BG2 with Bill Gurley & Brad Gerstner | MANG VC Gone Wild, Can You Trust AI Valuations, 2024 Set Up for Public Tech Stocks, & the VC Correction Grinds On | E01

28:43Yeah. Right. There was this idea that elephants can't dance. The companies get large. They can't innovate. They can't earn a great return on capital. And so eventually they get competed away. Right. I would suggest that we actually have a new phenomenon going on in the world, which is an increasing advantage of scale. Not a decreasing advantage of scale. And why is that? Well, because if you want to train the, you know, on 600 ,000 H100s, like we just talked Zuckerberg doing with the Lama 3 model, you have to have a business that is generating the massive cash piles that he's generating in order to do that.

29:23And so I do think like you said, it's a very unique, you know, moment time. Now listen, that doesn't mean that you're there forever. You know, I'm, I've been out there saying Google's got a lot of challenges as they try to transition the search monopoly to their answer monopoly, right? I think they're wrapped around an axle in terms of, you know, kind of doing the things they need to do to catch up into compete and to protect that search monopoly. But I do think that this is a moment in time where there are those increasing advantages of scale. Listen to this figure. We expect our forecast is that Microsoft and Amazon, you know, snowflake, they'll all accelerate their growth rates this year, right?

30:08Accelerating your growth rate, you know as an old stock analyst, accelerating your growth rate at that scale is unheard of, right? And so that's kind of the take down that that we were Okay, so I took you off on that. Let's go back. You presented a lot of data, a lot of, you know, his story, you know, to here we are now. Now what does it mean? What does that mean for people going through? Yeah, I mean, listen, I think that as the, as the charts have showed, like all attack, if you look at the cues combined, they're, they certainly aren't the deal. They were at the start of 23. Like, you know, the amazing thing is that we had the lowest exposures at this start of 23, you know, investors were so nervous they weren't investing and yet things were being given away for free.

30:56And now we see some of that money coming off the sidelines out of those money market accounts into all of these names, you know, after meta has moved from 90 bucks a share to $380 a share. I still think there are great returns to be had here, but the returns are much more normalized. I think the return to target in our portfolio is 20 to 30 % whereas the start of last year bill, it was like 80%. And we saw those returns play out. So that's the big thing. The world is normalized, multiples of normalized. It's not gonna be as easy as it was at the start of 23. I wanna show one other chart because I think this is the thing that we don't talk about enough in this business.

31:39And this is long -term, long -run compounding in tech. You know how it goes with our friends. We're always talking about much more shorter -term stuff. But this chart, I had my team pull together and I said, if we look over the last 10 years, okay. What have earnings compounded at for tech versus non -tech? and what have stock prices compounded at tech versus non -tech? Is all this just a bunch of crazy people in Silicon Valley that are running up prices and multiples? Or is there a reason that tech has grown faster? And if you look at this, over the last 10 years, tech technology companies have compounded earnings at 13%.

32:24And they're stock prices have compounded at 17%. So a little bit faster than earnings have compounded. But if you look at non -tech, So if you take the S &P and you strip out all the tech companies, they've only compounded earnings at about 6 % Right, and their stock prices have grown at about 8 % So let me ask you this question Bill Technology's gone from 5 % of global GDP to 15 % over the course of last 15 years When we we have this conversation five or 10 years now is tech going to be more or less than 15 % of global GDP? I'm going to say more, but with an aspect. So your chart has left off 2009 and 1999.

33:11And if you were, the argument you're making can be used holistically at any point in time. But if your point of entry is 99, 09, or the top of the end of 2021 here, you're not in a good place. So maybe you have to, maybe what are you to call when you roll in? Does it like dollar cost average? Cost up price event price event. Contribute matters. But what I would suggest to you is it's almost certain that tech is going to be a larger portion of the global GDP in 10 to 5, 10 years because technology is becoming more important every day in every company's life, every person's life. The second thing I would tell you is that I think that technology in aggregate will continue to out earn non technology companies.

