had the
00:20:38
chair of the SEC on
00:20:41
>> So today, if you are trading individual
00:20:43
shares, whether it's in an SPV or direct
00:20:45
on a cap table, you're accredited.
00:20:47
However, there are products coming to
00:20:50
market, we can talk about this in detail
00:20:52
later, that have 60 companies, including
00:20:55
SpaceX, that are listed products for
00:20:59
unacredited $500 minimums. And that
00:21:02
capital for those funds will be the
00:21:05
underlying
00:21:06
>> closed end funds.
00:21:07
>> These are interval funds.
00:21:08
>> Interval funds. He's got one out now.
00:21:10
>> I think Naval just did USVC as one of
00:21:14
these. He's gonna contribute to
00:21:15
>> now. the closed end funds
00:21:17
>> are are a very different bet because
00:21:19
you're betting on FOMO because if you
00:21:21
look at the underlying value of some of
00:21:23
the assets and those closed end funds
00:21:25
they have no bearing to reality of what
00:21:27
those underlying shares are actually
00:21:28
worth. So price discovery is another key
00:21:30
component of this structural shift. But
00:21:33
to answer your question specifically, if
00:21:35
a VC's LPs want to recycle or want to
00:21:38
get liquid, then a platform like this
00:21:42
will allow them to recycle that capital
00:21:46
and put it back into the next vintage
00:21:47
fund if they want.
00:21:48
>> I have a I have a question for you based
00:21:50
on this. When these returns come out,
00:21:54
the mean
00:21:56
return in venture is going to look
00:21:57
incredible.
00:21:59
The median return is still going to be
00:22:02
So walk us through how people will sort
00:22:06
through that and the reality of what's
00:22:07
going to happen in the next year.
00:22:08
>> Well, so I think there's there's two
00:22:10
very important things. one, I observe if
00:22:13
you if you were a venture firm and you
00:22:16
do not have material exposure to one of
00:22:19
these trillion dollar plus companies
00:22:21
that you had many many chances, you
00:22:25
know, to to buy into. You're not only
00:22:28
your returns not going to be good, but
00:22:29
you're not going to have DPI on a
00:22:32
relative basis, but you're not going to
00:22:33
have DPI. And you know, there's
00:22:34
exceptions. you know are you know you
00:22:36
know great series A firms they may not
00:22:38
have this but their returns are still
00:22:40
amazing with great DPI but in so I am
00:22:43
beginning to see venture firms who don't
00:22:47
have exposure to one of these companies
00:22:49
behave in strange ways because I think
00:22:52
they're starting to feel a little bit of
00:22:53
franchise risk because their DPI and
00:22:57
their returns are going to go from you
00:22:59
know hey top quintile top tile tile
00:23:03
>> so they're doing unnatural ads doing
00:23:05
unnatural things. They're writing what I
00:23:07
see as call options, like a bunch of
00:23:09
these, you know, Neolabs. Well, I need a
00:23:12
story. I've done something. And maybe
00:23:14
some of these call options pay off, but
00:23:17
I do think they're engaging at some
00:23:20
level and maybe
00:23:21
>> they're chasing it.
00:23:22
>> They're chasing gambling terms. Whereas
00:23:25
the people who have exposure to this, I
00:23:27
are being a lot more disciplined because
00:23:28
they know they're in in in a great
00:23:29
position. I think another very important
00:23:32
dynamic is going to happen in the world
00:23:33
of longon only mutual funds and
00:23:35
crossover funds. So, Long Only Mutual
00:23:38
Funds, uh, you know, my for former
00:23:40
employer, Fidelity, amazing place, love
00:23:42
it. Uh, Bailey Gford, Capital Research,
00:23:45
Wellington,
00:23:47
>> Tro, they all can, per SEC rules,
00:23:51
allocate up to 15% of their funds into
00:23:54
privates. And these are the biggest
00:23:55
pools of capital in the world. They
00:23:57
dwarf sovereign wealth funds. But, you
00:24:00
know, most firms, because they don't
00:24:01
want to get in trouble with the SEC,
00:24:02
they say, "Hey, we're going to cap it at
00:24:04
3% or 5% or 7%. It was very public.
