Series A valuations, M&A in 2024, and M.A.N.G with Jason Shuman and Raja Doddala | E1883

28:07And I'll define round tripping in a minute. um how much is round tripping of either credits for azure in microsoft case microsoft's case or buying silicon from nvidia so nvidia puts in you know whatever hundreds of millions of dollars and then the company is an interesting core weave is an interesting case there yeah yeah so explain it i think it's like this is really worth and round tripping for people who don't understand is when one person invests money and then the other person buys services from them so the money is round-tripping the SEC and other Department of Justice. They've taken action against companies in the past for doing this because it can look like you're propping up, painting the tape, et cetera.

28:49No, no. So CoreWeave, I think, you know, they buy processors from NVIDIA and then they resell them. And they're a reseller of CoreWeave services and then they're an equity investor. So where are they counting the sales? Are they counting, you know, for NVIDIA? Are they accounting for Coral Weave and how are they valuing their investment? I tried to make sense of it, I couldn't. So even to explain it, I couldn't. So it's a really strange, strange case. This is ultimately just old school financial engineering. You give somebody 40 million, they buy 20 million worth of chips. And if you're trading at a multiple on your stock, whether it's a 7x or 10x, you get to capture all that upside while also having the asymmetric equity investment in that company if that company ends up actually becoming like an open AI and ending up being...

29:42The minimum equity value is double counted. Yeah. See, your core weaves valuation and then NVIDIA's public valuation, it's double counting going on and definitely an evaluation. I don't know enough to say the sales are double counted, but I'm reasonably certain the valuation is double counted in two companies. So I think to your point, Jason, if you're an existing shareholder, you're happy. If you're a new shareholder buying at the new inflated price, you might want to take a second look at that. Totally. I mean, the irony is, by the way, this has happened in many, many other industries, even before this whole AI boom.

30:16I mean, go look at Clavio's IPO, like who's on the cap table, Shopify, you know, go look on the cap tables of a lot of these companies in healthcare, who's on the cap table, different hospital systems. And so it's just being done in a different way here. And now we're hearing about it versus the fact that it's been getting done behind closed doors. We have an expression in the industry, no conflict, no interest. And so, yeah, it's conflicted. So that makes it super interesting. You just can't get too cute or else regulators get involved. And they're like, hey, can you explain this to me? And I remember early in my career, an attorney was speaking at a conference I was at.

30:54and he just said the appearance of impropriety is impropriety as far as he was concerned and so you once it looks inappropriate it is inappropriate that was his you know uh message to folks this looks inappropriate in some cases therefore it is inappropriate it would be much cleaner if the investing was done by professional investors and then people made independent decisions of what they would do with that those dollars as opposed to the round tripping and you can just type in aol round tripping time one around tripping aol did this in the 90s sales teams would sell a startup on taking a 50 million dollar investment from aol that company would then buy 30 or 40 maybe maybe even 60 million dollars worth of advertising over the next seven years to be the default portal page for music for women for whatever vertical topic editorially you know they were involved in and uh there was a massive fine and i think some people even went to jail for a short period of time for doing this kind of stuff so when your name is on that insertion order and you've done the round tripping thing and then you get a commission on it man this stuff can get really really gnarly really quick because you also have people with equity compensation so you're the CEO of company a that made the investment and your equity went up to Jason's point, your equity just went up.

32:19And then Roger was like, Hey, well, wait, equity in both companies went up. And then the management team gets equity bonuses for hitting revenue targets. And this was a contributor to the revenue target. So let's say the entire management team, if they hit 1 billion in sales, gets this incredible bonus. And then this investment with the round trip got you over the hurdle, really messy. And so people got to keep an eye on this one. But it's definitely sort of the AI enclave. I think as you talked about, J. Cal and other podcasts, there's just lots of weird stuff going on in the AI enclave. Because people don't know where the value is going to reside, I think, in some cases.

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34:06Stop burning money. Hire developers smarter. Visit lemon.io slash twist. David, you asked the question, where do I see alpha? I don't know that we know. This is sort of a six to 12 year alpha. We won't see until eight to 12 years. But I'll tell you where our dollars are currently. 60 % of our LP dollars are currently in series A through D. But in terms of actual number of positions, it's the opposite. 60 % are in pre-seed and seed, sort of smaller funds. So that's kind of how our portfolio looks like currently. There's a rush right now to get to seed and pre-seed. I think the seed is kind of series A.

