Google weighs $23B for Wiz, startups in a second Trump admin, and Sequoia's Stripe sale | E1980

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34:59add some M &A to that I think really this entire election is going to boil down to Lena Khan won't let us buy stuff or sell our stuff to bigger companies I hate to have pointed this out so explicitly so many times I think it's incredible to me that even what I would consider to be a halfway mark towards how aggressive you could be on antitrust, we're not saying we're going to break apart these companies we're just saying you can't buy things that are quite large also that is enough to swing i mean a combined net worth of several trillion dollars in one direction that's very interesting to me and i think it says a lot about about humans but i think we can leave it there for now there's one more to talk about half hour on yeah what's happening politically and how it affects startups and venture capitalists and we do this because it matters and this is what's going on and these are the conversations and now we're going to go back into just full tech mode but uh the background of all this stuff is the rules of the road and this is how they're set.

35:57So, Jason, Google might buy Wiz for$23 billion. And I got to say, that is an enormous amount of money. And I knew about this much about Wiz. So I'm curious, have you ever seen a deck from Wiz? Have you ever seen anything from the company itself? I didn't know the company Wiz existed before I saw this headline. Got it. Okay. I feel a little bit less behind. Which tells you something about the scale of venture capital and startups. 10 ,000 startups get funded every year, you know like serious funding from you know you know serious people like some level of funding and maybe a thousand to two thousand of them are like really you know silicon valley type companies so you start compounding that over time there's tens of thousands of viable startups in the world in the united states specifically at any given point in time and here's one that i wasn't even aware of so wiz is an israeli-american cyber security company now headquartered in new york but with Israeli talent.

36:52It was founded in 2020 and it scaled to$100 million in ARR in 18 months. And then as most recently, yeah, yeah, I was looking forward to that. And it crossed the 350 million ARR mark, I think some quarters ago. So this is one of the fastest growing software companies of all time, period. And that's why people bid this up really, really fast. So December 2020, Series A,$100 million, Sequoia Insight Index. Then 2021, a two-part Series B, $4 billion, same names at Green Oaks and Salesforce. October 2021,$6 billion valuation, more capital. February of last year,$10 billion. Then this year,$1 billion at a$12 billion valuation, Thrive, Lightspeed, and Dresden.

37:41This is a company that has raised$1.9 billion in the cloud and cybersecurity space, scale super fast, and Google might drop roughly 64X ARR for this company, which I think says growth can still be profitable if you're the fastest growing company of all time. And also, well, Google has a lot of money and needs to do better in cybersecurity. So I can see why this deal makes a lot of sense. I'm just shocked that you can go from a$12 billion valuation earlier this year to 23 now. It just doesn't seem like sign of the time. Yeah, and if you think about that investment, the IRR, the internal rate of return is 100%, right?

38:16So the stock market makes seven, 10 % a year. So this is why people do love venture capital. That last billion dollar bet, although it's only a 2X, it's a 2X in 12 months, which is 100 % IRR. It's pretty juicy when you think about it, right? And venture capital firms tend to do 15, 20 % IRR over the life of a fund, which is really juicy as well in terms of compounding. But this is like really great. Sometimes the last bet is the best bet in terms of IRR because of the time horizon, right? So you shorten the time horizon. So it doesn't look like an angel bet where you do 50x, 100x, 200 times your money.

38:56It's only 1x, but it's 1x in one year. Pretty amazing. You know, cybersecurity is like one of these very boring, but essential and growing areas. When you see the AT &T hack that happened the other day or other hacks that have occurred. The fallout from those hacks is measured in hundreds of millions of dollars, typically. Some of them can be existential, could really damage a company. And so, yeah, I think it's an easy purchase for somebody with a cloud business, like Google Cloud, I think is the group that's buying it internally, or Amazon Web Services. There was probably many suitors for this company.

