Redpoint Ventures and Stepstone Group on VC Deployment, M&A, and Google's AI Strategy | E1934

0:00And so Tiger is used as this kind of almost meme for this. But what they were doing, actually, founders appreciated the lack of diligence and the high prices and all that stuff. Now, were they giving the vegetables or just giving dessert to the kids? I think they might have just been giving dessert to the kids and they should have been better off giving vegetables. It takes too long to wait to a full exit and sell nothing along the way. If you're coming in at pre-seed seed, even early Series A, taking some percentage of your position off of the table is the prudent thing to do. Otherwise, you're going to be sitting on funds four or five with zero DPI coming back to market and asking your LPs to support you again on the next fund.

0:38It's just not sustainable in this industry as hold periods continue to elongate. People need to use that as a mechanism for getting capital back. This Week in Startups is brought to you by HubSpot YouTube Network. Whether you're a marketer, a sales rep, or an entrepreneur, HubSpot has you covered with its tutorials and AI-powered tools. Visit HubSpot's YouTube channel and activate your free chatbot builder today. Check out the links in the episode description to learn more. DevSquad. Most dev agencies only offer developers. Why? Because product management is hard. Get an entire product team for the cost of one US developer plus 10 % off at devsquad.com slash twist.

1:29And Mercury. 90 % of startups fail. Just 10 out of every 100 make it. Mercury exists to close that gap, helping companies succeed with banking and credit cards engineered for the startup journey. Join over 100 ,000 companies banking with Mercury at mercury.com. Welcome back to this week's liquidity podcast. With me today, I have Logan Bartlett from Redpoint Ventures. Next, we have Hunter Somerville from Stepstone. Of course, we have Jason Calacanis from The Launch Fund. I'm your moderator, David Weisberg, co-founder of 10x Capital. Today, we have a couple of great topics on the docket. We discuss the fundraising market in the venture space.

2:13We discuss increased activity and secondaries. And finally, Google's big bet on generative AI. Let's dive right in. HitchBook is reporting that Tiger closed their latest fund of$2.2 billion, its smallest in over a decade. Tiger's previous fund raised$12.7 billion in 2022, the height of the bull market, during when Tiger led 92$100 million plus rounds in 2021, and 33 100 million plus rounds in 2022. This graph seems to mirror the Ernst & Young IPO graph that showed a very lock luster start to IPOs in 2024. But there is light at the end of the tunnel. Earlier this week, Andreessen Horowitz announced that they have raised 7.2 billion, coming in 4 % over their target.

3:06Hunter, you have a unique focal point in that you invest in funds, secondaries and directs at the late stage. What do you think about these indicators? Yeah, I think from a fundraising standpoint, it's really not that bad at all, particularly for the platform brands that are out there. I think there are big allocators, both domestically and internationally that are looking for ways to get exposure in the asset class view this as a very high quality vintage year, a good innovation cycle, and therefore are naturally inclined to go with the bigger multi-billion dollar platform brands to get that exposure, both due to perceived safety and also because of the check sizes that they're writing.

3:46And so I think where you see struggles from a fundraising standpoint is anyone that has weighted heavily into late stage. LPs simply have gotten too much late stage. They don't necessarily want to be adding more. And in this market, a lot of the late stage players are either sitting on the capital and not being overly active or are paying very high prices for late-stage AI-related deals. And so it's not a place that LPs are typically looking to be aggressive right now. But when it comes to the platform brands, of which I'd say they're 15 to 20 that would count in that kind of category, we see them able to hit or exceed targets pretty consistently fund over fund.

4:27So I don't view it as a tougher fundraising environment for them. where it is tough is in the long tail of smaller, more emerging managers that are on funds one, two, or three, and that aren't getting the time and attention from allocators and have a much different road to slog. Logan, I see you nodding your head. What are your thoughts on the fundraising environment today? Yeah. I mean, it seems like they're, to Hunter's point, there's some waterline. I don't know the Mendoza line in baseball, I'm sure the baseball enthusiasts here would appreciate where if you're above it or below it, is a determinant of how easy things are for you in the private fundraising market.