34:49And so series A has always been the coveted spot. You got just enough traction to know it's just past the product market fit phase, but not where the valuation is It's obvious to everybody. It's like this very sweet spot. We used to call it Series A and Benchmark used to do it. Now it's really seed and Benchmark. I think it's still the early stage, right? That was the early stage. And then in terms of, you know, being to J. Cal's point, like sobriety is back to Series A. At least, you know, some of the firms, not all of them. But, you know, which makes it, David, if I have to pick one entry point, that's probably So on a risk-adjusted basis, the alpha is probably Series A.

35:33You have a much larger portfolio at the pre-seed and seed and a much more concentrated Series A. Are they fundamentally different asset classes to an LP? I think they are. Because seed and pre-seed, there's a 5 % to 8 % premium that's available. As an LP, historically, that's been true. So as an LP, it's tempting to put more dollars there, especially in the period that we're in, where sobriety is back, better process, to Jason's point, more meetings. But that's a really fraught area for LPs, especially large institutions, because you have to see, we've seen 250 firms last year, and we made, what, 12, 215 bets.

36:17That's a really hard thing to do. Lots of institutions just don't have the patience or the time or the resources to do it. So speaking of asset classes that may or may not have alpha, let's talk about secondaries. Lexington Partners has raised a new massive secondaries fund. The fund Lexington Capital Partners 10, which initially had a fundraising target of$15 billion, raised a whopping$22.7 billion, significantly up from their 2020 vintage of$14 billion. It's reported that already 40 % of the capital has been deployed across 50 deals. Other firms are also following suit. Pine Grove Capital Partners, which is a joint venture between Brookfield and Sequoia, as well as Stepstone, are also raising multi-billion dollar secondary funds.

37:04Based on a recent SEC filing, it's reported that Stepstone has already raised$1.25 billion. Raja, I know you've seen a lot of opportunities in the secondary space. What are you seeing today? I've looked at secondary funds, a lot of them, and I've turned them all down, David. The reason is, you know, a lot of them, most of them, not all of them, but most of them, the strategy is basically price arbitrage. It's not that interesting to me, that part of, you know, if it's the secondaries, it's a way to sort of, you love the company, it's a way to get in the door and then increase ownership. And there are some that do that.

37:42And we're an LP and a fund that does that. But if your secondary strategy is strictly, you know, you think there's this massive arbitrage in price, I'm a little skeptical that that will work and it warrants tens of billions of dollars of capital. I can't believe that there are that many quality distressed assets. I just can't. You know, I just, you know, I've tried to understand it. I've asked them to explain it to me and they're not able to convince me. I had one or two people who know our book of business from, you know, our first funds, you know, kind of knock on the door. Hey, can we talk about doing, I think they called it a strip.

38:20And they, you know, hey, we'll look at your two funds as the GP, we'll get you some liquidity. So as but one example, our first fund, I think is like 4.9 or 5x on paper, we've distributed 1.x. And they're like, hey, we can get you to that 3x, that would look really good to GPs in this kind of market. I'm sorry, to LPs in this kind of market. can we can we get a little strip there and we know there are some cool assets in there whatever they've done the math and so you know it i did look at it i didn't go very deep because i looked at and said well you know this is a small fund these are me and my friends money i have faith in the names yes the market came apart for two years and we you know post serp and covet everything went crazy but we could hold on we could just communicate to our lps yes we think things are undervalued.

39:04I had somebody email me just last night, hey, can you tell me about these three names? And I was like, I'm on the board of this company. I'm in touch with these two founders. We still believe in these names. Yes, their peak valuation in two out of three cases is definitely lower, but we have insight into those companies and we think they're great. So why would we give that opportunity to somebody else and go through the point of a transaction? We'd rather just hold - I'll pick up on that. I think we get occasional calls from our GPs, hey, we have this opportunity to sort of bank some win. It's like a three to four to five X.

39:39When that's a minority, they're selling 10 to 20 % of the position, not like 80 % of the position at 40 % discount. I think that's a valid... Creating liquidity is kind of what makes the system sort of the flywheel turned. So if you have the opportunity to create a 3X outcome for the fund by selling 20%. But that's not a distressed sort of sale. That's more of an opportunistic way to create DPI, which is, I think, valid to do. And we've sold a couple where we're sitting on a 7x net and it's a nice four to five year hold. And my capital provider likes cash, especially with liquidity being delayed in the market.

