Latest / trading places / OpenAI $110B Raise, Stripe at $159B, and the Donor Money Tax Hack VCs Use | Trading Places Podcast E25

Transcript

OpenAI $110B Raise, Stripe at $159B, and the Donor Money Tax Hack VCs Use | Trading Places Podcast E25 · trading places

• 0:00
  Personally, myself, I have booked more than $5,000,000
• 0:03
  worth of tax credits using this strategy in the past couple
• 0:05
  years. Donor advice funds are
• 0:07
  essentially twice as tax efficient.
• 0:10
  The tax deduction that you receive, depending on the asset
• 0:12
  can be upwards of twice as large compared to a private
• 0:15
  foundation. I think what's happening now is
• 0:18
  basically just the market is taking a maybe an overreaction
• 0:21
  to every new AI agents that comes out, whether it's Claude
• 0:25
  or someone else. Good morning and welcome to the
• 0:50
  25th episode of Trading Places, the world's most horrible,
• 0:54
  terrible, bad podcast. Aman, you're back from Italy,
• 0:58
  back from the Olympics. I've got a dog in my lap here.
• 1:02
  I see if sides now that the USA won.
• 1:05
  You, you bandwagon fan. You.
• 1:09
  No, Well, it's the benefits of being a dual citizen.
• 1:12
  You know, you can, you can root Canada and they're when they're
• 1:15
  favored. And now I'm flipping over to
• 1:16
  team US. And it's interesting.
• 1:18
  I was travelling as both a Canadian and an American because
• 1:21
  for hockey, I grew up in Canada playing hockey, so I was rooting
• 1:23
  for their Canadian team, but for everything else that was
• 1:26
  traveling as an American. So I'm back on back on team.
• 1:29
  It's a good, good week to be an American this week, Dave.
• 1:31
  Hockey wins and then you get the women's one.
• 1:35
  The Men 1 is just a good good week I think to be on TVUSA.
• 1:38
  Little bit of fact I'm on, it was a pretty good hockey player.
• 1:42
  And am I correct you actually played the Russians?
• 1:46
  As a junior, I think semi pro by hockey and play for a junior
• 1:50
  team. Canada at a time when the Soviet
• 1:52
  Union was just coming undone. The Soviets that we skated
• 1:56
  against where the the fastest, biggest, strongest players I've
• 1:59
  ever seen. I must break.
• 2:07
  You Aman what's been happening with open AI and fundraising.
• 2:12
  Kind of a big deal, huh? Yeah, I think on the fundraising
• 2:16
  side, they are dialing in a $110 billion raid. $110 billion, the
• 2:26
  biggest raise of all time. It's it's bigger than any public
• 2:31
  IPO. It's bigger than any private.
• 2:33
  Raise yeah up until now the the biggest fundraising round of all
• 2:38
  time it actually was open AI about a about a year ago when
• 2:41
  they raised 40 billion on 300, the biggest IPO of all time it's
• 2:46
  basically tied between Alibaba and Saudi Aramco.
• 2:49
  I think Saudi Aramco has the official record of a 25.6, but
• 2:52
  that was with the green shoe and some friends and family money
• 2:56
  coming from the the the Saudi world family and their friends.
• 3:00
  But that's 25 billion. This is $110 billion.
• 3:04
  And so it's going to be I did a 730 pre money.
• 3:08
  So I guess it's not put some like 840 post money.
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  Biggest biggest fundraising of all time by probably an order of
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  free acts breaking their old record and four times bigger
• 3:16
  than the biggest IPO. And like, basically more money
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  than was entirely raised in venture capital a few years
• 3:23
  back, right? Like one deal is bigger than the
• 3:26
  entire year of venture up until like a few years ago, I guess,
• 3:30
  yeah. Amazing.
• 3:31
  I guess that's right. Although they're kind of they're
• 3:33
  kind of cheating because they're putting a lot of money in from
• 3:35
  strategic. So just to just to recap why I
• 3:38
  think this is such a big deal for opening AII think they're
• 3:40
  actually broadening their partnership base here.
• 3:43
  Up until October at 25, this was open AI was basically a wholly
• 3:47
  owned subsidiary of Microsoft. Microsoft owned at one time 49%
• 3:51
  of the equity. They they came down to 27% in
• 3:55
  late October and announced a whole bunch of agreements as
• 3:58
  essentially the primary frontier model partner for for open AI,
• 4:02
  including exclusive IP rights through 2032 and up until
• 4:07
  whenever AGI was announced or whatever, whatever the hell that
• 4:09
  is. But this is the new money coming
• 4:11
  in. It is not coming from Microsoft
• 4:14
  is actually this, these are the three big partners.
• 4:16
  It's Amazon for 50 billion. Now some of that's going to be
• 4:20
  in services, some of that's going to be in cash.
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  It's not all committed right out of the gate, but in milestones.
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  But it's going to make, I think by my math, Amazon is going to
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  be a 7 to 8% equity owner in open AI.
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  So they'll be right behind Microsoft in the low 20s and
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  against the open AI foundation of the low 20s.
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  Then you got some employees and you know, whoever, whatever Sam
• 4:38
  ends up owning, but Amazon's going to be a huge player.
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  Inviga's in for 30 billion, Softbank's in for 30 billion.
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  And I guess the good news is if you're, you know, if you're open
• 4:47
  AI, it's like, hey, I can raise a lot of money.
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  But they, they leaked a bunch of financials as a part of a
• 4:52
  fundraising. And David, I think he and I have
• 4:54
  been in this board meeting before where somebody says, Hey,
• 4:57
  I'm going to double my spend. You know, in this case it's 665
• 5:00
  billion by 2030. But the good news is I'm in
• 5:03
  revenue and the revenue is 280 billion by 2030.
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  But I don't know exactly. I'm gonna get there.
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  I need the money now. I'm gonna give you the money
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  later. The money later is gonna be some
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  combination of consumer modernization search.
• 5:16
  It's gonna be it's hardware, it's ads, it's everything else.
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  And they're also increasing their estimate cash burn to 111
• 5:23
  billion or by 111 billion now through 2030.
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  So they're gonna raise a lot more money.
• 5:28
  They're spending a lot more money and they're promising a
• 5:30
  lot more on the back end. But this is, again, we've all
• 5:33
  been in this board meeting, right?
• 5:35
  I don't think I've been in this board meeting.
• 5:36
  I think that is like high stakes poker with a couple of extra
• 5:41
  zeros, like 5 more zeros than I've ever been in any board
• 5:46
  meeting for sure. Yeah, fair enough.
• 5:48
  But man, that is kind of amazing.
• 5:51
  So, you know, again, in any other Newsweek, that would be
• 5:55
  stories 1-2 and three and we would be done.
• 6:00
  But guess what? There's a lot more going on this
• 6:04
  week. And I think our next four
• 6:09
  stories are all going to be stories about anthropic.
• 6:15
  And so let's let's jump into perhaps the least interesting of
• 6:20
  the four stories, which is Anthropic, who recently
• 6:25
  completed a raise at 350 billion, is now kicking off an
• 6:29
  employee tender offer of $6 billion.
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  And so employees in Anthropic are now going to be able to cash
• 6:37
  in five or $6 billion worth of their equity.
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  Anybody who's been to the company for more than 12 months
• 6:43
  and they're certainly demand for those shares.
• 6:45
  So that's, that's not a problem. I think real estate prices in
• 6:49
  San Francisco just went through the roof.
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  A lot of a lot of happy real estate agents in San Francisco.
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  We're going to be very busy over the next six months, I think.
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  How many? How many Decca millionaires did
• 7:03
  anthropic? I don't know.
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  And you know, a couple of that maybe 10,000 Decca millionaires
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  at at NVIDIA. That might be another, you know,
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  anthropic and. Certainly hundreds, if not
• 7:15
  thousands of people are now going to be millionaires of some
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  sort and may be correct, 10 millionaires.
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  Perhaps. This is the least interesting
• 7:26
  anthropic story this week. And that's what's kind of crazy.
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  So this was being threatened all week, but now it's official.
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  The Pentagon has declared Anthropic a threat to national
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  security, a supply chain risk. And Defense Secretary Pete
• 7:47
  Hegseth, who used to be a Fox News commentator, is now
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  blocking all federal agencies and contractors from doing
• 7:54
  business with the company. And not only that, all other
• 7:57
  companies that have business with the military from doing
• 8:00
  business with Anthropic as well. And I'm not, I'm not sure I know
• 8:06
  all of the reasons here, but I think there was like
• 8:08
  commentation, comments about two specific areas that Anthropic
• 8:14
  CEO Dario Amaday was not OK with.
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  One was mass surveillance and the other was autonomous use of
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  weapons of mass destruction or at least significant weapons.
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  So whether that's nuclear or other, my sort of on target
• 8:29
  there is that your read on the situation as well.
• 8:31
  Yes, I think so. There's an ongoing debate over
• 8:34
  the, I guess the use of Anthropic is this way.
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  Anthropic is a major supplier of the US military, has been for a
• 8:40
  while, right? I think Dario has said, and he,
• 8:44
  he has said as a condition for continued use of Anthropic, he
• 8:47
  really, he drew those two red lines.
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  In fact, the first one was mass surveillance of U.S. citizens.
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  I believe it wasn't even mass surveillance, but just US
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  surveillance. Specifically U.S. citizens.
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  You're correct. Yeah, right.
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  And that's illegal, by the way. So by asking for something like
• 9:00
  that hey you if I if I can do to sell me you my technology don't
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  use it to mass surveil U.S. citizens, which already is a
• 9:07
  violation of the law kind of a. Little bar, right?
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  Don't. I'm going to hold the line at
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  things that are already clearly illegal.
