Latest / trading places / Polymarket vs Kalshi ($20B), OpenAI vs Anthropic (IPO?), Tesla & SpaceX create Austin Terafab | Ep28

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Polymarket vs Kalshi ($20B), OpenAI vs Anthropic (IPO?), Tesla & SpaceX create Austin Terafab | Ep28 · trading places

• 0:00
  Is Open AI worried that Anthropic is catching up and
• 0:03
  maybe even likely to pass them? What do you what do you think?
• 0:06
  I can't believe it's actually taking PayPal this long to
• 0:08
  actually develop a stable coin product that they're going to go
• 0:11
  and deploy into 70 countries around the world.
• 0:14
  Yeah, I think that's the big question.
• 0:15
  Is SpaceX and Tesla going to be 1 company?
• 0:19
  Is that going to happen? All right, welcome back to
• 0:35
  another episode of our terrible, horrible, absolutely second rate
• 0:40
  BC Tech podcast, Trading Places. Well, what's been happening in
• 0:44
  the world? I guess there's been a little
• 0:46
  bit of news in Iran. There continue to be military
• 0:49
  actions there. The Straits of Hormuz continue
• 0:52
  to be closed or at least relatively close to not to
• 0:55
  everybody, but to Iran's enemies, which which includes
• 0:58
  the US and and Israel. And that that has continued to
• 1:03
  have elevated price of Brent crude and that on top of a Fed
• 1:06
  rate decision this week. It is.
• 1:08
  It is a busy week for news for sure.
• 1:11
  And why is this relevant to us, Aman?
• 1:13
  I guess we're, you know, pontificating about global macro
• 1:16
  and oil prices, but does that have an impact on the tech IPO
• 1:19
  market? Yeah.
• 1:20
  The, the immediate investor implication is it, it's kind of
• 1:23
  done two things to markets that we've talked about. 1 is the
• 1:26
  elevated price of oil flows into the inflation rate, which then
• 1:30
  sets interest rates. We got a very hot PPI report on
• 1:34
  Wednesday where the producer price inflation rate was much
• 1:38
  harder than expected. It's at 3.4% annually.
• 1:41
  It was at .7% overall. And even if you take out, if you
• 1:45
  quote, if you have core PPI, so take out volatile energy and
• 1:49
  food, it was still at .5%. So that came on Wednesday.
• 1:52
  And that was a little bit of a surprise to traders thinking
• 1:54
  now, well, inflation's higher, so therefore interest rates are
• 1:58
  higher. the Fed came out with their own decision last week.
• 2:01
  It didn't even reference the PPI because the PPI report came
• 2:04
  after the Fed had made its decision.
• 2:07
  And it also said basically that we're on holds until future
• 2:11
  notice. And so the betting on Fed rate
• 2:14
  cuts is now indicating that the Fed's going to be on hold
• 2:16
  probably the second-half of the year.
• 2:18
  And so that's one factor that when you have higher rates, it
• 2:20
  means that the markets in general and the equity side will
• 2:23
  go down. And the IPO market in particular
• 2:25
  is pretty sensitive. And then as the price of oil is
• 2:28
  bouncing around, there's the other effect.
• 2:29
  Even if you had generally benign inflation, but you had
• 2:32
  volatility and oil and volatility in the markets,
• 2:35
  that's also bad for IP OS. So it's a little bit of a double
• 2:38
  whammy for our our IPO market now.
• 2:43
  Saul makes 1010 ought to do it, don't you think?
• 2:48
  You think we need one more? You think we need one more?
• 2:52
  All right, we'll get one more. All right, moving on to our
• 3:00
  Private Mag 7 rankings, I guess we've been referring to the
• 3:03
  Augment Power 20 that take a look at this and you know, may
• 3:06
  not always be the exact same order that we think of Aman.
• 3:10
  How do you how do you sort of think about what should be in
• 3:12
  the top 7? Is that just a strict, you know,
• 3:15
  market cap valuation exercises, it's how much being traded?
• 3:18
  Is it stuff that's in the news? What do you think should be our
• 3:21
  criteria there? That's a good question.
• 3:24
  I would think it would start with the the market cap, but
• 3:27
  also what is the quality and level of the investment
• 3:31
  happening. So is there a, is there a real
• 3:33
  active secondary market that would be another factor or is it
• 3:36
  just a few, you know, one off trades between a small number of
• 3:39
  market participants that aren't really accurate?
• 3:41
  I would think that it'd be likelihood of a exit or an IPO,
• 3:45
  but also be up there as something relevant that
• 3:47
  investors. So I guess if we, you know, look
• 3:52
  at this list, we also looked at ACB Insights list from last
• 3:56
  week. And you know, there's been a few
• 3:58
  changes based on raises, but SpaceX probably #1 in almost all
• 4:02
  categories, both market size and interest and everything now
• 4:06
  valued at over a trillion dollars, Entropic and open AI.
