Misaligned Incentives Between GPs and Founders with Altimeter's Jamin Ball | E2045
01:01:39 Share

For venture capitalists to get rich, you need big company exit. For founders to get rich, you have equity in one company. There's one way for founders to get rich, which is big company exit. And so those past were lined right when founders got rich, venture capitals got rich.

And more importantly than that was kind of the only way to get rich is not to say that investors and founders now have opposite incentives, right? Is not like your failure leads to my success. And their perverse incentives is just more to call out.

The outcome is irrelevant. And now it's, how can I maximize my A U. M? How can I maximize to dollars? But that part of IT can lead to sub optimal outcomes and experiences for founders. And we can talk about like, hey, how can these incentives of just depend, deploy, deploy.

How can that lead to outcomes for founders than what are the implications for founders that they might not necessarily be thinking about before going into A N raising process this week, startups has brought you by linked in jobs. A business is only as strong as its people, and every three higher matters go to linked in docs lash twist to post your first job for free terms and conditions apply behav power. Your newsletters with A I tools, referable programs and network features, all in one platform get thirty days three and twenty percent off your first three months at beehive duck com, slash west and C, L, A.

Innovation takes baLance. C, L A S, C P, S consultants and wealth advisers can help you get from starting up to where you want to end up. Get started now at sila connect, darm slash tech.

Everybody, welcome back to this weekend startups. My name is alex, and today we are going to talk about venture in sentence. Now this is an engine that the start of world runs on.

And having the system be aligned is very, very important. However, IT does seem that as venture capital has grown, some of the incentives that we had depended on to understand the industry have also changed. One investor put together a post that absolutely blew up over on social media and around the world of venture chatter.

So I told myself, here, let's get geen ball to come here and tell us what's going on. And if you don't know, Jimmy, he was an investment banker. Then he worked at red point for about a half decade, and now he is an investor over at altimeter. Jen, hey, how are you and how does he feel to be a celebrity blogger inside of our i'm .

not sure if i'm quite a celebrity yet, but it's it's certainly fun and and thanks for thanks for having me here. I mean, I kind of you blogging the zone as a personal journal that I can make public, which IT IT forces all of us and forces me to really refine my ideas. But thanks.

thanks for having me yeah and just knows it's a cloud judgment to dot sub stack dock. They want to read your work and today we're gonna wind the clock to late october when you about venture in sentence. Now if you're listening to this and you're already going, oh my gosh, that sounds incredibly boring.

Keep in mind that benchMarks, bill girly said that this post from gen could quote perhaps be the single most important issue for the higher venture capital landscape. So jamin, let's talk about two weeks. One, traditional incentives in venture.

And then I want to work into what's change, but break down for me the importance of the two and twenty model, and how, back in the day, VS tended to eat well when founder stand. sure. So I think yeah .

first is defining defining the incentives, right? Or said another way, had to venture capitals make money. Think a lot of people appear about the the two twenty.

But what does that what does that actually mean there? There's predominantly two ways venture capitals make money. There's a guaranteed portion and then there is a variable portion. The guaranteed portion is what we call the two, the two percent. So venture capitals will raise a fun and they will charge a percentage of that on an annual basis, which is called the management fee.

It's usually around two percent vries over time and IT steps down as you go, but call IT roughly two percent on average and those dollars are used to pay salaries, pay rent, legal fees of that. Think about IT as funding the Operating expenses of uh of the venture funds and then intend them to that there is the Carry the twenty percent and this is the firms share of profits. And so when we make investments, you know you hope right that those return multiples of the capital that you invested and there's a share of the profits that the venture firms receive, that's twenty percent.

So maybe let's make this concrete traditional and o and it's variable, right? Is is sometimes is twenty five percent, sometimes it's thirty percent, sometimes is fifteen percent. But I would say it's side bar.

It's interesting how fixed the uh the incentive pool or the the Price of venture capital product has stayed given how much bigger scotland you'd think as an asset classic expands, as the supply of IT expands, you to think that would lead the pricing pressure was been interesting as IT hasn't at all, which I think just speaks to the demand for the asset class. But near maybe that's something we could put off to the side and visit. But maybe to make this concrete, let's talk about a hundred million dollar fund that a that returns to three x and that's not fund every year the front will collect two percent.

So, uh, two million, two percent of of one hundred, that is on an annual basis, kind of independent of the investments made. And IT IT usually last about a ten year period. Sometimes that can get extended, but typical life is ten years.

Now that hundred million dollar fund is three x, so we've turned one hundred million and the three hundred million, which means we have generated two hundred million of profits. And so twenty percent of those profits is forty. And so forty million would go back to the fund, which is then kind of allocated based on who owns what percentage of Carry within the venture fund from of your partners down to your your folks.

But if you think about that model, there's a guaranteed portion of the compensation which comes from the management phy and then there's a variable portion which comes from did you make good investments or bad investments? Not that longer funds were significantly smaller. And so that much, much, much smaller.

So that guaranteed portion wasn't enough to know really make you rich, right? That I think the term that I used in the blog post was was get rich. You right? It's harder to get rich on two percent of a small number.

And so as as venture capitals, like how did you really make money? How did you get rich? Well, as you maximize the Carry, you maximize that twenty percent.

And what does that mean? That means for venture capitals to get rich, you need big company exit. For founders to get rich, you have equity in one company.

There's one way for founders to get rich, which is big company exists since of those past were lined right, when founders got rich, venture capitals got rich. More importantly than that, I was kind of the only way to get rich, right. And so there was a lot of incentive alignment.

Rest funds have gotten significantly. The aligned sencer are pretty clear because if the venture capital est cannot get rich off of their management fees, the only way to do well was to have their founders really, really its self. And if you listen to this, you're thinking, you know, two million dollars a year, that's a lot of money.

Why could do you get rid off of that? Well, keep mind that business class tickets to france are not you. And also you do have staff, and there's a lot of legal work that goes into this as well.

You can burn through that money pretty quickly just on Operating cost to run a complex financial instrument like a venture capital thought. So don't think that, that two million doors in our example is a lot of money. It's got a lot ways and there are expenses, so not profit.

Certainly couple of gross revenue figure. Now g things have change and funds have got ten bigger. And that's where your argument comes in that the aligned and cinders between VS doing well and founders doing well do well. IT has essentially broken.

Yes, yes. In the purpose of all this two is not necessarily at a highlight that there's bad behavior in the venture. mars. I think there is good behavior funds that are large, but it's the highlight for founders that the incentives are different. And I think it's important for them to realize that as they're deciding which funds the partner with over their ten year journey OK.