00:24:07
Bailey Gford was forced to sell SpaceX
00:24:10
last year
00:24:10
>> for regulatory reasons. And um what's
00:24:15
going to happen as these companies go
00:24:18
public? All of these long only mutual
00:24:21
funds are by and large finding it hard
00:24:23
to participate in private markets right
00:24:25
now because they're at the limits of
00:24:28
their self-imposed
00:24:30
>> 3%
00:24:30
>> 3 5%.
00:24:32
>> When a company goes public and the
00:24:33
lockup expires, it moves out of that
00:24:35
bucket. Nice.
00:24:36
>> So, this is going to be hundreds of
00:24:38
billions of dollars of new late stage
00:24:43
demand that is coming back to the market
00:24:46
after kind of being out out of the
00:24:48
market for a while.
00:24:48
>> That's a lot of dry powder. There's a
00:24:50
lot of dry powder.
00:24:51
>> The net trade is up. Then the the
00:24:52
marginal trade is is up.
00:24:54
>> Founders are going to be in the cap bird
00:24:57
seat. People are going to be looking to
00:24:58
put money to work. Interesting
00:25:01
buzz going around about accreditation
00:25:03
rules. We had the head of the SEC on
00:25:05
Allins interview show. We did it. And
00:25:08
they're going to have a sophisticated
00:25:09
investor test, something I've been
00:25:10
talking about for a long time that would
00:25:13
really democratize the way Invest
00:25:15
America has access. Um, and then funds.
00:25:19
I've been getting pitched for years on,
00:25:21
oh, put your fund on blockchain or sell
00:25:25
your fund into this ETF. Maybe you could
00:25:27
talk a little, Kelly, about the
00:25:28
possibilities around venture funds being
00:25:32
more tradable like secondaries are. Is
00:25:35
that on your road map? Obviously,
00:25:37
there's demand for it. What would that
00:25:39
because I can tell you what that would
00:25:40
do for my LPs, you know, Brad Chamat's
00:25:44
LPs and and previous funds. If you could
00:25:46
come in and out of these funds, the way
00:25:49
you can come in and out of anthropic, my
00:25:52
lord, that could be just incredible for
00:25:55
folks who, I don't know, they have a
00:25:56
divorce, they have a life event, you
00:25:58
know, just a little more fluidity.
00:26:01
>> So, there's been there's been secondary
00:26:03
fund trading for a long time. Um, I
00:26:07
think blockchain and tokenization makes
00:26:09
it more efficient. That world will will
00:26:11
come. But the question we're asking
00:26:13
ourselves now is if you're an LP in a
00:26:16
fund that's holding something as
00:26:18
valuable as this, uh, are are you really
00:26:21
interested in trading your fund position
00:26:23
or do you just want to get out of
00:26:26
>> the big winner, that name?
00:26:28
>> Um, and and our view is it's probably
00:26:30
the latter.
00:26:32
Um, and in some cases funds will come to
00:26:36
us and say, "We've got a vintage fund
00:26:39
that has two companies in it that are 15
00:26:43
years old and we can't clear that fund."
00:26:45
And so that's that's an application of
00:26:49
liquidity to the market that we think is
00:26:51
coming to the market.
00:26:52
>> Are you are you worried at all over this
00:26:54
next year about this idea of retail
00:26:58
being exit liquidity for these three
00:27:01
ginormous companies? like is is there
00:27:02
any risk? Like how do you bucket the
00:27:04
risk? How do you manage the risk? Yeah.
00:27:06
>> What is the risk if something were to
00:27:08
happen? What's the blowback?
00:27:09
>> I was talking with Brad about this
00:27:10
yesterday. We're we're watching these
00:27:13
valuations and these multiples. We had
00:27:14
this conversation at dinner last night
00:27:17
and saying, "Wow, these are these are
00:27:20
extraordinary and people should come
00:27:22
into this market." And
00:27:23
>> extraordinary is a coded word for
00:27:26
>> uh it's you know, it's okay fine. Um
00:27:30
>> it's a bubble. You're saying you're
00:27:31
saying you think they're high the
00:27:32
valuation.