5:09And so I think what I've heard, at least anecdotally, from my peers in the industry is if you're above a certain threshold of returns and how you manage 2020 and 2021 was prudent and pragmatic, it seems like there's a real desire to concentrate dollars with those managers from a limited partner side. If you fall below that line, either because you deployed way too much capital over the course of 2021 at two high evaluations, or you're just not in the preferred manager class for an individual limited partner, I think it's really hard time to fundraise. There were a lot of first time managers that went out and got funds done in 21.

5:44And I know there's really a triaging going on on the LP side, it feels like where they maybe initially thought that manager was going to be more long for this world and that decided not. So it seems like people are really consolidating to the comforts of name brand firms across the board. Yeah, I would add Hunter makes two really good points there. The platform brands are, you know, in our case, the flight to safety, right, for our industry. So, of course, if you're coming out of some uncertainty, and you work at an endowment or a sovereign, and you work for somebody, they're looking back and saying to those fund managers hey let's really take a deep dive into uh to logan's point hey how did you behave over the last couple years did you sell in secondary when you had a chance and to tie the stories together when tiger came and did 120 hundred million dollar rounds did you sell any secondary did you take advantage of that opportunity for your lps and if not why and so this is where you know a lot of reflection uh is necessary as a gp when you're a gp and you write checks you can get very full of yourself you can get a little bit of a god complex i'm the decider who gets money and then when you have to actually get dpi instead of returns you got to get humble and say hey am i good at this and really examine you know what is your decision making process when you place bets what's your decision making process when you sell um equities etc and so the second piece uh that hunter uh pointed out about this is going to be a great vintage i think is the really important point just because the last two years were chaotic um and there was a lot of cleanup and there were 120 hundred million dollar rounds by one firm that didn't even join the board of these companies like of those 120 hundred million dollar investments i'd like to know how many of those did tiger join the board i mean does anybody have that number because to put a hundred place a hundred million dollar plus bet and not take a board seat seems insane to me like where's the governance where is the you know follow through on these bets and so i wonder you know if they're going to change their staffing requirements etc um but i do think the most important thing is the game on the field right now the game on the field right now is really serious entrepreneurs building great businesses with capital efficiency in mind and taking all these gains from ai and essentially the super cycle starting over again instead of with cloud and sass and mobile and then before that broadband and social networks and social graph now hey here we are we're going to start this over with ai and a new level of efficiency um and it's really exciting you do have um to logan and hunter's point a lot of scrutiny on the new funds and so we we talked about this statistic something like 15 or 20 percent of first-time funds are able to close their second fund right now i mean there were a lot of venture tourists and i am glad to see that be over because the venture tourists were making my job and i know logan you probably had the same experience really hard it's hard to like get to know a company when some lunatic is like here's 100 million or here's 50 million or here's 10 million and i don't need a board seat and yeah uncapped note sounds great and you're like did you do diligence and i had founders complain to me you're a seed fund doing better diligence or more detailed diligence than a series a investor and you know now that's changed now we have six weeks to get to know a company maybe three months for a deal to close.

9:14And that's healthier. So I'm very excited about the game on the field right now. Yeah, it's so much better. I mean, there's three different constituents I sort of think about on the, that all incentives aren't totally aligned. And one is like the individual GP and what they might be pursuing and what might make them wealthiest, for example. Then there's what's best for the founder. And then there's what's best for the limited partners. And so Tiger is used as this kind of almost meme for this. But what they were doing, actually, founders appreciated the lack of diligence and the high prices and all that stuff.

9:46Now, was it actually, were they giving the vegetables or just giving dessert to the kids? I think they might have just been giving dessert to the kids and they should have been better off giving vegetables. But from that vantage point, you could argue it was a good product, right? Or people at least liked it on the entrepreneur side. On their own pockets side of the house, I mean, raising big funds generates big fees. And I'll tell you, 2x on a$12 billion fund makes a lot more money than a 10x on a$500 million fund or something. And so from that constituent standpoint, at a selfish sort of capitalist level, I get it.

10:20I actually think that's a very prudent decision. If you can raise that much money, raising it, I don't know, as a capitalist, maybe it's a good thing to do. That's not my personal way of doing this business, but I at least understand it. But then there's the limited partner constituent. And Hunter, I'd be interested in your perspective on this. That was the one that was worst served by this strategy, right? Raise big dollars, not do a lot of diligence, just put the money to work. And that constituent, I think, is really who got burned over the course of 2021. Because the fee can come to sign up for what, 10 years, right?