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  Yeah, give me that one and then and then the second one I guess
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  is maybe a bit more debatable on what is autonomous use of
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  weapons and right, None by the way, if I'm Dario, it's not an
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  unreasonable. Question to ask.
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  I'm like, those two don't sound crazy to me.
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  Like, hey, don't let robots control nuclear weapons and
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  don't mass surveil the US public.
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  I'm like, yeah, pretty low bar, OK, I agree with that.
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  But DoD said no way man, you're being super woke.
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  Really. Well, I think Pentagon
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  reasonable, reasonable position would be we are buying your
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  technology just like we buy technology from Boeing.
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  Boeing doesn't tell us how to fly our planes.
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  Let us you know, in the defense of democracy and freedom,
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  freedom, use it the way that the military generals supervised by
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  Congress and the commander chief were supposed to do it.
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  But at the same time, you know, I think the, the, the, the
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  unreasonable response is, well, if you're not, if you're going
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  to sell me your technology with terms and conditions, you an
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  American, you know, violator of the Constitution.
• 10:15
  You are. Blacklisting you and your supply
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  chain risk? That does seem like hardball
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  negotiations. I'm, I'm hoping that they come
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  to some kind of reasonable, you know, that they maybe they're
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  negotiating and that they're going to have the, some kind of
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  deal here because I think the US military will work better with
• 10:28
  AI technology. In fact, I'm sure that will, we
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  don't want to be, we don't want the military left behind in AI
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  technology and adoption. But I think Anthropics had some
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  very reasonable requests on how to use your technology and
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  they're the experts where AI can go wrong, right?
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  So you think you would, you'd think you'd have some
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  accommodation and not, and not just, you know, blacklist them.
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  But I, I don't know of all the insurance and outs on the
• 10:46
  negotiation. What's the dog's name?
• 10:52
  Max. Hey, Janelle.
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  What's wrong with Wolfie? I can hear him barking.
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  Is he OK? Wolfie's fine, honey, Wolfie's
• 11:00
  just fine. What are you the?
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  First appearance are dead. Well, never one to miss an
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  opportunity, Sam and Open AI are grabbing that bag.
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  And so within hours of this announcement, Open AI has
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  reached an agreement with Defense Department to pick up, I
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  believe a $200 million contracts, which which sort of
• 11:26
  seems like chump change these days, right?
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  We're talking like billions, hundreds of $1,000,000, like
• 11:30
  $200 million contract. Oh, yeah, like, like, that's
• 11:33
  nothing. But it is sort of like having
• 11:37
  one of the two major AI players flip over and take up that
• 11:42
  contract. I guess Sam.
• 11:44
  Sam must have been ready. What do you think?
• 11:47
  Daria, you've you've you've dropped the ball there.
• 11:49
  Are you here? Let me let me pick it up for
• 11:52
  you. Good for Sam, I guess.
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  I mean, you think with a trillion dollar Pentagon budget
• 11:56
  this year, there's going to be you know, a lot of money spent
• 11:58
  on AI providers and it hopefully it's not just these two.
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  Hopefully they've got, you know, many different vendors, but I
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  wonder if Open AI is going to have the same requests.
• 12:07
  I guess not. I guess they're going to allow
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  the attendant. To I thought, I thought they
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  did. I thought Sam was kind of in
• 12:12
  other tweets agreeing with, with Anthropic's position on mass
• 12:18
  surveillance and autonomous use of of weapons, or at least
• 12:22
  autonomous use of nuclear weapons.
• 12:24
  But Sam seems to have been opportunistic in in saying, hey,
• 12:27
  you know what, we're going to step into the breach here.
• 12:30
  And I I think this kind of is harkening back to some, you
• 12:33
  know, woke, not woke positioning.
• 12:36
  Maybe I don't, I don't know if that's overplayed, but probably
• 12:40
  anthropic is a little bit more left of center and open the eye,
• 12:43
  maybe not right of center, but maybe a little bit more willing
• 12:46
  to play ball with the government.
• 12:48
  Is that your read? You know, it just may be a
• 12:51
  negotiating, it may be some name calling in a in a negotiation.
• 12:54
  I don't I don't really know how the ideology lines up here other
• 12:56
  than the same stuff that being opportunistic.
• 13:00
  I think he is, you know, I think the benefits of having multiple
• 13:03
  vendors in this game and I don't know where Brock is rather, but
• 13:06
  I would imagine having multiple players in this game are are
• 13:08
  good for the Pentagon and and that's what they would want to
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  do. This is the procurement best
• 13:11
  practice. I've got to think some of the
• 13:13
  calling and the personal stuff is a little bit of Trump being
• 13:16
  Trump and a little bit of maybe negotiating back and forth.
• 13:19
  Yeah, And I think you're right. I think there was also some
• 13:22
  announcements earlier in the week about Grok being selected
• 13:26
  for a lot of Defense Department contracts as well, and that
• 13:29
  maybe Elon had the inside track on some of that.
• 13:32
  And certainly, you know, before when Elon was more engaged with
• 13:36
  the government, people thought, you know, he's going to have a
• 13:38
  lot more role with the government there.
• 13:41
  All right, our fourth story involving Anthropic this week.
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  Couple things going on here. Anthropic has been releasing
• 13:49
  plug insurance that are category specific, industry specific.
• 13:54
  I think previously in insurtech and in wealth management and a
• 13:58
  couple other areas. And those resulted in public
• 14:01
  companies in those areas, stock prices getting crushed.
• 14:06
  And then this piece from Centrini Research came out about
• 14:09
  the 2028 global intelligence crisis.
• 14:11
  And I'm on maybe you can like give us a little bit of read
• 14:15
  between the lines about what's going on here.
• 14:18
  Is this about there being an AI bubble or not being a bubble or
• 14:21
  too much bullishness or bearishness?
• 14:23
  What's what's the Centrini memo all about?
• 14:26
  Yeah. Well, I think the let's ground
• 14:28
  it in some of the some of the facts on sort of the anthropic
• 14:31
  shake out that you described. So this is I think important
• 14:33
  because this is the it's driving market sentiment.
• 14:36
  And with the way that I would, we just talked about Anthropia
• 14:39
  being the left wing woke the nice guys in AI for a nice guy
• 14:43
  in AI. They're destroying the entire
• 14:45
  software sector market cap. They're wiping out probably 20
• 14:49
  to 30 billion in market cap. They don't doesn't sound very,
• 14:52
  very nice or sensitive. But so back on February 1, they,
• 14:56
  they announced a new plug in for Claude Cork, which is their AI
• 15:00
  agent. And it had some functionality
• 15:03
  for legal contracts. And you know, the sort of thing
• 15:06
  that I've been playing with this for six months.
• 15:07
  So this is not, it wasn't new. I've been playing with Claude
• 15:10
  'cause I do legal drafts and contracts.
• 15:12
  This was a feature functionality they had.
• 15:14
  They just sort of advanced it and super sliced it to this this
• 15:17
  API on February 1 and look at the share prices that and have
• 15:21
  you reacted between LegalZoom, Thompson, Reuters, LEXIS, Nexus
• 15:24
  and then Wolf with Kluwer? They were all down 2530% and you
• 15:28
  know, within a matter of like days after this new legal plug
• 15:32
  in went live. And then on the 20th, they they
• 15:34
  Claude put out new security features And again, the cyber
• 15:39
  and people knew this in advance. And so there was a little bit of
• 15:41
  a, a down draft and down trade, but Crowdstrike and Cloudflare
• 15:44
  and some of these high Octa, some of these high flying
• 15:46
  cybersecurity SAS companies, kind of, you know, kind of price
• 15:49
  for everything to go, right. They basically took a big hit in
• 15:52
  advance of that launch. And then the launch happened,
• 15:53
  they took another hit and they've kind of recovered since.
• 15:56
  But you can see the damage being done in these sectors from these
• 15:58
  new, you know, clawed features. And so I think what's happening
• 16:02
  now is basically just the market is taking a, the maybe an
• 16:06
  overreaction to every new AI agent that comes out, whether
• 16:10
  it's Claude or someone else. And then I think the most recent
• 16:13
  Citrine memo is essentially A doomsday scenario of what could
• 16:17
  happen in by 2028 turn course and speed with AI and the
• 16:22
  picture that it paints is 1 of radically increased
• 16:25
  productivity, but a lot of job losses, 10% plus unemployment in
• 16:28
  US concentration of wealth. The S and Pi think they have
• 16:32
  going down by 38% mainly because of what we just talked about,
• 16:35
  the 20% reduction of these SAS companies playing out over
• 16:38
  multiple years and profit is being destroyed.
• 16:41
  It's just it feels like an AI doomsday scenario.
• 16:43
  It's like the remember James Cameron's 1984 movie The
• 16:46
  Terminator. The if you look at the back
• 16:48
  story for that, you know, that's what it is.
• 16:50
  It's like AI is far more destructive and malevolent than
• 16:52
  it is positive. I think of technology as as it's
• 16:55
  a positive supply side shock like the railroads or like, you
• 16:58
  know, the telecommunications of competing revolution or you can
• 17:03
  go back to the automobile. There's always this job loss and
• 17:05
  profit creation that happens as a result of these things that
• 17:09
  that happened in tandem, losses and creation.
• 17:11
  And this just focuses on the negative.
• 17:13
  And I think the market's taken a very negative approach in the
• 17:15
  last couple of weeks. And this is just, you know, a
• 17:17
  manifestation of that. So 1 great question.
• 17:20
  If you're a founder right now or raising money in IPO, are you on
• 17:23
  Claude's shit list or not? Like if you, if your product is
• 17:27
  on a road map, I'm talking lovable or replit, if you're
• 17:30
  doing something that Claude can do, you better have a good
• 17:33
  answer for what happens when they launch a plug in or some
• 17:36
  kind of a feature. Because if you don't have that
• 17:38
  answer and why your why your business is defended against
• 17:42
  that kind of a move, then you're going to get discounted in the
• 17:44
  market by 20 thirty, 40%. Or, or more.
