02:36:33 · Jordi Hays, Luca Ferrari, Stacy Rasgon, John Coogan, John Tennant
[02:36:33] S1: Do you think it's funny that the The US venture capital ecosystem is somewhat like off balance sheet r and d for you guys? It's like they can deploy a bunch of capital into these categories, create good products like Evernote, then you guys can come in and and, own them for the long term? [02:36:53] S5: Look. We when it comes to acquisitions, we're opportunistic. I don't you know, whatever the market offers, if we think we can deliver great returns, we'll be happy to buy it regardless of the particular history. Usually, I don't know. I don't have a other gratitude or any particular opinion on on that. Know, VCs have many have done really well. I guess it's normal that at least in some cases, their investment didn't turn out to be the [02:37:19] S1: Yeah. [02:37:19] S5: Exceptional success that could have been. [02:37:22] S6: Well, in [02:37:22] S0: many cases, some of [02:37:22] S4: those firms [02:37:23] S0: have IPO ed, and, you know, delivered a bunch of returns for the LPs in the venture fund. Yep. I I am interested in now you you've you've acquired Evernote's probably a good example. Yeah. But any any example of acquiring a company that's already publicly traded, how does that work? How how do you work through those that process? Are you going directly to the board? Like, are there are there best practices around, like, when a company or or a group of shareholders might be more receptive to a to a takeover? Or or do you see yourself ever getting into more of like a hostile takeover scenario? Does that does that does that matter to your strategy?
02:37:23 · John Coogan, Luca Ferrari
[02:37:23] S0: have IPO ed, and, you know, delivered a bunch of returns for the LPs in the venture fund. Yep. I I am interested in now you you've you've acquired Evernote's probably a good example. Yeah. But any any example of acquiring a company that's already publicly traded, how does that work? How how do you work through those that process? Are you going directly to the board? Like, are there are there best practices around, like, when a company or or a group of shareholders might be more receptive to a to a takeover? Or or do you see yourself ever getting into more of like a hostile takeover scenario? Does that does that does that matter to your strategy? [02:38:12] S5: We've done two take privates [02:38:15] S0: Yeah. [02:38:15] S5: So far. One is Brightcove Yep. Early this year, and the second one is Vimeo. [02:38:20] S0: Yeah.
02:38:21 · Luca Ferrari
[02:38:21] S5: So I know like, I wouldn't consider myself a world expert in Sure. Private, but I've seen a couple of them, so I can probably provide at least some some input here. We have done it quite collaboratively reaching out to the board and and just saying, look, we'd be interested and we will make an offer. The I would say the the the negotiation is not massively different from what you would do in a private deal, but the there is a lot more pressure on a board of a public company to to to to act in the best interests of the broader shareholder base because the liability is a lot more legally speaking, it's probably not very different different, but of course, the transparency of that process makes it really difficult to say, I don't like it. Fuck you. You know, if it's a good offer, you have to entertain it. So on the bright side, if you have a great offer relative to the stock price, you have, I think, better certainty that it'll be at least entertained than with private companies where sometimes you find you you're absolutely confident you're making a an incredible offer, but say the founder is just not not gonna sell or a particular investor maybe invested at a really high valuation and they're now maybe even delusional in thinking, oh, we'll get back to 3,000,000,000 if we wait for, you know, long enough. And so there, you don't really have any leverage. It's like, okay. End of end of the conversation with a public company that can't really happen or at least is quite rare. On the on the you know, so that that's the positive. On on the negative, the process is a little bit more uncertain because with with a private deal, typically, if you have a handshake agreement with the two, three decision makers, then it's quite unlikely that the deal falls through. The public company, basically, at any point in time, if someone comes with a better offer, and it can be quite public, so everything is, you know, back to square to square one. Mhmm. You need to show all their votes. So you only know after multiple months, and so you're kind of keeping your fingers crossed. But overall, I love public deals. I think they're in many ways more straightforward. There's no hiding behind delusions. I mean, your stock price speaks volumes and if it's been at a certain level for a long time, that is it, you know, for the most part.
02:40:30 · John Coogan
[02:40:30] S0: Yeah. Is it also do you have more confidence in audited financials, or any other sort of process power that comes from actually being a public company. Do do you do you feel like when you go into a company that's been taken private, you can just feel the difference. Oh, okay. This this company has been operating like a public company, and that has maybe pros and cons, but it you can definitely tell? Or is it purely in the deal stage that you feel that there's a difference?
02:41:04 · Luca Ferrari
[02:41:04] S5: Yeah. We have seen private companies that are run really well in terms of the FPNA and we've seen public companies certainly have to reach a pretty high bar. So, yeah, I guess we're we're more certain that on the one hand, you're more certain that the public company will be better geared to to provide you with the say that the due diligence materials you need and whatnot. On the other hand, there's generally, and and understandably so, and rightfully so, more more risk aversion in a public company. Because if there is a leak that can truly, you know, create a pretty difficult situation for for everybody involved with private companies, it's leaks are also less likely because the incentives to leak something are lower. Mhmm. There are all sorts of perverse incentives with a public company for obvious reasons because the stock is so liquid. So sometimes deals are leaked that if the company was private, wouldn't be leaked. Mhmm. So I would say, yes, the data tends to be a little bit more ready, cleaner. But on the other hand, the the company tends to be more careful in bringing people under the tent. And so at the end of the day, it's not always necessarily faster or easier. You know? I I think, frankly, I don't see that's a major point of difference, to be honest. I think that's also important when you look for for an acquisition.
02:42:26 · Jordi Hays, Luca Ferrari
[02:42:26] S1: Yeah. Do you have any type of internal forecast around when some of the current the new generation of, like or or just the the new crop of AI native startups will start becoming for sale. Because, like, right now, if you're growing quickly and you have a great product, you can probably raise a bunch of capital. But I could imagine in in two ish years, there's companies that maybe don't fully break out that have great products but aren't necessarily gonna be, you know, public companies one day themselves. [02:43:02] S5: No. We haven't discussed that. We and our because the we try to focus our time and effort on things we control. So our our focus right now is to just meet as many great entrepreneurs and investors and private equities and management teams and and bankers as possible to make sure we are involved promptly every time there is an intention to sell a business. We have historically been a great acquirer very fast. IS IS bid every single time we actually competed. And essentially, no requirements on management teams to stay if they don't wanna stay. So we just need to make sure we are called upon if something is happening, but we don't necessarily need to know or have an opinion whether in three years time or two years time a particular company becomes available. There are so many variables that we wouldn't be planning for [02:43:52] S1: Yeah. [02:43:52] S5: For being ready for that anyway. So who cares in a way? [02:43:55] S1: Yeah. Makes sense.