10:56So these people are still going to do fine over the course of the next 10 years with these big funds. Yeah. I mean, I think one area LPs will definitely ding firms on is pacing. And so if people were putting money out the door that quickly and coming back to market and doing like annual funds instead of the typical two and a half to three, regardless of who that firm was, you're going to have to make a harder case for why you should get a re-up. And you've probably stretch the budget of the LPs that you work with simultaneously. And there are people that will be perceived as stacking management fees and approaching their business that way.

11:36And ultimately, the best way to build trust with your limited partners is by finding alignment that really works across the three constituencies that you mentioned. And so that is all tied together by being long-term oriented and maximizing multiple and end-of-day carry, not a fee accumulation approach. All right, startups, are you missing calls? Are you juggling all these notifications? Are you manually managing all of these customer interactions? Well, HubSpot's chatbot builder is here to revolutionize your workflow. Their chatbot builder is going to automate all the important tasks in your funnel, like qualifying leads or creating support tickets, scheduling meetings and so much more and you can do all of this without being a developer no you don't have to write any code imagine all the efficiency you're going to gain and setting this up is so easy just install the tracking code and you're ready to rock best part completely free that's right f-r-e-e it's the best price you need a hands-on guide well head over to hubspot's youtube channel and check out their video how to create a chatbot with hubspot there's a link in the show notes of course you'll learn step by step how to tailor your chatbot to meet your specific business needs.

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13:11Listen, startups are about three things, right? You got a team, you got a product, and you got customers. And you need to make sure your customers are taken care of. And that's what these chatbots do. To learn more about HubSpot's chatbot builder, go to their YouTube channel, search for HubSpot. Easy breezy. This is like a tragedy of the commons, right? We have to have this common effort to build sustainable, large businesses. And then incentives really matter. So you put those two things together. I think it's just such a great point, Logan, is like the incentives will drive behaviors amongst smart people and yeah they might drive themselves right off the cliff and they might drive these companies off the cliff and the founders uh i think the the eating vegetables are also a pretty good analogy what is in the best interest of the founders a lot of founders i know now have come back to me and said you know when you said um you needed a board observer seat when you had five percent ownership and a board seat when you had 10 and i was i fought you on that i've really appreciated having you on the board because when all this blew up uh i came to you and you had really good advice and you picked up the phone on the weekend and a lot of these folks they're not picking up the phones on the weekend and you know you you have to be a good steward of capital and you have to be thoughtful uh about how you build these companies and you know i was really lucky to be able to watch and be friends with bill gurley and rule off as he was coming up at sequoia with alfred and you know hanging out with doug leone and mike moritz i got to see their approach and everything came back to not the management fees not the how much how many assets under management they had it just came down to like hey building this business and what the founder was doing to build their team to build the product to delight their customers every conversation seemed to go back to the same place and then when i saw some of these tourists and i lp'd some of their funds uh you know a lot of it was you know their paper gains their press the midas list all this other stuff that is really superfluous and when i when i've learned going into my second decade as a fund manager of a fund i created which is very different by the way like all due respect logan like you joined red point it's a great institution you didn't have to like start from the cold start of saying like hey i inherited it yeah you inherited it's like it's really hard to cold start these things and i was you know talking uh with my wife over and i'm like god this you know she's like maybe you should have just joined another firm and you wouldn't have had to deal with all this and i was like now you tell me yeah exactly now you tell me on fun four now listen we've hit all of our goals which is great and we've built a great team and i wouldn't have it any other way um but boy you think this business is easy during boom times and you realize how hard it is when this stuff blows up because now you're looking through a portfolio and you're saying okay what's what's good in here what where can i squeeze out some dpi where can i find this and you're like god if i just made some better decisions when i was deploying the capital i would be in a better position than now and that pressure it takes a little while for it to manifest i find with gps so it's a little bit of time to manifest that you're not just getting a checkbook to drop money from the sky you you actually have to return the money and you have to return it faster than the public markets do or else you're out of business and um yeah i just think a lot of people join this pursuit because of i think what it looks like from the outside and what it looks like from the inside is an unbelievable amount of shutdowns suffering pain exhaustion and just sheer force of will to get some things across the finish line.

