20VC: Why the IPO Market is not Closed | Why Revenue Multiples are BS and Founders Need to Change | Advice From Jack Ma, Jamie Dimon and Evan Spiegel | Lessons from Taking Snap & Alibaba Public with Imran Khan

24:31So the valuation that Google offered and remind me I think was reported number 23 billion. 23 billion. So they have to do 1 .21 .3 billion dollar revenue to achieve and have to maintain the growth rate, to achieve that snapshot value. But that's not a sustainable value because something always happened, ultimately SaaS businesses trade seven times revenue multiple. But they would have been there in 18s, 24 months. The thing is that once you go public, your growth rate gonna slow, it's in multiple gonna compress, and along the road you're gonna take dilutions, because when you're growing that fast, you end up raising more money.

25:04Listen, when you're growing really fat, Jack Ma used to say and actually said that when their babies cats and tiger look same, but a cat never become a tiger. So when a business is very small, it's very easy to look at the business saying that hey, this could be a great business. And in a way, very much could be, I don't know. But the reality is, how many times we have seen that every 50 companies we look at that's growing and we think that will become a tiger, only five of them become. So if you have to play the probability game, there is a high degree of probability that may not be the right decision.

25:35That's probably my favorite quote that we've had on a show. By the way, that is fantastic. I love that. I want to go to the pricing of the IPO because we've had Bill early on the show a couple of times before and he's spoken quite strongly about how we leave too much on the table with the pricing of the IPO's and actually the pop shows that actually employees and early investors didn't optimize and actually left money on the table. How do you think about pricing below to leave room for a pop versus pricing to perfection to make sure full value extraction for the early investors and early employees.

26:06I have great respect for Bill Gurley. He's a very, very smart guy. But this one thing I don't agree with him. I think he is over -focused on one day stock pricing. Now listen, if the stock doubles, that's obviously bad. But between 20 % and 50 % and just over -focusing on that, I think it's misguided. And I'll tell you why. So number one, my guiding principle is whenever you bring a new investors. You want them to make money. You never do create a situation that they come in and they lose money because you're building new relationships. I think any times you're trying to build a new relationship, my philosophies, give them more because it's a start of a relationship.

26:47So when you're going to a public market, you are building a new relationship with a new group of investors who doesn't really know you that well and they're getting to know you. Fine, you give them a little bit more off -site. So be it because you're building goodwill because one day, you know, as in your public life, you're going to have a bad day and you want that build that goodwill. So that's how relationship builds and that's the way I think about life in general. Don't be over -transsectional. The second reason is, the reason I call it misguided, I think people don't necessarily understand how public market necessarily, I'm not saying about billgale, but people who get over -focus on it, is that when a company go public, they sell a very small percentage of the company.

27:26So even with the pop whatever the money left on a grand scheme of thing percentage of dilution is pretty low The other thing is that when a company go public because they sell a small percentage of the company Most investors cannot buy their full position So let's say you are fidelity and a company is going public and you are doing a 200 million dollar IPO Fidelity will get let's say 1515 15 % of the allocation. That's gonna be a very high allocation That's a 30 million dollar the amount of money that the fidelity PM manage That's not a lot of stock. So they need to buy the stock aftermarket to build their position.

28:00And so if the stock is, if you give them a discount, they can pay up more so that they can dollar -weight an average their price. If they're buying the stock at the price that it doesn't go up, only goes up 10%. They can dollar -weight an average. So they will not go buy the stock. So you're going to have a supply belt that demand imbalance. They will probably sell the stock and actually your stock going to cradle and that's going to create more problem for your company than living some money off the table. Can I ask a stupid question, but I think this shows for thrived because I ask questions that people don't know, but maybe too afraid to admit they don't know.

28:32How does the process actually work? So say I am the founder of Wiz and I want to go public in 24 months. I say I want to go public and I go and see a load of big institutions. How does that buy book building work and who sets the price and just take me through that? At the end of the day, the entire capital market in the United States and globally probably, but in the United States was built on trust. People give you money when they trust you. When they give you money, they give you their trust. No matter what you disclose, they don't know everything about your business. They don't understand every risk about your business.

