E114: Markets update: whipsaw macro picture, big tech, startup mass extinction event, VC reckoning
- Feb 3, 2023
- 1:12:33
- Full Episode
(0:00) Bestie intro! (1:15) Macro picture update: 0.25% raise, jobs rip up, wage growth continues to slow (17:52) Interest rates impact on mega-cap company creation (33:58) Mass extinction event coming to startups, reckoning for VCs, venture debt issues (1:02:33) Adani's potential fraud, role of short sellers
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Referenced in the show: https://www.washingtonpost.com/business/2023/02/03/january-jobs-labor-market https://www.wsj.com/articles/fed-approves-quarter-point-rate-hike-signals-more-increases-likely-11675278190 https://fred.stlouisfed.org/series/CIVPART https://www.ustreasuryyieldcurve.com https://www.amazon.com/Intelligent-Investor-Definitive-Investing-Essentials/dp/0060555661 https://chamathreads.substack.com/p/higher-rates-will-lead-to-the-next https://www.google.com/finance/quote/META:NASDAQ https://medium.com/@alt.cap/time-to-get-fit-an-open-letter-from-altimeter-to-mark-zuckerberg-and-the-meta-board-of-392d94e80a18 https://www.freightwaves.com/news/fedex-to-cut-global-officer-director-workforce-by-at-least-10 https://www.theverge.com/2023/1/27/23574322/zuckerberg-puts-metas-middle-managers-on-notice https://twitter.com/tomloverro/status/1620466827519496194 https://twitter.com/msuster/status/1620653106387386368 https://twitter.com/gradypb/status/1620937502248034304 https://www.axios.com/2023/02/01/david-cahn-leaves-coatue-for-sequoia-capital https://www.google.com/finance/quote/ADANIENT:NSE?window=1Y https://hindenburgresearch.com/adani https://www.bloomberg.com/news/articles/2023-01-30/most-adani-stocks-drop-as-rebuttal-draws-hindenburg-response https://www.sec.gov/rules/proposed/2022/34-94313.pdf https://www.theatlantic.com/magazine/archive/2023/03/wall-street-muddy-waters-activist-short-sellers-tesla-gamestop/672774
Brief Summary
The episode discusses job market data, Fed actions, venture capital challenges, and the role of short sellers in the market.
Key points
- Job Market Insights. Recent job data shows unexpected growth, raising questions about inflation and economic stability.
- Whipsaw Economy. The economy is experiencing rapid shifts in sentiment and expectations, making predictions difficult.
- The Evolution of Startups. Startups thrive during periods of austerity and technological advancement, leading to profitability.
- Facebook's Efficiency Shift. Facebook's stock surged after a focus on efficiency over the metaverse.
- Mass Extinction Event for Startups. A predicted wave of failures for early and mid-stage startups looms as capital tightens.
- The Reckoning of Venture Capital. Investors face tough decisions as companies unravel and founders leave. 'How do we wind this down?'
Episode highlights
- Job Market InsightsRecent job data shows unexpected growth, raising questions about inflation and economic stability.“We added 517,000 jobs more than 2x December.”1:22Feb 3, 2023
- Whipsaw EconomyThe economy is experiencing rapid shifts in sentiment and expectations, making predictions difficult.“We're in a whipsaw economy here.”5:17Feb 3, 2023
- The Evolution of StartupsStartups thrive during periods of austerity and technological advancement, leading to profitability.“Whenever you see huge tectonic shifts in technology combined with periods of austerity, that's when the gargantuan dollars are made.”20:34Feb 3, 2023
- Facebook's Efficiency ShiftFacebook's stock surged after a focus on efficiency over the metaverse.“The first time the word efficiency exceeded the word metaverse, you saw the stock price rip up.”31:12Feb 3, 2023
- Mass Extinction Event for StartupsA predicted wave of failures for early and mid-stage startups looms as capital tightens.“There is a mass extinction event coming for early and mid-stage companies.”34:08Feb 3, 2023
- The Reckoning of Venture CapitalInvestors face tough decisions as companies unravel and founders leave. 'How do we wind this down?'“How do we wind this down?”38:51Feb 3, 2023
- The Shift in Venture InvestingA call for a fundamental approach to investing as the momentum model fails. 'The window is now closed.'“The window is now closed.”39:48Feb 3, 2023
- The Importance of Commercial BackgroundsSuccessful venture capitalists often come from commercial backgrounds, not technical roles. 'Commercial people in Venture are the ones that make the money.'“Commercial people in Venture are the ones that make the money.”42:18Feb 3, 2023
