This is Master's in Business with Barry rid Holds on Bloomberg Radio.
This week on the podcasts, What can I say once again? I have an extra special guest. Brad Gersner is a founder and investor in technology startups. His firm, Altimeter Capital runs over ten billion dollars. That's after returning a big chunk of capital and profits to their investors. He's been doing this for about twenty years. They invest primarily in private and public companies. They're no longer very much of a seed investor. Although Brad himself was a very successful entrepreneur.
He either started or co founded, or came in to various startups, four of which have had substantial exits, to say nothing of the companies that he's invested in either late stage, private or early IPO and has done exceedingly well with. He has been involved in more than one
hundred IPOs. This is really a fascinating conversation, not just because of his acumen as a venture investor, but one of the things that Brad is passionate about is making every child in America feel like they have a stake in the country, they have some skin in the game.
And his idea for starting every newborn in the country with a thousand dollars investment in the S and P five hundred, or as he calls it, invest America is gaining traction not just amongst venture capitalists and corporate America, but on both sides of the isle in Washington, DC, and this may actually become a real thing. I thought this conversation was absolutely fascinating. I think you will also with no further ado my discussion without times brad Gersner.
It's great to be here, Barry, it's great to have you.
I'm kind of fascinated by your backgrounds, and before we get into what you do, we have to talk a little bit about how you got to where you are today, because it's a pretty wild ride. Starting with you're working with Peter Leegal of Forest River that's later sold to Warren Buffett and Berkshire Hathaways, but you're operating as his chief of staff. Tell us what you were doing with Forest River.
Well, thanks for having me. I'm a big fan of the show, and you know, I grew up in rural Indiana. I'm fifty two years old, so it is nineteen, you know, early eighties. My dad was first generation college became an entrepreneur started an auto parts manufacturing business. He chose a challenging time. There are double digit interest rates in America, double digit inflation. The Japanese were attacking our auto industry, and as you remember, that part of the world was
known as the rust Belt, yep. So it was tough times in America. You know, growing up where I did in Northwest Indiana. But you know, when I got to high school, I realized my dad's business didn't make it. I had to find my way out of this town. I was going to have to pay for college. So I had a job. And you know, Elkhart, Indiana happens to be the r V capital of the world. And there was a gentleman I got introduced to named Pete Legal.
Pete Legal had built an RV company called Cobra, sold it or partnered with private equity, had a bad experience, left that and said I'm going to do it over again, and he had a little startup RV company called Forest River. Pete's an absolute force in nature, and you know, so when he asked me if i'd come be his right hand guy, I had no idea what that meant, but
I knew i'd learn a lot. So I worked there the summers of my junior and senior year, and then I'd worked throughout the year a bit, and I learned so much from Pete. But Pete was one of these guys. He didn't spend a lot of time analyzing right the
way an entrepreneur does. It is the ab test. They're prone to action, right, right, So Pete would say that, you know, jump in the car with me and we go to a competitor's lot and he'd be measuring, you know, the dimensions on the new RVs out from the competitors on their lot. He's like, we don't need to waste money on expensive architects. We can just you know, do
this ourselves run a better, lower cost operation. He knew about competitive modes, Like I say, Pete knew about Michael Porter's five forces, all the stuff you learn at Harvard Business School, but he learned it by ab testing it in the real world. And so it was a real pleasure to work for him. And yeah, he went on to that became the biggest RV company in the world, would later sell it to Warren Buffett, and Warren writes about him extensively in his letters.
So eventually you get your jd. From the University of Indiana, you don't really strike me as a lawyer. Not only that, two years later you become Deputy Secretary of State for Indiana.
So so that happened. So you know, you're you're you're highlighting a random background. And we'll come back to this. I do think when I look for analysts today, I look for interesting backgrounds. You know, all of these things. I would say, the thing that connects them is just voracious curiosity about the world of politics and you know, economies and trying to make sense out of it. But because my dad went broke, I have three siblings, so there were four of us his father, so my grandfather,
he came to the grandkids. He sacrificed everything. This was a self taught man. I remember his bookshelf. He had physics textbooks and biology textbooks, you know, and and he would just read them. He couldn't afford to go to college, and so he came to the grandkids and he said, you can't be entrepreneurs. You have to become professionals, law school, medical school, become an architect. But we got to get the family back on track, right, And so really to
honor his wish, I went to law school. As it turns out, it's incredible training in just how to think analytically.
I love that take. That was my experience as well. But you kept going. You said, Hey, if law school is good, what about business school? And off to Harvard Business School you go. What was the career path? What were you thinking about? From politics to law school to business school.
Well, the truth of the matter is I was lucky enough one I came back from studying overseas to work for an incredible statesman, Indiana Senator Dick Lueger. He was nineteen ninety ninety one. He and Sam Nunn were denuclearizing the world with the Sam Nun Bill. This was post the fall of the Wall, the end of the Cold War. It was exciting times. And I just hit it off
with this incredible man. And so when I graduated from law school, he pings me one day and he said, hey, I would like for you to accept an appointment as deputy secretary of state. And it was really a launching pad in Indiana for higher political office by who became our governor and a US senator had been deputy secretary of state. So I knew what it meant, but I
took the job. I got there. I think it paid sixty thousand dollars a year, and I realized, you know how poor I was, and I had grown up poor, and I didn't want to spend the rest of my life begging for money. So the truth is, I thought to myself, if I could get into one of these fancy business schools, I'll go there, I'll figure out how to make a million bucks, and I'll come back and I'll run for governor. And that was twenty five years ago.
Well, if you ever get to the million dollars, you can run for governor.
Right So, Harvard Business School, it was a transformative time nineteen ninety nine two thousand. The Internet was blowing up and that would change really everything.
So you joined General Catalyst right out at a business school, and then par Capital Management. Tell us a little bit about both of those experiences at fairly established venture funds.
Well, at the time, there was no General Catalyst. It was nineteen ninety nine, was going wild. There were some established venture capital firms in Boston, Matrix, Charles River, Graylock, High Highlands, et cetera.
Bain.
But there are these two enterprising young guys, David Fialco and Joel Cutler, forces of nature, and they wanted to start a venture firm, and so we knew we had to put together a launch deal in order to launch this venture capital firm. I help them put together that launch deal.
Wait, so when you joined General Catalyst, it wasn't already established.
No, in fact that in fact, I think they were still investing money off their balance sheet called FC Capital. Fialco Cutler Capital gotcha.
Okay, all right, now that may that chronology.
Makes This was an early online travel company that we started. We would eventually not only eventually. So that was nineteen ninety nine. I was still in business school helping them incubate it. I became co CEO of the business and we sold our stake in the business to Barry Diller in two thousand and one. You know, the Internet had crashed, but our business was working really well. It was fortuitous and on that succes well launch deal they were able
then to go raise General Catalyst one. I learned a tremendous amount from them. They're both still dear friends. But one of the things I learned in that first startup, I had two guys on the two investors who were not traditional venture capitalists. One was Seth Clarmen, the founder of bow Post Sure, and the other one was Paul Reader, the founder of Park Capital. So these guys would be bucketed as hedge fund guys.
