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happy new year happy new year happy new
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year
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guys listen
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it's now it's candle season
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oh god look at the equanimity this look
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at his equanimity this candle costs 24
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000 it is an extremely rare
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brazilian sandalwood
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you literally have to go into the amazon
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and like
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you know you you basically have to like
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i mean try to extinct trees no bro you
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gotta you gotta tear out like two acres
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of rain forest and then you find this
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one tree completely
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you know sacred
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uh and then you chop it down
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you make this thing reduce it and it
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lasts for a full 45 minutes how do you
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like that sweater karen
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candle carrots are going to be karen
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candle carrots are calling it right now
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the dms are coming you guys want to hear
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about poker last night oh did you go so
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i go down i take my eight hour drive
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down south to jamaat's house and i pull
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in and uh you know the security guard
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greets me nicely as always i walk in and
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i walk towards the poker room and
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everyone's in there with the door open
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like someone just got shot
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masks on freaking out and champ is
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inside the house and i wave and he's
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like
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get in here
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and then i go in he's like oh who is
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positive
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max the dealer
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tested positive and everyone's been
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hanging out in the poker room with no
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masks oh
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the only two people that were exposed to
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max we sent home yeah so everyone starts
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freaking out he shuts the uh shuts the
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poker game down chamf kicks everyone out
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sends everyone home
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and then he's like all right let's go
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have dinner inside you know we're not
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we're going to we open up all the doors
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we're going to kind of lysol the room
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tomorrow we all go in have dinner or you
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know chamath and i go in and have dinner
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with matt and the kids and then chemoth
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starts thinking you know what it's okay
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they were only exposed for a few seconds
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let's call phil back okay let's call
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shuffle back let's call keating back and
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then they all come back for dinner and
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at this point it's become like a dinner
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party and then a couple of glasses of
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wine in and then it's like you know what
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the room's probably safe we should go
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i mean the whole poker night went
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through the entire cycle of psychology
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of covid the whole pandemic it's like oh
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my god get everyone out lock up and then
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by the end of the night it was like you
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know what let's go in the room and just
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play poker and give each other coven
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they got to acceptance they got to
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accept this they went through the whole
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emotional cycle of the pandemic in one
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hour does anyone know anyone who's a
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serious case of macron no i mean i know
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dozens of people at this point and they
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all say it was a cold yeah dozens of
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people and that's just except for jake i
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was on
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was on social media giving everyone the
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update like oh i sneezed today
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oh i still test the positive he's like
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showing his positive tests
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we're concerned it's the only good test
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result jkl's ever had yeah exactly
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it's the only positive that's true
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[Music]
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[Music]
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elizabeth holmes has been found guilty
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on four counts of fraud
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faces 20 years in prison for each guilty
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account they would be i understand
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served concurrently
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most people are here speculating four to
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10 years
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and then i think you can get 15 off for
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good behavior again i'm no expert on
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that but that's what i read
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uh guilty counts were two counts of wire
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fraud and two counts of conspiracy to
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commit fraud she was originally charged
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with a total of 11 counts of fraud
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uh four were guilty four were not guilty
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three were a split verdict the jury said
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they were unable to come to a unanimous
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anonymous
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verdict on three of the counts after
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more than 45 hours of deliberation quote
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from the wall street journal article
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juries were persuaded that ms holmes
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conspired to defraud investors this
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outcome could be significant because it
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means hundreds of millions of dollars of
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thera knows investors
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that there are the most investors lost
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could be taken into consideration during
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her sentencing his big numbers the jury
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was split however on which of the six
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investors who testified were defrauded
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the jurors convicted his homes on three
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counts
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these included a hundred million dollars
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from the family office of former
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educator ed education we know the
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details jake saw he was like doing it
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for the audience
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so anyway um thoughts on uh the legal
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uh technicalities of the case counselor
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sex well we've talked about this before
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i mean i think so at the end of the day
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she was convicted on the counts related
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to deceiving investors she was not on
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the accounts related to patients i think
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that makes sense in that her obligations
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to
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investors are very clear whereas i think
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that the patient related duties are i
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mean she had them but it's a little bit
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less clear so i mean look it's it's what
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we've always said here
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as a founder you can be
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as messianic as you want to be you can
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promise
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you know anything about your vision and
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what you intend into the future but what
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you must do is be accurate about the
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current state of your business you
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cannot lie
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about the deals that you've made about
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the current capabilities of your product
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and she was putting you know logos of
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customers she didn't have in her deck
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she was lying about the military being a
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customer so she simply exactly
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misrepresented where she was at that
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time at the at when
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these investors invested and that was
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the red line she should not have crossed
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and i think in that sense it's a pretty