00:27:33
>> I think the retail investor coming into
00:27:35
this space needs to look down market and
00:27:38
look at interesting opportunities that
00:27:40
aren't the things that are on CNBC every
00:27:42
day and have access to them earlier. And
00:27:45
we had a bunch of retail investors show
00:27:47
up in 2018 and 2019 that wanted to be in
00:27:50
SpaceX and they're and they're thrilled
00:27:52
that they got in when the valuation was
00:27:54
30 billion.
00:27:55
>> Yeah.
00:27:55
>> Um and I think if the market opens up,
00:27:57
that's what we'll be talking about. what
00:27:59
what's what what do I want to get into
00:28:01
now that's not you know at the very very
00:28:03
top of the market getting ready to go
00:28:05
public
00:28:05
>> also Brad and Gavin we're getting better
00:28:07
shout out to um Gurley we're getting
00:28:10
better at pricing these IPOs and not
00:28:12
leaving money on the table they're fully
00:28:14
valued in most cases when they go public
00:28:17
yeah or in some cases
00:28:18
>> they're still mispriced they're
00:28:20
massively mispriced
00:28:20
>> well no we we have seen some that have
00:28:22
gone down you know after they go out so
00:28:25
you know
00:28:26
>> nothing good that anybody wants
00:28:27
>> I mean listen anyway what what do you
00:28:29
guys think is are we are we closer to
00:28:32
correctly pricing them?
00:28:33
>> I mean Gav and I have been doing this 25
00:28:35
years. There are moments that the public
00:28:37
market is undervalued relative to
00:28:39
privates and moments where privates are
00:28:41
undervalued relative to public. Right
00:28:44
now everything in the world of
00:28:45
technology is pretty fully valued,
00:28:48
right? Like it's you can't have the
00:28:51
parabolic moves we've had and think that
00:28:54
everything is cheap. That's not to say
00:28:56
that we're not going to go higher, but
00:28:58
when you've been punched in the faces
00:28:59
many times, as all of us have over the
00:29:02
last 15 years in technology, we know
00:29:04
it's a jagged line up and to the right.
00:29:07
So for the retail investor, so long as
00:29:09
they have staying power, so if if you're
00:29:12
going to launch a product, as long as
00:29:14
the retail investor can stay in that
00:29:16
product through the draw down, they're
00:29:18
going to do fine. The problem is most of
00:29:21
them yolo at the top because everybody
00:29:23
gets them all jimmied up and excited and
00:29:26
so they're, you know, they're levering
00:29:27
up. They're doing 2x levered, you know,
00:29:30
memory trades and all this that Gav
00:29:32
and I are. There are 14 ETFs launching
00:29:35
on the day of the SpaceX IPO that are
00:29:39
levered ETFs into SpaceX at like
00:29:42
whatever 1.75 trillion. So, this just
00:29:45
tells me that there's a lot of signal.
00:29:48
We may not be at the top, but we ain't
00:29:50
at the bottom.
00:29:51
>> We're bouncing along. The top might be a
00:29:53
fair, you know, you got to allocate
00:29:56
accordingly. And that's what active
00:29:58
management is about. If we do not if
00:30:00
we're not thinking about that, when when
00:30:03
people are puking into their garbage
00:30:05
cans at the start of the Iran war and
00:30:07
the market is down, Gavin and I are
00:30:09
looking at each other and saying, "Good
00:30:11
God, these anthropic revenues are off
00:30:13
the charts. We got to get more dollars
00:30:15
at risk. shove more onto the table in
00:30:18
both anthropic and public market stocks.
00:30:20
But then 75 days later, it's all
00:30:23
changed. Right now, the market,
00:30:25
>> have you guys ever been in a market
00:30:26
cycle [clears throat] where these moves
00:30:28
are just so concentrated in time where
00:30:31
you take like a year or two's worth of
00:30:33
moves and you compress it into 30 days,
00:30:36
60 days?
