Latest / trading places / Top 20 Private Companies in 2026, The Billionaire Tax, Mistral AI Valuation | Augment + Sacra | Ep20

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Top 20 Private Companies in 2026, The Billionaire Tax, Mistral AI Valuation | Augment + Sacra | Ep20 · trading places

• 0:00
  You know, earlier when you said what sectors overvalued, I was
• 0:03
  going to say, you know, robotics, which might be a
• 0:06
  contrarian opinion because, yeah, everyone's excited about
• 0:10
  it. But if you just look at the, you
• 0:11
  know the difference between revenue and valuation on
• 0:15
  multiples are crazy. These companies are staying
• 0:18
  private for a very long time now.
• 0:21
  People want a ton of access to these things, so something's
• 0:24
  going to. Break there's some some hidden
• 0:27
  secrets that may be most of the market hasn't discovered yet or
• 0:31
  isn't aware of. Well, yeah, there's always those
• 0:33
  opportunities where. All right, folks, welcome to
• 1:00
  another episode of Trading Places are very bad, terrible,
• 1:04
  horrible secondary podcast and I'm on it's it's getting too
• 1:09
  late to say Happy New Year. So I'm not going to say that.
• 1:12
  Are we past the like statute of limitations on Happy New Year?
• 1:15
  One of the New Year's resolutions for some California
• 1:18
  Democrats is to kick all the billionaires out of the state.
• 1:21
  So what do you think about this billionaire wealth tax?
• 1:25
  Let's talk about what it says. It is a new wrinkle on an idea
• 1:28
  that's been around before. The proposal right now with the
• 1:32
  proposed California wealth tax, which is still being sponsored
• 1:36
  by the healthcare Workers Union, hasn't made it out of the ballot
• 1:38
  yet, may not get on the ballot. Basically what it says is
• 1:42
  they're going to apply a net worth test on every Californian.
• 1:46
  Anyone who is worth a billion dollars or more has to pay 5% of
• 1:50
  that net worth to California and A1 time excise tax.
• 1:55
  There are some legal challenges on whether they are allowed to
• 1:58
  raise it as a tax. Is it a property tax?
• 2:00
  Is it within the, is it constitutional based on
• 2:03
  California's constitution? Is it consistent with Prop 13?
• 2:06
  It's going through the legal challenges right now.
• 2:09
  There are some issues with the tax as drafted, even if you
• 2:13
  concluded that you want to get more money from billionaires.
• 2:16
  And I can see at least three drafting issues that are being
• 2:19
  worked out right now. One of them is it's a 5% one
• 2:23
  time tax, but there's no mechanism to show that it's
• 2:25
  going to be one time only. So there's no way to enforce,
• 2:28
  for instance, a, an amendment to the constitution of the tax law
• 2:31
  saying this is a 1 and done deal.
• 2:33
  So you may pay now and then may pay later in a future election.
• 2:37
  So that's one problem. A second one is that it says if
• 2:42
  you own, let's say 5% of the economic value of the company,
• 2:46
  but 50% of the voting stock in the company.
• 2:50
  So you control 50% of the shares of the company, you pay based on
• 2:53
  the control, not based on the economic value.
• 2:56
  I didn't just make up those numbers.
• 2:57
  The 5% and 50% are real. They're two founders of Google,
• 3:01
  Sergey Brin and Larry Page own 5% of Google each economic
• 3:05
  value, but 51% of the controlling stock.
• 3:09
  And so if you think about what that means is even though own
• 3:12
  the economic value of of Google, they're going to get packed on
• 3:14
  something they don't actually own.
• 3:16
  And so both of them have decided rather than taking their chances
• 3:19
  and paying what would be 25 to 50% of their net worth to the
• 3:22
  government, they're both leaving California or at least
• 3:26
  redomiciling their assets to Delaware, not California.
• 3:31
  And as if those two aren't bad enough, there's one more
• 3:33
  provision that essentially says it's the the taxes on all your
• 3:36
  net worth. So whether it's liquid illiquid,
• 3:38
  so you owe the tax based on the fair market value of your
• 3:40
  assets. So if those guys have assets in
• 3:43
  the liquid stocks or funds or real estate, then we have to
• 3:46
  sell in order to raise money to pay the tax.
• 3:48
  And of course, we may take a secondary discount and then pay
• 3:51
  a capital gains tax and what they sell and then use what's
• 3:53
  left to pay the government. So really quite a punitive tax
• 3:57
  when you put all those things together.
• 3:59
  I guess a couple of things here. 1 is you don't actually have to
• 4:02
  pass the law to have the negative outcomes of the law.
• 4:08
  We've already mentioned that Larry and Sergey get ready to
• 4:11
  get out of state. I think probably other
• 4:12
  billionaires might be taking steps along those lines as well
• 4:16
  just on the possibility of it happening.
• 4:18
  I think the other item is will this even get on the ballot and
• 4:22
  will it pass? At least at the moment, Cal, she
• 4:26
  is saying there's a 60% chance of it getting on the ballot.
• 4:30
  Holly Market has it at 54% and that if we look at whether it
• 4:34
  will actually pass, this is where the numbers diverge a
• 4:37
  little bit more. Calci only a 37 percent chance
• 4:40
  of it actually passing. Polly Market has another 52%
• 4:43
  chance of passing. This issue is kind of divided a
• 4:47
  lot of Democrats. This is not completely about
• 4:49
  going along party lines. Newson seems to be against it.
• 4:53
  A lot of folks who supported Ro Khanna for office. 1 of the
• 4:57
  California representatives who's behind this bill seemingly have
• 5:01
  turned on Rokon and are thinking about electing other people.
• 5:05
  I don't think this seems like a popular issue, at least among
• 5:08
  the technocrats. It might be popular at the
• 5:12
  ballot office for folks who think that billionaires are the
• 5:15
  cause of all of our problems. Well, I think it has divided the
• 5:20
  party in a couple of different ways.
• 5:22
  So Gavin Newsom's against it. San Jose Mayor Matt Man is
• 5:26
  against it, prudential reasons that make sense, like if you
• 5:29
  want to tax billionaires more or people who will be paying more
• 5:33
  and more, this is not the best way to do it.
• 5:35
  As I said, there's some drafting issues.
• 5:36
  It's been kludgy. It's punitive to certain people.
• 5:39
  There are other loopholes either probably closed in order to tax
• 5:42
  them more effectively. And the new mayor of San
• 5:44
  Francisco, Dan Lewis, against it as well.
• 5:46
  And I think the process right now is they are going to try to
• 5:49
  negotiate with the healthcare Workers Union that is collecting
• 5:52
  signatures to put it on the ballot and see if they can
• 5:53
  figure out a way to preserve healthcare funding or maybe
• 5:56
  close some of those loopholes. So yeah, maybe it doesn't get on
• 5:59
  the ballot. If it does get on the ballot, I
• 6:01
  can see it being a, you know, California's voted against tax
• 6:04
  increases the last couple of times, but I don't know, there
• 6:08
  are a lot more non billionaires than billionaires at the ballot
• 6:11
  office. And so if, if, if people just
• 6:13
  think they can pass the tax on other people without any
• 6:15
  consequences, you're thinking through the consequences, maybe
• 6:18
  get some popular ground, but it seems like a coin flip whether
• 6:21
  it gets on the whether it becomes law right now just based
• 6:23
  on the prediction markets. Well, I don't think it's a great
• 6:26
  long term solution for the state to force all the rich people out
• 6:30
  of the state. From what I understand, high net
• 6:33
  wealth folks, depending on how you define it, probably pay more
• 6:36
  than half the taxes in California already.
• 6:38
  So I don't think you want to give those folks more incentive
• 6:41
  to leave the state, at least if you're trying to balance the
• 6:43
  budget. Right.
• 6:45
  Top 1% of taxpayers pay 40% of California income taxes right
• 6:49
  now. So if if even a chunk of those
• 6:51
  folks leave, you may you may win some money in the short term if
• 6:54
  that tax passes, but you'll probably lose a big chunk of
• 6:57
  that ongoing income tax for next year.
• 7:00
  I do wonder if you know what's going to happen with the
• 7:03
  California budget. I, I think strangely revenue has
• 7:06
  increased in the last year largely because of all the AI
• 7:11
  stories that are going on and probably a lot of secondary
• 7:13
  sales and IPOs. And there's a recent headline in
• 7:17
  the New York Times about 2026 being the year of the mega IPO.
• 7:23
  And I think they're probably expecting or at least hoping
• 7:27
  that SpaceX, Open the Eye and Tropic are one one of those
• 7:32
  companies, hopefully more than one might go public.
• 7:35
  All those companies, I don't, I don't know about SpaceX, but
• 7:38
  Enthropic and Open the Eye are, are headquartered in California.
• 7:41
  SpaceX probably has a lot of employees in California.
• 7:45
  So if any of those companies go public, California stands to,
• 7:48
  you know, make quite a bit of money from the tax bills of
• 7:51
  those companies. I think it'll probably be a good
• 7:54
  year for California tax revenue if we don't kick all the
• 7:57
  billionaires out. Doesn't seem like a good way to
• 7:59
  solve our problems in the long term.
• 8:01
  No, I think there are better ways to do it, you know, and if
• 8:04
  any one of those three companies, if they do go public
• 8:06
  would probably raise something like 20 to 30 billion in IPO
• 8:10
  proceeds just based on the valuations there.
• 8:13
  Talking about a Goodyear for IPOs in general in the US,
• 8:16
  typically it's been like 50 to 60 billion is no K year, 75 to
• 8:20
  100 billion is a really good year for for IPOs.
• 8:23
  If all three of those guys go public, those 3 alone could be
• 8:26
  like a $75 billion windfall for the investment bankers and I
• 8:30
  guess the, you know, the tax just as well.
• 8:32
  So if no one else goes public but just those three, that's
• 8:35
  already like a, a near record year for IPOs.
• 8:37
  And there's probably, if those, if any one of them gets out,
• 8:40
  there's probably another dozen companies that are right behind
• 8:42
  them that that get out as well. So I don't think California's
• 8:45
  problems are going to be a lack of capital gains tax revenue.
• 8:48
  It'll be just, you know, not, not not raising enough income
• 8:51
  tax or not spending it in the right way.
• 8:55
  Skipper, I got a small idea, and if you tell me your idea, I'll
• 8:57
  tell you mine. We're working out together.
• 8:59
  No thanks, little buddy. Oh, I get it.
• 9:01
  You want to keep the $1,000,000 for yourself, huh?
• 9:04
  Oh, that's sure is nice big buddy.
• 9:06
  Well, somebody else is going to be pretty happy about IP OS in
• 9:09
  2026 appears to be China. I guess despite some of the
• 9:14
  economic problems that China may have from the real estate market
• 9:17
  and potentially from tariffs and maybe from demographics, China
• 9:21
  had a pretty good year for IP OS in 2025.
• 9:24
  It looks like it's going to be an even more.
• 9:26
  Exciting year in 2020. 6 And I guess from AI companies and
• 9:31
  manufacturing companies and EV and battery companies.
• 9:35
  China's been doing pretty well, don't you think?
• 9:36
  Come on. It's all relative.
• 9:39
  So if you look at the notion that they are having a good year
• 9:43
  versus last year, it's definitely true.
• 9:45
  They had 115 companies raise a combined CN¥128 billion last
• 9:50
  year. So it's about 18 billion in U.S.
• 9:53
  dollars. That's up to X from 2024.
• 9:55
  So it definitely was a better year than last year.
• 9:58
  But if you look at the graph that I'm showing, it is all
• 10:00
  relative. So let's go back to 2010.
• 10:03
  That top blue line is the USS and P500, that bottom orange
• 10:08
  line is the Shanghai Composite Index.
• 10:11
  And you can see that the US has really outperformed the Chinese
• 10:15
  market certainly over the whole period.
• 10:16
  But certainly since 2015, sixteen when China began
• 10:20
  cracking down on tech companies, they've, they've actually gone
• 10:23
  backwards. Their market has dropped about
• 10:25
  30%. So on a relative basis over the,
• 10:27
  over the last 10 or 11 years, they've been trailing.
• 10:31
  Now on the other hand, they are, they seem to be having a
• 10:33
  recovery in 2025. And I guess that's a that is
• 10:36
  science of life. Initially, they've made about 3
• 10:38
  or 4 rules changes in China that I think have made the IPO easier
• 10:43
  to do, but also might hurt their performance.
• 10:45
  So they had a rule up until the middle last year that said if
• 10:47
  you're unprofitable, you cannot list on Chinese markets.
• 10:51
  And there's, there's two big ones in Shanghai and Beijing and
• 10:54
  then the third one in Shenzhen. Now they're saying unprofitable
• 10:57
  companies can list at least on the Shanghai stock star market.