29:03At the end of the day, they read all the documents. They believe that you disclose everything and they trust you. That's why they're giving you capital. And that's why when the trust breaks, Jamie Dimon, in 2007, when I became Jeffy Morgan, managing director, he said that those are the time the financial crisis was happening. The two bear stern hedge fund went bankrupt. You know, and I was a young MD. I didn't really understand the consequences of that two hedge fund going bankrupt that ultimately figured a lot of different things. And he said something very good. It takes 100 years to build a trust, but one year, one day to destroy all the trust that you built and stays with me.

29:38So the reality is, you know, if you think you're going to go public, you should go build a relationship, tell your story, show your performance over the years. I said that I did that that will stress and that's a good business practice. But that has little to do with IPO. The IPO processes you go through this two you file a document people rated and then you go through these two weeks grueling roadshow you do 60 meetings. After those meetings people read your prospectus they may or may not know you from past. They do their own analyst called market research and then they put indication that they want to buy the stock.

30:12And if IPO is good, usually 90 % of the meetings that you have one in one and a good IPO will convert into an order. 90 % 90 % a good IPO. If it's less than 50, it's going to be hard to do an IPO. What was sort of percent, was Ali Baba, what was sort of percent, was snap. Both were pretty close to 90%. Wow. Yeah, they're very high. Have you had one that was incredibly low? Yeah, as in my banker career, yes. And we had to pull the IPO. And that happens. And it happened because the business is bad, or it happens because the market is bad. And then they set the price with that bid. So the way the pricing works, there's three different IPOs.

30:46Traditional IPO, auction IPO that Google did, and I think somebody else did, and then direct listing that few companies did. But let's talk about traditional IPO because that's the vast majority of it. So once you file it based on the comps, based on some of the public feedback that you hear, the company with the partnership with the banks set the price range. And then you go to the road trail And then based on the demand, either you hopefully raise the price range, because the price range going down, that's a bad thing. So you start with the price that you have a 98 % conviction that you can price it at that range.

31:19And then you go off from there. And that depends on the demand and the feedback you get from the investors. And basically you ask them, what is their price target on that company is? Sometimes they share a price target that's way too high. Sometimes they share a price target that's way too low, depending on who has the power. But that's how you come up with a price target based on the demand you see in the market. If the book is 10 times covered by high quality investors, 10 times covered midlets, they were selling 100 shares. There's a thousand shares demand high quality investors. You know that you can potentially raise the price.

31:51But you have to look at the what is the price target of this company could be at least a year to midterm and at what price people will continue to buy. So if you set the price at a too high nobody's gonna buy the stock and then all these people who bought the stock They will sell the stock. I remember when InstaCart IPO'd people said actually the distribution of the buy book Showed that it wasn't an Indomand IPO. There wasn't a concentration of one or two great names with larger Concentrated positions and that distribute distribution across several names Suggested that it wasn't a hot Indomand IPO.

32:26Is that a true characteristic? Is concentration a characteristic of quality. Yes, because the thing is that the concentration comes from if you give fidelity a million dollar allocation, they will dump the stock. They might disagree with that, but you know, a million dollar, you know, ultimately, if you have to think about it, if you're a portfolio manager, you're owning 30 names, 40 names, 15 names, 16 names, whatever the number is, right? And you are managing a lot of money. So if you give them a small, very, very small allocation, it doesn't move the needle. So then either they have to buy more, So that it moves the needle or you have to sell it out because there's so many names you can track and so many names You don't want to own bunch of names that then you're buying running an index month, right?

33:08But if you're really an active portfolio managers and you're trying to generate return you have to Size them and you have to have an understanding. Okay, is this talk is gonna go X amount and it will generate XM Y amount of return for my fund They have to get a certain amount of size for them to care about that position so that they can add more and that's why the pricing mechanism comes into the play. I'm so enjoying this. So we said about the M &A versus the IPO optionality in terms of liquidity. The thing that people forget is the lock -up period. And there's different lengths of lock -up period.