• 4:09
  There's a lot of competition between those two.
• 4:11
  We'll talk a little bit more about that in a second.
• 4:14
  Byte Dance. A pretty big company valued at
• 4:16
  550 billion, but not always in everybody's top 3/4, I guess
• 4:21
  because it's maybe a Chinese company and there's a lot of
• 4:24
  other things going on there that might make it a little less, you
• 4:27
  know, traded in the market. And then Dana, Bricks and
• 4:31
  Stripe, you know, typically those are in the top 7 as well.
• 4:34
  I guess again, if we sort of look at this list by Augment,
• 4:37
  you know, what do you see that sort of strikes you as different
• 4:41
  than our usual and rolls in their list here pretty high XAI,
• 4:45
  which isn't really an active company anymore after merging
• 4:48
  with SpaceX. Right, I suspect the XAI just
• 4:51
  that's just maybe a legacy thing of Augment that should be
• 4:53
  munched into SpaceX and Roll is surprising to be #3 on the list
• 4:58
  that might be high. Now they are 4 billion in ARR.
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  So I guess in that respect, they have, it's a real business, real
• 5:04
  momentum. They just this week signed a $20
• 5:06
  billion contract with the Department of War.
• 5:09
  So that's basically it's a 10 year deal.
• 5:11
  So we're talking about a company now that has 10 years of
• 5:13
  visibility and pipeline of the revenues.
• 5:16
  And they have a lot of momentum. So maybe they should be, maybe
• 5:19
  they should be #3 but that one, just on the surface, seems like
• 5:21
  to be. To be grouping the men with open
• 5:23
  AI, SpaceX and Anthropic is a little ambitious.
• 5:26
  Well, I think the market is saying that the company is
• 5:29
  raising at a $60 billion valuation, but their secondary
• 5:32
  market activity is far above that actually even in the 70,
• 5:35
  eighty, $90 billion. So maybe that's why because
• 5:39
  there's so much activity going on and there's there's a premium
• 5:42
  in the secondary market, pretty substantial premium to where
• 5:45
  it's being traded. And obviously military conflicts
• 5:48
  in Iran is on everybody's radar at the moment.
• 5:50
  Right. Sorry, we bought it.
• 5:55
  Look, we all go way back and I owe you from the thing with a
• 5:59
  guy in the place and I'll never forget it.
• 6:01
  That was my pleasure. I've never been to Belize.
• 6:04
  Well, if we look at SpaceX news, just yesterday Elon announced
• 6:08
  that there's this terrafab project in Austin, which is
• 6:12
  going to be jointly run by Tesla and SpaceX.
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  And they're going to be doing all sorts of cool and
• 6:17
  interesting stuff there. They're going to be building
• 6:19
  robotics. They're going to be doing chips.
• 6:22
  They're going to be doing data centers.
• 6:24
  What do you think about all this stuff?
• 6:25
  Is this real news or is this just Elon, you know, combining
• 6:29
  all of his efforts in one territory in Austin?
• 6:34
  I think it's real news. It's it's this ongoing debate as
• 6:37
  to how closely together SpaceX, XAI and then, you know, the
• 6:40
  Boring Company and Tesla are going to operate and work
• 6:43
  together. Elon is increasingly seeing
• 6:45
  these as complimentary companies and assets.
• 6:48
  They're not the same company. They have distinct shareholders,
• 6:50
  but obviously there's a lot of overlap in their shoulder bases.
• 6:53
  And if if the goal is for SpaceX to colonize Mars, it's going to
• 6:58
  need technology from each of these different areas which will
• 7:01
  enable it to get there. And that's the bridging of the
• 7:03
  scaffolding to space and the infrastructure to get to Mars.
• 7:06
  Tesla has a lot of technology that they need.
• 7:07
  The optimist robots is an example, the AI that generates
• 7:11
  and powers of cars. I guess the question is, is it
• 7:13
  all just going to be a serious and joint partnerships or is
• 7:15
  this ultimately going to be 1, you know, one company down the
• 7:18
  road? We don't know, but so far it
• 7:19
  seems like they're working together.
• 7:21
  Yeah, I think that's the big question is, is SpaceX and Tesla
• 7:25
  going to be 1 company? Is that going to happen after
• 7:28
  SpaceX IP, OS or before? This article from Sherwood News
• 7:31
  is talking about how in Elon's minds they're already one
• 7:34
  company. I guess there was some
• 7:37
  speculation by Chamath, Paula, Patia and the All In podcast
• 7:41
  that he thinks that SpaceX won't IPO.
• 7:44
  He thinks that SpaceX will reverse merger into Tesla.