• 11:00
  So, you know, that's 11 relaxation of a rule that'll
• 11:04
  help the market. They had a cap on the evaluation
• 11:08
  of IP OS at 23 times price earnings and they've relaxed
• 11:10
  that cap now. So that's also going to allow
• 11:13
  more companies to go public. But at the same time, you know,
• 11:15
  I don't know that the performance of the companies are
• 11:17
  is going to be as as good because the quality might
• 11:20
  deteriorate. So that might be a short term
• 11:22
  win for China, but maybe a, you know, maybe a long term negative
• 11:26
  for the IPO market. And they are emphasizing a lot
• 11:28
  of companies in AI, new energy, commercial aerospace, advanced
• 11:32
  manufacturing, quantum computing.
• 11:34
  So it seems like those areas are, are now now able to list on
• 11:38
  the Chinese market and will be favorably traded by rules and
• 11:41
  regulations. And now the question is just if
• 11:43
  they perform and if they, if they do well.
• 11:45
  And maybe that's, you know that's going to be the ultimate
• 11:47
  determinant in how that IPO market 1st going forward.
• 11:50
  Well, I know you're look back over the last 10 years would
• 11:53
  indicate that the US market's been winning.
• 11:55
  But if we just look at the last 12 months and particularly since
• 11:58
  the quote UN quote DeepSeek moment earlier last year,
• 12:02
  Chinese markets seem to be ahead of U.S. markets for at least the
• 12:04
  last 12 months. And I think that's maybe where
• 12:08
  probably there is, it is going to be a great year for IP OS in
• 12:11
  the US. And I wouldn't be surprised if,
• 12:13
  you know, the US has more dollars on it than the Chinese
• 12:17
  market, even if they didn't last year.
• 12:18
  But it does seem like there's a lot of great companies coming
• 12:21
  out of China going public. That's probably also true for
• 12:25
  India, even though it's a much smaller scale market.
• 12:28
  So I do wonder if the US maybe is, you know, still king of IPO,
• 12:33
  but there may be some contenders coming for that title over the
• 12:36
  next 5 to 10 years. Yeah, for sure.
• 12:39
  I think that China definitely seems like they have a long list
• 12:42
  of companies based on their pipeline that that ought to do
• 12:46
  well. And seems like they are more,
• 12:48
  more interested in decoupling from the US for reasons we've
• 12:50
  talked about before. So it seems like they're now
• 12:53
  encouraging those companies to go public, whereas maybe four or
• 12:55
  five years ago they were a bit more reticent.
• 12:57
  India seems like a a longer bet. I know they're good, good
• 13:00
  companies there, but not yet at the scale that like China or the
• 13:03
  US have. And so that might be a longer
• 13:05
  bet, but that's that's another area that bears watching.
• 13:10
  Well, although it's probably gonna be a great year for IP,
• 13:13
  OS, secondary markets and private markets just in general
• 13:17
  continue to also grow, perhaps because the bar is now much
• 13:20
  higher for IPOs. I think companies growing public
• 13:24
  in the US probably need to be doing 4 to $500 million in
• 13:27
  revenue to have a reasonable chance of going public, at least
• 13:30
  in most cases. JP Morgan is forming a new team
• 13:33
  to get in in the boom in private markets.
• 13:36
  Do you think this is a fad, Amana?
• 13:38
  Do you think this is a long term trend?
• 13:41
  I suspect the secondary markets will continue to track with the
• 13:44
  IPO markets. I think on a the, the companies
• 13:47
  we're talking about and that IPO shortlist are very high quality,
• 13:52
  very large companies. We're talking about you know 10s
• 13:55
  of billions of revenue and and looking to do valuations of 50
• 13:58
  to 100 billion or more. There's probably a dozen
• 14:00
  companies that fit that profile right now.
• 14:03
  If you're not in that top tier with a few exceptions, it's
• 14:06
  really hard to go public. As you said the bar is higher.
• 14:08
  The regulatory scrutiny I think is, is going to be pretty
• 14:11
  considerable for a lot of the companies.
• 14:13
  The SEC is going to be very careful about SPAC's for
• 14:15
  instance. So it's going to force companies
• 14:17
  to go through that traditional listing process, which I think
• 14:19
  it puts a lot of pressure on them.
• 14:21
  And I think a lot, there are a lot of companies, a lot more
• 14:23
  companies that would like to raise money at those types of
• 14:25
  evaluations than will be able to next year.
• 14:27
  So I suspect secondary markets will keep growing as a third leg
• 14:31
  of the stool alongside the IPO market and alongside the M and A
• 14:35
  market. So kind of makes sense JP Morgan
• 14:37
  is jumping in and doing that knowing that's going to be A
• 14:40
  viable paths to liquidity going forward and then an entree for
• 14:43
  IP OS, you know for for those companies later.
• 14:49
  Find $1,000,000 I share with you.
• 14:51
  Gilligan, I would gladly share my $1,000,000 with you.
• 14:53
  Oh yeah, yes. But now it's just I don't want
• 14:56
  you to help me with my idea because Gilligan, you're a one
• 14:59
  man disaster area and I don't want to be part of your next
• 15:02
  disaster. One buddy to say to another
• 15:04
  buddy. Well, another news item that's
• 15:08
  sort of in that being is that an Industry Ventures partner is
• 15:13
  joining Insight Partners. Amira Molieri was senior
• 15:17
  executive at Industry Ventures, which was recently acquired by
• 15:21
  Goldman Sachs and he's leading to join Insight Partners, I
• 15:26
  would guess to start a secondary practice over there or least
• 15:29
  expand their secondary practice. Insight Partners is a pretty
• 15:33
  large investment firm. They certainly do a lot of
• 15:36
  venture capital, but they also do a lot of other things as
• 15:39
  well. Seems like people are paying
• 15:41
  more attention to secondaries. Oman.
• 15:44
  Yeah, seems like it. We've got a number of private
• 15:47
  market stories that are happening this week.
• 15:49
  Some of the largest are BlackRock and Microsoft working
• 15:52
  on data center partnerships. There's about 12 billion that's
• 15:56
  been raised to date. There's discussions of them
• 15:58
  aiming for a $30 billion total goal.
• 16:01
  Yeah. Those are big numbers.
• 16:02
  And this is for AI data centers and infrastructure, right?
• 16:06
  So it's now we're talking about real estate and hardware.
• 16:08
  So this is where it becomes very capital intensive and this is
• 16:11
  where someone like BlackRock is going to have a significant
• 16:13
  involvement in the deal. Another big deal that's been
• 16:17
  announced already, but seems like there's somebody else
• 16:19
  joining the party. Anthropic had been stated they
• 16:23
  were raising at least $10 billion.
• 16:26
  Maybe now more like $25 billion, A $350 billion evaluation.
• 16:30
  Previously GIC, which is Singapore's sovereign wealth
• 16:33
  fund and coaching management, we're contributing money.
• 16:36
  But now it sounds like Sequoia is also jumping in.
• 16:40
  The number hasn't been announced, but quote, a big
• 16:42
  investment, UN quote, in Anthropic.
• 16:44
  Sequoia has been involved in a lot of different AI investments.
• 16:48
  What do you think about them jumping in on this route?
• 16:51
  It's interesting to watch them join the group so far.
• 16:55
  So the group so far was GIC, Sovereign MILF fund and CO2,
• 16:58
  which are more leader stage investors.
• 17:00
  Anthropics raised from a lot of money from strategics like
• 17:03
  Amazon and from from Google. But Sequoia is really just a,
• 17:09
  they're a very financially sophisticated and aligned
• 17:12
  investor on financial returns, not on strategic returns.
• 17:15
  And and they want into the three 50 billion valuation.
• 17:18
  So I think that's excellent signal for Anthropic to be able
• 17:20
  to raise from somebody at that valuation that's probably about
• 17:24
  30 times arr something, something like that.
• 17:27
  So you know, Sequoia is usually a pretty prudent investor and
• 17:30
  not not usually going after companies that excessive
• 17:32
  valuations. In my experience, they're one of
• 17:34
  the best investors in the valley.
• 17:35
  And the fact that they're jumping in I think is a is a
• 17:37
  very positive signal for the quality of that investment.
• 17:40
  And Vince is actually great for Anthropic to be able to raise
• 17:42
  from financial investors, not just from strategics or
• 17:45
  potential customers. Well, we have a bunch of other
• 17:48
  announcements. Cerebrus raising a billion
• 17:50
  dollars at a $22 billion valuation.
• 17:53
  Click House raising 400 million at a $15 billion valuation.
• 17:57
  Skilled AI which is building kind of a default robotics
• 18:02
  platform. Software platform for managing
• 18:03
  robotics, raising 1.4 billion at 14 billion.
• 18:07
  Replit raising 400 million at 9 billion.
• 18:10
  That's a vibe quoting platform. They just did a Series C in
• 18:14
  September at a $3 billion valuation.
• 18:15
  That's now a triple by that. I'll give you one more guess
• 18:19
  here. Aman 11 Labs is raising some
• 18:23
  money. At what valuation might you
• 18:25
  guess? If 11 Labs is raising money, is
• 18:28
  it going to be is the answer $11 billion?
• 18:33
  Ding, Ding, Ding, you win a prize 11 Labs is raising at $11
• 18:37
  billion. 11. Could you please repeat that
• 18:44
  1111? Could you please repeat that 11?
• 18:50
  All five of those companies raising at valuations between
• 18:53
  9:00 to $22 billion. I guess the total amount being
• 18:57
  raised probably between 4:00 to $5 billion.
• 19:01
  I mean, these are numbers that are large even for public
• 19:04
  company IPOs, but they're all happening in private routes.
• 19:08
  I guess This is why JP Morgan's excited about raising more
• 19:11
  capital and why everybody else is jumping in on secondaries,
• 19:14
  huh? Yeah, that is kind of amazing.
• 19:17
  What's notable is a lot of those companies just raised in the
• 19:19
  last 12 months at at like 1/3 of where they're at now.
• 19:22
  So this reuberous 1 is actually the most interesting, you know,
• 19:26
  you know why I think that's interesting.
• 19:27
  So about a year ago they are, they're an AI infrastructure and
• 19:31
  training and inference company. They were targeting a an IPO
• 19:35
  about let's say six months ago. It was July, August of last
• 19:39
  year, they were talking about an 8 to $10 billion evaluation.
• 19:42
  There was some discussion in the market about that.
• 19:45
  They ended up pulling the plug on their IPO in October and they
• 19:48
  raised that 8 billion, but any private market deal and the
• 19:52
  private market deal was led by NVIDIA and then ASML.
• 19:56
  And ASML is the large Dutch chip maker.
• 20:00
  But something like a $500 billion market cap.
• 20:02
  They're now a top, you know, a top 20 company in the world.
• 20:05
  And they've done it all by by essentially selling to AI
• 20:09
  hyperscalers. But Cerebrus didn't really
• 20:12
  wouldn't, they weren't really able to get that IPO done.
• 20:14
  A year ago, they have a lot of revenue, they're not making
• 20:17
  money. They have nearly $300 million in
• 20:18
  revenue probably. But the downside was that 87% of
• 20:22
  the revenue was going to G42, which is the Abu Dhabi, formerly
• 20:27
  Mubadala or collaboration Mubadala and the ruling family.
• 20:31
  And the market kind of looked at that and said 87% of customer
• 20:35
  concentration in in your revenue base, that's not really IPO
• 20:39
  able, that's just not going to be something that the public
• 20:41
  market could. Could do.
• 20:42
  So they pulled the plug on the $8 billion IPO, got a deal done
• 20:45
  in the private markets anyway, and are now targeting a $22
• 20:48
  billion evaluation. So that's that's is what you
• 20:51
  were saying before. The private markets are actually
• 20:53
  better for a lot of these companies, higher valuations and
• 20:56
  maybe even more money than the public markets, which are a
• 20:59
  little bit jittery and have their traditional metrics around
• 21:01
  things like, you know, you got to be profitable or path to
• 21:03
  profitability, customer concentration.
• 21:05
  A lot of those public market investors don't like that.
• 21:08
  If I had to speculate who the lead investor is, I don't think
• 21:10
  it's going to be NVIDIA and then in the new deal for Super Bruce,
• 21:13
  because they're kind of they're kind of sort of competitors.
• 21:15
  Not really, but as reverse is maybe more of a competitor to
• 21:18
  grok who just kind of emanate and sold out to NVIDIA.
• 21:21
  They just have a deal with open AI and that might that might
• 21:24
  signal it. Open AI might be the lead on
• 21:26
  this new round where somebody close to open AI.
• 21:29
  So, you know, good for them, but they Neil Dunn and kind of
• 21:32
  amazing that their private market valuation is probably,
• 21:34
  you know, three times what the public markets popped at just
• 21:38
  six months ago. Seems like there's just an
• 21:41
  unending appetite for AI companies and and technology
• 21:44
  companies and public markets, at least in the coming year.
• 21:48
  I thank you for that top, you know, three to seven.
