Cotu is one of the most successful hedge funds of the last two decades. The largest startup fund in the world right now. They are very discreet. Started with $50 million and now you're managing roughly $50 billion. From Cotu, Thomas Lafont. What separates the truly exceptional companies is to realize that actually sales and product are different sides of the same coin.

There was a confluence of trends that made us feel like we needed to be present in the Valley. The reason we decided to kind of get into this business is to find great entrepreneurs and find great companies. All right, thank you everybody. So my name is Thomas. I work at Cotu.

I've been a day one listener of the All In podcast. But when they called me and they said, would you be willing to present? I said, you know, absolutely. Tell me when. Then they told me, well, you're going to have the graveyard shift, the absolute last slot. I said, I can handle it, no problem.

Then they said, by the way, we are going to put Mark Benioff, the goat of enterprise software, right before you, the return of TK and some guy who figured out how to fix aging. I still got it. And the reason is because what I know is that to me, the besties are a band.

And they have what all great bands have, which is number one is they have talent. But number two, they have chemistry. And you can't teach either, but you need both to be great and they're great. But also like all bands, we know they like to have new albums and experiment with new producers and a new sound.

So I think we've heard a lot about the new sound. It could be geopolitics or free speech. And look, I know those are important issues. But being a day one listener, I love the old album, the first tracks we ever heard. To me, those are the ones that will go on the greatest hits album.

And so I knew that if I came, I would bring you back to the old days. And to me, I love new stuff too, don't get me wrong, but it's fun to play some of the classics. And what I love so much is listening to each bestie give their point of view about venture capital, about IPOs, about technology.

And so what I aim to do here is a bit kind of level set on the conversation. They'll join me afterwards and lucky me, I get to jam with the band for a bit. So all right, so let's dive in. I hope that this presentation kind of informs a little bit about what we see in the unicorn economy.

So let's start at the top. Let's just look kind of at funding. And what we can see in this slide is that funding is still actually pretty healthy. Now it's normalized post the COVID bubble, but it's still, if you compare it to historical averages, it's still quite healthy. But if we look at exits, which is defined as the cash that's returned, we see a bit of a different story where actually we're at pre-COVID levels without really any substantial increases since all of the capital that went into during COVID.

And one of the main reasons for that is that the three kind of traditional exits for companies are blocked today. So if you look at private equity, for example, very sensitive to interest rates. And so there's been kind of fewer buyouts despite record amounts of dry powder for that asset class.

If we look at IPOs, well, we're going to dig deeper into that, peel the onion a little bit. So I'll talk about IPOs in a minute. And since your political issues have been so present here, we know that regulatory has had a major impact on companies' ability to buy other companies.

Ironically, and I think somewhat perversely, one of the byproducts of constraining big companies from buying small companies is it hurts small companies. First of all, it makes them less valuable because if an investor, you think that big companies can't buy small companies anymore, you may adjust what you think that company's worth.

But to me, even more importantly, small companies can create a true sense of urgency in big companies. If you're sitting at Amazon or Google and you're meeting these small companies, now you don't have to worry about your competitor buying that company because you know that the government will make it really hard.

That gives you time. And we think that urgency is really important. So we certainly hope that whoever wins the election, they will rethink this strategy because we think it's really important to have a healthy ecosystem. And M&A is a really big part of that. So if you put all of that together, you see that in fact, you wouldn't be surprised by this chart, which shows that the distributions from VCs back to their investors are at essentially at all time lows.

almost back to financial kind of crisis levels. So if you think about our industry as a business now and we looked at the cash flow statement of the venture capital industry, it probably wouldn't look too good. We've raised a lot of money and we've given very little back. We are bleeding cash as an industry.

And it's ironic because many of us as investors have told companies they need to get fit. They need to generate cash. But we as an industry haven't done that yet. So what's left? Well, what's left actually is still a very substantial economy, what we call kind of the unicorn economy.

There's about 1500 companies by our count that are private companies with a last round of greater than a billion. Gavin Baker, who's another great investor who I follow, actually came out with a statistic that said there's more private companies in tech that are worth more than a billion than public ones.

Which is kind of an incredible statement to kind of think about. On top of that, if we just kind of look at employee growth, which I kind of think is a decent proxy for how this ecosystem is doing, we can see that there has been a significant slowdown post the digital transformation of COVID.