33:41Right. What determines the different length of lock -up period? So the standard lock -up is 100 -odd. And the reason they do that, they want to manage the oversupply in the market. That can also protect the banks that, say, instead of know something, you want the market to season out, right? If the company reports two quarter numbers that helps educate the market and things like that, a lot of the VCs, you know, I never like it, but a lot of the VCs push hard to short a lock up. Hey, the stock goes up a lot and stays up for a certain period of time, then we can sell. But I think that's the, if I were an operator or a banker, I would push back strongly against it because it sends a very bad message to the investors because we're basically saying that you think the stock going to go up in a shorter term and if not going to stay there and that's where you're existing investors want to get out What's the rush?

34:32My question is and I often think about this is we've seen a lot of Investors believe that because of the information they have from the company historically of last 10 years being private They have asymmetric information and can manage that position much better in public markets than maybe their LPs Can who don't have that information? I hear that and I understand that logic But I also think they've understood that company in a environment which is private and in public markets where you have activist investors, where you have shorts, where you have a huge additional amount of variance, which make it a very different environment.

35:01You do not actually have asymmetric information because of the changing landscape. Which site do you sit on? I think they're both right, depending on your duration, because they do have, you know, if you have a management company that you have 10 years of history and you understand how their ability to execute in difficult environment, if you have that understanding, their ability to pivot. But great founders are very good at pivoting. If you think about it, all the great business where they started and where they became is very different business. Google started as an enterprise search business.

35:31Netflix started as selling DVDs online, not even rental. Amazon started as a bookstore business. So now look at all these businesses where they generate most of their money. It's completely different businesses. So I think the great founders are great at pivoting. And so the risk with the business is any businesses, is not either, obviously you have a near term risk which everybody knows. the asymmetric understanding about the business that helps you to create long -term return. That is, you cannot quantify financially is that a group of people's their ability to navigate difficult environment.

36:03And that's very powerful, but that's not going to pay any dividends in the short term. So I think Sikwara is right that they have that information and they don't take a 10 years view. I think that's totally fine. But in a one to two years basis, they probably, as you're right, they're probably not going to be better than a public market investors who knows how to manage public market risk much better than a private market investor. Before we move into Snap and Alibaba, which I can't wait to discuss, I do just have to ask. When we look at the political environment today, it does have an impact on markets.

36:33For getting anything around the markets, because I don't want to wait into that, but just purely on market and market reception, how does a Harris versus a Trump administration change public market, health sentiment. Gosh, there's so many inputs. If I were to push you to say, who would be better for public markets? I think for businesses and for the economy, low regulation is better. I'm not saying no regulations. I think regulations are good, but we need regulations to be smart. Did the changes to unrealize cap gains actually happen? It makes me laugh that when people talk about unrealized cap gains in the private market context, the entire venture capital world is so small.

37:12It doesn't really matter, but people are not realizing that think about it. Like, okay, what happens to the farmland? Are you going to check tax the farmers? What happens to the real estate? People who own all this real estate, they are illiquid. Are you going to charge them and unrealize Gabgain? So they have to sell the real estate. You're going to destroy the real estate market. Honestly, taxing on unrealized Gabgain on Amazon is least of our problem. Unrealized Gabgain tax on a headline is not a good idea. There's a vast amount of wealth is owned by average American. American. So you cannot go to this vast amount of Americans and charge them unrealized cab gain.

37:45So then you have to say, okay, that's not the intention. We're going to exclude all these things. And then also ask that, are you setting up a dangerous precedence? Now we are doing that to go after a small group of people. It sounds very popular that we're going after this 20 people who are on Godly Ridge. Are we setting up a dangerous precedence? Like, now we're going after 20. Now next we're going to go 2000. Then we're going to go 200 ,000. Where does it end, and start and where does it end? So I think when you have to But think about the policy is that what sometimes feel right could set very dangerous precedence, and that's when you have to be very, very careful about what is the unintended consequences of those things.

38:20It did make me laugh because a lot of my American friends say, you're selling stifling innovation, and I'm like, well, you seem to be doing a pretty good job with this innovation on the tax system. Listen, I do want to just discuss kind of cat -backed spend buying incumbents, and then the chasm between cat -backed spend and revenue, which is vast now. I had David Column on the show from Sequoia who you actually kind of quote tweeted one of his and it's the $600 billion question in AI, he references. How do you feel about the large chasm between CapEx and Mumbai incumbents? Now, supposedly $600 billion and the lagging revenue that we see which is very, very significant and widening?