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simple case i think you know the the the
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part of this again you know the the the
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piece of this that's interesting
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is not the case itself but really the
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media coverage because the media wants
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to portray this case as an indictment
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of silicon valley and the thing you keep
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hearing over and over again none of us
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were involved
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well it just factually yes exactly we
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weren't involved but
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like there's not a single person in
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silicon valley i think who put in a
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single shekel into this thing who
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actually does this as a real job tim
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draper
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well she he doesn't know
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put in a little bit of money as an angel
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and then he he didn't put a single
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dollar in after that i'm saying you know
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you didn't come to social capital or
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craft ventures or to sequoia or to tpb
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or to google to raise money for this
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thing none of that happened
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you know saks is right like the the
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summary of uh the wall street journal
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nick you can post it because i put it in
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the group chat basically summarized the
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fraud and is exactly what sack says she
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had fixed the logo of specifically i
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think it was pfizer that had not
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validated theranos's technology in
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materials she presented to investors so
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she's basically like pfizer said this is
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a go
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and apparently that wasn't true she gave
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the false impression that the devices
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were used by the us military that's what
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got all these military folks to sign on
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board and support it that wasn't true
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and then uh
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and then she the biggest coup was that
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she signed a deal with walgreens and
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safeway to include its devices in
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hundreds of stores
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and then many investors saw these
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contracts as an endorsement of the
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technology and growth potential
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but basically those folks did no
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diligence and bought the hype and so it
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was just a whole cycle of this thing
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that basically fell apart because the
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tests didn't work freeberg
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what are your thoughts as our life
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science guru what's most interesting to
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me is how does this get to this point
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if you're elizabeth holmes you're 19
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years old
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and you start telling your story
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and the more
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grandiose the story you tell is the
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better the reaction you get is it
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becomes reinforcing and the behavior
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extends a little bit further and a
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little bit further every time she told a
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story about how incredible this tech was
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it's just one drop you take one drop it
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can measure everything when she
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simplified it and reduced it to that and
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it was such an incredible statement and
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she saw the reaction from people she's
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like wow that works let me repeat it
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it's like any good sales person they
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figure out what sells and then they sell
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it and then they repeat
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and what's interesting to me that you
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know you talk about the media
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but when she went out and told her story
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and got
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incredible press coverage because she
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was a young female doing something that
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was going to save lives
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there was this altruistic steve
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jobs-esque
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kind of combination here
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the media wrote a glowing review of her
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and then she said wow look they said
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something great let me go do that again
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and she got a bigger media piece written
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and a bigger media piece and the more
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she said the bigger she said it the more
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she claimed she could do the bigger the
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story got the more coverage she got and
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the whole thing became this kind of
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reinforcing cycle and i do think that
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the press coverage that she got as she
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was building this business which helped
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her raise capital helped her attract
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employees helped her get walgreens and
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safeway to the table
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allowed to fall
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it allowed her to build the business but
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it's exactly what created the narrative
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that wasn't true
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and so the coverage that the press gave
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her and we see this every day you guys
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all see these top 50 companies and we
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all know having met a lot of these
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companies as you go down that list this
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this 20 companies are total scam
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companies they're fraud they're not
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going to work they're grifters all the
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stuff that you guys might say about the
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quality of those businesses but the
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press reporter isn't doing diligence
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they're not a no you know it turns out
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all the diligence was done
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after the fact and then it's like well
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maybe we should go do some diligence oh
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wait a second because this the press
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coverage has now created this hyped
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story about who and what she is
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the the diligence actually pays off
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because you have something to take apart
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if she was just a nobody startup that
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raised 30 million dollars and they're
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still trying to figure out their way
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there would be no value in any reporter
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doing diligence on her and trying to
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figure out what was actually there it
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was because the story got big that it
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gave everyone including john kerry who
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an incentive he's the wall street
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journal reporter who broke all this an
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incentive to go in and take this thing
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apart
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and so i mean it's really unfortunate
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and it's really self-reinforcing that
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the press coverage that created the
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circumstance here
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ultimately also enabled them the press
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to take the thing apart and you know
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land this woman in jail and i'm not
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saying she did nothing wrong but i'm
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just saying that there's a system here
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and the system is set up but she
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manipulated the press yeah
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let me ask one question
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then i got a question for
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saxon champ her basic premise
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that one drop of blood could get you
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hundreds of results let me just ask you
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a question free break at what point
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would one drop of blood
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or so a nano tube uh be able to at our
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current technological
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you know ramp
