Imran Khan's 2025 Investing Playbook: Macro Trends, CapEx Cycles & Generative AI
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- All right, welcome to the Risk Reversal Podcast. I'm Dan Nathan. I'm joined by my very good friend Imran Khan. He is the CIO and founder of Pro-Am Asset Management. Imran, welcome back to the podcast. - Thank you, great to be here. - All right, so last time you were on, it was in November, and we focused a lot on your process, how you think about investing, how you think about choosing longs, choosing shorts,

the Maddox and the like here, how you do portfolio construction, risk management, and it was a great conversation. We're going to put that in the show notes. Today, we're going to do three things. We're going to talk about just the geopolitics, how you kind of factor into your investment process and the like, and we got a lot of uncertainty, whether it's trade, tariffs, tax, deregulation, geopolitics, all really kind of important themes, I think, right now. We're going to talk a little bit about this concentration in the S&P 500. We've had two consecutive 25% plus gains.

positive returns in the S&P. We're going to talk about how you're thinking about that and where you see opportunities in 2025. And lastly, how could we do this? How could we podcast without talking about generative AI thematics? You know, we had that deep seek sort of situation last month that really threw, I think, a little bit of a monkey wrench into the trade here in the public markets. But I want to get your take on all that. All right. Where should we start, Imran?

Whatever you want. All right, let's do the macro here really quickly because I think there were some trades that started working late last year after the election with the idea that we're going to have a more pro-growth environment here in the U.S. How are you thinking about that there?

then and how do you think it's playing out into the new year if you were hoping for corporate taxes going down, if you're hoping for deregulation and maybe that means some different business practices by many companies or M&A and the like. How are you thinking about that and how important is that to your investment process right now? They are very important. I think one of the biggest learning lessons in 2022 that if you run a sector-focused fund like us,

Obviously, you have to be very focused on your sector and be specialist about sector. But every sector is part of an economy. So you cannot ignore the economy. You cannot ignore the government. One of my biggest investment philosophy is invest with government because government is world's largest monopoly.

So, and I like people who are quote unquote monopoly companies, you know, and so that's what we think about it. So I pay very close attention to the economics. You know, I think, you know, it's interesting. I look at the market, there are a lot of excitement and there's a lot of right reasons to be exciting. I think the deregulations will happen. I think the...

taking out the government spending cut is a very right policy for the country. And I think there'll be potentially a lot more M&A as the deregulation happens. All those things are positive. But then you also have this potential trade war, decoupling the global relationships. For a long period of time, we are open to this global economy that I think will change dramatically. Every country will probably become much more...

more isolated in a sense. That's not necessarily the right word, but we're going to have less of an open economy that we saw in the last 30 years, and rightfully so. Well, open where? Let's talk about that for a second, because when I think about what's going on with Europe from a geopolitical standpoint, I think it runs the risk that we have less trade with Europe.

Right. If Trump is trying to impose tariffs on some of our biggest trading partners who happen to be our best allies, you know, I think there's risk to that. I think there's risk that, you know, some of the stuff that people were so focused on that was going to kind of take or have the economy inflect here, what lower corporate taxes and the like. I think you run the risk of a trade war lasting a bit longer than people expected.

think because we have the playbook from the first administration. So are you starting to think that some of the positivity in and around all that stuff could actually fall by the wayside this year? I'm not necessarily...

You know, I think I grew up in an education system and a lot of all of us at my generation grew up in an education system where we have been told that open trade is a great policy. And the reality is, yes, but I'm a big believer, as I think I talked about it, there is nothing 100% accurate on absolutism.