And you can see that employee growth, and by the way, this is XAI, which is an important statement and we'll get to AI in a bit, but you can see that basically the lowest levels of employee growth for this cohort, you know, in almost 15 years. That obviously also impacts their financing.

So if you look at the average company in kind of a pre-COVID era, they would tend to raise around generally less than 600 days, and bridge rounds and down rounds were about 30% of the total rounds. Well in today's market you can see something very different. You can see that it's now greater than 100 days, and you can see that the mix of down rounds and bridge rounds as a percent of total rounds is up to almost 63%.

So even when they do get a financing, the financing look very different. And so if you look at what that means on a cohort basis, and this is one of my favorite charts because I think it kind of tells the story of this era in one slide. You can see that the 2016 cohort, the way to interpret this is the 2016 cohort, which is the top slide, the green line.

After about 13 quarters, 80% had either raised the new round or exited. So 80%. You can see that in the 2021 cohort, that number is down almost in half. So significantly below, and if you see at the 22 cohort, which is the most recent cohort that we track, because obviously you need to give companies at least a year to make the analysis useful, you can see that those companies are tracking even below the 21 cohort.

Now, we can't blame the public markets, you know, the NASDAQ is at almost an all-time high. The NASDAQ has had a massive performance. But the index doesn't tell the whole story. And I think we need to kind of go one layer below to really kind of understand what's going on So if you look at the recovery, which is the piece that I kind of focus on since COVID, you can see that the index actually had very strong performance, right?

Up almost 122%, right, since 2019. But if you look at the two buckets that I've highlighted, which I've kind of created two, unprofitable tech is one and SaaS is the other. The reason that I chose those two is I think that they best mirror potentially the unicorn economy in the private markets.

You can see actually that those are down the most from the COVID high and have recovered the least since 2019, significantly kind of trailing the index. Now you might say, look, this is a bunch of really bad companies, so it makes sense. My argument to you would be there's incredible companies in this cohort, and I've just picked three.

So let's look at these three, DoorDash, Block, and Shopify. Three incredible entrepreneurs, Tony from DoorDash, Jack from Block, and Toby from Shopify. You can see that these companies have incredible scale if you just look at the GMV and the revenues. You can see that over this period of time, they got significantly more profitable.

But you can see that on a P/E basis, the multiple shrank significantly. And the growth just wasn't fast enough to kind of offset the lower multiple. Now if we look at IPOs, this chart basically, one way to look at it is, of all of the IPOs since 2020, if you look at the value created or destroyed from their IPO price, you can see that as a cohort, we've destroyed almost 225 billion in market cap offset by the value creation of 84.

So net negative as a cohort. This slide, every time I look at it, I still quite can't believe what it says, so we have to quadruple the facts, but it is, the fact is that since 2022, both in '22, '23, and '24, we had fewer IPOs than in 2008 and 2009, the depths of the financial crisis, and 2001 and 2002, post the greatest bubble in history in tech.

I mean, I remember in 2008, you know, sitting at my desk and we would get reports that Morgan Stanley and Goldman Sachs were going out of business, that's how dire those times were. There were still more IPOs in that environment than in today's environment. So I was talking yesterday to a late stage founder, very large valuation, a very kind of well-known company, and he was asking for the difference between private investors and public investors.

And what I told him is, I said, by and large, your private investors only compare you to companies that are very similar to yours, by which I mean if you're a venture investor, you look at a Silicon Valley named fund-backed company, and you compare it probably to another company backed by another Silicon Valley fund, et cetera, and you try and pick the best as you see fit from those types of companies.

Very similar to yours. But the public markets work really differently, and it's really important to understand, for CEOs, that public markets have options. Those investors may look at the risk-free rate, 5% to be able to earn with literally no risk whatsoever. They may look at, depending on how you want to bucket it, the magnificent six or seven, these are the largest companies in the world, incredible businesses with CEOs like Mark Zuckerberg, and you get to own that cohort at a pretty cheap earnings multiple for companies that even at the trillion-dollar scale are growing in excess of 15%.

Pretty amazing. Oh, and on top of that, there's a new type of company, the AI company, and those companies are growing at incredible scale, and they're growing sometimes at 50, 60, or 100%. And you get to back a founder like Jensen at NVIDIA, who many people don't know, but is the longest-tenured founder CEO in Silicon Valley.

And I can also buy those companies at pretty reasonable earnings multiples. And finally, just in case you think, oh, I'm only talking about big companies, you actually get to buy also an incredible set of smaller companies. We just had Travis on from Uber, but whether it's DoorDash or Instacart or Block, you can see that even great new companies like those are available at pretty reasonable multiples.

