Latest / Bloomberg Intelligence / Trinity's Tai: Large Companies Risk Becoming Dinosaurs (Audio)

Transcript

Trinity's Tai: Large Companies Risk Becoming Dinosaurs (Audio) · Bloomberg Intelligence

• 0:03
  Speaker 1: Global business news twenty four hours a day at Bloomberg
• 0:07
  Speaker 1: dot Com, the Radio plus Mobile Act and on your radio.
• 0:10
  Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.
• 0:14
  Speaker 1: I'm Charlie Pelota. The down Jones industrial averages trading lower,
• 0:18
  Speaker 1: the SMP and nez DAC both higher, and this update
• 0:21
  Speaker 1: is brought to you by Bentley University. What to tying
• 0:24
  Speaker 1: up the finances at Converse and managing asset allocations at
• 0:28
  Speaker 1: JP Morgan have in common a business degree from Bentley University.
• 0:32
  Speaker 1: Because business is everywhere, prepare here. Stocks are fluctuating. We've
• 0:38
  Speaker 1: got the SMP up two points to four. That is
• 0:41
  Speaker 1: a gain of one tenth of one percent, as stack
• 0:44
  Speaker 1: up nine a gain of two tenths of one percent.
• 0:46
  Speaker 1: Down Industrials lower by a point now to eighteen thousand,
• 0:49
  Speaker 1: five hundred seventy three. The ten year of five thirty
• 0:53
  Speaker 1: seconds yield one point five three percent. Gold up eight
• 0:56
  Speaker 1: thirty ounce the thirteen fifty three in advance of six
• 0:59
  Speaker 1: tenths of crude oil West Texas Intermediate traded in New
• 1:03
  Speaker 1: York up three point three four. Brent is above fifty
• 1:07
  Speaker 1: dollars a barrel, first time since July of two percent
• 1:10
  Speaker 1: now fifty nine. I'm Charlie Pallotte. That's a Bloomberg Business flash.
• 1:16
  Speaker 1: You're listening to taking Stock with pim Box and Kathleen
• 1:19
  Speaker 1: Hayes on Bloomberg Radio. Eat or Be Eaten, Acquire or
• 1:25
  Speaker 1: Be Acquired? M and A madness in the startup universe,
• 1:28
  Speaker 1: and our next guest says, if you want to survive
• 1:31
  Speaker 1: and thrive, you better pay attention to a very major trend,
• 1:34
  Speaker 1: the move from the information age into the intelligence age.
• 1:38
  Speaker 1: Joining us the studio day is gust Tie. He's general
• 1:41
  Speaker 1: partner at Trinity Ventures in Menlo Park, California, the heart
• 1:45
  Speaker 1: of the valley, and he's here today to join us
• 1:48
  Speaker 1: to talk about this. Gus, welcome, Thank you. So, uh,
• 1:51
  Speaker 1: there is certainly a lot of M and A activity
• 1:54
  Speaker 1: what is driving in and we're talking about trends, but
• 1:57
  Speaker 1: is there anything about people uh getting more confident, financing
• 2:02
  Speaker 1: being cheap? What's behind it? Yes, Kathleen, I think we're
• 2:05
  Speaker 1: in a super fascinating time right now where you have
• 2:09
  Speaker 1: Microsoft buying LinkedIn for six billion, you have Walmart buying
• 2:13
  Speaker 1: Jet for three point three billion, and even GM bought
• 2:16
  Speaker 1: Crews for billion dollars. I think that the trend is driving.
• 2:19
  Speaker 1: All of these are large corporations seeking to bring in
• 2:22
  Speaker 1: DNA and capability to move from the information age to
• 2:26
  Speaker 1: the intelligence age. Hey, Gus, you know, just to give
• 2:29
  Speaker 1: some context here, at Trinity Ventures, Zu Lily initial public offering,
• 2:35
  Speaker 1: that would be you, Blue Nile initial public offering, that
• 2:39
  Speaker 1: would be you. If I always keep asking myself, if
• 2:42
  Speaker 1: these are all such great companies, whether it's publical private,
• 2:47
  Speaker 1: why sell them? Sure? Well, from a venture capital standpoint,
• 2:52
  Speaker 1: when we make investments in companies, we do make agreement
• 2:55
  Speaker 1: with the management team and the other shareholders to have
• 2:57
  Speaker 1: some form of liquidity. And so if the liquidity comes
• 3:00
  Speaker 1: in other forms such as dividends, that would be possible.
• 3:03
  Speaker 1: But in general, when a company is acquired or goes public,
• 3:06
  Speaker 1: it makes their capital liquid and then we could we
• 3:10
  Speaker 1: buy in and we liquid eight and we distribute those
• 3:12
  Speaker 1: profits back to our LPs. That makes sense to me.
• 3:15
  Speaker 1: You want to put some money in your pocket when
• 3:16
  Speaker 1: you put all that work into starting up a company.
• 3:19
  Speaker 1: What about this? What are you talking about? Information age
• 3:21
  Speaker 1: to intelligence age? What does that mean? It's it's very
• 3:25
  Speaker 1: it's very compelling. What does it mean? Yeah, we view
• 3:28
  Speaker 1: this as as transformative from moving from the industrial revolution
• 3:32
  Speaker 1: to the information revolution. And so now over the last
• 3:35
  Speaker 1: twenty years, we've been aggregating all of this information about things.
• 3:39
  Speaker 1: So if you look at Amazon when they pulled together
• 3:42
  Speaker 1: all the things you could buy, that's pulling together information
• 3:45
  Speaker 1: on one particular place. However, the information overwhelms all of us,
• 3:49
  Speaker 1: whether we're individuals or businesses, and so you need to
• 3:52
  Speaker 1: add intelligence to be able to sort through that information.
• 3:56
  Speaker 1: So you've seen this intelligence revolution where you makes sense
