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If you're looking to sell your private company stock shares Bush has a solution for you more than four billion and company approved actions shirt suppose is the leading marketplace for private company shares to learn more visit us at sheriff's post com slash equity. Welcome back witty. I'm tech wrenches. Connie Loyola's today. I'm joined by our own Danny Crichton. Hi, how are you? Good crunch base. News is Alex Wilhelm. Hello, everybody. Hell ex and our guest this week is Jules malts longtime investor with IBP jewels. So glad you great to be here. Thank you. So a lot to talk about as always. But the big story today is the schizophrenic stock market guys. What is going on Alex? Now, you've probably been closed following this closely than anybody. Yeah. Well, I mean, if you're a stock market van it's been a fantastic kind of week of uncertainty and dramatic movements. Now, I know this venture themed shows I won't bang on too long about this. But I just kind of curious what the public markets do impact startups and started by rations adventure cycles to some extent. So this stuff matters a bit. It's not as directly linked to new funds, but it still fascinating. And if you were asleep yesterday, you missed a Washington not sorry this Friday for you. So on Wednesday, the stock market took a dramatic drop. The NASDAQ fell four point four percent we had drops SNP. And the Dow the NASDAQ actually dropped officially correction territories or more than ten percent movement before I came back today. So in the last twenty four hours, there's been a see-saw markets and each time this happens. I think it's having a couple of weeks Ireland's curious if we're about to see the beginning of the end of this long bowl cycle. So Danny were you afraid or? You think this is just one more those little airdrops we've seen recently the kind of goes away. And if you days, I think we're going to see more of it. I mean, I think I think stock investors are really struggling to figure out how to value these companies in some cases in the space. I think a lot of people know that the multiples are overheated. But then you have a lot of good news at the same time. Tesla headed it's I profitable quarters in some time and Twitter. Heads of really good news is up sixteen percent today. So it's a mixed bag at I think investors are just trying to parse through all that data. What happened yesterday so Twitter? I mean Twitter. Yes, Danny said up today. Tesla really big deal. He mentioned that was profitable. This is just the third time. It's ever had a profitable quarter. So that's huge. But why did the market so terribly yesterday was was it? You know, something having to do with China with Saudi Arabia with everything it is so hard to know if I could predict the stock market I'd be in a totally different job. But I think what people forget I was talking to my colleague Roseanne wins second EP and she had this funny quote. She said twice a year. People forget that this happens twice a year. And literally the stock market goes down like this. It's not that unusual that you're going to have a big correction in January February of two thousand eighteen we'd exactly the same thing in two thousand sixteen. We had a big correction. I think it actually in some ways it's a little bit like letting air out of the balloon, and it helps we've had such a large runup for the last nine years, essentially, this can't continue, and it we need some of these little pockets. Of softness that make allow people to reset and then hopefully, we have growth from here. But until it actually goes down consistently another ten percent fifteen percent. I think that's when the private market start changing for now. I think it's all systems go, okay? Fair enough. One thing I've been tracking probably for too long. Now, it's been kind of the Bessemer cloud index, which is a kind of a basket of public companies that are in the cloud slash SAS space, and in the last couple of days, there's probably been the biggest crushing I've ever seen in index today. And so I'm kind of curious what is enough to drive change? You know, I think you're right. We're not there yet. I don't think I've EP is going to change its investing canes plan based on a couple of days with NASDAQ moving down. But at some point things do get bad enough that people do change. I I I'm very curious to see one what that is. And to how will I be able to detect that in the venture markets as a whole is going to be a slowdown in like, you know, series A and B is going to be later stage slow down. I don't know. But I'm just trying to figure out when I want that. First ripple of material change in the pace of venture investment to spend at all time. Highs for some time. Now, it's been fascinating. But I don't know what it's gonna be. So so when you talk about this specimen index this is a bucket of publicly traded companies in you're saying, the the share prices have been sinking. Yeah. In the last I want to say about week and a half. And so I use this kind of the bellwether because cloud slash SAS companies have had a dramatic run of in multiples as Danny mentioned a few months ago. And so I think they've been kind of momentum play among public investors looking for kind of like the old school tech gross. And so I think they may be some of the first to show change in investor sentiment that could then trickle backwards into the private markets and just for the the big nerds out there. Bessemer just worked with the NASDAQ to come up with a new kind of cloud index a contract every day. So if you wanna get super dorky charts all throw TC about this. But it's one way to feel the pulse of public sentiment about companies that often have. Private cops on that surprised. And I don't know what's going