So let's take you a example and let's ten x IT. So instead a hundred million dollars und let's talk about a one billion dollar fund to show people how the numbers kind of shift yeah.

yeah, yeah. So in that billion dollars find you're collecting twenty million year. And I again, the thing to keep in mind, this is guaranteed for a ten year period, right? You know people love SaaS businesses because they've requiring ing revenue, but you can turn in a year.

You know you can't just think about this is almost a customer you sign that can turn for ten years, right? And so in that example, less twenty million a year and fees and and let's say you three the fun and you those numbers also get significantly bigger. Now you're talking about four hundred million of Carry.

Know a reality exists. Million is a lot of money now. And yes, it's still split a lot of ways, but it's it's now a lot of money.

It's guaranteed, right? Three, axing of fun is really hard, right? That almost certainly puts you in the top cortile kind of friend vintage class.

And so there is now an easy button to kind of get rich, which is raise as much money as possible. And you can get rich off that two percent of your of your feet. That's not to say you can't get rich off the Carry. You certainly still can when the numbers are still huge. But there is a path to getting rich where the the outcome of the underlying companies in a don't matter and it's guaranteed, right? And so I would say a IT economically rational to go maximized the guarantee portion of your income stream versus the harder variable portion.

And so what is that leads to IT? Leads to kind of what we talk about is, are you a two percent firm or twenty percent firm, right? Are you a firm that's looking to optimize the two percent or optimize the twenty percent? And that's where the incentive alignment ment matters because again, it's not to say that investors and founders now have opposite incentives, right?

Is not like your failure leads to my success and their perverse incentives is just more to call out. The outcome is irrelevant. And now it's how can I maximize my A U M.

How can I maximize my deploy dollars. But that part of IT. Can lead to sub optimal outcomes and experiences for founders. Yes, we are offered too much money at too high evaluation, which is obvious ly negative or can be negative for their business.

Yeah and maybe final thing like we did our fair share of overvaluing and over capitalizing businesses in point one like I I don't want this to be standing on his high horse, right like yelling down at the masses as if I have this kind of Crystal ball. You know we are always trying to learn in in Better ourselves. We raised a larger fund in twenty one and then raised a smaller fund. And we can talk about like, hey, how can these incentives of just depend, depend, depend, how can that lead to outcomes for founders? And what are the implications for founders that they might not necessarily be thinking about before going into a fun raising process?

All right, tell me if the sounds familiar. You hire somebody. There are not the right fit.

Productivity drops, the team momentum slows. It's uncomfortable. And suddenly you're spending more time fixing problems than growing your business.

The wrong higher is going to jail. Your whole company is gna kill the vibes, the culture and productivity. But there's good news.

A great higher can accelerate everything. That's why you need linton jobs. You want to find the bar raisers.

What's a bar raiser? Somebody comes into your organization, raises the bar for everybody else, and you going to find those people on linton, which has over a billion members worldwide in more than two hundred countries. I know what a lot of you are doing, international stuff.

I am. And did you know the majority of linton users don't even visit the other leading job sites? Seventy percent of them do not visit the other leading jobs sites.

So if you're not looking on linton, you're looking the wrong place. Linton is hack with amazing talent. They're just waiting for you to post your job.

And here's a cool bonus. Lincoln uses A I to help you craft job descriptions now that attract the right people. I've used this.

It's amazing. Linton is the best place to get eyeballs on your job posting in the best part. When using lincoln jobs, eighty six percent of small businesses get a qualified candidate within twenty four hours.

Stop waiting. Start creating posture for free. Linton docs, lush twist, that's right. F R E, E, if you use the following URL linton docomo lush twist to post your first job for free, terms and conditions do apply.

I wanted talk about that, in particular ics. I want to help people understand where they should look at, what type of fun they might profile to pitch, just so they can know what they get in into. But the thing that kind of confused me about the current native affairs is too old. The amount of capital that is flown that is a float into intra capital has has gone up dramatically in the last last five years, converge an historic or norms. And i'm very curious about why all that capital came to play inside the venture because if I was entirely predicated on low interest rates or deserve as black color, then to me, IT would imply that the era of the multibillion dollar venture funds is by us doesn't seem to be the case. So let's start with, you know, why has there been so much more demand for venture capital allocation then there was historical because that doesn't to be one of the dragon factors behind the incentive shift.

They're disgusting. Yeah, I think the serve periodists accelerated a trend that was audio emotion, which was venture capital. And this is not a phrase that I came up with, right? IT has moved from and is moving from a high margin cottage industry to a lower margin mainstream.

Fifteen, twenty years ago, the venture asset class was much smaller, funds were smaller and returns were pretty mazing right to be in one of the a top fifty percent, let alone the top twenty five percent fun. The returns were great. And so what does that mean? You know, anytime you have an asset class that is yielding a, you know, a really high return, that creates demand for that asset class and more dollars flow into IT.

And i'd say that was a trend that was happening for quite some time. Um and at the same time, you had a sophistication of the L P base. So people who give us money increased.

And not just that, you had a globalization of the L P base, emergence of single family offices, multi family, family rich as you have a the emergence of private wealth platforms from big banks, right? You have individual people. You have international sovereign funds.

You just had this. Russia people really didn't have a lot of exposure to the venture asset class prior at twenty fifteen, twenty sixteen, twenty seventeen, kind of all say at that point time. Hey, we need more venture.

We want more venture. They started standing of venture teams, venture practices, venture programs to get into these funds. But they never could. The funds were too small, right? If you're going from a five hundred million .

dollars n to a five hundred .

and fifty million million fund you with folks. And so the access to IT was hard. So all the sudden what happened in the serpent was you already had a lot of late demand that all the sudden now found at home, right?

Because if you're going from a fun that size x to a fun that size three ex, you might be able to get there by having all of your existing L P S three x, their commitments. More likely than not, you're going to new investors, right, who didn't historically have access. And I thought to say he was all new IT, certainly wasn't.

You certainly had all the existing L P S also up their allocations kind of up their size because their public portfolios balloon balloons, they got liquidity. There is just a lot of money in the system. And naturally, when you have lower interest rates, dollars move further and further out.

The risk of when I say adventure is or far out on the risk of and so kind of benefit from that environment. But yeah, what's been interesting as as we've moved out of that phase, there's still a lot of demand, right? Like I don't see that trend shifting, at least not in a big way.