38:58Well listen, I think one of the things that happened with internet, people are less underestimate how big this business can be. Not for the companies, but how it will change the economy. I think people get too focused on Technology cuteness and how cool this tech is. I think what's important is not how cool the tech is What's important is is this technology improve productivity or not because at the end of the day what is a GDP? GDP is number of people who are producing inside your map right in your country So ultimately the higher productivity will drive higher GDP growth So if the technology improve productivity that has incredible an opportunity to unleash value so US GDP is what 25 trillion or something like that or 30 trillion 5 % improvement is 1 .5 trillion of Economic value creation.

39:44So the big question to really ask is that is AI going to create 5 % 10 % 15 % productivity improvement in the economy that can Unleash so much the value. I would say that's reasonable because how much productivity was created by internet? It definitely more than 5 % to 10 % to the society. I agree, I think it goes back to a question like we said earlier on duration. One, and then I think it's kind of like an arms race in the way that the income is have to spend. You have to because if you don't spend your business goes to zero. So look at Google versus Yahoo situation. So what happened? Google spent the Capix?

40:16Yahoo didn't. I was an analyst at that time. I was a Google's IPO analyst. I covered Yahoo since 2002. It was a heated topic among investors. What Yahoo's lack of spend versus Google's spend? Yeah, people were loving Yahoo because they don't spend that kind of money 60 % of the EBITDA was translating into cash flow But Google was spending it so much money on CapEx people just couldn't figure it out like why is the ROI but 20 years later We see the ROI you know like when I worked on Google IPO we had this analyst meeting as part of this IPO you go meet them see you so they're like 20 analyst from different banks We went to see Larry Sarge Eric Schmidt and I remember one thing that really stood out Larry said that the most transformative thing Google did was the yeah, AOL deal because AOL they gave them 95 % revenue share on AOL search box was powered by Google.

41:08AOL search was powered by Google. The sign and all the Google power the search on the back and Google gave them 95 % of the rev share. And I think 5 % of the companies weren't and you have walked away from it because saying that this Google will never going to make money. But Larry said that that was the most transformative deal because that put Google on the map. People saw Google name and built Google's brand and then people went to Google .com. You said Google before, you said Amazon before, both are protecting incredible cloud businesses. They have to spend to protect their cloud business and that's their cash cow.

41:41Zuck has a cash cow in Instagram and newsfeed, which is not a cloud -based cash cow. How does Zuck know having a cloud -based cash cow change how he can behave? So if you look at AI, current cash cow is obviously cloud because all these guys are using the cloud businesses. And by the way, they're making great money. If you're Amazon, if you're Google, if I were running those businesses, my biggest concern would be now, I know the demand is not a problem. So I should be building it. But the risk I'm taking is that this demand is not sustainable. 5 years later, this demand is going to diminish dramatically and then I'm going to get stuck with all this capacity I built.

42:17And look, that happened with Amazon in 2020. They built massive capacity thinking that the COVID -bying patterns is the patterns going to sustain post -COVID. It didn't and they had huge margins of pressure. So there is more than reasonable chance that this could happen that we are seeing pretty significant demand and at some point demand going to stabilize our flood. I don't know if it will not only time will set but that's the risk they are taking and that's the risk You have to analyze that all my customers who are asking for this demand do they have the power to pay me in a long term on Metascase I look at AI.

42:55I think people focus too much on lm But I think okay, what are the areas that AI going to unleash value at least? You know, I'm not the smartest guy in the finance guy. I see human at robots. I see self -driving car I create better recommendation engines defense. I think AI gonna play significant role defense So there's a lot of categories that were the LLM is just the browser It's the entry point to what you want to do and what Facebook's case, you know the opportunity or Snap case and others the opportunity is is this AI can help you drive better engagement better content better recommendation You can show less ad and make more money.