• 21:50
  I think there's going to be a oversubscription for a lot of
• 21:53
  those companies because the public markets are looking for
• 21:55
  those AI care play stories right now.
• 21:57
  Well, it's going to be an exciting year for an IPOIPOS,
• 22:00
  but also an exciting year for secondaries.
• 22:02
  Absolutely. I think so.
• 22:18
  All right folks, welcome to another edition of Trading
• 22:21
  Places, our very Bad, terrible, horrible podcast about the BC
• 22:24
  secondary market. My guests today are Adam and
• 22:28
  Marcelo, Marcelo's with Sacra, Adams with Augments.
• 22:33
  Previously the show, we were also interviewing Noel from
• 22:35
  Augment, who's the founder and CEO.
• 22:37
  Thanks for joining us. I wonder if you guys could maybe
• 22:39
  give us a few minutes about your background and your company and
• 22:42
  your relationship to the secondary market.
• 22:44
  Why you guys think this is fun and exciting?
• 22:47
  This is Adam, I'm Co founder of Augment.
• 22:49
  I've been in the private market for over 10 years.
• 22:51
  So I've seen, I've seen this evolution moving from offline to
• 22:54
  online and becoming less and less fragmented.
• 22:57
  I was originally in Morgan Stanley into in sales and
• 22:59
  trading, but then I moved to shares post, which was one of
• 23:02
  the first online marketplaces joined right after Facebook IPO.
• 23:05
  And so that was an interesting time, suspend 6 years there.
• 23:08
  Noticed that there wasn't a lot of people solving the liquidity
• 23:13
  problem in the market and more specifically, execution problem.
• 23:16
  And so I teamed up with Noel, a technical person who changed the
• 23:20
  way I saw the market as opposed to building another investment
• 23:23
  bank that could scale globally to a product that could scale
• 23:26
  through technology. And that got me super excited.
• 23:30
  Very cool. Marcelo, could you tell us a
• 23:32
  little bit about Sacre? Yeah.
• 23:34
  Definitely. I used to lead research at CB
• 23:36
  Insights and yeah, I did that from 2015 for 6 1/2 years.
• 23:42
  So I was head of research there and LED the content and research
• 23:46
  teams. Yeah.
• 23:47
  And then it's Sacra. I do the same thing.
• 23:48
  I had research up at Sacra. Sacra is a platform for the
• 23:51
  private markets. We provide data and research on
• 23:55
  pre IPO companies. We mainly work with venture
• 23:58
  investors, secondary investors and also supplied research and
• 24:02
  data to platforms like Augment. Like if you go on Augment and
• 24:06
  you look at their company profiles, you'll see our
• 24:09
  research do that via API. So there's kind of like 2 tracks
• 24:13
  to our business. Can 1 of you maybe talk about
• 24:15
  what the augment power 20 is? Yeah, for sure.
• 24:19
  The goal with the the Power 20 is to to use our data and and
• 24:23
  data we aggregate to reflect the best companies in the market,
• 24:27
  where the demand is, where the the bid ask activity, where the
• 24:30
  general strength in the market is.
• 24:33
  Generally transaction volume in the market is heavily
• 24:35
  concentrated around the highest quality companies.
• 24:38
  We wanted to put together a methodology to reflect that.
• 24:40
  Someone suggested that maybe the top five to 10 companies
• 24:43
  represent maybe half of the overall transaction volume, the
• 24:46
  top 30 companies maybe 80%. Is that kind of in the ballpark?
• 24:51
  Yeah, that that's correct. Yeah.
• 24:53
  I mean, these are basically public companies that are still
• 24:54
  private and institutionally is really driving a lot of
• 24:57
  activity. And no surprise, names at the
• 25:01
  top of your list are SpaceX, Anthropic, Opening Eyes in
• 25:04
  there, you know, Stripe, several others, but a lot of AI names, I
• 25:07
  guess maybe a few space and defense tech and maybe a few
• 25:10
  fintech companies. But so it seems like AI has been
• 25:13
  dominating the conversation and also dominating your rankings
• 25:16
  and probably the transaction volume as well.
• 25:19
  That is correct. Marcelo, could you maybe walk us
• 25:22
  through some of the columns here?
• 25:24
  A market cap or valuation, how much capital they've raised,
• 25:27
  basically a preference stack with the revenue of the company
• 25:30
  is and maybe growth rates if you have access to that.
• 25:32
  Those, those seem like the things that are being
• 25:34
  highlighted along with I guess the share price.
• 25:37
  What I would add is the, the market cap is actually the end
• 25:40
  of quarter market cap key share prices.
• 25:43
  So I think that's important because obviously the the prices
• 25:47
  you see in secondary markets don't always reflect the last
• 25:50
  round value age, right. Right.
• 25:52
  Yeah. I think that's why this
• 25:54
  partnership was interesting to SACRA and and Togman as well is
• 25:58
  that we bring two data sources that really complement each
• 26:01
  other, right. SACRA focuses on the company
• 26:04
  fundamentals. We come with the revenue
• 26:06
  estimates, the revenue growth estimates augment has all the
• 26:11
  great market data and market insight into what's going on
• 26:14
  day-to-day in private markets. And so we like to think of these
• 26:17
  rankings as really, you know, the best 20 companies in the
• 26:22
  private markets right now, but also the company fundamentals
• 26:25
  like reflected through revenue and revenue growth.
• 26:29
  I'm noticing there's the little green percentage mark next to
• 26:32
  the share price. Is is that the upside or
• 26:35
  downside from the last round? It's it's the price change since
• 26:39
  the beginning of the quarter. Since the beginning of the
• 26:41
  quarter. OK, got it.
• 26:43
  So that's a pretty amazing bug, SpaceX over 100% since the last
• 26:48
  quarter. You're tracking this data I
• 26:50
  guess from the real time, you know, trains that are going on,
• 26:53
  on the odd man platform or other platforms.
• 26:56
  All the above shout out to Cap Light who we we have a part, OK.
• 26:59
  We also aggregate data from Cap Light.
• 27:02
  Their prices are also reflected in our pricing model, which if
• 27:05
  you're a user on AUGMENT, you can see mark to market based on
• 27:07
  where it's trading on a daily basis.
• 27:09
  So there's some differential between where these prices are
• 27:12
  At the end of the fourth quarter.
• 27:13
  SpaceX is already maybe 20% higher than what it is right
• 27:16
  now. I wonder if you guys could maybe
• 27:18
  talk a little bit about how you personally or your companies
• 27:22
  think about these valuations and I don't know whether you have
• 27:26
  opinions about whether you're bullish bearish or not on those
• 27:29
  numbers. I think, you know, these are
• 27:31
  speculation cycles, right? And I think you see that in a
• 27:34
  lot of these new technologies and we saw it in crypto and
• 27:38
  we've seen it in AII think initially there was concerns
• 27:41
  about AI being being in a bubble, but.
• 27:45
  What are you talking about? There's no bubble in AI that's
• 27:48
  in the future, man. It will any speculation is going
• 27:51
  to have, you know, overreactions and maybe some things that don't
• 27:54
  work out. But if you look at specifically
• 27:57
  like Anthropics revenue, so it's showing 5 billion here for 2025
• 28:02
  in ARR, but the the company's come out and said further 2026
• 28:06
  estimates, it would be between what 20 to 25 billion in
• 28:09
  revenue. And there are and which would be
• 28:12
  even open AI who who had just like one or two year head start
• 28:16
  on Anthropic and a bit of a different enterprise versus
• 28:19
  retail business model historically.
• 28:22
  But in opening eye expecting around 30 billion in revenue and
• 28:25
  next year in ARR. So these are big numbers.
• 28:28
  So it'd be different if if the revenue wasn't wasn't catching
• 28:31
  up. The way I think about this and
• 28:32
  how sustainable is it is a lot of a function of liquidity and
• 28:36
  where interest rates and where the business cycle is and and
• 28:38
  that allows speculation cycles and I think we have environment
• 28:44
  now that is more conducive to business than than maybe it was
• 28:47
  in over the last four or five years.
• 28:48
  I think we're probably expecting there's going to be, you know,
• 28:51
  further reduction in interest rates.
• 28:52
  There's certainly some quantitative easing going on.
• 28:55
  Again, probably that's a favorable environment.
• 28:57
  I mean, hard, hard to predict the overall macro picture with,
• 29:02
  I don't know, tariffs and wars and other things going on make
• 29:05
  it a little bit more interesting.
• 29:06
  But I, I think generally everybody's expecting a positive
• 29:09
  year for IP, OS and from the market.
• 29:11
  I, I hope that's hope that's accurate.
• 29:13
  We'll see. Yeah.
• 29:14
  But I, I think, I mean paying attention to inflation because
• 29:17
  if inflation moves higher than it makes it harder for the Fed
• 29:20
  to cut rates. And so we've easing in inflation
• 29:23
  which is really positive trade that wins and so an environment
• 29:27
  that is conducive to more loosening of policy, which I
• 29:30
  think is conducive to risk taking and speculation.
• 29:32
  So some sectors are feel a bit expensive and a bit overvalued
• 29:36
  but. Which sectors or companies might
• 29:38
  be more overvalued than others? I mean, the easy answer would be
• 29:41
  people to say open AI is overvalued.
• 29:44
  I think given the revenue velocity, I think it's actually
• 29:47
  like in Tropic at 3:50 on, on 25 billion revenue growing what
• 29:51
  400% a year like that's, that's security growth.
• 29:54
  But the defense sector, we've been very interested for the
• 29:57
  last few years, we've had a focus on on semiconductors
• 30:00
  defense and foundational AI. And the defense is now really
• 30:04
  ramping up. And I think you could argue
• 30:06
  maybe there's some valuations might be a little higher there,
• 30:08
  but there's, there's also we're in a structurable market there.
• 30:11
  There's a lot of defense spending in the geopolitical is
• 30:14
  certainly moving in that direction.
• 30:16
  So. Marcelo, I, I'm looking at some
• 30:19
  of the revenue growth numbers as we kind of scroll through these
• 30:22
  and some of them are rather I Poppy, I might speculate that
• 30:26
  some of XA is revenue is maybe more Twitter revenue and not as
• 30:29
  fairly, I don't know organic AI revenue, but 3100% growth is
• 30:34
  pretty crazy. That's an annual growth rate.
• 30:37
  I'm just being correct. That's probably because of the
• 30:38
  acquisition. You're right on.
• 30:40
  On, yeah. And then if you Scroll down even
• 30:42
  further, cursor has a crazy number there.
• 30:45
  I don't I don't know whether that's starting to hit the limit
• 30:48
  9900% and then polymarket. Also a growth.
• 30:52
  Rate like how she is over 1000%. Well, even Cursor's number of
• 30:56
  500 million, I mean they, they came out recently and said that
• 30:58
  they were, they were surpassing a billion in AR by 25 S Even
• 31:03
  these numbers are a little bit. Yeah.
• 31:06
  Well, I I'm always reminded of like it's startups you're
• 31:08
  pitching us and particularly a lot of our exchange shops are
• 31:11
  like our Voodoo has tripled quintupled in the last year.
• 31:15
  And I'm like, yeah, well, you started from a dollar, so it's
• 31:17
  like easy. But, you know, I think it's most
• 31:20
  impressive when you look at some of these companies where, you
• 31:22
  know, it's already been billions of dollars and you're still
• 31:24
  seeing, you know, you know, 345 X kind of like increases, but
• 31:29
  maybe not quite as impressive or not quite as clear when you have
• 31:32
  companies going from zero to 100 million in a year or something.
• 31:35
  What's the future introductory might look like?
• 31:37
  That's fair. How do, how do you guys get to
• 31:40
  that revenue, Marcelo, where, where are you guys collecting
• 31:43
  that data from? Is that come through your
• 31:46
  research or cap light or others? Yeah, it's, it's not, no, that's
• 31:49
  SACRA research. These are SACRA estimates that
• 31:52
  that we develop internally. You know, we don't do anything
• 31:55
  magical really except gather all the data points that are out
• 31:59
  there and put them together, right.
• 32:01
  So. Does that include hanging out in
• 32:03
  bars in San Francisco and might be my founders?
• 32:06
  Drinks here and there. It might, it might.
• 32:10
  There's any means necessary? Yeah, there's a lot of places to
• 32:14
  get information. We do really take it seriously.
• 32:17
  And they're all built on publicly available information
• 32:21
  that, you know, you might not always see it because it might
• 32:24
  be buried in minute 44 of a podcast or, you know, stated in
• 32:29
  some obscure filing in Ireland or, you know, etcetera,
• 32:33
  etcetera. But yeah, these models aren't
• 32:35
  like what you see online often, which is these like, you know,
• 32:38
  junk revenue estimates. They're like based on
• 32:42
  multiplying employees by a certain number or something like
• 32:44
  that. Yeah, they're all grounded on on
• 32:47
  on hard data. Hey.
