The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:37:54 · Scott Wilson, Harry Stebbings
[00:37:54] S0: That's exactly how we think about it. We hardly ever talk about, like, fund performance. We we only really talk about the underlying exposures in the portfolio. So we aggregate everything up, and we know that we have x dollars of SpaceX or Cerebras or Anthropic in the portfolio, and that's that's how we think about it. [00:38:12] S1: Can I ask you, on your, like, Cerebras, how do you think about performance being challenged? And I'm not saying to comment on Cerebras at at all. But when you have a company that is hit by bad tailwinds in the public markets, how do you think about whether the stick and hold or actually a fiduciary duty to just cash your chips in? [00:38:30] S0: Yeah. I mean, Cerebras specifically of... Like, for us, that, that was a really big position at the IPO. And so we took some chips off the table and put some hedges on even pre distribution, but we like Andrew and the team. So we'll continue to hold some of that. And I think, you know, it's, if you look at the current kind of KPIs of the business relative to expectations going out the next four or five years, it's tough to justify the valuation, even at $2,530,000,000,000, wherever it's at today, based on what they've done the last twelve months, you're, you're betting on the, the come, so to speak. So that that company has a lot to prove, but it's clearly a great company, and we have lots of confidence in in Andrew and his team to produce good results over the next decade.
00:38:30 · Scott Wilson, Harry Stebbings
[00:38:30] S0: Yeah. I mean, Cerebras specifically of... Like, for us, that, that was a really big position at the IPO. And so we took some chips off the table and put some hedges on even pre distribution, but we like Andrew and the team. So we'll continue to hold some of that. And I think, you know, it's, if you look at the current kind of KPIs of the business relative to expectations going out the next four or five years, it's tough to justify the valuation, even at $2,530,000,000,000, wherever it's at today, based on what they've done the last twelve months, you're, you're betting on the, the come, so to speak. So that that company has a lot to prove, but it's clearly a great company, and we have lots of confidence in in Andrew and his team to produce good results over the next decade. [00:39:08] S1: Scott, if you could do anything without retribution from any stakeholders, students, board, team, What would you do differently?
00:39:08 · Harry Stebbings, Scott Wilson
[00:39:08] S1: Scott, if you could do anything without retribution from any stakeholders, students, board, team, What would you do differently? [00:39:16] S0: You know, I would I would probably... There's this natural tension between what, like, we're here to support the mission of the university, and that's why we exist. But I also think, like, a 5% payout in certain market environments is, is tough long term, depending on gift flow. So I, I probably smoothed the payout over a longer period of time, but I understand that tension and, and, you know, it's great to grow the endowment and, and be able to see the impact on the institution. So I think that's a natural tension. I I don't think there's really much at WashU that if it makes sense for for the stakeholders and for the team, like, we... We've been able to accomplish everything we wanted to accomplish. [00:39:55] S1: Scott, you've seen many cycles now. You're a pro. Does this have a shakeout, or do we keep going on the meteoric wave that is superintelligence and AI?
00:39:55 · Harry Stebbings, Scott Wilson
[00:39:55] S1: Scott, you've seen many cycles now. You're a pro. Does this have a shakeout, or do we keep going on the meteoric wave that is superintelligence and AI? [00:40:04] S0: Yeah. Well, I I think there will be a shakeout. I don't know what the timeline of that is. Like some of these industries that have just had massive runs, historically, they were not great businesses, you know, and that was for like three decades. They were businesses that probably barely returned their cost of capital. And at some point they'll go back to being not great businesses, but in the short term, you know, if you used to sell a chip or memory for $3 and now you sell it for $30 and all that excess just falls to the bottom line. I mean, think you see that in the multiples. Like, I think some of these industries, right, you you buy them at very rich multiples and you sell them at low multiples because that's how cyclical companies work. But how long the cycle actually lasts, I think that's anybody's guess. [00:40:45] S1: Can I ask you, given what we said earlier, you mentioned, like, Nubank or, say, I'm just choosing, like like, an Uber or an NVIDIA of the world? These are comparatively very cheap companies based on a fundamentals basis actually, today. And then the privates are exorbitantly priced if one looks at fundamentals. And then I look at your statement earlier of wanting to be 70 to 80% in privates, and I just try and juxtapose.
00:40:45 · Harry Stebbings, Scott Wilson
[00:40:45] S1: Can I ask you, given what we said earlier, you mentioned, like, Nubank or, say, I'm just choosing, like like, an Uber or an NVIDIA of the world? These are comparatively very cheap companies based on a fundamentals basis actually, today. And then the privates are exorbitantly priced if one looks at fundamentals. And then I look at your statement earlier of wanting to be 70 to 80% in privates, and I just try and juxtapose. [00:41:09] S0: We are deploying all of this stuff that we're generating liquid back into public markets right now. So, like 70 or 80%, I, like, if we didn't have any liquidity constraints, think over time privates would grow as a percent. I mean, we're at the end of our fiscal year, we were 70 in privates, but a bunch of that has become liquid. So we're redeploying that. And we think the opportunity set in publics, particularly like non AI AI infrastructure related publics, it's a really good time to be investing in in sectors completely that we think are relatively protected, if not immune from AI. [00:41:45] S1: It's a bit of a blunt question, but you've had such a meteor... Like, $11,000,000,000 is an incredible capital accrual value appreciation for for WashU, and it's it's an amazing journey. You could do anything now, Scott. You could have every trillionaire, billionaire in the world pay you an exorbitant amount of money to join you on their superyacht and run their family office. Yeah. With respect, why
00:41:45 · Harry Stebbings, Scott Wilson
[00:41:45] S1: It's a bit of a blunt question, but you've had such a meteor... Like, $11,000,000,000 is an incredible capital accrual value appreciation for for WashU, and it's it's an amazing journey. You could do anything now, Scott. You could have every trillionaire, billionaire in the world pay you an exorbitant amount of money to join you on their superyacht and run their family office. Yeah. With respect, why [00:42:09] S0: why do It actually lies a lot. So in the nine years I've been here, we started roughly say eight... We've generated $17,000,000,000 profits on that original 8,000,000,000, and we've paid out roughly 5,000,000,000 to the university. [00:42:21] S1: I I mean, that's just showing off, Scott. Okay? But you but you could. And, obviously, WashU is an incredible institution, amazing, but, like, humans are humans. Yep. Why do you stay in? [00:42:33] S0: I'm super happy here. I've got a great board, a great administration, a great team, you know, and, I make plenty. I'm well compensated. So it's a great place to be. And I, yeah, I obviously had opportunities to go elsewhere, but I'm I'm very happy at WashU. If you if you spent time with my board and and the chancellor of the university, like, this is a great place to work. And, you know, I think, maybe more than half of your your fulfillment and enjoyment coming to work every day is who you get to work with. And, you know, from that standpoint, I'm just super fortunate. And you've spent time with my team. Like, that's... It's a really great team.