• 7:48
  Right. I guess, you know, kind of
• 7:50
  interesting to look at all these different mergers of Elon's Musk
• 7:54
  companies. So this shows Solar City merged
• 7:57
  into Tesla many years back. That was a little bit
• 8:00
  controversial because Solar City was being run by I think Elon's
• 8:04
  cousins. There was some family connection
• 8:07
  and some speculation as to whether that was, you know,
• 8:10
  Tesla doing a, a, a solid to the Solar City founders and picking
• 8:14
  up a company that wasn't really maybe worth as much.
• 8:17
  Yeah, we sort of had a similar story with X&XAIX being the
• 8:22
  Twitter, you know, story where XAI was almost out of nowhere an
• 8:27
  AI company that Eli put together and immediately started having
• 8:32
  really, really crazy high valuations.
• 8:34
  And again, some people were speculating that was a save for
• 8:37
  the people that had, you know, helped Eli, you know, raise
• 8:40
  money to buy X. And then more recently, XAI
• 8:44
  folded into SpaceX. And we talked about that being
• 8:46
  maybe a little bit questionable in terms of the dilution to the
• 8:49
  SpaceX shareholders. And now maybe finally we get the
• 8:52
  full merger, everything all together, Tesla and SpaceX.
• 8:56
  Do you think that's likely a month?
• 8:59
  Well if it's if it's happens, it's got to happen before the
• 9:02
  IPOI think because you'd have to convince all the shareholders to
• 9:05
  sign off on a merger. So if you've got 1 task already
• 9:09
  to convince all the public shareholders at Tesla except the
• 9:11
  merger, if SpaceX goes public and you have another shareholder
• 9:15
  group, I think that's another battle that just seems to make
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  it a lot more, the degree of difficulty goes a lot more if
• 9:20
  you do go public, the the model that I think is going to make
• 9:23
  more sense than just a single company.
• 9:25
  Is this like a Zaibatsu model? There are conglomerates, not so
• 9:30
  much now in the, in the US have fallen a little bit out of favor
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  though they had them in the the 1970s and 80s.
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  We had conglomerates where we had cross shareholdings, the
• 9:38
  companies and a lot of joint partnerships and synergies, but
• 9:41
  not technically the same company.
• 9:42
  I think that kind of makes sense to me that as a way to proceed.
• 9:45
  I don't know that they ever get into one, one company where you
• 9:49
  know, 11 ring rules them all and it's all under Elon that that
• 9:52
  seems to me like the, the most extreme version of what he's
• 9:55
  shooting for. But I don't know.
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  I think the, I think our conglomerate is, is very likely.
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  13 million and you drive this piece of shit cross country to
• 10:06
  pick me up? Blew it all on the soup.
• 10:11
  Let's go back to our top 7 and focus maybe on two and three for
• 10:15
  just a second. There's been a lot of
• 10:17
  announcements and maybe some concern from open AI, even
• 10:20
  though they just raised the biggest private round and public
• 10:23
  round ever, $110 million. There was a story in the Wall
• 10:28
  Street Journal about quotes from Fiji, Simo saying no more side
• 10:35
  quests. Open AI needs to focus.
• 10:37
  Is open AI worried that Anthropic is catching up and
• 10:41
  maybe even likely to pass them? What do you what do you think?
• 10:44
  I think they probably are even I, I know Fiji quite well.
• 10:48
  She actually used to work at eBay when I was there and she
• 10:51
  was an employee on my team when I ran strategy for eBay.
• 10:53
  But the way that she thinks about this, I think is very much
• 10:56
  about focus and execution. And if you're getting distracted
• 10:58
  with side projects, I just as a way of managing people.
• 11:01
  I think that's a very useful message.
• 11:03
  Sam has said the same thing. He said that about six months
• 11:05
  ago at Open AI. Elon has said the same thing at
• 11:07
  his company companies. It's a good forcing function to
• 11:10
  keep people focused and have an have an enemy that you that is
• 11:13
  leaning on you is just a healthy way to motivate people.
• 11:17
  I think they are still over a billion users monthly actives.
• 11:20
  They are still the biggest, fastest growing company probably
• 11:23
  in the in the history of startups in terms of real
• 11:26
  revenue. I don't think they should be all
• 11:28
  that worried, but it's just, you know, it's a healthy instinct to
• 11:30
  to and motivating way to get people to think about stuff by
• 11:34
  by telling them who the enemy is and what you have to do to stay
• 11:36
  ahead of them. So they ought to be a little bit
• 11:37
  worried about the momentum anthropics making, But I think a
• 11:40
  lot of this is just motivation. Who is number 7?
• 11:43
  I think the top six are pretty clear as all multi $100 billion
• 11:46
  valuation companies. So I think if you, if you wanted
• 11:50
  to gauge this based on momentum, like trading velocity, ability
• 11:54
  to go public, I guess by dance would be 11 candidate to put in
• 11:58
  the in the in the top seven. They are a couple $100 billion
• 12:01
  revenue company on par with Meta, not quite as profitable,
• 12:04
  but a lot of their legal uncertainty was around TikTok
• 12:07
  and the US that seems to have been resolved favorably.