So it's really important for CEOs to understand who is the competition for the capital that you're trying to raise. And the public market can be tough, and this is one of those moments where the public market is tough, because what essentially the public market is telling you is that we want it all.

We want you to be profitable. We talked about that already. We want you to grow, so you have to be in a big market and have a big trend. But by the way, we also want you to have scale. That's a lot to ask for. The good news is within this cohort of unicorns, we've already identified a good list of companies.

We're lucky to be investors. I'm thinking about eight or nine of them that match that criteria. And I think all of these companies on this slide will one day make for incredible public companies. So what do you make of all this? Well, I kind of wanted to end -- I only have two charts left, but I wanted to kind of end on this chart.

This chart is from Andrew McAfee, who has an incredible sub-stack, which I encourage all of you to follow. What this chart looks at is it looks at the average age of the top 50 U.S. public companies weighted by market cap. Okay. So average age of the top 50 U.S.

companies by market cap. So what do we see in this chart? And by the way, he goes back to 1926. It's hard to get data. That goes back to 1926. Believe me, we tried. So what this shows actually is you can look from 1926 through to almost the late '80s.

The biggest companies are the oldest companies, and they keep getting older, which means that the biggest chance of you becoming a big company was to have been a big company in the past. So you can see that that kind of can atrophy. But it doesn't take a mathematician, which I'm not, to see that something kind of happens in the, let's call it, mid '90s.

The average age starts to reverse. What happened? Technology happened. Technology is the great resetter of the business world. It can take an incredible company and turn it into dust. Just ask Blackberry or Nokia or other companies that have been on the wrong side of a trend. And what you see in this chart is you can see that actually the past 25 years have been really good for young companies.

Which is why another inverse way of looking at it is what is the average founding year of that cohort of companies. And you can see that that cohort of companies is getting younger. So the reason why I'm still an incredible optimist about our industry and about technology is because technology is still the most disruptive force.

And we haven't even talked about AI and robots and all of the incredible things that are kind of happening. So, I kind of wanted to put it all together and kind of use the concrete examples. This is one of my favorite charts. What this shows is the valuation of two companies that are kind of competing with each other.

They are enterprise data companies. They make essentially a way to store data in the cloud. So you can see the blue line is Snowflake. It's a public company today. And you can see that the red line is Databricks. And it's kind of interesting to see what do we take from this chart.

Well, we can see, okay, a lot of volatility in the public markets, valuation going up and down, kind of a steadier rise in the private market. But there's other ways to kind of look at this. You can see that Databricks, there's been a lot of talk of founder mode, right?

The besties talked about it on the podcast last week. Databricks is a founder-led company. Snowflake was more of a managerial-led company. Maybe that's one way to kind of interpret what happened. Maybe another is to say, if you're a public company and you need to be profitable for your shareholders, and your biggest competitor is private and can incinerate and burn a lot of money, maybe that makes a difference.

Though when I mentioned to Ali, the CEO of Databricks, that I was using this chart, he told me, please remind the audience that I'm growing in excess of 60%. So I put that, that while I'm burning money, I'm actually getting much more efficient. So I said that I would obviously say that.

And he also gave me a non-public data point around his cloud cloud business, which is now 500 million of ARR, which was almost zero a few years ago. So I kind of lent in on that because I think that what I love the most about technology and markets is you can't be complacent.

You always have to stay on the, on your toes. And part of why I love the podcast so much is it always makes me rethink my assumptions. And I'm really grateful to the besties for that. So with that, I think they'll come on and we'll chat about this. And I think all the other topics that you guys want to talk about.

Thank you. Thank you. Wow. Thank you so much for that. That was amazing. Thank you. Thanks brother. That was great. Thank you. Have you sent someone to Sax's house to steal wine? Not steal. Did you go to, which cellar did you go to? Take. The secret cellar or the faux cellar?

The house cellar. The main cellar? The main cellar or the house cellar? Which one? They, they know not to go to any other cellar, but the, the real cellar, the real cellar. I think probably the best moment that you and Sax had around wine was he poured a wine at a poker game that you did not like.

And I kid you not, Chamath took his glass and went like this and poured it on the floor in David Sax's house. When was that? Really? We weren't outside on the lawn. It was hard. Yeah. This was in Sax's living room. Honestly, stop. Stop. The shit I'm gonna get.