40:24But we're not selling under duress. is sort of a more of an offensive thing. Jake, I took the words out of my mouth because I think that there was a lot of funds that started to get raised in the 2015 to 2017 era that now are sitting on a lot of big marks and they need to come back to market, right? And if you're a secondary fund and you're looking at all these funds and you try to find the funds that have the most diversification, for instance, like our first fund here, primary, I think it'll be about eight unicorns out of 24 companies. If you're going to go do a strip sale, that's the type of fund that you want to go do it at.

40:59Because you know that there's going to be some companies that don't pan out. There'll be some companies that do pan out. And it's easier for you as an LP to underwrite if you're going to buy that out. Versus I think it's very, very scary when you're looking at some of these funds that are... I mean, you look at the average seed stage fund, what? 8 % of their deals become north of 10x type returns. And hopefully that's going to pay for everything. But all of a sudden, you see companies like Convoy and a number of others that go out of business just like that overnight, and all of your turns are gone.

41:31So I do think that managing liquidity is an incredibly important thing that some firms don't well. It's an active activity. It's not a passive activity. So I think every GPD should be trying to create liquidity. Jason Schumann, how has Primary managed liquidity? What's your operating principle? I mean, anytime that we're constantly thinking about it, and we will sell shares of companies, when it starts to get to the point where it's obviously a fund returner, for instance, we have a couple of positions that were north of that first one was$60 million. So we took off, call it 10 % to 20%. We left the remaining 80 % riding.

42:09That got us a half a turn of the fund or a full turn of the fund. And then you still have all the upside in the world. But whenever I talk to LPs, by the way, they say one of the most impressive things about Union Square is Fred Wilson's ability to get out of positions as much as it is to get into positions. Because if you look at the best venture funds in any vintage year, the top 5 % is never much further north than 6x. So if you're at a 6x, maybe you should start considering selling out at that point. Yeah, I think it's really wise. um and you know fred and and jerry colonna when they were running union square ventures back in the day or sorry flat iron partners the precursor union square they had a bunch of investments like geo cities and a couple of other ones that um did collapse and i think they got scarred early on by some of those and then you look at like a firm like benchmark i think does a good job as well when you look at we work which funds made money on we work like that thing went down in a blaze of glory as we all know and they seem to have sold their position you know at a couple of billion dollars and it always looks smart so just at launch when we get these offers we sell 10 20 on the way out maybe once or twice and you know then you have the 80 in play and on a personal basis i've told you this david before like i sold some of my shares back to uber at 32 a share years before they went public i sold a bunch to masa i think at 40 or so i don't remember what his secondary was for our shares.

43:37And then I held the rest. And here we are today. It hit a all-new record of 65. There's not a signaling risk. If you're a small fund and you're not, the lead Series B investor selling half would be a signaling risk. But a seed investor selling 20 % is not a signaling risk. I think this is why also, Roger, you tell me if I'm right, LPs are interested in seed funds because they do have this chance to hit the early liquidity. Whereas if you're a later stage fund or a series a fund well you already paid 200 million now the company's worth 600 like it doesn't to jason's point give you that full turn of the funds to three to five x in a smaller fund you know definitely yeah i always find it funny though especially you know when i first got an adventure and you know being in new york you hear this like west coast mentality of rider winners i think jay it's in your in your guys intro right let your winners ride and like you know you you go through one down market, by the way, that completely changes.

44:32Or you talk to one hedge fund manager in New York City, and that also completely changes because managing risk is just super important. And too many VCs are good at picking companies, but they're not good at getting out of them. Yeah. Let your winners ride with a caveat of, yeah, sell 20, 30 % on the way up. If you think about if people who were in Facebook or Google, I have a lot of friends who early facebook early google many of them liquidated their entire positions you know and if you liquidated your google or your facebook or your tesla at very early positions man that smarts that smarts for a while that stings right and i'm always a fan of yeah maybe 50 keep 50 and sell 50 you said that you're never selling your uber shares you know i i don't think i'm ever going to sell the the ones i have remaining because i believe it's a trillion dollar company I believe in network effects.

45:28I believe in the management. I believe in the profitability of it. It's a verb right now. And so I feel it's kind of like destined to be like Amazon or Apple or some of those companies. And, you know, if it's going to be the next Amazon or Apple, I'm going to be alive for hopefully 30 or 40 more years. Like, what's the point of selling what I have left? I could just ride it forever. And that's worked okay. I mean, it is a little stomach. I will say, you know, when it hit$15,$16 a share, man, my stomach was like, you know, Because that was, at a certain point, the majority of my net worth, I did diversify some of it.

