00:03:11 · Guillaume Moubeche, Larry Aschebrook
[00:03:11] S1: So so when it's, like, 2011, you want to make, like, an investment in Uber or Twitter at the time. Like, how do you do it? Like, do you message the founder directly? Like, do you send emails to employees? [00:03:23] S0: There wasn't a robust LinkedIn back then. And, yeah, it was... The universities they worked at all had alumni lists, and and I worked at five different major universities around the country in The US. And I had those lists of alumni, and I just started calling them, folks that worked at Twitter and early Palantir and Spotify and, early Uber and many others, and just just started offering to buy their stock and didn't really know how to actually go about doing it, but just kinda made it happen. [00:04:03] S1: So, like, I own a software company. And, obviously, like, if an employee wants to sell their share, like, the the company always has, like, or in most cases, I would say, like, a roofer. How do you, like, overcome that? Like, so
00:04:03 · Guillaume Moubeche, Larry Aschebrook
[00:04:03] S1: So, like, I own a software company. And, obviously, like, if an employee wants to sell their share, like, the the company always has, like, or in most cases, I would say, like, a roofer. How do you, like, overcome that? Like, so [00:04:18] S0: Well, on, there wasn't... It was so taboo, as you mentioned in the intro, that it wasn't widely done. I mean, secondaries, now I know, were were mostly reserved for fund stake purchasing and also large PE deals. The growth venture ecosystem really didn't have many secondaries. In fact, there was the the new regulation coming out following the financial crisis for managers who spent their capital on the secondary market that most traditional managers wanted to stay away from. They were they were afraid of that. Now you see many of many managers opting in for the registration. And so I think that there was just a broken market, and employees, you know, like the idea of liquidity, and companies just kinda turn their turn turn their back on it and didn't really didn't really care. There... It was so small. It wasn't meaningful in the beginning. Now the industry has really evolved, and we're we're thankful to be one of the first movers to to now be in a position to to get the phone call versus making all the calls. [00:05:32] S1: So so now how exactly does that work, like, versus back then when you want to to get into, like, a a secondary transaction?
00:05:41 · Larry Aschebrook
[00:05:41] S0: Well, I wouldn't advise anyone on deploying capital the way I did on the early days because it was Mosaic theory. It wasn't full information. There was very little connectivity to the actual management team members. You know, today, it's it's it's very involved with the management team members. We partner with the issuers. We work with them directly. We support them staying private longer. We have a whole tool kit that we've developed over fifteen years to really help the company stay private longer. It's self fulfilling, of course, because we could do a lot of work on the secondary market then. But, yeah, the market's mature today. In the beginning, it it didn't exist. And so today, we underwrite like a primary investor. We wanna touch and feel the companies. We wanna talk to management. We wanna have full data. In the beginning, it was, you know, hiring some analysts out of, you know, India to write memos for me. And when I was working during the day, they were sleeping, and they were working at night when I was sleeping, and and it worked well. And there was a... It was really a business of of one in the beginning, and now we've got a... Very thankful to have such a tremendous team at G Squared, and the growth has been unprecedented for us over the past several years. And the returns have have been very good for our LPs, and and we're kind of at the sweet spot of the intersection of really awesome businesses and access. And that, to us and any manager in the space, primary or secondary, is is what you're searching for. And in some cases, that is the definition of success.
00:07:12 · Guillaume Moubeche, Larry Aschebrook
[00:07:12] S1: Nice. And can you walk us through maybe, like, the the whole, like, Spotify story? Because I know it was a a big bet of yours in the in the early days. [00:07:24] S0: You know, what an incredible business that Daniel and team have built at Spotify and continues to amaze me today, especially now with the kind of integration of of full agentic AI into their their business model. It continues to evolve and just inspire artists and and compensate artists around the world, So congratulations to them. In the beginning, you know, like the early... The other early investments, I loved consuming music. Got to know, Spotify through through that as a consumer, wanted to buy stock, found employees that had shares, sent a notice to the company, and they didn't respond. So, you know, I think for me, it was natural. Others say it was... Is probably not so natural as I just got on a plane with a young analyst that worked with me at the time and went to Stockholm and begged for a meeting. And finally, they gave me one. And that's how the journey started. And [00:08:36] S1: So you, like, you went to their office? Or
00:08:36 · Guillaume Moubeche, Larry Aschebrook
[00:08:36] S1: So you, like, you went to their office? Or [00:08:39] S0: Yeah. Went to their office. You know? Stayed. At no appointment. Just kept showing up day after day. And finally, a young legal officer, I think, took pity on me sitting in the lobby and and my colleague and invited us back and basically told us that, you know, there there wasn't an opportunity, and we just kept asking. And and, eventually, they started sending a bunch of sellers to us. It got to got to a point where we put up a sign in their break room that, you know, we will buy your shares. And I think Spotify and a few others were early in this movement to embrace the idea that you could stay private for much longer than most, help your employees, keep them from going to other public tech companies where there's value immediately in the paper they hold. And it was a a good marriage for a for a long time. You know, there was some stress along the way. They sent us some really large blocks of stock that we were so small. We didn't have the ability to to buy right away, and we went out and traveled the world and raised the money to to close it. And they were very fond memories for me, the Spotify journey. And when it went public, it was a massive celebration for the company, but also for our business. It really changed the trajectory of G Squared. [00:10:04] S1: So you... Did you, like, keep the shares of Spotify after, like, it goes public, or how how exactly does that work?
00:10:04 · Guillaume Moubeche, Larry Aschebrook
[00:10:04] S1: So you... Did you, like, keep the shares of Spotify after, like, it goes public, or how how exactly does that work? [00:10:12] S0: Yeah. So for us at G Squared, we're focused on a kinda cash in, cash out situation. So we we send cash to our to our LPs post public sometime. We develop a strategy on on slowly moving out of the position after the company doesn't need our support anymore. But building that position in Spotify was was one that I think really set the framework for how we were going to establish our business going forward. Now it came with a lot of stress. There was very large transaction they sent to us. We didn't have all the money. We had to find it. In fact, we... I actually had to personally borrow some of the money to close the transaction, but I didn't have anything to back up the loan. So I put a lot of risk in it, and it worked out. [00:11:08] S1: Yeah. Great rewards. [00:11:11] S0: Yeah. I mean, it was a very tense time in in G Squared's history, but, you know, the conviction [00:11:19] S1: Did you have, like, such a conviction at the time, like, that your loan would be reimbursed? Like, how do you build, like, such strong conviction on a company? Was it because you had access to all the data and you knew that it was going to be a hit or, like