43:31So that's obviously has value I do want to touch on you mentioned Google quite a few times, but you also took Ali Baab al -Pahab Lake. How did that come to be? I know this was earlier in your career. How did you come to take Ali Baab al -Pahab Lake? It's a funny story. You know, I'm an immigrant. I came to this country as an immigrant and I came from Bangladesh and I saw this internet thing. It's not a US thing. Ultimately, you know, it's gonna empower everybody. And so to me, at that point was number of people and what's the revenue part person you can generate on the internet transaction that gonna create your internet economy.

44:03So I was really interested about the global opportunities of this internet companies. So in 2004 I go to China because they have a billion P plus people and internet is very nascent. So I took a group of investors to my clients, public market investors, to go visit all these Chinese companies. And Alibaba was one of the company but there was private at that time. The only reason we wanted to meet with them because Yahoo made that investment and all of my clients were interested in Yahoo. So I met Joe Chai, who's the co -founder and now chairman of Alibaba in Shanghai. And we really hit it off.

44:35And over time, we became friends. And in 2010, I became very bored with my research job. It was the same day you covered the same company, stocked the same clients. I'm like, I need something more to do with my life. And I was like, hey, should I go to move to China? Seems like a lot of happening. My wife was working for L 'Oreal. And Joe's like, no, why don't you go become a banker and helped these companies. Three days later he called me and said, hey, can I introduce you to some banks? And that's how I end up going to credit Swiss to run the internet banking. So, you're not only made the introductions, but then also, you know, when I became a banker, he hired me to help buyback 20 % of its stake from Yahoo, help finance the production process.

45:14That was a pretty wild M &A. I think it's the day Carol Bartz got fired. In a Carol Bartz was the Yahoo CEO, she got fired. So, the new CEO came in at that time, we approach Yahoo say that, hey, listen, we're going to buy back 20 % of our stake. We're going to pay $14 .40, which is I think value that $40 billion. So you're going to get $8 billion or so cash. So that's great for Yahoo. You can return the capital to your shareholders at first. They didn't, but after a lot of negotiation, we had to come up with the price. And at that time, Yahoo went through a lot of problems, you know, themselves.

45:43So we bought back the share and then we had to go raise the money, raised $8 billion to buy back that 20 % stake. Was it an easy process? It was difficult in a sense like getting Yahoo to do anything was tough. And then raising capital was tough in a sense. There were a couple of issues in 2012 Facebook went public and the stock literally just went down 40%. Hey, tanked. Yeah. And so when we decided to go raise money from the private market, investors were not interested. A lot of look at Facebook that went down 40%. I don't want to put Alibaba. And then also some of the investors were concerned about the whole whole ant financial issue with the corporate governance.

46:18So the way we solve it, this was one of the most important things. most creative transactions and I am very proud of it because all all bankers were against me doing that. Basically, Jo and I talked about it and he agreed on it, obviously I cannot do it. I said the whole issue is the lock up, right? Because all these investors were concerned that hey, we bought the Facebook shares, Facebook went public, I have six months lock up and the stock went down 40 percent. I don't want that situation. We looked at Alibaba, I said at least and this is going to be a 25 billion dollar transactions. And the amount we are raising that $8 billion transaction, $4 billion is dead.

46:52So that's not a problem. You know, $20 billion is a common stock that came from the Chinese investors. So that was not a problem. So the really issue is we're raising $1 .75 billion from global investors who are not, who are concerned because of the Facebook situation. So we looked at it, it said, look, and it's going to be a $25 billion public IPO. Who cares? If we tell 89 % of that offering to a group of investors who we know will have to buy more at IPO and and give them no lockup because we know we can go to fidelity saying, hey, I'm going to give you $200 million. But by the way, this company is going to go public at a $25 billion offering.

47:26The offering size is $25 billion. The market cap is going to be much higher based on the trajectory. You probably want to buy $2 .5 billion and there's no way you're going to get $2 .5 billion allocation. This is your way to get $2 .200 million. If you're worried that it's going to go down like Facebook, there's no lockup. You can sell that same day. But we're comfortable because we knew that a company that size they will have to buy it or at the post market even with DiePew allocation. So that lock up while it was incredibly valuable to investors who bought that security had zero cost to In the company.