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be able to give us a hundred different
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data points on a person every time
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you're generating a data point you're
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running what's called an assay which is
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a measurement of something
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the question is how much of a molecule
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are you measuring against what volume is
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there enough of that molecule in that
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volume to give you a statistically good
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reading and that is a function of how
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precisely you can measure that thing so
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there are there are great advances
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happening right now in a domain and life
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sciences of hardware technology called
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microfluidics this is the manipulation
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of pico leader you know very very small
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volumes of liquid and then being able to
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run chemical assays using biochemical
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techniques which we now have all these
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amazing new
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kind of tools like crispr and other
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things that would allow us to get a much
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more precise measurement with a much
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smaller volume than has ever been
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possible so we can manipulate small
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fluids we can measure them so there's
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nothing today that would physically say
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we cannot do many of the things that she
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claims to have been able to do but there
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are there's a stacking of technology
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assets that need to be done to make that
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happen in reality
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and each of those assets are very
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different so look you could do it with
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cholesterol right now you could do it
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with blood sugar right now but you
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couldn't do both you could theoretically
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you could put them into a device and do
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that no the reason the reason why lipids
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work can you do four hundred things
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you cannot i've actually funded three of
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these businesses and i've poured almost
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100 million dollars of money into it and
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they've all failed and the reason is
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exactly what he said you can do
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cholesterol because lipids are big
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enough you know and so you can basically
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build an assay that can pick that off
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with a drop of blood you can do a
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reasonably good job with pretty large
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error bars on sugar but all of this
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other stuff where you're going to
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replace like a you know a cbc or these
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broad you know profile panels that we
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all get once a year to assess our health
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today i don't think that that's
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necessarily within reach it's not within
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technological region it's not because
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people aren't you know smart enough it's
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just that not enough of this investment
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is happening because then you go back to
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this whole idea where the funding cycle
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needs to see a big payoff for the
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capitalists to want to get involved in
00:12:40
this thing and there really isn't you
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know it's not as if like quest and
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labcorp
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are printing 400 billion dollars of
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revenue and profits and so it's not like
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there's a massive economic incentive to
00:12:52
run in
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and so even when you know we have tried
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in multiple occasions with completely
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different teams of incredible people
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every single time we have failed so
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there's a physics
00:13:04
law here that's just not physically
00:13:05
possible she made this claim uh
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saxophone remember and don't don't make
00:13:09
it broad there are things there are
00:13:11
molecules there are pathogens there are
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things you can absolutely detect small
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molecules
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you can you can detect with a drop of
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blood
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you know measure counting how many blood
00:13:21
cells you have in your whole body you
00:13:24
know using an estimate from a single
00:13:26
droplet of blood because you know we
00:13:27
have these machines called flow
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cytometry machines where we sort blood
00:13:30
cells and then it'll tell you how many
00:13:32
red blood cells you have and how many
00:13:33
different kinds of white blood cells
00:13:34
that's a big part of your annual checkup
00:13:36
that you'll typically get you know you
00:13:38
need a good amount of blood to get an
00:13:39
accurate reading on how many blood cells
00:13:41
there are using even just using lasers
00:13:43
and and you know these sophisticated
00:13:45
machines can you reduce that down to a
00:13:47
droplet physically probably not right
00:13:49
and so there's some it's not universal
00:13:51
to say this is possible it's not
00:13:52
possible there are elements that are
00:13:53
absolutely possible some of which are
00:13:55
being done today and there are some
00:13:56
things that are going to be very hard to
00:13:57
pull off got it and she was making these
00:13:59
claims as early as 2003 when it was
00:14:02
founded so we're talking about 19 years
00:14:04
ago and we're saying here it's not going
00:14:05
to be possible to do hundreds of these
00:14:07
things maybe in our lifetime we're
00:14:09
talking about decades from there we need
00:14:10
to be some significant breakthrough
00:14:12
sacks let me ask you a legal question
00:14:15
i was on a podcast and i
00:14:17
said to them why haven't the prosecutors
00:14:20
had bill maris who is a friend of
00:14:23
freeburgs who helped me get him on the
00:14:24
podcast he was great thank you for that
00:14:26
uh david um this week in startups very
00:14:28
smart guy very smart guy and he came out
00:14:31
publicly when he was running google
00:14:34
ventures and he said we looked at it a
00:14:35
couple of times he's referring to their
00:14:37
nose but there was so much hand waving
00:14:39
like look over here that we couldn't
00:14:41
figure it out
00:14:42
so we just had someone from our life
00:14:44
science investment team go into
00:14:46
walgreens and take the test and it
00:14:47
wasn't that difficult for anyone to
00:14:49
determine that things may not have been
00:14:51
not be what they seem here now saks i
00:14:55
was on this podcast to drop out which i
00:14:57
think is an abc news one and i said why
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didn't the prosecution bring up
00:15:01
you know gv let's assume sequoia
00:15:02
andreessen and you know the 20 top firms
00:15:05
in the valley uh who said no and they
00:15:07
all said no because she wouldn't show
00:15:08
them due diligence and i asked them why
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didn't the prosecutors bring up those 20
00:15:14
firms and compel them to testify about
00:15:16
why they didn't invest to give the
00:15:17
counter example and she said i don't
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know
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wouldn't that have been a much better
00:15:22
strategy to say
00:15:23
here are the credible people who didn't
00:15:25
invest i'm not sure i see the relevance
00:15:27
of that because
00:15:29
elizabeth holmes crime was not
00:15:31
promising something that she couldn't
00:15:33
ultimately deliver on
00:15:35
it's okay to fail in silicon valley one
00:15:37
of the best things about silicon valley
00:15:39
is that we don't punish failure
00:15:42
her mistake wasn't making
00:15:44
misrepresentations to the people who did
00:15:45
invest
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right
00:15:47
if and what i'm saying is if anything
00:15:49
actually what elizabeth holmes maybe
00:15:51
should have done was call up some of
00:15:52
those firms and they could have said how
00:15:55
easy it was for them to figure out
00:15:57
that they shouldn't have invested maybe
00:15:58
that would have been a way to kind of
00:15:59
muddy the waters on her side so i was
00:16:02
thinking that they would have said hey
00:16:04
she wouldn't show us the technology and
00:16:06
when we did our independent diligence
00:16:08
she wouldn't let us diligence we did
00:16:09
outside backdoor diligence
00:16:11
it failed there were red flags all over
00:16:14
this thing we we had talked about in our
00:16:16
poker games way before this thing went
00:16:18
off the rails um the fact that there
00:16:20
were no major vc firms involved who
00:16:22
could who had expertise in biotech who
00:16:24
could do the diligence it was all
00:16:27
sort of
00:16:28
it was basically
00:16:29
family office money of people who
00:16:31
weren't in silicon valley you know
00:16:33
writing big checks whether it was rupert
00:16:34
murdoch or the devos family or what have
00:16:37
you
00:16:38
there were there were just red flags
00:16:40
coming off this thing which is why
00:16:41
silicon valley was not
00:16:43
by and large due by it the people who
00:16:45
were duped by it were the people
00:16:47
that elizabeth holmes was able to sell
00:16:50
the patina of silicon valley to
00:16:52
and the media
00:16:54
because the media
00:16:56
what we've seen over and over again is
00:16:58
they don't fact-check stories when they
00:17:00
fit their priors
00:17:01
the prior here is that you know what the
00:17:04
media want to believe is that the next
00:17:06
steve jobs was going to be a woman
00:17:09
and so when elizabeth holmes served that
00:17:11
up to them wearing the black turtleneck
00:17:13
it was too good a story for them to fact
00:17:15
check too heavily and so they ran with
00:17:17
it in the same way in the same way that
00:17:20
you know the ivermectin hoax that
00:17:22
rolling stone ran with was too good a
00:17:24
story to be fact checked because they
00:17:26
want to believe that the maga people in
00:17:27
oklahoma were eating horse paste i mean
00:17:30
no there's a hundred better examples of
00:17:32
just i mean just to be generic sacks of
00:17:34
other startups that we all know are
00:17:36
total nonsense and
00:17:38
total nonsense and the report
00:17:41
there's a he there's a fraud in biotech
00:17:43
going on right now that hey
00:17:45
david and i david and i saw upfront i
00:17:48