A large funds have been able to raise larger funds. I'd say what happened is that smaller funds have had trouble. First time funds have had trouble raising second time .

funds a little confused, their jam, because, yeah, listen to your history adventure, which to be cleared tracks with my understanding as well. You and I turned around in the earliest stage of intercapital because we were little babies.

But like, we don't story .

and small funds, big beats, you hit a google, you'll do fantastic well. And the returns were incredibly impressive compared to save public markets. But as these funds have got a larger to me, like IT feels like the returns profile by definition, has to calm down.

That to me would incentivize people putting money into smaller funds. But you're saying here, and I ve heard that some other focus as well, smaller funds are really struggling. So to me, that feels that there's a crowding into the the funds that probably have lower I R R targets are kind of way return targets just given their scale. And that feels bulkers to me. So help me understand why small funds, huge returns are not doing Better in this market than the big kind of more P H funds.

Yeah, man, okay. Lots to impact there. Uh, just a couple points off the top one. A lot of l peas.

I've gotten a lot bigger as well, right? And they just need to write a hundred million dollar check. You can't write a hundred million dollar check into four hundred million dollar fund.

You're just never going to be twenty five percent of the funds are best. And so you just have to hunt larger funds. And so you have the emergence of L P S, who only want to write really large jx because they just need to move a gross tonnage of dollars.

Then i'd say, you know, there's another thing, which is there is this whole I mean, the state private for longer trend has been going for a while. And like when what does that mean? That means you have world class companies who are appreciating significantly in the private markets, right? IT.

Wasn't that long ago that a world class IPO a willia a hub spot is and desk was a billion dollars, right? Those companies exit entered into the public market. Is that a billion dollars and valuation? And I think they are, and I might be wrong, but you can check me after. But you know they are appreciated from like a billion to where they are today. In the public markets.

there was five billion the material. Now I can see A C, C, for two billion. So the number have changed.

And not even just that you're seeing companies like stripe, like open eye, like data bricks, like canvas, like others that you know don't just get to four, five, six, I get to thirty eight hundred and in billion. And so what does that mean? That means there are world class companies in the private markets that can absorb really large investments and still appreciate value.

The downside of that is, is not available to your everyday retail investors, right? That's only available to the venture capitalists and ultimately the investor in those venture capital funds. But I do think that there is a world when you can invest in the gross stage in a very profitable way.

IT just has to be very concentrated in to those few companies that that truly matter because the way I think about IT, you know, ultimately, venture will all always be a power log game, no matter if you are seed funded or P, P, O fund. The only way you're gonna top cortile returns is if you have power lot outcomes. So the question you have to asked yourself as, like how can I generate power lot outcomes at different stages? Here's what I think about IT at seed stage.

This maybe this many companies that could not give you a power lot outcome everyday, this money b, this money c, you know what? That goes down. There's a aller smaller number of companies that can generate a parallel come as you get later, later stage.

And so I do think you can pitch a fund that is a large fund that will be extremely concentrated IT will be diverse, right? Not this. Hey, let's go built a basket of thirty companies.

It's let's go bea basket ah and put hundreds of millions of dollars into every single one of those investments. That is the way that we are going to drive alpha above kind of the media returns. I don't necessarily think that's how most large funder approaching the market.

So I think what naturally happens is you get bigger and bigger. You just build more than index. And what happens when you build an index, you start to hug the media.

And so I think IT gets harder to generate outlier returns at scale in venture funds unless you are more concentrated just because natural. You hug the index, but I do also think you have a class of L P S who that the product they want to buy, right? When you're putting a three hundred million dollars to work, you're not necessarily expecting that technic.

You know you'd be happy if you hugged the index and was slightly Better, right? And so that's kind of the promise. And so like and what does that mean? That means as the world has now moved again back to this serve period, people move out the risk curve.

As serve reverses, you move in the risk of the chAllenge with second time funds, third time funds. Everyone knows, hey, smaller funds are more likely to get to that power law outcome. You are investing in risk of businesses, right? But with more risk comes a greater potential return.

But the chAllenges is if you know you're raising fund to, you just have data right where you good know the company is in fun one you you know have two years of marinating and we just don't know and there's just this hey, this big fun, I think is also important to call out me. Know big funds only have the right to get back. If there a history of success, right? You had a history of success over a decade, two decade, three decade, period that gave you the right to raise a lot of money.

And so you have made money for L, P. S. In the past. You are known commodity that is the safer place. You know, of course, the natural question is you made money in a smaller fun setting. Can you also make money in a larger fund setting? But the in a lot folks are asking themselves for investing in these funds is what's more likely someone who I know is made money some way but is now trying to make money a different way.

But there's lot of paris or someone who like there's just maybe not as much data on yeah that's risk here, right, you know and who's not having trouble raising a second time fun or first time fun right at its folks who maybe we're at one of these large funds and then kind of broke off to start their own fund that had a personal track record and a personal history and just they were personally underwriters bio P S. But I do think there was this wishing coming out of the venture market of maybe some of the fast money that entered in twenty twenty one, that wasn't quite sure. I think when you invest in venture from an L P standpoint, you really have to you know, smooth your vintages, right?

You can just pick, I would invest in twenty twenty four in this one fun. You should say I want to invest in venture. I'd pick this manager, the manager that I want to back and i'm to back them in twenty four and twenty six and twenty eight and thirty because just like fans are driven by power law outcomes, I think funds over a period of funds are driven by individual power law funds, right? So across five funds, you might have one fund that makes your investment in those five funds worth IT. Like it's all it's .

all kind of a power of game. We switched to be hive and he has been huge for this week and start up have this twist five hundred newsletter. I've been working on this entire platform where we're trying to find the five hundred most important private companies.

So twice, five hundred 点 com。 And we've been using beehive for this email newsletter, B B E E H I I V. It's a service that's built for growth.

And when you're doing an email list or a podcast, you want growth and they've baked IT into IT. The hive was cofounded by one of the minds behind morning bro, that incredible newsletter. Well, you can get access to the tools that helped build morning blue to millions of readers.

And if you are interest in making a little money with your newsletter, beef can do that two because behind has an add network. So it's a no brainer for folks who want to drive revenue and wanna grow. There is a million platforms.

There's a million tools out there, but a tool that solves those two problems, growth and revenue. That's the winning tool in my mind. That's why we moved over to IT.

They have an A I post builder. They got a referral program, politics on and on. It's super affordable at thirty nine dollars per a month, but we ve got a great deal for you now.