33:57right? Why because of, you know, the age of efficiency. Why because of an AI super cycle? And so if you know of what I said basically, if you're playing from home, right, I think the biggest free lunch in all of investing is the asymmetric bet over the long haul on technology companies compounding. Now the hard thing is you know, Bill, is are you able to pick the ones that do the best versus the ones that don't do great? Because we know lots of technology companies get white doubt get white doubt. So I mean, I think unless you do it for a living, you probably just buy the index and you're betting on technology out compounding.

34:35You know, for us, we, you know, we have a lot of fun trying to pick the ones that are going to be the winners versus. What are the best, I don't know if you know, but just for listeners, what are the best tech indexes? Or I know there are, I mean, listen, there are a lot of ETFs like gross software ETFs or growth with internet ETFs, you know, you can invest in the Q's. It turns out that even the SPY, which is the S &P 500 index, is very quickly becoming a tech index. And so I think a big mistake, here's an interesting one. A big mistake like that a lot of technology investors have made is nobody feels smart just investing in the big companies, right?

35:16They wanna, they wanna present to their friends the company nobody's ever heard of that turns into a 10 -bagger, a 50 -bagger, or a 100 -bagger, right? It's a much more interesting conversation to have a cocktail party, presenting that idea than it is presenting the idea for Microsoft, which is going to be a pound of 15 percent, which has led investors to be grossly under leveraged to the largest companies that have done the best and over leveraged to the rest of the technology complexion. And we just mentioned you had an unusual, I mean, I can't articulate how unusual it is for the biggest companies to be succeeding, because my entire career up until now, you know, the large companies become a laughing stock.

35:59And Microsoft had a window, pre -sought you, where it was in that place. It was considered to be like HP or DAC or IBM, right? And it was just assumed that the startups would come along and roll them, and that the big company they get stodgy and led footed and falls behind. So this is a different world range. Yeah, I agree with that. Hey, how about how about we shift gears here a second? You know, so that's public markets. Great year in 23, 24 gonna be a little more challenging. People panicked when we started the year. Mag seven was down, I don't know, 5%. Now it's up a lot, you know, and so it will see where it shakes out.

36:39But, but VC, you know, man, we've talked a lot about this, you know, where we are in this VC correction. You know, the number one question I get from founders who come in here, the number one question I get from my LPs is where are we in this correction? What stage of grief are we in, Bill? And when does it end? Well, look, for reasons that you and I have talked about a lot, I think the most differentiated element of this correction versus 09 versus 01 is the amount of capital that the companies went into the correction with, the speed at which they lowered cost afterwards. So there wasn't denial.

37:23Everyone got along pretty quickly. And therefore, the elongated window, months of cash, you know, it'll encourage a lot of our companies to track months of cash, just burn rate divided by how much you have into bank account. That was elongated. And so, things are taking long to play out because the day of reckoning has been pushed out. Now, one thing that's really wild to me, in 0 1 and 0 2, when a company went bankrupt, it was news. Every single one of them, when they shut down, there was this website called, uh, F company that literally tracked them. And the, the, the, the C, your air quotes bill, uh, that was F up company.

38:09Yeah. And the guy that ran that site actually runs a really cool company in the in the audio space that helps you post on Spotify. Anyway, we're all vilified. Like we were just taken down. Oh, you got these dumb companies that doesn't seem to be happening. You you guys stumbled on this chart. You can pull up. I think it's it's from Cardidator or something, but but the first three quarters of 2023 saw all around 180 a quarter of shutdowns. And so our run rate, let's assume the run rate's like 200, we're like 800 a year shutdown. No one's writing about it. I mean, we had convoy, like there's a few high profile ones where people wrote about for the most part.

38:56I guess with the election in Ukraine and Gaza, like there's so much going on that maybe, people just don't give a shit. but it's wild that it's happening so quietly. So that's one thing. I guess it is happening even though it's not so quiet in Silicon Valley. Like I feel for a lot of founders and frankly early stage venture capital firms, even when companies are doing well, they're really having challenges raising a follow on round of capital. Yeah, and if you look at this other chart, you know, of Series A and Series B type funding its way down and that's where you take out the credit funding we were talking about and get that out of the mix.