Okay, not traditional vcs.
But the truth of the matter is, if you think about Warren Buffett's hedge fund, Seth Klarman's hedge fund, Paul Reader's hedge fund, they never quarantined themselves to just public investments. They just made great investments. Sometimes they were private, sometimes they were public. And so I was really a believer that this was going to be the future of venture capital.
The companies were going to scale faster, that there was going to be a lot of information flow that you could extract out a venture into the public markets and vice versa. I had an appetite for both the public markets and the venture markets. So I went to Paul, who was the founder of Park Capital, and I said, Hey, how about if I build your technology practice, I'll run a public sleeve and I'll also run a venture sleeve in technology. Paul was crazy enough to invite me on board.
So wait, at this time, you really didn't have a whole lot of investing experience. You were both a lawyer and a business school graduate, so you had a lot of academic knowledge. What was that transition like once you're in the trenches and actually deploying real capital.
Yeah, so what I mentioned my grandfather, you know, he sacrificed everything. So it was a surprise when he passed away that we learned that he left one hundred thousand dollars twenty five thousand to each of the four grandchildren. And you know, I vowed on that day that I'm going to I'm going to multiply this money. Like this guy sacrificed everything, I'm not wasting it. And you know, so in law school, I went and got my Series seven and sixty three. I started plotting stocks. I started
thinking about public market investing. I started doing some of my own public market investing. And you have to understand what this felt like for a kid on the outside looking in who never had money for the first time to buy a stock, to make some money, to sell a stock. And so I would say I had an
appetite for the public markets. When Paul met me, I was modeling companies like Priceline in my spare time and investing out of my you know, probably Fidelity account at the time, and Paul said, hey, I think you would be good in this hedge fund business. And I said, Paul, I don't know anything about managing a public portfolio. But the deal we made with each other, I actually said to him, I'll come work for free. I said, you just have to agree to have lunch with me every day.
If I love the business, I'll probably start my own. Because by this time I had started and sold a couple companies and I knew I was an entrepreneur. And you know, I will tell you I still talk to Paul every week. He's an incredible friend, an incredible mentor, and a super investor.
You have one of the wildest backgrounds. It's really quite amazing to me seeing how you were driven and you were running pretty fast and you really didn't know in what direction you wanted to go, and once that came into focus, lots of pieces fell in quickly. Now you're running Altimeter Capital. You launched it at a really fortuitous time fifteen years any second thoughts that was this what
you were born to do? How does it feel having spent so much time not knowing exactly what direction you want to go, and then suddenly it's all falling into place.
You know, you always have to contextualize those moments in your life. So I had started a third company called Room seventy seven that we had end up selling to Google. I had just gotten married in the fall of two thousand and seven. I had my first child in June of two thousand and eight, and I told my you know, you know, very pregnant wife at the time. You know, we didn't have a lot of money, that I was
going to leave this secure job. Now the first half of two thousand and eight, I was doing pretty well in the fund. I think I was up twenty or twenty five percent, and so I was feeling pretty good about things. I said, you know, now I've been thinking about starting my own firm. Now's the time I had soft circled a couple hundred million dollars from some endowments. These are folks who said, we'll give you money, we think you're good at this, we want to help you
launch your own firm. And explicitly what I was going to do is move to Silicon Valley and start a crossover firm by a founder so I had started three companies. This was somebody who was venture first, public market second, and I thought that was a really unique wedge into the venture community in public investing. But of course I didn't know the world was going to melt down in two thousand and eight. So by August the world started melting down. Remember I've got a three month old child,
and September rolls around every morning. Every morning, I'm on you know, watching NBC. It's gapping down five percent, six percent. Advisors were calling me saying, don't leave your firm. The world's ending. This is a terrible time. But what I had was having started three other companies on the back of a napkin. I knew what it felt like to be in a windowless office on the back of a napkin by yourself. And I just said to him, the horse has left the barn, like I'm doing this and
I'll have whatever money I'll have. And I knew that Seth Klarman had started with very little money in eighty one. Paul Readers started, I think with less than five million dollars. In nineteen ninety one, the SNL crisis, Tiger Chase had started, you know, in the wake of the Internet melting down in two thousand, so a lot of folks who I knew and respected had to stress ERA firms. So I
started with less than five million bucks. My first trade I bought price Line on November one, two thousand and eight. Last week we celebrated our fifteenth anniversary, and I would own price Line. I bought it when I was at par We bought it, you know, at I think it was ten bucks a share. We would own it when it was over two thousand dollars a year.
Unbelievable. So you start three separate companies. NLG eventually gets sold to Dillar's ic open Lists, which goes to march X, and then Faircast gets sold to Microsoft. Am I missing anything? Well?
The third company I starts, Room seventy seven that Google bought, Faircast, was an investment, a Series B investment we made in two thousand and five. I believe, in fact, we backed the head of artificial intelligence. Listen to this very yeah, two thousand and five we backed the head of artificial intelligence.
People don't realize AI has been here for.
That was my first AI investment. Two thousand and five. We back it. He was out of the University of Washington. He had an idea for being able to build predictive analytics into the future movement of airline ticket pricing using early AI technique, and we would go on to sell that business to Microsoft in two thousand and eight. Now here's the interesting part of the story. The person who bought Faircast in two thousand and eight for Microsoft was Sacha Nadela.
Oh really, he.
Was running bing at the time, right, and he was buying this as a search business into the search platform. And I said, I had dinner with him the other night, and I said, do you remember the conversation we had when you bought fair Cast And he said, yes. What I said was, we'll never beat Google with ten blue links. We have to get to answers. They think about that. Fifteen years before chat gpt started producing answers, Sacha knew that that's where they had to get to if they
were going to leap for all Google. Such a fascinating and.
Here we are, and they really put fear gun to Google with chat GPT. It was incredibly disruptive.
I think, you know, I've had the true luxury of investing into what we call four super cycles. You know, I think Sacha calls them platform disruptions Internet, mobile, cloud, and now AI. And I've said in several places I think that the platform disruption around augmented intelligence is going to be bigger than the Internet itself. Now follow me on this. If you think about what AI is already doing for the enterprise, we're seeing thirty to fifty percent
productivity improvements in engineers. There's never been a technology in the history of technology. There's never been a tool that increases productivity almost instantaneously by thirty to fifty percent. Call centers are now fifty percent more productive, So you're seeing margins explode as people are able to run their call centers more effectively. Sales centers are more productive. So you want to know why Meta doesn't have to cager its
employee head count at forty percent anymore. You want to know why Dara reported for Uber that again their number of employees was down quarter over quarter. I wrote this letter a year ago, Time to get Fit. It was an open letter I published ta Meta. You know Mark would go on to write his letter Year of Efficiency. This is what we're seeing. The power of AI is unleashing incredible potential within the enterprise. And then look at consumers. I was speaking at the Javit Center, two thousand people
in the audience. I asked, how many of you have used chat GPT in the last two days as a replacement to Google. Half the hands in the room went up. That is the first time in twenty years there's been a challenge to Google search monopoly. And Google search monopoly represents over one hundred percent of the profits of the business. So this is one of the most fascinating times I've seen in my twenty five year career. And we're just getting started. The irony of.