46:01But that's a gut check. What was that for you, JCal? 4 ,000x? Is that the correct multiple? I mean, depending on where you tip it, if you tip it today, it'd be more than 5 ,000x, right? So I always tell my LPs the same thing. My returns are only going down from here. The chances of me hitting another 5 ,000x are low. So, but, you know, I did change my strategy to try to own 10 % of the winners rather than 10 basis points. You know, so if you, you know, adjust your approach. Your math is different. Your portfolio math is different now. We're your stage of your life. Yes. Yeah. And right now, like I'm trying to, my strategy is have enough surface area per fund, which is 300 of the accelerator type companies to have 20 of those become unicorns or something really meaningful, hundreds of millions of dollars, and then be able to plow half the funds dollars into the top 10 names right so they're spraying prey as a portfolio strategy then there's concentrated and trying to do both of those things in the same fund is very hard for people to understand um and that's the thing i'm trying to do you know and we'll see as a strategy if i'm successful we'll know in the next couple of years you almost have an entire portfolio that an lp would have if you look at raj's portfolio you have how many 20 funds with 30 managers about 30 manage.

47:19So you're not investing as a single fund, you're investing as a portfolio. Tell me about how that changes your calculus. So our approach to the portfolio is we sort of like, I think earlier you alluded to, I never thought about it that way, but it's true. We think about seed and pre-seed in sort of a separate asset class. And then A through two. So my focus is pre-seed through D, and that's as late as we will go. We sort of have this barbell strategy where A through D is these five, six core, reputable multi-stage firms out of the, I don't know, 20 or 25, let's say, the ones that kept their fund sizes somewhat manageable, somewhat exercised price discipline over the last six, seven years.

48:11Generalists where they have diversified sector exposure, that's one part of the barbell. And the other part is sort of pre-seed and seed. And the way we think about that is these are a lot of small 25 to$85 million funds where they have some specific network or expertise or value that they're able to get into these syndicates and then have good graduation rates. And then layer an additional capital on top of that sort of an inflection point series B, you know, late A or B or C at, you know, lower hold periods and better economics. That's kind of how we think about our portfolio. And J. Cal, you alluded a little bit to your portfolio construction.

48:58You have 300 at the early stage. How do you pick which companies to follow on? Yeah, this is something I've hard fought and learned over 10 years, I think. And also just talking to LPs, because this is really the fourth fund is the first time I've met with a lot of LPs. I think people are GPs or softies, right? We love founders. We want to be supportive. And it's very hard to communicate with your portfolio and say, we don't do bridge rounds. We don't do, uh, you know, uh, we, we don't expand our position, you know, except in these circumstances. And in my early years as an investor, I too was a softie, right?

49:38And I, I would give token investments. I want to support the rounds signaling. So, you know, we have a portfolio company. They've worked really hard, but they don't have escape velocity yet, right? It's not a hockey stick. But we're going to put an extra 50K in. We want to be supportive of the founder. We want to put an extra 100K in, right? And you know what? That next 100K could have been another accelerator company. It could be actually a new bet. So this bet has proven it's going sideways, and we didn't make a new bet. Was that the most capital-efficient thing to do? Obviously not, or probably not.

50:09Was it the kind thing to do? Did it make you feel good as a GP? Yes. And so we've told our founders, we have two follow-on bets we do. One is in likely winners, one is in definitive winners. And I just came up with a framework for my team, because I have to train a team of people now, right, with this many investments. I'll start with definitive winners. A definitive winner, in our definition, there's a notable lead investor doing this round. Sequoia, benchmark, go right down the line. So there's a notable lead pricing the round. And the revenue has grown 3x year over year. So just if you just take those two things, how often do you see that in your portfolio, Jason Schumann?

50:49How often do you see we got benchmark leading the next round and it's tripling revenue over year? It's not often, right? It's a unique event when those two things are occurring. So that's definitive. We all know, and maybe that's 5 % of the time, if you're lucky for a seed fund. that those kind of scenarios happen. And then we have likely winners. And likely winners, we're seeing two or three X year over year revenue. And we're seeing a lead. Maybe it's not the top tier lead that we would want. And then we say, try to say no to everything else. And we've now communicated to our founders. We are a seed fund.