on. Exactly. I saw earlier this week that event bright and survey monkey to companies that went out last month are down significantly think they're both off by a third from their IPO prices. But those companies didn't seem to have maybe what it takes to have like a, you know, I was frankly surprised that they had the offerings that they did. So I think people are probably paying closer attention at the fundamentals. I think that's right. I a lot of those companies didn't have the same growth profile. We'd expect from Tacoma days our running if I recall correctly persistent GOP losses, so you can lose money growing, perfectly fine. But if you're not growing much you really need to keep an eye on profitability. And I'm curious we'll see a flip to profits over growth in terms of what investors are looking for. If we do head into a stronger crushing. But again, it's still really early. We don't know this stuff is is still cooking. So by the time you hear this may also totally change all over again. So of in that that happens. We're sorry. Well, neither company that seemed to have an impact directly on a an already publicly traded company was tricks, which just I guess filed for its IPO long last. This company was founded in two thousand and two and it competes with survey monkey, and it's interesting as soon as I think we're it got out that it had filed survey monkeys shares sort of started falling to the floor. Alex. Can you tell us a little bit about the IPO filing? Yes. So this came out just a little bit ago. And I have to say normally, I'm very rude about violence because they tend to be of it messy. This one's pretty good. I think just just as a data point in the in the first half of twenty eighteen they grew revenue from one hundred and thirty one to one hundred eighty four so a reasonable pace of growth at that kind of scale, but their their net loss fell from three point seven three point four million there, essentially break, even and putting up pre reasonable growth numbers, which I think is strong. I think they have a pretty good corporate history. I think if I recall correctly, they didn't raise for some time. Till later on. So this could become a big win for the Utah space and going back in time. I interviewed a call tricks group at tech crunch disruptive in back in the back in the day, maybe three or four years ago. And so it's kind of fun just from me on a personal no dec- accompany that I was talking to you back when they were raising kind of their first external money, go public. I'm enjoying it. The Danny what do you know about Quadros working tells about silicon slopes out there in Utah? Look, I it just another side that I think Utah's sort of eight oh has this history of being the sales center for Silicon Valley. And I think when you look at a company lake called tricks where you're really saying is this region really has the ability to grow really, great indigenous companies and have them get all the way to go. So I think it's a great win for for Utah. And that's an ecosystem. And I think that venture capitalists are spending more time looking at Joel do you agree with a lot of deals coming out of Utah? I love Utah's an area we just invested in podium earlier this year in a review saw. For a company that we think very high hopes for I've spent a lot of time with Baltics over the years. We were not an investor, but I'm haunted by them because I'm close to riot. And he's giving me shirts, and sweatshirts and notebooks and everything. So I'm surrounded by basically quality logos. And and I tried to invest many times, he's got great investors already. But I think what's really unique about that company as the the the profitability and cash flows. Even though they're gap slightly gap break, even they're actually they I think they generated over thirty million dollars of free cash flow in in either precaution per for six months. So this is generating a lot of cash, and that's unique. You know, there's everyone talks about unicorns unicorns aren't that rare anymore. There's a ton of companies valued over a billion dollars. What is rare is a company growing, very quickly and profitable? Those should really be the real unicorns qualifies. As one everyone. Don't forget this episode is brought to you by shares post. As I say this company. So we've talked about how long it took to raise venture funding. We should know. It was ten years. I think it was founded in two thousand and two and it didn't raise money until two thousand twelve and it it was it was it was all secondary. I think they raised a bunch of money at least two hundred ten million perhaps more, and the fact that they continued to be profitable is a big deal. Yeah. And your numbers were correct there free cash flow in the first half of this year was thirty basically thirty million. But what's crazy is? It was twenty one million in the first half a twenty seventeen. That's just a history of cash generation. That's just fantastic. Who would have thought you can do is offer company and not lose money. I thought that was bad. So. What what what I think is amazing though is that the founders how much the company that actually retained this is a two thousand two company sixteen years in and at least for the common stock, the founders collectively Oded, I believe they're brothers rides method Jared Smith, they own eighty percent of the company, and that I had a couple that you know, there's voting Sierra structures and other stuff here. But that's the power profitability in many ways is that they did not take all of those different desertion rounds across the history of the company. And so you look at this in comparison to say box where Levy had a couple of points at IPO Italy at least personally for them. I think it's an amazing win. Yep. I agree with that entirely. And