• 32:52
  Did you hear the one about the movie star who was divorced so
• 32:54
  many times she got custody of a judge?
• 32:59
  I guess the one number or one sort of metric that is maybe
• 33:02
  missing here would be profit or margins, you know, unit
• 33:06
  economics. Is that something you guys also
• 33:08
  have access to and maybe chose not to publish or profits don't
• 33:13
  matter? We're talking startups here,
• 33:15
  right? No, we do.
• 33:16
  We look at, you know, particularly at unit economics
• 33:19
  quite a lot in our research. But the important thing with
• 33:22
  these rankings right, is that we want almost complete coverage on
• 33:26
  all the metrics that go into the rankings.
• 33:29
  You know, to be fair, the rankings are tilted more towards
• 33:32
  exchange based numbers like spread volume, price increase,
• 33:38
  et cetera. So revenues really what we're
• 33:40
  looking at here. So I think that's a fair
• 33:42
  observation. It's it's not in the rankings
• 33:44
  because we wouldn't have complete information on that to
• 33:47
  be able to generate the rankings.
• 33:50
  Yeah. And I guess, you know, from a,
• 33:51
  you know, traditional fundamentals perspective, maybe
• 33:53
  I would be more concerned about profitability.
• 33:55
  If the company's growth rates are, you know, lower,
• 33:58
  particularly if it's, you know, below 30 to 50%, then I maybe
• 34:01
  care a lot more about, you know, profitability than I do about
• 34:03
  peer growth. How much do these rankings
• 34:06
  change? The top five have been the same
• 34:09
  for I think 8 quarters now. We've been doing this report
• 34:13
  since Q 4/20/23. But yeah, particularly lower in
• 34:17
  the rankings. You have a lot of, you know,
• 34:20
  companies coming in and out and, and companies moving up and down
• 34:24
  the rankings. But yeah, that top ten has been
• 34:27
  pretty steady and the top five has just, you know, been in
• 34:31
  place with some switching between them for a while now.
• 34:34
  Yeah. And the up and coming names are
• 34:36
  or would we really get excited about?
• 34:37
  Because those are the names that people may not know, but we're
• 34:40
  starting to see Signalr are. There particular names that have
• 34:43
  just entered this list in the last quarter.
• 34:46
  Are there names that dropped off in the last quarter?
• 34:48
  Yeah, I mean I think Cal she and Polymarket entering the list
• 34:52
  this quarter is is interesting and those were companies that we
• 34:56
  had on our up and coming list in previous quarters.
• 34:59
  Obviously if everywhere you look, you hear about prediction
• 35:01
  markets now like you know, off time football ads and
• 35:05
  everything, but but yeah, these companies volume, not talking
• 35:09
  about revenue, but volume here is like off the charts.
• 35:13
  It's been crazy seeing the growth of calcium Poly market in
• 35:17
  2025 was was tremendous and it was really the year of these
• 35:21
  markets. They both raised I think 2 or
• 35:24
  even 3 times in 2025. Very, very quick markups and
• 35:28
  substantial dumps in valuation and some super visible headline
• 35:32
  investors to Sequoia Founders Fund and a bunch of others.
• 35:35
  Any notable ones that dropped off this list, I guess, Well,
• 35:38
  who was on the list last quarter that didn't make it this?
• 35:41
  Quarter one name that dropped off was Glean.
• 35:44
  It's still a company to watch, but just in comparison to the
• 35:47
  other companies and remember this is you know this is scoring
• 35:50
  driven. It didn't have the the activity
• 35:53
  growth, the sustained interest as reflected in platform
• 35:57
  activity as as the other companies did, although it still
• 36:00
  grew, grew revenue, I think 200% ARR in the nine months of the
• 36:05
  first nine months of the year. It's still a company that seems
• 36:09
  to be doing well. But yeah, it just didn't rise to
• 36:11
  the level of these companies in terms of market signals.
• 36:14
  Yeah, Crusoe, another one on the back of Core Weave's successful
• 36:18
  IPO and Core Weave used to be on the power of 20 and and Crusoe
• 36:21
  was one that recently joined the top 20.
• 36:24
  We're seeing healthy demand, healthy activity there.
• 36:26
  What do you think about the companies that aren't on your
• 36:29
  list and you know are there? Are they quote bad because
• 36:33
  they're not in the list or is there more arbitrage and
• 36:35
  opportunity because they're not on the list?
• 36:38
  There's some some hidden secrets that maybe most of the market
• 36:42
  hasn't discovered yet or isn't aware of.
• 36:45
  Well, yeah, there's there's always those opportunities
• 36:47
  where, you know, companies are, you know, hitting that growth
• 36:50
  cycle and we'll suit we'll, you know, potentially be on the top
• 36:53
  20 list in the future. We're always looking out for
• 36:56
  those names. That's where you tend to find
• 36:57
  the interesting investment opportunities or as a
• 37:00
  marketplace, we like to be involved as early as possible
• 37:03
  in, in the future winners like even like a Ceronic where
• 37:06
  they're carving out their own category and winning that
• 37:08
  category and you're seeing all they're in that scaling process.
• 37:11
  And so we've had we've had an eye on Ceronic and, and, and
• 37:14
  there's some pretty strong momentum around that.
• 37:17
  You can argue about the valuation, but.
• 37:18
  You know, one thing that affects the rankings quite a bit is, as
• 37:21
  we've been saying, volume, activity and demand for
• 37:24
  companies not on the list. It doesn't mean at all that
• 37:27
  they're a bad company. It just means that, yeah,
• 37:30
  they're just not the, you know, the beauty at the ball or
• 37:32
  whatever do. You have a favorite that's not
• 37:34
  on the list that you think might show up in the next quarter or
• 37:37
  two? You know, earlier when you said
• 37:39
  what sectors overvalued, I was going to say, you know,
• 37:41
  robotics, which might be a contrarian opinion because yeah,
• 37:46
  everyone's excited about it. But if you just look at the, you
• 37:49
  know the difference between revenue and valuation on I.
• 37:53
  Think Figure was a company we looked at that was just crazy.
• 37:56
  That was an outlier and like that wouldn't actually
• 37:59
  frustrate. Yeah.
• 38:00
  We value it like 40 billion or something and less than a
• 38:03
  billion in revenue there. There were no VCs leading that
• 38:05
  round, so I think that's. Important to pay.
• 38:07
  Attention to. Well, but but yeah, having said
• 38:10
  that, I think this company that we have in the up and coming
• 38:13
  list, we include companies a little bit more loosely just
• 38:17
  based on momentum and this company skilled that does the
• 38:21
  software layer for robotics. I think that's really
• 38:23
  interesting. It's not on the hardware side,
• 38:26
  it's on the software side trying to build a universal kind of
• 38:29
  software robot brain. I think that's cool.
• 38:32
  Yeah, the market doesn't understand a lot about what
• 38:34
  skills doing, but we're seeing, I mean Sequoia came in, came in
• 38:37
  big on that one. There's some some big BCS
• 38:39
  backing that one and that one's starting to pick up on the
• 38:41
  marketplace side. So we'll we'll probably be doing
• 38:44
  a deal there in the future. So I guess that'd be sort of
• 38:47
  like, you know, the Unreal Engine equivalent for robotics,
• 38:51
  right? Right.
• 38:52
  What do you guys think is kind of the biggest risks going on
• 38:55
  right now with some of these companies?
• 38:57
  I think revenue, making sure revenue is following along on,
• 39:00
  on the valuations like Andro was a billion trailing maybe 2
• 39:04
  billion this year, but the markets been really building in
• 39:06
  some, some high expectations there.
• 39:09
  For sure, that's one of the ones that's in our portfolio too.
• 39:11
  So I I wonder sometimes if that valuation got ahead of itself.
• 39:14
  But Palmer is a compelling salesperson, so.
• 39:18
  That's right. Again, at least speculation of
• 39:19
  what this category could look like.
• 39:21
  It's non traditional for a defense company to be, you know,
• 39:24
  technology and and I think you really know how big they they
• 39:29
  can get and what kind of interesting products they can
• 39:31
  create. You know birds are a spider's
• 39:35
  deadliest enemy, even if the spider is gargantuan.
• 39:38
  Or even if it's big, what do we think the issues are with how
• 39:45
  these companies disclose information And you know, I
• 39:48
  guess are, are there companies that might never go public?
• 39:51
  Frankly, when, when a company goes public, then, you know, I,
• 39:55
  I see that as a loss for, for us, you know, it, it, I mean, I,
• 39:59
  I think you can break down why companies go public into three
• 40:02
  reasons for capital, branding and liquidity and the.
• 40:05
  Capital. You know, that's that's being
• 40:07
  solved in the private market for its.
• 40:09
  For sure. Of the quality of the company
• 40:12
  and then the branding through technology direct to consumer is
• 40:15
  being solved and, and the liquidity is the last variable.
• 40:18
  And so I think is you chip away at liquidity, then you only
• 40:21
  increase the incentive and the probability these companies stay
• 40:23
  private. So that's that's what really
• 40:25
  excited me about building Augment was what can the future
• 40:28
  look like? And I think though is an example
• 40:30
  of these private assets that have liquidity and more market
• 40:34
  structure with market makers and, and exchanges buying a lot
• 40:38
  of these shares. And so I think you can see
• 40:39
  something similar happen in in this market.
• 40:44
  I think when we get clarity from the regulators and, and the CFTC
• 40:49
  and and the SEC figure out, you know, who, who's going to
• 40:53
  actually manage and regulate the these assets because all these
• 40:57
  can be tokenized. And, and so, OK, So what if
• 41:00
  everything in in our market is tokenized, then then who's in
• 41:03
  control of it? So I think, I think yeah, the
• 41:07
  the next year or two could be, could be very interesting.
• 41:11
  For the private, I guess there was there's a little bit of
• 41:12
  controversy with people trying to tokenize assets that they
• 41:15
  didn't actually hold. Is that what you're sort of
• 41:18
  talking about or? Well, I, I think more just from,
• 41:22
  you know, what's the differentiation like, you know
• 41:25
  what these are securities. We know that and the crypto
• 41:28
  market, what is which ones are securities?
• 41:30
  I mean, I think the the top that you know, Bitcoin and Ethan and
• 41:34
  some maybe if we carved out, but then you know, are the rest
• 41:39
  securities and if that's the case, then you know, what are
• 41:43
  the regulators not going to allow not accredited to invest
• 41:45
  in crypto? I don't think that's this
• 41:48
  administration. What does that mean for our
• 41:49
  market, you know? As you know, in Europe, in a lot
• 41:52
  of jurisdictions, it's it's fairly easy to get filings that
• 41:56
  can point you to the right numbers and companies file them
• 41:59
  on time. So I can see a future in which
• 42:02
  companies as they stay private longer, feel like because of all
• 42:06
  the constituencies they've kind of gathered over time, you know,
• 42:10
  feel like they have to Telegraph what's going on in a quasi
• 42:14
  public way. But honestly, I think like, you
• 42:18
  know, that's like kind of the Max.
• 42:20
  Like I think that's just another advantage of being private.
• 42:23
  Private is that you can keep things close to the best.
• 42:26
  So I don't think it'll change meaningfully, but I think you'll
• 42:29
  see companies have been private for a long time, start to, you
• 42:33
  know, leak out the basic numbers.
• 42:35
  I think companies are more and more are releasing the revenue,
• 42:37
  at least the top line numbers and probability less so.
• 42:41
  But yeah, as as Marcella mentioned, there is a precedent
• 42:43
  for financials with the year in the European market.
• 42:46
  So maybe a guidepost on what what could happen here in the
• 42:48
  US? I I spoke with Hive founder, CEO
• 42:52
  SIM Desai a few months back and he sort of indicated or
• 42:55
  speculated that possibly what a lot of these companies could be
• 42:59
  doing or should be doing. The ones that are maybe doing a
• 43:01
  couple 100 million revenue, but maybe not, you know, till 500
• 43:04
  million where we might think they could go public is kind of
• 43:07
  doing like, you know, almost a test drive or IPO in private.
• 43:11
  He, I think he used the words, you know, IPO on training wheels
• 43:14
  for a year or two to do price discovery.
• 43:17
  And I thought it was a really interesting concept of kind of
• 43:20
  running maybe a limited set of disclosure around financials for
• 43:23
  a year or so, developing a market and, and see where that
• 43:27
  price price ends up. And then going public with that
• 43:30
  discovery of price information, perhaps not even with any lock
• 43:34
  up period, maybe doing a direct listing IPO.
• 43:38
  What do you think about that concept?
• 43:39
  I mean, I thought, I thought that was a pretty radical
• 43:41
  thought. But then when he kind of
• 43:42
  explained it, I was like, oh, and that actually does kind of
• 43:44
  make sense. Like, you know, I can test the
• 43:46
  market, get some information about what things are worth and
• 43:48
  then set my actual, I wouldn't have to go pay bankers, you
• 43:52
  know, 5% or whatever to do a roadshow.