• 12:11
  They wouldn't list in New York, but they can certainly list in
• 12:13
  Hong Kong and and and I think Shanghai as well.
• 12:17
  I don't love Revolute. Revolute just got a the good
• 12:20
  news I guess is that Revolut just got auk banking license
• 12:23
  cleared. The bad news, Dave, is that they
• 12:25
  just got auk banking license cleared.
• 12:27
  So, So what does that mean? They are a, they're a bank.
• 12:31
  They are a bank. They say they're a bank.
• 12:32
  They're revenue as a bank. You don't, you do not value a
• 12:35
  bank at 20 times revenues. They're a $75 billion fintech
• 12:39
  company that does not want to be valued as a bank.
• 12:42
  And so they're going to have to convince the market that their
• 12:44
  their payments and that their fintech revenues and recurring
• 12:48
  revenues are, are recurring and have a lot more durability than
• 12:51
  than bank profits. And they want to stay away from
• 12:53
  banking analysts. On the flip side, Canvas at 42
• 12:55
  billion, that was the last price round.
• 12:57
  I think there's secondary activity north of 42.
• 12:59
  So they're a lot, lot less expensive than Revolute.
• 13:03
  They have 4 billion revenue and counting.
• 13:05
  They've reaccelerated their business.
• 13:06
  They're using AI to improve their business as a as a way to
• 13:10
  make their products stickier and are growing faster than they
• 13:13
  were a year ago. They might be the underdog that
• 13:15
  should be on their top seven list.
• 13:17
  If I had to pick, I guess I my favorite would be Canva because
• 13:20
  I was an investor, but it sort of seems like Andrew is really
• 13:24
  catching up and passing, you know, Canva and Revolute on
• 13:28
  attention. And that's, that's definitely
• 13:30
  true from sort of valuations on the secondary market where it's
• 13:33
  being traded. But I, I do wonder which of
• 13:36
  those companies is going to go public sooner.
• 13:39
  And there I would probably say Canvas seems like the better
• 13:42
  bets. They've talked about going
• 13:44
  public in the past, in the second-half of this year.
• 13:47
  I guess we might, you know, think about after those big
• 13:49
  three, who's likely to go public next?
• 13:52
  Do you think Databricks, Canva, maybe Revolute or Discord, which
• 13:57
  one of those do you think is the most likely to go public in the
• 13:59
  second-half of the year? I think those are all really
• 14:02
  strong candidates. Revolute, I think we'll have
• 14:04
  some work to do to, to stay out of the banking valuation box.
• 14:10
  Andoro as great as they are, they only have four or five
• 14:12
  customers. So they, they've, they better
• 14:14
  have multiple, you know, multi billion dollar deals locked in
• 14:17
  for five or ten years. I think it they can prove that
• 14:19
  that would be that'd be an easy one.
• 14:22
  I think Databrex is a very straightforward easy IPO with,
• 14:25
  you know, Snowflake as a comp, whether the public markets value
• 14:28
  them at 100 and was it 3000 and 40 billion, given that Snowflake
• 14:32
  is half that valuation and the markets are a bit rocky, I don't
• 14:35
  know the Daybreaks gets the valuation it wants, but that's
• 14:37
  the most to me that's the most straightforward 1 and it's
• 14:39
  probably one that we'd we'd see by the end of the year if the
• 14:42
  markets cooperate. I hope you were the groom.
• 14:51
  Ted Nugent called. He wants his shirt back. 1 The
• 14:58
  IPO that got pulled, however, was crack it.
• 15:01
  They had been planning to go public.
• 15:04
  There's a discussion about that happening later in the year.
• 15:07
  They recently raised 800 million of $20 billion valuation.
• 15:11
  But I guess both because the IPO market is kind of like got a
• 15:14
  little bit tougher, the price of crypto and particularly Bitcoin
• 15:18
  has maybe fallen recently. You think that's what's causing
• 15:22
  this to be put on hold among? Well, we, we cover them in
• 15:27
  valuation corner. About four months ago we were
• 15:29
  definitely hot on them as a potential candidate and it was
• 15:33
  them and Binance and Coinbase. But I think since then initially
• 15:37
  the, the, the price of Bitcoin is down about 40% since then.
• 15:41
  So the trading activity is going to be way down.
• 15:44
  It is it is kind of interesting that the since the beginning of
• 15:46
  the Iran hostilities, crypto is Bitcoin has been flat, it hasn't
• 15:49
  really benefited and gold is down 14%, which is kind of a
• 15:52
  little counter to it for these fight the quality trade.
