Big VC Firm Shows Where Economy Is At (and How This Will Affect Your Growth Big Time)

0:00All right. So a big VC firm shows where the economy is currently at right now and how this is going to affect your growth big time in the world of marketing and business. So I'm going to reveal some slides over here. This is from Code 2. And they did a summit called East Meets West. So basically like Asia meeting kind of the West. And they did a summit. And I wanted to share some slides over here. Niels, I'm pretty sure you haven't seen this. Maybe you have. But I'm pretty sure you're going to read this after when I link you after we're done recording today. So there's a bunch of slides here. And you can see my screen, yes?

0:31Yeah. But I can see your screen. Is it bigger now? Not for me, but it could just be because we're on Riverside. Oh, you know what? Here, let me do this real quick. Let's do this. Okay, here we go. All right, you see this? Yeah. Okay, cool. So you can see what's going on in the economy right now. Where my cursor is, the green is showing the Magnificent Seven. This is Microsoft, NVIDIA, Google, Apple, Meta, Amazon, and Tesla. So people are like, oh my God, the economy is up. the S &P is up 20 % this year. You know who's really lifting it up? It's these seven companies. The rest, the 493 other ones.

1:10Yeah, but a lot of us know that, right? Apple has really crushed it this year. Google has. Meta has done extremely well. NVIDIA because of the AI boom has done well. But yeah, and you can continue reading and didn't make it cut you off. But that's where most people get it wrong. It's not the economy is booming. It's a handful of companies. And it's actually more than just those seven that have been growing. but those seven are really big outliers. Their market caps are massive, but you're also seeing some smaller companies grow, but the majority of companies aren't growing at that scale or pace or anything like that.

1:43Anyway, so my point was, my point was actually for this slide over here. So you can see this right now where my cursor is. Yeah. So I'm going to pull it to the top over here. So new market regime. So end of free money is indeed over. So you can see on the left side over here, if you're not watching this. So basically there's a left column that says yesterday, so maybe the last 10 years or so prior to 2022, was a lot of the era of free money, right? And so the rules of the game previously were there's free money, you can get loans for relatively cheap, and there's abundance of growth, right? We're talking about huge valuations for companies, right?

2:17Capital drives growth, growth at all costs. Now, in today's reality, the rules have changed where it's a 5 % risk-free rate, okay? So that means that you can go put your money into treasuries or something like that and earn 5 % on your money. Previously, you had to put your money into growth stocks because that's just how it worked and potential for lower growth now. And then now you're seeing rational valuations, innovation and execution drive growth, and profitable growth. And so this is what I wanted to talk about for this podcast. It's like the regime has changed and you also have to adjust your marketing accordingly or else your growth is going to suffer.

2:50Any thoughts on this to start? No. Okay. So then I have, there's another piece over here on hiring, needing to hire badasses, right? I forgot where it actually is. But what are your initial reactions as I pull up that slide? Yeah, you build big companies not off of one person, you build it off the team. If your team sucks, you're screwed. You need really amazing people, especially at the top. Because if you have amazing people at the top, they'll want to work with other amazing people. And they'll just create layers and layers of great people throughout the organization versus mediocre people who are just expensive and the output's not that great.

3:32Check this out. So this is what I wanted to get to over here. Okay. So I'm not going to try to read everything, but if you can see it on YouTube, this is why you got to subscribe to us on YouTube guys. So what does this mean for founders and really anybody on the executive team? Right? So really before, like prior to 2021, again, we talked about the free money, you know, the key player in the company that you might want to hire is like a head of growth. Everyone was asking me, Eric, we need a head of growth. We need a VP of growth. I'm sure Neil was getting the same questions too, right? We just need a marketing badass.

3:59Prior to 2021, it's like, you got to invest in every moonshot project, right? Actually, even in 2021. And then hiring, can't hire fast enough. Neil and I have seen the pain, right? You can't hire the people that you want to hire. Otherwise they ask for like four times what they're worth, right? And then any unicorn can IPO. And now then the crash happened in 2022. and so zero funding, closed IPO markets, hiring freeze and layoffs, and then cut all costs and make payroll. And the key player in this situation was the CFO. And the key focus when the crash happens was efficiency, prior to that was growth.