47:57It was a very creative transactions. What was the biggest lessons from being part of that? The biggest lesson is simplify the story. So one of the things that Jack and Joe did is simplify the stories, right? Because you know the challenge for the global investors is they don't use Alibaba. They don't know a lot about what is how about T -Mall, all this thing is. But the story was positioned very simply. It's a China consumer play and they are the eBay, plus Amazon, plus Paypal of China. One of the biggest things that a lot of the founders make or CEOs makes, they use a lot of jargon. If it takes a portfolio manager more than 30 seconds to understand the story, they will never work on it.

48:36They've got to keep it the story simple so that it gets you interested. And then they will do the work and that's why analogies can be helpful people often describe it Uber for X Abby and me actually it can sometimes really help simplify the story of Abby and B4Y Yeah, then you understand then you can do the work right nobody does the work based on that narrative You know, I don't think anybody bought the stock because it's a China consumer player and things like that But it got people interested to do the work. So I think the simplifying story is important I have a lot of LPs and I speak to a lot of LPs and they have existing China positions and they have no net new forward China positions.

49:13And they go, I don't know what the fuck's gonna happen in China. And I don't know what to do with my historical and then moving forward. If you were to sit down and advise me as a big institution with a historical portfolio in China and then capital allocation decision of whether we should continue to commit to China, what would you say? The challenge in China is, again, what drive valuation, consistency and predictability. So right now there is no predictability on regulations. So it's hard to invest. This is why I think that regulations could be very challenging primarily when there is no predictability.

49:43So I think it's hard. Until we have more visibility what's going to happen with the regulations, what can happen, and that those things will be more of a consistent pattern. Moving to SNAP, it's an interesting kind of roll shift because then you achieve strategy officer with average SNAP, and you took the company from 0 to 1 .6 billion in revenue. First off, working with AV, AVS, a hailed product mind, what are your biggest lessons from working with AV? What makes them so good? He has deep understanding about his customers, very, very deep understanding of his customers. And that makes him so special.

50:15And then the second and third thing, I think these are actually true for every great CEO's. One, they understand their customers. Number two, they have deep conviction because the reality is return is a function of poor uncurt risk that everybody thinks it risky, but you don't because you have the conviction. And that's why you can underwrite that. And the most people don't do it makes you special. So Evan from a day one had a very deep conviction on his product and you know like the lenses acquisitions that we acquired you know Evan looked at the product and he knew exactly how people are going to use the product.

50:46We finance guys I'm like why are you paying so much money for this deal but he had a very good hack or with maps or with stories. Everybody was like why you've been creating stories isn't that like anti you are trying to do but he had a deep understanding how he's consumers how he's customers use the product and he was able to build a product and he has a very deep conviction on it. And the other third thing I think what makes great founder is your pain tolerance. It's true for founders, it's true for investors, it's true for a lot of people. Because the reality is, you know, rarely going to be right overnight.

51:17Right? When you take a make a bet primarily when you're running a business, you know, it takes time. Your thesis to play out. And during that time, you take a lot of pain because everybody talks negative about you. You're doing wrong things. But he is a wonderful human being in a great friend and I'm very grateful that he took a chance on me When you reflect back on your time, he mentions an incredible product additions improvements What did you do that you wish you hadn't done? One of the things I think we grew too fast too quickly I think you know if you look at in January 1 we did zero revenue 2015 you fought up 2018 so four years later our annualized revenue was 1 .6 billion today Snap will do what 5 billion plus minus revenue.

52:00So in 14 they had almost no revenue. So in 10 years They revenue went from zero to 5 billion plus So the challenges and this is actually a good lesson for all the seniors and again I think I don't think I will show the ocean but that it created a lot of fresh But the thing is that when you grow really fast couple of things happen expectation goes out of hand Everybody always expect you to grow that when Second is it's like when you run really fast at some point, you know It is start harding, right? So when you grow a little bit more deliberately, you can control those paints. Zero to 1 .6 billion in revenue is enormous.