• 15:56
  So that seems like that's probably you know causing them
• 15:59
  to to delay until the markets are a little bit more favorable,
• 16:03
  favorable for them. Another news item that's been on
• 16:06
  the radar basically is stable coins, and there's been a couple
• 16:10
  of activities and stable coins and a couple of things that have
• 16:14
  happened recently. MasterCard has announced they're
• 16:16
  acquiring crypto start up BVNK for 1.8 billion.
• 16:21
  Previously been some discussions about whether Coinbase might
• 16:23
  acquire the company. And then another stable coins
• 16:27
  news item is that PayPal has announced expanding stable coin
• 16:32
  payments to over 70 countries. Seems like stable coins is the
• 16:36
  only stable thing going on in the market lately.
• 16:38
  A month. I can't believe it's actually
• 16:40
  taking PayPal this long to actually develop a stable coin
• 16:43
  product that they're going to go and deploy into 70 countries
• 16:46
  around the world. I've got on the screen here the
• 16:49
  this is the original logo for PayPal when it was a little itty
• 16:52
  bitty startup in 1998 and you were there I think in 1999
• 16:57
  those. Stickers out to everybody.
• 16:59
  I know well, this has just seemed obvious to me that they
• 17:02
  should be a a platform that enables people to trade digital
• 17:06
  assets, cryptocurrency, stablecoin, do that across, you
• 17:09
  know, multiple currencies and in minutes at low cost.
• 17:12
  It's just taking a long time for them to deploy it.
• 17:14
  I guess now there's, you know, market validation for the demand
• 17:16
  for stable coins, but I think that's going to be a huge
• 17:19
  business for for more than one company.
• 17:22
  All right. Well, quite a bit of news going
• 17:23
  on this week. I guess.
• 17:24
  Let's hope that Iran conflict doesn't take our IP OS off track
• 17:27
  too much, but I still think we're going to see a SpaceX IPO
• 17:31
  sometime this year, probably sooner than later.
• 17:33
  I think those big, you know this top three to top 7, the market
• 17:37
  volatility is not great for them, but I think they have the
• 17:39
  ability to get out this year. It's the ones that are one step
• 17:42
  down that it'll be a bit more challenged.
• 17:44
  But I think a couple of really big ones will make a huge
• 17:46
  difference in terms of sentiment and capital flowing back to LP.
• 17:49
  So that'll that could have really helped capitalize the
• 17:51
  market. All right.
• 17:58
  Welcome back to Evaluation Corner with Professor Aman.
• 18:02
  Virgie. And Aman, I predict we're going
• 18:05
  to have a very interesting valuation quarter.
• 18:08
  You're predicting correctly right in the middle of March
• 18:11
  Madness. So we thought, you know, let's
• 18:13
  cover all the rage in sports betting right now are the
• 18:17
  prediction markets, especially polymarket and calci and both of
• 18:20
  them are out raising at some huge valuations.
• 18:23
  So I thought we could cover both of them and decide whether we
• 18:26
  want to buy one by the other or maybe go long both of them and
• 18:31
  shortly disrupted, which is kind of where I'm coming out.
• 18:34
  So let's talk about probably market and Cal she these are
• 18:36
  both of them are operating now in the US They are a very
• 18:40
  different way to bet on events than what you'd see in a casino
• 18:45
  or from a traditional sports book.
• 18:47
  They are both offering marketplace propositions where
• 18:50
  buyers and sellers are betters and recipients at the bet can
• 18:54
  can agree on trades very, very low fees, typically under 1% of
• 18:59
  a fee on winning trades that there's really no vigorous,
• 19:01
  there's no house edge or no house advantage.
• 19:04
  The casino casino, they do make a little bit of money on spread
• 19:07
  on some data modernization, but they're both figuring out their
• 19:10
  revenue models just to think about what the incumbents look
• 19:14
  like. If you ever walked into a
• 19:16
  casino, you know, you know how they work.
• 19:18
  You would walk into let's take a sports book.
• 19:21
  We'll put down like $110 on let's say the the Toronto Blue
• 19:27
  Jays to win the World Series and you're betting 110 to win 100.
• 19:31
  And you might ask yourself why am I betting 110 to win 100?
• 19:33
  Well, the answer is the house gets the $10 profit.
• 19:36
  So these casinos are operating on 7 to 10%, what they call hold
• 19:40
  percentages or vigorish in a more traditional casino setting.
• 19:45
  So very, very expensive to bet. And there's no secondary market
• 19:48
  in a casino, right? Like if you, if you go to a
• 19:49
  casino and you put money down on, on one team that you want to
• 19:53
  win. And then a couple of, you know,
• 19:56
  couple of quarters later, you decide I want to change my bet
• 19:58
  and bet on the other team or I want to sell my bet because
• 20:01
  stuff has happened. You can't do that in a casino.