You know, absolute free trade, I don't personally believe works. I think it's a bad decision. And if you go to my wife from upstate New York, if you go to upstate New York, you go to the small towns in New York City, you see what the global open trade did to those communities. It's terrible. It's

It's terrible. We lost a lot of jobs. It ruined our small towns and against the government policy. So I think there is a point to it that we cannot have a complete free trade. I think there has to be a balance. And whether President Trump is right or wrong, only time will say. But

I think we're going to find the new equilibrium. What is the new economy of open trade looks like? There is an irony to all that because a lot of these large FTC and DOJ investigations to our national champions, these massive tech companies, they did start under Trump 1.0, right? And when you think about tariffs and the like, those didn't change much under the Biden administration, right? And both of the administrations were responsible for throwing trillions and trillions of dollars, you know what I mean, on the budget deficit.

And the like. And so when I think about what we're in for right now, it might just be more of the same. I don't know about that. Again, I think there's a lot of uncertainty in the economy. I think inflation is sticky. There is a high degree of probability that we're not going to see. I actually think there is a significantly high degree of probability we will not see any rate cut this year. And I think it is more than 0% probability that Fed may have to raise rate. So that's a pretty significant...

headwind. I think on a trade war side, I'm reserving my judgment whether they're good or bad. I think the issue here is that it will create uncertainty and the market doesn't like uncertainty. However, going back to this point, I think President Trump 2.0 versus Trump 1.0

I think it's different because I think when he first came in, regardless of your opinion, governing versus campaigning is very different. And we saw that with President Bill Clinton. The first time, first year or two was really tough. So when you're somebody who is completely outside in Washington DC, you don't know how to run the government. And I think now he has more experience. The second thing is, regardless whether you like President Trump or not, I think he has proven right in many points.

Which we got to give him credit. You got to be objective. Which ones? Listen, I think his point of view about, you know, China before nobody talked about that concern about the China. I think some of the issues that he's raising about our allies, you know, whether we may not like the way he's going about it. Yeah. You know, it's not necessarily completely false either, you know, you know.

Well, that is a subjective view. I mean, like, to be honest, half of America probably disagrees with that, too. Yeah, but half of America does agree with that. And so I think, you know, the other thing is I also think he has it...

My opinion, you know, you might disagree. That seems like he has a more competent team around him. See, I take the opposite side of that. But again, if you go and look at the cabinet he put in place, you know, in 1.0, and you look at the credentials that they had versus what we have now, I mean, I think that's night and day. You just mentioned lessons from 2022. And I think that's really interesting.

Because the pace in which interest rates were raised by the Federal Reserve, I think, caught a lot of investors off sides, right? So they basically came to the conclusion in late 2021 that inflation was not transitory. They said they were going to start to raise Fed funds rate. And at that moment...

in the Q4 of 2021, like these long duration, high valuation, whatever you want to call them, you know, risk assets started to sell off. And by, you know, I guess Q4 of 2022, we saw the NASDAQ down like almost 40%. We saw some of the biggest sort of names within that index down. Some meta sold up 77% from the highs in 21 to its lows in 22. Now,

Netflix, Nvidia, Tesla, all down more than 65%. So you just said that there's a potential that there's no rate cuts this year, possibly raising rates. That should be, if you're using the 2022 playbook, a bit of a headwind. I'm not talking about some of the biggest names going down 65%, 70%. I'm just curious how you're thinking about that when you look at the landscape, you think about the macro right now. I'm very cautious.

Period. I think interest rate going up is not necessarily a great scenario. Again, I'm not saying the interest rate will go up, but I think it's definitely more than 0%, maybe more than 10% probability that Fed will have to raise the rate. But I think, in my opinion, more than 80% probability that rate doesn't come down this year. Yeah.