00:30:37
>> I mean, this is nothing relative to 99
00:30:40
and 2000.
00:30:41
>> Nothing.
00:30:41
>> This is nothing relative to that.
00:30:44
>> Like, I mean, describe describe. Yeah.
00:30:45
Just package. Sometimes they wake up.
00:30:47
>> What was 992000 like in terms of like a
00:30:49
if this is a roller coaster, what was
00:30:51
that?
00:30:51
>> Yeah.
00:30:52
>> And what was that? I mean, I don't you
00:30:55
know, this is this is this is like a uh
00:30:57
this is a roller coaster that's um like
00:30:59
kind of a gentle sinewave.
00:31:02
>> 99 was Vegas on a Friday night after way
00:31:05
too many drugs.
00:31:07
>> Okay. Like it was out of control nuts.
00:31:11
CMGI had no revenue and the stock went
00:31:13
from $2 to $2,000 over the course of,
00:31:17
you know, six months. They buy Foxboro
00:31:19
Stadium. They're on the cover of Time
00:31:21
magazine and they're out of business 2
00:31:23
years later, right? Like that is very
00:31:25
different than Anthropic, Open AAI, and
00:31:28
SpaceX. These are extraordinarily real
00:31:30
businesses. So, I think the better
00:31:32
compare is like 2021. Yeah.
00:31:35
>> Right. Where valuations get ahead of
00:31:37
themselves or they're at the top end of
00:31:39
the range. We could have a normal
00:31:42
run-of-the-mill consolidation in the
00:31:44
public markets in the semi-index of 10
00:31:46
or 20% which means high beta would be
00:31:49
down 30 to 40% and a lot of people who
00:31:52
just got in would be panicking right but
00:31:54
the people who have been in for 6 months
00:31:56
or 3 years would would would notice that
00:31:59
that's just a blip. So I don't think
00:32:01
it's at all like that.
00:32:02
>> Okay. I have a question for the three of
00:32:03
you. Four. Yeah. Final question.
00:32:04
>> I have final question. Take the top 10
00:32:06
names private companies off. Okay.
00:32:09
Forget those. You can't pick those. Give
00:32:12
me a sub,
00:32:14
you know, in the tens of billions, few
00:32:16
hundred billion private company that you
00:32:19
could buy today a secondary in that you
00:32:21
do not own that you would want to own.
00:32:23
I'll start with you, Brad. Just go
00:32:24
around the horn. Something you don't
00:32:26
own, but if you had the chance to buy a
00:32:29
secondary, you would.
00:32:31
>> I mean, I take a company, you know, in
00:32:34
that what I call inflection growth,
00:32:36
Jamas. So, these are companies, the
00:32:37
thousand companies that are over 3
00:32:39
billion, but let's call it sub50
00:32:41
billion. I think it's the trickiest area
00:32:44
of the investing landscape. Um, because
00:32:46
they're the beneficiaries of high
00:32:48
valuations, yet they still have binary
00:32:50
risk.
00:32:51
>> Right.
00:32:51
>> Right. Like Anthropic, OpenAI, SpaceX, I
00:32:54
don't think these companies have binary
00:32:55
risk, but there are a lot in, you know,
00:32:57
in that bucket that do. Um, and so I
00:33:01
mean, we own most of the ones I want to
00:33:03
own. I I I can't give you one that we
00:33:04
don't.
00:33:06
If I want to own it, I I generally own
00:33:08
it.
00:33:08
>> It's a hard question. [laughter] I'll
00:33:09
give you How about the last one you say?
00:33:12
I'd say like Sierra Brett Taylor's
00:33:14
company. Um, you know, what do they do?
00:33:17
>> So, they're building basically
00:33:19
Salesforce
00:33:20
>> agent native.
00:33:22
>> Got it.