• 43:54
  I just have a year's worth of data to to do a direct listing.
• 43:58
  Yeah, it's funny because you know it reminds me of Circle
• 44:01
  before they went public like the institutional market are is
• 44:05
  pretty efficient in the secondary market currently.
• 44:08
  And so Circle, I know they went public at a valuation that was a
• 44:11
  lot lower than where the actual institutional market was bidding
• 44:14
  and would have been trading the shares.
• 44:17
  So that could have easily been done and then they would have
• 44:19
  done, they would have saved. A lot of rights and had to give
• 44:22
  up a whole bunch of that upside to the market.
• 44:24
  It seems kind of obvious to us because like we're in the market
• 44:28
  and seeing how much demand these names and these are
• 44:31
  institutions, you know, that are the same, a lot of the same
• 44:34
  buyers that are in the public market.
• 44:35
  So it's, I don't know, it's kind of, it's kind of funny to, to
• 44:38
  see that. Actually that that's a great
• 44:40
  point that you bring up. I guess you know, who are your
• 44:42
  customers, where is that volume coming from?
• 44:44
  Is it, is it mostly institutional versus retail?
• 44:47
  How much are there different, you know, choices for the retail
• 44:50
  market than the traditional market?
• 44:53
  Well, sometimes it bigger size is easier to work with in
• 44:56
  smaller size, especially to to to get optimal pricing in the
• 45:00
  market. So I would say 80% of our
• 45:02
  business now is institutional call it OK, this is wealth
• 45:07
  managers and you know clients like that and.
• 45:11
  This is maybe a sensitive question, but do you think those
• 45:13
  institutional investors are substantially smarter, better
• 45:17
  than the retail market or is it, you know, not, not so much?
• 45:23
  Not well, no, to honestly, to be in this, being in this market
• 45:25
  over 10 years, it's like I, we, we couldn't get people to invest
• 45:29
  in Airbnb or like any of these names or even institutions.
• 45:33
  So I actually don't believe that.
• 45:35
  So I've come to think that they're all in the same
• 45:37
  category. OK, I.
• 45:40
  Mean, you know, that's maybe that's a little bit hyperbole,
• 45:43
  but but yeah, their institution set the pricing in the market
• 45:47
  and there's difference between retail.
• 45:49
  But again, a lot of these guys chase and they want to wait
• 45:52
  until it's it's a much bigger company and they miss out on on
• 45:55
  seeing it. Yeah, I think that's more Kindle
• 45:58
  our philosophy. We've been sort of talking
• 46:00
  about, you know, these different models of companies that are in
• 46:03
  the, you know, the private Mag 7, maybe the Top 40 are sort of
• 46:07
  on everybody's radar. But I kind of use this term
• 46:09
  Secret Stallions is I think there's, there wasn't 2 to 400
• 46:13
  companies out there that are maybe only doing 50 to 200
• 46:16
  million in revenue, not on everybody's radar, but some
• 46:19
  really great companies. And we actually feel like we can
• 46:22
  get those companies at discounts that we, you know, really can't
• 46:25
  get, you know, from the top of the market.
• 46:28
  So there might be some arbitrage and looking at that next set of
• 46:32
  names are outside the top 20, top 30.
• 46:35
  I'm not, I'm not talking about the, you know, broken unicorns
• 46:37
  or you know, busted companies because a lot of those as well,
• 46:40
  but they're serving through companies that we find really
• 46:43
  great companies, just not an everybody's radar and certain
• 46:46
  people who are looking for secondary looking to be and it's
• 46:49
  tough for them, you know, as particularly for smaller
• 46:52
  sellers, if there's not an organized primary or secondary
• 46:55
  offering going on, it's very difficult for them to get an
• 46:57
  efficient price in the market. And that's the fun part when you
• 47:00
  find these these companies that are doing really well and you
• 47:03
  don't have the, you know, potentially inflated and
• 47:05
  competition around the, the, the pricing.
• 47:10
  Gilligan, you just drank the kept a bar extract.
• 47:13
  I know it well. Now I've got 5 pies.
• 47:21
  Do you guys see any other limitations that happens?
• 47:25
  I guess there are you know, you know, roofers that are set by
• 47:27
  the company where below a certain number they might not
• 47:31
  approve a trade or they might grab that themselves.
• 47:34
  Is that is that something that happens?
• 47:36
  We don't see a ton of roofing or we'll know if the company
• 47:39
  historically has roofered and maybe there's a price that
• 47:41
  they're they're referring up to. So we we, we don't see that too
• 47:44
  much these days. There's also a lot of, you know,
• 47:47
  working with GPS large shareholders that are, are
• 47:50
  existing shareholders and, and maybe we're, you know, coming
• 47:54
  into to their vehicle or investing in their vehicle.
• 47:56
  Marcelo, what do you think is kind of the most surprising
• 47:59
  trends in the last quarter or the last year?
• 48:02
  I think the market took a long time to catch up on on on
• 48:06
  Anthropic. When folks close to these
• 48:09
  companies and everything looked at Anthropic and what it was
• 48:13
  doing with enterprise, what it was doing in the coding market.
• 48:17
  Yeah, I think it was clear to people that it was doing
• 48:20
  something kind of special there, that it had really good revenue
• 48:24
  quality, that it was, you know, shipping coding and Enterprise
• 48:28
  Products really quickly. The revenue growth reflected
• 48:31
  that, but the markets took there was like a lag between that
• 48:34
  happening and and the pricing ran Entropic, especially Visa,
• 48:40
  the open AI kind of reflecting that over the last year.
• 48:44
  Do you think that had something to do with fact that Dario is
• 48:47
  not quite as amazing a salesperson as Elon or Sam or
• 48:51
  Palmer? Yeah, I mean, it might.
• 48:55
  He's going around saying that, you know, AI is, is, is going
• 48:58
  to, you know, kill our jobs and he's very concerned about it.
• 49:02
  That's. An interesting sales pitch for
• 49:04
  the company. Yeah.
• 49:08
  So it could be. You you see that in the public
• 49:11
  markets too. There's certain, you know, CEOs
• 49:13
  that are more, you know, luminary more charismatic than
• 49:17
  others. I guess I historically speaking,
• 49:19
  Steve Jobs probably been, you know, a more charismatic and
• 49:23
  interesting CEO than, you know, I don't know, Tim Cook perhaps
• 49:27
  it's a little weird in that now sort of have these companies
• 49:30
  almost like acting like public companies, CEOs in private,
• 49:34
  albeit with the caveat that they don't have, you know, public
• 49:38
  regulatory requirements for their disclosure.
• 49:41
  So, you know, Sam or Elon can basically say almost anything
• 49:45
  they want and you wouldn't have the normal rules in place that a
• 49:48
  public company would have about those those statements.
• 49:51
  I guess there's no insider trading share private companies,
• 49:54
  right? Is this category becomes more
• 49:57
  interesting to people? I mean, the journalists are all
• 49:59
  are all on it. There's a lot of people that are
• 50:01
  are trying to get more information out of what's going
• 50:03
  on in these companies and. When Sam goes on the BG2 podcast
• 50:07
  and is speculating, hey, we're going to get to 100 billion in
• 50:09
  revenue by 26 or 27, Like who's call him on that, right?
• 50:14
  Like there's no, there's no information about whether that's
• 50:17
  accurate or not accurate. It's just him saying so that's
• 50:20
  fair. You know, that might influence a
• 50:22
  lot of people about whether that's $750 billion valuation is
• 50:25
  real or 500 billion. I guess that that's where it
• 50:28
  sort of feels a little bit like, hey, are we getting into sketchy
• 50:31
  territory here where, you know, people can say any number that
• 50:34
  they want to, you know, raise capital or move their number up?
• 50:37
  Yeah. But I but I guess time catches
• 50:39
  up with us all. So, you know, hopefully, you
• 50:41
  know, Tropic is rewarded for actually delivering on numbers
• 50:44
  that are not inflated, you know. Yeah, but.
• 50:47
  I guess the the. Investors that are leading these
• 50:48
  rounds that have to believe it. And I think, yeah, keep, keep
• 50:52
  raising the kind of scale of of dollars they need to raise.
• 50:55
  So I don't know when that starts to go the other way, then yeah,
• 50:58
  that's definitely a signal. Yeah.
• 51:01
  You know, something that's become more common, I think at
• 51:03
  least for some of the larger companies is organized tender
• 51:07
  authors on a regular basis. And I think there was some
• 51:10
  recent news. G ^2 did a partnership
• 51:14
  announcement with NASDAQ Private Markets about providing capital
• 51:17
  for company tenders. I guess, you know, looking back
• 51:19
  10 years ago, secondaries were almost, you know, a dirty word.
• 51:23
  And a lot of companies didn't want to allow secondaries.
• 51:26
  You know, now it's almost the opposite.
• 51:29
  It's almost like having a regular tender offer is a
• 51:31
  retention vehicle for these companies.
• 51:34
  And you know, it's great if they can arrange a frequent and
• 51:38
  regular tender offer every six to 12 months.
• 51:40
  Do you guys see that being a trend that's going to accelerate
• 51:44
  more? I think so, I mean especially,
• 51:47
  especially as these companies become multi billion, it's
• 51:50
  there, there's a lot of demand for these shares and I don't
• 51:52
  think it's right for maybe the the founders to get liquidity
• 51:56
  and and not give their employees the opportunity to do that.
• 52:00
  Yeah, I think it's just. Specially as IPOs take longer
• 52:03
  than 10 years now, maybe 12 to 15 years.
• 52:05
  Of course, especially like for a company like Stripe, I mean, I
• 52:07
  think they've probably done a good job to their employees and
• 52:11
  but it's necessary. It's where people work hard and
• 52:14
  you know what, if you know you don't, you go public and then
• 52:17
  it's worth half of what it was privately and then no one can
• 52:19
  get liquidity privately. Like, I don't know, that's just
• 52:21
  not AI, don't think. That's right.
• 52:23
  Or or it never goes public and well, that's right.
• 52:25
  You've been maybe paying to vest your your exercise or options
• 52:29
  and then you're you're out out cash for something that isn't
• 52:31
  liquid ever. That's right.
• 52:33
  It's the people building these companies.
• 52:34
  And so I think you you have to take care of the employees.
• 52:36
  I think it'll only increase. Do you think there's a similar
• 52:40
  mechanism that might happen at the fund level?
• 52:42
  I, I was sort of having this conversation with some friends
• 52:44
  the other day, which like, you know, seems like for companies
• 52:47
  having a predictable frequent, you know, tender offer a price
• 52:50
  in the market is, is good for their employees to know that
• 52:54
  they've got a price, you know, whether it's great or not great
• 52:56
  that they can get liquidity at. I don't think LP's and funds
• 53:00
  have that same option. There's very limited ways for
• 53:04
  LP's and funds to get liquidity on a frequent, regular basis.
• 53:07
  Maybe if they, if the fund has SpaceX or something like that in
• 53:10
  it, they might be able to. But what do, what do you think
• 53:13
  about fund managers trying to arrange the equivalent of tender
• 53:16
  offers for their funds? Do you think that's something
• 53:20
  that we might see in the future? Yeah, you can come to augment.
• 53:23
  I mean, that's that's what that. More complicated trying to
• 53:28
  figure out valuation analysis for a basket of companies than
• 53:31
  just one company, but maybe if you have 3, three or four
• 53:34
  companies in your portfolio that are the majority of the value,
• 53:37
  you might be able to, you know, target or zero in on some kind
• 53:40
  of value there. But yeah, I, I should leave M
• 53:43
  and FPA bunch of funds. Most of the time you just think,
• 53:45
  well, I'm just going to have to wait until they deliver DPI if I
• 53:49
  ever try to sell and secondary shows that's a very difficult
• 53:52
  proposition, usually involving pretty substantial value.
• 53:56
  Yeah. I mean, liquidity is not, I
• 53:57
  mean, it's good that the conversation has shifted to to
• 53:59
  DPI. So I mean that that's pushing on
• 54:01
  the liquidity. For sure.
• 54:04
  Yeah. So liquidity is only going to
• 54:05
  increase as as more institutional and retail capital
• 54:08
  come into this market do. You guys have any predictions
• 54:10
  for us for 2026 and. IPOSI mean we have, we have,
• 54:14
  yeah, I mean, this was probably. Well, I hope so.
• 54:19
  Yeah, I mean this will probably be the best year for apios and I
• 54:21
  don't know, 5 plus years so. Don't jinx it, buddy.
• 54:24
  I know. Well, that's everyone.
• 54:27
  Is so bullish that, you know, I I try to be, you know,
• 54:30
  contrarian on some things and. I, I was AC Brown investor in
• 54:34
  Canva in 2012. So it's been a long journey, but
• 54:37
  we're we're holding our breath for sometime this year.