And, you know, listen, that's a headwind. I think it's different than 2022 was 2020 and 2021, the companies became very bloated, you know, and they hired way too many people. The company's culture changed very dramatically. So we don't have that anymore. But also on the other hand, being completely objective, you have a massive CapEx spending going on and we have to see what's the ROI from those CapEx investment. So, you know, I think I'm more cautious, you know,

You know, it's interesting. And again, until a lot of those major bloated companies started making those sorts of job cuts and that started to happen in late 2022, that's when the stocks bottomed. Right. And so it didn't really matter that Fed funds got above 4%. The 10 year was above 4% because in 2023, it really set the stage for the companies that got leaner. Right. And got more focused. You did have the start of that capex cycle.

for generative AI, and I think that helped a lot of the big names or so. So I guess my point is, if rates just stay here, if the 10-year stays at 4 and 1/2, the Fed Fund stays at 4 and 1/2, they're focused on bringing down inflation, and the economy keeps chugging along at 2 and 1/2%, that's OK. Yeah, that will do well. Listen, in 2005, 2006, market did fine, and the interest rate was around the same. So I don't think interest rates staying flat

is a problem. If interest rate goes up, can it be a problem? Maybe. I think that's not priced in in the market. However, I think the most interesting thing for these companies is, for technology, it's probably one of the most exciting time

It's like, honestly, in my life, I went through a couple of cycles. When people are first building website, then we went through the SaaS transition from on-prem, then went to the mobile revolution. This is going back 25 years ago, internet, like the amount, like I played with some, GROK 3 yesterday. It's...

Like the fact that I wake up in the morning and ask Grok3, tell me all the tweet summary of different stocks and that it sent it to me on a real time, that's pretty amazing. So let me ask you this really quickly. So if you were to do that on ChatGPT or Lama or Claude, you know, that sort of thing, did Grok3 do that much better? Did you compare it to some of the other ones? Yeah, there are some things they do better. Yeah. You know, again, I don't think who is going to be the winner on Twitter.

this chat gpt story has been told yet my personal view ultimately it will get commoditized yeah you know and uh uh so so at that point the companies that have the biggest distribution yeah going to win by the way satya nadela ceo of microsoft that was reading an article in the information this morning was saying exactly that and i think it's one of the first times he's really come out and said that and he said yeah we're doing 80 billion dollars supposedly in capex this year half of it's going to be outside the us

But they're also doing a lot of leasing of data centers and the like because he worries about an overbuild, overcapacity. You don't get the use cases right away. And that's kind of not too different than the internet. So talk a little bit about what the excitement was in the stock market in the late 90s and then how we saw the NASDAQ and many of the names that are now trillion-dollar market cap companies, they lost – Microsoft lost 70% of its value. Amazon lost 90% of its value. I am very constructive on these companies, but –

I'm a big believer of being objective. This is my biggest pet peeves with investors that they only talk about their book and they don't be objective. What do we know about these internet companies? They didn't see they've overbuilt their business in 2021.

They understood that they thought all these guys, they're great CEOs, I really admired them, but they all thought 2020 was a baseline. Yeah. You know? And now what gives you the confidence the same guys not going to overbuild the CapEx? Yeah. I think it's a serious question to ask. I've been asking this and you and I have talked about it offline. I agree. So let me ask you this. When you say-

blank check to anybody. When you say Satya says we're going to spend 80, when you say Andy Jazzy says we're going to spend 100 or whatever, up from 60, you hear Meta, so it's Meta, Microsoft, Google, and Amazon, they're all talking these huge numbers, hundreds of billions of dollars. What do you think the probability of them not hitting those numbers are this year? I think this year they will hit the number because

The way I run a large company, the way the large companies work, they plan it significantly ahead. They're not going to change their capex budget in one week or two weeks or three weeks. When you're running a 72,000, 100,000, 200,000 people company,

- They don't do that. - Here's my pushback though. In 2022, lots of job cuts happened across all of those companies because of the overbuild. - But they were late though. They were late. First of all, they overbuilt it. You saw the sign in 2021, their stock had to get punished.

before they did it. Why is it different though now if you've built out all this capacity? Now you have guys like Oracle and Stargate coming in with open AI. I don't understand why that would be too different because if they've overbuilt capacity in the data center front, they bought too many hoppers and black wells and all that sort of stuff. And then their customers don't see, you know what I mean, the uses right now. Don't they cut that capex? I don't think...