• 17:48
  Yeah, well, there was, there was a bit of a rebuttal to that
• 17:51
  Satrine memo by Citadel and I guess they were saying, hey,
• 17:55
  maybe not quite that bad. Rapid expansion of artificial
• 18:00
  intelligence unlikely to trigger mass job losses at least some
• 18:03
  concern that the AI driven labor disruption was really not
• 18:08
  happening quite just yet, right. And I don't know if I sort of
• 18:14
  believe the you know AI is going to kill everybody company, but I
• 18:17
  also don't necessarily believe hey, there's no impact there.
• 18:20
  I think somewhat notable this past week, Block CEO Jack Dorsey
• 18:24
  Block, which used to be called Square, is a public company and
• 18:27
  he announced layoffs of 40% of the company because he said not,
• 18:34
  hey, we're not doing bad. We because we can't, we can lay
• 18:38
  off 40% of the company because AI is going to make us so more
• 18:42
  productive, so much more productive.
• 18:44
  And I believe the stock price jumped 15 or 20%, maybe more
• 18:47
  than 20% as a result of those moves.
• 18:50
  What do you think about that? Who's right on this?
• 18:53
  Like how much of like job losses is AI related or just like AI is
• 18:58
  the fall guy for all these job losses and people are just
• 19:01
  trying to be more productive and, you know, look, cut
• 19:04
  expenses. Well, you hear a lot of
• 19:06
  anecdotal evidence about the use of these AI specifically, but
• 19:10
  maybe just, you know, technology and automation to make the work
• 19:15
  more efficient. And you hear, you know, Amazon
• 19:17
  laying off a few thousand here, Alphabet laying off a few
• 19:20
  thousand there. So far it's been like 1235
• 19:23
  percent of the workforce at most.
• 19:24
  It hasn't been anything quite so severe as the 1020 Thirty 40%
• 19:29
  Doomsday scenario 40. Percent is a lot, right?
• 19:32
  40% is like, hey I can run my company on half the people.
• 19:36
  Yeah, exactly. This is the second time I think
• 19:38
  I've heard something real. Like the first time was Elon
• 19:40
  Musk at at Twitter and he laid off some of the 580% and the
• 19:44
  site didn't go down. The one piece of contacts that
• 19:46
  say just before we get into the who's right or wrong is just as
• 19:49
  a reminder, let's take block. This is their headcount going
• 19:52
  back to the last few years. So they hired look at 2018
• 19:56
  nineteen. They basically tripled the size
• 19:59
  of the workforce between 2019 and 2023.
• 20:02
  So all through COVID. They basically hired way ahead
• 20:06
  of their plan, way ahead of their revenues.
• 20:08
  And I think there's been a couple years now of just going
• 20:10
  from that over hired bloats to now, you know, significant
• 20:13
  reduction. So I don't want to minimize the
• 20:14
  reduction, but I just say in context, there's a, there's a
• 20:16
  lot of fat in these organizations that's going away.
• 20:19
  The overall unemployment rate, it's the point Ken Griffin makes
• 20:22
  in Centadel. The overall unemployment rate in
• 20:23
  the US is 4 point, what, 3%? Back in the 80s and 90s when I
• 20:27
  learned economics, that was full employment, like that was
• 20:30
  supposed to be a kind of condition of a Golden State or a
• 20:33
  paradise. Anything below 5% was amazing.
• 20:37
  So we have a very low unemployment rate.
• 20:38
  We have software jobs are actually going up, not going
• 20:41
  down. Anthropic is hiring right now
• 20:43
  for AI engineers. They're paying according to a
• 20:45
  million and a half million in starting salaries.
• 20:47
  So there's a lot of job creation and a lot of jobs that are being
• 20:50
  that are coming into being. There's also a lot of
• 20:52
  offsetting, you know, decline and destruction.
• 20:55
  I think Dorsey's maybe on the more extreme example of what's
• 20:57
  what is happening or what will happen.
• 21:00
  But I think on the whole, there's going to be a lot of
• 21:02
  positive creation over the next five years that we don't yet
• 21:04
  have our arms around. Just a lot of anxiety around it.
• 21:06
  But I think that's going to be the that's a positive supply
• 21:09
  shock that when you get productivity going up, people
• 21:11
  can do a lot more things, things become a lot more cost
• 21:13
  effective. And so people find jobs to do.
• 21:15
  It just hasn't, you know, and it's not showing up the, the AI
• 21:18
  job description scenario isn't showing up in the macro stats at
• 21:21
  least at least not yet. So I tend to be on the
• 21:23
  optimistic side. I think, you know, I think
• 21:25
  Citadel's got a point and I think the the doomsdayers are,
• 21:28
  are probably overstating it. Jesus, you're going to kill that
• 21:34
  guy of. Course, I'm a Terminator.
• 21:37
  All right, another amazing, but you know, still kind of lower
• 21:41
  down on our list here. Byte Dance recently valued at
• 21:44
  550 billion, that's up from where we were looking at it,
• 21:48
  maybe, I don't know, 3-4 months ago.
• 21:50
  And it was only valued at the $300 billion evaluation.
• 21:53
  I think at the time, we were wondering why it wasn't valued
• 21:57
  more. And I guess now the market is
• 22:01
  recognizing that and and valuing it appropriately.
• 22:05
  So $550 billion, that's, that's right up there.
• 22:11
  I'm on that. Isn't that #4 now #3 on our
• 22:14
  list? I guess number three behind
• 22:15
  SpaceX will be #1 right? I guess open alley will be #2.
• 22:19
  Yeah, the other week. Story, but they're they're the
• 22:22
  number three most valuable private company in the world.
• 22:25
  They're they're last round and we covered them in our valuation
• 22:27
  corner about six months ago. They were at a $330 billion
• 22:32
  valuation we thought based on the summer parts.
• 22:34
  Oh, that's gotta be, that's gotta be a buy if you think
• 22:37
  there's any value to TikTok. And I guess the way I think
• 22:39
  about the valuation, this is just a, a snapshot of social
• 22:44
  media companies in both the US and in China.
• 22:48
  And you can see where Meta is, right?
• 22:49
  The big, the big blocks are Meta, which is the $101.5
• 22:52
  trillion social media giants. But on the Y axis is the growth
• 22:56
  rate and the X axis is the revenues for the company.
• 22:58
  So you can see where Meta is. And when Bytedance did its
• 23:01
  evaluation right before evaluation corner, you can see
• 23:04
  where it landed. It was a much smaller
• 23:06
  evaluation, but similar revenue and higher growth.
• 23:09
  So pretty, pretty attractive and if you look at their valuation
• 23:12
  now, I think they're much closer to where you would think it
• 23:16
  would be based on the chart. They're you know, they're
• 23:18
  basically at or maybe a little bit growing faster than than
• 23:21
  Meta. Their revenues are probably
• 23:23
  right on top of Meta's now probably 200 billion this year
• 23:25
  versus 200 billion for Meta, but higher growth rate for Byte
• 23:28
  dance. I think the one adjustment you
• 23:30
  have to make now is with the spin off of TikTok that is no
• 23:33
  longer part of the business, although they own 20% of that
• 23:35
  U.S. business. So if I, if I pro forma them
• 23:38
  right back to take out the US business and just go with what,
• 23:42
  what they have in the rest of the world's and the attribution
• 23:45
  to the USI think they're right on top of Meta now.
• 23:48
  They've now revalued exactly what you'd expect them to based
• 23:50
  on comparables and based on, you know, a, a business that is 1/3
• 23:55
  the size of Meta in terms of evaluation, but has the same
• 23:58
  revenues as about half as profitable, maybe 2/3 as
• 24:01
  profitable, has exposure to the US still has that the benefits
• 24:04
  of the tech talk license agreement.
• 24:06
  So this one now feels like this is where I would have, you know,
• 24:08
  I would have expected this to be the the the valuation.
• 24:11
  Right, OK, I, I decidedly lower valuation tender is fintech
• 24:16
  company Plaid. Plaid revealed that it had
• 24:19
  completed a tender offer to employees at a valuation of 8
• 24:23
  billion. That's up from a $6 billion
• 24:25
  valuation back in April of 2025 when it did a previous tender
• 24:30
  offer, down from maybe the 13 billion in 2021 when they had
• 24:35
  previously been valued. And I guess they they had turned
• 24:39
  down an acquisition offer or something had been blocked.
• 24:42
  I I believe with Visa correct? So Visa maybe acquisition offer,
• 24:47
  I think that was the $5.3 billion acquisition regulators,
• 24:50
  you know, I'm sure had a bunch of conditions on how that would
• 24:53
  go forward. I think it's and Plaid and then,
• 24:55
  you know, then the business began to pick up in 2020 because
• 24:57
  the during the pandemic a lot of the Plaid benefited from the
• 25:01
  mobilization of commerce. So they've had a bit of a, you
• 25:04
  know, rocky road stance. So when since their evaluation
• 25:06
  got reset, they went as high as 13 billion in 2021, they got
• 25:11
  reset to six after the crash. So this is invested in 390
• 25:14
  million in revenue. So it's about a 20 times
• 25:17
  multiple based on the latest round.
• 25:18
  I think that's pretty good. Their growth rate in 2023 had
• 25:21
  really slowed down to low teens, 12% revenue growth back in 2023
• 25:27
  and then we accelerated to 27% more recently.
• 25:29
  So I think they did have a reset after the the bubble pops, but
• 25:34
  you know this is to that $6 billion number.