39:43And so yeah, it's tough. You know, I have discussed this many times but I think the number one thing a founder can do is to as quickly as possible get in touch with what your real actual evaluation is. And then ask yourself, But what do I need to do structurally to give this company a fighting chance knowing that that's reality? And I think a lot of people live in a reality discussion. This to me is something that I'm deeply passionate about because I think, you know, it's a unique moment in time right now where I think because of what happened in Zirtville, founder friendly, this term founder friendly, it kind of was like just telling the founder what they wanted to hear.

40:38Whereas, you know, maybe pull up this tweet from Jam and Ball my team last week and I'll just read you what, you know, he said, you know, lots of talk about getting fit, but too few boards and founders are having honest conversations. you know, I've always preached to the team here, founder, friendlies doing the right thing and being truthful with founders, you know, like the letter to Metta on time to get fit, saying up front what's too often discussed outside the boardroom and behind their backs, even if it means making hard decisions like layoffs selling, shutting down, down rounds, et cetera.

41:17And so I, you know, I look at the situation today, frankly, I don't know whether it's because venture or capitalist are a lot younger, a lot of people just moved into the system. They haven't seen a drawdown before, whether they're on too many boards and spread too thin, so they just can't handle the deluge of conversation, but my biggest concern is that boards haven't even been having the tough conversations, right? We certainly have the examples like you pointed out. I, you know, and, and, you know, take something like clarna. And I think Sequoia deserves some credit here. If you look at Clarna or you look at what happened in Instacart, I mean, Clarna's 2021 round, right?

41:5946 billion dollars led by Softbank, Sequoia, Dragoneer, Silver Lake in that round. 46 billion. They do around in 22 at 6 .7 billion, right? Sequoia and Silver Lake. That to me is a great set of people around a board table having an honest conversation with the founder and and getting the business reset. You cannot, it's not good for the employees, it's not good for the company, it's not good for the investors. If you're living in delusion when it comes to your, to your cap table and to your evaluation. So I think we're starting to see more momentum of this. I certainly know in our portfolio, we're pushing really hard on every board that we're on, on having those conversations, getting liquid, if you don't have a model that you feel comfortable with to get back to that valuation.

42:52You can sell the business, but you got to sell, restructure, or take the business public. I mean, those are the doors. Yeah, people get overly focused on this last round valuation thing. Like, it is, I can't tell you how many founders I've had a conversation with where it's clear. The number one objective in their function about the next financing is to clear the bar of the last round. And it just shouldn't matter that much. especially after we just went over the waterfall that we did, like you got to just get that out of your head. It's so stupid. You've created an artificial constraint that's just not that big a deal at the end of the day.

43:32I used to have this chart, I wish I had prepared it, but of the logos of the public companies that traded below their offering price. And it's some of the best companies in the world. It includes Amazon and Salesforce. And a whole bunch of great companies. And yet if you go to IPO and you're arguing over price they'll say the one thing you can't possibly let happen is you trade below your offering price even though some of the greatest companies in the world did it and so I think that's a similar kind of silly constraint that people throughout there. I would say this about your initial comment.

44:08Some of the board members are just too young. They have never lived through it. They don't know. They were trained in the last 10 years. They've only seen up. Some of them are naive, which means they haven't studied economics and finance to the extent that they should. I might point them to one of my favorite blog posts, the keys to the 10X revenue club because Silicon Valley mostly lives on price -to -revenue multiples. Like, it is the conversation to your in Silicon Valley and it's one of the most naive ways you could value a financial asset in the world. And so people just need to sharpen their pencils to assert.

44:51Yeah, I mean, like just a couple of comments there. I mean, you know, you and I both know we talked about it even at the top. price to revenues. So you see this all the time in software. It's just a shorthand for investors to get to discounted free cash flow. But here's the problem. Because I live in the public markets, we do DCFs all the time. But how many people in Silicon Valley even build a model on the company, right? Like there's just not a lot of that that goes on. If you're doing seed in series A, that's not what this is is predicated on either. But when you're investing in a business at over a billion dollar valuation, you sure as the hell better be building a model and understanding what the exit value is going to be based upon a normalized multiple into the public markets.

