This Week in Startups
00:53:34 · D.A. Wallach
[00:53:34] S2: am relatively confident that the hyperscalers are behaving rationally. They can get money at six or 7%. And if they can earn 10 to 14% returns on it, it's a great financial decision. They create value for their shareholders. So I don't... And and by the way, if this whole thing blows up, they just stop spending the money and it was a bad couple years and whatever, they move on. So they're fine. This entire circular economy of the labs, the cloud providers, the hardware providers, I'm convinced that it makes sense within itself as one organism. But the only question that matters over the next decade is whether that organism can find enough nutrients in its environment. And the challenge here in parsing all of these financials is that yes, sunlight's the best disinfectant. As these companies go public, we're gonna see a lot about where they're spending money, but they are not gonna tell us all that much about who's giving them money, what their customers are doing, who their customers are. And unfortunately, our best source of information for that is probably gonna remain the investment banks who have this capacity to integrate the financials of every other company in the economy. So what we need to do is stop looking at the AI guys so intently and spend more energy looking at everybody who's supplying their revenue. Right. That's where we're gonna see how this story evolves. And as long as as long as that demand's growing like gangbusters, the organism's gonna be fine.
00:55:15 · S0, Dave McClure, D.A. Wallach, Ben Black
[00:55:15] S0: Yes. You might get some people who get ahead on their skis, who maybe act irrationally, and then they have to cancel or postpone, or, you know, one of their real estate providers says, hey, I'm not letting you off the hook. You gotta give me money. And they say, don't have money. And then that company goes out of business and somebody buys our assets. And the question is, does it become a dark fiber like situation where there's no buyers in your analysis as a biotech investor? The nutrients are just not there. You don't have people providing Yeah. Good. [00:55:47] S3: I'd love to hear Ben's position on this because he's, you know, sort of a retired secondary investor. Now he's managing a public, you know, traded portfolio of, you know, private companies about to go public. [00:55:58] S0: What are the top three holdings in there, Ben? Top three holdings in your public private... What do they call this? Is this a closed end fund [00:56:05] S2: or something? What do you [00:56:05] S4: call them? End fund called Powerlaw, SpaceX, OpenAI, and Kalshi. [00:56:11] S0: SpaceX, OpenAI, and Kalshi. Okay. But open... But SpaceX is already out, so you you We're you keep it in [00:56:17] S4: in we're in the process we're in the process of of Got it. Of selling that down. [00:56:22] S0: Got it. When did you buy your SpaceX? How how many years before, it went public? [00:56:26] S4: It wasn't that long ago. It was, like, early twenty five. [00:56:29] S0: So you got a 50% lift on that, something to that effect? 50%? [00:56:33] S4: No more than that. We got about a 3x.
00:56:33 · Ben Black, S0, Dave McClure
[00:56:33] S4: No more than that. We got about a 3x. [00:56:36] S0: Oh, 3x, fantastic. 3x in two years is great. [00:56:39] S4: Awesome. Yeah. Looked at all of the private, know, neo clouds and yeah, mean, think the hyperscales are totally fine. I think they're so dominant. They can always adjust. They have they have so much negotiating leverage in all their deals that, you know, I'm not I'm not worried about them. You know, I I don't love companies as an investor where there's just a lot of factors out of your control. And with all the NeoLabs, your cost of capital is out of your control and also how long it takes you to implement your projects is out of your control. And when you put that those two things together, I've stayed away from all of them. I'm sure that maybe I certainly missed CoreWeave for that reason, and you know that's on me because that was a great deal if I had done it. I missed a big one, but I just... I like to sleep at night. That's why I do growth stage instead of early stage, and I can't take businesses that are are built like that. [00:57:39] S3: I think what you're talking about is a lot of debt capital and I think Ben Horst... [00:57:42] S4: Well, debt. Yeah. It's debt and it's timing. [00:57:46] S3: Right. [00:57:46] S4: Right. Like, you know, that is your ability to build. [00:57:49] S3: Yeah. [00:57:49] S4: Right. You know, your bill... Your ability to build. Oh, and by the way, if Jensen gets mad at you, forget it. They're all sorts of trouble. There's just so many things out of these companies control. And I don't like that as an investor.
00:57:49 · Ben Black, D.A. Wallach, S0, Dave McClure
[00:57:49] S4: Right. You know, your bill... Your ability to build. Oh, and by the way, if Jensen gets mad at you, forget it. They're all sorts of trouble. There's just so many things out of these companies control. And I don't like that as an investor. [00:58:02] S2: And it's like fat. It's it's... I mean, look, no no fault on anyone who's doing it, but it's it's, fast momentum chasing kind of... These guys were all Bitcoin miners two years ago. And this is a hot thing right now, so you run after that. And the next week, they'll be in Miami buying Ferrari. [00:58:19] S0: Oh my God, did you see my you see my Bitcoin post? My monthly Bitcoin post? [00:58:24] S4: Yes. Everybody's stable. Right? [00:58:26] S2: Every month you [00:58:27] S0: want us to sell, every month, I do my Bitcoin is dead post. Yep. But I'm bored. But I I keep working the thesis because I do, in fact, think that it's run its course. And if Lon goes through, he can do a little research here on the previous two. Lon, go find the previous two as well. So this is a good one for us to discuss. I say, hey, listen. [00:58:52] S3: Have you checked with Naval or Balaji on this perspective? [00:58:56] S0: I think they left Bitcoin for X cash. I think other people have left Bitcoin for TAO. I have a small bet, like maybe $7.50 ks on TAO. And we have millions in Bitcoin, but... And we're hold rulers. It's a very small percentage of the overall family office, but you need to have some, right? You Because never know [00:59:16] S2: a family office, Jason?
00:59:16 · D.A. Wallach, S0
[00:59:16] S2: a family office, Jason? [00:59:17] S0: That's a family office. Just me and my wife Don't first [00:59:20] S2: say that. [00:59:21] S0: Don't say it micro. Well, whatever. Mean, it's like the first stage of a family office because when you start having a couple of real... You have disparate assets, you need to do coordination. And so Jade is running it with me and my wife. And she's awesome. So here's what I wrote. A brutal year for Bitcoin is just getting started. Give me three minutes to explain why you should dump it now. See, that's the hook. That second line there, D. A, that's the hook. You you as a musician understand a good hook. [00:59:46] S2: Yeah. That's
00:59:46 · D.A. Wallach, S0, Dave McClure
[00:59:46] S2: Yeah. That's [00:59:47] S0: great. And now I'm just... I'm asking for but three minutes of your time. Outflows from ETFs or signal, and we'll continue. We're gonna test the low again. Why? Because there are far too many dynamic places to put your money that are creating much more value. Why put your resources into a dead network, that's a trigger right there, that offers nothing beyond a store of value, that invites the reader and the holder to challenge those two things? What's the point of the BTC's Ponzi scheme nature has gone away? I'll type Well, it I'll leave I think that was actually its biggest value, Dave, was that if you owned Bitcoin, your moral obligation was to shame people who didn't. But people do not do it anymore. There is no more have fun being poor and put laser eyes in because it's embarrassing to do that when the thing is sideways for so long. And I just say, listen, no one is trying to convince people to buy it anymore. And no one is saying BTC can change the world because it won't and because AI has. Just sell and shift from Bitcoin to superintelligence because one provides little to no value, the other provides unlimited upside for humanity. This should be obvious to everyone right now. Bitcoin will never break its all time highs again. So another hook at the end. [01:01:07] S3: Drop the [01:01:08] S0: 2,000,000 views. Wow. Two points. The number of retweets [01:01:14] S3: is great. Of haters in there.