What's going on with Google is, and I'll use a dirty word, a lot of the big tech companies having going through a process that Corey doctor calls and notification and Google search results have become worse and worse. It's festudent with ads. Pick a company, Amazon, Apple, Microsoft, any large tech company. At a certain point they kind of lose touch with what made them so successful in the first place. So I don't use Google half as much
as I used to. And before I start the research process, I use a little app called Perplexity, which is a pretty decent AI And who is Brad Gersner in upcomes like pages and pages of information organized in such a useful way. It's not different than what I would have found from Google, but it saves me ten steps in between.
At the end of the day, you know, a lot of the information on Google you could have also found in a card catalog in a library, but you would have to drive there, you would have to open the card catalog, you would have to go find the periodicals, you would have to find the books, you'd have to read them yourself. So really, when you think about it, I described Google, it's the largest card catalog in the history of the world. Right, it's ten blue links, but
it's an infinite number of blue links. But you have to open the blue link, you have to read the information yourself. And you know, So I did this experiment the other day. I was lucky enough to be having dinner in Omaha with Paul Reader, you know, and Paul and I were flying back to New York, and I needed to know the answer to the question what is
and we'll talk about invest America in a bit. So as related to that, I wanted to know what was the aggregate amount of corporate matching dollars for four oh one k's on an annual basis. I said to Paul, you use Google and I'll use I'll use chat GPT. I got the answer instantaneously. It took him three or four minutes of hunting and pecking around. It was full of ads about four oh one K providers and everything else. And the reality is this is a was a better
tool simply because it made us more productive. In the moment. Google is an extraordinary business. A healthy Google is good for Silicon Valley. The challenge is they are facing a massive innovator's dilemma. The organizing philosophy principle for the Internet for twenty plus years has been Internet search, and it's changing. So I said to somebody the other day. They said, yeah, but Google's got AI. You know, they've got Barre, They've got this and that. I said, I will stipulate. I
will stipulate they'll be successful in AI. But do you think they can cross the chasm? And on the other side of this chasm, knowing they have to compete with METAAI, with chat GPT, with Copilot, with claud at Anthropic, with you know whatever the post AI to series going to be at Apple. Do you think they're going to be able to replicate the same dominant monopoly in this new world that they were over here. Now I know your answer. As an investor, you would say, well, Brad, it's possible,
but I'd apply a high discount rate to that. And that's the truth. And yet if you look at it today, it shouldn't be like when I say this, it's not attacking Google. It seems to me to be a statement of the that you know, we are ten years from now, We're not going to be using a card catalog called ten blue links to find information. My son came in the other day, fifteen years old. His name's Lincoln. He said, Dad, you know it's funny. All my friends at school they
think chat GPT is just good for writing essays. He goes, I now use it for everything. When people say stuff like that. When I go to the Javit Center, they all raise their hands when I'm speaking to groups of founders and they all tell me they're using as a replacement. When I watched the Open AI dev day yesterday and I realize the pace of innovation is faster than any innovation I ever saw with the Internet, Faster than any innovation I ever saw with mobile faster than any innovation
I ever saw with the cloud. Okay, so whatever it is today, which already is I poppingly good, whatever it is today, you have no idea how good this is going to be in three to five years.
And the amazing thing is markets are mostly kind of sort of efficient, and even if this is obvious now, it's still gonna take a while to work its way into the prices because people just aren't going to believe that a company like Google can be dethroned. I have a vivid recollection of the news coming out about Enron being a fraud. The first big article, I think it was Fortune magazine Bethany McLain. Took a year for the stock to collapse, a full year. No one wanted to
believe it. People look at at the Magnificent Seven, they look at these big, great tech companies. There's a hesitancy to believe that the winners are eventually gonna tumble. Thank goodness for books like The Innovator's Dilemma.
Yeah, I mean, and listen, I've also said I think what is different? So if you say, well, Brad, are you excited about AI and venture capital? You know, given you know this new super cycle, and you know, these are going to be the disruptors against the incumbents, you know, and that was true. If you think back to two thousand,
Amazon was the disruptor to Walmart, to May Season. If you think about it, mobile, the iPhone was the disruptor to your black barrier, to Nikia or to you know, the palm pilots of the world, or in cloud Snowflake was the disruptor to Tarra Data and to Oracle, et cetera. But when you think about AI, what are the primitives to AI? The first primitive is massive amounts of data.
The second primitive is massive amounts of compute. Those things take scale, and they take money, massive amounts of money, tens of billions of dollars, you know, in order to build the infrastructure to do what chat GPT is doing. So this is not your typical venture domain where you put five million bucks in and you wake up in ten years and they've disrupted you know, Google or Microsoft. The incumbents are not asleep at the switch. Satchya new fifteen years ago answers, not ten blue links. He is
in front of this. He was prescient with open ai co pilot in the enterprise is the fastest adopted in
the history of Microsoft. So I think eighty percent of the benefits of AI over the course of the next three to four years are going to inure to the benefit of the incumbents to the larger platforms that are already pro public today, whose businesses will get better, their bottom line margins will expand, their top lines will reaccelerate, and so it's not just going to be the you know, the gold rush for venture, though venture will do just fine.
I think it will be a great time for venture as well, but I do think that the incumbents here are going to compete very vigorously.
So let's stick with the topic of AI. What sort of companies are you looking at in that space? Are you only focusing on the incumbents that you think are going to do really well and find a way to integrate this in this business, or are you looking at startups or private companies that have been for around for a while that are potential disruptive.
So you know, as you know, twenty twenty two was
a tech recession. It was a challenging hear for all of us who are investing in tech, and yet we bounce back in twenty twenty three with one of our best years in the history of the firm, and what we recognized in the fall of twenty two, In fact, we had our investor day for all of our LPs, and our investor Day was in October on the age of Ai, before chat GPT entered the public consciousness, and what we were already hearing throughout twenty twenty two was
the voracious appetite people had for Nvidia GPUs. We were hearing about the moves that Microsoft was making. So we repositioned our portfolio at the end of twenty two, recognizing that there had been too many dollars that went into safety trades, too many dollars that went into bonds right before bonds collapse, too many dollars that went into cyclicals that were trading at twenty five times earnings despite the fact that they had five or seven percent growth and
everybody had vacated the scene ontoechnology. Remember in December of last year, in videos trading at one hundred and twenty five dollars a share and the consensus sell side expectation for data center growth this year was negative six percent. So don't give me this craziness about efficient markets. In the short run, markets are voting machines, they're not weighing machines. And the consensus estimates were radically wrong. At the end
of last year, we loaded the boat. We shrugged off the Mike Wilson hard landing consensus bet that everybody had on. At the start of the year. We were ninety three percent net long at the start of the year. We're sixty percent today. Okay. And if you look at what we owned, excuse me, we owned in Nvidia, we owned Meta, we owned Uber. Those are three of the top four performing Nasdaq one hundred companies I think this year. We also owned companies like Snowflake. So remember data and data
infant structure. That is the number one primitive to AI. There is no AI without data and ten thousand or so customers. The biggest companies in the world like Apple, JP, Morgan, et cetera, have entrusted their mission critical data with Snowflake. Okay, now, a lot of people, In fact, I heard Kramer say on CNBC yesterday, well, Snowflake's not really an AI company.