• 54:40
  I think we've seen some interesting projects and
• 54:43
  companies come along that are building on top of foundation
• 54:47
  models. You know, they call themselves
• 54:50
  AI harnesses. There was a, it was a company
• 54:52
  called Poetic that that got a, yeah, a new high score on the
• 54:57
  ARC AGI too, a benchmark, you know, and the whole thing is, is
• 55:01
  we built this whole complicated system.
• 55:03
  You just plug any foundation model into it and we kill all
• 55:07
  the benchmarks. It's like, you know, if this
• 55:10
  keeps happening, it'll build a new layer on top of the
• 55:13
  foundation model layer, you know, a new abstraction level
• 55:16
  above it. That would put some pressure on
• 55:18
  the Foundation model companies if they can be interchanged into
• 55:22
  these harnesses. I guess I wonder if it's going
• 55:24
  the opposite way. I think we've seen in the last
• 55:27
  week or two some pretty big announcements on healthcare AI
• 55:29
  from both Anthropic and Open AI and maybe even from, you know,
• 55:34
  Google. And in the future I, I wonder
• 55:37
  what kind of pressure that puts on any of the vertical AI
• 55:39
  companies that have chosen, you know, that particular category.
• 55:43
  I guess right now Bytedance is probably the only Chinese
• 55:46
  company that's on that list of top 20, correct.
• 55:49
  You do you think any other Chinese companies might
• 55:52
  breakthrough on that? Yeah, that, that's a good
• 55:54
  question. I could see that.
• 55:55
  Yeah, we, we do. We do come across some some some
• 55:57
  big Chinese companies that are starting to get more and more
• 56:00
  traction. Great.
• 56:01
  Well, listen, it's been really great conversation.
• 56:03
  I, I appreciate all the explanations and everything.
• 56:06
  I'm going to start taking a look at some of your listings there
• 56:09
  and hope you can have you guys back on the show again sometime
• 56:11
  in the future. Thanks, Dick.
• 56:13
  Thanks. Professor Virgie, what company
• 56:20
  are we covering this week? So Dave, I'm in France today,
• 56:24
  I'm in Paris. I've been skiing through MLK
• 56:27
  weekend in the Alps and got a chance to hang out with some
• 56:30
  French entrepreneurs and talk about the French tech ecosystem,
• 56:35
  among other things, just drinking wine and looking at the
• 56:37
  Alps. And so I thought I would pick
• 56:39
  Mistral today, which is the one of the stars, the French
• 56:42
  ecosystem. If you aren't familiar with
• 56:45
  France, just I want to start a little bit of like what the
• 56:47
  ecosystem looks like and where Mistral fits in.
• 56:49
  So there's an old school group of companies in France, which
• 56:51
  are mostly e-commerce and media companies.
• 56:54
  It's sort of what you think about when you think about
• 56:56
  France. It's companies like Deezer and
• 56:58
  Vampire and blah blah car. None of those companies in that
• 57:02
  cohort seem to be highly successful exits.
• 57:05
  And there's a new school that's emerging in really the last
• 57:07
  couple, maybe five years, three of them at the top of the list
• 57:10
  are 25% of the entire value of the French ecosystem, Dr. Lib,
• 57:15
  which is like a health, health tech company, health and AI
• 57:19
  Mistral, which we'll talk about. And then remarkably is called
• 57:21
  Back Market. And those companies are
• 57:25
  basically 1/4 of the valuation and I think are the most
• 57:28
  exciting ones within the investor universe here in
• 57:31
  France. This is a graph showing just the
• 57:32
  distribution of top unicorns in France and just how dominant and
• 57:35
  how top heavy this group is. The result of that is a lot of
• 57:39
  money is flowing into that top group.
• 57:42
  A lot of French locals, a lot of French VC money and strategics
• 57:45
  are headed towards that pop group that's dominating the the
• 57:49
  top of the food chain. It's even more concentrated than
• 57:52
  what we see in the US and we've talked about the top 8 or 10
• 57:55
  companies being the dominant players in secondary markets.
• 57:58
  That is the case in France, but it's actually even more
• 58:00
  concentrated among those top two or three.
• 58:03
  Mr. All has emerged in the last three years as a open source
• 58:06
  configurable AI platform. It's actually founded by a
• 58:09
  couple of X Facebook or X Meta employees.
• 58:12
  They are targeting or have just done a raise at about a ten €10
• 58:16
  billion valuations. So at today's FX rates around 13
• 58:20
  billion, they raised over a billion dollars.
• 58:23
  NVIDIA was the lead. That is a big jump from their
• 58:26
  their February 2025 rounds. Early last year they had a round
• 58:30
  led by A16Z at a $2 billion evaluation.
• 58:34
  Before that they had a $200 million evaluation 2 years
• 58:37
  before that by Lightspeed. So A+ investors in those early
• 58:41
  rounds add valuations that are way South of where they're at
• 58:45
  now. They're now doing a essentially
• 58:46
  A5 or 6X step up multiple to become the most valuable company
• 58:50
  in France. So I guess that's the good news.
• 58:52
  When you have a plus early investors and lots of revenue
• 58:55
  momentum and then your valuation steps up, that feels like, you
• 58:58
  know, a, a good momentum story. Here's the downside though.
• 59:01
  They're reporting something like $100 million in revenue.
• 59:06
  I take that back, it's actually $100 million in ARR.
• 59:09
  And I actually use the term contractual ARR for AI companies
• 59:14
  that are doing large language models because when you look at
• 59:17
  those contracts, they don't really have the same nature of
• 59:19
  recurring revenue that like SAS companies do where you're locked
• 59:21
  in for 2-3, five years. A lot of these contracts are
• 59:24
  usage based. They're month to month, quarter
• 59:26
  by quarter and companies can opt out of the contract almost at
• 59:30
  will. So it's not quite as robust as
• 59:33
  ARR, but we'll call it contractual ARR.
• 59:36
  Even if you give them credit for for that, the multiple on this
• 59:39
  new round is something like 100 * 100 deaths multiple of ARR,
• 59:43
  which is far higher than what we've seen even for open AI or
• 59:47
  Entropic, but you're more like, you know, 25 to 30 times ARR.
• 59:52
  Those multiples are already high, but somehow Mistral has
• 59:54
  gotten a premium multiple on even those guys.
• 59:57
  So that's a little bit of a, a red flag.
• 59:59
  And I was trying to figure out what justifies the fact that
• 1:00:02
  these guys have such a premium multiple.
• 1:00:06
  Their lead investors, as I said, were very good in the early
• 1:00:09
  days, Lightspeed and A16Z, but the more recent ones are NVIDIA.
• 1:00:13
  And then ASML is the other big one, which is a chip company.
• 1:00:18
  They're here in Europe. This chip company is one of the
• 1:00:21
  stars of the European tech ecosystem.
• 1:00:23
  They're selling to folks like TSMC and NVIDIA and Samsung and
• 1:00:26
  Intel, but they're definitely a strategic.
• 1:00:29
  They're not a experienced VC investor.
• 1:00:31
  So the fact that their leading ground is not necessarily a, you
• 1:00:35
  know, a good signal alongside someone like NVIDIA, you'd much
• 1:00:38
  rather have a a financial investor.
• 1:00:41
  And then I thought, well, maybe these guys are emerging as like
• 1:00:44
  a, you know, fast growing company that's taking share from
• 1:00:46
  all the others. But it seems like just based on
• 1:00:49
  this chart from Menlo Ventures, Mistral, which is the, the green
• 1:00:53
  shaded part of this graph, they're actually losing market
• 1:00:56
  share against Anthropic and Claude, who has now 40% of the,
• 1:00:59
  this is the B to B enterprise market share for AI large
• 1:01:03
  language models. The number one market leader in
• 1:01:05
  growing is Anthropic and Claude, the number two player in
• 1:01:08
  shrinking is open AI. And then you have a long tail of
• 1:01:10
  other people who are fighting for the rest of that business.
• 1:01:13
  And it seems like Mistral losing, not not gaining share.
• 1:01:17
  And then the last thing I figured was, well, maybe they're
• 1:01:19
  emerging as a European champion. So at least as an investor, if
• 1:01:22
  you can jump in and feel like all these Europeans are going to
• 1:01:25
  want to jump in and these guys are going to be the, they'll be
• 1:01:27
  the client that serves European companies.
• 1:01:30
  And, and so they'll be some a local bid to the, to the
• 1:01:34
  investment, which will make it more valuable.
• 1:01:37
  But it turns out just based on analysis of who their customers
• 1:01:39
  are, and this isn't perfect because there's a lot of
• 1:01:41
  information that they don't disclose most of their
• 1:01:44
  customers, 13 of the 24 customers are from the US and
• 1:01:47
  then there's got you got three in France, which is definitely
• 1:01:50
  in Europe. But last I checked, last I
• 1:01:53
  checked, Canada is not from Europe either and neither is the
• 1:01:55
  USI don't think India is either although.
• 1:01:58
  Although maybe Hinduism. Europe either, yeah.
• 1:02:01
  Yeah, well, the British might dispute that, but probably not
• 1:02:03
  Anyway. So you 3 of the tops that
• 1:02:05
  they're most not even European. So the imperialist ambitions of
• 1:02:09
  the British aside, I can say that because I'm in France and
• 1:02:11
  one of the things you do when you're in France is you make,
• 1:02:13
  you know, you make fun of the British.
• 1:02:15
  It doesn't seem like they're emerging as a European champion.
• 1:02:17
  So, you know, you put it together and it's like one of
• 1:02:19
  these things where it's an excellent company.
• 1:02:21
  It's but it's losing market share.
• 1:02:23
  It's grown quickly, but not as quickly as some of the others.
• 1:02:25
  They have a premium valuation over Open AI and Anthropic based
• 1:02:28
  on the multiple and investors strategics are not financial
• 1:02:33
  investors. As we talked about, Anthropic is
• 1:02:35
  raising a big chunk of money and their lead investor looks like
• 1:02:38
  it's Sequoia, which is the perfect financial investor.
• 1:02:40
  Where if you're a secondary buyer and you want to set your
• 1:02:43
  evaluation based on someone else's homework, you'd probably
• 1:02:45
  rather have someone like Sequoia doing the work and being aligned
• 1:02:48
  with you than a strategic who may want to be a customer or
• 1:02:51
  have some other ulterior motive. So I, I'm sorry to say this
• 1:02:55
  because France is such a great country and it's such a
• 1:02:57
  beautiful place to be and to ski, I don't, I don't feel great
• 1:03:00
  about Mistral. With that, I lay a bet at these
• 1:03:02
  valuations on those companies. I probably bet Open AI and
• 1:03:05
  Anthropic first and then really think about whether Mistral is
• 1:03:08
  worth 100 X multiple valuation. Yeah, it certainly seems like
• 1:03:14
  the revenue multiples on valuations are starting to come
• 1:03:17
  down to more reasonable territory.
• 1:03:20
  Open AI and Anthropic, I guess as a result of their revenues
• 1:03:23
  increasing very quickly, aren't quite as expensive on that
• 1:03:27
  revenue multiple basis as they were a year or two ago, but that
• 1:03:29
  one still seems a bit high. Well, we'll see what happens
• 1:03:34
  there, but I guess good luck for the French and their pursuits of
• 1:03:38
  AI. Exactly.
• 1:03:39
  I think they are. I think there's I think there's
• 1:03:41
  room and space for a European specialist, a large language
• 1:03:45
  model in in French. I think every, every language to
• 1:03:48
  some extent has this big advantage to being the leading
• 1:03:50
  LLM in a particular language. But yeah, the 100 X multiple
• 1:03:55
  seems like they're going to have to grow.
• 1:03:57
  They got to grow into that one. So I wish them bun shots, but I
• 1:04:00
  don't know that that's a great bet.
• 1:04:08
  Noel Moldavi is our guest. He's the founder and CEO of
• 1:04:12
  Augment Software. Happy to have you on the show.
• 1:04:15
  Wondering if you can give us a little bit of your background,
• 1:04:17
  how you got started with Augment and why is secondary
• 1:04:22
  interesting? Thanks for having me.
• 1:04:24
  Long story short, we started the company in 2022 and the goal is
• 1:04:29
  essentially a, a bulletin board of like who's buying what stock,
• 1:04:35
  at what price, who's selling it at what price, having the the
• 1:04:42
  tech match those groups have them negotiate on platform and
• 1:04:46
  then execute that trade. And this is really a, I would
• 1:04:51
  say maybe like a 50% improvement over the current user
• 1:04:54
  experience. I think it was better in that,
• 1:04:56
  you know, you could actually see what you were doing instead of
• 1:04:59
  talking to people on the phone and pinging them every once in a
• 1:05:01
  while. But at the end of the day, these
• 1:05:05
  groups still wanted to negotiate.
• 1:05:07
  It's a 1 to 1 trade. And so, so you're, you're
• 1:05:12
  negotiating price, you're negotiating size.
