Episode
E80: Recession deep dive: VC psychology, macro risks, Tiger Global, predictions and more
1:41:14
Published: Fri May 13 2022
Description
0:00 Bestie catchup and Friedberg intros! 4:40 Breaking down current macro risks, Great Recession comparisons 31:55 How a historically large amount of dry powder is impacting VC firms as the market shifts, problems with mega funds 41:31 Tiger Global's historic loss and where they might have gone wrong; Sacks' gives his playbook for raising capital in a downturn 58:35 How startup employees can protect themselves in a down market, questions to ask and metrics to know while evaluating startups to work at 1:13:21 Psychological impact of investing after taking huge losses 1:29:00 Predictions on how the market shakes out Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/TheZachEffect Referenced in the show: https://twitter.com/cullenroche/status/1524441227931774976 https://www.axios.com/2022/04/08/consumer-debt-soars-credit-cards https://www.bls.gov/news.release/realer.nr0.htm https://www.federalreserve.gov/releases/g19/current/default.htm https://www.longtermtrends.net/home-price-median-annual-income-ratio https://www.bloomberg.com/news/articles/2022-05-12/musk-seeks-to-scrap-tesla-margin-loan-with-new-twitter-funding https://twitter.com/Jason/status/1523780820112007168 https://fred.stlouisfed.org/series/CIVPART https://www.dol.gov/ui/data.pdf https://twitter.com/TheBenSchmark/status/1522669777478684672 https://twitter.com/AndrewE_Dunn/status/1523653942252826624 https://twitter.com/mattturck/status/1524773379416408064 https://twitter.com/jonsakoda/status/1522625236130144256 https://cloudedjudgement.substack.com https://techcrunch.com/2022/05/10/tiger-global-hit-by-17b-hedge-fund-losses-has-nearly-depleted-its-latest-vc-fund/ https://twitter.com/ZoeSchiffer/status/1523017143939309568 https://twitter.com/BurryArchive/status/1524504399070081025 https://www.usatoday.com/story/money/2022/05/04/dow-rallies-fed-ups-rates/9649150002/ https://twitter.com/Airbnb/status/1524379284260892674
Chapters
The podcaster shares a funny anecdote about being recognized by fans while eating at a restaurant.
00:00 - 01:43 (01:42)
Summary
The podcaster shares a funny anecdote about being recognized by fans while eating at a restaurant.
EpisodeE80: Recession deep dive: VC psychology, macro risks, Tiger Global, predictions and more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The speaker discusses the recent market crash affecting stocks and cryptocurrencies such as Tiger coinbase, Shopify, and meme stocks.
01:43 - 04:59 (03:16)
Summary
The speaker discusses the recent market crash affecting stocks and cryptocurrencies such as Tiger coinbase, Shopify, and meme stocks. Also, he adds a little humor by talking about a loud individual with nothing much to say who still remains on the show.
EpisodeE80: Recession deep dive: VC psychology, macro risks, Tiger Global, predictions and more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
As inflation rises, wages in real terms fall and consumers turn to credit cards to cover the rising costs of goods and services.
04:59 - 14:39 (09:39)
Summary
As inflation rises, wages in real terms fall and consumers turn to credit cards to cover the rising costs of goods and services. This may signal the beginning of a consumer credit bubble, which poses a scary situation for the economy.
EpisodeE80: Recession deep dive: VC psychology, macro risks, Tiger Global, predictions and more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The cost of capital for a risk bearing asset is high, but the job market is opening up, allowing people more opportunities to work and earn money.
14:39 - 25:43 (11:04)
Summary
The cost of capital for a risk bearing asset is high, but the job market is opening up, allowing people more opportunities to work and earn money. However, companies may focus on maximizing short term cash flow by cutting expenses, which could impact consumers negatively.
EpisodeE80: Recession deep dive: VC psychology, macro risks, Tiger Global, predictions and more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
Many public biotech stocks are now trading below their cash balance, leading to difficulty in obtaining funding for the next phase of clinical trials.
25:43 - 30:45 (05:02)
Summary
Many public biotech stocks are now trading below their cash balance, leading to difficulty in obtaining funding for the next phase of clinical trials. The biotech industry and companies such as SYNBio now face a tense financial situation.
EpisodeE80: Recession deep dive: VC psychology, macro risks, Tiger Global, predictions and more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
A look into private equity funds shows that 40% of their capital is deployed in struggling businesses, resulting in 50% losses.
30:46 - 38:55 (08:09)
Summary
A look into private equity funds shows that 40% of their capital is deployed in struggling businesses, resulting in 50% losses. This raises questions about the future of private markets and the likely division between those with available funds and those without.