You know.
I love public commentary like that because that allows me to generate alpha. The truth of the matter is that Snowflake has seen record increases in their data science and AI workloads because no enterprise wants to port all their data out of one system and into open AI and worry about whether open AI is using this data to train models or anything else. You can't do that. You have privacy and governance requirements, HIPPA requirements, whatever they are
if you're these big enterprises. So instead the data has gravity, it stays put, and you bring the compute to the data, you bring the AI workloads to the data, you bring the predictive modeling workloads to the data, the data science workloads to them, and that's what Snowflake's doing in space.
So what I'm hearing from you is there's a lot of chatter out there about the market is too top heavy. It's just the big legacy companies. But you're big into Meta, Microsoft, Uber, go down the list of the companies. You don't think this market apparently is too top heavy in the tech space. You think these companies are big for a reason. Am I putting words in your mouth?
Or No? I think that's right. I mean there's a reason they've gone up Barry right, Remember I said in Vidia the expectation was they're going to have negative six percent data center growth and that we're going to have anemic growth in their earnings for the year. Instead, it's exploded higher. The multiple today for in Vidia or at least at four hundred bucks. Where the stock was last week, the multiple was somewhere around twenty five times next year's
consensus earnings. We started the year at four times. The multiple is compressed. Meta is still trading below twenty times earnings. That's below Levi's, that's below Coca Cola companies that are growing at a fraction of the rate with nowhere close to the incremental EBITDAH margins produced by a company like Meta. You know, Meta has is going to have a big role to play in AI, so it has all of
these growth vectors these other companies don't have. So yes, I do think those big companies are placed to play. But we also in our hedge fund at the start of the year were shorting some of the companies that we thought were COVID beneficiaries that wouldn't be sustainable, and we've seen those companies go down.
Give us a few examples.
If you look at the SMP this year, the SMP is up fifteen to sixteen percent through through today. If you take technology companies out of the SMP, the SMPS down on the air. The Russell two thousand is down on the year.
Just down period without even correct taking tech company correct.
So we were shorting the components of those indexes that we thought had gotten too bold up as safety trades in twenty twenty two. You had a reversion to the mean this year. And so I know, I think in this business, I've been doing this for a long time, probably you know, twenty years now. In the public markets, technology by its very essence is about disruption. If you ever think you can go to sleep on a technology company, you know it's a sure way to get carried out
on a stretcher. It requires agility, it requires intensity. That's why I think being in Silicon Valley, investing and talking every day with venture capital companies, founders, et cetera, is a huge competitive advantage test because we see the disruption coming years in advance.
So let's stick with that concept of disruption. You invest in startups, you invest in public companies, you invest in privates. Where is your sweet spot on the private side early stage, later stage? How do you think about that?
Yeah, great question. You know, so when I started these companies, I started literally on the back of a napkin. So that would you know, we would call that seed stage in the parlance. You know, that's where you're asking your friends and your family for money. You're trying to establish product market fit. Altimeter generally doesn't invest in seed stage companies or early Series A companies because those companies are what we call in the business pre product market fit.
You have an idea, you're trying to build a product. There are world class partners of ours in Silicon Valley, you know, I think of like a Mike Spiser at Suttery Hill, you know a Martine Casado and Andreas and you know Gurley when he was at Benchmark but now Chathin or Eric Vishria or you know my friends at
you know Sequoia. That's what they do. The firms are built, purpose built, founder's fund to do those early stage gestations where we've really carved out our you know, our brand and our niche is we we still you know, we wear the black T shirts. We're in Silicon Valley. We have the sensibilities of venture capitalists, right, I've started the companies, I've stood in their shoes, I've hired, i've fired, I've
done all the challenging stuff. But I also, you know, very familiar with New York, with CNBC, with IPOs, with scaling to the public markets. So we usually take the handoff right when they discover product market fit. Okay, So that's usually a couple of years into a business, you know, a Series B, you know, a company maybe somewhere between fifty and two hundred million dollars. In that first round of Funny Snowflake, which was one of our you know, uh,
you know, Hall of fame, uh, you know moments. We invested in that first round. It was pre revenue, they had about ten beta customers of the product. It was about one hundred and seventy million dollar valuation. And we would invest in every subsequent round, and I think owned seventeen percent of the company when they went public.
Seventeen percent. That's a big uh, that's a big chunk of a company. Are you still long Snowflake or have you paired back a little bit?
How you make Yeah? So I remember we have different fund, so we're investing out of our sixth venture capital fund. We just had our first clothes on our seventh venture capital fund. So in those funds where we invest in those very early rounds in Snowflake, yes, you know, I
mean our journey with Snowflake started a decade ago. So for those investors, we've returned capital and you know, Altimeters Fund one will probably be in the top five all time returns, you know, for Silicon Valley because of the likes of Snowflake and Mango and other great names that
we had in that portfolio. In our hedge fund, right where we're focused on annual returns, just like you, we start every year and we say, okay, what's going to power a twenty percent you know, risk adjusted return in this portfolio? And so yes, we still own Snowflake because we see it compounding on the top line, you know, in this thirty plus percent range, and it's still expanding margins.
So this is one of those unique and rare software businesses that's going to have over thirty percent free cash flow margins. Has a massive market all this AI stuff that we're talking about, the entire database market. Do you know in the year two thousand, the database market was worth a trillion dollars, right, It's the single largest market in all of software, and it should be. Think what is the primitive to every you know, everything we do
in our lives. It's data. Data isn't oil, Data is oxygen.
Huh, that's really interesting. You mentioned meta. I know you're a fan of Twitter, or at least the way Twitter used to be. What's going on over there? Is this doing the full friends to MySpace circling the drain? Is there any hope for Twitter becoming what it once was or is it mutating into something unrecognized?
Oh well, call me outside of consensus on this. Yea. You know, I know it's not popular today, but I'm in camp Elon. I think Twitter was pretty broken before. I think, you know, what we what we've learned about Twitter was they may have had a lot of advertisers, but I'm not sure how well it was actually working for users.
You know.
So I'm on Twitter. I find it probably my most most valuable source of information. Bloomberg's right up there, Barry, but I would say that my newsfeed in Twitter is extraordinary. And Elon came in there. Think about this, He let go eighty percent of the people at Twitter, and I know everybody on the East coast flip their lids. How can he do this? You know, mean spirited, you know, et cetera. But you know, the cultures at a lot of these places in Silicon Valley were broken, they were bloated,
and they were entitled. What I've seen out of Twitter is a ten x increase in product velocity. Okay, I'm talking you.