just in case, you're curious if this is mostly a subscription or not business. It is definitely in the SaaS space because one hundred thirty six out of one hundred eighty four million of its first half this year revenue was recurring. So this is a SAS company that is generating boatloads of cash while still growing. And is roughly break, even on a gap basis. Like, you said, that's fantastic. I'm very impressed gills. This may be a dumb question, but I've EP sometimes goes into companies that are also sort of established. They've been bootstrap for longtime. How did the deal sort of tend to get structured? So it makes sense that the Smith rather zone. So much of the company do employees tend to get a very different looking package when I guess, you know, they do sort of companies take on equity funding so late in the game. I don't think it's actually that different employee's, which is good. I mean, I think it depends on the founder some founders don't give stock options as generously as as venture backed businesses. But but usually after you raise venture funding, you end up looking quite a bit like any other business that had done a traditional ABC's. So it's not that unusual. But I love these businesses. I mean, what's what's unique is the growth and profitability. And you know, we had backed companies like ZipRecruiter like Gramley that was bootstrapped like a legalzoom was a business. That's. Doing fantastically. Well, now that we invested in years ago, these are just incredible businesses. And and there's a there's a saying that basically you can get financed either. By venture capitalists, or your customers and customer financing is a lot less deluded. So that's what these companies are essentially doing. They're getting financed by their customers. Yeah. And it looks beautiful. I mean, the box example is conical. That is the the best example of what happens when you have to raise one hundred million dollars each year and put it through a relatively inefficient sales machine. If you're SaaS business Zo, but let's flip a little bit. And talk about some big funds that are gonna come out and fund everyone who's listening to this show. So Danny what's going on with thrive? Alex thrive capital announced this week that it had raised about a billion dollars across two funds. A four hundred million dollar early stage fund in a six hundred million dollar late stage fund, and that'll be the sort of six thrive fund dozens of debuted a little less than ten years ago. So a huge huge could have largest in their history of a big win a probably based on Oskar Covault. There are other major portfolio companies, and this is famous because of one of the Kushner brothers is part of it and his brother jerk owners in the White House. I still have that. Right, right. Yes. Judge kushner. Yeah. I haven't the bring politics into this show, we do with that just want to point out. That's why you may have heard of thrive capital going back a little bit in time. Their preceding fund fund five was the seven hundred million. They're fun for was four hundred million fund three one hundred fifty fun to forty fund one to those nine ten million dollars. So that is enormous. I think one hundred increase in funds is over a ten year periods of points to thrive, and it's credible. Would you consider it? Oh, particularly that. They're based in New York, they have to be what are the largest funds? Now, that's focused on New York and headquartered in New York in a US visa has famously decided to keep its fun as much for focused. Although Connie might remember their last numbers. I don't recall ahead. I don't I don't. But I think you're right that they've probably are one of the biggest funds out there now. And it's it's funny. Because I I mean, I feel like I still remember when they appeared on the scene, and I can't believe now that it's you know, was nine years ago another big funding though are Bank fund. I should say that you guys probably paid a little bit of attention to his Tiber tiger global management, which is the seventeen year old investment group that spaced I believe in New York, and it just closed it. You know, the this group has been raising big funds sort of serially over the years. But this is the biggest date three point seven five billion dollars. And it told the financial times that it was only actively marketing it for six weeks. So so. Pretty pretty big coup. So tiger. I had written a story back in may saying, you know, if it must have been talking to interested limited partners back then because it's had a really good year. It was involved in Spotify. I think it had like at least a seven percent stake in that company. And it's about a five course had that directly down the us market back in April. I it was an early investor in glass door. Actually, I'm not sure if it was that early investor, but it was an investor in glass door, which was sold. I guess it earlier this year, two Japanese company, recruit holdings. It was also an investor in event Brighton survey monkey and as we've said, we're not sure how those are going to end up panning out, but you know, better than going out of business. I guess and the company also has a lot of international bets that are starting to pay off the biggest being an investment in flip cart, which was sold a majority stake of its business to WalMart earlier this year, and it's Hege reportedly saw three point three billion off of that deal along. So. Yeah. Presumably it could have been raised more. Well, if you Jules is at tiger somebody that you guys are seeing in many deals are we almost never compete with tiger received. The we see thrive a lot of respect for Josh Warren hymns with him. You know, I I just think he's done. It's so hard to create a venture firm from nowhere. I mean, we saw Andriessen Horowitz. Do