• 25:37
  But I think everyone got reset and and payments and this is now
• 25:40
  a much better reflection of where they are a 20 times sales
• 25:42
  multiple. I think for them is actually
• 25:43
  quite, quite a quite a big win. I think we'll end this week with
• 25:47
  one last story of the secondary market.
• 25:50
  Robin Hood launched a billion dollar pre IPO stock fund giving
• 25:55
  the retail market opportunity to sort of cash in on private
• 25:57
  companies. I guess you would say Kathy
• 26:00
  Woods arc fund does a little bit of this little known public
• 26:04
  company called Destiny XYZ, which has some SpaceX did this.
• 26:09
  I think we're seeing aqueous anime be forged offering similar
• 26:13
  things. So our retail markets coming to
• 26:16
  secondary Aman are we are we going to be out of business here
• 26:19
  as a secondary fund because the retail market jumps into these
• 26:22
  vehicles? I hope not, I guess is the
• 26:24
  answer. But between the machines coming
• 26:25
  on one side and my mom and retail coming on the other side,
• 26:28
  maybe maybe you know, the question is what's the play,
• 26:31
  What's the, what's the space you occupy?
• 26:34
  I guess think of it this way in, in public markets, you have
• 26:36
  institutional money and retail money, right?
• 26:39
  You've got pension funds and hedge funds and insurance
• 26:42
  companies making smart bets and taking significant ownership
• 26:45
  positions on allocation strategies.
• 26:47
  And that's what VCs ought to be doing.
• 26:49
  I think Robin Hood and I guess to some extent Kathy Wood are
• 26:52
  opening the playing field to retail money.
• 26:54
  We're just going to go after stocks, but without that
• 26:57
  institutional discipline or governance or oversight.
• 27:00
  And that's probably good for the market and hopefully good for a
• 27:02
  lot of investors. But I don't I don't think it
• 27:04
  displaces institutional capital. At least I hope not.
• 27:08
  Well, I hope you enjoy your hockey game and I'm off to New
• 27:11
  York next week. I'm going to go check out the
• 27:14
  East Coast and get a little snow and ice, I guess, while I'm
• 27:18
  there. Hope you have a great week and
• 27:22
  we'll see you back in the markets.
• 27:30
  All right, what's what's new with Stripe this week?
• 27:33
  And let's break down the valuation now.
• 27:35
  They're up substantially from, I guess, just a year ago, right?
• 27:39
  Yeah, just a year ago, they've been doing a tender offer every
• 27:42
  year, more or less February, March of every year for about 3
• 27:45
  years now. They've really systematized it
• 27:47
  and I think that a really good job of recruiting and pulling in
• 27:50
  new investors every step of the way.
• 27:52
  A year ago they were at 91.5 billion.
• 27:55
  They were rumored at the start of this year to be at 140
• 27:57
  billion, which would already make them the most valuable
• 28:00
  payments company in, in the world and probably, you know, 2
• 28:03
  times over versus anyone, anyone else.
• 28:07
  I think they were oversubscribed and they're now operating at
• 28:09
  $159 billion valuation. So very big step up from a year
• 28:14
  ago. Their last primary around they
• 28:16
  haven't even raised money as a primary company for three years
• 28:19
  now. The last prime around was three
• 28:20
  years ago at a $50 billion evaluation.
• 28:22
  So we'll talk a bit about their metrics and you know how we, how
• 28:25
  we see that shaping up. This is a company generating
• 28:27
  about 20 billion in top line revenue, total revenue.
• 28:31
  There's an important concept we're going to dial in on which
• 28:33
  is net revenue for any payments provider.
• 28:35
  We're just taking money in from merchants.
• 28:37
  You're paying a bunch of fees and processing costs.
• 28:39
  You should always look at the net of that.
• 28:41
  At PayPal where we worked, we would just call that the gross
• 28:44
  profits. The way that the way that Stripe
• 28:46
  shows it in their financials, they call it net revenue.
• 28:49
  I think that $5 billion net revenue number is really a much
• 28:52
  more important way to benchmark them versus any of the other
• 28:55
  payment companies. So, you know, just a pro tip for
• 28:58
  anyone investing in a payments company, just to recap now where
• 29:02
  they are in terms of their valuations.
• 29:03
  This chart shows in the green how much they've raised and then
• 29:07
  the blue line shows where the valuation was.
• 29:08
  So going back to 2000, 2020, one, they were pretty much
• 29:11
  raising every year, not a lot of money, but you know, enough to
• 29:14
  run the business. They then raised a fair amount
• 29:17
  in 2021, their business dramatically accelerated.
• 29:20
  They got a big increase in their secondary valuation and they
• 29:23
  didn't need to raise money. They turned the turn the corner
• 29:25
  profitability and didn't need to raise a lot of money had a bit
• 29:28
  of a reset in 2223 when the market tanked.
• 29:31
  They, like everyone else, got reduced by about they went from
• 29:34
  an A 95K an hour valuation to about 50.
• 29:37
  So almost got cut in half, raised a lot more money.
• 29:41
  That's the green. And then every year since
• 29:43
  they've had steady up for the right progress on resetting the
• 29:46
  valuation to the secondary market higher.
• 29:48
  So I think just a really good, you know, a plus performance and
• 29:51
  how to manage tender offers. One of the crazy things to think
• 29:54
  about in, in terms of the valuations is look at the
• 29:57
  multiples now on strike. They're at a 25 X multiple on
• 30:01
  net revenue. Take Audion, which is very
• 30:03
  familiar in terms of payment volume.
• 30:05
  Now they're Audion is only a $30 million valuation.
• 30:08
  There's seven times sales and then PayPal and Block are at
• 30:12
  basically one times sales. Kind of crazy to think about.
• 30:15
  How is it possible that you know, stripes it in such a
• 30:18
  premium to all these other companies and the team across?
• 30:22
  What's all that magic sauce about?
• 30:23
  Why is that such a big difference?
• 30:26
  Well, I think what it comes down to is let's talk about
• 30:29
  valuations and you know how you think about valuations.
• 30:31
  So on the Y axis I want to chart something called EBITDA margin
• 30:35
  multiplied by your growth rate, OK, So take your revenues and
• 30:39
  your multiplied by your profit margin that gives you your
• 30:42
  profits or EBITDA cash flows. That's really what payment
• 30:44
  processor should be tracking to and then look like that by the
• 30:48
  growth rate. It's a bit of a hack.
• 30:51
  It's a shorthand formula just to simplify some important concepts
• 30:54
  down to one metric, but it's basically growth and
• 30:57
  profitability. And any discounted cash flow
• 30:59
  analysis you do will focus on growth and profitability.
• 31:03
  Different ratings, they will matter differently in the
• 31:05
  valuation depending on the rate of growth, on the amount of
• 31:08
  profitability, the terminal value, quote UN quote.
• 31:11
  All that isn't in a textbook you can buy online, but just
• 31:14
  simplify it now to this one metric on the left hand side of
• 31:17
  the chart and then on the on the X side of the at the X axis.
• 31:20
  Now it's just going to be the EV to 25 sales.
• 31:23
  So what is your enterprise value divided by your sales?
• 31:25
  Well, let's start with tracking certain payment processors like
• 31:29
  we just talked about PayPal and block Fiserv Western Union.
• 31:33
  You can see where they fit on kind of a a line of best fit.
• 31:36
  Visa is way off to the right. Much higher growth, much higher
• 31:39
  multiple payment processors like MasterCard and Visa are going to
• 31:42
  be because of their the network effects they have and their
• 31:45
  established market position are getting premium multiples.
• 31:48
  But it kind of makes sense given premium growth.
• 31:50
  A couple of others want to add in ADP and paychecks.
• 31:53
  These are payroll processors. So they are payment processors,
• 31:55
  but they have some lock in effects because they're working
• 31:58
  with your payroll provider. Tough to switch away from those
• 32:00
  guys. So a little bit higher multiple,
• 32:03
  but also higher growth rate. Well, let's see now where Stripe
• 32:07
  and IDM fall and you can see where they land right on that
• 32:10
  line of best fit. So they they are getting a
• 32:13
  premium multiple, but it is a reflection of very, very rapid
• 32:15
  growth rates in their underlying business being able to
• 32:18
  demonstrate now profitability, extending profitability.
• 32:21
  And so you know, that kind of justifies the devaluation.
• 32:24
  So I think based on this new round, as long as it can keep
• 32:27
  delivering these kinds of numbers, it feels like Stripe
• 32:29
  was probably being fairly valued.
• 32:32
  One thing I do want to I'm kind of concerned about that.
• 32:34
  I'm now hearing rumors about Stripe buying PayPal or maybe
• 32:39
  acquiring their way into some other businesses, Right.
• 32:42
  Any time you're worth 159 billion, I think there's that
• 32:44
  temptation. PayPal in one time was worth 300
• 32:47
  billion in the pandemic. They're now down something like
• 32:50
  85% from that peak to only 45 billion.
• 32:53
  I know there are a lot of people at who are now thinking about
• 32:56
  PayPal being an acquisition target and strike as a natural
• 33:00
  acquirer for PayPal could be a big benefit if they do buy them.
• 33:04
  I can think of three advantages that that strike get right away.
• 33:07
  1 is scale. PayPal has got a lot of
• 33:09
  customers and a lot of consumers.
• 33:10
  The second is the cost advantages.
• 33:12
  PayPal was able to process volume from their balances and
• 33:15
  bank accounts. That's all technology that Dave,
• 33:17
  you and I helped to build, right?
• 33:18
  And then consumer. Paypal's got consumers all over
• 33:21
  the world. The challenge of getting into an
• 33:23
  acquisition, though, where I do feel like Strike might get
• 33:26
  distracted. 1 is there's a lot of technical debt with PayPal.