• 20:04
  You can take an offsetting bet on on the opponent team that you
• 20:07
  can try to. Hedge your bets that way, but
• 20:09
  now you're paying twice the fees and you're putting more money
• 20:10
  out. So there's no secondary market
• 20:12
  where you can buy, sell or trade the bets.
• 20:15
  So that's a real deficiency in this model.
• 20:17
  And that's that's something that both DraftKings and FanDuel, who
• 20:20
  are the two big online sports books in the US tend to suffer
• 20:23
  from. Both DraftKings and fan FanDuel
• 20:26
  are doing pretty well financially.
• 20:28
  DraftKings and it's just gave their 2025 financials.
• 20:32
  They generated over 6 billion revenue.
• 20:34
  Fanduel's around 7 billion in revenue.
• 20:36
  Both of them are growing reasonably well.
• 20:37
  They grew at 27% and 20% in 2055 respectively.
• 20:41
  They're both guiding to continue to revenue growth.
• 20:44
  The draft came to a little bit more conservative.
• 20:46
  They are I think feeling the effects from prediction markets,
• 20:50
  but they did guide to about a 8 to 12% revenue growth.
• 20:53
  When they did the stock tanked. They're at about a 12 billion
• 20:56
  market cap today. So maybe two times revenues,
• 20:59
  maybe about 12 times their anticipated EBITDA or profits.
• 21:05
  Both companies are profitable, but haven't really generated a
• 21:07
  lot of profit in the last five years.
• 21:09
  They're only now getting to scale where they are profitable
• 21:12
  and I think operating their business in a way they generate
• 21:13
  profits. Both are about that 10 to 15
• 21:16
  times price earnings ratio on a on a go forward basis.
• 21:19
  So both of them are being that valuations you can see are
• 21:22
  definitely being affected now by the challengers, the Poly
• 21:25
  markets and the Cal she's. This is a quote from Danny Ocean
• 21:30
  and Ocean's 11, the George Clooney Steven Soderbergh
• 21:33
  version. Because the house always wins.
• 21:37
  Play long enough, you never change the stakes the house
• 21:39
  takes you. Unless when that perfect hand
• 21:42
  comes along, you bet big and then you take the house.
• 21:46
  And I think that is what Polly Market and Kelsey are trying to
• 21:50
  do right now. They're trying to take down the
• 21:51
  house. If you use the products, if you
• 21:54
  are in the US, you can use it now.
• 21:55
  Over the past couple of months they've both become legal and
• 21:58
  you should go around and play around with them.
• 22:00
  Polymarket has made a lot of money on some very esoteric type
• 22:03
  bets. They do.
• 22:04
  They do stuff like product releases, they'll do celebrity
• 22:07
  pop culture stuff. They're not regulated as an
• 22:10
  exchange here in the US and so they have the ability to launch
• 22:13
  a lot of these prop bets, be very quick and nimble and focus
• 22:16
  on breadth and speed. Kochi is regulated here in the
• 22:19
  US. They are approved for the CFTC.
• 22:22
  Good news for them in terms of their better to operate here,
• 22:23
  but also bad news because when you're a legally regulated
• 22:26
  exchange, all of your fine print and all the contracts have got
• 22:29
  to be very, very specific and there's real legal consequences
• 22:32
  for getting the stuff wrong. Just in terms of how to resolve.
• 22:34
  That's 90% of the revenues now comes from sports betting.
• 22:38
  There's there are a few other areas where they do macro
• 22:41
  indicators and weather and maybe Fed moves and some financial
• 22:44
  events. But sports betting has taken
• 22:46
  over for the most part where they're where the revenues
• 22:48
  coming from. So let's talk about how much
• 22:51
  money they make culture. Let's start there.
• 22:53
  They only got their CFC approval in October of 24, which allowed
• 22:56
  them to get into the US and let them do sports betting.
• 22:59
  They generated 260 million in revenue in 2025.
• 23:03
  That was like a 10X jump from the year before.
• 23:05
  They're already 1.5 yeah, crazy step up in a $1.5 billion
• 23:10
  revenue run rate right now. So another easy step up because
• 23:13
  they've essentially turned on their monetization now, right?
• 23:16
  They're now legal in the US. They're now figuring out their
• 23:18
  revenues and they've they're gone essentially from zero to 1
• 23:21
  as far as modernization goes in February of this year, only last
• 23:25
  month technically they closed a deal at an $11 billion
• 23:28
  evaluation a 16 and Sequoia were in the round along with
• 23:31
  Paradigm. That was already a double from
• 23:34
  October 25 before they got that CFTC final approval and all the
• 23:38
  sports betting and went live. And they're now in the market at
• 23:41
  a $20 billion evaluation. So another another double from
• 23:44
  just two months ago, which just tells you how fast this the
• 23:47
  space is moving. Polymarket was banned in the US
• 23:51
  until 2022. They recently got back in late
• 23:54
  2025 through a acquisition of a CFTC licensed broker.