00:33:22
>> So, sales, marketing, customer service
00:33:24
agents that are agent native. I'll give
00:33:26
you the downside and the upside. We also
00:33:28
own a company called Parlo and the same
00:33:29
space in Europe that I think is really
00:33:31
interesting. downside open AI and
00:33:34
anthropics say we're going to do this
00:33:35
and all of a sudden it eviscerates their
00:33:37
hundreds of millions of dollars in
00:33:39
revenue. The upside on on these
00:33:42
businesses is that they actually have
00:33:44
already built very sophisticated agentic
00:33:47
layers and that all these guys Meta,
00:33:50
Google, uh SpaceX come along and say we
00:33:52
want to buy you because we want to
00:33:54
accelerate our path into agent.
00:33:56
>> I I'll give you the name that I was
00:33:57
convinced of today yesterday by um by
00:34:00
Thomas Leant which was Revolute.
00:34:02
>> You know, I had always the kind of like
00:34:04
I had some early Jack like I owned some
00:34:06
Coinbase, I owned some Robin Hood, we
00:34:08
did all of that stuff. It was fine. Kind
00:34:10
of ignored fintech and Thomas backstage
00:34:13
gave me an incredibly we were together
00:34:15
an incredibly compelling pitch for
00:34:17
Revolute and and I and I actually went
00:34:19
and I was like, "Okay, show me what the
00:34:21
Revolute share prices in these secondary
00:34:23
markets." I got kind of curious. Maybe I
00:34:24
should pick up some that. So [snorts]
00:34:26
that that would be my
00:34:26
>> What does Revolute do? Explain for the
00:34:27
audience.
00:34:28
>> It's a bank. It's a bank. And what's
00:34:29
interesting is it's a neo bank that has
00:34:31
a completely next generation stack. kind
00:34:33
of what Brad said is like that theme of
00:34:35
you rebuild it in the modern era and you
00:34:37
unbundle the incumbent that that has a
00:34:40
lot of legs and in a regulated market
00:34:42
that has a ton of legs and so you know
00:34:45
they're doing really well in Europe
00:34:46
they're coming to the United States the
00:34:47
founder seems to be just an absolute
00:34:49
star
00:34:49
>> tens of millions of customers 14 lines
00:34:51
of business they're like a billion
00:34:53
curious like that I I have Gavin do you
00:34:55
have one that you've bought recently
00:34:57
>> no I would just say um well you know two
00:34:59
names that um we've been involved in
00:35:02
publicly is leading are Arya and Drivets
00:35:05
and they're both in the networking space
00:35:07
and basically as um data centers get
00:35:10
more specialized and complicated
00:35:13
you you're going to have increasingly
00:35:15
specialized chips it's called the
00:35:17
disagregation of inference and pre-fill
00:35:18
and decode and to make all of these
00:35:20
chips to work together like a symphony
00:35:23
and have the kind of the right chip for
00:35:25
the right job at the right time I do
00:35:27
think we need to reinvent networking and
00:35:29
Arya and driveets are coming at the
00:35:32
in a very different way. And if you're
00:35:33
an AI lab,
00:35:35
>> you've been one of the earliest. I'll
00:35:36
give you credit. I think that you you
00:35:38
you framed this on one of on a podcast
00:35:40
that I saw, which is there is an
00:35:41
impending super cycle in infra
00:35:44
networking, silicon, and you've really
00:35:46
been at the front of it. I buy into it
00:35:48
completely now, too. Really, it's a
00:35:50
really It's really good. It's really any
00:35:52
names.
00:35:52
>> Uh Neuroobotics
00:35:54
in Europe.
00:35:56
>> Neuroobotics is a company name.
00:35:58
>> Yes. and uh AI powered um logistics
00:36:04
robotics.
00:36:05
>> Love it.
00:36:06
>> Um they're not in the main strip of high
00:36:09
value real estate in Silicon Valley.
00:36:12
They're in Germany.
00:36:13
>> Uh quiet company, big investors, 100
00:36:17
million revenue, kicking ass.