it. We saw social capital do it for a while. But it looks like that's. A different story. Now burtle. Are self sabotaging the on Wales, and it's sad. Because I think I mean, I just think it's so hard to create a venture firm to scale. And and really the only two now that I'd say have really done it, successfully our entry cinnamon thrive. And I think it's incredible Tigers a different story. They were started out of you know, it's traditionally a hedge fund they're doing a lot of global investing companies outside the US. So sometimes we'll see them in a US company much later than us doing hundreds of millions of dollars of investing. And that's that's just part of the market. That is I mean, it's almost like, you know, these are almost like public investments is just that the company has decided to to not go public because, but it's it's companies with huge revenues multibillion dollar valuations. It's not venture anymore. It's interesting. It does seem like it's kind of moved downstream more. Remember when it first started writing checks was writing really huge checks and everybody was sort of like what are these guys doing? But even today and invested in a company, that's based lakeland Florida called. I don't know how to say it metric M E T R C. I actually talked to the embarrasses, Donna. It's just. Won't be Murdoch. I guess without that with couldn't. They just include that spelling is so hard. But it says supply chain management company focused on cannabis so see to sale so it's working with regulators. But it's a it's a five year old company. It does have one hundred -ployees, but it raised a fifty million dollar round from tiger and CASA Verde venture. So I'm just saying it's a slightly earlier company. I think is castle Verde snoop dog is God. Okay. Involved. It's this guy who was a Goldman Sachs alum kind of that that to me sounds like their seed program. No pun intended. I mean, just play play money for them. Right. So it's just I don't I mean when you've got people, you know, with these massive funds and a lot of different interests that they want to do a cannabis deal in Florida. I can imagine the partner meeting decision around that probably wasn't as extensive as flip cards. So I, you know, we're not really seeing them. Well, also just going back in time when tiger a little bit there last couple of funds for two and a half billion. So even though you're not seeing them too much with VP. They certainly now have even more capital than it did before on hand to invest so they're going to be out there pretty active, but amazingly enough we have one more fun to bring up today because Bessemer today, I think actually announced I think is their tenth fund BVP ex. And this is a one point eight five billion dollar vehicle and then going back in time their ninth fund in two thousand fifteen was one point six billion their eighth fund in twenty eleven was one point six and then one billion two hundred seven and about a half Lantos four. So definitely their biggest date, and that's actually putting them right in range with VP which raised one point five billions of December of two thousand seventeen so the same size. So same question again are using Bessemer bounce around more than yours in tiger. We do actually I mean, I think that's I think what's really changed in the venture industry is that they're the the funds. Are successful or getting bigger, and it's the industry's consolidate in. You're seeing you know instead of seeing competing with thirty fifty firms or seeing, you know, hundreds of series, a investors you really see in the market start to consolidate among, you know, maybe ten twenty thirty large players at Bessemer in that bucket. We're seeing them and later stage investments even coming in after us, which is super unusual. But it's the reality. Now we differentiate because all we do is late stage. So we think will be good at it. Because we focus Bessemer does everything from seed till later stage. But they've got a great portfolio SAS companies. I like the people there, and you know, we'll we'll fight it out. And then we'll be friends to you. You both do SAS and consumer facing gals. Do you do fifty percent enterprise? Fifty percent consumer or as a fight as a fun. We try to. And we I mean, that's kind of what's worked out. What's interesting is this year? We've been eighty percent enterprise. Also, it's been a, you know, it's hard to predict, but we're seeing so much amazing activity within the enterprise space within south companies. We were part of the UI path round that closed earlier, which is an incredible incredibly fast growing company, the fastest growing software company we've ever seen. And you know, we've we've really seen great companies, you know, like podium, keep trucking earlier this year in the space, and it's an area where continuing to to lead great investments in what are you seeing on the consumer side? I mean, so hymns is an interesting the brand that we've talked about a little bit. Here are you to sort of focus on like new brands, or what are some of the bets that you've made recently that you think are especially interesting because. It's kind of hard to get a handle on. What's happened? Yeah. To the side of the road. It's frustrating. Because I I mean, a I investment I worked on it. I've EP was our Twitter investment when the company was twenty two people, and you know, social networking was burgeoning, and it was super exciting. And then we did snap in two thousand thirteen I believe, so as you know, we've we've had a history of back in some great social networks, and I think that market's really hard today. I don't think there really are. I mean, the platforms are just so dominant. You see what's happened with snap with Instagram, and what's up, you know, taking share. And so it's