• 23:58
  They're also now focusing on sports betting.
• 24:00
  They have a partnership with with Major League Baseball.
• 24:02
  They made very little revenue in the last couple years.
• 24:05
  So their valuation is entirely based on what's happening now
• 24:08
  and in the future. They have also just recently
• 24:11
  turned on their revenue really since January 6th, 2026.
• 24:15
  It's impossible to know just given how the recent that was
• 24:18
  what the revenue run rate is. But Polymarket exists on chain.
• 24:22
  They're entirely on chain on Polygon, Calcia is not.
• 24:26
  And the benefit of being on chain, I guess is as an
• 24:28
  investor, you can actually look at their activity.
• 24:30
  And this is a, if you read finances blogs, which which I, I
• 24:33
  do for fun and look at who's monetizing and where contracts
• 24:36
  are going and who's making money.
• 24:37
  You can see that a bunch of analysis has been done on what
• 24:40
  revenue they're generating. It looks like they got about
• 24:42
  11.2 million so far in revenue in 2026.
• 24:45
  That's just in the past couple of months.
• 24:47
  But if they were to turn on their revenue, their fee revenue
• 24:50
  for all the markets in which they're in and we're able to get
• 24:54
  to the same kind of modernization that they've noted
• 24:56
  to demonstrate in the first two months, they could get to $400
• 24:59
  million in annual fee revenue right now as a run rate just by
• 25:02
  turning on the modernization. So that's not quite where Kyle
• 25:05
  she is, but it is basically a $400 million revenue run rate
• 25:08
  business also valued at 20 billion based on their current
• 25:11
  conversations. Their last round was in January
• 25:14
  26th, so just a couple months ago and it was a stretching
• 25:17
  investment from the Intercontinental Exchange.
• 25:20
  And before that they raised money from Founders Fund and
• 25:22
  Valor and a few others. So they've moved away from VCs
• 25:25
  into more strategics, but are also demonstrating A tremendous
• 25:28
  amount of revenue growth on the downside.
• 25:31
  And where I think investors should be paying attention is
• 25:33
  what's what are they legally allowed to do in sports betting?
• 25:36
  That's really where the most of the money is.
• 25:38
  They're legally allowed to do it based on these federal approvals
• 25:41
  from the CFTC. So that's the good news.
• 25:43
  The bad news is virtually all states are looking very hard now
• 25:47
  at restricting the revenues that these two market makers can make
• 25:52
  in a couple of areas, in particular sports betting,
• 25:54
  things like election contracts, things like betting on wars or
• 25:58
  terrorism or any activities like that.
• 26:00
  All the state AGS are concerned about this stuff already in
• 26:03
  Nevada, Arizona, Massachusetts, Tennessee, there have been
• 26:05
  seasoned desist orders or injunctions against other
• 26:08
  culture, Polymarket or both. In a few other states that have
• 26:11
  been legal battles and just ongoing negotiations as to how
• 26:15
  to do a lot of the sports betting activity.
• 26:17
  So this is a big question as to how sustainable these revenues
• 26:20
  are. I think Council is a bit more
• 26:22
  aggressive at going after turning on the revenue and
• 26:23
  figuring out the legal stuff later.
• 26:25
  Polymarket is stepping into it very, very carefully.
• 26:28
  In fact, in California right now, you can't use Polymarket
• 26:30
  legally. You can, but that's only a wait
• 26:32
  and see list. The the only way you can use it
• 26:35
  is if you get invited into Polymarket and then have to get
• 26:37
  invited in and use it. And so it's a little bit of a
• 26:40
  clumsy user experience. But if I had to stack them up,
• 26:43
  it looks now like just in terms of revenue, Polymarket is
• 26:46
  probably between 1 and 400 million in revenue run rate in
• 26:48
  2026, depending on how aggressive they monetize how she
• 26:51
  is over over a billion. So they're further along in
• 26:55
  terms of key investors. They both have great investors.
• 26:57
  Founders Fund LED Polymarkets earlier rounds A 16 and Sequoia
• 27:01
  have led Calci's latest rounds. The regulations different.
• 27:04
  Polymarket's been decentralized and only recently got their QCX
• 27:08
  to become CFTC regulated. Calci's been legally operating
• 27:12
  the US for about a year, so they're a little bit further
• 27:14
  ahead, but there's also more of a regulatory burden.
• 27:17
  The technology is a big difference.
• 27:18
  Polymarket is all on chain. Calci is off chain, much more
• 27:22
  like a traditional exchange and then the fees are also very
• 27:25
  different. Poly market is between zero and
• 27:27
  just now in March Madness that turned on fees to but .4% is
• 27:31
  what they're monetizing on the college basketball bats.
• 27:33
  Couch is a little bit higher around 1%.