• 33:32
  What do I mean by that? They were built 25 to almost 30
• 33:35
  years ago now. So Stripe is all APIs.
• 33:38
  It's very cutting edge technology.
• 33:40
  They're going to have to figure out how to either acquire,
• 33:43
  integrate or more probably deprecate probably billions of
• 33:46
  dollars of technical R&D that PayPal has invested in network
• 33:50
  that won't integrate with what Strike does.
• 33:52
  So that's one concern. And Stripe is never a lot of
• 33:54
  acquisition history, right? They've only made a couple of
• 33:56
  acquisitions in their history. The most recent one was like no
• 34:00
  more than a couple of billion dollars.
• 34:01
  So they don't have a lot of expertise in acquiring and
• 34:05
  integrating companies. The second concern is if they do
• 34:08
  go after someone like PayPal, I know that they will not think
• 34:12
  the last bitter capital bond will jump right in.
• 34:14
  Probably JP Morgan Chase will jump right in and start bidding
• 34:17
  up the asset. PayPal shareholders won't want
• 34:19
  to let it go aside for some huge, you know, without a huge
• 34:21
  premium to where the where the market is right now.
• 34:24
  We know from our past experience Google and Apple have designs on
• 34:27
  payments. Apple has a pretty good project,
• 34:29
  but left PayPal and then Meta and Amazon.
• 34:32
  I don't know that they've given up on their payment dreams.
• 34:34
  They've they've sunk 10s of billions now into payments with
• 34:38
  not much to show for it and they still want to be in the game.
• 34:40
  So I do kind of worry that Stripe might get distracted with
• 34:43
  their increased market cap in a acquisition war.
• 34:46
  It also complicates the IPO story if you start making
• 34:49
  appositions. But if you set aside
• 34:51
  acquisitions and potentially those opportunities, I think
• 34:53
  Strife is right where they're supposed to be given, you know,
• 34:55
  organic business profitability growth and have clearly
• 34:59
  established themselves now as the most successful payments
• 35:02
  leader with the best technology, probably a top five private
• 35:05
  company in in the world now based on its latest valuation.
• 35:08
  And I think the very likely IPO candidate if you want to do it
• 35:10
  and you know, 2020, six, 2027. So I'm kind of bullish on
• 35:14
  Strife. I think this is a good, you
• 35:15
  know, reflection of the progress they've made.
• 35:18
  Small anecdotal story, I I met Patrick Collision probably over
• 35:21
  10 years ago. He was then I guess one of the,
• 35:25
  you know, best companies that came out of YC and was kind of a
• 35:28
  darling at the time we had the opportunity to invest.
• 35:31
  In fact, Patrick asked us when we were running 500 to invest.
• 35:37
  And at the time, you know, I think Stripe was already a
• 35:40
  billion dollar company, 500 was mostly investing in early stage
• 35:44
  I think because we had exposure to a lot of international
• 35:47
  markets. That's why Patrick was
• 35:48
  interested. He actually spoke at a
• 35:50
  conference that we organized called Commerce ISM way back
• 35:55
  about e-commerce. We ended up putting a small
• 35:58
  amount of money into the company when they think they were only
• 36:01
  valued at between 1:00 to $2 billion.
• 36:03
  And that ended up being one of our best investments.
• 36:06
  That's actually why we have a position in Stripe also was we
• 36:09
  bought secondary in one of 500 funds that held that Stripe
• 36:12
  position. I, I wish I'd bet bigger on
• 36:16
  Stripe at the time, Patrick always seemed like a pretty
• 36:19
  amazing leader as well as his brother John Collision also.
• 36:23
  So one thing I think you maybe have overlooked there, you talk
• 36:28
  about that technical debt issue. I think that that's going to go
• 36:31
  away as an, as a problem because of AI.
• 36:34
  And I think we've already been hearing that there's now AI
• 36:37
  that's going to go in and recode a bunch of COBOL for IBM and all
• 36:40
  these old folks. So I think the technical debt
• 36:43
  issue is going to get solved by AI much quicker than maybe
• 36:47
  anybody realizes. Sort of seems like Stripe and
• 36:50
  and maybe Apple would be the more natural acquirers.
• 36:53
  I, I don't know about the other financial providers that you
• 36:56
  mentioned, but it does seem like something's going to happen
• 36:59
  there in the near future and that we do have a, a new set of
• 37:03
  kingmakers in the payments world.
• 37:06
  Yes, I feel like Paypal's on the block.
• 37:08
  I think you're right about Apple.
• 37:10
  And we know that you remember Google Pay.
• 37:13
  Maybe not because they they try that.
• 37:14
  Yeah, and then a bunch. Of people from PayPal, but it
• 37:18
  never really got off the ground now.
• 37:21
  Meta, we know friends that we know LTS and our fund and
• 37:25
  friends of the of the company who've run payments at Facebook
• 37:28
  and it just hasn't really gone anywhere.
• 37:30
  The only concern to have the technical that point is well
• 37:33
  made. The only concern to have is
• 37:34
  someone like Stripe because they don't have a history of
• 37:38
  acquiring they're builders. Yeah.
• 37:40
  And I think that's now where we were we were builders, eBay was
• 37:44
  an acquirer and it was just different skill sets, different
• 37:46
  DNA. We botched more acquisitions to
• 37:48
  be to be successfully integrated, but you know, having
• 37:52
  the discipline to walk away from a company that has has technical
• 37:55
  deck where you have to fix it, where you have to integrate it
• 37:57
  is that's an important, you know, trait of the collisions.
• 38:01
  I think where if they make the bets, they really know how to
• 38:03
  they have a good product plan on how to build it and integrate
• 38:05
  it. And if you, you don't get
• 38:06
  distracted by, you know, by some of these other companies that
• 38:09
  seemed good on paper, but just turned out to be culturally
• 38:11
  weird or, or hard to integrate. So I trust their judgement on
• 38:15
  it. I just think you, you could
• 38:15
  easily get into a bidding war with someone like PayPal, a very
• 38:18
  different culture. All the PayPal folks are ex
• 38:20
  investment bankers now and they come from heart associations and
• 38:24
  Stripe came from a a they'll come from a different cloth.
• 38:26
  And so I worry about things like cultural and integration, But I
• 38:30
  think the business is fantastic and would would also if they can
• 38:34
  fix a technical debt issue with PayPal, it could be a good
• 38:36
  synergy there. I think you're right to mention
• 38:39
  Facebook or Meta as a as a potential acquirer also, I think
• 38:42
  they are one of the few that could maybe handle and manage
• 38:45
  that. And there is a lot of PayPal DNA
• 38:47
  that went over to Facebook and Meta.
• 38:49
  So strikes strikes me that Apple, Apple or Stripe and
• 38:53
  possibly Facebook or Meta, Facebook and Meta would be the
• 38:57
  other acquires that would be natural fits.
• 38:59
  I guess we'll we'll see what happens.
• 39:02
  All right, I'm on. Well, thanks for the valuation
• 39:04
  corner and go USA. Yo, USA, thank you, Dave.
• 39:11
  See you next time. Mom, are you OK?
• 39:17
  Mom. Come with me if you want to
• 39:21
  live. All right, Well, thanks for
• 39:36
  joining us this morning. I'm Dave McClure, founder and
• 39:39
  Managing partner at Practical Venture Capital.
• 39:41
  And Daniel Blake, who's the founder and CEO of UI
• 39:44
  Charitable, is also with us. And we're gonna tell you guys
• 39:47
  how to save millions of dollars in taxes.
• 39:50
  And that's not just a crazy pitch.
• 39:53
  Personally, myself, I have booked more than $5,000,000
• 39:56
  worth of tax credits using this strategy in the past couple
• 39:58
  years and probably a little bit more in the next few years as
• 40:01
  well. So this is a real strategy and
• 40:04
  we'll give you actual case studies of people who have saved
• 40:07
  six and seven figures by using this method.
• 40:10
  Dan, could you give us a brief introduction to yourself and UI
• 40:13
  Charitable and then maybe we can talk a little bit about who
• 40:16
  we're talking to today and what we're going to try and explain?
• 40:18
  Yeah, absolutely. Like Dave mentioned, my name is
• 40:20
  Daniel Blake. I'm the CEO here at UI
• 40:23
  Charitable. UI Charitable, we, we really
• 40:26
  think of ourselves as a philanthropic back office for
• 40:29
  high net worth individuals and institutions.
• 40:32
  And so we focus on making sure that you're giving is structured
• 40:37
  in the most tax efficient way possible as well as making sure
• 40:41
  that you accomplish the charitable outcomes that that
• 40:43
  you care about. So like Dave mentioned, we're
• 40:46
  going to run through a couple of strategies that are very well
• 40:51
  documented strategies, but aren't very well known.
• 40:55
  So that the IRS has very clear rules on how these strategies
• 40:59
  work. And there's a tremendous amount
• 41:01
  of value being left on the table specifically for investors and
• 41:05
  founders. So we're we're just going to go
• 41:07
  ahead and jump right into it. So the the problem that we're
• 41:11
  looking at is for individuals that have privately held
• 41:16
  illiquid assets, these can be very difficult to sell.
• 41:21
  The value of the asset on paper is generally going to be very
• 41:25
  different than what you can actually sell it for.
• 41:28
  Currently we're seeing assets like these LP interests, you
• 41:32
  know, founders equity, if it's sold in a secondary transaction,
• 41:37
  it's often times sold at a very steep discount.