16:58That's what this is about. And then some luck. By the way, I am telling everybody who tells me they want to get into venture capital, don't do it. I know a lot of young people are watching. Oh, it seems like the greatest job ever. It's a great job. If you want to have every weekend be phone calls from founders that you have to pick up the phone and that you cannot send to voicemail. There is no turning it off. So if you're thinking about venture, you better be thinking about 60, 70, 80 hours a week because it's going back to that. This idea that you could just be at both weekends of Coachella and go skiing for eight weeks.

17:31Like, no. Sorry. It's a big problem because people's board loads and capacity is strained to the hilt because of the pacing point I just made. So you're going to have a lot of pass-offs. And even if you got the board seat or the board observer seat, it doesn't mean that you're going to have everyone fulfill their promise to be that person that's actually interacting with the founders and doing the hard yards and the hard work. And you've got a lot of pass-off kind of behavior and a lot of junior partners that are now saddled with tough vintage year portfolio companies that they're spending their time on instead of building their own track record and setting themselves up for future success.

18:10So I do think that board coverage and capacity issue is only beginning to become a problem and it's going to get worse. And no incentive, right? Because they're underwater on the carry. What are the odds that these funds are going to return? What they thought? the senior partner sold them on this 3X hurdle. This is what you make when you deliver a 3X. So it could be very demotivating for the junior partners in those cases. Jason, you mentioned how difficult it is to be a GP. Do you see a corollary between being a great founder and being a great GP? That's a great question. A lot of the people I know who got into being a venture capitalist have now gone back to being an entrepreneur because it's very hard to know oh you know when you take this corner on the track if you go too fast you're going to flip it over and the founder's like yeah let's do that but no no slow down slow down if you go into that corner too fast and you you hire that vp of sales or whatever you know you got to be more thoughtful you flip the car over uh and then you just got to watch people flip cars over a crash and you know that i think some people that's very hard to be able to um let the founders make the decision when they know they're making a wrong decision or they suspect this is a suboptimal decision so i think the people who are relentlessly supportive and inquisitive and have a lot of energy you have to have a insurmountable like amount of energy and enthusiasm because 80 go to zero at the seed stage and at the serious a stage it's like 60 or 70 go to zero what other pursuit is there where the majority case is just abject failure every day with moments of like unbelievable delight oh my god i can't believe we were the third or fourth investors in this great company wow um you know you really have to be built a certain way uh as a gambler as a person who places bets to have the wherewithal to lose and get punched in the face over and over and over again to have that you know one in 30 breakout um and so again if you're listening to this and you're a young person if you are relentless in terms of your intrigue and and how you know much you want to be supportive of other people yeah do it but if you've got a low energy level this is not the pursuit for you what do you think jason if somebody's considering being an entrepreneur versus being a fund manager and which which direction should they go if they immediately go to an entrepreneur be an entrepreneur 1000 % provide some value yeah I mean at least you know exactly how hard it's going to be and you've suffered and you've gotten punched in the face over and over again I do think like you can get a skewed version of entrepreneurship and life by getting a cushy job at a VC firm if it is in fact cushy you know our team works really hard people are doing three four meetings a day with founders consistently every week you know we did 60 or 70 first meetings last week as a firm so you know to do that requires a team doing a lot of meetings you have to have a lot of energy so i'm now hiring based on like energy level on zoom and that sounds crazy but to be able to do four zooms a day and keep your energy level and your positivity level high is hard that's not it's not an easy task and that's really what this is about is how many people can you meet with how many people can you say no to and then when you do say yes how supportive can you be so go be an entrepreneur for sure go work at a startup jason do you think being an entrepreneur makes you a better investor or do you think it just makes you more empathetic to the founders and therefore maybe a better board member or supporter along the way 100 it makes you more empathetic of course right and the thing i've learned also is you got to be a little bit humble what i learned 20 years ago doing weblogs inc and building companies like is it exactly analogous well hiring might be but how you do development or how you do marketing has changed radically and it changes you know some things are fundamental principles other things change so um but there are people like i guess you know uh fred wilson uh and girly who are just career analysts and you know they seem to have done pretty well too i think hunter Jeremy Levine.