52:35What did you do very well that allowed you to grow revenue as successfully as quickly? I think the decision where I probably contributed is hiring cell steam and ramping and good people, and ramping them quickly, and empowering our cell steam to take those meetings that everybody who wanted to meet Snap and educate them. So that was the first part, right? Educate people because most people didn't even know how snap works. They saw their children, you snap. They didn't know how snap works, you know? Just educating the world because when you're not telling your story, somebody else is telling your story.

53:05And so there's a lot of misinformation, there's a lot of misunderstanding. So we had to build a team who went and educate the world. So that was the first two years. And that probably took us from zero to 400. 2014, I think we did two or three million. 2015, we did 50. and 2016 we did $400 million annualized revenue. And from there, we need to automate the business. And this is where we need to build self -service advertising platform. This is where we need to build attribution. This is where we can. And a lot of the things that's still happening, that's just, you know, takes time. So the one of the challenge was, you know, hindsight, because I went from 0 to 50, 50 to 400, it was so intoxicating that if I were to go back, I would do the exact same thing, but probably start investing in bringing small businesses, building DR business much earlier, so that it would smooth out the growth rate.

53:56And the business is, jerk response for our insurance business. Okay, and you did that earlier. I did a little bit earlier. Things break when you move that fast. Yeah, or you ignore things, because you feel like things are working. Because the reality is, when you're growing that fast, you're driving that expectation higher. You constantly have to think about it, that how I'm going to maintain that growth. So one of the thing that 0 to 400, 400 to a billion, we should have planned that in 2015 to get to 400 to a billion, a billion to 3 billion, right? So that's something, you know, but you're growing so fast and you're distracted, you know, you didn't get time to plan all these things, right?

54:34Do you think that's Sally Validze? I think Evan is one of a generation founder and the user they're mass is incredible. So I think people continue to misunderstand him. What do they misunderstand about him? There's a very few people who know how to build a great product and he's one of them and he has the scale to that sometimes you need to build a great product. You don't have that install base. He has the install base So I think with Evan you're getting that install base and a track record of building great product So that's why I think it's a mistake to under this limit Evan. How did the 200 million Ali Bob or investment come to be?

55:08So Joe was a big fan of Ali Baba from day one of snap. So snap. Sorry a big fan of Snap from day one and when Evan offered me the job, you know, I went to Joe for his advice. And hey, should I take that job? He said absolutely should take that job. Evan is a great founder. And he said something that is very humbling. He said, listen, if the company works, you're gonna look great. If it doesn't work, all the blame will go to Evan because it's his company. So what, what are you upset about? I'm like, okay, when you say it that way. I absolutely love that. But stop with him. That's fantastic. So how did that correlate into the 200 million?

55:44So Joe Kools, you want to answer his hair? I want to formalize. So once I invest, I told him that I joined. He said, listen, we would love to invest. Well, that's out. And then in terms of the Snap IPO process, how was that? Because Snap is a unique beast in terms of the story to public markets that I always think, you need to understand your audience when you're selling a story. It's a different audience to adventure and best audience when you're selling Snap to public markets and investors, how did that go down in the IPO process? It was relatively easy because the number one, we had developed a relationship with public market investors in advance.

56:17They were in our cap table, so Fidelity invested, Tiro invested. So they knew the story, they knew our numbers, they saw the ramping, so it's not like they were not familiar with it. So that's one thing. And second thing with Snap, while many of them didn't use the product, their children used it, 100 % of their children used it. The true story is, when the day I got the call to go meet Evan for the job, I was not a snap users. True story. I was 35 I think at that time. How was the interview? It was great. He's an incredibly talented guy. We went for a walk. My only struggling was he works really fast and I'm a little heavier.

56:51He works slowly. I had to keep up with him. Try not to be out of breath. I thought somebody was, you know, that was the toughest part. But yeah, Evan is an, people who knows him knows that he is one of the nicest person in the world. Listen, I love this conversation. I want to do a quick fire round. So I say a short statement. You give me your immediate thoughts. Does that sound okay? Sounds good. So what do you believe the most around you disbelieve it, man? I'm a big believer that market likes to make full of the full of the greatest number of people. So everything that everybody believes, take a conscious at least question that belief.