How do you define product velocity?
Think about the things that they're now doing on Twitter, everything from virtual and fully encrypted private messaging calls, fully hosted videos, short form videos, long form videos, subscription business that empowers content creators to share in the upside of those subscriptions. There's payments coming. I mean like this is. And now we have x dot ai where you know, he launched groc last week. It's rumored that, you know, twenty people working for about three months have produced a
very credible AI. Remember Elon was also the founder of open ai. Okay, so to underestimate him. He's the first to raise his hand. He said, I overpaid for the asset. I did it because I wanted to protect free speech. You can quibble about that one way or the other. It's a longer debate.
But what I would say, free speech his definition of free speech is kind of off kilter. Free speech is about not having the government coming in and telling people what they can and can't say. But if you own a company, you're free to say, Hey, Nazis are bad for my business. So I'm going to keep Nazis out of my out of my public business because I like Procter and Gamble. I like these big advertisers, but they
don't want to be associated with that. So his definition of free speech kind of perplexes those of us who have been to law school or who like to open our feed and not see a stream of anti Semitic vitriol. And that's the perplexing part. And I don't think that's an East Coast or a West Coast thing. I think it's a dude. It was toxic. Social media in general has this toxicity problem, but opening the floodgates. So I really want to hear your thoughts on this.
Well. I mean, I want to take two angles on I want to talk about respond to that, and then give you the business angle.
You know.
The truth of the matter is, the public square has been a pretty brutal place for two hundred and fifty years of American history. Whether you're standing in the halls of Congress or you're in the public square. People always said things that people disagreed with, and that's the beauty of this country. Right. So if you do work on Twitter, you can tailor your feet in a way that will be more productive for you. Right. I imagine with AI, they'll tailor the feed in a way that it can
be more productive to you. They don't want to alienate users. In fact, the user volume or the user and engagement studies that I'm seeing are higher, not lower, over the course of the past four or five months. But I agree with you and stipulate that a lot of the advertisers that were there have left. I think that Elon is trying to get them back. But more importantly, Elon
wants this platform to be something totally different. He thinks there's an opportunity for this to really live at the intersection, you know, to harness the power of our collective brain and provide a great AI build on the back of Twitter,
to open up the public square to discussion. So when you think about it as a business, I you know, like when I look at Elon building reusable rockets, electric cars, changing the world, you might you might say this was not the highest and best use of his time or energy, But having had that conversation with him, he's deeply passionate about it. He believes in it. I would never bet against the guy.
Yeah, No, he's a tough guy to bet against. I will say if anybody thinks the public square, as we've traditionally known it is what people go to social media for, well, they completely don't understand what that technology is about. It's not where you're can have long form, intelligent discussions. It's where people throw tomatoes at each other. Yeah, and it's fun and it's amusing, and we listen.
I Twitter spaces. I think is some of the most interesting dialogue that's happening anywhere in media today. Okay, and so again, I think there's a spot moment in time where there's some fair criticisms, and I think Elon himself has said, we've made some mistakes. But I'm just saying the consensus view that you know, and I've heard it
every time this guy starts a business. I love the consensus view that a guy who's created trillions of dollars in value, okay, dating back twenty five years across I don't know ten companies. He's probably never done a down round of financing in the last ten years. And yet we have all these people who've never started a single business who like to, you know, lecture him and say, you know that he has no idea what he's doing. He's running the business into the ground. All I would
say is weight watch and see, I don't know. Business is hard, right that changing the culture at Twitter is hard. Rebuilding the business is hard. But if anybody can do it, if anybody's gonna work twenty hour days to pull it off, it's Elon Musk.
So Brad tell us about invest America.
Well, you know, Barry, we talked at the start of the pod about my childhood. I was on the outside looking in, didn't have any money, like a lot of rural kids in America. And you know, it seems to me, over the course of the last twenty years, we've experienced perhaps the greatest explosion in the history of modern capitalism. Massive amounts of wealth have been created, We've seen extraordinary
leaps forward in human progress. But the problem with it is seventy percent of the people in this country will never have a savings or investment account. They feel left out of the system, and it's part of the reason that under the age of forty less than half of the people believe in capitalism. Ray Dalio tells us that it's a threat to democracy. In the Rise and Fall of Nations, he says, this is where it starts. Wealth inequality.
People lose confidence in the organizing principles of society, and it leads to strife. We see this in some of the populist movements. We have right that you know, whether it's occupy Wall Street or whether it's charging the White House, and so to me, we have agency and there's a fix. This idea is a bipartisan piece of legislation where the federal government will seed a private investment account for every child born in America. So think about this, three point
seven million children born a year. When you're born, you're issued a Social Security number and you're going to be issued an invest America account. The invest America account will have a one thousand dollars in it invested in the S and P five hundred. You own it. You'll be able to open it up on your mobile device. At eighteen. You'll be able to take out up to twenty percent for a qualified purchase college, first time home. Otherwise it's
got to compound until you're fifty. Now here's where it gets interesting.
Hold on, let me just stop right there, fifty years of compounding. People are very bad at recognizing what that looks like. The rule of seventy two isn't very intuitive. If on average markets gained let's use a conservative number eight percent. That means that pile of money is doubling every nine years. So by the time you're fifty four, that's doubled quite a few times.
Right, Yeah, So what we envision is think of a four to h one k from birth. So the federal government seeds it. It's a tiny investment by the federal government three point seven billion a year. That's less than one one hundredth of one percent of the annual budget around Okay, so they seed it and then get out of the way. Now private industry comes in and like four oh one K matches. Dara at Uber will say, hey, I'll give this to the kids of my of my employees.
Rich Barton at Zillo says, I'll give this to the kids of my employees. United Airlines, Microsoft. Go down the list. You've gotten commitments from various commitments already for various So if you see.
This account will match our employees' children on a certain.
Yeah, we'll give them a thousand bucks an account. So here's the math, Barry. If you start with one thousand, and you only have an addition of seven hundred and fifty dollars a year, okay, families can contribute to that. Your quacks free, you're correctation can contribute to it. If
you have seve hundred fifty dollars incremental year. Then every ten year old in America when they enter into the fifth they're sixth grade, and the teacher says, hey, today we're going to talk about math, or compounding, or stocks or capitalism. They'll say open up. You all have phones, get out your phone and open up your invest America account. Those kids are going to have over ten thousand dollars
their ownership in America, their slice of America. They'll see their the amount at the top, twelve thousand, five hundred dollars, and they'll see their top five holdings, their slice of Apple, their slice of Microsoft, their slice of United Health. Okay, by the age of thirty, they'll have over one hundred
and fifty thousand dollars in that account. And if you take one thousand dollars at seven hundred and fifty bucks a year, and it compounds at the exact same rate as the S and P five hundred for the last fifty years of a million dollars in their account. This is a way we get people to believe in capitalism again, this is a way we teach financial literacy. This is a way we give people hope, the people who feel like they're left out of the system. You give everybody's
skin in the game. And if we can afford to send five billion year in foreign aid to our top fifteen countries that we send foreign aid to, then we can spend three point seven billion dollars a year to seed every American child with upside in American enterprise and capitalism.