In my opinion, as an operator, become an investor, it's hard to do it immediately. It'll show up in 2026, 2027, if they do that. But the stock market will start discounting that ahead of time. But if they cut the capex, that's a good thing for these companies. Again, I don't know what's going to happen, but I just don't think if they give the guidance in February, that's...

I just think it's already planned. It's going to be tough to do it. But again, let's play the psychology game because I think it's really, really important when you invest, understanding your manager's incentive, right? So at the end of the day, these guys are also smart enough to know that they have kind of asymmetric risk here. So if they don't invest and they lose out, their business is going to get cut into half potentially. Yeah.

If they over invest, guess what? They might have a one bad year in stock, but they're going to be fine. Because over time, you will need the capacity. So it's not like, yes, we might overbuilt it. We might have a glut of servers and GPUs for two years, for three years. That's the max. You will need that. The world will get there. So if I were running a company, it

I always like to think about it, these guys are smarter than me. So if I were running Google, if I were running Facebook, if I were running this, I would invest like a drunken sailor too. Because the risk is, I will be remembered that Imran is the guy, you know?

who destroyed this business versus Imran is the guy who spent two years more money in an arm race. It didn't work out. Not a big deal. So to me, it's like how as a CEO, you want to be recognized. So I just don't think in a shorter term, they cut capital. Well, by the way, the stock market is giving them that leeway, right? So if you look at the performance of a lot of those names, Meta in particular, they're basically saying, okay, go ahead, have a ball.

we'll deal with it on the other side of it. But by the same token, Google, Microsoft, they've kind of been stuck in the mud a little bit, or Microsoft clearly, and maybe that has to do because they were one of the early beneficiaries of the trend. You tweeted out something the other day on the 16th, which I thought was really interesting. I think it was something from Goldman Sachs. It was talking about the market's dependence on a large cap, on a small group of names. And you have to go

all the way back to 1932, where we just took out that number. We're far above the year 2000. So right now in the S&P, the top time names make up 130% or something. Why is this important to you? So I think if you take a step back, when you look at NASDAQ and say half of the QQQ is 10 stock, what does it tell you? It tells you that these guys are ultimately net share taker. Now that is,

To me, you can believe if you believe that AI will be a closed-loop system and only few guys will have that. So if you think AI is like a nuclear weapons and only five guys in the world will have nuclear weapons, yeah, then they are the superpower and they're going to capture more market share and they can overcharge their customers and that's great. However, if you believe that ultimately AI will be a more of a, you know, commodity product that everybody can access,

And that's why I think the deep seek is so fundamentally interesting, regardless how much it costs. Then

you can see the balance of world's power going to be very different. Because then somebody who has great install base can take these AI tools and build clever product on top of it and will capture the GDP share, right? Because ultimately, what decides the market concentration? Who's going to have the biggest power of the GDP? So that's why I think, you know, that this concentration, you might have to start thinking about it. The second thing I think you have to think about it

If you look at the top mega seven names, not all of their fundamentals are equally good. Because if you can argue, if the capex cycle is going to continue for three years, phenomenal for NVIDIA, phenomenal for Broadcom. If the capex cycle is going to slow down in 18 months from now,

It's actually better for Google and Facebook and those guys, less so for Nvidia. Because they've already built out the infrastructure. Yeah, like, you know, like if they're not growing CapEx 15, 20%, you know, every year. You get a lot of leverage on those investments. If you have a flat CapEx in one year, what does that mean for Nvidia stock? So when you have a, you know, the mix of companies where one gets benefited, other become potentially loser. Yeah.

that's not good for overall index, right? So there will be a winner, there will be a loser. So if this capex cycle grows like this 20% for next three years,