Did that happen or not? I'm gonna get from Nat for that story. It was in my basement. Not even true. It was in the basement. It was in the poker basement. And it was not an inexpensive wine either. The basement is not a typical basement. You shouldn't use that term.

But there was no rug. This was a marble floor to be clear. Not true. Wherever more is. Not true. It could be cleaned. It was more like wood. Actually, after that. Oh my god. Stop. What happened after that? It's gone. Chamath raided my wine cellar and found all the LaTosh.

Oh, he did. That's right. Oh my god. That is true. Yeah, because you hit it. I think they went through a case of LaTosh. Yeah, and it all started to come out. That was great. Don't stop on my behalf. Great, nice. I could just sit here all day. Let's talk to Tom.

Just so if you invested in the Qs and the Nasdaq and held it for 10 years, you make 7.5x. This is a couple months old. If you invest in the top 10 by market cap companies in the Q, you make 8.7, so 9x. If you invest in the S&P over 10 years, you make 3.2x.

And sorry, sorry, if you invested in the, yeah, I'm sorry, that was incorrect. If you invest in the top 10 of the Qs, you make 8.7x. And if you invest in the Qs, you make 5.2. So 5x, 9x. Why would I invest in venture at all as an institutional investor?

And is that going to shift? Because you have to be in basically the top two funds, five funds to beat the returns you make just by buying an index of the Nasdaq. And how do institutional investors rationalize investing in venture funds at all, given how much value is accruing to public companies in technology versus the private companies?

Have you tried the Montrachet, Thomas? Just teed up a softie for me, right, to tee me off. First, I ask myself that question all the time, right? And because we sit in both public and private markets, we a bit have this unique ability ability to kind of look at both and try and use one to make better decisions than the other.

I think what's implicit in your question is, is what has happened over the next decade going to happen over the next one? Yes. Right? I also remember a time where, and I think this was roughly, call it the 2010 period where Google was like flat for seven or eight years, right?

From like 07 to I think the next seven or eight years, right? And that's how the market was digesting Facebook and kind of things like that. I think the question you have to ask yourself is we have now multiple multi-trillion dollar companies, right? Um, three trillion dollar companies with Apple and Nvidia, are those companies going to 10 trillion?

Um, and so, you know, to me, it's not necessarily as obvious. Maybe it was obvious, you know, 10 years ago and we all should not have invested in venture 10 years ago because we should have just owned Apple and Google and Meta and others. You know, the question is, as investors, we get paid to think about the next decade.

Right? And so I think the question for, you know, all of us and is, well, what do we think is going to happen in the next decade? And to me, it's not as clear just because those big companies are so big now. Right? Um, is, are we going to see the same pattern occur?

I mean, sometimes law of large numbers and other things like that would say no. There's another, I think, part of this, which is when you invest. You have to get some risk premium for where you're investing. And, you know, the, the complicated thing with venture is when I started my business, I think when David and Jason started his actually also, when you started, um, your investment business, we typically thought seven to 10 years, we're going to get out of these businesses and return capital to shareholders.

investors. And then all of a sudden it's doubled. And now to your point, you have wars in Europe. You have wars in the Middle East. You have this potential thing, sort of Damocles hanging over us in China and Taiwan. There's risk everywhere. And theoretically, what is supposed to happen is you're supposed to get paid a risk premium to be illiquid and not be able to get out over periods of time where any of that stuff could happen, right?

So how does that start to play into the mindset of the investor that was giving all this money in the first place? How does that change? You know, it's a great question. I was talking to one of the, uh, partners of a leading series, a firm, a brand name that, that all of you would know.

And what was interesting about their business is that by and large, their average funds were, we're doing the same, but the problem is at the time, liquidity had doubled. And so if you just think about it on an IRR basis, all of a sudden I'm down half, right? Yeah.

So that's a huge problem. And I think part of the reason I kind of wanted to, to bring this up is I do think it's a problem that we need to kind of address as an industry. And I think it starts with boards and it starts with founders, right?

And investors. I was chatting with Bill Gurley, um, you know, in the green room before, and he, he told me, he said, well, look, Thomas, you know, you're, you, you guys are part of the problem. You're kind of doing this. And I said, you're right. You're absolutely right. We've contributed to it.

Not to interrupt. What, what did he mean by that? That we were giving liquidity to, uh, secondaries and founders and, you know, companies that should be public by giving them private capital. We were essentially enabling them to stay private longer. Making the problem worse. Correct. Is that true? Yes.