51:22Our agreement with our LPs is we do not do bridge rounds. We do price rounds. And so, and that's the truth. That's what I pitched LPs. Because now these serious LPs who we have are saying to us, what is your follow-on strategy? So I had to clearly define it and I just clearly defined it. We're not doing bridge rounds. We're not doing these internal rounds unless it's like 5X revenue, right? Like if there's something crazy going on, but that's like, if you're growing revenue five times year over year, shouldn't Benchmark or Sequoia or somebody be coming in? Yeah. So, you know, that's the kind of, I think, discipline you have to have.

51:59And I think it comes from having a couple of funds under your belt and having to face the scrutiny of lps who say tell me about this investment tell me about that investment oh you followed on with this one it was struggling why did you do that oh because i like the founder oh the founder got to me first the founder told me a good story i'm founder friendly you know what you have a portfolio strategy and i've told my internal team it's a competition for those dollars and the competition is amongst the top six or 7 % of the portfolio. So there's 300 names in the portfolio and the top 20 get to compete for those dollars.

52:34So, you know, more than nine out of 10 do not qualify for the top 7 % by definition. So it gets a little bit easier as you get older and you just have to communicate it to the two customers, LPs and founders. They just, I think if you tell it to them straight early on, everybody's in alignment. I don't know what Jason Schumann, I don't know how many years you've been doing this now. So tell us how many years and what's your philosophy? Nine years at this point. I mean, I'll tell you a couple of things. So one, I've had this exact same conversation with Josh Koppelman first round and Jesse over at IA.

53:08And our three funds all looked back at the historical data and all of our funds. And basically what we found was that if you survey all your partners in the middle of a fund, and you take the top third, the second third, and the bottom third, the top third is definitely where you want to concentrate your capital, by the way. Everybody knows that because if you look at funds, and I've looked at the fund and portfolio breakdown of funds that have returned over 10x before with one of our LPs, and 91 % of the value came from 14 % of the investments. However, 23.9 % of their capital went into those 14 % of investments.

53:44So concentrating capital is a great strategy. However, what we also saw, all three of our funds, there's always one or two fund returners that comes from that bottom third or that messy middle that you never would have anticipated. And you look at a company like Alloy and they're in our portfolio and Lightspeed did a big round. That company basically had zero revenue. We wrote three checks while it had zero revenue. And all of a sudden it was up and to the right. And so I think what you really need to do is you need to either A, have the trust of your LPs, but B, you need to have a lot of conviction if you're going to be writing checks in those bottom two thirds.

54:20Otherwise, you should be putting all your money into your winners. How do you find that conviction? What are the non-tripling revenue, non-metric ways that you did it, Jason? Candidly, your job is very different, I think, than my job at the end of the day. I'm literally talking to our founders almost every day because I only work with 3 or 4 new ones a year. And we have different people at our firm who work inside those companies one day a week. And so we're using asymmetric information to make those calls. And so if you're a founder, and you're moving super fast and you're learning really quickly and you're iterating and finding product market fit where it feels like there's signs of that, great.

54:58We'll give you capital because we think you'll finally hit it. But if you're not learning super fast and we give you some advice and you're not taking it or you're not going out and getting great advice, then unfortunately, there's probably other things that you shouldn't be doing. I love that answer. In those cases where you have this asymmetric information because you're spending a lot of time with the team, are you doing a conviction-based bridge round or are you bringing in outside funding to go along with your dollars? I'll give you a great example. So our LPAC gave us approval to lead later stage rounds now in our portfolio companies when we had conviction and the outside world didn't.

55:41And so this actually happened recently, 3 separate times. In every time that this has happened, we gave a company a term sheet for an$8 to$12 million check from us, which as a seed fund is really big, but our opportunity funds 150 million. And that round became oversubscribed by 30, 40, 50 % afterwards. And it was just because I think we're in this weird time right now in the world, where sometimes, especially with the later stage companies, they just are having trouble figuring out where's pricing and people don't want to get fired because the market's still figuring itself out. But at Seed, the answer at the end of the day is we usually are the ones who are stepping up, pricing it, increasing exposure.

56:25Because why... If you're going to write a check, write a check. And then go out and try to bring in some other folks as well. And you mentioned the three, the third, upper third, middle third, and bottom third. Is that from a revenue standpoint? Or is that qualitatively... Have you had companies in the quote unquote, bottom third, the ones that you have the least conviction in really be a fund returner? We have had, yes. We've had fund returners come out of the bottom third. What are the lessons learned from that? What did you guys miss? What did we miss? The market usually catches up. So one thing I fundamentally believe in is that you can put a great founder in a bad market, the market will keep its reputation, the founder won't.