45:40And so I think way too little of that was going on. We're seeing these corrections, you know, beginning to occur. But if I go back to my first question I had for you on this topic, bill. I went back and I saw a talk you did in 2012 and somebody said, oh 2008 wasn't so bad, we've bounced right back, et cetera. And you said, you know, listen, 2008 wasn't so, 2008, 2009 wasn't so bad because the bubble never got that big. And here's the interesting thing about what you said. You said, I don't know if we'll ever see a bubble again like we saw in 1999. 1999. So was the Zurb was the Zurb bubble as big as the bubble we saw in 1999 and will it take us the same four or five years that it took in 1999 for the world to work through that entire backlog?

46:36Well, it was wildly different in the terms of one thing which is the amount of capital being thrown around. And so the companies, you know, in 99, a huge round was 20, 30 million dollars. And so we went well past that with billion dollar rounds and whatnot. And so from that standpoint, I think you could argue maybe the price height of the bubble may have been similar or maybe even lower because then we were giving companies with no revenue huge prices. But the capital intensity of the bubble with, I would say is a more important metric. It was bigger, it was bigger. And how long will it take? I don't know.

47:16I mean, I'd love to see companies start going public again. You and I have talked about this. I don't think the windows close. Like, you may not like the valuation. Like, you got to decide, you may be afraid to be public. You know, you may have had someone tell you it's too hard. Like, all those things, but it's not close. Like, it's just a matter of price. and it just takes a while for everyone to get busy, getting busy after you've come through. For sure, I may even take it a step further bill. There is a voracious, voracious appetite for IPOs. You know, normally we have over 100 tech IPOs a year.

47:53And we've basically gone two years with no tech IPOs. We only had three, whatever. Like, like, you had a handful, but I'll tell you this. Yeah. Most of the folks who are on the buy side, right? So think about whether you're a long, only fund, a capital group or T -Roh or whether you're altimeter or co -2 or tiger, et cetera, right? If all you're buying is Mag 7, you're feeling a little bit uncomfortable. You're looking for new ideas all the time, right? And so I think the only thing holding us back is to find high quality companies that are going to the public markets and accepting the valuations of the public markets, right, which is the market clearing price.

48:36I think you're going to see the damn really break on this this year, particularly in the back half of this year. And the reason is because people got to raise capital, right? And I just think they're coming to grips with it. And I thought we would see some IPOs that were either related to recapping or raising capital. right? You know, and there were sometimes, sometimes what you need first is the derivative instrument that then makes you realize, oh shit, I really got to get public and convert everyone to comment. That happened to square actually. They had done a they had done a time bomb derivative thing that didn't make made you go public.

49:13And so maybe maybe that maybe we got to have those first and then and then we'll have more. But I would have thought you'd seen more. I think a lot of people also have this silly argument that we gotta wait for someone big to go first. And I actually think we'll probably see someone, a smaller company with a courageous founder step through the window. Like I don't think, we don't have to wait around for a stripe. That's kind of a silly notion. You know, you asked a question earlier that I just wanted to touch on, I just remembered, which was why is it taking longer for founders maybe to come around to the valuation adjustment.

49:51Right? I think one of the reasons is that with all the secondary liquidity that occurred this time around, right? You know the hardest thing is if you ever anchor your net worth, if you ever look at OIO and 20 % of this company, it's valued at $10 billion. So therefore, I'm worth $2 billion. Okay? And if you set that anchor in and worse yet, if you start living your life that way, right? And then all the sudden, you know, you have this re dramatic reset down 80 % and you're like, oh, I'm not worth two billion dollars. Instead my company, somebody says your company's really worth a billion or two billion dollars.

50:28All the sudden, like go back to the stages of grief, what's that stage denial? And then anger, right? I think it's, I think it's close to what I finally see happening this year. I think 2024 in terms of the stages of grief is the year of acceptance, right? I think people are just going to have to get liquid. They're going to accept the prices that they have to accept because frankly, there are no more soft banks to bail them out, right? And the public market's not going to overpay because the public market knows what the clearing price is. And so that I think gets founders to the stage of acceptance, but I think we probably have another quarter or two to get there.