But if that were true, wouldn't, wouldn't value creation accrue to those private companies and the performance of venture funds? It should. Can I just go back and just add a nuance to that? But I said, Bill, realize that also you guys are also part of the problem because you're on the boards that are also letting this kind of happen.

Right? So we have as an ecosystem, right? I don't think like, to me, the IPO chart is kind of an existential one for our industry. Right? I mean, if we don't get these companies to go public, um, in my opinion, we are, um, as an industry, going to have to face really hard questions with the ultimate funders of our industry, who, by the way, are not our funds, but are the investors in our funds.

Right? And eventually they are going to demand from us, right? Um, capital back. Well, sorry, Tom and Thomas, just to build on your point. It's actually not even those nameless, faceless people, because so much of that money, for example, in sovereign wealth funds and pension funds theoretically come from these citizens who will at some point need the money because all of these other existential issues that they're dealing with.

And so these, these pension systems and others will really have to justify, um, while, you know, they say, I'm going to swing for the fences here to make up for my deficits. But with those deficits aren't actually made up and you've paid 2% a year for 13 years and you've burned through a quarter of your capital and fees and you have nothing to show for it.

The jig is going to be up. I think. I mean, that's totally right. And look, I think it's going to be, um, my biggest other fear, uh, you guys can tell I have a lot of fears. So, um, but my other one is, yes, is that we're creating a worst cohort of companies because of this, right?

Because at the end of the day, I do believe that you guys all sit on the tons of boards, right? I do think that it can be, uh, I think part of why the all in podcast got so popular is there was a sense that you guys were saying to, uh, the public, what people were afraid to say in public or what actually you were saying behind closed doors.

Right. And I think it can be very difficult in boards to go against a founder or a CEO. Um, even just propose something a different path, right? You know, the high school, I went to severe in high school in Brooklyn had a sign above the, the door when we walked in every morning, the truth shall make you free.

And I think a big part of what we have to realize in an industry is staying private and giving the founders massive amounts of secondary, not modest, modest. We all agree. Um, and keeping these pub companies public too long. Um, and then private too long. Um, you know, it's just bad hygiene and bad discipline, allowing founders or telling founders, the VCs are the enemies like Paul Graham essentially does, um, saying governance isn't cool.

Um, you know, most of the companies I've invested in when they fail and they don't have governance say to me, if only somebody cared enough to help us solve our problems. And I say, well, remember I said, would you like to start board meetings quarterly for one hour and I'll come to it.

And they said, yeah. And we got advice from people don't have board meetings. You know, at some point we have to have discipline and we have to accept the truth. And the truth is, you know, on a, on a societal level, 40% of the country does not own equities.

And they believe that everybody's getting rich, but them, and they're voting for socialism. And they're voting to not let these companies merge and grow, which is now going to freeze the system. And if the system freezes because of Lena Khan, who was picked on a strictly political basis, because she's anti-tech and because that gets votes from a bunch of socialist voters, uh, who feel disenfranchised and we got to solve the disenfranchised problem.

Um, but we also have to create jobs and we have to create the next companies. And I, I encourage people who may be, who are anti-tech or anti-capitalism to imagine a world in which we didn't have Google, Apple, Tesla, Facebook, Microsoft, Uber, DoorDash as our companies in our country.

And you know what that looks like? That looks like Europe and that looks incredibly slow growth. And it looks like all the growth comes from governments. Can I ask you a question? Yeah. And I know, but I mean, we have to be adults in the room here and tell the truth.

Look, I agree. I'd like to ask Thomas a question before we... Yeah, please. I'm sorry. It's the Montrachet talking. Clearly. I mean, it's amazing. I think you bring up something that, again, is something that it's the quiet part said out loud, which is maybe we have this cultural issue.

And I actually have a lot of empathy for where this cultural issue came from. You're Sequoia and you've done it a certain way, but then now you're Andreessen or your social capital, your craft. You have to decide how you're going to disrupt. And you say the thing that the other person is not saying.

But then it just gets out of control. What do we do to fix the problem? How do we collectively identify a set of solutions? What do we do? I think to me that the most obvious is we have to take our companies public. Because to your point, Jason, the public market is the great disinfectant.

The public market doesn't care that you're a CEO and you're going to give a referral to the other investor. And so you have to become friends and, you know, that whole thing or the brand of your investor is X or your prior company did Y. You know, at the end of the day, the public market will look at your business.