22:32I mean, there's a fair number of careers. What do you think, Hunter? You place these bets for a living on GPs. What do you think? Is there some dispassionateness that comes from not being an entrepreneur? What's the problem, Con? No, I mean, I think there's no one-size-fits-all. It's all network and the ability to interpersonally and empathetically connect with people, end of day. And I think really be a true supporter and someone that can take the blows and doesn't get affected or spooked too quickly. I think there's a lot of behavioral elements that go into it. And we've backed people that have been founders and then become VCs.

23:13We've done pure spin-out VCs who have never had the background. I think the best firms combine different profiles together and are able to bring both to the table. But more than anything, a lot of it comes down to psychology, in my opinion. Can you say more about that? I thought that was really fascinating. I immediately came to mind was tilt control. If your aces get cracked, you're not supposed to lose or an 80 % chance of winning and somebody hits runner-runner on you, you can lose your mind and you can start batting too many hands or whatever. So tell us more about the psychology of great GPs.

23:50I mean, I think when you look at a lot of the younger, less experienced VCs, they get rattled very easily. And you can just tell. And they make selfish decisions or they make rash decisions. And they end up creating a bad reputation in the founder community because instead of being supportive and helpful and solutions-oriented, they're worried about how they appear in their partnership or how they're going to be viewed externally. And it creates bad behavior and bad partnership. And in a business where reputation and relationships are everything, that's not a good way to sustain success as a VC.

24:26And as you've mentioned today, there are a lot of up and downs in this industry and companies that end up being successful had a bunch of weird twists and turns along the way. And if you don't have the stomach, the grit, the conviction, the ability to wade through all of that, it's a horrible business for you to be in and you're inevitably going to blow up your reputation in one of the different constituencies along the way. And so a lot of these personality and psychological elements, I think, become increasingly important. That's not even talking about how you interact and build and maintain credibility with other venture partners you work with within the firm.

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26:45Hunter, have you seen, I'll ask you to do a composite, but the most challenging founder situation to deal with and then thinking about your reputation, the firm's reputation in dealing with something that was crazy. And if you give me a good one, I'll give you a crazy one too. i mean where i think you see the worst behavior from founders is when it's like a subpar acquisition and it becomes a fight among the syndicate um and then the earn out and you have people talking to the acquirer from four or five different angles and no one has full visibility on what's going on and the partnership elements like end up disappearing very quickly i literally have this one and you know it's it's always these like very minor single and double ones that get so contentious and we have this like situation and wait you know i the um i have the due diligence team when we have these acqui-hire situations you know i i see it as an opportunity for our team to learn so i'm like okay here's the and i like checklist so i make a checklist check all these items and every time we go through one you know the checklist gets edited you know post and one of the things we check is like you know obviously just for hygiene what's the um what's the stock option plan for the for the management team and then also can we get the vesting schedule of that i'm going to give a composite here i'm not talking about a specific company but imagine a company where 90 of the sale values in the equity for the management team and then or 95 even and then imagine like half of it's on signing and you're like wait a second um and i i just said to the person i was like um i want you to win just can we give the investors rlps you know just x consideration and it was like this big thing and i said you know just for your own reputation over time just so you know this is not going to move the needle for our fund and it'll give you the ability to come back to us and other people and you know they'll feel really good about backing your next company and you'll feel pretty good about it it's it's not going to be that much of a haircut for you it's just like a little a little buzz on the side it's not a big deal and um you know i wind up like you're saying talking to the founder of the company uh and i just say hey you know do you want to be perceived this way and zuckerberg used to do this all the time and chris saka called him out publicly on this podcast or on this week in startups he called him he called zuckerberg out on the podcast for doing this and you know you do see this like weird trends and so i've had to deal with that and that's always a problematic logan because you don't want to be like the bad vc who's you know arguing over the minor employment contracts but totally but yeah you can't do things that are unethical i don't know but it seems people like lose their minds over fairness is a big one or insecurity and when you have to flip it on the VC side, if you have someone that feels like they're being treated unfairly, I will lose my mind over the dumbest things.