39:33And in order to get a company growing that has plenty of cash in the bank to sell, you have to make an offer above market. So this is the wonderful thing about, you know, having a high growth company is great companies are bought, not sold. Google wanted this before it IPO'd. I'm sure there were other suitors like Amazon Web Services or Oracle Cloud, you know, which is coming on pretty strong or Azure and Microsoft. And this is the perfect example of a tuck in acquisition, you know, a mere$20 billion acquisition. put that under your arm yes and carry it along i mean the fact that 20 billion dollars is considered like a medium-sized acquisition now it just tells you something about the market and let's see if some agency tries to stop it i don't know why they would who cares is a 20 billion dollar acquisition for a security company if this company gets out to more users more cloud computing providers that's arguably good for everybody it's not like somebody can't compete against this product if it's bought you know it's going to be included in the google cloud package probably and be better for everybody.

40:36So M &A can be great for consumers. And that, back to our previous discussion, do you view the lens as like, now all competition is going to end because of this acquisition? No, of course not. And do our consumers harmed? Of course not. So this one is not going to harm consumers. It's not going to be a big deal. There's nothing to worry about. Boom. It's not like, gosh, you know, facebook buying the two largest footprints of a social network at the time instagram and whatsapp you know or something or you know it's not adobe buying figma come on and even in that case like is figma such all due respect such a unique product in the world that it can't be duplicated for free or very quickly by ai and the features that are in figma could they not be done by an ai in this next paradigm shift of course it can so you know this is where blocking let's say transactions under$100 billion.

41:30Doesn't make much sense. Under a hundy. Oh, I like that for any. On the price point, well, actually, I'm going to double click on that. I agree with you in this case. I think this is a fine acquisition and should be allowed through because Google's third place in cloud. And Microsoft announced last year that they had reached$20 billion in cybersecurity revenue in their last 12 months. So Google is fighting for relevancy here. And that's actually a place where acquisitions can make some sense. Now, they might limit downstream competition in cybersecurity, but they'll increase competition in the cloud, making Google more competitive.

42:04Fine. I'm fine with that. The price point, though, I just pulled up some data. Of all the public software companies today in the market, in the top 10, at least three are cybersecurity as measured by the most expensive forward revenue multiples. And so right now, if you're buying a company and you're buying a cybersecurity company, you have to pay top of market plus. It isn't like you're buying a SaaS company that would sell at 5X. Now you're going to buy it for eight. You're going to have to pay up quite a lot for this. I think this is just tremendous. Good sign for the economy. Good sign for venture capital.

42:39Good sign for the ecosystem that people don't want to just buy H100s with the cash they have sitting on the sidelines. And so this is a very large acquisition. I mean, it's a different moment in time. The economy is much bigger, but it has a lot of revenue. if you look at that bubble chart that shows um you know the size of acquisitions and so if you're not watching go to youtube and type in this weekend startups but you can see like the nest acquisition and looker fitbit for 2 billion youtube for 1.75 billion 20 years ago my god that was 20 years ago i know um so you know today you know we've been three times as much it would have been a 6 billion youtube you know this is a pretty um it's a pretty juicy one and the motorola one was for buying a patent library that they subsequently sold so just keep that in mind that that was like a collection of assets that got broken apart so you probably would make you probably look at that it's like maybe half the size um but you know google used to do a lot of these google used to do a lot they used to be very acquisitive and they just i think the last couple of years because of the eu specifically and then lena khan that one two punches made them less acquitted it.

43:50But their last acquisition was Mandiant, which was cybersecurity. So this is a theme now from the Alphabet Empire. I want to go ahead and move to a tweet that we have pulled up from my friend Anshu. He says that cloud security is probably the single largest TAM in software today. And that just got me thinking about where the biggest problems are in software, because I'm shocked that this company grew as fast as it did. Are cybersecurity deals like the the dark horse of venture capital investing today? Because, oh my gosh, I'm blown away by it. You know, I think you're going to see a rush of venture capitalists taking meetings in cybersecurity.

44:27I don't want to get away from this. It's like, huh, these things sell, people buy them. You don't have to go through an IPO or a SPAC and have the stock collapse. People pay a premium for it. It's kind of like doing an off market real estate transaction for a high end home. Like it doesn't make any sense. Like how did this home go for so much in Malibu? It's like, They're not making any more beachfront properties in California. There's a limited number of them. And this has to do really with two things that you have to keep in mind. One, our reliance and trust in online services to put so much of our trust in them.