frustrating. So you have to look for other areas within consumer we've done a lot in fintech. Wherein coin base Ren, transfer wise, we've done a lot in branded commerce is what we call it. So glossy lulus hymns is an example of that. And you have to have that that differentiation and find some other place to play within the consumer market. That's also it's shifted a lot of our dollars to enterprise because it's hard to find this consumer businesses where I think it's it's almost like instead of. To the core of the consumer internet. We're around the fringes now. So we're finding things in industries like real estate and rent, compass refining things, you know, within fintech. So it's it's it's not the core. Core social is just really hard. And can I ask, you know? I think we've talked to other investors about this test. But I'm always sort of intrigued because the platforms are because we sort of have settled on a certain number of platforms that are successful. And because a lot of the new brands reach people on those platforms. Is there a sort of a saturation point where people like I can't hear about another cool new, you know, shoe brand. I mean, how do you sort of do you have to find new ways to reach customers? I think those channels have been I think there's more I think it's gonna be a trend that just continues the direct to consumer branded stuff. And I think I think those brands have to figure out ways to reach consumers outside a social media to social media has been such an effective channel for them. But you think about all the products that people buy or used to buy at at department stores or used to. Advertised on TV for us to you know, used to see kind of in the physical world, and there's a ton of really innovative awesome products that now can be marketed to to consumers in a different way. And I think hymns is actually a great example of that they're doing, you know, pharmaceutical men's wellness products that historically have been marketed to people over fifty years old on TV and kind of antiquated ways. And they're reaching a different set of consumers with with the product that's needed in the market. One hundred million men that suffer from either ED or hair loss or have skin skin issues were or hymns can can be helpful. And it's not a company I would have thought I would have invested in. If you had asked me a year ago, what I was going to go it's going to back, but it's an incredible business with a passionate founder, a great team of individuals and a business that looks a lot like a software business with great margins and lots of retention. So I think we're gonna see more businesses that are really unique in delivering a Taylor. Brand message to to consumers gills, I know we have to sort of wrap up soon. But I also have to ask you the last time. I saw you. We were talking a little bit about SoftBank. And it's been a big threat to late stage. Investors writing these checks you guys wanna write a fifty million dollar check. They come around and say look to founders you take three hundred billion from us. Can you sort of comment on whether things have sort of slowed down? Softbank is in the middle of an s storm right now, it's a closely related with, you know, this crown prince and Saudi Arabia. Nobody knows that. There's a lot of controversy for obvious reasons we won't get into right now. But how does that impact? Do you feel like things are sort of? Did did you feel any sort of a slow down to the last couple of weeks where people are like trying to figure out what's happening if they're still in the game? I think it's good that entrepreneurs are starting to ask the question about where capital comes from in the funds that back them because I think that's an important question. I think you know, their employees care about that. I think they should care about it. You know, I think that softens not going away. I think in even with all the stuff with with them Bs and Saudi Arabia. I think that you know, it's got a lot of capital Moss's incredible personality in person and investor, and you know, they're they're going to be an alternative. But I think it's appropriate asked the question about where the comes from on the topic of other large funds just as a little bit of note. I think we pulled some data today on my team found at least twenty VC funds this year that a billion or more. So wow. Great international global. But like, you know, there's a lot of US names on here. Like Norwest venture partners fund. That's fourteen lights beat venture partners select three BVP like we discussed. On down the chart. So I'm curious. You know, even if saw thanks lows down to our point about what they're gonna do with Saudi problem in probably no fun too. If there's not just enough capital around to keep the game going at roughly the same pace. And I don't think we'll be able to answer that until it actually happens. But what a Mark of the times that there's so much money today. That's even a possibility. And that's why I'm concerned about a slowdown because I think there's just so much created risk at the moment that it's it's worrisome, especially as above market gyrates. But that's why I'm no fun at dinner parties. So I'll leave it there. Everyone needs a good recession. So we'll see I hope I hope it doesn't happen anytime soon. But you know, it's healthy. And the problem is there's so much capital though. It's going to be unclear whether you know, even if we have a slowdown people need to put that capital to work, so private markets are going to be strong on that note. We will hang back here next week. We'll tune in. Thank you everybody in a big extra special. Thank you to our executive producer Henry pick of it. Our producer Christopher gates, Danny Connie. And of course, you for sticking with us through all this time Jetson.