I think Google, Facebook, Meta, we got to rethink about their stock valuation, right? But you have to rethink about NVIDIA's growth potential. But if it flips the other way, that one year the CapEx doesn't grow, still spending a lot of money, you know, think about it. All I'm saying, the CapEx is not growing, not declining. If CapEx cycle doesn't grow for hyperscalar for three years, whether it's 27, 28, 29, or 26, 27, 28, I don't know, then NVIDIA's growth will slow down.

significantly, you know. So that's the way to think about it, the world, you know. And then Apple has their own issues, right? And then if you look at the stocks, you know, they're not necessarily cheap, cheap, cheap stock. They're not bargained. So I think, you know, listen, I own many of the stocks.

I'm not here saying poo-pooing on the stocks. All I'm saying is that we got to be cautious and be objective about all the stocks we own. Well, let's play out that theme for a second here because I think if you look at Microsoft's CapEx, the growth has slowed, right? And so even Meta, it slowed a bit. They were able to use a lot of the spend from 2021 on the Metaverse into what they've built here.

You know, Amazon's the one that just jacked it pretty high, you know, from where they were last year. And again, they have not been one of the ones that built one of these foundation models and the like, and they built, you know, really the superstore for anyone who wants to come there. And they have a huge installed base of, you know, enterprise customers, obviously small, medium, you know, also, when I think about the potential for let's just call it flat, let's not call it down, right. And I say to myself,

who is going to benefit from here on out to a flat CapEx cycle? You just talked about NVIDIA runs some risk there. Which ones are you most excited about the opportunity to see some of their competitors who didn't gain the market share after the build, right? Who like, which names here do you think benefit in a flat sort of CapEx environment where you're starting to see an uptake of some of these, you know, the compute. So if you think about it, right, more, yeah,

Fundamentally, what happens if your revenue grows 20% and if your capex dollar stays flat? What does that mean for free cash flow?

So you're going to see pretty significant free cash flow growth. And I'm a big believer the free cash flow expansion actually drives stock price higher, everything being equal. So I think that's good for Meta. That's good for potentially Google. Obviously, they have other things that you have to worry about. And that's why you've seen the Meta outperformance right now because- I don't know about that necessarily. I think Meta outperformance was they really had a good quarter. So if you look at the max seven and you be very objectively, who had a good quarter?

Meta had the only company that I can remember top of my mind right now among the max seven whose revenue growth rate accelerated. - Yeah. - You know? - Well, Apple was disappointing. Nvidia we're gonna get next week. Microsoft is disappointing. Amazon was disappointing. - Google was disappointing. - Google was disappointing. Tesla was an absolute disaster. I mean, the fundamentals there are like horrible. - Fundamentals not bad. - And Broadcom was pretty good. But they were late to join the party.

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All right. So how does deep seek, in your opinion, upset the apple cart here? Like what were your biggest takeaways? Because the market on that Monday, I think it was what Monday, the January 27th or something like that, you know, Nvidia closed down 17% on the day. I mean, the whole mag seven got destroyed. Overreaction, in your opinion, a lot of them have come back from those lows. Short term, hard to say, but I think the most important thing is that it raised some legitimate questions.

Regardless how much they spent. One thing we can probably say with high degree of confidence, they didn't spend like open air. It wasn't $6 million trading the model. Yeah, but it's not $100 billion either. So that, I think at a minimum, I think you can say with high degree of confidence that there is an opportunity to productivity improvement.

in all these tech companies. And my experience with these tech companies is also that, you know, this thing came so fast that they all probably joined the arm race without thinking about, you know, productivity improvement or efficiency improvement, you know. And again, as I said, I'm a big

deep, deep respect for these founders and CEOs. They have done a great job. But you should not give blank check to anybody. These are the same people who I overhired in 2021. So I think, you know, my sense is there is room for efficiency improvement. And there's always room for efficiency improvement. And I think, you know, me being an operator, right?