Thirty day free trial and twenty percent off your first three months just had over to be hive dom like twice for twenty percent off your first three months b hive B E E H I I V 点 com slash twist hit the rewind button right the year all down。 Sign up now and get that discount. Great job to the beef team. We really love the problem.

I quite literally tweet about power laws rule everything around me. Earlier response to the fact I think top twenty five podcasts get like half of all downloads or something like that parallel, you don't know what we're talking about. Goal and learn.

It's incredible important. But to summary, companies are staying private longer. Overall demand for venture allocation went up.

And because funds that were already at scale had earned that right because of a track record, they're able to absorb more capital and returns. Expectations have come up. okay.

Yeah, that explains the capital wave. They were described IT. Now turn to the founders. One thing that you said, the old model kept vegetables and the other day back in line or aligned because they were together for ten years now with a faster funders ing cats and a faster diplomacy cats and more than index approach, as you mentioned earlier, founders can get a big check and then be effective left in the lurch if they aren't one of those absolute outlier companies. Tell us about that dynamic. And then if you could gain, how often do you hear from founders who have been essentially left by the side of the road by their prior backed ers?

Yeah, I I mean, I think I think that kind of happens all the time. And again, that's probably like a train that was just made stronger in tony twenty one period.

Um but is IT is an issue, right? Like there was kind of you know the cotton industry days of ventura capital where you are a true partner through thick through and you had eight boards that you are on, and you spent a very real amount time with every company that you are on the board of. And that was a real responsibility to work with companies at a board level.

Know now this funds got on bigger. There is just a reality that you just have to make a certain number of investments like the only way to deploy that does, again, I think unless you point IT in this really concentrated grow, stand a lot of invest. And the right, if you're sitting on thirty boards like there's just no way if you can spend a lot of time with every individual company, you know the model becomes more of fine company, western company and find the next company.

It's more about deploying the net new dollar vers, optimizing the existing ers that have already been spent. I all invested spent sounds to transaction. But I think that just a reality right, where at the end of the day, again, from a purely rational standpoint, if there is going to be a few things that really matter, you should spend all your time on those few things yeah, but that leads to sub optimal outcomes for founders because at the end of the day of your company is crushing IT probably don't.

I mean, not that you ever need your venture capital, but like you know, you need them less. You're probably have less questions for them. You probably have less chAllenges that you have to deal with, less one of things that come up and you're kind of on you know you're not a cruse control. You're doing a tune of work but like you're .

just you're Operating well absent to your board, right?

You don't need training wheel if you are not going really is struggling, right? More of that, that board is how do we handle the the future of this company? Should we sell IT? How should we go about selling IT? Should we shut down? What a other questions that I take the benefit of of an investor board member can be quite helpful. But you know again, that's probably the time you're less likely to to get that attention in time um just given the nature of your on so many boards and only so much you can individually do.

So I wanted ask about like what this means for for founders today who are going out and approaching the market now, fun ways, always difficult unless you are incredibly luck in doing incredibly well, which point nervous that I supplies you anyway. So put those aside. But if you you're a founder out there and you're looking to this capital, let's say, seed through a series bee and you're looking at funds and firms that are A A variety of sizes, what advice do you give the founders in terms of sizing up what type of firm is the right fit for their company and their approach?

Yeah look, I would say I don't want to take a way to be to take away to be like big fun equals bad, right? It's just more about like what are you getting from your partner is not just the firm, is the partner who's at that firm. I have committed to your success, are they? And there's lots of different ways to answer that question. There are a few important things also consider right again, let's think back to one of the incentives of large funds is to deploy them so you could raise the next week fun, right?

Cannot become a machine. And to go back to why that matters, if you raise another billion dollar fund, will you start another twenty million dollars? Ten year timer, you got a couple of those going and suddenly you're just fine on your jet and children and doesn't really matter the site work to .

do yeah if you yeah these funds stack fees right when you when you raise fun three, you are still collecting fees on fun one in fun two those don't stop um and so the more you raise write, the more fees you generate. So what does that lead to? Can lead the situations where your primary K, P.

I deployment, hey, I don't want to deploy fifty. I want deploy a hundred. Yes, you've seen round sizes balloon.

You know, our companies growing faster than they ever had. Yes, are they are growing hay count fashion than they ever had? yes. Could they then absorb more capital than they ever had? yes.

But I would say the magnetite of which rounds have increased as far outpaced the i'd say maybe that the trajectory of a kind of company growth. And so you might set out raising twenty five million dollar series, but you'll get fifty million dollars series b offers. And why is that? Is that actually good for your company? You might say, wow, great.

It's more money. Yes um at a higher valuation yes this firm has the deepest conviction me. But the reality is, is there in centres might be just to deploy more money and it's not necessarily that they have all that more conviction.

I knew it's hey, in a power outcome. Doesn't matter if I pay one hundred and two hundred because if this is a twenty million dom, that's a poor outcome. I just to deploy more money.

No, again. And what lesson have I learned this? That because this is lot to coming up here, coming at a twenty one like over capable zing and overvaluing, a business really can create risk. What are the benefits of IT? IT might be .

less the founder because people might think, oh gosh, more capital, more capability, more flexible, more time. But higher valuations that come with larger checks come with their own expectations, and you can end up essentially stuck. And my regiment is that some companies that may have done Better essentially were over capitalized to the point which they kind of like kind of choked on their own spit.

I'll give you a couple examples, right, which is generally what I like companies to do is raise around hit milestones, raise an x round. Hit milestones raise an x round by raising a lot of money and a much higher valuation. What you understating is the structure of raise round.

Hit four milestones, raise the next round, because ultimately, you may be able to raise off of hype. And you may you know that the good times may keep Brown, but you know at some point of my chef and then you'll need kind of underlying business momentum. Fundamentals to justify up around starts are hard, right? They're fraught with risk.

Their fraught with chAllenges in kind of stacking four milestones in a row is hard. You might hit a road bum at milestone two or three might take you longer and often times does. But when that happens, if kind of you're staring down the barrel of like a really high valuation, you know you're not worth today just kind of create existent al questions for the exec, for the employees here, we ever going to grow into this valuation? Oh, my gosh, like we're not a rocket ships any more.

What's going? I got to get off. And I just kind when you raise these big grounds of big Prices over, over, over again, IT kind of creates, I don't want to call an illusion, but IT creates an illusion that, hey, this is just, it's going to the men and companies move from hiring missionaries in the early days, people who deeply believe in what the companies doing the problem there are solving the product to personal ies.