• 27:36
  Both of those way below casinos and you know, way below
• 27:39
  DraftKings and FanDuel, but they're still trying to figure
• 27:41
  out their monetization. I think conscious maybe a little
• 27:43
  bit further red and both of them around a $20 billion evaluation.
• 27:46
  So I give the edge to Polymarket notes of technology, maybe the
• 27:49
  edge to culture in terms of where they are in the business
• 27:51
  and the regulatory infrastructure.
• 27:52
  I kind of think you should kind of be going long both of these
• 27:55
  and and just shorting the casinos and the other players.
• 27:59
  Just finally a couple of concerns about these businesses.
• 28:01
  I just went on this morning to try to bet on March Madness to
• 28:03
  see who was who is offering these prediction markets.
• 28:07
  Now, definitely calci and polymarket are possibilities,
• 28:11
  but here in California, FanDuel is going to offer prediction
• 28:14
  markets. So is so is sports book.
• 28:17
  There's another dozen prediction market players who are out
• 28:19
  there, including, you know, fanatics and a few others who
• 28:22
  are making it just a very competitive space.
• 28:25
  So it is going to be a very, very competitive space.
• 28:26
  So that's kind of one thing you have to, you have to really
• 28:28
  worry about is who's going to sustain monetization and, and
• 28:31
  the ability to turn all these customers into profits in the
• 28:35
  long term if it really does get deregulated and if the
• 28:38
  competition heats up, which I think it will.
• 28:39
  And then the last thing is there's a lot of complications
• 28:42
  and you know how you resolve these bets if you, I don't know
• 28:45
  if you followed the Super Bowl at all, Dave, but I was at the
• 28:48
  Super Bowl. So I kind of, I had my eye on
• 28:50
  the halftime show, which Bad Bunny was headlining and I
• 28:54
  didn't, I didn't really hear understand a word of it because
• 28:56
  it was All in all in Spanish and was all very, very fast, but it
• 28:59
  was entertaining. There was a prop bet on both
• 29:01
  Poly Market and Colchi on whether Cardi B would perform.
• 29:06
  And there was a maybe a three second cameo where she stood and
• 29:10
  was was in front of the camera but didn't sing, didn't dance.
• 29:13
  And you know, therefore there's a question now and, and whether
• 29:15
  she was performing or not. Apparently $55 million got bet
• 29:19
  on this prop bet whether or not she would perform, which is
• 29:22
  amazing. And it turned out and they
• 29:23
  resolved them differently. So I think what happened was
• 29:26
  after the performances, there was a conversation with between
• 29:28
  lawyers as to wait, was that a performance?
• 29:30
  Was that not a performance? If she wasn't singing and she
• 29:32
  wasn't dancing, there wasn't really a performance.
• 29:34
  Kelsey took that position and they have a very, as I said,
• 29:37
  they're they're regulated exchange.
• 29:38
  So they're fine print is very, very detailed.
• 29:41
  They went through all this rigmarole and decided we're just
• 29:44
  going to settle the bet like she didn't perform and it's just
• 29:46
  going to be resolved to an emergency rule we're going to
• 29:49
  invoke. It's going to resolve the last
• 29:50
  trading price and try to make everyone whole.
• 29:52
  Polymark had been a very quick decision.
• 29:54
  They decided, yeah, that counts and we're going to resolve it.
• 29:56
  Yes. And that's the benefit of, I
• 29:58
  guess, being might be regulated and being able to make quick
• 30:01
  decisions on this. But I think there's going to be
• 30:03
  a lot of issues like this and there's going to be scandals on
• 30:05
  sports betting and, you know, especially players who are
• 30:08
  taking bets and trading with insider information.
• 30:10
  So there's a lot of regulatory overhead and a lot of legal
• 30:13
  issues here that they're going to have to resolve.
• 30:14
  And I think that's an investor. You have to be very thoughtful
• 30:16
  as to what those liabilities look like.
• 30:19
  I still kind of like them. I love them at the 9 and $10
• 30:21
  billion evaluations from three months ago.
• 30:24
  I kind of like them at $20 billion.
• 30:25
  I think maybe that's getting a little bit ambitious, maybe a
• 30:27
  little bit ahead of it, ahead of themselves.
• 30:29
  I definitely would not be long DraftKings and FanDuel right
• 30:31
  now. All right.
• 30:32
  Well, thanks for a great valuation corner again, Aman.
• 30:36
  OK. Thank you, Dave.
• 30:38
  Been practicing this speech. A little bit.
• 30:39
  Did I rush? It felt like I rushed.
• 30:40
  It was good. I liked.
• 30:46
  It we can go in and invade Venezuela, but they win a
• 30:49
  baseball, huh? I know I feel bad.
• 30:52
  They, well, they're that's revenge, I guess.
• 30:53
  We, we grabbed up their democratically elected leader
• 30:56
  and they took it out on us by beating us at our own sport.
• 30:59
  But.