00:27:38 · John Collison, Toto Wolff
[00:27:38] S1: win win. Almost like an investment banker to some of these dot com companies. You probably wouldn't have described it that way, but you were helping them with financing. [00:27:45] S0: I was wearing cufflinks, an Hermes tie, and a pin striped double breasted suit, but eventually put it in in a cave and never wore it again. But there was another experience. But, no, it wasn't. It was it it it was actually a hybrid between sweat equity, early stage micro investments Yes. And equity kicker or options related to success. And that's how it worked at the beginning. And then eventually, we raised capital, not fund like structure. It was still my company, but we got two private equity, two venture capital companies in that each owned 10%. So we got real money and then Yes. Deployed some of that. [00:28:34] S1: And you also importantly had good market timing. Right? Because, I mean, for people who weren't around, the ninety nine, two thousand period was crazy, whereas you say, the valuations just became fairly disconnected from reality, and then they crashed hard shortly afterwards. And so a lot of the people who did well in that ninety nine, two thousand era were people who were optimistic enough to get into these companies, but then skeptical enough to sell some of the proceeds rather than just watching the account
00:28:34 · John Collison, Toto Wolff
[00:28:34] S1: And you also importantly had good market timing. Right? Because, I mean, for people who weren't around, the ninety nine, two thousand period was crazy, whereas you say, the valuations just became fairly disconnected from reality, and then they crashed hard shortly afterwards. And so a lot of the people who did well in that ninety nine, two thousand era were people who were optimistic enough to get into these companies, but then skeptical enough to sell some of the proceeds rather than just watching the account [00:28:59] S0: balance go up and then down. And lucky. So in in our case, within two years, we went from actually me pitching an idea to an entrepreneur that didn't have a company around him to an IPO Mhmm. Which was crazy. You know, we found ourselves in the after IPO party, which we used to do back in the day, and we thought that we had zero value three months ago and now a €100,000,000. You know, one of those companies that I pitched is... I I found out that there was a web portal, free SMS web portal. It was called sms.at. And what you did, basically, you wrote your your SMS on the interface and at no cost. And Austria back then had around 9,000,000 people, and 2,000,000 were using this Mhmm. Because SMS were expensive. [00:29:49] S1: SMS cost money back then. [00:29:50] S0: Yeah. Cost money back then. [00:29:51] S1: 9¢ a message.
00:29:51 · John Collison, Toto Wolff
[00:29:51] S1: 9¢ a message. [00:29:51] S0: Yeah. It was a lot. Yeah. And so I found out that this was run by a teenage boy in Austria in Graz. Visited him. And, basically, with the model, I'm gonna raise money for your company, which then was very successful. You wrapped it into a legal entity. When I said to him, how how do you do that? I mean, he said, I'm hacking. I'm hacking into the SMSC servers of the big tel... Telcos. I said, okay. And then... And I said, well, eventually, they find out that the data volume was bigger than, let's say, on normal days, and they shut me down. And I said, okay. And if that happens, what do you do? Well, I have a plan. So for example, today, I'm running on Nigeria Telecom, and next week, it's gonna be Norway. So, okay, we put it in an entity, and I started to visit Telecom Austria, the biggest Austrian and T Mobile then, the two biggest Austrian telcos. And they said we hate SMSAT. We absolutely hate it, but we can't shut it down. So what is what is it we can do together? And, eventually, you know, within two years, that nonexistent company was sold for 250,000,000 to T Mobile. [00:31:01] S1: For 250,000,000? Yeah. Wow. So This people forget. 2000? This is the year 2000? [00:31:06] S0: That is obviously the... [00:31:08] S1: Yeah. It was just... Was a different era. [00:31:09] S0: Different era. Yeah. You know, maybe the kind of 250,000,000 today, when you look at the AI situation, that's gonna be 25,000,000,000. [00:31:17] S1: But on a relative basis,
00:31:17 · John Collison, Toto Wolff
[00:31:17] S1: But on a relative basis, [00:31:18] S0: yeah, relative, it was unbelievable and enormous money and valuation. So... And this was the lucky moment, actually. Not only And they bought [00:31:25] S1: it to shut it down? [00:31:27] S0: No. They bought a large part of it and integrated it in... Took over the customers and integrated it in their systems. So what happened is we signed the deal in Bonn, which was Deutsche Telekom back in the day. T Mobile was a subsidiary of Deutsche Telekom. And I flew back with my CFO, Austrian Airlines, And he was fifteen years my senior and was running the m and a department of the Austrian National Steel Company. Mhmm. And we were sitting in Austrian Airlines and got a glass of cheap bubbly and said that was a good transaction. And he said something's going wrong here. And I said, why? He said that business with literally tiny revenue with a lot... But with a large customer base. That means with lots of potential, but no way of of actually knowing how to monetize it or how to repay the CapEx investment. There's quite some correlation to the current markets now. Was valued as... At this absurd... With this absurd amount. In... Compared to my specialized Alu business that he had that was generating 30,000,000 in in EBIT. So something's going wrong. And I said to him, nothing's going wrong. The Internet is gonna dominate, and can't you see the amount of customer... Customers that [00:32:46] S1: The new paradigm, your old fashioned.
00:32:46 · John Collison, Toto Wolff
[00:32:46] S1: The new paradigm, your old fashioned. [00:32:48] S0: Exactly. Exactly. And he said, no. No. I'm sure this is this is gonna collapse. The valuation's absurd. And we had a... We listed another company on the stock exchange, which was between pitching into the bankers that scratched the eyes out of each other to do this to the day of listing in three months. And and he said, I promise you, we need to look at that. I don't think this is sustainable. Mhmm. And that impulse that he gave me from this one hour flight from Bonn to Vienna was enough to look at our whole portfolio of nine investments. [00:33:21] S1: Mhmm. [00:33:22] S0: And we decided to exit all of them. And that was started end of ninety nine and went all through 2000. Obviously, when the market collapsed in spring two thousand, people were still hoping for a rebound. It was just a glitch. Yes. And then the the market never came back, and we exited all of those investments. They are one. Yeah. An Israeli startup that we couldn't exit. And and we were out. And what remained was a skeleton of a venture capital company, very much downsized Yes. To continue to look for opportunities whilst having the philosophical idea of this is not gonna come back for a long time. [00:34:05] S1: I think this is an underrated aspect of good investors is knowing when to sell. And I think there's an incentive in the investor ecosystem where they all like talking about, oh, we found this founder very early, and we, you know, [00:34:19] S0: bought the stock and, you know, it grew and grew
00:34:19 · Toto Wolff, John Collison
[00:34:19] S0: bought the stock and, you know, it grew and grew [00:34:21] S1: and grew, and, you know, we we want to be on the journey forever. I think all of the myth making tends to be about getting in early and being a very long term partner. I noticed a thing that doesn't get talked about, but is a very common trait amongst the most successful investors, is they have this spidey sense for... You know, it's like the movie Heat. You gotta you gotta know when to get out. And a lot of the very good investors have this very commercial sense for... Again, you're in this period, like ninety nine, two thousand, and it's an important moment to sell. And it doesn't get talked about because it sounds cowardly or it sounds like you, you know, you don't believe in this company that you made a lot of money from because, you know, you're you're now a seller, but it's, it's an interesting aspect. [00:35:06] S0: I came from a very financially or generally poor family background. No money. And financial safety and opportunity was always a very strong driver for me. And I owned 90% of that company. It wasn't a fund. I wasn't managing anybody else's money. [00:35:27] S1: It was a corporate entity. You had your own venture investors,