EpisodeE80: Recession deep dive: VC psychology, macro risks, Tiger Global, predictions and more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
Venture capitalist, Bill Gurley, explains that it will be challenging for many to raise LP (Limited Partner) money for private companies following the influx of multi-billion dollar funds, and that he would use his own money for 10-50 million dollars before relying on LP money, due to the increasing reliance on machines and accurate models to ensure you only rely on one winner.
38:55 - 45:20 (06:25)
Summary
Venture capitalist, Bill Gurley, explains that it will be challenging for many to raise LP (Limited Partner) money for private companies following the influx of multi-billion dollar funds, and that he would use his own money for 10-50 million dollars before relying on LP money, due to the increasing reliance on machines and accurate models to ensure you only rely on one winner.
EpisodeE80: Recession deep dive: VC psychology, macro risks, Tiger Global, predictions and more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The troubled asset relief program in 2008 introduced the concept of quantitative easing or the "Fed put", which provided comfort for companies to raise funds.
45:20 - 54:29 (09:08)
Summary
The troubled asset relief program in 2008 introduced the concept of quantitative easing or the "Fed put", which provided comfort for companies to raise funds. Alongside this, modern monetary theory was promoted, suggesting that money printing was a good idea.
EpisodeE80: Recession deep dive: VC psychology, macro risks, Tiger Global, predictions and more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
Without preferred shares, founders could liquidate a company without regard for investor returns.
54:29 - 1:02:15 (07:46)
Summary
Without preferred shares, founders could liquidate a company without regard for investor returns. Founders also have unique tax advantages, but investors should be wary of unrealistic ARR projections in determining company value.
EpisodeE80: Recession deep dive: VC psychology, macro risks, Tiger Global, predictions and more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
In times of a valuation reset, it's crucial for employees to understand the company's worth and have a way to participate in it.
1:02:15 - 1:11:12 (08:57)
Summary
In times of a valuation reset, it's crucial for employees to understand the company's worth and have a way to participate in it. Failure to do so may lead to problematic employee retention, especially in the case of layoffs contagion in tech.
EpisodeE80: Recession deep dive: VC psychology, macro risks, Tiger Global, predictions and more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The quarter trillion dollars of dry powder sitting in venture capital coffers might end up being stimulatory by funding the next generation of technology businesses that create new jobs and new areas of growth within the economy.
1:11:12 - 1:17:38 (06:26)
Summary
The quarter trillion dollars of dry powder sitting in venture capital coffers might end up being stimulatory by funding the next generation of technology businesses that create new jobs and new areas of growth within the economy.
EpisodeE80: Recession deep dive: VC psychology, macro risks, Tiger Global, predictions and more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
Jason shares his thoughts on the current climate of startup funding and urges founders to accept reality and understand the importance of being focused on customers and product.
1:17:38 - 1:23:43 (06:05)
Summary
Jason shares his thoughts on the current climate of startup funding and urges founders to accept reality and understand the importance of being focused on customers and product. He also advises VCs to focus on backing better founders and better products to increase their chances of success.
EpisodeE80: Recession deep dive: VC psychology, macro risks, Tiger Global, predictions and more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The speaker discusses statistical insights into market bottoms, highlighting the turnover of shares, companies like Microsoft and JP Morgan during the 2000 and 2009 eras, and the tough position of the Fed in a time of inflation and impending recession.
1:23:43 - 1:31:50 (08:06)
Summary
The speaker discusses statistical insights into market bottoms, highlighting the turnover of shares, companies like Microsoft and JP Morgan during the 2000 and 2009 eras, and the tough position of the Fed in a time of inflation and impending recession.
EpisodeE80: Recession deep dive: VC psychology, macro risks, Tiger Global, predictions and more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
With a potential recession looming, a consumer credit bubble and lack of wage growth could lead to a credit crisis in the next year, making it difficult for consumers to afford their credit.
1:31:50 - 1:35:47 (03:57)
Summary
With a potential recession looming, a consumer credit bubble and lack of wage growth could lead to a credit crisis in the next year, making it difficult for consumers to afford their credit. The real Fed funds rate has also become negative, leading to concerns about the data the Fed is using to make policy decisions.
EpisodeE80: Recession deep dive: VC psychology, macro risks, Tiger Global, predictions and more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The hosts discuss the fallacy of not working and the value in creating things, arguing that a lack of labor participation and reliance on non-productive activities like NFT flipping is harmful to the economy.
1:35:47 - 1:41:00 (05:12)
Summary
The hosts discuss the fallacy of not working and the value in creating things, arguing that a lack of labor participation and reliance on non-productive activities like NFT flipping is harmful to the economy.