• 1:05:14
  So even if some of those criteria fit, you have to have
• 1:05:17
  all of them fit. And when you go and execute
• 1:05:21
  these transactions, most of these secondary transactions are
• 1:05:24
  completely custom. And so there's a lot of work
• 1:05:29
  that goes into that. When I did my transaction, you
• 1:05:32
  know, I paid my broker, you know, it's a few $100,000 and I
• 1:05:36
  had to hire a lawyer for the first time in my life because
• 1:05:38
  this was a big transaction for me.
• 1:05:40
  You know, I was like 28 at the time and, and so Adam and I
• 1:05:48
  looked at each other and we, you know, during that time it took
• 1:05:51
  us a year and a half to get our broker dealer license from
• 1:05:55
  FINRA. We also got in the alternative
• 1:05:58
  trading system license from, from the SEC.
• 1:06:02
  We launched the product. This is essentially how it
• 1:06:04
  worked. But what Adam and I noticed is
• 1:06:08
  that the real problem in the space was not really the
• 1:06:11
  matching. It was more the execution.
• 1:06:14
  Because to execute these trades, it takes 30 to 60 days.
• 1:06:18
  And there's a lot of legal documentation back and forth.
• 1:06:21
  People still back out. But I think the biggest problem
• 1:06:24
  is that at the end of the day, you still have to go to the
• 1:06:26
  company and say, hey, I need you, I need to swap me on this
• 1:06:30
  cap table. And most of the time the company
• 1:06:32
  has a right of first refusal or they'll won't let you sell those
• 1:06:37
  shares at all and they'll, they'll block transfers.
• 1:06:40
  And so we said, well, we have a lot of access to, to this stuff.
• 1:06:44
  Why don't we kind of switch up this model, purchase the
• 1:06:48
  securities off balance sheet or we use a credit facility in some
• 1:06:52
  situations and then bring out on the platform this is iteration 1
• 1:06:57
  and then go and sell chunks of that of, of those shares within
• 1:07:03
  our SPV. So people are end up end up
• 1:07:04
  buying units of the SPV instead of.
• 1:07:07
  So you would be the entity on the cap table, your SPD would be
• 1:07:10
  on the cap table, and then you could manage any kinds of trades
• 1:07:14
  within that SPD that you wanted. Exactly.
• 1:07:17
  And so to the to the user, what they see is, hey, this company
• 1:07:21
  is offered to me at this price with this structure.
• 1:07:26
  And the, the question that I have to answer is, do I want it
• 1:07:31
  and do I not or do I not And how much do I want to invest, you
• 1:07:34
  know, up to some amount. And so we started off doing that
• 1:07:38
  in early to mid 2024, just last year and really productize that
• 1:07:44
  experience to make it a very pleasant for users where they
• 1:07:47
  can go and execute these transactions in 5 minutes.
• 1:07:50
  And if we already hold the shares, there's no execution
• 1:07:52
  risk it the shares are in your, are in your hands immediately
• 1:07:56
  after the wire hits our account. That's really the, the
• 1:08:00
  experience that we've scaled over the last almost two years
• 1:08:04
  now and kind of the the next step for us.
• 1:08:08
  And something that we've noticed is that people want to trade
• 1:08:12
  these shares after they buy them and people are acting more as,
• 1:08:16
  as traders rather than buy and hold investors where they buy
• 1:08:20
  into something and that they hold it for 5 or 10 years.
• 1:08:23
  We've noticed this empirically, you know in the product we
• 1:08:26
  didn't, this isn't something that we wanted to build
• 1:08:28
  immediately. You know, this would have been a
• 1:08:29
  couple years out, but we've noticed this behavior.
• 1:08:32
  And so now of the transaction volume that we've done within
• 1:08:36
  these SP VS about 20 to 25% had actually traded already within
• 1:08:43
  you know six months to a year of of acquiring the shares people
• 1:08:46
  are looking to get out. And so OK, it's an interesting
• 1:08:50
  new phenomenon. You know, SPVS are taking off
• 1:08:53
  and I think those two things coupled together have let us
• 1:08:57
  really grow quickly and gets where we are today do.
• 1:09:00
  You find that people are selling because they want to take
• 1:09:02
  advantage of, you know, the locked in gains or is there some
• 1:09:07
  other information that's driving them to, you know, sell?
• 1:09:10
  People sell for a few reasons. If something's way up and they
• 1:09:14
  want to return capital to their LP's is speaking mostly about
• 1:09:18
  institutional investors here. They'll take a little bit off
• 1:09:21
  the table and, and convert that to cash and maybe invest in
• 1:09:24
  something else on the platform that is a little bit earlier on.
• 1:09:29
  For individuals, the story is a little bit different.
• 1:09:31
  I think for individuals, you know, they don't have the
• 1:09:34
  responsibility of returning money to LP's, but maybe they're
• 1:09:37
  like, hey, 5X on 100K is good enough for me.
• 1:09:40
  So I'm going to, I'm going to go and buy something, you know, put
• 1:09:44
  a down payment on a house or something.
• 1:09:46
  Those two are the biggest reasons.
• 1:09:48
  And some people can, you know, some people sell just because
• 1:09:51
  they see another opportunity out there that might be better
• 1:09:55
  providing that liquidity. Are you using this model where
• 1:09:57
  you're the buyer upfront before you sell on most or all of your
• 1:10:03
  transactions? Is that always the case?
• 1:10:05
  It's it's not always the case. So the way that we think about
• 1:10:09
  filling some of these deals is that we will generally have an
• 1:10:14
  institutional investor anchor a deal and so that really sets the
• 1:10:20
  price. There's a lot of other ways to
• 1:10:22
  do this. One is like we could come up
• 1:10:24
  with a price and a justification for the price at act more as
• 1:10:29
  like an asset manager and advisor.
• 1:10:31
  So we really want to just be the facilitator of these things.
• 1:10:34
  And so we're building the rails in order to have these
• 1:10:37
  transactions done in a more streamlined, simpler manner when
• 1:10:42
  we fill some of the. Deals.
• 1:10:43
  We'll have a couple. Institutions that set the price
• 1:10:46
  and then when I say retail, I mean individual invest
• 1:10:49
  accredited investors will will then follow and that's that's
• 1:10:52
  mostly how it's done. The classic example is there's a
• 1:10:55
  primary around that's open for some hot company.
• 1:11:00
  One of the asset managers LP's falls down.
• 1:11:03
  We can come in there quickly and jump on the allocation with that
• 1:11:08
  cash and then resell it, you know, a week later.
• 1:11:11
  And so we that facility acts as a stopgap in order to secure the
• 1:11:16
  allocation. Do you worry that that strategy
• 1:11:19
  and times of high volatility might backfire or get you guys
• 1:11:23
  in a tough spot? There's, there's usually people
• 1:11:27
  that are waiting in line to get those allocations, but you know,
• 1:11:30
  they have to call, they have to call their own capital and
• 1:11:32
  sometimes that takes time. And so really we're solving the
• 1:11:35
  time and the execution equation here.
• 1:11:37
  We're, we're not trying to make directional bets on these
• 1:11:40
  companies. It just so happens that yes,
• 1:11:43
  sometimes we do absorb some of that risk for some period of
• 1:11:46
  time. So in general, you're sort of
• 1:11:47
  figuring out how much demand there is.
• 1:11:49
  Usually there's one larger player at least that's driving
• 1:11:52
  some of that demand. Before you jump in, take a
• 1:11:54
  position. This is why we had pivoted our
• 1:11:56
  entire business model is because for us we're buying directly
• 1:12:01
  from the companies and secondaries and primaries and
• 1:12:04
  we're buying stakes in other managers funds.
• 1:12:08
  But we only buy from like 1% of the supply that we see because
• 1:12:12
  we're very careful about you know reputation.
• 1:12:16
  How was the the manager behaved in the past?
• 1:12:18
  And if someone has a lot of the time you'll, you'll go to a
• 1:12:22
  manager to wire, wire the money and it disappear for two months.
• 1:12:26
  And if you come back, you're like, Hey, this deal actually
• 1:12:28
  didn't execute. Here's your money back.
• 1:12:31
  Like that's a pretty bad experience.
• 1:12:32
  And so when you, when we build up our network, we just keep
• 1:12:37
  doing repeat transactions with the, with the groups that we
• 1:12:39
  trust. Trust is like a massive, a
• 1:12:41
  massive thing in the space much more, you know, I think then
• 1:12:44
  than anything else, especially when you're layering special
• 1:12:48
  purpose vehicles on top of the other.
• 1:12:51
  This is like an entire, you know, I could spend an hour on
• 1:12:54
  that. You know, you're layering all
• 1:12:55
  these St. VS It's going to be a lot of fun
• 1:12:57
  for the banks to pull this apart when there is liquidity event
• 1:13:01
  because, you know, in one entity underneath it, you could have, I
• 1:13:04
  don't know, thousands of investors depending, depending
• 1:13:07
  on how it was organized. And I think the other big thing
• 1:13:12
  here is are the fee structures. When you're layering St.
• 1:13:16
  VS, you could just be layering fees upon fees upon fees and
• 1:13:20
  paying, you know, you're paying like a yeah, you're paying like
• 1:13:24
  a three and 30 or something at a higher price than the last round
• 1:13:28
  just for access. I mean, I've heard stories of
• 1:13:30
  that actually working out in that, you know, these companies
• 1:13:32
  are growing so fast that it outpaces, you know, the crazy
• 1:13:36
  high prices in the carry that you pay.
• 1:13:38
  But we, we, we try to be a lot more fair to our our customers
• 1:13:44
  and we will only take on opportunities where the price is
• 1:13:46
  right and the trust, the trust aspect is, is satisfied.
• 1:13:50
  Do you have a policy then on like the on the pricing of the
• 1:13:53
  transactions to work with? Do you have policies around like
• 1:13:56
  premiums or discounts or you know, nested Russian doll type
• 1:14:00
  SPV structures? Or do you just kind of like you
• 1:14:02
  let the you just investigate each one and make sure you feel
• 1:14:04
  good about each one rather than having like a a blanket
• 1:14:06
  prohibition or a policy around it?
• 1:14:09
  Yeah, we have a. We have a preference stack,
• 1:14:11
  right? Preference stack is we always
• 1:14:12
  try to go direct to the company even if it costs more.
• 1:14:15
  You know, Second is we'll do, we'll do one layer SPVS.
• 1:14:19
  I don't actually think we've done a second layer SPV, but
• 1:14:23
  typically in terms of price, we try to buy at or below market
• 1:14:27
  value. And the way that we're able to
• 1:14:29
  do that is when we started out we couldn't do that because the
• 1:14:33
  volume was just so low. But essentially the the flywheel
• 1:14:37
  was, we did our first ever deal in early 2024.
• 1:14:42
  We didn't, when we didn't really figure this out, $500,000
• 1:14:46
  brought an interesting name onto the platform.
• 1:14:48
  People invested, it was a great experience.
• 1:14:50
  And then they told us about a bunch of other companies that
• 1:14:52
  they wanted to, to to buy shares of.
• 1:14:55
  So we went back and we said, OK, we're going to get supply in
• 1:14:58
  this company at a much higher volume.
• 1:15:01
  Got that came back, people came just for that name.
• 1:15:05
  And then those people started indicating interest in other
• 1:15:08
  companies. And so now we're up to, you
• 1:15:10
  know, doing trades of like 10s of millions of dollars each.
• 1:15:13
  And with that kind of buying power and being reliable, being
• 1:15:17
  a reliable buyer, you tend to get better prices.
• 1:15:21
  It's a lot easier dealing with one, you know, $25 million buyer
• 1:15:25
  than 100250K buyers. And so we, we kind of absorb, we
• 1:15:31
  built the product out specifically for managing that.
• 1:15:33
  And then we have humans on the supply side that go and, you
• 1:15:36
  know, manage the relationships. In general, there's not usually
• 1:15:40
  more than 3 or 4 marketplaces that dominates.
• 1:15:44
  Do you, do you feel like there's going to be 1 big winner here?
• 1:15:47
  Do you think there's going to be multiple players?
• 1:15:50
  Are we, are we in a period of consolidation or is it still in
• 1:15:53
  the expansion stage? Well, I'm, I'm worried with,
• 1:15:56
  with some of these acquisitions that were going back to
• 1:15:58
  fragmentation because I think, you know, pre 2020 you had a
• 1:16:03
  bunch of independent broker shops where you had, you know, a
• 1:16:08
  team of one to four people that hung your license at a broker
• 1:16:10
  dealer and then started doing these trades.
• 1:16:14
  And if you really wanted the whole picture, you'd have to go
• 1:16:16
  to each of them and their networks and, and finding out
• 1:16:20
  what the price for your shares was.
• 1:16:22
  I think in 2020-2021, we started seeing more groups that are, you
• 1:16:27
  know, price aggregators where you can understand the going
• 1:16:30
  price of one of these illiquid securities.
