The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:57:27 · Rory O'Driscoll
[00:57:27] S0: You're all sweet, Harry. I know you care so deeply. But no, just comment. Yes, I'm in the position of having an ownership interest, but not in any way being actively involved. So not having any insider information. But I will admit this surprised me. I mean, it super surprised me. Aura had planned to do an IPO. They were a long way down, meant to price this week Wednesday. Right? They went into it feeling very strong. In fact, for the record, they had Morgan Stanley, Goldman Sachs, and JPMorgan. I mean, all the people. Mean, I there was no people left that you couldn't have. Right? So it's not that they had the dummies here, people. And then the second thing is, you know, it's a profitable, it's a big company, consumers know it, it's a kind of thing that should be very doable. And the third interesting thing is when they first filed, one of the largest investor Forerunner, who I think are super smart, said they're going to sell all their position, which I've been doing a long time. I'd never seen someone in an IPO being able to sell all their position. Right? So I was like, ballsy call and give you credit because consumer electronics is hard. But the fact that a priori they'd said, we're going to do this. To me, you wouldn't say that unless you are highly confident the deal is getting done. Because it's always harder to get a deal done when there's secondary action. And when the more secondary action there is, the harder is to get a deal done. Do you understand me? So having leaned in upfront to say, effectively, we're doing this with a primary and a bunch of secondary, right? And we think we're getting a lot of secondary off the table to have to walk it back to we're gonna downsize the deal, and now we don't like the price.
00:58:49 · Harry Stebbings, Rory O'Driscoll, Jason Lemkin
[00:58:49] S3: Do you think it's the right decision, Roy? [00:58:51] S0: Well, in one sense, because it was a huge secondary component, the secondary buyers who are venture people on the board, it really matters to them the price they sell at because they're actually crystallizing it versus, you know, if the company's taking 10% dilution and it leaves a little money on the table, then with all due respect to Bill who has been positizing on this, I'm gonna say something awful. No one really cares. The stock pops 20%, everyone moves on, and the stock is trading nicely, and it's set up nicely for secondaries down the line. That's the normal move. Right? If you're actually selling your entire position at the IPO, and you think you're gonna get $22 a share and suddenly you're getting 18, that's gonna reduce your entire venture return by 20%. So you become very price sensitive. So maybe maybe they felt they could get the deal done any time and they only wanted to do it at a high price. That's the positive version of the argument that the investors liked the deal, but just wouldn't pay up, and they decided, hey. At that price, we prefer not to transact. It's a totally rational outcome, but it's kind of a weird one. [00:59:46] S2: You really think Tom Hale decided not to do the IPO because 4Runner couldn't get the price they wanted? I don't I [00:59:51] S0: don't know. I don't know. That's what I'm saying. I'm trying to piece it through because [00:59:54] S2: It's possible. Don't get me wrong. He's not a founder, but I find it all the effort that went in. He wants his liquidity.
00:59:54 · Jason Lemkin, Rory O'Driscoll
[00:59:54] S2: It's possible. Don't get me wrong. He's not a founder, but I find it all the effort that went in. He wants his liquidity. [01:00:00] S0: If I'm the company, I'm bummed because I always think doing an IPO... I've been in IPOs that nearly pulled on the last day before. And, you know, it's like those bobsled races. My opinion, I always tell people just the minute you unveil the s one, the minute it goes public, you're jumping in that bobsled and you're sliding to the bottom and there's very few easy way out. Before you unveil, you can do what you want. But once you unveil, this is a hardest thing to do, which is to pull a night or two before the thing. If it was an enterprise company, it would be even harder because then you get all these second order questions. Are they at risk? Are the dynamics? But because it's consumer, consumers don't care that much. Because it's already profitable, they're not at risk. So it's not fatal, but it can... I'm with you. It's like a whole bunch of hard work to get it this far, and then a bummer at the last minute. It sucks. I'm like, I don't know why that happened. I'm a bit bemused, to be honest.