mean it's like this stuff is crazy
00:17:50
it's really really crazy look i mean i
00:17:52
think the moral of the story for
00:17:53
entrepreneurs i mean i think there's a
00:17:55
couple of takeaways here number one you
00:17:57
got to be really clear with the present
00:17:58
state of your business it's okay
00:18:01
to talk about your grand vision and what
00:18:03
you're going to do in the future but you
00:18:04
cannot be inaccurate in any way with
00:18:06
respect to your current numbers and
00:18:09
partnerships and deals and current
00:18:11
capabilities i think number two i think
00:18:14
when you start working with the media in
00:18:16
this way to promote your company you're
00:18:18
playing with fire because the media
00:18:20
really has two kinds of stories they
00:18:21
build up and they tear down and when
00:18:23
they're done building you up they're
00:18:25
gonna tear you down because that's the
00:18:26
only story left to right so
00:18:28
if you're gonna go court the media in
00:18:30
that way to try and get publicity you
00:18:32
better be really careful how you do it
00:18:34
you better be really accurate and you
00:18:36
better not give them cause to later
00:18:39
regret pumping you up because they will
00:18:41
tear you down even harder if you do that
00:18:43
i think i think the more important
00:18:44
danger that i just like to speak
00:18:46
generally to for a second is to not let
00:18:48
other people do your thinking for you
00:18:50
the investors that came into this
00:18:51
business came in under the assumption
00:18:53
that this was a real business because
00:18:56
the press had written about it and the
00:18:57
press wrote about it because the general
00:18:58
had joined the board and the general
00:19:00
joined the board because his buddy
00:19:02
george schultz said hey you should meet
00:19:04
this lady and the whole thing ended up
00:19:06
becoming this roundabout where no one
00:19:09
actually did any original thinking and
00:19:11
no one did any actual diligence stop and
00:19:13
the whole thing ended up being this i'm
00:19:14
sorry yeah now you're talking about
00:19:16
actually how silicon valley works so
00:19:17
that's [ __ ] [ __ ] yeah okay you
00:19:19
don't think
00:19:20
these dopes run around thinking of
00:19:22
sequoia benchmark social capital craft
00:19:24
invest i'm just plowing the money in of
00:19:26
course they do they don't even think
00:19:28
social proof they assume that we've done
00:19:30
our jealousy
00:19:31
you think they're doing principal
00:19:32
diligence these like the silicon by the
00:19:34
way
00:19:35
this is also how the bernie madoff
00:19:37
scandal you know um got so far ahead of
00:19:39
itself no one actually went in and did
00:19:41
the audits of those financials everyone
00:19:43
assumed that because someone else has is
00:19:45
in this thing and because someone else
00:19:47
is involved or someone else something
00:19:48
nice has been written about it or said
00:19:50
about it it's worth backing and like the
00:19:52
lack of original thinking in business
00:19:54
and life in general i think is you know
00:19:56
one of the biggest you know risks that
00:19:58
each of us takes and it's why it's
00:19:59
really important to learn how to take
00:20:00
your for yourself i i have a deep
00:20:02
respect
00:20:03
for early stage investors because they
00:20:05
have to get in and make some critical
00:20:07
decisions
00:20:09
some people make those decisions about
00:20:10
the team
00:20:11
right the psychology of the co-founders
00:20:14
sometimes it's about the end market and
00:20:16
sometimes it's about a deep analysis of
00:20:19
the traction
00:20:21
but you have to honestly let's be honest
00:20:23
there is a valley of funding between the
00:20:25
series a and maybe the d or the e
00:20:29
where
00:20:30
i really think a lot of folks just look
00:20:32
for signaling value based on who the
00:20:34
series investors were they're saying
00:20:36
i'm not sure they're making black i'm
00:20:37
not sure that those family offices were
00:20:39
any worse or any better like maybe the
00:20:41
devos family looked at rupert murdoch
00:20:43
and said he's smart so i'm in yeah
00:20:45
that's exactly what happened that's so
00:20:46
different than all these series b and c
00:20:48
firms that say uh benchmarks in i'm in
00:20:50
totally it's the exact same thing
00:20:52
totally i literally had a situation and
00:20:54
i think i brought it up in a previous
00:20:55
episode where i was working on a deal it
00:20:57
wasn't like a major check for us it was
00:20:59
you know a six-figure check
00:21:01
and they said uh none of the other firms
00:21:03
are asking for diligence uh why should
00:21:05
we give it to you and i was like
00:21:07
how much are they crazy and they were
00:21:08
putting in more money than i was they
00:21:10
were putting seven figures in crazy and
00:21:11
i said because i have no idea diligence
00:21:13
when you ask for diligence now some of
00:21:14
these founders look at you like how dare
00:21:16
you yeah exactly they no in this case
00:21:18
they were insulted and they said we're
00:21:20
not giving you diligence and they and we
00:21:22
walked away
00:21:24
without visiting the house
00:21:25
yeah they're like buy it without
00:21:27
this company that dave and i call called
00:21:29
you know well david was calling it
00:21:30
theron was 2.0 but
00:21:32
this company couldn't even explain gross
00:21:35
revenue they couldn't they didn't it was
00:21:37
like gross revenue asterix and it's like
00:21:40
if there's one metric on a pdl that can
00:21:42
never have an asterisk ever the top line
00:21:45
the top gross revenue the money that
00:21:48
came into your right
00:21:49
customers
00:21:55
i get it okay
00:21:56
but
00:21:57
gross revenue asterisks how much money
00:22:00
is in the right
00:22:01
open the register count the money and so
00:22:03
i just remember asking the simple
00:22:05
question like
00:22:06
um
00:22:07
can you just take the asterisks away and
00:22:09
just tell me
00:22:10
this is a company the two of you were
00:22:11
looking at together
00:22:14
you and i have talked about many times
00:22:15
oh really you're a theradose 2.0 sir
00:22:18
that's what this guy is and i and i've
00:22:20
learned a lot about delaware law i don't
00:22:22
know if you guys have i've talked about
00:22:23
this company
00:22:25
yeah yeah well bro you in the text you
00:22:26
were like i'm shorting again i'll tell
00:22:28
you in a minute oh right um yeah you
00:22:30
know what it is but anyway i've been
00:22:31
getting a big um a lesson here about
00:22:33
delaware law there's something called a
00:22:35
section 220. have any of you ever had to
00:22:38
file one of these by the way
00:22:40
it worked out really well sorry go ahead
00:22:42
do any are any of you aware of whatever
00:22:44
oh you're sure
00:22:45
any of you aware of what a section 220
00:22:47
is or heard of this before
00:22:50
basically in a delaware corporation if
00:22:52
you're a shareholder of any size not
00:22:53
just like a board member with 10 or
00:22:55
whatever
00:22:56
if you feel there's malfeasance going on
00:22:58
you can file this 220 in delaware and uh
00:23:01
according to there's a great scandanarps
00:23:03
uh article on this
00:23:05
the the delaware courts are taking very
00:23:06
seriously that if there's any accusation
00:23:08
of any kind of malfeasance especially
00:23:10
financial
00:23:11
any shareholder
00:23:13
even tiny can get all of the books
00:23:16
and in detail not board minutes not top
00:23:18
level p l like detailed financials uh
00:23:21
and so for people who are running
00:23:23
companies
00:23:24
this is private companies too or this is
00:23:26
in private companies look up section 220
00:23:28
of the delaware general corporate law i
00:23:30
remember at facebook is because we had
00:23:32
these vagaries of having to control
00:23:34
shareholder account or stuff like that
00:23:36
and information rights yes we actually
00:23:38
kept the financials on a physical
00:23:41
computer that was not connected to the
00:23:42
internet so the people that wanted it
00:23:45
to come to our office and then we
00:23:46
remember them in like a windowless room
00:23:48
without their phone or something is that
00:23:50
i think that's that's that's how they
00:23:52
avoided people filing 220 requests
00:23:55
and so just something for people to be
00:23:56
aware aware of on both sides of the
00:23:58
table that if they're shenanigans going
00:24:00
on a company founders think well i don't
00:24:02
have to give any information to my
00:24:03
shareholders that's not true and it's
00:24:05
not true whatever you have in
00:24:06
information rights whatever your lawyers
00:24:08
wrote is not
00:24:10
above section 220 in delaware so just
00:24:13
keep that in mind i got a case like that
00:24:15
right now going on
00:24:17
where our founder won't give you
00:24:18
information well
00:24:19
it's not the founder but there's a
00:24:22
company that just sold and they won't
00:24:25
tell the shareholders like the terms of
00:24:28
the deal
00:24:29
what
00:24:30
yeah even possible good question but
00:24:34
it's it just reeks of a fraud i'm not
00:24:37
going to say the name yet because i'm
00:24:38
hoping that they're going to start
00:24:40
acting in a more kosher way but it's the
00:24:42
most egregious thing i've ever seen all
00:24:44
you have to do is talk to your attorney
00:24:46
at wilson fenwick or whatever one of the
00:24:49
cohort of silicon you literally have the
00:24:51
management of the company
00:24:53
they've engaged in a sale the sale has
00:24:54
been publicly announced we have reason
00:24:56
to believe it's in the hundreds of
00:24:57
millions and they won't tell anybody the
00:24:59
terms
00:25:00
yeah file a 220 follow 220 and you know
00:25:03
what they're public so then the crazy
00:25:05
thing about these 220s is it used to be
00:25:07
that all of the information had to be
00:25:09
private yet to sign like non-disclosures
00:25:10
whatever and now in certain
00:25:11
circumstances i think it's in the best
00:25:13
interest of all shareholders the 220
00:25:14
information can be public and so that is
00:25:17
just like
00:25:18
a sniper shot to anybody who is
00:25:21
doing any kind of shenanigans we had a
00:25:23
company in the same situation who
00:25:25
wouldn't tell us about a sale
00:25:27
and then i have a call with the board
00:25:29
because i own seven percent of the
00:25:30
company this is years ago and i said can
00:25:31
you explain to me what happened here and
00:25:33
they're they're like yeah well we're
00:25:34
doing the sale and blah blah and it
00:25:36
turned out the bankers were taking 40 of
00:25:38
the sale whatever and i was like okay
00:25:39
well i'm not going to approve this and
00:25:40
it you need my approval
00:25:43
let's talk about how we can make this
00:25:44
work because we have outside funding
00:25:46
that the company's turning down to do a
00:25:47
sale that everybody's losing their money
00:25:49
on doesn't make any sense
00:25:50
and um they said well we can't really do
00:25:52
that because we've already sent the
00:25:53
eight employees over to the new company
00:25:55
that's buying it i was like what do you
00:25:57
mean like we ran out of money to pay
00:25:58
them so
00:26:00
they all moved over to the payroll of
00:26:01
the new company i'm like you haven't
00:26:02
closed the transaction yet wow
00:26:05
it was crazy like there's some weird
00:26:06
stuff that happens to private companies
00:26:08
yeah
00:26:09
this stuff is always at the peak of when
00:26:11
there's a correction right i mean this
00:26:12
may be a good way to talk about what's
00:26:14
going on it's a great segue but it's
00:26:16
like that level of grift happens right
00:26:18
before
00:26:20
you know basically we have to re-rate
00:26:22
valuations you know people because
00:26:24
entrepreneurs entrepreneurs just take so
00:26:26
much
00:26:27
well there's just a small small
00:26:29
percentage of them but they just take so
00:26:30
much leeway in pushing the boundary
00:26:33
and and sometimes it's other board
00:26:34
members who are acting their own
00:26:35
interests but i solved this problem
00:26:36
really easy i called the ceo of the
00:26:39
public company that was buying them and
00:26:40
explained the situation he's like talk
00:26:42
to my cfo a friend of the pod whatever
00:26:44
and i they said how do we solve this
00:26:45
with you i said well this is how much
00:26:46
money i have in this is the value of
00:26:48
your company how would you like me to be
00:26:49
an advisor to your company for the same
00:26:51
amount of that value in shares also you
00:26:53
grifted so no that's great so basically
00:26:56
you got bamboozled and so you bamboozled
00:26:59
everybody else by the way
00:27:01
and then they said okay we'll make you
00:27:03
an advisor then i took the advisor
00:27:04
shares and i wrote a letter and pledged
00:27:06
them to my investors
00:27:09
and my investors are now 3x their
00:27:11
original investment
00:27:12
and i said i'm not letting it go i'm not
00:27:14
signing the paper until i get the 250k
00:27:16
that my investors put in period and then
00:27:18
they didn't now i'm up all right let's
00:27:19
segue
00:27:22
crazy market pullback the great write
00:27:23
down has occurred charts from altimeter
00:27:26
uh our friend brad gerson i assume uh
00:27:28
show a major regression to the mean for
00:27:30
tech stock sas index median enterprise
00:27:32
value next 12 months expected revenue
00:27:34