• 41:40
  And I could attest to that as your greedy buyer of secondary
• 41:44
  shares. We are tough negotiators and
• 41:47
  many cases the discounts that we're buying individual equity
• 41:50
  in companies is 30 to 50% for fund interest, GP and LP
• 41:54
  interest. Sometimes that could be as high
• 41:56
  as 50 to 70%. And so part of the strategy is
• 41:59
  really just to show you that by doing a tax, by doing a donation
• 42:03
  and tax reduction, depending on what state you live in and what
• 42:07
  tax rate you're paying at, often times you can save more money in
• 42:10
  taxes than you would get from trying to sell a tough interest
• 42:15
  on the secondary market. And so the thing that most
• 42:17
  people don't realize is just how easy it is to donate those
• 42:21
  privately held complex assets. By donating those assets, you
• 42:26
  get a, a tax deduction based off of the fair market value.
• 42:30
  You avoid capital gains when those assets are sold.
• 42:34
  And this is a fantastic way to increase the funding for your
• 42:37
  charitable goals. So, and that's a a great segue
• 42:41
  into this next section on donor advised funds.
• 42:44
  Dave just gave a a great explanation of donor advice
• 42:48
  funds. So a donor advice fund really is
• 42:52
  an alternative to a private Family Foundation.
• 42:55
  It's like having your own charitable investment account.
• 43:00
  You donate to your donor advice fund, you receive an immediate
• 43:04
  tax deduction. The assets in the donor advice
• 43:07
  fund can grow tax free and then you can give out of that donor
• 43:12
  advice fund overtime to any nonprofit or most social
• 43:17
  ventures. It is important to call out that
• 43:21
  a donor advice fund is a separate public charity.
• 43:25
  That's how you receive your tax deduction.
• 43:28
  And so you you are the donor advisor and the individual donor
• 43:33
  advice fund is going to have specific rules and guidelines
• 43:37
  that they follow. So it's really important to
• 43:38
  understand who is your donor advice fund host and do they
• 43:43
  have any additional restrictions above and beyond what the IRS
• 43:46
  allows? At UI Charitable, we really
• 43:49
  pride ourselves on giving donors all of the flexibility that's
• 43:52
  afforded to them by the the IRS. And the the power of a donor
• 43:57
  advice fund really is around the separating the timing of your
• 44:02
  tax deduction from the timing of your charitable giving.
• 44:05
  And by separating those two things, you're now able to
• 44:08
  optimize for both of those. I just wanted to point out
• 44:12
  something that Dan mentioned on that previous slide.
• 44:15
  Dan, if you could go back one second there.
• 44:16
  So you mentioned this is an alternative to setting up a
• 44:19
  Family Foundation. That's a really important point.
• 44:22
  And let me just tell you that setting up a Family Foundation
• 44:25
  is much more of a pain in the butt and a lot more challenging.
• 44:29
  There's a lot more reporting. I'm saying this because I've
• 44:32
  done both and I wish I had not set up the Family Foundation.
• 44:37
  I wish I just gone straight to set it up the DAF and it's a lot
• 44:40
  easier to manage a lot of this within DAF.
• 44:44
  Also for a personal Family Foundation usually doesn't make
• 44:47
  sense unless you have at least $1,000,000 or more to set up a
• 44:50
  Family Foundation. Dafs are much easier to set up
• 44:54
  on a much lower dollar a month. Dan, I don't know what the
• 44:56
  smallest DAF you've ever managed to set up, but I believe it
• 45:00
  could be less than, you know, $10,000 if people want it.
• 45:03
  We have Dafs that are as small as, you know, thousands of
• 45:06
  dollars. Yeah.
• 45:08
  And I think the other thing that to mention here is although the
• 45:12
  shareable grants are emphasized, you can still manage investments
• 45:16
  inside your DAF in any type of, you know, vehicle that you want.
• 45:21
  And we'll talk later about you could even transfer in crypto
• 45:25
  assets and hold and invest crypto assets.
• 45:28
  I've personally made startup investments and even fund
• 45:31
  investments out of my DAF. You can put those in normal
• 45:35
  public stocks or indexes. You could do any kind of
• 45:39
  transaction for most parts that you can do within a normal for
• 45:42
  profit vehicle. Just that this is happening
• 45:44
  within your your charitable entity.
• 45:48
  The only thing that I would add to that donor advice funds are
• 45:51
  essentially twice as tax efficient.
• 45:54
  The tax deduction that you receive depending on the asset
• 45:57
  can be upwards of twice as large compared to a private
• 46:00
  foundation. So not only is it easier to set
• 46:03
  up, easier to manage, but donor advice funds are generally far
• 46:08
  more tax efficient than a private foundation.
• 46:12
  Most people also don't realize how flexible donor advice funds
• 46:17
  can be and everything that you can donate into a donor advice
• 46:21
  fund. When most individuals that
• 46:24
  already have a donor advice fund, you know, they, they are
• 46:27
  contributing cash, they're donating public securities and
• 46:32
  you know, that's, that's fantastic, you should do that.
• 46:34
  But they don't realize that you can donate private company
• 46:37
  stock, GPLP interest, precious metals, cryptocurrency, real
• 46:41
  estate, essentially any asset that you can have appraised by a
• 46:45
  third party you can donate into a a donor advice fund.
• 46:49
  And so when individuals. Look to for one second and I
• 46:53
  would just say you're actually telling a little bit of a lie
• 46:56
  there. Not every donor advice fund can
• 46:58
  accept these and in fact, most donor advice funds will not
• 47:02
  accept private company stock, GPLP interest in the fund and
• 47:05
  cryptocurrency. So that's a particularly a
• 47:09
  special attribute of UI charitable.
• 47:12
  I guess I'm, you know, selling here because I am a customer as
• 47:15
  well, but you know, contributing private company stock and in
• 47:20
  particular holding it in the same form after you made the
• 47:23
  donation into your donor advice fund and sent the new GPLP
• 47:26
  interests and crypto is not typical for most donor advice
• 47:29
  fund. So although we can saying here
• 47:31
  that you can do this into a DAF, you should check which DAF
• 47:35
  platform or sponsor you're talking to you whether they
• 47:37
  allow that. Many of them do not.
• 47:40
  Many of them won't accept illiquid assets and many of them
• 47:43
  will force you to sell those liquid assets if they do accept
• 47:46
  them. So that's really a particularly
• 47:48
  important point that we're talking about here for UI
• 47:50
  Charitable is that they allow illiquid asset contributions
• 47:54
  like stock or fund interest or crypto, and they allow you to
• 47:57
  hold them in that same form after you've contributed them to
• 48:00
  your DAF. Yeah.
• 48:02
  No, that's a great call out there.
• 48:04
  There are hundreds and hundreds of individual donor advice fund
• 48:09
  platforms, donor advice fund sponsors, and they they all do
• 48:13
  have very different rules and additional constraints that
• 48:16
  they've placed on themselves. Again, at UI Charitable we think
• 48:19
  it's really important that if, if the IRS allows you to do it,
• 48:23
  you should be able to do it. And so again at UI Charitable we
• 48:28
  will allow you to donate essentially any type of asset
• 48:32
  that can be appraised by a third party.
• 48:34
  And that requirement of having the the asset be appraised by a
• 48:38
  third party is simply because that's the IRS requirement for
• 48:43
  non public securities. I need your clothes, your boots
• 48:51
  and your motorcycle. You forgot to say please.
• 49:04
  So what does this mean for founders and employees?
• 49:09
  Again, I think there's a tremendous opportunity here.
• 49:13
  So if you are a founder, if you're an employee of a high
• 49:17
  growth startup, you are going to be holding a tremendous amount
• 49:21
  of illiquid wealth and on occasion you are going to have
• 49:27
  very meaningful liquidity events and those liquidity events
• 49:30
  create a one time tax planning opportunity.
• 49:34
  If we go back to the the first example that I shared of you
• 49:38
  know the, the business selling for $10 million, that doesn't
• 49:41
  happen everyday. That's a large transaction.
• 49:44
  You have to get the timing right if you want the tax savings.
• 49:48
  So if shares are donated in kind prior to a sale, you receive a
• 49:54
  tax deduction in the year of the donation and that's based off of
• 49:58
  the fair market value of the asset.
• 50:00
  And then you also avoid capital gains on the shares that were
• 50:05
  donated into your donor advised funds once.
• 50:09
  I should mention in, in a special case, Dan, that might
• 50:12
  not just be capital gains, that might be ordinary income.
• 50:15
  And for many people in the Bay Area who are going through
• 50:18
  secondary sales tender offers or selling those shares themselves,
• 50:22
  especially if they have to exercise their shares and sell
• 50:25
  them in a short period of time, you're going to have a very
• 50:28
  large tax bill to pay. And sometimes people aren't
• 50:32
  aware that that, you know, they'll be paying it.
• 50:34
  The maximum, you know, ordinary income rate, which might be
• 50:38
  3940% of the federal level, could be 1010% or more if you're
• 50:42
  living in California, New York or Massachusetts.
• 50:45
  So sometimes half of your gains will end up going to taxes if
• 50:50
  you're not doing tax planning carefully.
• 50:51
  But you could probably cut that by half, at least at the federal
• 50:54
  level, if you do plan ahead. The the opportunity is massive,
• 50:59
  but the timing is so, so important.
• 51:02
  I mean, if, if you miss the the window around timing, if you
• 51:07
  don't do this in kind and you, you sell your ownership, you've
• 51:11
  booked the ordinary income capital gains that's
• 51:14
  irreversible, you now owe taxes. So the order of operations here
• 51:18
  really matters. So, and again, it's a super
• 51:23
  simple process, donate the the non public shares in kind to
• 51:27
  your donor advice fund. It maybe takes you two or three
• 51:30
  minutes to set up a donor advice fund.
• 51:33
  We will help you craft the the legal documents to transfer the
• 51:38
  assets into your donor advice fund.
• 51:40
  We'll walk you through the process there.
• 51:44
  Once those assets are in your donor advice fund, you can
• 51:47
  either hold them like they've mentioned or you can sell them.