Hey, this company is a rocky up, and i'm going to make money on my equity. The chAllenges, you hire a lot of people who that's why they join when you then hit a road bump or two or three in U. L, then people started to second.

We were raised at three x mark up every six months every year. Now, the sun were not like, maybe I was wrong, right? I didn't join the company with deep conviction, which means i'm going to leave the company with loose conviction.

And then you hire all these people, you train them up. People leaving. Those attitudes are infectious. There's a nursery to IT, you know, german leaves. And I talked out out helps like I was reading jams called judgment.

He says software comes only with eight times revenue if we apply that multiple to our business, eighty percent discount Price. We're never making money like we gotta go. IT becomes infectious. And you hire all these people for the wrong reason, who then leave. And its chist c creates a lot of turmoil that you have to .

come out of everybody. Welcome back to the program. Stephen s, this is with us again, is a principal at C, L, A, A professional services provider.

They specialized in the cpa tax consulting and wealth advisory. His areas of expertise lie in VC, back startups, V, C, funds. High road starts with complex tax issues in multistate and interrogation filings. Welcome back to the takes.

Jason appreciated.

The last couple years, it's been a little bit rocket started up land after the bubble burst post jerk. Tell me what founders sweating right now, what I was keeping them up at night.

I'll take the low hanging fruit here and and say funding before the the pandemic VS were just printing in money. And last four years after the and that event, a bit a roller coaster in terms of new capital availability. And I think things tighten up right after then in twenty, twenty two, twenty three capital team to open back up. Now we've got inflation and interest rates are higher. So we were kind of back in a position when one's tightened up, investors can get a good return someplace else. Gone are the days when, and I really degree in an idea on the back of barn apin will get ten VC lined up to to invest in a seat round, absolutely mean to do more with less and anything they can do to defer the need to raise again for as long as possible because the evaluations out there just aren't what they used to be.

right? You need to trust the advise or taxes accounting. You don't want to play games to the stuff.

Get IT right. Get a great partner like C. I go to C. I connect docs, flash tech, and let know. C, once again, conca flash.

This is always a conversation I have with everyone, which is when you raise around the venture capital, you're implicity committing to something. And what I mean by that is generally like raising rounds, and especially raising big rounds. IT closes a path for an ex IT, right? Let's say you raise a hundred million dollars as a series a company.

The way capta les work is venture dollars invest going to primary shares, which means primary shareholders get first on their investment prior to everyone else in the captain is founder shares. That's common shares at everything. So if you raise a hundred million dollars pre product market fit, that means if the company sells for less than a hundred million dollars, nothing will flow through to anyone who is not a preferred shareholder, which means you have closed that exit path.

The counter is, if you're a founder, you might own thirty percent, forty percent year. Business is serious. If you saw that for a hundred million dollars, that could be a forty million dollar payday like that.

Life changing, that's massive. But that path is no longer the table. If you raise one hundred million dollars, you have you, you are implicated, committing to the next big outcome.

And one of my big chAllenges with the big fun dynamics is big funds are driven by power. Lose what matters to my fun, what matters to all funds? Are R U.

A home run or are you as zero? That's really all that matters. And even the in between don't really matter. Here's the irony adventure funds. If I run a fun that gets to a three x return, if I have an individual investment in the fun that returns to three x, that individual investment is actually irrelevant because I guarantee you, if that three x investment was a zero, the fund would still be a three x because the fund got to a three x because of the thirty x deal, the 4x deal。 And so the middle outcomes, again, I don't want to say that irrelevant.

They can all be appreciated, but they don't matter in my ultimate goal of of delivering a top cortile fund that's important to call out because the ground outcomes can be especially meaningful to founder, yes, and employees, yes. But this is this this word where these big rounds, again, IT, is shutting a lot of those middle ground doors. And I don't think often times founders realized that, hey, we have just implicity shut that exit path door.

And now we're playing the same game as the venture capital bus. The differences as a founder, I have one bt I get to make its my company. No venture capitalists get to build a portfolio .

and the two percent the entire time. But I want to take what you just said and apply to A A theme we've been talking about on the show a lot, which the start of imminent death or just the light and actions that we've been seen and you mentioned the IP has been delayed and that's a known phenomenon. There has been a lot of commentary in the in the venture world, start of world about kind of who's the blame for the lack of imi, essentially.

And I know a lot people have perspective of lacon and so for but IT seems also that venture is partially to blame because if they are putting too much money into these companies, too early closing off doors, well, there go the singles and doubles. To use the classic baseball analogy that some people in visual world really seem r about a cubit. So yeah, no is part of the the lack of exists, just vital capitals over capitalizing early .

stage companies. IT can be in IT. Has that has two impacts, like first, let's talk IPO markets. Second, let's talk eminent markets. Everyone likes to say and many markets open clothes, like I kind of a take a different perspective. They're always open the market clearing Price, just barriers.

And like you are willing to take the market clearing Prices, are you not one chAllenges all these companies are, you know again, of all the unicorns, you know there's maybe a 3 hundred and I saw read some article hundred of unorthodox like i'd probably weigh your five percent or less of those unicorns like ever actually like exit had a Price greater than like what they raise in his errant right。 Like it's a really small number that will what's one reason people think that the IPO markets are closed. You raise around at five, six billion dollars, but you're public.

Know if you are public today, you are two billion dollars. You're like, I don't want to do that. Maybe your board doesn't want you to do that, right? Your board doesn't want to take that marker.

Investors didn't want to take that had hey, just keep growing. Eventually you will be you will grow into IT. But if your last round was a billion dollars, maybe you go public at two billion dollars.

You could w your last round Price. There's no employee hit. There's no moral issues. You just double your valuation in an po. But if you raise at six billion dollars, you don't want to go public at two billion dollars.

That's a downward you know your .

investors might not want that, you oman know. I think one of the reasons you don't see a lot of these ipos is that there is just a market clearing Price people don't wanna accept because you can raise that thirty times revenue in the private markets and five times in the public markets and there is just a big valuation there um and it'll change, right?

I think today, the public markets are placing a premium on platforms, right to say, have you proven you have hit escape velocity and you have staying power versus are you a point solution that might have a zero terminal value five, ten years? And now because you're disrupted, so you have large companies that are successful companies like a confluent or brazil rua, trying to think of other appeal that. Very good companies that just don't trade IT big multiples, right? And so very I am I I off of my head, I think they're trade IT less .

than revenue, I might think I twenty two P L IT. Was that that was yeah yeah.