yadda yadda this includes people like
00:27:36
adobe datadog
00:27:38
shopify twilio workday and as you can
00:27:40
see here on the chart which will pull up
00:27:42
saks explain to us what's happening here
00:27:44
well it's a major regression to the mean
00:27:46
on value on public company valuations in
00:27:49
both sas but also more generally the the
00:27:51
high growth
00:27:53
stocks have corrected more than the
00:27:55
indices so that would imply that there
00:27:58
might be more correction to come
00:28:00
against the indexes i think the growth
00:28:02
stock's already taken the bulk of the
00:28:04
hit but what triggered it this week is
00:28:06
you know i predicted and you guys had
00:28:08
similar predictions on the just a few
00:28:10
weeks ago
00:28:11
that this would be the 2022 be the year
00:28:13
of the correction it really began in
00:28:14
november you had the the fed
00:28:17
you had fed governors make some hawkish
00:28:19
statements about the about inflation not
00:28:21
being transitory about the need to raise
00:28:23
rates
00:28:24
then we had the um the fed open market
00:28:26
committee meeting this is in i think
00:28:28
around december 15th and they announced
00:28:30
what they were going to do on rates
00:28:32
and now this week the minutes of that
00:28:34
meeting were released
00:28:36
and it basically
00:28:38
it said something that was completely
00:28:39
different than what they announced to us
00:28:41
just three weeks ago
00:28:43
and so the market basically just seized
00:28:46
up and went into convulsions and
00:28:48
specifically
00:28:49
what they said you know in in
00:28:51
mid-december was that
00:28:53
they were going to taper faster they
00:28:55
were going to end q1 sorry they're end
00:28:57
qe
00:28:58
at the end of q1 instead of q2 and then
00:29:00
we're gonna have quarter point rate
00:29:02
hikes in q2 q3 q4 that was the plan for
00:29:05
2022 and then there was additional
00:29:07
guidance that they were expecting three
00:29:09
more quarter point rate hikes in 2023
00:29:12
and two in 2024 so that was sort of the
00:29:14
three-year plan that was laid out then
00:29:16
we find out from these minutes and i
00:29:18
guess these minutes weren't leaked or
00:29:20
anything they they published them after
00:29:22
a like a three week revise and extend
00:29:24
remarks type period but what we find out
00:29:27
is there what they were talking about
00:29:28
was having a rate hike as soon as q1 and
00:29:32
not just ending qe but actually shedding
00:29:34
assets which is like the opposite
00:29:36
of qe so instead of basically going out
00:29:38
there
00:29:39
and creating money shrinking the balance
00:29:41
yeah yeah shrinking their balance sheet
00:29:43
so instead of going out and buying bonds
00:29:45
they're going to sell their bonds which
00:29:46
will reduce the money supply
00:29:48
so look if that was their view three
00:29:50
weeks ago why didn't they announce it i
00:29:52
mean my problem with this is it makes
00:29:55
the fed look like they don't know what
00:29:57
they're doing because they announced
00:29:59
something just three three and a half
00:30:00
weeks ago that's completely at odds with
00:30:02
the statement they just put out
00:30:04
so either something changed in the last
00:30:06
three weeks and there's been no data or
00:30:08
they don't know what they're doing just
00:30:09
so you know they they they have a little
00:30:11
bit of a track record of this so in 2018
00:30:14
it looked like there was going to be
00:30:16
inflation
00:30:17
and powell tried to get ahead of it and
00:30:20
he raised rates and the the market
00:30:23
completely collapsed and they were
00:30:24
looking i think a chinese data at the
00:30:26
time and it looked like you know china
00:30:28
was turning you know going crazy then
00:30:30
china completely turned over it was a
00:30:32
complete head fake the economy wasn't
00:30:34
rip roaring inflation didn't exist
00:30:36
and
00:30:38
they basically just curtailed a lot of
00:30:40
investment and destroyed a bunch of
00:30:42
value
00:30:43
so this time around i think they're very
00:30:44
sensitive to not correcting too quickly
00:30:47
but then the opposite thing happened
00:30:48
which is they probably waited a little
00:30:50
too long and now you know we're
00:30:52
correcting too slowly too late into the
00:30:54
cycle
00:30:55
and
00:30:56
we're just sort of digesting that
00:30:58
reality and so i think that you know
00:31:01
we're probably to be honest with you
00:31:03
like actually like we've puked it all
00:31:05
out for the most part in my opinion you
00:31:08
have to remember right like the big
00:31:09
difference between now and even 10 and
00:31:12
frankly more importantly 20 30 40 50
00:31:14
years ago is how many computers are
00:31:17
involved that trade
00:31:18
how much passive money is involved that
00:31:21
owns assets and how much of this stuff
00:31:24
is sitting on the sidelines still in
00:31:26
money market accounts and munis so if
00:31:29
you look at those markets there is a ton
00:31:32
trillions of dollars
00:31:34
waiting to find a home
00:31:36
and what we've now done and brad's
00:31:38
charts show this is we've basically
00:31:41
chopped the head off of all of these
00:31:44
fast growing growth multiple the
00:31:45
underlying companies have not changed
00:31:47
once until it right these companies are
00:31:49
still growing by crazy amounts like
00:31:51
snowflake is still an incredible
00:31:52
business unbelievable but the multiple
00:31:54
that one was willing to pay has been
00:31:56
has been very much re-rated as is a
00:31:58
bunch of other so let me ask you a
00:32:00
question
00:32:00
if we've gone from these 50 60 70
00:32:03
multiples time sales and now it goes
00:32:05
back down to 20.
00:32:07
is that dare i say a buy signal
00:32:10
well those trillions of dollars start
00:32:11
moving back in because who wants to be
00:32:13
in a money market i don't i don't know
00:32:14
and i i can't really call these things
00:32:16
but one a really smart person that i
00:32:18
talked to this week
00:32:20
you know he actually liquidated
00:32:22
everything
00:32:23
in october and november
00:32:25
[Music]
00:32:27
and you know and i i don't know we
00:32:30
talked about this on the pod but you
00:32:31
know i
00:32:32
was feeling so much tension at the end
00:32:34
of last year i actually had when i look
00:32:36
back on q4
00:32:38
it was probably the most difficult
00:32:39
quarter of my professional life
00:32:42
and just trying to manage risk and i
00:32:44
exited a ton of positions all my pipes
00:32:47
you know my third party pipes i
00:32:49
basically sold off except for one you
00:32:51
know i generated some liquidity in other
00:32:53
places as
00:32:54
well and
00:32:56
i was glad that i did that
00:32:59
in part because i saw you know what he
00:33:01
was doing and in part because you know
00:33:02
jeff and elon were selling and i thought
00:33:04
i mean this is just this is crazy to sit
00:33:06
on the sidelines and you know be the bag
00:33:08
holder here
00:33:10
going into q1
00:33:12
i talked to the same guys and what he
00:33:14
said to me which i think is very smart
00:33:16
is
00:33:17
you have to really look at
00:33:19
the first and second derivative of the
00:33:21
10-year bond
00:33:22
because when that stops moving like the
00:33:25
10-year bond is this beautiful barometer
00:33:27
of the collective wisdom of every single
00:33:30
investor in the world
00:33:31
about what they think about long-term
00:33:33
growth and inflation and it's a really
00:33:36
important market you know we've talked
00:33:37
many times look at the 10-year break
00:33:39
even if you want to understand where
00:33:40
inflation is going we started to talk
00:33:41
about that seven months ago
00:33:43
and if you look at that the rate of
00:33:45
change so the volatility in the 10-year
00:33:48
yield is slowing way down
00:33:51
and if that continues to hold
00:33:54
that means that people are really saying
00:33:56
there's a small amount of real inflation
00:33:59
a reasonable amount of transitory
00:34:01
inflation and we're about to kind of
00:34:02
wash most of it through the system with
00:34:05
you know 100 basis points of rate hikes
00:34:07
and if that's the case then
00:34:09
you may see a quick pullback you know in
00:34:12
q1 and we're back to the races again
00:34:14
because of all this other money that's
00:34:16
going to say i got to get back in and if
00:34:17
you look at all these corrections in the
00:34:20
world of computer traded algorithms and
00:34:22
etfs and passive money and
00:34:24
it's all the snapbacks are so fast you
00:34:27
correct 20 and then whoop
00:34:29
you whip it back and you go
00:34:31
so i don't know i mean that's one view
00:34:33
based on the past but when you have
00:34:36
these big swings remember it's not that
00:34:38
every
00:34:41
issue moves perfectly in sync with every
00:34:44
other issue
00:34:45
so there are these
00:34:46
call it over adjustments that happen
00:34:49
within a cohort so within a group of
00:34:51
companies some of them will trade down
00:34:53
much farther than others the multiple
00:34:55
will compress much further than others
00:34:57
and there's certainly opportunities
00:34:59
within as there is in any market that's
00:35:01
moving quickly
00:35:02
uh to find businesses that now are
00:35:04
prices mature
00:35:06
non-growth value businesses and they're
00:35:08
profitable and growing and there's a
00:35:10
bunch of those out there now
00:35:11
and that wasn't the case a month ago i
00:35:13
don't think a single thing in the last
00:35:15
quarter has changed in the underlying
00:35:17
fundamentals of the majority of
00:35:19
businesses that are public
00:35:21
and i actually think for the most part
00:35:23
nothing has really materially changed
00:35:25
for the majority of private companies
00:35:27
all that's changed is what you're
00:35:29
willing to pay in the future for it
00:35:31
and the one thing that hasn't changed is
00:35:33
what you're willing to pay in the future
00:35:35
for the private businesses so the real
00:35:36
question you know for saxon you know for
00:35:38
the active investors in the private
00:35:40
markets which i
00:35:42
don't know what to think about is
00:35:44
will the haircut that we've all taken in
00:35:47
the public markets
00:35:49
spill into the privates and it's
00:35:50
starting it's starting but it feels to
00:35:52
me it's not just about what's going to
00:35:54
happen with new emerging growth
00:35:56
companies but i mean you guys correct me
00:35:58
if i'm wrong but there are hundreds of
00:36:00
companies
00:36:02
that have raised billions of dollars at
00:36:05
valuations that if they look in the
00:36:07
public markets now they are never
00:36:09
actually going to achieve if they were
00:36:10
to go public in the next three four or
00:36:12
five years based on their projections so
00:36:14
to your point so what are nine yeah
00:36:17
there are 900 unicorns right now 900 and
00:36:20
so
00:36:21
once you get to look it's one thing to
00:36:23
be a 200 million dollar company and sell
00:36:24
to microsoft or whatever but when you're
00:36:26
a billion dollar company there are very
00:36:28
few buyers i just want to point out
00:36:30
there's a huge disincentive
00:36:33
for an investor or a shareholder of vc
00:36:36
or a private equity firm to take a big
00:36:38
write down on a company like that
00:36:40
and so there there is always this push
00:36:42
to what do we do next and it creates
00:36:44
this certain certainly i can tell you
00:36:46
i'd love your point of view but you're
00:36:47
this really like unhealthy tension
00:36:50
because to take a write down
00:36:52
on 900 unicorns is gonna cause a
00:36:55
write-down of
00:36:57
hundreds of billions of dollars and not
00:36:59
gonna cross all vc portfolios in
00:37:01
aggregate because they're not going to
00:37:03
end up going public well i'm sorry just
00:37:05
to finish your thought
00:37:06
because the end market is only to go
00:37:08
public there are very few kinds of exits
00:37:10
yeah there are no and not in the
00:37:12
billions of dollars because you have to
00:37:13
think one or two people
00:37:14
yeah big tech is off the sidelines okay
00:37:17
you know even if you look at like visa
00:37:18
members
00:37:20
nobody's
00:37:25
but my point is when you have 900
00:37:27
companies with a billion dollars in plus
00:37:28
they have to go public they have to go
00:37:30
public and so correct you can't go
00:37:32
public into a valuation framework that
00:37:34
values you at 30 to 40 percent less of
00:37:36
your last private mark right yeah it
00:37:39
said as well you did have do use
00:37:41
tomorrow
00:37:42
so this is an important question because
00:37:44
isn't that going to be the case that all
00:37:45
these vc's with the
00:37:47
2015 2016 2017 2018 2019 vintage are
00:37:52
gonna end up having they've all got
00:37:54
these great marked books right now you
00:37:55
know the books are all marked to 3x uh
00:37:58
you know multiple on invested capital
00:38:00
and now they're going to end up having
00:38:01
these liquidity events that are going to
00:38:03
come in at shockingly low valuations and
00:38:05
there's going to be this great re write
00:38:07
down and retrenchment
00:38:09
i can tell you there's a couple of
00:38:10
examples one is the athletic yesterday
00:38:12
which had raised money at 500 million
00:38:14
just two years ago just sold for about
00:38:16
500 million to the new york times
00:38:18
and
00:38:19