51:09I think we beat that one to death. By the way, Matt, I'll say something. Well, you maybe think of something that I will share maybe on behalf of all venture capitalists and maybe to make everyone's lives easier. One of the easy defaults you go to in the middle is, oh, I'll just go to my insiders and ask for a bridge. And I will tell you at least all the data I've seen, the success stories coming off of bridge or our feud and none. That's why we always refer to him as peers rather than branches. As it walking off the end of a peer. Yeah, yeah. Like it was in, it doesn't get you to the other side.

51:49It just takes you out into the water. You're much better off like talking through a recap with investors than you are doing. You're just piling delay upon delay. You know, you're just setting yourself up for more failure. It reminds me of a related subject, Bill. You know, I remember at the start of last year, we were talking about who were the companies that were gonna follow Facebook in terms down the path of layoffs and getting fit. And, you know, there was somebody produced an article and they said, you know, once we started to see a trickle of companies, they all magically, you know, they hired some consultants and they said, how many people should we lay off?

52:30And they all magically came up with like 13 or 14 % And we're like, why 13 or 14? And they said, well, it's bigger than 10. And it's not as hard as 20, okay? And I think that this is the other piece of evidence we have here that people just didn't get the drill. We always say, do it all up front, get it over with, and get on to rebuilding your business with unit economics that makes sense. But unfortunately, if you just look at the number of layoffs being announced, I think we now are up to 40 or 50 big companies, you know, I mean, just recently, Wayfar and eBay and go through the list. But these were all decisions that could have been made at the beginning of 22.

53:13I'm wondering why or at the beginning of 23, it's shocking to me that we're we're in the first quarter of 24. Okay. This correction started more than two years ago. Right. Why are people just now getting to the conclusion that they should be getting fit. There's a wish, there's a lot of wishful thinking and quite frankly, let's let's paint it in a very different light. Startups aren't created by pessimists. They're created by blind optimists, right? And so you're you're you're most likely mindset if you're the type of founder who who runs at walls is that you you're going to figure it out. It'll be better.

53:58I'll make it work. I'll get back to where we were. Like that's how you program to be. Yeah. So I'll tell you the story. The story of Elon is, you know, always up into the right. People need to celebrate the stories about Elon's survival and Elon not hiring people and Elon, you know, making it through the near death experiences of 2008. What he did at Twitter laying off 75 % of people, you know, I saw somebody tweet the other day, Bill. They said, I guess Twitter isn't gonna fall over, right? I mean, the platform is as vibrant and the product development cycle is vibrant as it's ever been. Why don't we maybe wanna jump on to topic four?

54:45Sure. So, I think through our discussion, We'll get back to why this relates to VC and tech, but a lot of people were, found it quite interesting, let's say, the new leader of Argentina's speech at the world economic forum, Miele. And we'll put a link in, but I'm sure most everyone's seen it by now. Obviously, very different from all the other talks that are there, but why was it meaningful to you? Well, you know, the first thing I did when I listened to the speech, and it's something I've thought about a lot, was, you know, here, here, me, Leis and economist, when's the last time you heard a politician give a major address?

55:35And he starts it off by talking about the empirical evidence and starts quoting data. So I was just, my first question was like, I want to see this data. So I had one of my analysts go back and pull the data, which was the underlying support data that maybe we can bring up and What this data shows so this is the years it takes to double global GDP per capita Now first maybe we should just start off by saying why should we care about this? right so GDP really is the excess the progress the prosperity that's created by a fixed amount of labor and capital in the world. We have a fixed number of human beings.

56:18They can only work so many hours a day and we have a fixed amount of capital in the world. And what are all the things and services that we can produce with that? And that is the global GDP. Well, what he noted in this chart shows that basically from year zero to the year 1800, We had almost zero GDP globally and we had very little prosperity. We had very little excess. One might think of it in a very primitive way, even before the year zero, that we were 100 gatherers and we basically lived a subsistence life. In that case, he said, takes you 3 ,500 years for global GDP to double. Then something crazy happens around the year 1800.