00:36:19
>> Love it. Jason, well, I you know, I I
00:36:22
have a couple of thesis uh that I've
00:36:24
been looking at. One is what is Elon
00:36:27
helping put into space as the price goes
00:36:29
down. And so we did uh direct on the cap
00:36:32
table and SPV for vast which is building
00:36:35
space stations and we think they're
00:36:37
going to win. The other one is what I'll
00:36:39
just call Uber 2.0. You know, we girly
00:36:41
and I took a lot of notes on that, Brad,
00:36:43
as well. And so we were able to do
00:36:45
zipline and we we put a small ticket
00:36:47
size into zipline as well because if you
00:36:49
can take the delivery cost down from $15
00:36:52
to five and then eventually two, that's
00:36:54
going to just drive consumption
00:36:56
massively and it's going to happen in
00:36:57
the air. And these actual drones had
00:36:59
such a false start that everybody gave
00:37:02
up on the entire sector and now it
00:37:04
works. And it was just a very simple
00:37:05
innovation that Keller told me, which
00:37:07
was it's the drone stays up in the air
00:37:10
and drops a tether with the box in your
00:37:12
burrito. If you grab the tether and you
00:37:14
pull it, it just comes down. You don't
00:37:16
have to land like this giant robot in
00:37:19
your backyard with blades spinning to
00:37:21
kill your dog. Well, I think there's
00:37:23
actually a very important like on
00:37:24
Zipline. It's an amazing It has done
00:37:26
great things for the world. Um so my my
00:37:30
at trades is also uh in involved in
00:37:32
zipline but zipline started so the hard
00:37:35
thing is to make anything autonomous
00:37:37
work you need to get it out in to the
00:37:39
world and gathering real world data.
00:37:41
This is how AI works and it's hard to
00:37:43
get approval to fly things around um
00:37:46
autonomously in American airspace. So
00:37:49
Keller had the idea of we're going to go
00:37:51
to African countries and we are going to
00:37:54
de you know if a we're going to help or
00:37:57
deliver medicines to these small
00:37:58
villages and they focused on maternity
00:38:01
and they have cut the maternal mortality
00:38:05
rate in some of these African countries
00:38:07
by 90 to 95%. And so you're in a small
00:38:09
village, there's a one midwife, there's
00:38:12
an app, a woman goes into labor, they
00:38:15
press a button, and you know, an hour
00:38:18
later, a zipline drone drops a
00:38:20
refrigerated package of modern medicine,
00:38:23
blood, and everything needed. They did
00:38:25
it for seven years
00:38:26
>> and it's had a huge impact on health
00:38:28
outcomes in these African countries
00:38:30
>> and now it's come to America.
00:38:32
>> I I this is an incredible story and I've
00:38:34
basically now reconstructed my firm to
00:38:36
do the barbell. I missed the seed
00:38:39
investment. I turned him down because I
00:38:40
was like, "We don't invest on that
00:38:42
continent. We don't have any insight
00:38:43
into it. We don't understand it and
00:38:46
hardware is hard." And he has the email,
00:38:48
whatever. And I've stayed in touch with
00:38:49
him and he said, "Listen, I figured it
00:38:50
out." And I said, "Hey, you know, I have
00:38:52
the syndicate. Let me see if I can
00:38:53
correct that mistake. May I invest?" He
00:38:55
said, "I I you're my dream investor.
00:38:56
I've wanted you on this whole time and
00:38:59
it's just so important." Um, no. No.
00:39:03
we've been friends for all this time and
00:39:05
I've you know I have had him on the pod
00:39:06
three times
00:39:07
>> and he said when are you going to be on
00:39:08
the cap table and I said you know what I
00:39:11
learning from you guys specifically this
00:39:13
late stage stuff I'm like well I can do
00:39:14
that and here we are and
00:39:16
>> on that note
00:39:17
>> yes
00:39:17
>> let's wrap up
00:39:18
>> yes well done guys thank you so much
00:39:20
>> thank you Kelly thank you
00:39:23
>> thank Thank you. [music]
00:39:35
[music]
