00:45:23 · Larry Aschebrook, Guillaume Moubeche
[00:45:23] S0: In one of your listeners' shoes, I would I would start from the first entity. I would dig through it. I would ask for all the documents. I would dip... Get all the way down so you can follow the tree all the way to the cap table, tie it out, get audited financials of each of the vehicles. It's it's onerous, and most people don't do it. And there are these SPV shops that are out there that this is their business, and many of them are great, and they serve a place in in in in the ecosystem. But there are, you know, not so great ones. [00:45:55] S1: Bad ones. [00:45:56] S0: And people need to just to pay attention, and they need to to do their own due diligence because there will be, in my opinion, stuff that comes out as these companies get liquid, and and it's inevitable that there is some bad actors out there. So as investors wanna play the space, you know, go to the reputable firms that do it, and there are those out there, and and and and find an opportunity. [00:46:21] S1: So when when you, like, decide to sell a position, do you actually use continuation vehicles, or do you like We tried that. [00:46:32] S0: We Okay. We tried one. [00:46:36] S1: And
00:46:39 · Larry Aschebrook
[00:46:39] S0: I would say that that industry needs to evolve from where it's at, especially in the growth tech space. The process that's currently put in place for CVs, and I understand why they exist, and it's a good business, and there's good returns to be had as the the investors in those vehicles. It's it's currently structured for a PE like transaction, not in the world that we live in every day. It's not meant... It's currently not set up to have success with managers that have underlying assets that three months is like five years in traditional industries. The assets move so fast. The best assets in the world are achieving greatness on a daily basis and growing at unprecedented rates that most of us haven't seen before. And when you overlay a complex m and a like CV process, because that's what it is, it takes months to get done. It puts a lot of risk on the transaction. We've... We did one. We had it very... All the way to the finish line, and we ultimately didn't close it because of the underlying assets move so much. And you also need the full support of the underlying portfolio companies, which, you know, in our space, they're very protective of who gets on that cap cable, and it becomes very difficult to get some of those transactions completed. So I do think the CVs, as an investor, because I'm an investor personally in some of the large players in the CV market, and they do great work, and there are great people behind it. I do think the the process needs to evolve, and I think if if those players want to be more and more around the hoop, so to speak, with the logos that are getting all the attention today, they have to change their process because it just fundamentally doesn't work for a g
00:48:37 · Guillaume Moubeche, Larry Aschebrook
[00:48:37] S1: How would you change it? Like, what would you change in the It needs [00:48:40] S0: to be handled like a traditional secondary, not an m and a. It just needs to it just needs to be very simple. It can be done in a matter of weeks. It shouldn't take six months. [00:48:53] S1: Okay. So it's like selling shares, putting them into a new vehicle, and then, like, I guess Very simple. [00:49:00] S0: It it it... No different than if you and I decide to transact on an individual name, just transact in 10 names real quick. Because time kills everything. And in our space Yeah. [00:49:12] S1: You know Thank [00:49:13] S0: you. Three three months, you just look at look at some of the businesses and their performances that have been publicly announced. In three months, it's [00:49:20] S1: It's insane. [00:49:21] S0: It's it's... The movement is... The companies raised two rounds of capital in six months. [00:49:25] S1: Yeah. So It's it's insane. And whenever you look at the the valuation that we're seeing today... So, yeah, Anthropic, close to like 400,000,000,000, SpaceX more than a trillion, OpenAI close to a trillion. Like, how from investors perspective do you like value these businesses? So for a lot of people looking at SpaceX, they might think, you know, like, okay. It's doing 15,000,000,000 in revenue. How do you make up, you know, that huge gap between the 15,000,000,000 and [00:50:00] S0: the TAM. The TAM is so big. No. [00:50:02] S1: Yeah. Yeah.
00:50:02 · Guillaume Moubeche, Larry Aschebrook
[00:50:02] S1: Yeah. Yeah. [00:50:06] S0: Look. I think it's a struggle. Right? It's it's... You're paying today for growth tomorrow, and you you you have to do your own work and and decide what's what's the right value to to enter and if you can get access at that value. I would say it's it's... You know, some of the AI native businesses are are easy... The larger ones, the first movers, the the clear leaders, consumer enterprise level, and the two LLMs you you mentioned, they're probably a bit easier to underwrite at those prices. You know? And and SpaceX is now a complex business. It's it's... When we invested back in 2014, it it was like, we wanna, you know, win some NASA contracts and build some spaceships. You know? That... It's very different today. And and the scale of it, by the way, is unbelievably massive. And congratulations. Talk about the ability to to to create something that nobody thought was possible. It... It's staggering to think about [00:51:08] S1: Never bet against Elon. No. Guess it's just... And and
00:51:08 · Guillaume Moubeche, Larry Aschebrook
[00:51:08] S1: Never bet against Elon. No. Guess it's just... And and [00:51:13] S0: remember bet against Elon is a good rule. I'm gonna add that to the... We have the g squared eight. Now it's gonna be g squared nine. Don't bet against Elon. Exclamation point. And my friends at Valor Equity would say, Larry, you know, and listen to Guillaume, he's absolutely right. But, yeah, I think it's difficult in... Fundamentally to underwrite. So how we how we do it is is we use public comps. Of course, in some of these assets, there are no public comps. You have to use a basket of comps. You have to see what you've invested previously and think... You know, the history doesn't repeat itself, but it often rhymes. The characteristics of great businesses really don't change. If if if if they can generate, you know, a significant amount of free cash and they're still growing, they're good businesses. It's just a matter of what price you pay, and can you get involved at a price of of of safety and a margin of safety embedded in it? And that's what we pride ourselves on doing, and sometimes we miss. We we we don't get the shiny logo because we can't we can't underwrite it, and other times, we come back around. You have terrific business. It's been all publicly reported in in in Stripe, and it's, you know, accelerating at scale. And that's unbelievable to see a business where one out of every $60 that transacts on the Internet flows through their platform. [00:52:32] S1: It's insane. I mean, one
00:52:32 · Guillaume Moubeche, Larry Aschebrook
[00:52:32] S1: It's insane. I mean, one [00:52:35] S0: of the businesses that got away early on, and now it's like an opportunity. But, you know, nine years ago, we could invest in Stripe. And how stupid was I for not doing it? It's like when the Spotify founders introduced me to the founders of Klarna, and I could have done it for, you know, $250,000,000 valuation, and I passed. So [00:52:56] S1: Yeah. Mean, I think we're almost running out of time. So to conclude, like, what would be one one tip you could give to anyone, you know, like starting a business from scratch and wanted to build something ambitious?