57:05Remember, Adam Smith's wealth of nation about free market capitalism published in like 1775, 1780. And so we have free market capitalism, market democracies introduced into the world about that point in time. And just coincidentally, we start seeing an acceleration in the rate of global GDP growth. So the period 1820 to 1900, it only takes 87 years to double GDP. and then 1900 to 1950, only 60 years. And by the time you get to the year 2000, we're doubling global GDP every 20 to 30 years, okay? Which results in this chart, you know, the next chart, which is, this is just, like such a shocking hockey stick chart to look at, okay?

57:56So this is the increase in global GDP, okay? over the course of the last 2 ,000 years, right? You almost have none and then it starts going up a hockey stick. And then we said, let's forecast it forward for the next 100 years. And if we forecast it forward and we just assume, right, that we have the same rate of GDP being added every year that we have this year. So we're not assuming any acceleration from AI, no systems getting better. you know, you just see the advancements caused by this. And Mealay was of course arguing that this was the result of free markets and competition. Yep, no doubt.

58:42So Bill, you know, I think if we look at this, one of my questions for you, you know, gets back to this, why should we care so much about these empirical facts and this speech? And what are the risks to this? So I would highly encourage listeners to read two books. The first one is The Rational Optimist by Matt Ridley. And the second one is How Innovation Works, also by Matt Ridley. And they should be read in that order. There are almost ones almost a sequel of The First One. But in The Rational Optimist, you know, Matt talks about the underlying mechanisms that lead to the data you just shared and what Melee was talking about.

59:29And he sums it up in around two functions. One is ideas being exchanged. He calls it ideas having sex. I'll give you an example. If you know, we can go back to early agriculture. If I learn how to plow and put seeds in the ground and I go to a town to trade, I can tell someone else how to do it. I can show them how. And now they can go and do it on their own. And that exchange of idea was free, but it had a magnificent lift to prosperity. It's ironic, because when I wrote down that I wanted to use that example, the thing that immediately popped in my mind was in the AI world, the deep mind paper about the attention window, attention is all you can need.

1:00:19This concept was done inside a Google as an open source concept, immediately copied by all the other players. So OpenAI doesn't exist today if that's patented in control. It just doesn't, which is another irony around this open source argument because they've been at Fred and from massively from a major. But the idea being sheer, and this is also why I'm such a massive open source because I think it's so relevant to prosperity for the masses. If ideas can be shared, there's zero cost, but infinite lift. And then the second part of it in Ridley's book is commerce. For all the reasons Adam Smith talked about, it's just a way to allocate resources.

1:01:02And so if you get both of those things humming, you get massive success. It's super interesting if you look at the history of China because they've opened up and closed multiple times. So they used to be like a third of world GDP and then they closed their borders and quit training and they went down like way into the low like 200s or something and then of course, you know By the way, I want let me share something on my screen if I can I'm gonna try Yeah, right here. So this is my favorite test of AI bot I asked the very simple question What single human being has brought the most humans out of poverty and And chat GPT got it right, of course.

1:01:45Ding Jaoping, who brought capitalism to China and brought 500 million, 500 million people out of poverty. No other human being, not the most, not Mother Teresa, not like no Altsawist, no Socialist, has come anywhere close to this number that was done merely by unleashing the human potential So it was latent inside of China by allowing for ideas sharing and commerce to have this massive impact. And I even think there's an argument in the past, let's say three or four years that by stopping commerce or at least restricting it a bit and stopping trade has led to at least the shakiness within the Chinese economy, which may have led to what happened.

1:02:39And so I guess it was in Silicon Valley in that meeting and like, hey, maybe we need to get this thing back on tracks. Because of that, like you asked what could harm it, one of my favorite thinkers and professors is a gentleman named Ricardo Hausman at the Kennedy School. He's been in his way, and he was giving a presentation once about what went wrong in in Venezuela and he said they attacked the invisible hand. And I love that phrase. I attacked the invisible hand. Yeah. And so these people, and I'm sure they're well -meaning, but that view capitalism as the cause of poverty or negative prosperity.

1:03:21When the data all says it's the opposite, it's actually the thing that brings people out of prosperity. That appears to be the way you get yourself in trouble. Yeah, I think you met out of poverty and into prosperity, out of poverty and into prosperity. And that seems to me, I think the reason that this speech in particular at Davos, right? Because there's this phenomenon that's been criticized there for years, that there's a move toward perhaps collectivism that we need to move away from free markets. And I think people set up this false dichotomy. like that people are absolutist on free markets and they don't think that there should be any regulation, no government's kind of anarchist view, or that you should have this very, you know, collective as organization.