57:04And oftentimes, we have been right on the idea, but wrong about the timing. And sometimes the timing catches up. And then all of a sudden, that's when you start to see things take off. The world catches up to the founder's vision in some way. And I think that's super profound. Yeah. Speaking about the world catching up, M &A activity is finally starting to pick up. It's reported that PE firms Bain Capital and Hellman and Friedman are in competition to acquire DocuSign, may even end up partnering together on the deal. After the news broke, DocuSign shares were up 5.3%. According to a BA of A analyst, the company could potentially see a buyout of up to$95 a share based on comparables.

57:51Is it now time for the M &A market to start to heat up? What has been present when M &A has heated up historically? Generally, capital scarcity and money sitting on the sidelines. That's definitely true. There's a lot of money sitting there, especially we're seeing in some funds that we're in where they're now getting inbound from PE firms, sort of growth equity, you know, tech growth equity firms. And they have a lot of, you know, dry powder, and people can't sit on the sidelines forever. The IPOs is what I'm watching. I think we saw today, there's rumors, Reddit is quietly filing and go out in March, Stripe, obviously, ByteDance, Plaid, there's just a ton of backlog inventory.

58:34And these private equity firms, I don't call them bottom feeding, but they're looking for a really good deal. I mean, they're the most value conscious. And so if they want to buy Zendesk or DocuSign or whatever, they want to buy it, reorganize it on a Google spreadsheet in Excel and make it super profitable and then flip it for max return, right? So if they're active and they're seeing opportunities, that means maybe there is some market opportunity. And this does dovetail with the layoffs and being more fit, as Brad Gerstner says. As companies get more fit and founders accept financial discipline and throwing off profits, the companies become more attractive.

59:13Companies that are losing money are not attractive in M &A, except in very rare instances where they have some strategic value. When they become money printing machines, like Uber, like Airbnb, having talked to the Airbnb founders, when they started becoming profitable and the cashflow started, man, did they get treated completely differently by Wall Street. And so I think that's going to change everything. As founders work through these really difficult times and the companies become profitable and the balance sheets look really good, which takes founders a couple of years coming out of Zerp to clean it up.

59:49That's when I think everybody gets a little greedy. Jason, is the bid and ask spread, is that coming down a bit? Great question. That's been the problem last fall. I don't know if that's changing or not. Yeah. I mean, Instacart took the medicine, right? So they bit the bullet. They went out at seven or eight billion or something. And now people are saying, wow, it's such an attractive valuation that Uber could buy it with no problem. They could buy it for like$30 or$40 a share, I read. They could buy it for a much higher price than it's currently trading at. And it would make sense in terms of the arbitrage between Uber's valuation and theirs and how Uber might be able to do it.

1:00:24When people start having those moments of greed, right? uh like a healthy greed that's when i think that shows the market has turned a corner and i think feels like 2024 could be the year that that happens i'm super excited to see exits happen so that lps can feel like this business is viable again i think some lps are like is venture viable is and i'm like are we really having that discussion is venture capital viable not at the Zerp lunacy. It wasn't viable. But what we do every day, sticking to our knitting, yeah, of course, it's incredible. On the 10X side, we do quite a bit in the public markets.

1:01:02And one of the consensus views is that if Instacart had actually gone really well last year, there would be a flurry of IPOs. There's certainly a lot of pent-up demand behind Instacart. It's one of the largest IPO pipelines, I think, over the last several decades. So I think a lot of the success will actually depend on a Reddit IPO and whether IPO investors are able to make money. The only people that made money on the Instacart IPOs were the ones that bought it on the IPO day and sold it at the end of the day. And that's not healthy for the IPO market. So I think... People made fun of Uber and Airbnb for years over the same exact issue.

1:01:38And then all of a sudden, it turns a corner. So... I just keep thinking about incentives at the end of the day. And if you're a founder, get profitable, open up the market to a PE acquisition. Because if you're not profitable, it just trims out a massive chunk of the market for you. And on the public market side of things, look, I think going back to your comment about VC, there's going to have to be some companies that go public that are going to be below their last round price, because we all need liquidity in order to keep this engine rolling. Well, this has been an exciting episode. We covered quite a lot on liquidity from Jason Schumann at Primary Partners, Raja Dadala at Churchill Asset Management, of course, JCal, the world's greatest moderator.

1:02:18This is David Weisberg from 10X Capital signing off.