57:23And that's the right thing to do. You know, sometimes, you know, people are right, but in general market likes to make full of the greatest number of people. What do you make of the large institutions and crossover funds all coming way early into private markets? I think it's a mistake. I think public market investors should not go deep into private investment. I've been in the business for not 24 years. Early days nobody would do it. And then like in 2007, the first deal I saw crossover was Mercado Libre IPO. Believe it or not, I was the IPO analyst. I took Mercado Libre public. No way. I didn't know that.

57:55And of course, he's a friend and he's a great dude. A $800 million IPO that today is $90 billion market gap. And phenomenal CEO and another example, great business built in public market. That was in 2007, August of 2007. And General Atlantic, which is not public market, but Tiger came in. They wrote, they were an anchor investors on the deal. They wrote a check and I think they signed a lockup. And that's totally fine. I think that's a really, really smart thing to do. I encourage other public market investors who do it. If I had the means, I would do it. I think that's a good strategy because you're really leveraging your core skill.

58:33Then people start going into the companies that would go public within 12 months. Some would find because you can analyze the business. But then all these guys start doing series A, series B, series C. And I think this is why it's bad because everybody has their core strength. Somebody who is good at real estate investment is not good at technology investment. Somebody who is good at technology investment is not very good at investing in industrial or biotech. Somebody who is seeded investors are not the greatest public market investors. And so that's I think thinking that you are a great public market investor makes you a good private market investors is wrong thing.

59:07Second is the model is different because if you think about what makes a great private investment and investor is access, judgment and conviction. You need to have a lot of access to a lot of deals. Public market investors don't have time for that. So then you're not managing your own book, right? So then you're hiring people who doesn't maybe good may not be good. So that's, I just don't think that works either. To me, if you're truly a good public market investors, you know, guys like Steve Cohen or Ken Griffin or those guys, you know, like they do private as a hobby, but they don't build a private business.

59:40It's not, I totally agree with you. That's why we don't do a lot of things. And I think Danny Reim has had to be very wise. The only show the biggest last night I have for you, Harry, is Keep the Main Thing, The Main Thing. Focus matters. Yeah. The one biggest lesson I learned in life from some of my biggest mistakes is lack of focus. What was your biggest mistake? Gosh, there were times I overestimated myself and I had probably the same situation that sometimes things look good in a context and you have to think about that same context not going to look is consistent, right? Context is changing all the time.

1:00:14So when you have to make a decision and this is going back to the CAPEX decisions, you You understand the decision at this context, it makes sense. But you also have to think about the two years, three years, five years, ten years later, that context will change. So when you're making a long -term investment decision, you've got to, and you know that you're going to get stuck with that decision, you have to be very comfortable that you are okay with that as the context change at different variables. What have you changed your mind on in the last 12 months? I'm a big believer in AI and really looking at each business, you know, are there beneficial of AI or there they will be challenged by AI and that's probably one way of changing.

1:00:54And then I'm also the companies that will be beneficial of AI. I also need to trying to get this context to window right because some companies might be beneficiaries of AI but that may not be in two years in four years. So you have to think about those businesses differently than the companies that will be benefit it immediately. So you got to get that context window right. I think AI is as important as internet. What question are you not asked that you should be asked more? So in my business, everybody focused on return but nobody really asked about after -text return. This is going back, I look at so many funds that are just constantly in and out and after -text return is terrible.

1:01:34It blows my mind if I do 100 meetings. I probably want two meetings I get where clients ask you What's your after -text rate? Listen, I've absolutely loved having you on. Thank you so much for putting up with my wide array of discussion topics. Great, it's fun. You've been a fantastic guest. Thank you. I appreciate it. I mean, from Jack Maure and Jamie Diamond, the IPO and the M &A markets, that conversation certainly had some breath. I so enjoyed doing that one. And if you want to see the full interview, you can watch it on YouTube by searching for 20VC. That's 20VC. But before we leave you today, when a promising start -up files for an IPO or a venture capital firm loses its marquee partner, being the first to know gives you an advantage and time to plan your strategic response.

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