And so I think encouraging entrepreneurs to go public is really important. Right? Let me ask you a question. The traditional go public model is an IPO. You raise capital and you list your shares at the same time. Those are two separate activities. People don't realize they're actually separate. Your shares are available for sale on a public market and you're raising capital in the process.

And you create demand through the capital raising process such that your shares will go up as they start to trade. The model of the direct listing is you just list your shares. They start trading. They're going to go up. They're going to go down. We've seen a couple of these in the past few years.

They're like, oh, as soon as it hits the market, it goes down. It goes up. And but the market values the company. Once the company's been valued and the market's stable, maybe then you raise capital at whatever the market tells you the valuation is. However, there is a very big aversion to direct listings in Silicon Valley and it seems like there's either a failure of the business or it's one of these businesses that are such an outlier of success that it doesn't matter.

They're like, I don't care. I'll just direct list. Should direct listings become the kind of de facto model? Because otherwise everyone talks about the IPO window being closed. The big institutional investors that build the IPO book are all sitting on the sidelines right now. They're like, I'm not investing in any new stuff for a quarter or two quarters.

So the IPO window is closed and you can't go public. Should we not kind of push all of Silicon Valley that like this direct listing might be a better model? And I know some have tried to motivate this transition, but it's why hasn't it gotten legs? And is it a better way to kind of get to the end point?

So what I would say to that and Chamath, you kind of hit on this with some of the work that you've done here. But I do think that the recipe to go public is different. First of all, I can tell you is I've, you know, we've looked at buying IPOs over 20 years.

I mean, probably thousands of them. We couldn't care less whether it's a traditional IPO or whether it's a direct listing. Like we care about the business and the price and the mechanics are completely irrelevant to us. Right. So that's kind of number one. But I do think founders have to understand that the public market itself has changed.

Okay. Being an active investor in the public market over 20 years has been a really bad business. We are fighting the machines, first of all. Right. So Ken Griffin, Citadel, Renaissance, you know, all of these, you know, quants and algorithms. And that's number one. We're fighting the indices. Right.

Massive move away from active investing to passive. So being in the quote money management business, I mean, just look at the chart of T. Rowe Price and others. It's not been a great business. So the public business has changed. And I think why is this relevant to founders? Because I think there's another big constituency that's really important as an example of retail.

Right. And so if you can tap into a retail investor base and convince a retail base that your business is worthwhile, that's maybe something that 20 years ago you might have said, I don't think that's a good use of time. I think this year is a really good use of time.

Right. So going on podcasts, right, going on CNBC, going out and educating the public about your business so that you're not just reliant on a, frankly, shrinking pool of investors in the public market. I remember when I started in the late 90s, early 2000s, you had small cap mutual funds in Kansas City and other places.

Right. Their whole business, Chamath, you may remember, was taking small companies and bringing them to the public market. Those, they're gone today. They're gone. They're gone. There's none left. Right. So we need to adapt. And I think those are the conversations that we need to be having. I hope that some of the companies that we listed, right, you guys know these companies, your investors in a bunch of them, they're generational opportunities.

I hope some of those kind of go public. Right. And that we kind of get the machine kind of working. What do you think of, I just want to build on this. Please. It is one of the most systematically broken things. And just to even be more specific, what happens in Silicon Valley boardrooms is you have folks that are playing a very establishment insider game.

And whenever I see that, I just get offended just at a core level. And it's about a certain set of banks and it's about a certain set of privileges and conferences and it's a cabal of bullshit. And this is what convinces these very impressionable people, all kinds of spurious data to say what it is that they want, which is not that the company goes public or not come public, but that they have ball control to help them influence that decision.

And that's the game. And you can look at all the major investment banks and that's how the game was played. And every time there has been an attempt at an innovation, people push back severely. The most impressive one that I remember, I mean, I was part of one version of that just a few years ago with these backs.

They had a very checkered, obviously set of outcomes. But it was courageous to try. And when I remember I worked with Credit Suisse when I was launching this first one. The reason I picked Credit Suisse, do you know why? Because they were the ones that were totally blackballed in 2004 for doing the Google listing.

And do you know what Google did? They completely pushed back on the IPO. They completely restructured it from first principles. They decided how to do it. And when I looked at it and I read the filing documents, I was like, this is courageous and incredible because if other people follow this, it'll unlock money.