one other thing I learned that, you know, engineers, you cannot give them too many tasks to do at the same time. You've got to give them one marching order. You know, right now, obviously their marching order is to win the race and build the best product. But at some point you have to give them the marching order and say, hey, go improve the efficiency. And that is the single biggest focus. So I think, you know, so I will be shocked, you

That in two to three years, we don't see this meaningful productivity improvement out of it, efficiency improvement out of it. But I don't see it's a priority right now for big companies, but I think it might become a priority in 26, 27. All right, so let's move away. You talk about the productivity gains that these companies themselves...

will kind of realize, but what about you're a tech-focused investor. Will you start looking at other industries as they start adopting these products and services to kind of focus on their own efficiency, their own productivity? Walmart is maybe a good example. It's down today. Disappointing results, but in the last quarter, they accelerated their e-commerce growth, and they were talking about...

there was distribution and fulfillment and customer service. I mean, some of the investments that they had made in generative AI were helping that growth. So will you start to look at other sectors, how they might adopt this technology? I'll look at names, other tech names, right? There is like what, thousand plus companies that's over a billion dollar market cap. You know, there's a 990. You know, I think what I learned from going through different cycles, that each cycle has their own uniqueness, right? So to win on the market,

Web 1.0 versus Mobile 2.0 or winning SaaS versus on-prem versus now with AI, who is going to be winner? Each of the cycle has their own uniqueness. However, there's one common thread among all four.

Do you know what is that? Execution. You have to execute. Because I always tell people, you and I have this, people always say, hey, what's so secretive about your stock? I'm like, there's nothing. You can give the same ideas to others, they will not execute the same way. Execution is different, difficult. And same thing for the company. So I think this is the time, the way I look at it,

Who are the big winners going to be outside? If you look at the, think about the broader world, forget about the 10 big cap names, is the companies that have big install base because then you can roll it out faster because customer acquisition remains very tough.

Remain very very tough right if I go build the same product like grok 3 I'm not gonna get the same distribution that grok 3 is getting right because he has the Twitter distribution He has his own follower. So he drives that right here all the media right likes to write about him, you know So that drives that distribution is super super important, you know, the second important thing is companies that have a lot of data and

right? So because AI without data means nothing. So those are the two very unique to be successful. And then the third one is the common thread that we saw all four cycles that I have experienced in my lifetime is execution. Which of the management team will execute the best? And I think you really have to question, right? Right now, there is a chaos in my mind, you know, because the entire world changed dramatically. And then the right leader is going to

navigate that better. So I'm paying a lot of attention who's going to execute better. All right. So you hear this all the time, you know, different cycles, specifically in technology that, you know, a handful of them go by the wayside, right? Some of the biggest winners in different, you know, periods and the like. And I look at, and I love what you just said. You like to invest in monopolies. You like to, you know, and when I think about Apple, I think about Nvidia. I think about Microsoft. I think about Amazon and Google and, you know, Meta, maybe not Tesla so much, but

They're basically the moats are massive. Their distribution is massive. The amount of data I'm hitting on some of the things that you just said is massive. The execution has been phenomenal, even in a company like Apple that was kind of in the penalty box, you know, relative to some of the other big ones.

I would just focus on two of the things that you just mentioned. Even if Apple intelligence sucks, which it does, even if we can't see what it's going to look like in two or three years, it's probably going to be pretty good then. But they have the ability, they have the distribution, they have a billion and a half, you know, iOS installed, you know, so do you look at names like that and say, it sucks now the valuation might be high. They might've pulled forward some excitement, but this is a stock that,

This is a company that I think has great potential. You know what I mean? They didn't have to be first, but they might be, you know, a real winner, you know, if I'm looking at three, five years out. Yeah. So there are three things. Number one, you are absolutely right. They are sitting on a lot of great assets that's super, super valuable and that their moat is very, very high that you need to potentially pay attention to. But, you know,

One thing we learned in tech, monopoly doesn't last very long, right? Somebody, somewhere, come. You know, I always like to say that I don't actually worry about bigger competitors. I worry about the competitors that you never heard of.