those investors basically put money in
00:38:21
and they got their money back it's a
00:38:22
push so i think you're going to see a
00:38:24
lot of these questions no i agree with
00:38:26
you yes i'm going to give you the
00:38:26
examples and there's also your
00:38:28
acquisition by a mid-tier comp acquirer
00:38:30
and so there'll be plenty of those that
00:38:32
occur so there'll be a lot of pushes i
00:38:33
think is my prediction of those 900
00:38:35
unicorns and then for a lot of these sas
00:38:37
companies so you're saying you think
00:38:38
that a bunch of them are going to sell
00:38:39
for under a billion dollars and the vcs
00:38:42
because they have preference they're
00:38:43
going to get their money correct correct
00:38:45
i think it's going to be a lot of these
00:38:46
pushes where i don't know what is it in
00:38:48
blackjack david when you're playing
00:38:49
those three hands and you get a push
00:38:50
like and it's like okay i'm going to
00:38:51
live to to fight another hand now which
00:38:53
we've seen sax do a number of times and
00:38:55
then for the sas is where sax i'm
00:38:57
interested in your position because we
00:38:59
saw in sas all of a sudden the private
00:39:01
market 30 40 50 60 70 times top line
00:39:05
and now it's gone back down to 20 30 40.
00:39:08
so those companies now basically have
00:39:10
three the public markets have but i
00:39:11
don't think that the private market has
00:39:13
happened already everybody's pausing and
00:39:15
so for the people who raised that 50x
00:39:17
congratulations you did the right thing
00:39:19
if you have enough money to fill in that
00:39:20
valuation is it a congratulations though
00:39:22
i mean it seems like there are people
00:39:24
say it is pretty tough position now
00:39:26
hey
00:39:28
you just raise money at a billion dollar
00:39:29
valuation with 10 million of revenue
00:39:31
you're like 20. let's say let's say yeah
00:39:34
okay i mean like what are you gonna do
00:39:35
what are you gonna do in your next round
00:39:36
because you're burning 100 million a
00:39:38
year now or 40 million or whatever it is
00:39:39
you're burning almost all the companies
00:39:41
i've seen in this exact situation you're
00:39:43
talking about have that 20 million they
00:39:44
got a billion they raised 100 million or
00:39:47
200 million and they're basically now
00:39:49
saying okay we got to make this last
00:39:51
until we can catch up to that valuation
00:39:52
and get to 50 to 75 million so i think
00:39:55
you would i would take that deal as a
00:39:56
founder and as an investor because it
00:39:59
takes out the downside and now you just
00:40:00
have to worry about catching up to the
00:40:02
valuation and you have four years of
00:40:03
runway
00:40:04
if they're not gonna they're gonna right
00:40:06
now no no no no no no those companies do
00:40:08
not those those companies absolutely do
00:40:10
not have four years of runway i will bet
00:40:12
dollars to donuts they have two years or
00:40:14
less
00:40:15
and most of these companies have 18
00:40:16
months which means they got to be
00:40:17
raising in six to nine no correct
00:40:19
they're changing they're changing their
00:40:21
spend and they're
00:40:22
changing their spend they're not firing
00:40:24
anybody you're not hearing about layoffs
00:40:26
at startups okay all right
00:40:28
you're not hearing about it but maybe
00:40:30
they're changing their forward-looking
00:40:31
growth plans what are you seeing sex
00:40:34
i'm telling you what i'm seeing what are
00:40:35
you seeing i think that
00:40:37
the trickle-down effect is inevitable
00:40:40
but i'm not sure it's fully kicked in
00:40:42
yet um it's going to take
00:40:45
a few high-profile deals to land at say
00:40:49
50 times arr instead of 100 times ar in
00:40:52
order for everybody to know that there's
00:40:54
a new
00:40:56
valuation level
00:40:58
so if you look at the altimeter chart on
00:41:00
set public sas multiples let's see i
00:41:02
mean they can pull it up it basically
00:41:04
it's the sas index that shows median
00:41:06
median expected value to
00:41:09
next 12 months revenue
00:41:11
and during this sort of
00:41:14
late 2020 early 21 period it got as high
00:41:17
as about 15 times the historical average
00:41:22
yeah for well for next 12 months or uh
00:41:24
revenue
00:41:26
the
00:41:27
which is sort of that kind of makes
00:41:29
sense um so so historically it's around
00:41:32
eight right so so basically all the
00:41:34
valuation levels doubled
00:41:36
and now they've come down to about ten
00:41:38
times so you could say that if it fully
00:41:41
reverts to the mean we still got like
00:41:42
another negative twenty percent to go i
00:41:46
don't know if that's going to happen i
00:41:48
mean i think there has been a greater
00:41:50
recognition that sas businesses are some
00:41:52
of the best businesses to own right it's
00:41:55
they are
00:41:56
subscriptions software businesses great
00:41:57
gross margins they just keep compounding
00:42:00
so maybe it will stabilize it 10 times
00:42:03
but i think what we can say with 2020
00:42:05
hindsight is that the record price
00:42:07
levels we got to in the public markets
00:42:09
in 20 and 21
00:42:11
were
00:42:12
sort of unusual and unique and probably
00:42:14
the result of this incredibly
00:42:17
expansionary fiscal and monetary policy
00:42:19
that was coming out of washington
00:42:22
now has it trickled down to the again vc
00:42:24
markets yet i mean the way that that has
00:42:26
to happen is that the latest stage
00:42:28
investors the crossover investors who
00:42:30
invest in both public markets and
00:42:32
private markets they have to to pay they
00:42:35
have to start paying less for the latest
00:42:37
stage growth companies and then you know
00:42:39
all the downstream vcs are going to
00:42:41
start paying less as well because you
00:42:43
know if you know the markups are lower
00:42:45
you have to take that into account so
00:42:47
look all of this is underway right now i
00:42:49
mean i gave a bloomberg interview in
00:42:52
december and um
00:42:54
i think i went on maria barromo show
00:42:57
around that time as well and i kind of
00:42:58
warned that all this was coming
00:43:01
and um yeah we were in the midst of it
00:43:03
of a giant re-rating because we're
00:43:05
realizing that so much
00:43:08
of the peak values we were seeing
00:43:10
in 2020 and 21 were the result of
00:43:13
artificial liquidity
00:43:15
and as what you guys predicted you know
00:43:17
it's one of our big you know
00:43:19
i guess my big prediction for uh
00:43:21
business losers
00:43:22
this year were asset classes that were
00:43:24
highly dependent on liquidity you guys
00:43:26
predicted crypto would be one of those
00:43:28
clearly it's taken a massive hit
00:43:30
um have you seen how much the crypto
00:43:32
markets are off just in the last week
00:43:34
so it's um
00:43:36
so much for them being uh uncorrelated
00:43:39
no it's because
00:43:40
look the customer says bitcoin is going
00:43:42
to be uncorrelated so the market the
00:43:43
crypto markets are like a sponge for
00:43:45
liquidity and the more liquidity there
00:43:46
is out there the more money can flow
00:43:48
into a more speculative asset class
00:43:51
but look my my objection to this i mean
00:43:54
is that if you look at the fed's actions
00:43:57
i mean i think chamath is right that
00:43:58
they waited way too long to react and
00:44:01
during the crisis they overreacted i
00:44:04
mean they pumped i mean we on a previous
00:44:06
pod we showed the assets
00:44:09
between under reaction and overreach yes
00:44:11
exactly and and now they're i think
00:44:13
they're in they're going into
00:44:14
overreacting again
00:44:15
i actually think they nailed it in in
00:44:17
mid-december they nailed it by giving us
00:44:19
business certainty around what the new
00:44:22
raid environment was going to be and
00:44:23
just three weeks later in the minutes to
00:44:25
that very meeting they completely
00:44:27
undermined the certainty or the
00:44:30
the greater level of certainty and
00:44:31
predict the predictability that they had
00:44:33
provided markets they've now introduced
00:44:35
massive uncertainty
00:44:37
so it's just it's unbelievable
00:44:39
it's like they're pilots and like they
00:44:42
stalled the plane and then they're like
00:44:43
oh let's pull back well no it's more
00:44:46
they're kind of pulling out the manual
00:44:47
and learning in real time yeah and it's
00:44:49
like you need to just point the nose
00:44:51
down a bit and add a little bit of speed
00:44:53
so you get some lift like it really is
00:44:55
tragic the performance of our government
00:44:57
at every level over since covet at the
00:44:59
last you know since 2020 i mean it's
00:45:02
been abysmal i mean first you have the
00:45:04
self-inflicted wound of lockdowns i mean
00:45:07
the economy is going to take a hit no
00:45:08
matter what because highly at-risk
00:45:09
people would have stayed home and
00:45:12
reduced their economic activity but
00:45:13
instead of just protecting the at-risk
00:45:15
people we had to lock down the entire
00:45:17
economy we padlocked elon's factories
00:45:20
and on and on so we basically shut down
00:45:22
the whole economy for no reason and
00:45:24
states like california kept it going way
00:45:26
longer than they had to so then the
00:45:28
government just prints
00:45:30
like five six trillion and the fed
00:45:32
doubles the size of its balance sheet
00:45:35
and then now they're abruptly getting
00:45:37
off drugs i mean look they put us on
00:45:38
drugs and now they're going cold turkey
00:45:41
and so i think there's actually like a
00:45:43
much greater risk now of the economy
00:45:45
going to recession this year because of
00:45:46
the fed's overreaction this week
00:45:49
i mean they had they had the goldilocks
00:45:51
scenario down about three weeks ago and
00:45:52
i think they're going to tank the thing
00:45:53
now or there's a much greater risk of
00:45:55
that best advice for founders private
00:45:58
companies
00:45:59
in this turmoil
00:46:01
what's your best advice fam
00:46:03
you're a founder you got i don't know 18
00:46:05
months of runway right now you're going
00:46:07
into this
00:46:08
you know slush and you want to know what
00:46:10
should i do
00:46:12
what should i do i think paul graham's
00:46:13
advice it makes the most sense here you
00:46:15
need to focus on being default alive um
00:46:18
define what that is just for people yeah
00:46:20
so you know paul graham wrote this great
00:46:22
essay uh as part where he's the founder
00:46:24
of y combinator and you know he has this
00:46:26
very simple you know framework of
00:46:28
looking at companies which is your
00:46:29
default debt or your default alive and
00:46:31
when you're losing money
00:46:34
as a company and you're burning enormous
00:46:35
amounts of cash your default debt now if
00:46:37
you're growing fast enough
00:46:39
default debt is a great strategy for
00:46:41
value creation
00:46:42
but at some point
00:46:44
everybody around you will expect you to
00:46:47
be default alive and what that means is
00:46:49
that the cost of what you do
00:46:51
are less than the revenues you bring in
00:46:53
when the result or profits
00:46:55
and even then that's not good enough i
00:46:57
don't know if you guys saw but you know
00:46:59
if you look inside of big tech
00:47:01
i was shocked to find out that you know
00:47:03
for example you know companies like
00:47:05
microsoft specifically and apple you
00:47:07
know these guys trade at huge forward
00:47:09
multiples right for enormous
00:47:11
profitability but companies like
00:47:13
facebook and google for the same level
00:47:15
of profitability you know trade almost a
00:47:17
third less in terms of multiple
00:47:20
so even when you're that good it's not
00:47:22
good enough to be default alive that's
00:47:24
how hard this game is over very long
00:47:27
periods of time
00:47:28
and so when you have a moment to really
00:47:30
understand how to be default alive
00:47:33
and you don't take it i think it's a
00:47:36
huge disservice because we don't do
00:47:38
enough of that kind of coaching that
00:47:40
really
00:47:41
inflicts that kind of discipline and
00:47:43
expectation setting i remember i have a
00:47:46
large climate investment it's actually
00:47:48
the single largest investment i've ever
00:47:49
done
00:47:50
[Music]
00:47:51
and so i sweat the details pretty
00:47:53
significantly and you know i was with
00:47:55
the team
00:47:56
in
00:47:57
uh
00:47:58
uh in november december
00:48:00
for board meeting and setting up 2022
00:48:03
and my whole thing was guys you have to
00:48:05
get default alive you have to get
00:48:07
contribution margins to be in a certain
00:48:08
band you were we are going to target
00:48:10
this level of free cash flow generation
00:48:12
this year and there's no if ands or buts
00:48:14
about it and what's great is the entire
00:48:16
team embraced it and we're marching
00:48:18
towards that but if they didn't and
00:48:21
they're like no we're just going to grow
00:48:22
at all costs again
00:48:24
oh my god i would be freaking out right
00:48:26
now freeberry what do you have to add to
00:48:27
that as advice to founders who have not
00:48:29
been through this before i built my
00:48:31
business my
00:48:32
climate corp uh we raised a round in
00:48:35
november of 2007 we raised 12 and a half
00:48:38
million dollars and then the financial
00:48:39
crisis hit in 2008.