4:29And then now in today's environment, now it's kind of a combination, right? So you're looking for both efficiency and scale. You wanna read this part? No, I can't read it, it's too small for me. Okay, Tim, hey, I was gonna make a joke. Companies always want growth. That doesn't change in a good market or a bad market. But in a bad market, they want growth with efficiency. In a good market, they do prefer growth with efficiency. But they just want to ride the train and they'll take growth at all costs. Although I think that's going to start changing. And people are really learning that you can't just have growth at all costs.

5:04And those days may be over, even going forward once things start booming again. We'll work towards wrapping on this one. So there's a column that says today here, right? So you had the bubble, you had the crash, and now you have today. So efficiency and scale is the key focus for today. Now, fundraising option is fundraising is available for offensive deals, meaning that companies that are doing well, that are growing efficiently, right? That's what people are interested in. You need scale now for IPOs, kind of the same thing. And then the hiring now, the hiring market is the labor market is a little looser, but you're only looking to draft MVPs, which means that you're only looking to hire the A players at the end of the day, all right?

5:39And then invest in high ROIC projects, meaning high return on invested capital projects. Okay, so efficiency again. And then the key players now that you're looking for is a chief of strategy, head of M &A and biz dev, right? So you're looking for people that maybe help you prepare not just strategy internally, but also prepare to buy stuff for the cheap, right? And how to win and earn path to liquidity, efficiency, scale, and growth. It's right in the middle. It's a nice Venn diagram. him. Dude, funny enough, we just hired, I think maybe a month or two ago, head MNA. He came from Dentsu and he was head of Americas for MNA.

6:16There you go. Pennies on the dollar right now. You're preparing as well. Yeah. Yeah. So look, anything else to say from your side? Otherwise, I have a story to share before we go. No, share the story. Okay. So I have a friend. And so he, like in the last two years, he was texting me the other day and he moved to Newport beach and, you know, he had a baby and he's like, yeah, you know, all I was doing during the pandemic was I was playing call of duty every day and I was collecting my$2 million a year paycheck. And you look like you need to sneeze. $2 million a year. Yeah. He's like, yeah. Cause I hired the president.

6:50I hired a CEO, whatever. Right. And then not from call of duty. I thought you were saying he was getting paid. No, no, no, no, no, no, no, no, no, no. So he's just messing around. My point is like he stepped out, right? So my point is like we were making all these hires. We were investing in all these moonshot projects, you know, myself included, right? Making all these moves. And then what happened was for him was he had a president and a CEO. And I was like, what happened to them? He's like, I just had to sack them. I'm like, so what's going on now? He's like, I'm back in the business, right?

7:14And the trend that I'm seeing now, I was looking at LinkedIn this week, the friends that we know, a lot of people are back in the business. They're cutting a bunch of costs. It's only hiring eight players. And it's just a back to this whole efficiency and scale thing. Yeah. A lot of businesses are doing it. Even the profitable ones are doing it. Why not be more efficient, more profitable, and then you can reallocate your money and figure out better ways to grow. Yep. By the way, so I highly recommend everyone reads this. Code 2, they invest in a lot of amazing companies. And this is kind of my, you know, Kara Swisher used to always do a report every year.

7:47Maybe not Kara Swisher. There's someone that put like a state of, not Kara Swisher. Yeah, I know who you're talking about. tech, right? Yeah. She was with Kleiner Perkins and then she created her. Oh, Mary. Mary Meeker bond report. Mary, there you go. Bond was her fun name or something like that. But I forgot what the report's called. Maybe bond report now. Yeah. She doesn't do them anymore, but I think this is a nice like sub this year here. I'm going to share this thing before we get out of here. And then I know this episode was a little longer, but let us know in the comments if you actually enjoyed this type of episode, because I like sharing this stuff.

8:17So leading founders pivoted hard. So key quotes here. We've cut about 80 % of Twitter staff. So that's Elon. And so founder learnings is Twitter can operate without any employees. And then you have meta over here. Key quote from Mark Zuckerberg was flatter is faster, leaner is better. Founder learnings, fewer people enable better and faster execution. And you have Toby from Shopify. He said, the most important thing is to keep the most important thing, the most important thing. Founder learnings is a strong core is better than a broad scope. So take this for what it is. It applies to both business and marketing.

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