What's the appetite on the hill on amongst the Democrats and Republicans for a program like this.
Well, I can tell you you know. I mentioned I've been a four time founder and the number one thing you got to do when you're starting a company is called product market fit. Do the dogs want to eat the dog food?
Right?
And so for two years now I've been funding this and bootstrapping and going out and talking to everybody from the Clintons to the Cookes. A giant tent, okay, And I'm happy to say that now we have bipartisan authors and co sponsors lining up in the House and the Senate. We hope to introduce it in the spring. I think
there's going to be massive support for this. This is one thing that all both political parties in a highly divisive country can agree on that every kid not to This is not a big entitlement program to guarantee anybody anything. What this is is a seed program by the federal government that partners with the power of the private sector to give everybody a shot, to give everybody hope, to teach everybody what it means to participate in American capitalists.
So we've heard a couple of variations of this over the years, Baby bonds. Senator Booker had had a couple of programs. How does this compare to various you know, opportunity accounts type things that are out there, so.
You know, and and by the way, I think a lot of them have great motivations and so there's no pride of authorship here. The more people who want to work on this issue together. And I have some of the greats, the investing greats, who are excited to participate, who've offered to write the financial literacy, give us a namel components like this. You know, I'm not going to drop all those names right now because I want to have a big splash when we do, Barry, I'll come
to you, I promise. But all the people who are my friends, who I talk to, who run these big firms, they believe in this, right they because they it is their life experience. So think about this versus a baby bond. You know, bonds don't appreciate very much. They don't compound very much. It's not very exciting for a kid. They don't own part of a company, you know, and and so you don't achieve the same things. On top of that,
this program needs to be universal. If you're a poor white kid in Indiana, right, or you're a black kid in Trenton, or you're you know, if you are a Latino kid living in East pal Aato. This is an opportunity to unite America. We are all on team America, okay. And so that's the other thing. We're not gonna pick and choose right, And we're not gonna pick and choose companies. All goes into the S and P five hundred, five
hundred of the best companies in America. If it's good enough for everybody else to index off of, it's good enough for these kids. And so I would say in addition to that, there have been other attempts previously. I think a lot of those attempts were also tied to Social Security, and I think it's a big mistake.
You anticipated my next question, because does this eventually set up a method for people to say, all right, now everybody has an invest in American account, we could stop funding socials now.
In fact, we need to fully fund social security. Right. We made a commitment to seniors. We need to keep our commitment. We need to do the things we need to do around financial discipline in this country. We have a two trillion dollar deficit. We spend a trillion dollars more today than we did in twenty nineteen. COVID's over the extenuating circumstances that COVID are over, So the extenuated circumstances of our spending increase should also come back to normal.
So we got to deal with our debt. We got to deal with our deficit, and we can solve social security in the context of that. But we all know Barry, sacrifics are going to have to be made. But that is a separate and a distinct problem. This is much more fundamental. I want to give every child hope for their entire life about my opportunity to participate in the game, in the system, to know what it feels like to own something. Most of these families and kids will never
know what it feels like to own something. And we talked a lot today about AI. My prediction is that artificial intelligence will lead to some of the biggest labor dislocations in the history of capitalism. Okay, so if we already have people who disbelieve in capitalism, they feel like the system's rigged against them. Now, imagine you're one of those people right in a sales center or a call center. Right, You've done everything that was asked of you, Right, you
worked really hard, and now you lose your job. It's going to take a while to integrate integrate those folks back into other parts of the economy. And so we need people to understand that human progress is not always distributed equally. But one of the dividends, one of the birthrights of being part of this great system is you ought to have a little skin in the game. And it's you know, Warren Buffett said it best. Compounding is
the eighth wonder of the world. He said, give me a really small snowball and a really long hill, Barry. There's no longer hill than starting at birth.
All right, So I have a couple of questions around what you've described. I just want to make sure I understand this money's locked up for fifty years. You can either borrow against it or draw against it to pay for college or the first purchase of a house. But other than that, it's there. It can't be a touch by creditors. You can be forced to sign it away. It's locked up and nothing can happen.
Correct, and you own personal title to it. Now, of course we know that saviors save. What do I expect's going to happen? Right, They're gonna open adjacent accounts. They're gonna, you know, they're gonna learn the power of compounding.
Who can contribute to one babies two thousand dollars is the proposal can be contributed to those accounts.
Annually like like an ira, and that can come from anyone, can come from family, can.
Come frozen and appreciate. Correct, you take it out text free as well. That's right the thinking, And why the S and P five hundred? Why not a broader index? Off the top of my head, the Vanguard total market is two thousand stocks. It's a little less volatile, and it has the S and P five hundred in it.
So you know, I'm sure there'll be plenty of debate about this, you know, when when you know the rubber meets the road, five hundred of the biggest, best, safest companies constantly rebalanced, that represent the best of America benchmark to be right. And then you just look at the fifty hundred year history of that index. We've got so much data over that period of time. It's compounded at ten point two percent. Right, And so to me, let's
not let perfection be the enemy of the good. Let's get started.
I love it. I love it all right, So put on your AI hat a second. You've been working on this for two years. In the beginning, even though it was a great idea, not a lot of traction from my sense of doing a little homework on this. It seems to be getting a little bit of attraction. There's a little more lift to how broadly both sides of the aisle looking at it. What are the odds that this gets done next year?
You know, I've recruited a great guy, Matt Lera, to run this day to day in Washington. He helped push through opportunity zones, another one, another great bipartisan you know, piece of legislation. Washington is tricky. It's a long putt to get anything done right. But I will tell you we're gonna spend the money we got to. Nobody's gonna work harder to make this happen. And the goodwill of people
on both sides. It's this has made me so optimistic on America because you know, if you read Twitter like you were saying, you may think that people on the left are people on the right, you know you radically disagree with them. They must be bad people. You know, this has given me the opportunity to canvass everybody right across the political spectrum. And I'll tell you, they all believe in America. They all believe it can be improved.
And you know, people are climbing on board, So I think this can be one of those big tent movements. I hope that, you know, it enters the fray of presidential politics. I would love to see both presidential candidates endorse it. You know, it's tough to get anything done in a presidential year, Barry, but I'm not stopping. You know, I'm not stopping next year. I think we're gonna put it on the agenda next year. Hopefully magically we can
get it through. But if we don't, we're coming back the next year, and we're gonna come back the year after that.
Well, Brad, really good on you for this. This is so fascinating and just such an obvious and hindsight way to bring everybody in. It's always nice to see somebody do more than just write a check, come up with a great idea that's disruptive and innovative and just makes so much sense. Congrats to you to getting it this far. I hope you get over the goal line. But even taking it as far as you have, you should really be proud.
Of what I can. I tell you one quick Stu, and before I.
Forget at invest America twenty four is the Twitter handle right?