All right. Well, let's talk about those. Because again, if you just said you're slightly cautious on some of the big ones and you like the themes, and I'm sure you're going to be invested in and out of those over the next five, 10 years. I'm invested in many of this currently. Yeah. So when you look, where are you going further afield down the market cap scale? Because we had Jeff Richards of Notable Capital. He's a great, I don't know if you knew Jeff, great VC tech, former operator like yourself. He was saying, I think you want to look

down the market cap scale. There's a lot of great companies doing a lot of great things in around that. You don't know of them. But I go and look at a couple that he mentioned, and I was like, Jeff, they still trade at 40 times sales. These sorts of things are kind of uninvestable because the stock market has been looking for these sorts of things. So I'm curious, where are you looking for the 2025, 2026 opportunities? Because we're not going to talk about your performance other than the fact that I know it's been really good. We've had 25% consecutive S&P years.

You know, you don't need a 25% gain in the S&P 500 for your fund to do very well. You just need to pick themes and stocks that work within those themes. Yeah, listen, I think there are companies like, you know, like in the past, actually we still own Tulio, like we own DocuSign, right, for example. You know, I think on a valuation basis, they're relatively cheap. You know, I agree with you that you cannot go...

Down the downstream and pay for companies that are significantly premium to these companies that have strong moat You know to me if I'm paying for a company that is growing at a same rate as meta at a higher multiple Why own that meta is less risky, you know for everything that you pointed out So I asked that question a lot, you know Don't go by small mid cap just by the for the fact of it because you know small mid cap names are like teenagers You know, so they can be genius

or they can be a complete disaster. You don't know. So overpaying over price doesn't make sense. So we've been very valuation concerned across the board. But we're also looking at companies that we think has a strong

data and install base and the management team we think we can trust to execute. All right, I got one for you. And I'm just going to throw this out there. And maybe if you don't want to talk about it, you don't want to talk about it. Look at Zoom, okay? Here's a company where growth has just stalled. I mean, maybe low single digits earnings and sales growth, but margins have really actually started to improve a little bit out year over year. It's got a $19 billion enterprise value. I think, you know,

over a third of that is in cash, right? You say to yourself, the stock's up 50%, you know what I mean, from the recent lows. You have data. I don't know if you can trust the management or you like their execution. The founder is pretty good. Yeah, I mean, but what I'm saying is like-

pretty good right and this i mean at one point is a hundred billion dollar company you know you know what i mean so my point is is like this the sort of thing that you would start kicking the tires on it trades at 15 times earnings and there's probably a whole host of things that they could do with that data you know what i mean that i think zoom is pretty cheap yeah uh you know now i would say uh i have a very small position on it i would say zoom um

My concern with Zoom is I'm not so sure I understand what will take it to the next level. But as you pointed out, it's very cheap. My view is like if a company is trading at a 10%, 12% free cash flow multiple, 10%, 12% free cash flow multiple, you can just buy back share all day long. As long as you can...

say that if I have a business that's trading 10, 15 times free cash flow and as long as I have a confidence that it's not going to go down, if you just buy back, you're going to get 7% accretion. And so to me, it's like, that's fine. Where I struggle with buying

DocuSign versus Zoom. Docu, they have a new product upgrade cycle coming up. I think that could be very, very interesting. Zoom, I'm not sure if I understand the next product upgrade cycle, how big it can be. That's something I need to really understand. It doesn't have to be big, but...

cannot accelerate the growth. We haven't seen that. Let's go back in the last 10 years. Microsoft bought LinkedIn. People didn't really see why and look at how well that transaction has worked out. You could also go to Slack and Salesforce. I'm assuming that's worked out pretty well. These are both, I think, like $25 billion deals or so. Seems like LinkedIn might have worked out better

Yeah. But like this one seems like it could, Zoom could be a really easy bolt on. You know what I mean? Yeah. What are these companies? Maybe it's Cisco, maybe it's Microsoft or something like that. Or, you know, they have a big install base and they will do something interesting. No, but you know, listen, I think,

With Zoom, what's intriguing to me is that you have a founder. He's a repeat founder. He has done well. He has a very good track record. He has a tech mindset. He's technically savvy. Because one of the biggest things is that I cannot go run a tech company now because AI is so...