45:02And so you look at something like that AT &T hack. Imagine if everybody's text messages were released, the damage that could cause. I mean, explosive. There could be, you know, 100 ,000 lawsuits that would emerge from that. And so, you know, and the fact that AT &T is keeping text messages, like, should you trust AT &T? Absolutely not. You should be using some more secure, you know, messaging platform than AT &T is apparently. And then the second piece is the coordination of state-sponsored hackers, specifically from certain states. And that is why this industry is doing so well, because our government is not bombing the countries who perpetrate these.

45:46It's kind of hard to imagine us sending bombs into a country that has nuclear weapons because they sponsored some terrorists to do something, essentially hackers, terrorists, to go do something like this. these things are arguably more damaging, not psychologically than a terrorist attack, but they're more damaging in terms of cost than an attack. So it's hard to frame a physical response to a virtual attack. The only way to deal with it is with software and companies. We're not too far from that. I can't find the exact quote right now, but I was watching the Danish prime minister recently discuss this exact thing.

46:19She just says, you know, well, right now we're under cyber attack every single day from Russia. And China has been very active in this way as well. North Korea is famous for its hacking prowess. And just to be clear, democracy's hacked too. I'm not trying to say that, you know, our hands are clean here. Yeah. We have God on our side. Remember that famous Bob Dylan song with God on our side. We have God on our side. No, they're doing it for money. Or they're doing it to disrupt power systems and so forth. There's that too. Would you be in favor of asymmetric responses to state-sponsored hacking?

46:46Yeah, this is a question that nobody's been able to answer yet, because what if you do a physical real world response, an asymmetrical one. And the other party says, oh, great, we'll respond too. We'll go kill some American soldiers. So my gut tells me no, if I was president, would I do it? But I would invest deeply in cybersecurity and I would do counter measures where we hacked the phones of their generals, et cetera, which I'm sure we're doing in real time. I mean, we were doing it. I remember we got busted having spied on other leaders. Was it Germany? We had Merkel's phone. The Americans had, it came out in the Snowden papers that we hacked Merkel's phone, I believe.

47:31I think Obama had to have a very awkward conversation with his German peer. Yeah. It's like, sorry, we looked at your text, if I've got it right. But yeah, that was super awkward. That was an awkward state dinner. Can you imagine? How do you prep for that? sorry about hacking your phone and cheating this entire time i know we're supposed to be friends but can we just let it go no we've got your nudes oh no i like i like how we got through the whole trump section i think in good shape and then when it came to angler merkel right off the i mean it's literally i think what a lot of the uh compromise concept is is to try to get you know uh folks and you know to bring up trump the documents case i I think was overturned today or something.

48:16I just saw the news go by. There's going to be quite a lot more coming there. I mean, there's going to be appeals and everything. But even in that case, one of the things that they were saying was a certain French politician has a file and Trump has that file and likes it to show it to people. That's one of the accusations and that the file is about personal behavior of a certain state leader or something. Wait, a French politician who is - Yeah, maybe having a good time on the weekends. Yeah. I mean, that would be the first time in the history of the Grand Republic. There might be a couple of Italian politicians also known for having a good time on the weekends in their personal life.

48:49I feel like this reminds me of that famous Buffett-Munger quote when they're on stage at the Berkshire Hathaway yearly. Bring their Statler and whatever from the Muppets. I love that. Great shtick. Munger's like, well, then there was that country in Europe where they just threw all the mail away to get the mail, you know, delivery times down. And Buffett's like, oh, let's not go there. And then Munger goes, it was helly. just shouts over the top oh gosh yeah yeah pretty great pretty good it's like okay um let's move on this is a very important moment in terms of explaining the importance of mid-market acquisitions in the ecosystem because venture capital right now is so uh what's the word when you have uh it's so constipated it's got so much backed up here that i saw a headline that sequoia was offering early investors in Stripe, I think a$70 billion valuation to buy out their LPs in secondary.