29:51But if I feel like I'm getting screwed, immaterial to the dollars or whatever it is, it will drive me insane. But then the insecurity one's an interesting one. And Hunter, to your point on the partnership dynamics and how comfortable someone is in their seat, generally when I'm dealing with other board members that are maybe newer or are, for whatever reason, maybe less embedded into their firm, or they haven't had a history of returns or whatever, that's where you tend to see really perverse acting and things going on, because they're insecure to their partnership. And so one of the things I think when you're taking a great investor, it's, yes, the lessons learned, sure, that might be helpful that they've sat on the board of XYZ company.

30:33But the best thing I think you're getting is that person will be a rational iterative thinking actor of what actually makes the most sense for you as an entrepreneur, for their limited partners, they're going to play that long game. And if you have someone that's optimizing for a local maximum along the way, like, oh, well, if this sells, then I become a partner or a general partner, or I get into the management company or whatever. That's where you really see this weird behavior. And it can lead to just really interesting board dynamics or conversations because people are solving for something that isn't congruous with the ultimate outcome of the company.

31:09Yeah. It's also interesting. You have some of these people now who had a company go public or went public through a SPAC and they got promoted for it. And now the equity value has been crushed and you almost wonder if it's deserved in retrospect. And that's an interesting partnership dynamic too. It's getting liquidity isn't easy. And when you have the opportunity man i feel so smart right now with some of the secondary transactions we did and yeah you know and it comes up in lp meetings now oh wow yeah you made that decision okay that seems like that's what was a good trade um even when i sold uber i sold uber shares back to uber you know maybe at 30 bucks a share five years but four years before they went public and then i sold some at$37 a share to Masayoshi-san.

31:59I really was thoughtful about pairing that position on the way up just a little bit and then holding some amount. I held all my Robinhood. That was a challenge because I just believe in that company so much. And then watching Cathie Wood and all these folks run it up to$60 a share while we were locked up, that was like a new experience for me. And I'm happy I held it now because I just got my Robinhood gold credit card today. And I just watched them continue to execute. and i guess the stocks recovered a bit and i'm like it's gonna be a 200 stock someday i don't know what my lps did with their shares i'm holding mine i still believe in that management team and that's that's the second part of i think being good at this job is just knowing like if this team is truly special this product is truly special and if it's going to stand the test of time something stand the test of time it's really really interesting to see that like airbnb and Uber and even Coinbase, which I thought like, huh, I wonder if that one's going to stick around.

32:57Like, you know, a lot of these things have staying power. And if you don't, if the business doesn't die, there's a good chance it could fraud. I know it's a weird observation, but I keep seeing it. Your first point, I couldn't agree with more. Every, you know, of every 3 ,000 long tail seed investor that's listening to this needs to sell partial positions into large growth rounds. It It takes too long to wait to a full exit and sell nothing along the way if you're coming in at pre-seed seed or even early Series A. Taking some percentage of your position off of the table is the prudent thing to do.

33:37Otherwise, you're going to be sitting on funds four or five with zero DPI coming back to market and asking your LPs to support you again on the next fund. It's just not sustainable in this industry as hold periods continue to elongate. People need to use that as a mechanism for getting capital back. Jason, did you have a structured way that you went about doing it? I know Fred Wilson, I think, had some structured framework on the way up that he would trim positions, or did you just sort of do it ad hoc with intuition? I started making phone calls to people and saying, what should I do? And when I had phone calls with Ruloff, Bill Gurley, Doug Leone, that cohort, they all said - Logan Barlett.