• 51:50
  If you do sell them, the assets are sold tax free and then you
• 51:54
  have cash available to support the charitable causes that that
• 51:59
  you care about. So again, most people just don't
• 52:01
  appreciate how simple this process can be to donate non
• 52:05
  public shares in kind prior to a liquidation event.
• 52:12
  So that's founders and employees.
• 52:14
  There's also a tremendous opportunity for investors.
• 52:19
  You know, this is if you are AGP or an LP.
• 52:22
  This is also true if you have a direct investment in a company.
• 52:27
  So when donated, the IRS determines the value of your tax
• 52:32
  deduction based off of the fair market value, which is going to
• 52:35
  be determined by a third party appraisal.
• 52:39
  That is often times very different than what you can
• 52:42
  actually sell the asset for. So, you know, and Dave, do you
• 52:47
  want to talk about kind of the the.
• 52:49
  Discounts, you're being pretty subtle here Daniel, but the
• 52:52
  scenario is you could offer you get that fair market value
• 52:55
  appraisal at a much higher number than the market will buy
• 52:58
  that asset for from you. And in some cases there really
• 53:02
  may not be a buyer at all for the asset.
• 53:05
  Again, I can speak from personal experience here, you know, not
• 53:09
  to mention any particular companies or funds.
• 53:11
  Many of us might be holding investments in overvalued
• 53:15
  companies, busted unicorns from you know, four or five years ago
• 53:19
  where the on paper value might be a billion dollars of the
• 53:23
  actual value of that company might be a lot less than that.
• 53:27
  In fact, I would say again, you, you might have a price for a
• 53:31
  company that's half that on paper value or less for fund
• 53:35
  interests. It could be 1/3 of the on paper
• 53:39
  value, it could even be 0 because there are there are no
• 53:41
  buyers. So something we often say in
• 53:44
  JASP, it's really true, the IRS is always a secondary buyer of
• 53:48
  last resorts. And what we mean by that is you
• 53:52
  can get a third party appraisal and often times that will be at
• 53:55
  the on paper value as reported by the company and their most
• 53:58
  recent financials or by the fund manager in their last quarterly
• 54:01
  report. You would go to a third party to
• 54:04
  get that appraisal. That's a fairly quick process
• 54:07
  and usually done within 30 days, sometimes even faster.
• 54:11
  And if you've ever watched the 1800 Cars for Kids commercial or
• 54:15
  if you've ever donated clothes to Goodwill, often times those
• 54:19
  folks will give you a receipt for your donation.
• 54:23
  That's a very optimistic value for your car or your clothes.
• 54:27
  That's not any different from what we're talking about here.
• 54:30
  I'm not asking anyone to miss reports or to try to play games
• 54:34
  with the IRS. But as long as you get a third
• 54:36
  party fair market value assessment, they will probably
• 54:40
  use that last reported public funding round or privately
• 54:44
  reported quarterly financial statements as their initial
• 54:47
  place to start beginning their homework.
• 54:49
  And sometimes you can get it for 100% of that value on paper.
• 54:53
  That might be a lot more than you would get in trying to sell
• 54:57
  it on the public market and certainly for fund interest.
• 54:59
  That's that's true. Dan, I think you probably have
• 55:02
  some math on the next slide that explains that.
• 55:05
  Yeah. I I just want to hit on this
• 55:06
  point one last time. For the tax deduction, the
• 55:10
  assets are valued at the fair market value that is locked in
• 55:14
  when you make your donation. So whatever happens after that
• 55:19
  is independent of the the value of the the tax deduction.
• 55:23
  So that asset may rise or fall in pretty significant ways after
• 55:29
  you've made that donation. If it increases in value, you
• 55:33
  don't get an additional tax deduction.
• 55:35
  Again, the tax deduction was locked in based off of the third
• 55:39
  party appraisal in the fair market value.
• 55:41
  If the value decreases for whatever reason, again, it
• 55:44
  doesn't change the the value of that that tax deduction.
• 55:48
  So this is a very simplistic model.
• 55:53
  So two options. You have a GPLP interest.
• 55:58
  On paper it's worth $1,000,000. You can go get that appraised
• 56:03
  and donate that to your donor advice fund.
• 56:06
  You're going to receive $1,000,000 tax deduction based
• 56:09
  off of that fair market value. If you sell it inside the DAF,
• 56:14
  you avoid capital gains. It's another 20% savings versus
• 56:18
  selling that in a secondary secondary transaction, you might
• 56:22
  be selling that for $0.50 on the dollar, $0.30 on the dollar.
• 56:26
  If you sell that, you know your $1,000,000 LP position.
• 56:30
  There might not be a buyer, there might not be a buyer, and
• 56:33
  the value you could get is essentially 0.
• 56:36
  Yep, absolutely. So, you know, maybe here we're
• 56:39
  being optimistic. You sell it for $300,000, you
• 56:42
  know it's a 3X increase and in many cases it's going to be
• 56:48
  significantly larger than than that.
• 56:51
  So again, this is there are hundreds of thousands of dollars
• 56:56
  that's all employees, all founders, all GPS, all LP's are
• 57:01
  leaving on on the table by not understanding this, this
• 57:05
  strategy. Broke my arm.
• 57:11
  There are 215 bones in the human body.
• 57:14
  That's one. Well, maybe just talk
• 57:16
  personally. Again, from my experience, there
• 57:18
  are probably 2 scenarios, 1 where you have some assets that
• 57:21
  you think are probably optimistically valued or you
• 57:24
  know, maybe going to go lower in value in the future.
• 57:27
  You can have certainty by donating those assets into your
• 57:30
  donor advised fund and locking in that tax deduction at the,
• 57:34
  you know, most optimistic value that you can get from a, from a
• 57:39
  third party fair market value assessment.
• 57:42
  It might go up, it might go down.
• 57:44
  If it goes down, you've locked in your, your tax deduction
• 57:47
  savings at the point of donation.
• 57:49
  If it goes up, worst case scenario is you have more money
• 57:51
  in your philanthropic pocket to give for charitable causes or to
• 57:55
  invest, which isn't the worst thing.
• 57:57
  So again, I want to make the, the station here, you're not
• 58:00
  necessarily giving this to someone else at that point of
• 58:03
  donation. You're giving it to your own
• 58:05
  donor advised fund. It's still under your direction
• 58:08
  to some extent and control. It's not your personal money,
• 58:11
  but it is part of your philanthropic accounts and you
• 58:14
  can still hold that asset if you think it's going to appreciate,
• 58:16
  You don't have to sell that right away.
• 58:19
  So you might optimize for, you know that potential upside
• 58:21
  within your DAV. Absolutely.
• 58:25
  A couple of details just worth calling out.
• 58:28
  The deductions of a illiquid private asset are capped at 30%
• 58:33
  of your adjusted gross income. If the deduction value exceeds
• 58:38
  that 30%, the excess tax deduction can be rolled forward
• 58:42
  for up to another five years. And so, again, just a lot of
• 58:46
  flexibility here when it comes to tax planning.
• 58:49
  The things that you do want to consider, regardless of, you
• 58:53
  know, if you are a founder employee, GPLP, this only works
• 58:59
  in this particular case if you have AUS tax exposure.
• 59:03
  There are things similar to Dafts in other countries, but if
• 59:08
  you don't have any U.S. tax exposure, this isn't going to be
• 59:11
  a strategy that you should be pursuing.
• 59:14
  And then you also need to make sure that you can get the GP or
• 59:17
  management consent to actually transfer your ownership interest
• 59:21
  into the donor Advice fund. I have gone through hundreds and
• 59:25
  hundreds of these transactions and I can maybe think of a
• 59:30
  single transaction where we couldn't get the GPU or
• 59:34
  management consent to to make the transfer.
• 59:38
  The the process again is much simpler than people realize.
• 59:43
  You select the asset, we will then help you do due diligence
• 59:48
  on that asset. The due diligence really is
• 59:50
  around the consents needed to do to make the transfer.
• 59:55
  We will then help. We will then craft a gift
• 59:58
  agreement that takes into account any of the consents that
• 1:00:03
  you need to make the transfer. You then execute that gift
• 1:00:08
  agreement. You need a third party appraisal
• 1:00:11
  to determine the fair market value of that tax deduction.
• 1:00:16
  When you file your taxes, you're going to file what's called a
• 1:00:19
  Form 8283. You sign it, the appraiser signs
• 1:00:24
  it and your donor advice fund is going to sign it.
• 1:00:29
  And that's, that's really the entirety of of this process.
• 1:00:34
  It is, again, like I mentioned, just much simpler than most
• 1:00:37
  people realize. Dave, you've done this now,
• 1:00:39
  what, half a dozen different times?
• 1:00:41
  At least our generally say it takes between two to four weeks.
• 1:00:44
  Most of the time is really getting the appraisal scheduled
• 1:00:48
  and lined up with the with the party to do it.
• 1:00:50
  For more complex assets, it might take a little bit more
• 1:00:53
  time. So a fund interest might take a
• 1:00:55
  little bit more due diligence and appraisal than a single
• 1:00:58
  asset. If it's a single asset with the
• 1:01:00
  company and you have a recent, you know company financial or
• 1:01:04
  quarterly statement, it's probably fairly straightforward
• 1:01:07
  to do that that process. And again, yes, I've done this
• 1:01:11
  personally at least three or four times.
• 1:01:13
  We've done it with some of our clients multiple times as well.
• 1:01:17
  And this this is. Going.