49:44These are called, these funds exist in private equity. There's a name for them, strip funds, where they'll go in and buy a strip of assets from a venture fund that's 10 years old, and then basically push the can down the road, let another set of investors take that off your hands. Oh, absolutely. I wanted to talk about this next because I think it's such a great dovetail to what we're discussing. Stripe has not gotten public. It is not sold. It is just sitting there, this diamond on the private markets. And so what Sequoia did this morning was they emailed their LPs from funds from 2009 to 2011, and they're going to buy up to$861 million of Stripe shares with more recent funds.

50:23And the reason for this is if you've been sitting on your paper markup since 2009, and it's 2024, you probably want to see some liquidity. So So Sequoia is saying, hey, we'll pay you$27.50 you want to share. That's from Stripe's most recent 409A valuation, according to Axios. So their 409A is now at 70, up from 50 last year, down from 95 at the peak. And then Stripe gets to stay private. Sequoia gets to keep its LPs happy-ish. And this deals with only about 10 % of Sequoia's overall stake in the company. So Sequoia still has, by my math, about$7.8,$7.7 billion left of Stripe stock to deal with.

51:01But Jason, this to me seems like a financial engineering to a problem we didn't used to have. Correct. It's a solution to a problem that didn't exist because we had a more fluid IPO market and we had a more fluid M &A market. And so this is, what is it? Nature finds a way. What did Malcolm say in Jurassic Park? Life finds a way. Life finds a way. So venture finds a way. Capital markets find a way. It's one thing that you were so busy figuring out if you could do it. You never asked if you should say if you should do it. Okay. So here we are. So the, if you should do it in this case, I'm going to work on my, uh, what's that guy's name?

51:38Goldblum, Jeff. Yeah. Your Jeff Goldblum accident might need a little bit of work. I think it's work. I'm just workshopping it here on air. Um, we're just going to workshop it live. Why not? Working on live. Did you ever think maybe you should have done it? Anyway, here's the, here's the problem. Set of LPs who are getting liquidity, new LPs, uh, getting to buy Stripe. You just have to make sure everybody's copacetic with this. That's the key. So now let's say it's a new growth fund. They would love to get their hands on some pre-IPO stripe, right? Late stage investors. We talked about the 1x in one year, or maybe they get a 50 % pop because this is a 70 billion valuation.

52:18If it goes out at 100 or it hits 100 or 125 in a year, those people would be pretty happy with that, especially if they're public market investors who are used to getting 7 % or 10 % or 12 % a year in an actively managed fund. So you got to find LPs who understand the trade they're making here. And then you have to make sure that these folks don't feel like you gave their last double up or their last 50 % increase to somebody else. So I think, I don't have any inside information on this, even though I'm associated with Sequoia and have a relationship with them on a business level. I'm not involved in this in any way.

52:52I have no data on it. I do know when you have a transaction that has the potential to be conflicted, there's a very simple solution. Everybody's got to sign off. Everybody has to be fully informed. That's why the price is released in this. That's why this story is being released. It's because they want everybody to know they're doing this, why they're doing it, and those people understand the bet they're making. So if the people selling it think there's a double up here, they're not going to sell unless they need the money. And the people who are buying it, if they don't think there's a double up here, they're not going to buy it unless they think they've got a good opportunity here.

53:29So that's what you need to understand. If you are a neophyte and you're not inside the venture or the capital allocation community, you would think, oh, they're just moving like a shell game. no the shell game would be you don't know which shell the p is under this is literally the p is on the table we're weighing it on a scale we're moving it we're going to take your p and we're going to move it over here if you want to so you can move your p from this cup that's upside down the cups now not turned over would you like to move your p we're not going to move it you have to move it but you have this opportunity to sell the p if you want to that's what's actually going on here.

54:07It's not a shell game. It's a trade with the cups up, everything fully documented. And I've been through this before myself, which is, could the same venture fund want to invest in a late stage deal and having done the seed? Well, if you have a full lifecycle company, when I had done the Uber investment as the Sequoia Scout, there were late stage investment opportunities for Sequoia for Uber as well. So now you have to be thinking about like, How does the Scouts program deal with the Sequoia Heritage, which was their family offices business, their growth fund? And Andreessen Horowitz has the same set of issues.