34:17Logan Barlett. Yeah, the all-stars. the mount rushmore yeah exactly the who's who of venture capital yes i know we got we got work to do with logan we're going to be in this business for another 20 30 years we got time we have time um you know people retire at some point lebron and steph are going to retire and that'll be a whole new generation luca and yeah jalen i got some good advice and you know 10 20 in each of those rounds on the way up seemed like the right number so i did that and then i had some situations um i saw another trend happened which was founders saying hey um we had this opportunity to sell on secondary you're cool with it i'm like that's great for all of us and they're like ah yeah it's one more thing um would you waive uh your selling of the shares and i was like yeah um so you're waiving yours so we were none of us are selling they're like no no we're selling we want you to not sell i said ah i said but we're pari parsu and so let's just do that let's be pari parsu what do you want to sell and they're like we want to sell 20 i was like great i'll sell 20 like uh well if you sell 20 we probably can only sell 14 that's great so we'll all sell 14 sounds great and then i'll see you at the next board meeting and i i just held firm um and i think other folks didn't i know the other folks who didn't and now they probably have some regrets because you know we locked in in i'm just taking one case something to the effect of like a 15 or 20x by selling 20 % or 14 % and we still have the 86 % of the shares so it's 86 % of the shares on today's market might be worth the same as the 14 % we sold wow so and now I do think it's going to come back but you know will it come back fully I don't know and that's that ended up being contentious because as we talk about those three constituents you definitely did right by your limited partners there right you might have done well by Jason Calacanis there but like did it become contentious with the entrepreneurs and all in getting that done I said to them I said listen you know i've been with you since the beginning we happen to have incubated the company that went to our incubator i said i i need to get liquidity for my lps in order for me to invest in the next generation of companies like yours and founders so i hope you understand it's the business i'm in is getting some early liquidity they're like totally get it jake out totally get and when i wanted to sell some uber because i personally had money but i wasn't you know where i am now i just went to travis and i said hey i heard there was like a secondary thing he's like how much you want to sell and i was like here's a number he's like no problem i got you and i was like thanks travis because is there anything i can do and he's like yeah there is something can can i um have the voting rights to your shares and i was like you got it boss i just i literally physically saluted to him i said oh captain my captain and i literally gave the voting rights and nobody knows the story but i told travis you can my shares are your shares now you vote my shares um which turned out to be prescient if you know the history of the company being a founder can be overwhelming don't i know it you know i get those phone calls on the weekend sometimes people are a little overwhelmed they need to talk to jcal they got my phone number I know the reason why.

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38:01The end result is the precision control and focus your startup needs to transform how you operate. Join over 100 ,000 startups that trust Mercury for financial excellence, growth, and of course, the community. Mercury, the art of simplified finances. Apply a minute, mercury.com, and start transforming your startup's journey today. Next up, Sendana Capital announced that they have raised a$105 million fund, in partnership with Klein Hill in order by secondary stakes and seed funds, where LPs are seeking liquidity. Logan, what do you think about the Sendana Klein Hill strategy? I mean, to the earlier discussion, I think finding liquidity is the name of the game for managers.

38:45And I assume this is going after, is this going after manager liquidity, or it's going after company liquidity? It's going after manager at the early stage, roughly the seed or early stage. I mean, I think these time horizons keep getting longer and longer, right? When these companies are going to go public and the bars keep going up higher and higher of what you need to go public, right? I think people have probably seen, I think it was Philippe Lafon said pretty publicly from KOTU that the new bar might be a billion dollars in revenue for a company to go public. And if you're an early stage seed investor or angel investor in this, I mean, it starts to be a different product when you're talking about companies raising at 10, 20, 30, 40, 50,$100 billion in the private markets.

39:32Once upon a time, Microsoft, back in the day, went public at a$500 million valuation. You can look at these charts of how much value is created in the public markets versus private markets for a lot of tech companies. And you look at it for Cisco, and you look at it for Facebook, and you look at it for Microsoft. And then you compare it to some of the companies today, and most of the value is actually getting created in the private markets versus the public markets once upon a time. And so if you're an early stage investor, it makes sense to me that you would want some liquidity or some product to get out and change hands so someone else is taking more of that risk along the way.

40:07So I think it's smart. I do think there's a lot of people that have been doing this as a part of their strategy at different points in time. And so I don't know how it's probably needed more than it has been today. I don't know if it's necessarily like a totally novel concept, but certainly seems that it's more prudent than ever. And Logan, I'm curious, we talked early in the show, Tiger's raising$2.2 billion down from$12.7 billion. The late stage is essentially disappearing more or less. So how do these companies get to a billion dollars? Because the way that I look at it is companies go public when they decide to go public when they file an this one.

40:44So how do we reconcile this dearth of late stage capital with companies wanting to go private, stay private longer? It's hard. I mean, if you look at what the number of public companies, I don't know, in tech or in general, back in the 90s or 2000s, like, as we've increased the regulatory hurdles for these companies to go out, there's a lot of benefits to it, for sure, right? There's a lot less fraud going on in the public markets. The disclosures are a lot better than they were once upon a time. But as the bar goes up higher and higher, the number of companies that go public keep going down. And so you have retail investors that aren't able to access these products or access these companies that once upon a time would have already been public.