• 1:16:33
  And that seemed like it was starting to to get better.
• 1:16:36
  And then now with these acquisitions now it seems like
• 1:16:39
  is the fragmentation going to happen at the bank level?
• 1:16:41
  I think they're, you know, they're a few independent
• 1:16:45
  platforms left. I think we have a plan to tackle
• 1:16:49
  the rest of the market. And I think, you know, there's
• 1:16:52
  the direct to consumer aspect of it, but there's also the
• 1:16:54
  distribution aspect is like if you can get the supply and you
• 1:16:59
  make it, you can make it very easy for people to invest in
• 1:17:02
  these things. Why can't you just have a
• 1:17:04
  partner that is an RIA or a wealth manager and have them
• 1:17:09
  push that out to their clients and that we don't have to have
• 1:17:12
  direct relationships with those clients.
• 1:17:14
  I think there are a number of barriers to that.
• 1:17:17
  I think we're pretty close to solving all of them and going
• 1:17:22
  after that entire market. Kind of imagine, you know,
• 1:17:26
  you're, you're in your Fidelity or E*Trade and instead of
• 1:17:28
  seeing, you know, just public companies, maybe some crypto,
• 1:17:32
  you also see these private companies that you can trade in
• 1:17:34
  and out of pretty easily. So that's that's where I think
• 1:17:37
  we're headed over the next few years.
• 1:17:40
  And so I think you know the players out there currently, I
• 1:17:44
  think a lot of them are acting as big investment banks where
• 1:17:47
  they're doing all these custom transactions one to one across a
• 1:17:52
  very wide array of companies. We're focused more on the
• 1:17:55
  companies that are the highest volume and then going downward
• 1:18:00
  from there because we want to build this technology layer.
• 1:18:02
  We want to build the good experience 1st.
• 1:18:04
  And then once you have that, I think you can scale it down
• 1:18:07
  market too. Any thoughts on what's been
• 1:18:09
  happening lately with some of the larger public companies?
• 1:18:12
  I guess we've seen some pretty big announcements, Coinbase
• 1:18:15
  maybe just in the last 24 hours, Robin Hood maybe the last few
• 1:18:19
  weeks and seems like everybody is converging crypto exchanges,
• 1:18:23
  prediction markets, public company markets, private company
• 1:18:27
  markets. Is there just one ring to rule
• 1:18:31
  them all, or do you think there's differentiated
• 1:18:33
  approaches for each of these verticals?
• 1:18:35
  Yeah, I think, I think there's going to be some differentiated
• 1:18:38
  approaches. You know, Robin Hood has tried
• 1:18:40
  their private stock tokenization stuff.
• 1:18:42
  I think there's an entire class of companies in this space that
• 1:18:45
  are tokenizing private stock. I think it's a great idea to be
• 1:18:49
  honest. I don't think the regulatory is
• 1:18:51
  clear there on like what exactly is permitted.
• 1:18:54
  So I think we need some guidance from, you know from the SEC on
• 1:18:59
  what is actually like allowed to happen.
• 1:19:02
  You know, I mentioned we were a broker dealer in ATS.
• 1:19:05
  We're also going to be a registered investment advisor
• 1:19:07
  here shortly. So we have a lot of different
• 1:19:10
  things we have to pay attention to.
• 1:19:11
  I don't know like where this is going to go, but if you look at
• 1:19:14
  calci, for example, prediction markets, like they solve the
• 1:19:17
  regulatory challenges upfront and that's why they're kind of
• 1:19:21
  the leader in the space in Poland market came at it, you
• 1:19:24
  know, the opposite way where they they just launched the
• 1:19:26
  product outside the US and then now they're coming in coming
• 1:19:30
  into the US, But their distribution strategies are
• 1:19:33
  interesting, right? It's like, I don't know how
• 1:19:36
  Robin Hood's doing it anymore, but most of these platforms are
• 1:19:39
  just plugged into Cal Shoes Exchange and they're not
• 1:19:42
  building them from scratch. And so maybe that's the future
• 1:19:45
  is that there's one or two like big markets that have access to
• 1:19:50
  the supply or dealing with all the details and all the other
• 1:19:54
  retail facing brokerages just plug into that central place.
• 1:20:00
  So a shared infrastructure, but just different interfaces for
• 1:20:03
  for different users in a segment along like customer needs or
• 1:20:06
  something like that. Yeah, exactly.
• 1:20:09
  You can make 2 analogies about us at this moment in time.
• 1:20:12
  I don't know which direction we're going to go.
• 1:20:13
  We'll probably figure it out that out in the next 6 months.
• 1:20:16
  But you can either view us as like the NASDAQ, which is the
• 1:20:19
  exchange that people plug into and all these brokerages plug
• 1:20:22
  into. And they have all the financial
• 1:20:24
  rails built. They have a lot of technology
• 1:20:26
  built in there. But what we're really starting
• 1:20:28
  with is we're trying to be the Robin Hood for private markets
• 1:20:31
  in that it's a slightly new business model.
• 1:20:33
  Like Robin Hood started by having a pretty interesting
• 1:20:36
  business model, innovation with the payment forwarder flow thing
• 1:20:39
  and like the advertising of the zero fees.
• 1:20:42
  And I think they had a great user experience, something that
• 1:20:46
  was completely differentiated from anything else out there, I
• 1:20:48
  think. That was a big part of it in my
• 1:20:50
  mind. I I started doing some work with
• 1:20:54
  my son to help explain how to value companies and we just used
• 1:20:57
  Robin Hood as our platform for doing trades and research and it
• 1:21:01
  was really quite, quite easy and quite comfortable user
• 1:21:04
  experience. Yeah.
• 1:21:06
  And so I, I, I think we're we're trying to follow that model is
• 1:21:09
  just number one, just make this super, super easy and then go
• 1:21:13
  and and find some distribution. So I think we'll see, we'll
• 1:21:17
  we'll see how you know how willing those big.
• 1:21:18
  Players are to play ball. Prediction markets, in a way are
• 1:21:22
  sort of an alternative secondary market.
• 1:21:24
  It's not like you're necessarily buying the company position, but
• 1:21:28
  you're making a prop bet about the company and what it's stock
• 1:21:31
  price might be or when it goes public or whether the
• 1:21:33
  valuation's on target. There's so it's, it's kind of
• 1:21:36
  like a derivative of a secondary market I guess.
• 1:21:40
  But we've been sort of fascinated by how quickly the
• 1:21:43
  valuations for prediction markets have presented in the
• 1:21:45
  last like really in the last three months, six months.
• 1:21:49
  And I just wonder if, you know, you know, historically, I think
• 1:21:53
  there's a lot of aversion to secondary markets because
• 1:21:55
  companies want in control of their evaluations and pricing.
• 1:21:59
  There's such a large amount of interest in private companies.
• 1:22:02
  The size of these private companies, as you mentioned, is
• 1:22:05
  so substantial. People want in and they're going
• 1:22:10
  to beat down the door whether the companies like it or not.
• 1:22:12
  The employees want liquidity, you know, because companies are
• 1:22:15
  staying private longer. I think it's going to have to
• 1:22:18
  be, you know, competitive advantage that these companies
• 1:22:20
  offer some form of liquidity. If it's not a tender offer every
• 1:22:24
  six to 12 months, then you know something's going to break.
• 1:22:27
  And so it seems like there's no going back.
• 1:22:30
  There's definitely going to be interested private markets one
• 1:22:33
  way or another. Like you said, these companies
• 1:22:36
  are staying private for a very long time now.
• 1:22:39
  They're essentially public companies that just don't want
• 1:22:42
  to be beholden to quarterly Wall Street reports.
• 1:22:46
  People want a ton of access to these things.
• 1:22:49
  So something's going to break. I think we're the ones and, and,
• 1:22:53
  and some others in the space are the ones that are going to need
• 1:22:55
  to build infrastructure to make this stuff happen.
• 1:22:59
  And I think you can do it in a number of ways.
• 1:23:00
  I mean, we're innovating on the technology and user experience
• 1:23:04
  front, on the on the buy side and the investor side.
• 1:23:07
  I think companies will have to look at how they run the
• 1:23:11
  liquidity internally because I think having liquidity would
• 1:23:16
  actually increase the value of their stock price and it'd be
• 1:23:19
  great for employee retention, right?
• 1:23:23
  Well, I, I think regular liquidity is probably more of an
• 1:23:26
  issue for employee retention than, you know, transparency on
• 1:23:29
  financials. At least that's what we've seen.
• 1:23:32
  Like for the same reasons you brought up before, people want
• 1:23:34
  to buy a house. They have to plan for, you know,
• 1:23:37
  kids going to be born or going to college or family medical
• 1:23:40
  emergencies. And you know, there's probably
• 1:23:43
  10,020 thousand, maybe more, you know, employees in the Bay Area
• 1:23:47
  that have $1,000,000 worth of concentrated high net worth in a
• 1:23:50
  single company. Anything you think is kind of
• 1:23:52
  happening in the next 12 to 24 months?
• 1:23:54
  You guys just raised a Series A Congrats.
• 1:23:57
  Thank you. I wonder where you plan to spend
• 1:24:00
  that And you know, what's on your radar for for the next 12
• 1:24:03
  months? The biggest thing is that we're
• 1:24:05
  investing in the technology to be able to build a better user
• 1:24:07
  experience and build the financial rails to make
• 1:24:10
  everything that I've talked about happen.
• 1:24:12
  And there's, you know, there's a little bit of sneak peek there
• 1:24:15
  and into a new product that we have where 25% of the offering
• 1:24:19
  volume that we've done has actually traded in the last 12
• 1:24:22
  months. And so we want to build
• 1:24:25
  technology that enables those trades to happen pretty much
• 1:24:28
  instantaneously rather than, you know, going through signing
• 1:24:32
  documents and wiring over a period of a week and then
• 1:24:35
  leveraging that infrastructure to go after kind of the
• 1:24:38
  institutional brokerages and and and Rias in the space for for
• 1:24:42
  distribution. I think St.
• 1:24:44
  VS are going to be a massive thing going forward in 2026 as
• 1:24:48
  well. Like it right yeah we've we've
• 1:24:50
  had that you know conversation come up with multiple folks on
• 1:24:52
  the pod. We we talked to, you know,
• 1:24:55
  Sidecar, we talked to folks at Hive and I think Ford should
• 1:24:59
  said that more than half of their volume is coming from
• 1:25:02
  SPV's now. So yeah, that's another thing
• 1:25:04
  that I whether companies like it or not, I don't think that's
• 1:25:07
  going to change. That's going to keep happening.
• 1:25:09
  Yeah. I mean, we're, we, we pivot our
• 1:25:11
  entire business model to this. I mean, 75% of our volume comes
• 1:25:14
  from SPV's. We're using that as a building
• 1:25:17
  block to building something a little bit more interesting than
• 1:25:20
  what's out there today. Yeah, it's really seems like
• 1:25:22
  just using SPV's and there's as an abstraction layer so that you
• 1:25:25
  have, you know, a single entity on the cap table, but you can
• 1:25:28
  still manage liquidity under the covers with your SPV.
• 1:25:32
  That just seems like a huge benefit, at least to the
• 1:25:35
  syndicate manager and the SPV buyers, with the caveat that you
• 1:25:40
  want full transparency about what's going on there and
• 1:25:42
  there's there's no shady stuff happening or lack of access to
• 1:25:46
  the underlying securities. Yeah.
• 1:25:49
  And that's that's something that we'll see probably play out in
• 1:25:51
  the next few years as these companies IPO and.
• 1:25:54
  I think we're going to transition from KYC to KYSPVI.
• 1:25:57
  Think that's probably way more important.
• 1:26:01
  There's a there's a start up idea for you.
• 1:26:04
  Maybe we'll build it. That's, that's great.
• 1:26:07
  Well, just make sure you send me some of the big if you use that
• 1:26:10
  acronym in the future. You got it.
• 1:26:14
  No, thanks for being on the show and appreciate you coming out
• 1:26:18
  and spending some time with us talking about the very boring
• 1:26:21
  and unexciting world of secondaries.
• 1:26:23
  I appreciate you having me on. So would you say that
• 1:26:32
  secondaries might become a secondary investing activity for
• 1:26:36
  all these other folks out there? Hey.
• 1:26:39
  Hey, folks, please tip your waiters.
• 1:26:42
  When we started five years ago, six years ago, we thought it was
• 1:26:45
  like the most boring ever. Yeah, that's certainly changed
• 1:26:49
  quite a bit. Well, I think it's a much
• 1:26:52
  simpler explanation. Never heard the reason why dogs
• 1:26:55
  lick their balls a month. No, Dave.
• 1:26:59
  Why? Because they can.
• 1:27:01
  Because they can. Yeah, I should.
• 1:27:03
  I should. I sort of started with a dog
• 1:27:04
  ball analogy that makes a lot more.
• 1:27:06
  Sensible.