So you think you have you have really good companies that are growing well at scale, but they're not a billion dogs of revenue plus. yeah. And and I think they're just this question.

And you know the public market stay are placing a premium on large companies. What are startups right there? They're not going na be a billion dollars, might have two hundred. So the market clearing Price today for a sub scale software company, it's just a huge delta between what you are able to raise private market. And so that's a really tough pills to swallow that no one wants to.

But but how can we ended up still here? Because I feel like everything you're describing right now is not newly true. Like this is a month year situation in which we've been staring at the same gap between public bottles and private valuation.

And I just said, your going surely eventually people are gonna to bite the bullet. Well, the and IT turns out the answer is a no. Not really because we're just sitting here. So jm, windows is just a couple of point when things break and then the logging does release? Or do we just keep adding intention to the spring until IT explodes?

I mean, I don't know. I I think there was probably a Normal amount of like start up liquidity that if you were to graph IT over time, you know is probably going in up. Um but the reality is that IT wasn't exponentially change.

And so we started funding companies as if the exit environment would fundamentally change. And I think the reality is, is reverting to the mean. Ah and I don't think the log gem ea, I think look like rates are going down.

Markets will come back. Maybe there's a new regime, the government and ma picks backup, but like we're not exponentially picking up. And so I think the reality is there are a lot of companies that were over fun addition have been there was a lot of money that was on fire that .

we're not going to see back, right? Go back to our point about how large funds with brand names can also a lot of ital and are staying large. yeah.

And the fact that we are over capitalizing startups and the inDiana valuations that are often unable the public markets, yes, to me, that just seems like a recipe for more of the same. And so I wonder, why isn't there a movement? And I know the answer to this, this is a pal. Why isn't their movement among vcs to build smaller fun that can do Better, not only for themselves in I R R basis, but also to help founders cover correctly and have access? And the answer is fees.

But yes, it's incentives. And I mean, just think about IT like, yes, let's say you had a big multibillion dollar fun. You could get smaller, but you have to lay off a bunch of people. You can have to deal with reputational damage like yeah, it's the same reason it's hard for companies to take down and .

is venture capitalists are always like.

god, take the downtown and take your medicine like it's not a big deal and they are like, but this is a big deal. The same thing for venture funds like there's just you imagine the headline like, oh, you know this fun raised that like twenty percent of the last fun size like the appearances you're losing momentum, the appearances you didn't raise, like even if you chose that, right, there's just an appearance of IT.

And then the reality is, is you know you raise a fun that you know a fifth the size, like you don't need the huge team that you had to deploy the fun five axes big. And so you're onna have to lay people off and that's hard. And so like there's just a ntia.

And when the inertia allows you to continue, if you're able to raise IT, you know I think bill said this is like it's hard to point to like one individual constituent to say like this person was at fault, was A L P S, was a founders, was a GPS, someone else the fed like it's hard to point to one individual constituent. We all just have got here, right. And now that you're here, then the question is, what do you want to do, right? Do you want to take your medicine and it's painful. Like or do you just kind of anna state course.

especially the same problem that we have with these, uh, unicorns that are stuck somewhere at at really a fraction of their theodore in venture capital firms that are to become very large and are used to eating well off of a creative A U M. They both are not really incentivize to change course if we're going .

to end up and that's even different. There's not A I mean, the downside for the companies is like you're in a zombie march right in your life, slowly going to zero.

but you have a lot really bad.

No, no, no, this i'm saying that's bad. But like there that doesn't happen. That doesn't exist for venture funds.

I see is more painful .

for the founders. I yes. So like there's actually you know I give youth know this term, zombie gets used.

I feel like zombie gross y software company, you're not able to for money, you just can't. No one wants to or they will, but at a massive discount with tones the structure. As we've kind of said earlier, there are still lot of demand for large venture funds. And so like there isn't a zombie .

venture fund. No, I we're back the comes that are only going seventeen percent year yeah .

that there is just like everyone still wants you know, again, I say this holistically. It's it's not this black and why would be like they're still a lot of demand for very large fans because IT is this parallel? Because is are staying private longer because there is more value to be captured.

Private markets in the eba has been before. Now individual firms might take different approaches to that which either put them in line or out of line with bounders incentives um or with L P S desires for returns. But right, the L P environment is also changing.

You have a whole new class of please that have different return expectations, that have a different cost of capital. And so like the you the sucker's game has become just right in in some ways. But I don't know it's a target to like what's the forcing function to this changing.

I don't know idea. I know that if you are a partner in a venture capital fund, you are expected to put some of your own capital into that vehicle. The game, again, aligned in santo.

If you own money in the fun, you're gonna be more careful. So uncurious, if the percentage of A U M on a perf, but just percentage new fund that partners put in has changed and if so, has a gone down? And if so, by how much?

Yeah, I M I don't have tons of inside into this. Maybe just for the audience what alex is talking about, IT, it's called the G P. Command, which you know typically says a few, raise a fund of size x, the GPS.

So the investors in the fund will contribute one to two percent of that. And that I think historically ally, what it's spent, it's about one to two percent. So let's go back to that hundred million or fund the investors at the fund are going to a hundred organic, contribute one to two million.

And often times that is split proportionally amongst st. The different kind of seniority of the venture. fine.

But I again, let's go back, right? That used to be very significant. Now you have a lot of folks who have made a lot of money. And so well, yes, the dollar value of that G, P, commit has gone up.

So has the network of the people putting them in, right? And so it's like on a relative basis, that might actually be a smaller percentage of their network because again, historical, uh, like there are financial products. It's like capital lines, right?

Like you go to you know a bank and you have to take out a lot of credit to fund your cap call, like that's very committed. Like you literally taken alone to fund your capital commitment to the fund, right? Like you Better hope those investments work out because now you have alone is now it's a little different.

I think everyone is the industry has gotten bigger. The industry has gotten richer, and I don't know if the persse have changed again. I don't have tons of insight. They've certainly lowered as a percentage of net worth.

And so well, then I think to solve them, we need need to tune that up because because the more of a fund that A V C owns, the more likely I think they're gonna willing to put time in to save companies that might not be that grand slam that you're looking forward might be a triple.

And you 一定 you certainly have funds that have a larger portion of the G， P. commit. But when I go back to was I, who's going to mate that? Obviously, the l PS want that.

But again, let's think about a rational actor. Why not put zero dollars at work and guarantee a ton of money like pure economic capitalist animal? That is probably preferred path.