54:43Easily solved when you have full transparency and full optionality and people have to make their own decision. Yes. And I think that's a great point to make. We have a tweet here from John Collison, one of the Collison brothers discussing this. Co-founders. Yeah. And he says here, lots of firms say that they're long-term oriented, but Sequoia actually is. 14 years after their first check in Stripe, they're making their largest investment yet because Stripe's going to buy those shares with their other funds. But you know that if someone drops, if a co-founder quote tweets Bloomberg or Axios who broke a story and endorses it, that's a pretty clear point that they really wanted this information out there, to your point about transparency.

55:22But the question I have for you, Jason, is let's say you are a LP back in that 2009 Sequoia fund. You're sitting on enormous returns off your managed investment into Stripe, you're offered this liquidity chance. Do you take it? Yeah, so this is a personal question of how much it represents of your net worth. If it was 90 % of your net worth, you would certainly want to sell 20 % of it, 30 % of it. This happened to me very specifically in the Uber transaction where Uber's acceleration started to, which I had a net worth there before having sold Weblogs Inc and done pretty well in some other investments.

55:59And then, you know, as it accelerated, I'm just sitting there with my partner, my wife, and we're like, okay, as a percentage of our net worth, this is getting a little scary. And you got to remember, it was not, I mean, I knew it was going to work, but there were other people saying Uber's toast because it's illegal. It's going to get banned. You know, all this stuff, all the hand-wringing, Travis is too aggressive, you know? And I was like, oh, that's why it's going to succeed. Putting it all aside, you know, I did make secondary transactions along the way, 10%, 20 % here or there, just to be fully transparent.

56:31I bought real estate that my family could enjoy, ski houses, primary residence, all this kind of great stuff. So then I kept trying to rebalance my portfolio to be a certain risk asset that doubles every year, every 10 years, as opposed to one that might double in three years or four years when it hits scale or not. I'm sitting on a large amount of Uber shares, but my philosophy has always been to sell as you go. If you were a$50 billion endowment like Harvard and you had access to this and you're looking at it and you're like, okay, it's a difference between getting$100 million now and$200 million.

57:06Yeah, just let it ride. We know Stripe Stable. So it really becomes the most personal decision to make. Two factors go into it. Percentage of your overall net worth or fund holdings, percentage of your overall holdings, let's say. And then the second piece is how confident are you in management in the business in this case an endowment a sovereign wealth fund a high net worth individual probably not selling at this price because i think they believe this will be a you know someday a trillion dollar company and if you could have bought google at the ipo or uber at the ipo and held it or tesla you know pick the company i think the best is yet to come for strike i know not all people think that so google's valuation i just literally googled this so i haven't fact checked it but about 23 billion at its ipo so the value of whiz companies used to be cheap yeah things used to be like for sale that's amazing go public earlier yeah yeah and so here we are well that's my question because what if all of this conversation has been predicated on the idea that stripe will eventually go public 14 years i mean what are they waiting for but what if they just don't what if they just say we're going to do 20 years as a Yeah, they're not going to do 20 as a private company.

58:19I don't think. I mean, in the secondary market that does exist today, it is possible. It's just not probable. Well, I'm saying if it's a money printing business, they could create their own secondary market and just keep buying. So if it was truly a money printing business where they threw off massive cash flow, they could just do a tender every six months and just keep buying shares back and retiring them and lowering the number of shares. It is possible. It's just not probable because I think the founders and everybody would like to have the tool of being a public company to do other acquisitions and to reward employees.

58:49But, you know, hey, maybe it's an interesting point you bring up, like, maybe the founders, a pair of iconoclastic founders could say, you know what, this thing is a money printing machine, we're going to just buy back our shares over time. And we're not going to tip people off to how good this business is. Other people think this business is easily disrupted. I'm not one of those people. But other people think it's a commodity business, a low margin business that will get, the profits will be abstracted away over time. I mean, if you want to go back to IPOs that gave away too much information, Google.