Yes? At invest America twenty four follow it. We need followers. We need you to build the movement. We need you to tell your friends, talk to your congress people about it. Right, really, let me tell you a quick story about go ahead. You know, I'm a four time founder. I live in Silicon Valley.
Right.
Human progress is people who take risk to push the whole system forward. That's not just starting a company. Right. My son and I were on Capitol Hill this summer. My son, Lincoln's fifteen years old. I've taken him into all these meetings with me to meet the to meet Congress people, and to have this conversation. And we're walking out of McCarthy's office and we had been in there for sixty minutes. It was a great meeting. And we're walking down the hallway. The capital, you know, just has
the power of the Capitol. And I look at him and he just said, Wow, that was amazing. I said, dude, For two hundred and fifty years, there's not a single thing that got done in this country without it starting with a conversation between two people like that. Every piece of legislation, every idea is the back of a napkin. And somebody who's tenacious enough not to give up.
Really fascinating stuff. Let's talk a little bit about the state of the IPO environment currently. For a while it looked like the IPO window reopened a bit, then it seemed to have closed. What does the IPO market look like to you?
Well, I tweeted something the other day and I said, the IPO market is always open, right, It's just question of whether or not the sellers want to sell at the price the buyers are willing to buy. And it's really true. What I mean by this is, so we had three IPOs, right, we had Armclavyo, and Instacart. We participated in each of those IPOs, Okay, you know, and if you think about the opening that we had that was in June of this year, the ten year was
closer to four, right, the Nasdaq was doing well. What happened between July and October of this year, the ten year bond moved twenty five percent, Okay, so went down twenty five percent, and you had the nasdak off twelve percent. So of course, when you have that level of volatility in the market, it's going to put a little chill into people's plans.
But look at that that was last month.
Now let me tell you this. Let me tell you this. We have a thousand unicorns just in technology that need to get public. These are companies that are valued in the private market. Last valued at over a billion dollars. And what I say said in that tweet is if you were valued at over two to three billion bucks, if you have a decent amount of revenue, it's time to get public. You cannot anchor yourself to some delusional price you got in twenty twenty or twenty twenty one.
Anybody who's in the stock market will tell you gross stocks are down fifty to seventy percent during that period of time. So it's reasonable to assume that these late stage venture capital companies also lost that value. We see it with great coming to think about Stripe. You know, Patrick and John Collison have built one of the premier companies in Silicon Valley. At its peak, I think they did around at one hundred and twenty billion. Its most
recent round was at sixty billion. Right, you see Odden in some of these companies getting you know, really getting crushed in the public markets. The clearing price will be the clearing price. If you're a great business Okay, think back to the day when you and I watched the Sales Force ipo, the Google IPO, the Apple I go through the list. You get into the public markets. You can innovate plenty in the public markets. Public markets exact
a discipline which is good for companies. They keep companies fit. And the reality is your price is your price. It will go up and down depending upon factors in your control and many factors beyond your control. But hiding in the private markets, like you know, Bill Gurley uses this, it's you know, this is like a college a great college player who's too afraid to play in the NFL. Right, No, you got to enter the draft. You're gonna get picked. You may get picked lower than you think you deserve.
Then you step on the field and you prove. It shows the power of the public market.
So in late twenty one twenty twenty two, valuations had gotten a touch frothy in both the public and the private markets. When you see that sort of reset that takes place in the public markets, how long does it take for the private markets to similarly adjust? What's the lag from when the NAZAC is down thirty percent? How long does it take for private stocks to get that big of a whist.
You know, we've been doing some study on this. It's pretty fascinating. So I would say over most of my venture career, which is now over two decades, I would say that was like nine to twelve months, right. And the reason that they adjusted that timeframe is most companies needed to raise money in nine to twelve months. So you know, when you discover what you're worth when you have to go raise more money. Okay, but what happened
in twenty and twenty one was so unique. We were so aw wash in money because of the ZERP environment that startups were raising gobs of money way more and putting it on their balance sheet than they normally raise. So they have not needed to go raise money in that nine to twelve month window. Instead, they need to raise money more like in a twenty four or a thirty month window. Well, now we're starting to come up
on that period. So twenty twenty four, particularly the back half of twenty four, that's when real price discovery is going to occur. I will tell you, though we've been talking about late stage venture in the IPO market, early stage market has already reset pricing. Okay, we have a little bit of an AI bubble and some things, and we can chat about that. But normal venture these are companies that raise the series A now have to go raise the series B or they're coming to market for
the first time. Prices are already back to what I would call like twenty thirteen levels.
All right, So you mentioned the AI bubble. Is it a bubble? Is there just a lot of interest because everybody's figured out, hey, this is a game changer, this is another one of those platform or supercycles. Or is it just too much money chasing too few ideas and it's a bubble?
Yeah? No, I think I think there's a moment that you have to hold two simultaneous truths. Intention it is true, all right, believe it to be true that this is going to be bigger than the Internet itself. It's having massive impact already on every enterprise and you know, most consumers, right, And so I don't think in fact, if anything, I think we're likely overestimating it a little bit in the short term and underestimating it in the two to five year range.
The famous Bill Gates, Right.
But with that said, remember nineteen ninety eight, vividly we all knew. We all knew the Internet was going to change the world forever, and a lot of us knew that internet search was going to be one of the biggest businesses to come out of it because it was the tollkeeper, it was organizing all the world's information. In nineteen ninety eight, there's mad scramble was on among venture capitalists. They got to get a search logo, so they went out.
They invested in Alta Vista, in Infoseek, do in Licos, in Dogpile, you know, go through the list, Yes, Jeeves, ash, Jeeves, et cetera. All of those companies right a few years later would basically be where zero. You could have waited to invest in Google in two thousand and four in their IPO, and you would have captured ninety plus percent of all the profits ever generated in Internet search. Okay, So my point there is sometimes in venture capital, right,
you've got to be in the trenches. You've got to be studying, you've got to be researching, you've got to be preparing your mind, developing conviction. But as Warren Buffett has said, the hardest thing investing is to do all the work and then do nothing right right and right now, I think this has been one of those times where
we've passed on over fifty AI companies. We've made some select investments, but it's been easier to invest in AI in the public markets because we already see the fruits of Microsoft's labors of snowflakes, labors of Nvidia's labors, et cetera. The private markets, it's hard to know which assets are going to have durable value. I mean, think about it.
Open Ai just dropped its prices ninety percent again. Okay, So if you're trying to build a model barry like you and I do, for one of these you know, for Mistral or Anthropic or cohere, any one of these companies that are in the model space, it's very, very difficult. So I think you know, study a lot, but tread lightly.
Huh really interesting. Before I ask you all of our favorite questions we ask all of our guests, I have to throw a little curveball at you. You have what has to be the best job title I've ever seen from anyone in tech. Founder and chief boat washer. Tell us a little bit about your first entrepreneurial gig where you were washing boats.