But who's going to mate that? You know back to the supply demand, there is such a wall of demand for the venture asset class. You was an L P might say, hey, you know, gm, five percent.

G, P, committees be five percent. I'm not investing unless you put in five percent. I say, okay, that's fine. I got ten other people who are willing to do IT at two percent like duchess supply.

You know with the supply demand curve, like there is just a demand OK that is willing to absorb all the supply at the Price venture is selling, which is two and twenty. With this may know, maybe call the G. P. Comment as a, as a, as a component of that.

I figured IT out so that the the question of who is to blame, the answer is, effectively, nobody is two things. I think one of the start and one of the big wall of capital wanting good individual capital funds, it's rational for PC funds to raise money and then deploy. We both agree.

The problem is there's just not enough outlier companies built each to absorb that amount of money. So as long as the demand stays high, VC will be rational and there will be distortion on the founder side and delayed existence of as you discussed. But until you can tune up the number then of break out outlier homework n power law companies to back, we're going to end up, I think, still here. So then the question jamon becomes what changes first to we get more out there companies first or to be get a decrease in the wall of demand for venture al location that made in the right question desk?

And look this why it's so hard to answer. Like I think especially with this way of the I like companies like let's talk about open a eye over billions of revenue they've got to and like a couple of ears like that is mind blow that you can have a company scale that quickly like that. Just it's mindless, but you're seeing companies grow faster than they have ever grown.

The size of the prize is probably bigger than that has ever husb. I mean, again, go back. Wasn't that longer or a block bus IPO on the software side was a billion dollars.

And so all of that is true, but it's still true that maybe the the number of companies that are outlier isn't greater, but the size, the Price, if you're in one of them, is far greater. And so then IT just leads to this interesting question of again, back to like that fun of I draw. There's just a decreasing number of companies out our outliers at every stage.

If you have a huge fun that's gona be baLanced, you would just have to absorb companies that aren't outliers because let's say, you are serious define and I to make up numbers. Yet there are six companies a year that really matter at stage. If you have to invest in fifteen company, this like you could have a hundred percent hit rate and get every single company that matters.

But like every incremental company, investment is going to be included to your returns, which is why you kind of either you are going to you onna further concentrate as you get later stage as an investment firm or you're just naturally can have a wide in the apache, which will force you returns, which will be deluded to return because there's just there's only so many companies that matter. And the reality is no one's gonna in all of them. But I go back to why do big funds get bigger? Like what the big funds have a lot of influence, they have a lot of brain, they have a lot of reputation, is who the best companies at those breakout stages want to work with. And so it's kind of like recursive loop of that's why the big get bigger because the big are generally the firms that those late stage, those quail y public companies want to work with.

I want to underscore your point about companies grow faster than ever before and look OpenAI killed from essentially nothing to what is IT this year, three point seven billion dollar run rate or maybe it's trAiling reviews, whatever huge number shown up in other companies. I'm cursor, which just A I think they're closing around at two point nine, two point five somewhere in there. And I was reading that they grew from four million in revenue to four million in monthly revenue. An incredible quick time line that's a pace of growth that simply insane.

Yeah, it's crazy, I honest.

I think I think curse or are two and a half is under valley, but that's a different story. yeah. But that people are chasing those prizes. I just that company probably won't go out until it's worth twenty years, thirty billion and is going to be another eight, ten years.

I mean, it's just be once yeah, you see a lot of value of proving in the public, in the private markets. I think the interesting thing with A I and particularly like there's just gonna a lot of head fix there are urging to be a lot of companies that grow really quickly and the growth curves kind of look like this and then they stall, maybe good negative. Can some of them will either rebound back up or go negative?

Just kind of fatal relevance because what happens if you had any big company, everyones boss says to them, hey alex, like I want book, I want you to introduce efficiencies to our business with A I it's it's a Mandate. You say I gotta go do that, you're just going to go out and buy lot of a isolations because it's your Mandate and you're not you might not have a clear cut R Y case to be made, but there is a demand for A I efficiencies in our business. I think you see a lot of companies growing really quickly off the back of that, right? You're not doing a full or APP.

You're not really saying let me evaluate three solutions. I need to buy and I need to buy IT. Now I do think what's going to happen with a lot of the A I start up there going to be some that kind are on that trajectory that are best of breed, that are end of one, that then continue once we get a little bit more scrutiny on AI procurement and AI purchasing.

But there will certainly be a lot that grow really quickly, that become commoditized, that grow really quickly, that are actually the number two or three in their space. And then they really slow down and they see a lot of turn. We h eric Fishery at our investing day, not too longer.

And like he said this very well, which was you, we expect a lot of the companies that we invest in to slow down or decline at some point in the next one to two years. That isn't what we said about kind of classics s and classics s software. What we expect that happen in the I don't want to miss quote him. So if I said IT wrong.

he can first after the .

but there's like why we're investing in the companies that we're investing is because we believe that even despite that inevitable slowdown that will happen, like we're investing sturt companies that will then continue to grow. One's kind of the dust has settled in a lot of these A I categories.

I appreciate you talking me through this uh watch you been tractable from the outside is is incredibly interesting and fun but it's always good to get to the horses north perspective one thing. So thank you. And i'm going say again, cloud judgment on subject con.

I am a huge fan. We redial for a long time and it's more popular than my blog. So you gene ah okay.

So now on to our favorite stuff, which is um SaaS multiples and kind of what's going on in the world of software economics. Uh over on cloud judgment. You had a chart showing quarterly performance versus consensus estimates for the last earnings cycle.

And if you're watching the video, you'll see on the four right, we have one hundred percent of companies that have reported in jen, but this charge together, in fact, had beaten consensus estimates. So to me jamin, that would imply that the salt market is incredibly healthy right now. And yet market enthusiasm process, as we discuss earlier in a multiple es perspective, is relatively limited.

So this just clearing a low bar? Or is the public market being a little bit personified? Its multiple.

Les, yeah, you see I it's always hard to draw trend from one data point. And when I say historic, lets say like the markets for sas got tough, you know twenty two and twenty three, right? The sa the clubs everyone to call like selling software got hard.

As we came out this sert period, people focus on the optimization. They focused on reducing redundant spend, right? There are just a lot of contraction and emphasis and focus on driving efficiencies, particularly run how you buy software.