00:48:41
and um i'd say two things
00:48:44
were really important uh number one was
00:48:47
just
00:48:48
keep building so if you're building a
00:48:50
great business
00:48:53
it doesn't matter what the market
00:48:55
perturbations are uh you know the the
00:48:57
market will value you what they're going
00:48:59
to value you add and if you're a good
00:49:00
business there's going to be money
00:49:01
available
00:49:02
to you
00:49:03
the second piece of advice is one that i
00:49:06
know has been said over and over again
00:49:08
but you know never raise an evaluation
00:49:10
beyond you know what you're reasonably
00:49:12
going to be able to kind of deliver
00:49:13
returns on at some point in the future
00:49:15
because otherwise those nasty dynamics
00:49:17
emerge
00:49:18
you know you could raise money at some
00:49:20
crazy high valuation that's not always
00:49:22
the best thing to do because then the
00:49:23
expectation of the investors coming in
00:49:25
at that valuation or they want to make
00:49:27
three times that money or four times
00:49:29
that money and it pushes you to do
00:49:30
something unhealthy like spend more than
00:49:32
you otherwise would
00:49:34
stretch for a bigger outcome and put
00:49:36
your entire company at risk so you know
00:49:38
two things to me have always been just
00:49:40
stay focused on building your business
00:49:42
don't let you know kind of market
00:49:43
conditions drive your decision-making
00:49:46
and second define what for you is the
00:49:48
best practice of staying focused on your
00:49:50
business because that is a very general
00:49:52
term what is freeberg if you're going to
00:49:54
say the top three things of focused on
00:49:56
your business tactically means i have a
00:49:58
simple rubric for value creation in a
00:50:00
business you know number one is can you
00:50:02
make a product number two is do people
00:50:04
want to buy your product number three is
00:50:06
can you make a positive gross margin
00:50:08
selling that product to those people
00:50:10
number four is can you make a return on
00:50:13
the marketing dollars you have to spend
00:50:14
to generate that gross profit meaning
00:50:16
you know can ltv exceed cac and number
00:50:19
five is can you scale the amount of
00:50:20
money you deploy to grow your business
00:50:23
such that as you grow the return goes up
00:50:25
not down if those are the five kind of
00:50:28
things you can accomplish in that order
00:50:30
you can build the next google and so and
00:50:32
then the sixth thing is can you be a
00:50:34
platform which is meaning can you
00:50:35
transition to being a multi-product
00:50:36
company that gets leverage out of the
00:50:38
the user base or the technology that
00:50:40
you've built got it and so you know if
00:50:42
you think about revenue streams more
00:50:44
multiple revenue streams using the same
00:50:45
customer base or multiple products or
00:50:47
you know whatever
00:50:48
um and so if you can achieve those six
00:50:50
things
00:50:51
um in that order
00:50:53
every step of the way every increment
00:50:54
you can make across that spectrum drives
00:50:56
significant value as a business
00:50:58
ultimately what the multiple on your
00:51:01
business will be is purely going to be a
00:51:03
function of what else is going on in the
00:51:05
world things that you cannot control
00:51:07
and so if you're driving your decisions
00:51:09
about building your business using that
00:51:10
first rubric good for you you're going
00:51:12
to succeed you're going to have money
00:51:13
available to you awesome if you're
00:51:15
driving your decisions based on what the
00:51:17
market is telling you to do and what the
00:51:18
market is saying is available to you and
00:51:20
money and all that sort of stuff you
00:51:22
know you're setting yourself up to
00:51:23
basically be you know blowing up are you
00:51:25
also saying to be independent of
00:51:27
valuation
00:51:29
yeah i i'm always of the opinion that
00:51:30
you shouldn't raise money beyond your um
00:51:33
into evaluation that you're not
00:51:35
comfortable saying in different market
00:51:38
conditions or what have you i can return
00:51:39
multiple ways i don't think any founder
00:51:41
has ever you know
00:51:42
most of these founders were not around
00:51:44
in 2000 and they were 2008 or two but
00:51:47
even 2008 was less important in my mind
00:51:50
because it was it was it was fast and
00:51:52
again we had government stimulus so you
00:51:54
know like i think 2008 was an
00:51:56
aberrational moment i was i was in the
00:51:58
middle you know inside of facebook and i
00:52:00
was like what the hell is going on here
00:52:02
the government's going to step in and
00:52:04
you know with tarp printing a trillion
00:52:06
dollars whatever it was it didn't affect
00:52:08
you guys
00:52:09
it didn't affect us at all yeah but you
00:52:11
were the most powerful company or not at
00:52:13
that time 2008
00:52:15
wow
00:52:21
here's the thing that people don't
00:52:22
realize with facebook google was
00:52:23
profitable from day one too yep we we
00:52:25
were always default alive i want every
00:52:28
single person listening to this to
00:52:29
understand this okay we sold poker ads
00:52:32
for party poker in big banner ads on
00:52:35
facebook and we made money you got the
00:52:37
bag you got yourself independent we're
00:52:39
profitable okay so i don't buy this
00:52:41
argument that argument of unprofitable
00:52:43
growth is a vestige of fund dynamics and
00:52:47
vcs who want to raise larger and larger
00:52:49
funds to blind their pockets with fees
00:52:52
it's a function of what i mentioned
00:52:54
before which is if you can
00:52:56
think about the context of a portfolio
00:52:58
of those bets it makes sense but if you
00:53:00
think about your business it doesn't
00:53:01
make sense in 2000 that didn't make
00:53:03
sense you could not run an unprofitable
00:53:05
growth business the money would not have
00:53:06
been there right and the real reason is
00:53:08
that was a a market check meaning you
00:53:11
had people reallocating capital because
00:53:14
risk rates were different you know you
00:53:15
could put money at six percent in the in
00:53:17
u.s 10-year bonds now obviously you
00:53:20
can't do that today so maybe this cycle
00:53:22
is just the new normal and so you know
00:53:24
maybe you can always be default debt and
00:53:26
be able to raise money because
00:53:28
the incentives exist but i wonder when
00:53:31
that stops and so i don't know google
00:53:33
was an incredibly cash efficient
00:53:35
business i think they raised under 50
00:53:37
million as a private company they never
00:53:38
used any of it because google the first
00:53:40
the first thing google did is they did a
00:53:41
massive search syndication deal with aol
00:53:43
that paid them hundreds of millions of
00:53:44
dollars and that funded the business if
00:53:46
you can sell ahead of your customers in
00:53:49
terms of delivering the service or the
00:53:50
product to them you've got the most
00:53:52
beautiful business in the world that's
00:53:53
the definition of bootstrapping google
00:53:55
even though they raise venture capital
00:53:56
effectively bootstrap the business by
00:53:58
getting customers to pre-pay like elon
00:54:00
getting people to prepay for cars i
00:54:02
wrote this in my annual letter like two
00:54:04
years ago but facebook google apple
00:54:06
microsoft and amazon raised collectively
00:54:07
less than 250 million dollars yeah i
00:54:10
mean what yeah so i mean i i agree with
00:54:12
what a a lot of what you guys have said
00:54:15
um
00:54:16
i mean so i agree with freeburg that
00:54:18
recessions or downturns are actually
00:54:19
great times to build startups because
00:54:21
innovation doesn't stop and you know so
00:54:23
paypal was predominantly built after the
00:54:24
dotcom crash
00:54:26
uh yammer was probably built after the
00:54:28
2008 sort of great recession so it's
00:54:30
absolutely doable and some things
00:54:32
actually get easier in a downturn
00:54:33
there's like way fewer startups getting
00:54:35
funded and so like talent gets easier to
00:54:37
recruit so
00:54:39
you know things loosen up in you know in
00:54:41
terms of the company building side the
00:54:43
only thing that really gets harder in a
00:54:44
downturn is fundraising right this is
00:54:47
and by the way i think it's a good
00:54:49
practice for
00:54:50
founders not to care what happens
00:54:52
in the public markets than as to early
00:54:54
stage founders right because
00:54:56
the only time that really touches you is
00:54:58
when you need to access the capital
00:54:59
markets right and then you will be
00:55:02
subject to the downstream impact on vcs
00:55:04
of what's happening in the market so
00:55:06
so the only thing that really gets
00:55:08
harder is fundraising and this is where
00:55:10
i think
00:55:10
chamas
00:55:11
advice comes in i i personally think
00:55:14
that trying to achieve default alive
00:55:16
status is too high a bar i mean it's a
00:55:19
wonderful thing if you can do it i mean
00:55:21
facebook did it google did it the very
00:55:22
best companies did it but i know very
00:55:25
few sas companies that could continue to
00:55:26
grow if they had to be castral positive
00:55:29
i mean at an early stage so
00:55:31
the metric i use is bird multiple i
00:55:33
wrote a blog about this once um
00:55:35
it's basically just how much are you
00:55:37
burning for every dollar of net new arr
00:55:40
you're adding so in other words like if
00:55:43
you're burning a million dollars you
00:55:45
know over whatever period of time a
00:55:47
month quarter year to add a million
00:55:49
dollars of net uar that's actually
00:55:51
pretty good so a bundle
00:55:53
of like one or less is amazing i'd say
00:55:55
even up to two
00:55:57
is good so in other words like if a sas
00:55:59
company can
00:56:01
say add 10 million of net new arr in a
00:56:03
year and burn 20. i think vcs will fund
00:56:05
that all day long even in a recession
00:56:08
two year payback yes but when you start
00:56:10
getting to burn multiples of three four
00:56:11
five six and up that's when like vc's
00:56:14
are going to go wait a second yeah
00:56:16
you're that gross that's efficient right
00:56:18
you're not efficient it's not just
00:56:19
efficient but it starts to raise
00:56:20
questions about your product market fit
00:56:22
because you're effectively spending too
00:56:23
much money to grow so like why is a
00:56:25
growth
00:56:26
that hard right no market yeah no market
00:56:29
yeah exactly no marketable i think it's
00:56:30
a good way of putting it so i do think
00:56:32
you have to start like in a downturn or
00:56:33
in choppy waters you have to sharpen the
00:56:35
pencil get more efficient about your
00:56:37
burn look at your burn multiple
00:56:39
and then i think you know if you have
00:56:40
the opportunity to top off your war
00:56:42
chest like that's smart you know and
00:56:44
don't wait too long and be frugal i mean
00:56:46
god the amount of like
00:56:49
crazy spending i'm seeing in some
00:56:50
startups and unnecessary spending if
00:56:52
you're spending something it's not going
00:56:53
into product it's not going into
00:56:55
marketing
00:56:56
you know it's not going into sales and
00:56:58
it's not you know just you really have
00:56:59
to ask yourself why am i spending money
00:57:01
on going to this conference going to
00:57:02
that conference on this office space
00:57:04
like really be frugal i know that it's
00:57:06
when you have all this money sloshing