59:21I mean, I don't think people were fully aware of how great of a business search was until Google said, look at all of our numbers. And then everyone went, excuse me? It was, that's one of the best S1s. Well, and then Facebook stole Sheryl Sandberg and other executives. So yes, there you have it. Well, I would love to see Stripe's numbers. And then I have one more question on this that I want to get to before we wrap, which is, are there any other companies of sufficient scale putting SpaceX to one side, because I'm kind of putting a different category now, that could have a similar amount of market pull to put off their IPO, demand that their earlier investors do complex transactions to create liquidity?

59:54Is this a one-off or a sign of things to come? Yeah, there's only two. This is like one of two, I think. There's only two companies that are in, you know, getting close to, you know, SpaceX, I think the last was$200 billion, I heard, I think. So yeah,$200 billion, then this is$75 billion or whatever the secondary market is at. So yeah, it's really just those two. I don't think there's anything even close to this. That tells us that then no other company can avoid an IPO by going this route. And this means that this is a Stripe story, very interesting, but not one that other founders should kind of expect to lean on, which means that the IPO pressure should still be on for everyone else, though, you know, election years.

1:00:32The one thing that I think has changed things is the companies that are pre-IPO or could IPO at any point in time, the liquidity of secondary markets and the ability for legal teams, accounting teams, operating teams to manage an orderly transfer of sales on a regular cadence like SpaceX has done and Stripe has done. I think that's like a new art. Remember, second market brought by NASDAQ, other people, Uber did it before the IPO with Masayoshi-san. And so those kind of things didn't exist as a discipline 10 years ago. And now people have invested in the infrastructure for those things. So I know this sounds banal and tedious, but I do think the fact that there is an infrastructure to keep your company chugging and keeping shareholders liquid is an interesting turn of events.

1:01:24And private equity has this. Private equity is constantly flipping assets from one private equity firm to another. They kind of just throw these hot potatoes back and forth and trade them like trading cards. And maybe in venture, we'll get to that point where people will just trade their stakes. There's a fund of funds called Industry Ventures. They're not RLPs, but I know them. And they were, I think, Chris Sokka's original LP and Zach Colias' LP. So they are doing these strip funds. And they had reached out to me about it. And they're reaching out to all venture firms. Dave McClure of 500 Startups.

1:01:59Now he has a strip fund. So they'll look at, let's say, launch fund one and two, and they'll say, oh, superhumans in there. That's but one example or Kong. Okay. And you bought it at a$5 million valuation or a$10 million valuation. We like these five assets in that fund that's 10 years old. We'll buy them for you at a 30 % discount, kind of like this thing is occurring. You get your LPs, get their DPI, you get to raise more funds. And then one was pitched to me as we will put money in your new fund. So we'll put money into Launch Fund 4 and we'll buy some of Launch Fund 1. So we'll solve two problems for you.

1:02:31You're illiquid. Your LPs need DPI. Great. We'll get those people from Launch Fund 1. It's going to look good. You're going to turn TVPI to DPI. You're going to get actual not paper returns. And you know what? We'll put a little bit. We'll spice it up. We'll put a little bit into your most recent fund. So these are the kind of things that are trying to keep nature finds away. Is that what it is? Nature finds away? I think it was life, but I have not seen. Life finds away. It's life finds away. So capital finds a way. Life finds a way and capital finds a way. Well, that's literally, I mean, that could be the summation of why I'm a capitalist.

1:03:05Because capitalism demands finding solutions versus tamping down problems. I keep comparing the US system versus the Chinese system right now as we look at the two economies in contrast. Though I will say we don't have to do all this extra work. Stripping a fund is timing intensive. There's lawyers involved. if everyone just went in public, imagine Jason, how great it would be to have all this information on the public. No one has to do all the extra work, but it's, you start to sound like Bill Gurley. It's not a banal point that we built that framework because if we built it, we're going to use it.