We've kind of been in this period for two years, right? So prior to that period and even prior to deserve, you know like you'd see kind of ninety five, two hundred percent of companies be quarterly consensus. You know that why is this? Because there's a beaten race model in software, right like slightly beat you hitting the estimates is actually miss, right, because you've d in a margin of .

safety and you basically miss that margin and you I and bags a little bit.

It's examples ing exactly um again, it's so in this period that was harder to twenty two, three period that dropped down and ninety percent now the ten percent of companies were missing the quarter's consensus estimates and I don't remember exactly up the top my head, but you know and then companies report a quarter, but then they also guide and we drop from something like seventy percent of eighty percent of companies guiding above consensus for the next quarter to fifty percent of companies guiding ahead for for next quarter consensus.

And so I say, you know that chart it's not a hundred percent. Now there have some companies software companies that have misinterpreted is just like a lot the launch al basic cate of companies, you know over a period of time, just a kind of its more than apples to apples 是 comparison。 But of I think there's about thirty companies so far that have reported q three, like all of them a beat, and they have kind of in the margin with which they've beat has gone a relative to the last couple quarters.

And so know that maybe more indicative of hay is the buying behavior changing? You know, we might also be getting towards the iran and a look like there's just a lot of positive reflexivity in the market today. Rates are going down.

You know trump selected people say the tax cuts is going to be permanent. Is that going to be stimulate? Know, there's just a lot of if you're hash is about buying that, say, everything that happened over the last six months makes you less cautious.

yeah. And so you're more likely to kind of spend that budget for twenty four that you haven't that sitting on the shelf. And so I could just be like a budget flat, that's what that's called that were head into is the iran.

So again, i'm i'm hesitant to necessarily say performance to starting to rebound because if we were wine the clock back to q four of twenty three, which those companies reported those quarters in january and february this year, software performance really picked up and people like were back IT turned out that was kind of largely just this budget flesh. This is my theory. But you know, other people as well as this budget fly the end of twenty three people that unhuman budget that they can spend at the end of the year. And the environment had actually really changed. IT was just this kind of one time thing.

We have a charge from cloud judged that shows the aggregate clouds off A A net new arr Y O Y growth charm and IT went up as twenty three ended, and then I went on and .

then I went up again. Yeah and and so well, you know will see if if one data point is a trend or or not, you know we again, you're not going to know until it's obvious in high insight in the market will move ahead of of ahead of that.

Um and I think multiple software multiples of I think the media has kind of hug grade around six times over the last few years and know historical the medium was around eight times that comparison just for reference, like the eight times media software multiple for a monitor twenty ten occurred when the average ten year. Was about two point two, two point three percent. So eight times in two point two percent today were at six times and four point two percent.

So rates are still higher in ironically, is the fed have cut rates ten, you has actually gone up from three point eight, three point nine in the four point two. But I think that just as as views of the strength of the economy of continue, right? And then maybe views of, hey, will inflation pick back up? And so if you have a strong economy, you don't need cut of tax.

That's with this new president made permanent is know I I think you just have there's lots of reasons for why rates of come up yeah where six times today ah and everyone looks at that the historically ever say at eight times like that should be a thirty three percent multiple expansion. But as I K let's remember that also was when multiple rates were low tours. Right now rates are low force. And so you know rates left to change, to posit expand or we got .

two a two percent right again, even if we to 8x yeah， that doesn't solve a lot of the property. Discuss earlier for union and start companies, that pie provides A A, A more attractive P O doo IT probably make some imma little bit easier to do, but that's gonna cut your fever from one hundred and three to one hundred and one degrees. It's you down to ninety eight point six.

That's right. That's right. That's that's tough. okay. So one last question. I recently talked to the CEO of implicit, a public company, only one I P, L. Love sponsor, and I was reading to the orange reports. And one thing that kind of call my I was he was talking about how the era of software, you know, people trying to cut back on their spend and dealing with uber purchasing was kind of coming to an end. And that me just felt very, very bullish, ed, for startups a next year. And so I just want to put that to you and say, hey, and do your portfolio companies in the boards that you sit on seem to be pretty optimistic about next year? I'm trying to get a vide for .

january short. I think I think were seeing some signs of that. I say you look at the hyper skeleton, where are they saying, hey, this focus on cloud optimization has eased in the forest on new workload, growth has grown. And so I think you're hearing a lot of consistent messages from from the folks who are giving us big public statements.

I think that the thing to be wary of is in twenty one, right in the sir period, everyone benefit proportionally, right? Like every company, whether you were the best degreed, whether you are the third in your category, like you all benefit. And so it's important to call out that as the you know as the software buying environment thaws, we're not going back to this like is easy for everyone.

What we're going back to is it's gna be easy for the best of breed the leaders and categories with differentiated products who you know have a right to win that incremental budget. And so I think there is a little bit of like a disillusionment that, hey, we're going to get this snap back when rates go down, and it's going to be easy for everyone. But all of the muscle memory that's been built in to every procurement team, everyone buying soft over the last two years, you see a foe like cracking the whip behind you about you care by this this product because we are you spending for something else in this work that similar like no redundant spend.

Sorry, you don't get this standardized on that like that muscle memory on procurement, like that's not going away OK, right? And so like that because IT has been like wiped in the people and budgets might get bigger, but they're still gonna lot of scrutiny, tom. They're still gonna lot of like why this versus that? What's the R Y? What's the business case? What problem is that solve? How much revenues are gna generate us?

How much concerts at this was my attention at indian on a positive note. And I feel like you just brought in the procurement department and cfs cracking winds. You're supposed to be thrown .

in some joy out here. Yeah no. Look, I think yeah that he I think IT look, IT is what IT always has been, right? Companies that are differentiated playing big markets are going to big build businesses. And those who aren't, we're gna.

And I think it's important is to call IT out because we did have this period of disillusions where it's like k everyone gonna win in. The reality is everything over the last few years has kind of been a theme of just like reversion to the mean. And like everything we're witnessing now is, is just exactly that. A reversion to the mean.

the reversion of the main board, not reverting, is the wall of capital looking at the venture. And that's going to return to start up to your point about incentives. But if you want to know which companies out there are the the breakout winners, I would recommend airport click D B T labs lima, which are the boards that german is currently on.

So if you want to know what place his bets there you have german are a real treat. I'm going to have you back on like six months to talk about what goes on. New year administration starts access. And but i'm really hoping that you and I get as many apples next year to chew on and look at as we are hoping, because, my gosh, we have been starving these last two years.

You may come .

on ball, ball on twitter cloud, judged over on something. He's the man, walk back by everybody.

谁 呀？