But what happened to that whole model? People put it on the side and they were like, if you go to Credit Suisse, this will happen, that will happen. So the infrastructure pushes back on you. So I think part of what we need to do is make people open to realize direct listings work.

Now, for example, I went through a direct listing with Slack. What we did not learn is that the best price is the day one price. So if you had investor pressure, the thing that I should have done, it was a probably a $1.2 billion, $1.24 billion mistake. I know it because I distributed too late.

I should have sold every share. I didn't know that. It was very hard to know that. So I think the point is that there is this system of weird incentives that have everything to do with what Barry Weiss yesterday called prestige and nothing to do with what you said, which is disinfecting a business and just let it win or lose.

Yeah, so very well said. And then I know you will move on after this. But to me, Jason, there's one other big thing, which is CEOs need to understand that it's okay for their valuation to go down. Right there. You know, it's like this bet noire in the Valley that my God, if for some reason your valuation goes down 10 or 15% is the end of the world.

100%. 100%. Guess what? It isn't. It's the craziest concept. I cannot figure it out. It's not going up. Right. It doesn't. It's like in Silicon Valley, if your stock's not always going up, it's like it's a failure. It's so immature. Yeah. It's so immature. Yeah. And there's these people that perpetuate that because then they have ball control.

And it's just not, who's in a relation, who's married? Okay, we'll give the final question to Zach. Okay, how many of you have been in a marriage where at some point the marriage was not always the best? You can't ask that and then ask people to raise their hands.

My point is relationships go up and down. Correct. Friendships go up and down. Businesses go up and down. I mean like this is real life. Well, so just to- This will be our last question. Yeah, just to wrap things up. So I really wanted Thomas to give this speech because I thought this is the nitty gritty of what we deal with in the venture capital industry.

Your slides are incredible, by the way. We'll make them available, by the way, to everyone. So this is really the straight dope on what the venture capital industry is dealing with because we had this massive bubble in 2020 and 2021, especially the second half of 2021, where, you know, we all know that the Fed cut interest rates to zero and the federal government airdropped trillions of dollars on the economy.

And the way that affected the tech ecosystem is we had a bubble, like probably the biggest bubble in 2021 that we had since the dot-com bubble. And since then, 2022, 23, 24, we've been dealing with the fallout and the hangover from that. And I think that's what you're, if I was to kind of TLDR your slides, it's basically, we had this incredible bubble.

Now we're in this sort of workout period. There's a lot of fastest. But we've doubled the payback period. That's a real problem. Yeah. So that's, so, and so there's more to work out. At the same time, I think that we've heard at this conference that some of these emerging tech trends are going to be the biggest we've ever seen.

Benioff talked about agents of the enterprise. Elon talked about robots. So at the same time that I think the tech industry is feeling this huge hangover. And it's, you know, frankly, if you're like doing all these workouts, the companies, it's pretty miserable, but we're seeing these upward trends that could be the biggest yet.

David and I said something backstage. I just curious what you think of this. We were looking at your slides, the one that said the 2022 cohort was below the, and the comment was, and you can just say yes or no, but that's probably where the best companies are going to emerge because they will have the most Darwinian risk of demise.

Yeah. Is that kind of counter-intuitively make sense to you or? It's not. And look, it fits within a framework that I really believe, which someone kind of told me in the context of China, but I think is appropriate, which is, you know, dictatorships double down and democracies self-correct. You know, markets self-correct, right?

So I'm a big believer in our ability as a market to kind of self-correct. It's kind of why I wanted to show the slide about the age of companies, right? Because it kind of crystallized what we all believe, which is that technology is fundamentally changing the world of business and markets.

And kind of, I still really believe that. So, David, I 100% agree. I just hope, like, take the AI trend as an example, right? Part of also why I like talking about this stuff is so we don't just repeat some of the same mistakes, right? Because I always view my role as an investor, first and foremost, as a version of the Hippocratic Oath.

We're both just do no harm, don't make things worse, right? Maybe you can't help, but at the very least, don't, like, make things worse, right? And my one worry, I kind of said it a little bit before, is that some of this stuff is actually making things worse. So let's kind of stop doing what we think makes things worse, and let's try to focus on, again, the incredible value creation that will come.

We have the chart that shows it over 30 years. We know that technology creates incredible new companies. Let's just kind of let that process play out. Ladies and gentlemen. Thank you very much. Thank you, Tommy. All right. Thank you. That was awesome. Thank you. Thank you.