01:00:49 · Jason Lemkin, Rory O'Driscoll, Harry Stebbings
[01:00:49] S2: It does soften it slightly. The employees had 534,000,000 in tender offer just a couple months ago. It does soften the blow, but it's definitely a bummer. Like the whole, if you've been on the other side of it, going public, there's just so much emotion, right? It's a bummer if the stock price is lower than you thought. It's a bummer if the pop is less than you thought. What I thought when I read it, I was like, man, there's just, there seems to be so much liquidity. We talk about all the M and A deals when we started it, but man, you can't get a damn IPO done. [01:01:17] S0: And that's what, I mean, Dan Primmick made that point. He said, don't like it because of market conditions. We are 1.4% of the S and P all time high. The Schiller PE is at an all time high. I mean, how much better does it have to be big guy? Because I agree, it was like, And it would be interesting to see any of these other non anthropic IPOs. I'm not sure what's up next. I know what it is. Is it new, not new scale? [01:01:40] S3: It's Enscale. [01:01:41] S0: Enscale. Yeah. Yeah. That's another highly aggressive compute dependent one to Jack's point. The interesting thing when that one goes.
01:01:41 · Rory O'Driscoll, Jack Altman, Harry Stebbings, Jason Lemkin
[01:01:41] S0: Enscale. Yeah. Yeah. That's another highly aggressive compute dependent one to Jack's point. The interesting thing when that one goes. [01:01:48] S1: What'll be interesting too is we haven't really seen any of the like AI native companies go out yet. My guess is a lot of them would trade very well because public markets don't have enough exposure to them. But I think it's scary to be the first one. It's scary to do it before the labs have gone out and everybody can see how the markets react to all of those things. So I think there's a lot of companies waiting in the wings. And I think if the market holds on, I would I would expect that in 2027, there will be quite a few of these. We just... It's interesting that we haven't seen one yet. [01:02:17] S3: Which will be the first, Jack? [01:02:19] S1: If I knew that, I'd be really good at my job. I'd be able to pick them all. I don't know. There are many that can choose to go out tomorrow if they wanted to, but it'll just be a decision with the management teams and the boards to the point of this, you know, the... Or a conversation. It's... It it is not a question of can they be public. It's just what price do they get, are they happy with it. So it's... There's a lot of companies who just... Know, it's at their option right now. [01:02:40] S3: On the other end, you've also got Monzo, the British bank getting inquired for [01:02:44] S1: Oh, Roy, why do you not like [01:02:45] S0: that one? Come on. I love [01:02:46] S3: that one. [01:02:47] S0: No. I I think it [01:02:48] S2: gives me a chance
01:02:48 · Jason Lemkin, Rory O'Driscoll, Harry Stebbings
[01:02:48] S2: gives me a chance [01:02:48] S0: to bitch. No. I know. No. I'm sorry about my face, Howard. You... I'm really excited to do Monzo. I have stunningly opinions on this. [01:02:54] S3: For everyone, Rory has an astonishing RBF, which is a resting bitch face. But whatever you say is continuously just miserable. But Monzo, 8 to kind of 12,000,000,000. There's quite a range now on the suspected acquisition price by Newbank. Honestly, I was really surprised by this. David is very focused on winning The US. Buying Monzo, which is bluntly a phenomenal asset in The UK, a really strong, strong British bank, but it... It's in The UK. To bite off The UK and The US at the same time, I thought was respectfully very strange. David's brilliant, so much better than me, so he knows what he's doing. But I was shocked to see this news. [01:03:32] S0: Put it another way, it is more surprising to see that NewBank wants to buy than it is to see that Monzo wants to sell. That's effectively what you're saying, Howard. [01:03:41] S3: And I agree with Monzo wanna sell for sure. They're too... They're way too small to be significant in a US public market, and that the European public market's a shit ass. And so you've got... You... You're praying for someone to come and save you. [01:03:53] S0: Agreed. That that is funny because that's all you're gonna take. Yeah. That's exactly right. Yeah. So the question is why new bank? Because in fact... And the interesting thing is the stock market agreed. I think the new bank stocks went down on this. Right? [01:04:03] S3: $6,000,000,000. Yeah.