1:04:09It seems to me like the United States has constantly been search of a balance between embracing its DNA of free market capitalism while at the same time putting in basic protections for the least fortunate among us, for those who can't take care of themselves, for the people who don't benefit equally in society. But I think what we've seen is over the last few years, some concerns among the two of us included that the pendulum swung too far, that there was a lot of anti -capitalist, anti -free markets, almost anti -democratic fervor, that somehow it was unfair, it wasn't equitable you know, to all participants.

1:04:54Go ahead. Go ahead. I would just say the social safety net is funded by the progress that's created from capitalism and tack and growth and all the things that we talked about. And if you eliminate the latter, there is no money for the former, at least in the long run. Well, that's exactly what, you know, you know, I think Miele's argument is. And perhaps bringing this bill full circle back to Silicon Valley, back to tech investing. You know, people, you know, I have family members and others, they say you've done well. Like why are you still doing this? You know, like, and it may sound a little cheesy, but I say, like, the very nature of what we do, I think, is a public good, right?

1:05:39And I think about it in this way, like human progress. And I'm not just talking, I'm not just talking venture capitalist, like, in fact, less about venture cap was, I'm talking about risk takers. I'm talking about founders. I'm talking about like the engines of the innovative system. In fact, you know, the rule of law around bankruptcy was a pretty novel concept in this country. But we wanted to make a deal. We were basically saying if you're going to be the risk taker, if you're going to want put your neck on the line to move our country forward, if it doesn't work out, we want to give you some protection so it doesn't ruin in the rest of your life, because we were trying to create a system of incentives for people to take that risk.

1:06:22And so when I look at, you know, what we, where we are today, one of the things that you saw in the empirical facts is the accelerating rate of capitalism, right? And it seems to me part of the reason for that acceleration is that systems compound upon systems. These are non -linear, right? And so, you know, mobile compounded a lot faster because of the internet, because, you know, of micro computers, you know, the cloud because of mobile and the internet, AI, all those things were preconditions to AI, right? You just maybe think of something that, like, if you look at what things are being did in China and how quickly, and you've been over there and met with the founders, I mean, and you've seen comments from Maritz and others just like like at the least they're equally good and arguably in some way, you know, some dimensions that are certainly harder working like from the cultural standpoint.

1:07:29And that happened pretty damn fast, right? That, you know, we used to say there was only Silicon Valley, like there's no other place like it. And then China very quickly mimicked it, very quickly in the span of time. And And it makes me wonder if you had, like for say inside of Russia, the type of embrace of capitalism and free trade that you did under Ding -Jong Ping, you might see the same damn thing. People are certainly smart enough. You know, I think you're spot on, you know, I was having a conversation on Sunday with Mike Milken, and he's starting the center for the American Dream. And Mike is very, very concerned about move away from, you know, just free market capitalist democracy.

1:08:14And he said to me something that struck me, he said, Brad, when I travel the world, it dawns on me. That Vietnam, everybody there wants to be an entrepreneur. Everybody there is running hard after after capitalism. And then, at least we see the same thing occurring. And he's like, I just want to make sure that we continue to underscore in this country. that it is the thing that caused us to be at the top of the heap. It is what led to the progress, and we need to protect that, because like you said, you can't take it for granted. And that's certainly, that's even more true if you look at the last 20 years.

1:08:52Like American industrialism could have arguably been a post -World War II thing. You know, with all the factories that were blown out, but if you look at just the companies that lead our market caps today, They're all venture back and they're all started within the past 30 or 40 years and most of them started by immigrants Most of them started by people who didn't start with a lot like the amount of economic mobility that we have in this country You know, and so you know, I would I would say that was a hell of a conversation I've enjoyed it like I always do been doing these things for a long time But why don't we leave it there?

1:09:31It's a good note to end on that was a lot of fun and until next time BG2 is out. Take care. Bye bye. Take care.