Like you have to be a little bit more tech savvy than me, you know. But, you know, I think can you go run in 2015, 2016 a lot of the tech companies? Because the tech was not that sophisticated, you know. Like, you know, at the end of the day, Uber, DoorDash, they're not necessarily AI company, you know. And that's, I think, that big risk with some of these businesses. So I think, you know, my personal biases, you know,

In this kind of technology chaos time, I probably, you know, think about it. Let's say you're sailing and if there is a dark cloud, you hope that you have a very experienced and knowledgeable captain.

So if this whole technology thing that comes out that fundamentally changed the world, you need somebody who has a deep understanding about tech. And I feel like Eric has that. They have a big install base. They have a lot of data. And the stock is cheap. So it's a very intriguing company. But like I said, a very small position. Let's start kicking the tires on the Zoom. All right, last question before we get out of here. You mentioned that you were an operator.

You're a COO of Snap. Okay. You were talking about, you just mentioned what technology was like back then and the like, and you know, this is amazingly sticky product. If you have children, you know what I mean? They still use it all the time. The stock has been stuck in the mud. It's at $10.5 right now. It has a $19 billion enterprise value. Earnings and sales are expected to grow double digits, right? It's got a

Gross margin, that's the problem. It's like 55 if you look at Kiphart and Summers. That's a little bit misleading because the way it's an accounting issue, right? Because Snap expands their data center because they don't own data centers, right? They use AWS, sorry, Google and AWS. But Google is the biggest one. So they're actually paying Google. So that's cost of revenue. Whereas if you look at Facebook of the guys, they own the data center. So they're amortizing the cost.

So, so I think it's kind of a misleading, you know, so the CapEx is much lower for Facebook, Snapchat, Snapchat as opposed to Facebook. Yeah. So do you find it intriguing here? I mean, like this was obviously a COVID play. The stock went from 10 to 80 and now it's 80 to 10. And, you know, again, the price doesn't really matter, but it really doesn't go anywhere. And I'm just curious. So I'm biased, but Evan is my friend. Yeah. And I think he's one of the most exceptional product leader in the market. Yeah. You know, and, uh,

Again, I worked with him. He's a great friend of mine. I really, really think he's one of the greatest product mindset, that mind person right now. And listen, on his credit, everything that Facebook is talking about, he talked about during the IPO, calling Snap as a camera company when everybody made fun of him.

And now everybody is like... By the way, I still have the spectacles. And I'll tell you, the spectacles are basically the same exact thing of these meta AI glasses. Exactly. And they were like the same price point and they were seven years before. It's seven years before. So Evan is a great product mindset. And I think, you know, you never underestimate a person who is an incredibly product innovator.

Because they will surprise you. Well, you know, he was at your conference back in October and it was one of the first times in a while I had seen him, you know, talk in front of an audience like that. He's one of those guys, everybody likes him and everyone likes his vision. He's a very nice guy. He's one of the nicest person out there. I think it's a sort of stock you kind of close your eyes and, you know, and it's probably a double as a point. Like,

Evan is really, really special. And look at his track record. Yeah. Well, I'm rooting for them. I like him. He seems like one of the good guys. All right. Imran Khan, you're also one of the good guys. I really appreciate you coming here, being on the Risk Rehearsal Pod. You know that this mic is always open to you when you're in New York City. So I hope you'll come back really soon. Great. Thank you.