Well, you know, my dad moved us to a small town in northwest Indiana because he thought it would provide He didn't have a lot of money, but he thought it was a nice town, provide a better life for his kids. What this town had was a really beautiful, big lake in it. It's called Lake Wawasee, and you know, about twelve miles long, a couple miles wide. Everybody had
a dock out front and a boat. All the boats had to be cleaned, and I had to make money, and so I partner with my friend Jimmy Koshnik, and we co founded Wawasee Boat Care and we ran the table on boat cleaning on the lake. We had a lot of fun. We probably spent all the money before the summer was over.
But how much did that affect that experience effect how you approach being an entrepreneur? How seminal was that for you?
You know, I think those moments working for guys like Pete legal omer Krupp at Supreme Industries, I was always working. I was always a student of the game. I was always studying. I was always curious, like how does businesses get built? And you know the reason, Barry, I think, if you really boil it all down, my dad went. My dad was kind of my hero mm hmm, you know, and I saw him give everything and his business go under right, and it affected his health, his marriage, lost
the house. And so I think, if you're the son, the youngest son of a guy who's like your hero, you see him go through that trauma, you kind of spend the rest of your life trying to figure it out, like why didn't it work out? And really, you know, doing it for him, avenging what the dream you know that he didn't have. And so from an early age, I knew I had to put it on my own back and get it done. And here we.
Are, Here we are, So we have you for four and a half minutes. Let's let's turn this into a speed round and I'm going to ask you the questions that we ask all of our guests, starting with are you streaming anything, listen to anything? What's keeping you entertained these days?
The Diplomat I was watching so good, so good, so terrific. You know, watch a lot of docs, listen to a lot of pods, and listen to a lot of books on tape.
By the way, I enjoy you on the oil in pod with a Chamatha and company. That that's a hell of a podcast.
You know, what I'll tell you about that group is authentic friends. Right. You could tell they've all known each other in some capacity. You could tell a long time. We do play poker, uh, you know pretty much every week we're in town on Thursday nights. We like to give it to each other. But importantly, you know, we have a we have a thread with one another throughout
the week. We are all analysts, We're all I mean, it's like a Bloomberg stream constantly sharing news, analysis, politics, economics, company specific venture capital because we care. And so to have friends that you get to play a game with, you get to debate with. You don't always agree on everything, but at the end of the day, you know, you learn a lot with you know, it's a real privilege.
You've already mentioned some of your early mentors. Who else helped shape your career?
You know, I think you know Dick Luger clearly as a statesman. I think in life, you know, we talk about compounding, right, and in compounding, you know, you got your principal p times your rate are you know for duration T right, And I think you can apply that same formula to life. But your principle is your purpose, it's your passion, right, And I was lucky enough to find that. I just like to be a student and study the world, be an anthropologist and try to make
sense out of it. You know, if I was a college professor, I'd do all the same studying, but then i'd teach a class. Right. If I was a host, I would do all the same studying, and then I'd do a TV show. I happen to be an investor, so I do all the studying and then I get to place bets. You know, the r I think of as the Raid accelerators. Who are the people in your life? The Paul Readers, you know, the the David Fialco and Joel Cutler's, the Pete legals of the world, right, who
Rich Barton, Bill Gurley. You know, when you find those people, collect them, and you need to make yourself collectible. And the way you make yourself collectible, right is you have to invest in them. You have to you have to be you know, insightful to them, right. And I tell my kids all the time, you got to invest in friendships, right, And you know, so that's been really the the byproduct of that has been a lot of fun, a lot of learning, and a few good investments.
H really good answer.
What about books?
What are some of your favorites? What are you reading right now?
Well, I'm going to tell you one. You know, there's a lot of stuff I'm listening to on audible. You know, Chama said something the other day. Somebody was talking about a book in our thread that he needs to read, and you know, within fifteen seconds he snapp called it. He put the GPT summary in there. He's like, I'm done, which I thought was was pretty funny but actually quite true. Essentialism by Greg mchun the art of doing less better. So for me, my design philosophy is minimalism and my
life philosophy is essentialism. And that's also really how we run the business. We don't have to do everything, we don't have a lot of fomo. We're happy being students. But when we develop deep conviction, we put a lot of wood behind the bat, and that leads to enduring relationships, enduring investments, and the ability to compound over a really long period of time.
Really again, really good answer. Our final two questions, what sort of advice would you give to a recent college grad who is interested in either startups, entrepreneurism or venture capitalism.
You know, I'll tell you where I go to look for analysts in my firm. I go to Twitter. I want to see what they're saying. Right. And so if you want to break through, if you want to get noticed, right, then do research study something. If you come in and tell me you're super passionate about something, but then I asked you a couple questions, it's pretty clear to me you've never really done any work on it, right, It's
not very convincing. But you know, jam And Ball one of my partners in the firm, he was a young a young partner at Redpoint venture capital firm in Silicon Valley. He had seventy five thousand followers on his substack called Clouded Judgment. This guy's twenty nine thirty years old.
Right.
How did Bill Gurley break through in Silicon Valley? He started I think he was twenty eight years old. He started sending out a facts called above the Crowd every Thursday night at five o'clock, telling people what he had learned that week in Silicon Valley. That is the type of hack that shows people your passion. It shows them your insights, your capability to process information. So I mean you got to earn it, nobody's handing it to you.
Love that. And finally, what do you know about the world of venture investing today? You wish you knew twenty plus years or so ago when you were first getting started.
Power law, power law, power law.
It's all about company.
The first ten years of my of my venture career, I would see something as a founder, I'd say, oh, yeah, I can help make that work if we just change this and this and this, and you know, I could earn a three X on this, a four x, a five x. Right. The truth is in venture you have to play for spectacular outcomes. So we don't invest in a software company if we think it can be a nice little company with thirty or forty million dollars in revenue.
We want to go after the biggest market with the most audacious founders, Founders that want to change the world, that want to do things. Palmer Lucky, what he's doing at Anderill Right, Mark Zuckerberg, what do he wanted to do in social you know, Sam what he wants to do you know at open ai, Elon in electrification. Those are the people, right, who do in fact change, you know, bend the universe, and you know you want to back them. It's not gonna happen fast. There won't be a lot
of people who agree with you at the start. You know, when we when we invest in Snowflake, that first round, it was backing the founders out of Oracle that we're going to rebuild the Oracle database in the cloud, separate storage and compute. Most of the smart enterprise software investors in Silicon Valley past. Okay, really and so like, you know, because the cloud in twenty twelve, twenty thirteen was out
of favor, it was out of consensus. People were like, it's not as secure, it's not as fast, it costs more. So you had to see a future where it was going to cost less, it was going to be faster, and there's going to be more secure, which we did. And so that only comes from study, only comes from study. So study hard, look for the really big outcomes, find people who are undeniable outliers working in those areas, and back them.
Brad, thank you for being so generous with your time. This was just we have been speaking with Brad Gersner. He is the founder and CEO of altiminer Capital. If you enjoy this conversation, well, be sure and check out any of the previous five hundred such discussions we've had over the past nine and a half years. You can find those on Apple Podcast, Bloomberg, YouTube, Spotify, or wherever you get your favorite podcasts. Follow my daily reads at
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