1:03:36And so I think you're right that some companies are going to get very good at this. I'm just, I'm by the way, thank you. I'll echo Bill Gurley all day. That's great. If you're sounding like Bill Gurley, he's a very thoughtful guy. His podcast is best friends. His podcast BG2 is wonderful. he talks at this speed and brad gerson talked at this speed it's like listening to a 45 and a 33 on your record player you skip back and forth without ever looking at the size of the disc but you know hey i guess that's your option i love that show because they are uh always like 10 more casual than i expect they're going to be and it just it converts very well to camera um yeah they should go public i'm tired of this and uh just to close off one last thing one stream a corporate financial software company kkr bought a majority stake in 2019 going public and i do think that there's some interesting numbers there we'll get to that on the next news roundup but just a note for everyone ipos are mostly dead not entirely yet do we have a question from our amazing live audience we have one question from youtube that's not a political one hopefully it'd be great if we had one someone from youtube hbou or habu i believe you pronounce that uh made the point that the Figma and LinkedIn acquisitions were larger than some of the deals that we have seen go through.

1:04:50How much was the LinkedIn deal for Microsoft? 20? That's a great question. I think it was two in the 20 area. Yeah. Yeah. Yeah. Yeah. Yeah. So that's, that's another example. Like, so if you think about what LinkedIn was worth in your mind, that's what Google is saying whiz is worth now. Now there's some time difference there. I understand, but they're in the same ballpark financially. And Google's about to pay 23x what Facebook paid for Instagram. Wow. Yeah. I mean, Instagram was a small company at that time. I think they only had a couple dozen employees and 100 million users. The question always is, if Facebook hadn't acquired Instagram, and Google hadn't bought YouTube, would those things have become multi billion user franchises?

1:05:34It's impossible to tell. That's why Lena Khan's future competition, you know precog concept is kind of i don't know i don't want to say doa but it's a it's a mental exercise that i think is impossible to it's like trying to guess like you know oh if we both go all in and we only know one of our cards and two of the plot cards in the flop like are we going to be able to guess the outcome here it's like so many possible things can happen it's so situational you know i don't know instagram could be bigger than facebook right now as a public company and is the worst sale ever in the history of technology potentially youtube probably would have gone out of business so you know if you were asking me what i thought at the time and what i think now i actually think youtube would have gone out of business i think they would have gotten crushed under the legal bills because that was a time when startups didn't have the ability to do a five-year ten-year lawsuit and i think instagram the opposite i think instagram selling for a billion was the worst transaction in the history of venture yeah i think that thing was But at the time, don't forget, the era was billion-dollar deals didn't happen.

1:06:36I remember when that deal hit. It was a bombshell. It was back to our war references from earlier in the show. It was a massive splash. There you go. People couldn't get over how much money was being spent on this little social app. Now we know better. And think of this. It was a situation where there wasn't a big secondary market to dovetail our last story. There wasn't this ability for the founders of Instagram to sell 300 million or let's just say 100 million of their shares and take 50 million each off the table, get a jet card, buy a ski house, pave down their mortgage, whatever, on their primary and put some money into their kids' 529s, whatever.

1:07:17Now that exists, founders can go along. The Coulson brothers have no problem with liquidity. I can tell you that for certain. If they want to sell some shares, if they want to do what the guy from WeWork did and Adam Newman and just have a big credit line against their shares, they can do that as well. There's no bank that wouldn't give them each a billion dollar credit line against their Stripe shares. Right. And that's how you avoid paying taxes for as long as you can. Well, Jason, we're going to have more shows this week. Lots coming up here on Twist. In the meantime, don't forget to like us on YouTube, subscribe on your podcast app.

1:07:54We are also going live on LinkedIn X and YouTube whenever we do news. Well, one idea for you do like three 20 minute interviews and it's just Alex interviews, you know, the Alex interviews and then pick the favorites from the 500 twist 500 and you just do a solo interview or release it like as a little one off for the channel. What do you think of that idea? I love that idea. I'll do that. And pick your favorites from twist 500.com. Yes. And we're going to be adding more companies to be at a bunch yesterday. Sorry, last Friday and more today in the newsletter. So lots to get through everybody.

1:08:24See you soon, bye bye.