00:57:08
around you're looking for things to
00:57:08
spend it on but stay focused
00:57:12
yeah i mean yeah don't don't spend 7 500
00:57:15
on that unless you've got tons of cash
00:57:16
laying around
00:57:18
and we will be getting back to the
00:57:19
people who applied we're going to go
00:57:21
through and
00:57:22
somebody's going to approve you
00:57:24
let's add one other thing to this which
00:57:26
is you're right that like most founders
00:57:28
have never even seen a downturn because
00:57:29
the last big one was a great recession
00:57:31
of 2008 2009. so many founders were even
00:57:33
around back then the most the most the
00:57:35
real one was 2 000. that's right that
00:57:37
was the big crash it froze i would say
00:57:40
it froze to that 2008
00:57:42
was what like 12 to 18 months of
00:57:44
choppiness and i would say a lot of
00:57:46
companies couldn't raise money had to do
00:57:47
down rounds had to do multiple
00:57:48
liquidation preferences it was gnarly on
00:57:51
some cap tables during that period
00:57:52
and if you don't know what multiple
00:57:54
liquidation preferences are ask your
00:57:56
attorney i understand but there was no
00:57:57
real market check the market check was
00:57:59
really in 2000. and you saw it was a
00:58:02
multi-year slog
00:58:04
it was a bloodbath you had to be deep
00:58:05
well it's not vaporized yes people or
00:58:07
you had to be default alive absolutely
00:58:09
absolutely yeah but i would say a third
00:58:11
of the startups went away in 2008. i
00:58:13
don't think we're running into that
00:58:14
again so you know let's not create a
00:58:16
sequoia graveyard
00:58:19
but you could
00:58:20
nobody knows just a point look it's a pr
00:58:22
it's a probability of getting your
00:58:23
business funded right and and that's
00:58:25
kind of
00:58:26
lower it's it's not like but here's the
00:58:28
thing what i but what's shocking to me
00:58:30
it's like
00:58:31
i don't understand why people think you
00:58:33
can grow infinitely forever it's just
00:58:36
not true
00:58:37
even the best businesses in the world
00:58:39
after 15 or 20 years are barely growing
00:58:41
at 20 percent people forecast facebook
00:58:44
and google
00:58:45
those are the two best businesses in the
00:58:47
world
00:58:48
but isn't the question what kind of
00:58:49
growth vcs are willing to finance no
00:58:52
what i'm saying is if you know that your
00:58:54
terminal growth rate if you are one of
00:58:56
the best companies ever created ever is
00:58:58
20 in 20 years it doesn't take a genius
00:59:01
to do a line of best fit between now
00:59:03
where you're at 100 and 20 and realize
00:59:06
that at some point if you don't figure
00:59:08
out how to make money by selling what
00:59:10
you're selling there's a lot of people
00:59:12
who will be smart enough after enough
00:59:14
historical data has come through the
00:59:15
transom or come over the past to realize
00:59:18
that these things are not that fundable
00:59:20
and this is what's shocking to me it's
00:59:21
like that data is hiding in plain sight
00:59:23
for anybody to look at
00:59:24
it doesn't make sense unless you believe
00:59:26
that those those growth rates of 40 50
00:59:29
60 are sustainable for 30 years or 40
00:59:33
years we've seen zero examples and you
00:59:35
have to look at these canaries in the
00:59:37
coal mine because if if the best
00:59:38
companies in the world can't do it
00:59:41
you're you have to really scratch your
00:59:43
head here or ignore it
00:59:44
whatever that's fine
00:59:47
just wing it yeah it'll work out don't
00:59:50
worry about it don't worry about it
00:59:51
don't worry just add like teachers
00:59:53
around it's fine one of those features
00:59:55
will work and save the day there's some
00:59:57
magical future though did you see
00:59:59
andreessen announced that they raised
01:00:00
nine billion dollars or something today
01:00:02
across the united states congratulations
01:00:05
they're building a colossus yeah i mean
01:00:09
silicon valley in terms of capital is um
01:00:12
you know seeing kind of power returns
01:00:14
itself right there's going to be a few
01:00:16
firms that are going to you know control
01:00:18
eighty percent of the and reason should
01:00:19
go public and drinking
01:00:22
tiger global
01:00:23
you know whatever happens i don't know
01:00:25
if something is i mean there's
01:00:29
if you look at the aggregate capital
01:00:30
that's being deployed into private
01:00:32
markets right now
01:00:33
in in probably two years eighty percent
01:00:35
of it's going to come from three firms
01:00:36
or four firms the problem is if you're
01:00:38
running that much money
01:00:40
you're insane to not take your gp public
01:00:42
because it's the only way like you're
01:00:44
not really generating carry at that
01:00:46
point because you're generating a market
01:00:48
beta return so you'll do okay but when
01:00:51
you're sitting on 20 30 40 billion of
01:00:53
imputed wealth by being the owner of the
01:00:55
gp of tiger or andreessen you'd be
01:00:58
insane to not go public i think the odds
01:01:00
are going to be pretty high that
01:01:01
andreessen will go public right i mean
01:01:03
they're certainly setting themselves up
01:01:04
to be a lot more than just a capital
01:01:05
allocation though right it's never
01:01:07
happened well
01:01:14
no but i mean like venture's never
01:01:16
scaled up to the point that private
01:01:17
equity has until now and now that they
01:01:19
have it's very likely it's very likely
01:01:21
that you'll see andreessen be the first
01:01:23
i don't know them you know very well but
01:01:25
sacks you were gonna say something yeah
01:01:26
well i think it's a super interesting
01:01:28
point because if you talk to the
01:01:28
previous generation of vcs what they
01:01:30
will tell you is who retired right is
01:01:33
when you ask them well did you get
01:01:35
anything for your
01:01:36
partnership share in the firm not just
01:01:38
in a fund but in the firm they'll tell
01:01:40
you no they basically just gave it away
01:01:42
to the next generation of partners even
01:01:43
though they they built the firm and it's
01:01:45
because historically the belief on the
01:01:48
part of vcs was that there was there was
01:01:49
no value to vc firms other than just
01:01:53
their interest in each particular fund
01:01:56
but you're right like if they do achieve
01:01:57
a much greater level of scale and they
01:01:59
can go public then there is
01:02:02
actually value in the firm itself
01:02:04
and if you look at the terminal
01:02:06
valuation of blackstone as indexed to
01:02:07
aum you know uh once you pass a couple
01:02:10
hundred billion of aum you can trade
01:02:13
point two towards 0.1.2 times and so you
01:02:16
know if you have 50 billion of aum
01:02:18
there's 10 billion dollar market cap
01:02:20
there and if you you know if you're
01:02:21
calling jason or
01:02:23
andreessen or horowitz i mean
01:02:25
that's five billion dollars that just
01:02:27
appeared out of nowhere why would you
01:02:29
not do it right right it's a little bit
01:02:30
like goldman sachs they always said that
01:02:32
we're a partnership we're never going to
01:02:33
ipo because and then they did and then
01:02:35
they did and the and same thing did caa
01:02:38
do it too no i guess there are no what
01:02:40
happened with cna was ovitz
01:02:42
uh sold this position to go to disney so
01:02:44
there wouldn't be a conflict but he
01:02:45
could have kept it and the like
01:02:46
residuals they were getting from
01:02:48
projects they packaged were incredible
01:02:50
didn't the aria emanuel one
01:02:53
it did endeavor did endeavor
01:02:55
how are they trading i haven't even
01:02:56
looked at
01:02:57
endeavor i'm not sure but let me tell
01:02:59
you like it's actually but think about
01:03:01
if you're not like the current
01:03:03
like partner owners of the firm but
01:03:05
you're like on a partnership track there
01:03:06
and you're working your way up to
01:03:07
partner
01:03:08
like by time you get to partner it's
01:03:10
gonna be a very different economic
01:03:12
equation because instead of getting your
01:03:14
one over n share of the pie when you
01:03:16
eventually become
01:03:17
partner with n being the number of
01:03:19
partners or some version of that
01:03:21
now the company is owned by the public
01:03:23
and the public or the board of directors
01:03:25
is determining your salary and maybe you
01:03:28
get a salary and bonus and some you know
01:03:30
essentially
01:03:31
options or equity participation but
01:03:33
you're not going to be a true owner
01:03:34
anymore because you the firm is going to
01:03:36
be owned by the public wait a second
01:03:38
what if we take each of our businesses
01:03:40
put them together and then take them
01:03:42
public as all in capital
01:03:45
and then we get the best i'm good i'm
01:03:46
good i'm good
01:03:47
we got the startup studio
01:03:51
on a conference so i don't know
01:03:54
we can't agree on the decor and food
01:03:56
for our one day event in miami that's
01:03:58
because the amount of work you guys want
01:04:00
to do is slagging me in a slat in a chat
01:04:02
no what we want is someone to do the
01:04:04
work we want to hire a professional
01:04:06
i have been doing conferences for 25
01:04:09
years stop starting my no and you know
01:04:10
what's going on for tuning it you know
01:04:12
what's gonna happen you launched yammer
01:04:13
at my conference and i put the fix in
01:04:16
for you to win
01:04:17
thank you tech crunch was a beautiful
01:04:18
conference
01:04:19
but for all in summit is it just the
01:04:22
case we want people to show up and
01:04:23
there's gonna be a stage and people
01:04:25
talking on stage in this whole
01:04:26
conference or we want to create a more
01:04:27
magical experience
01:04:30
a davos or a sun valley or something
01:04:32
like we're in an agreement all right
01:04:33
everybody thanks for tuning in to
01:04:35
episode 62 of the all-in podcast we'll
01:04:38
see at the all-in summit and if you want
01:04:39
to do us a favor please go ahead and
01:04:42
subscribe and rate us on
01:04:44
apple we could really use that
01:04:47
uh and uh thanks to spotify for
01:04:50
including uh daniel shout out to thanks
01:04:52
dad
01:04:53
he included us in their video so now if
01:04:55
you're on spotify and you're listening
01:04:56
to the pod you can click a button as of
01:04:58
this week and watch the video or you can
01:04:59
watch the video on youtube yeah it was
01:05:01
nice he emailed us and uh his team and
01:05:03
then i cc'ed him on the email he's the
01:05:05
best yes i think would he be good for uh
01:05:08
what do you think about having him and
01:05:09
mr beast he's super super super here's
01:05:11
my idea for a trio him mr beast
01:05:15
and then one other person to do a media
01:05:17
trio future of media what is your what
01:05:19
is your own
01:05:20
what is your idea you don't even know
01:05:21
the third person i mean well i'm putting
01:05:23
it out there asking for a suggestion for
01:05:24
their relationship
01:05:26
you just throw this [ __ ] this is our
01:05:27
conference in presario oh my gosh well
01:05:30
those are two great guests on the stage
01:05:31
at the same time let's figure out who
01:05:33
besides j kell's gonna produce the
01:05:34
conference
01:05:45
david
01:05:48
it said we open sacks it to the fans and
01:05:51
they've just gone crazy
01:05:55
[Music]
01:06:16
it's like this like sexual tension that
01:06:17
they just need to release
01:06:23
your feet
01:06:34
oh
01:06:36
[Music]