• 4:00
  Speaker 1: of the data in in information technology companies, but you
• 4:04
  Speaker 1: haven't seen that shift yet in all the other industries.
• 4:07
  Speaker 1: And that's what we're arguing is taking place right now
• 4:10
  Speaker 1: that if these large companies don't add intelligence to all
• 4:13
  Speaker 1: the information they have already, they may become dinosaurs. Does
• 4:17
  Speaker 1: that same strategy apply to the venture capital world? Well,
• 4:21
  Speaker 1: because I understand that what is it you know? You
• 4:23
  Speaker 1: do ten investments, seven dive, three maybe live on, and
• 4:27
  Speaker 1: one is the thing that you know puts the roof
• 4:30
  Speaker 1: over everybody's head, it sure does apply to venture capital
• 4:34
  Speaker 1: in all other industries. And you are seeing innovation at
• 4:38
  Speaker 1: various different types of venture firms, particularly the newer ones
• 4:41
  Speaker 1: that have this fresh look A dear friend of mine
• 4:44
  Speaker 1: who who inspires me in the valley is Dave McClure.
• 4:47
  Speaker 1: He has five startups, and he would argue that firms
• 4:51
  Speaker 1: that are traditional, perhaps even a firm like ours, as
• 4:53
  Speaker 1: a dinosaur, and and we have to pay attention to
• 4:56
  Speaker 1: that because you need to sort data better. I mean, seriously,
• 4:58
  Speaker 1: what does that mean for you? If you're a dinosaur?
• 5:00
  Speaker 1: How could you be a dinosaur? Well? You know, I
• 5:02
  Speaker 1: would argue that venture firms are more resilient to this
• 5:06
  Speaker 1: trend because we actually are competing to understand and makes
• 5:10
  Speaker 1: sense of data we already have and put it in
• 5:12
  Speaker 1: the forms of or what it's it's the model of
• 5:17
  Speaker 1: so so a thesis for a disruption for venture capital
• 5:21
  Speaker 1: what pim the way, what I inferred from what Pim
• 5:23
  Speaker 1: was saying is that the traditional model is you make
• 5:27
  Speaker 1: two investments per partner per year. And if you have
• 5:29
  Speaker 1: a firm of ten ten partners at investments per year,
• 5:32
  Speaker 1: from a portfolio theory basis, it may make sense to
• 5:35
  Speaker 1: make a hundred investments per year. If you have a
• 5:38
  Speaker 1: strategy for feeding the winners and calling the losers, that's
• 5:41
  Speaker 1: a legitimate strategy. And if you have information that that
• 5:45
  Speaker 1: you can transform it intelligence to understand that trend better.
• 5:48
  Speaker 1: You could have a leg up. I just want to
• 5:50
  Speaker 1: go through some recent deals to get your thoughts on this. Gillette,
• 5:53
  Speaker 1: Dollar Shave Club. Yeah, I mean Dollar Shave Club, as
• 5:57
  Speaker 1: I understand, doesn't make money necessarily, at least not yet.
• 6:01
  Speaker 1: Is there a strategy or a theme that we need
• 6:03
  Speaker 1: to understand here? Yes? And and so? Uh the theme
• 6:07
  Speaker 1: and Uni Leaver purchased Dollar Shave Club for a billion
• 6:09
  Speaker 1: in Gillette, which is owned by PNG, had a lawsuit
• 6:12
  Speaker 1: against Dollar Shave Club. If I understand the public information properly,
• 6:16
  Speaker 1: the theme would be that Uni Lever, being a hundred
• 6:20
  Speaker 1: and thirty billion dollar, hundred forty billion dollar company, would
• 6:23
  Speaker 1: be interested in developing a deeper relationship with end consumers
• 6:26
  Speaker 1: and collecting information from them and serving them. Dollar Shave
• 6:30
  Speaker 1: Club innovated in moving from a product to a service
• 6:34
  Speaker 1: and using analytics of understanding the customers and how to
• 6:37
  Speaker 1: tune products for those customers. So it's very savvy. So
• 6:42
  Speaker 1: what what do you make of I just have to
• 6:44
  Speaker 1: ask you. Just Walmart just seems like a match made
• 6:46
  Speaker 1: in heaven potentially, sure, yes, Uh, it's I think it's
• 6:50
  Speaker 1: a very savvy strategic move and strategic moves have to
• 6:54
  Speaker 1: play out operationally. You have to execute. But why so
• 6:57
  Speaker 1: savvy strategically is that Walmart is a four billion is
• 7:01
  Speaker 1: revenue company. Last year it actually shrank from the previous year.
• 7:05
  Speaker 1: It's online business last year was fourteen billion dollars. And
• 7:10
  Speaker 1: if you think online revenue retail is important, that fourteen
• 7:14
  Speaker 1: billion dollars barely matched the growth of of Amazon, so
• 7:18
  Speaker 1: they have to do something to catch up. You remember
• 7:21
  Speaker 1: a dollar Shape Club? I am not no would you
• 7:24
  Speaker 1: invest in that? Would you have invested in Dollar Shape Club?
• 7:26
  Speaker 1: I made the mistake in passing, and I regretted, but
• 7:29
  Speaker 1: you were offered Yes both, Thanks very much, Gus, general
• 7:34
  Speaker 1: partner at Trinity Ventures. They're based in Menlo Park, California.
• 7:38
  Speaker 1: You're listening to taking Stock. This is Bloomberg coming up.
• 7:46
  Speaker 1: Designers on a dime, a global consignment business selling merchandise
• 7:52
  Speaker 1: via e commerce platform. I'm gonna take a look at
• 7:55
  Speaker 1: how it works and why small business and focus something
• 7:58
  Speaker 1: of the radio