• 1:01:18
  Down. One thing I wanted to go back to
• 1:01:20
  on the previous slide, just for calculation purposes, Dan, you
• 1:01:24
  mentioned 30% of your adjusted gross income rolled over five
• 1:01:28
  years. So the basic calculation you
• 1:01:29
  should probably make is how much money you're going to make in
• 1:01:32
  the next 5 years, both in terms of ordinary income and
• 1:01:35
  investment income. Add those numbers up for five
• 1:01:39
  years multiplied by 30%, and then go find an amount of assets
• 1:01:43
  equivalent to that amount that you can donate so you can
• 1:01:47
  maximize and and hopefully not pay any taxes for the next 5
• 1:01:50
  years, at least at the federal level.
• 1:01:53
  Well, that's, that's great. Thank you, Dave.
• 1:01:55
  We've talked a lot about investors, founders, you know, a
• 1:02:00
  private business interests, GPLP interests.
• 1:02:02
  I also want to call out just cryptocurrency.
• 1:02:06
  This is another asset that you can donate to a donor advice
• 1:02:09
  fund. Again, you should donate it in
• 1:02:12
  kind. There are many donor advice
• 1:02:15
  funds that will accept cryptocurrency.
• 1:02:20
  The vast majority require you to immediately liquidate that
• 1:02:24
  cryptocurrency. We're different and we in the
• 1:02:28
  fact that we allow you to hold whatever token, whatever token
• 1:02:34
  it is that you have. And then we are also very unique
• 1:02:38
  in that we are currently the only donor advice fund that will
• 1:02:41
  allow you to grant it out in kind as well.
• 1:02:46
  And so you are able to stay on chain for the entirety of the
• 1:02:50
  life of your donor advised fund. Far more flexibility here than
• 1:02:54
  many people realize. I think this is important for
• 1:02:56
  folks who might have been early in crypto and are sitting on top
• 1:03:00
  of a really large taxable event. If they ever sell it where they
• 1:03:04
  could donate a portion of that not have any gains and and all
• 1:03:08
  of a sudden you know, then they could sell it within their donor
• 1:03:10
  advised fund for cash or hold it, but they can start doing a
• 1:03:14
  lot of other investing or charitable getting with those
• 1:03:18
  proceeds. Absolutely.
• 1:03:21
  Again, process is very simple. Go through, identify what token
• 1:03:25
  it is you want to donate. You move that into your donor
• 1:03:28
  advice fund. You receive an immediate tax
• 1:03:30
  deduction. You can then decide, do you want
• 1:03:33
  to continue to hold in kind? Do you want to liquidate and
• 1:03:36
  diversify or do you want to donate that to, you know,
• 1:03:40
  whoever your preferred charitable causes, they've
• 1:03:44
  mentioned this at the very beginning.
• 1:03:46
  Not all donor advice funds are created equal.
• 1:03:49
  We, we pride ourselves again on giving donors all the
• 1:03:54
  flexibility that's afforded to them by the IRS.
• 1:03:57
  So we will accept far more complex assets than the typical
• 1:04:03
  donor advice fund. We will allow you to continue to
• 1:04:07
  hold those complex assets where appropriate.
• 1:04:10
  If you'd like to sell them, you can.
• 1:04:13
  Once those assets are in the the donor advice fund, Dave alluded
• 1:04:18
  to this, but there's a tremendous amount of flexibility
• 1:04:20
  in how you invest those assets. If you want to invest in public
• 1:04:25
  securities, that's fantastic. If you want to continue to
• 1:04:30
  invest in Private Securities, you can.
• 1:04:33
  We have a couple. We have one really interesting
• 1:04:35
  case study where a a donor donated their employee equity
• 1:04:44
  and then invested it in kind into another fund.
• 1:04:47
  So just a tremendous amount of flexibility in how you manage
• 1:04:50
  those assets and then again, a lot of flexibility and the
• 1:04:54
  charitable causes that that you support.
• 1:05:02
  I'll be back. Let's look at two different case
• 1:05:09
  studies. So this one was a former
• 1:05:13
  executive they should say at a major social media company.
• 1:05:17
  This was pre IPO. So this, this executive was
• 1:05:21
  looking at his holdings and decided he wanted to sell some
• 1:05:27
  portion prior to the the IPO as as they were going through that
• 1:05:33
  transaction, they were doing their tax planning and decided
• 1:05:36
  in addition to selling their shares, they should also set up
• 1:05:41
  a donor advice fund to reduce the overall tax burden.
• 1:05:45
  So they donated $5,000,000 worth of their employee stock into
• 1:05:49
  their donor advice fund. They then went through a
• 1:05:55
  secondary transaction. They sold, you know, a large
• 1:05:59
  portion of what they owned personally in addition to
• 1:06:02
  everything that they had donated into the donor advice fund given
• 1:06:08
  kind of the quality of the asset.
• 1:06:10
  This was sold at a 0% discount, which I candidly I think is
• 1:06:14
  pretty rare. And so they had $5,000,000 cash
• 1:06:20
  go back into the donor advice fund.
• 1:06:22
  And so the individual received a $5,000,000 tax deduction when
• 1:06:27
  they made the donation and then avoided capital gains on the
• 1:06:31
  full $5 million that was sold within the the donor advice
• 1:06:36
  fund. They now have $5,000,000 cash
• 1:06:39
  that they can grant out to whatever charitable activity
• 1:06:42
  that they would like. The benefit of a donor advice
• 1:06:46
  fund is there are no annual requirements around how much you
• 1:06:54
  have to give. So if you want to give
• 1:06:56
  everything away in one year, you can.
• 1:06:57
  If you want to give nothing away in a year, that's also OK.
• 1:07:01
  So just a tremendous amount of flexibility there.
• 1:07:04
  And this second one, a founder of a $800 million tech company.
• 1:07:10
  This company had raised, you know, 100 plus $1,000,000 in
• 1:07:14
  capital. Founder donated $1,000,000 worth
• 1:07:17
  of shares in kind to their deaf. They received a the $1,000,000
• 1:07:22
  tax deduction for that donation. And then the thing that I think
• 1:07:26
  is really creative here is they took those shares and invested
• 1:07:30
  them in kind into a fund so that they could have greater
• 1:07:34
  diversification. In this particular instance, it
• 1:07:38
  was invested at a 20% discount. Given that all that was done in
• 1:07:42
  the structure of a donor advised fund, that was all a tax free
• 1:07:45
  transaction. Assuming this fund does really
• 1:07:48
  well, it's going to return more than $1,000,000 into the Donor
• 1:07:52
  Advice fund, which again will appreciate in value.
• 1:07:55
  All tax free. I think one of the other things
• 1:07:58
  to note here, I'm I'm pretty sure I'm familiar with both of
• 1:08:01
  these two examples, although they're anonymous.
• 1:08:03
  I, I think I was the referrer about these folks to you.
• 1:08:06
  I in, in the first case, not only was that, you know, cash
• 1:08:12
  within the fund given to chair was also used to make individual
• 1:08:16
  startup investments. And I've done that myself as
• 1:08:19
  well, both startup investments and my funds and funds.
• 1:08:23
  And in the second case, I'm pretty sure that was invested in
• 1:08:27
  our fund. But one of the things I would
• 1:08:28
  point out was whether you invest in our fund or another one, you
• 1:08:32
  can still get diversification benefits as well.
• 1:08:34
  So one of the things that is typically the case that
• 1:08:37
  someone's donating a single company position is it's a
• 1:08:41
  highly concentrated asset. And so just like they might want
• 1:08:45
  to get diversification benefits in their for profit pocket in
• 1:08:48
  your donor advice line, you might also want to diversify
• 1:08:50
  that position. So you might sell to get cash,
• 1:08:53
  but you also might, you know, transfer it into a fund in a
• 1:08:56
  more diversified portfolio and you know, hopefully get some
• 1:09:00
  benefits from the other portfolio positions there as
• 1:09:03
  well. But I think it's really unique
• 1:09:05
  specifically with UI that you can manage and hold these assets
• 1:09:10
  in the original form. You can transfer them into other
• 1:09:13
  fund interests. You could do other, you know,
• 1:09:16
  crypto investments or deployment.
• 1:09:19
  You could even do startup and VC fund investments within your
• 1:09:23
  donor advice fund. And again, personally I've done
• 1:09:25
  more than $3,000,000 worth of investments in startups and
• 1:09:29
  funds and even fund to funds within my donor advised fund.
• 1:09:32
  One of the things that I will mention that's a an example that
• 1:09:36
  I talked to someone recently about is many people hold their
• 1:09:39
  options unexercised and if they are leaving a company then they
• 1:09:44
  have a limited time frame to exercise those options.
• 1:09:46
  So cards correct, they might need to, they might need cash to
• 1:09:50
  do that exercise otherwise they would lose those shares.
• 1:09:54
  If they want to have a lower tax rates on the shares, they might
• 1:10:00
  exercise and hold in order to then get capital gains treatment
• 1:10:04
  if they hold for more than 12 months instead of ordinary
• 1:10:07
  income treatment. So if you if you exercise and
• 1:10:10
  sell your shares right away, you're probably not going to
• 1:10:12
  qualify for capital gains. And that would typically be at a
• 1:10:15
  very high tax rate, sometimes the maximum tax rate at the
• 1:10:18
  federal level as well. Well, we are happy to answer any
• 1:10:22
  other questions that that people have otherwise, like Dave
• 1:10:26
  mentioned, you know, also happy to jump on individual calls with
• 1:10:30
  people if you have specific scenarios that you'd like us to
• 1:10:34
  walk through and explore with you.
• 1:10:45
  Well, once again, been kind of a slow Newsweek.
• 1:10:48
  Hardly anything has happened here in Silicon Valley or in the
• 1:10:50
  rest of the world. I just don't know if we're going
• 1:10:53
  to have enough news items to cover every week.
• 1:10:55
  Come on. I'm sure we'll come up with
• 1:10:58
  something, Dave.