The Exchanges

Q do over the last few years, and Brad, me and you both know the dirty truth, which is, it is a fucking lucrative game if you want to do it and do it right, and some people have, absolutely, but you will, I think, obviously see a damage to, like, Multiples. So how do you think about this misalignment between fee collection and maximizing multiples on smaller pools of capital?

A Again, you know, you're right. It's structural. Um, one of the ways, like if I'm an LP and I'm allocating to somebody, I need to think about their economic alignment. Okay. So I think at altimeter, I'm 20% of the capital in altimeter. Okay. So the return to me of an incremental turn on the multiple Is a lot more important and dramatically more important on an after tax basis than return to me from fee, from management fee. Okay. And so I'm very well aligned with my partners that I'm going to size our funds in a way that I think balances maximizing return and building the firm. Um, and so like, for example, our fund started off at a hundred million, our first VC fund, VC six was closer to a billion and a half. We could have raised a lot more than a billion and a half. Why did we choose billion and a half? I think where the space we occupy at Altimeter, which is sitting in between the best seed and A investors in the world and the public markets and really helping invest in those companies like Snowflake, like Modern Treasury, like DBT pre-revenue and growing with them all the way to public markets. We need scale to do that, right? And so how much is enough scale But not so much as it becomes hugely dilutive or even meaningfully dilutive to our returns. Deploying a ten billion dollar fund or, God forbid, a fifty billion or a hundred billion dollar fund like Masa tried to do, righ…

AI assessment note: “return to me of an incremental turn on the multiple Is a lot more important”

Q publics and privates within LPs books, which is meaning they're going, whoa, I'm not allocating anything to venture for a while because it's so out of kilter. And it's because managers aren't either doing it at all or doing it aggressively enough. How do you think about the right way for managers to think about marking down books? How would you advise me on it? I'd love your genuine thoughts.

A Well, so we have a, you know, I think our policy is pretty standard with, with most managers, which is we don't spend a lot of time marking up our books when the NASDAQ's going up and we don't spend a lot of time marking down our books when the NASDAQ's going down, when the facts change or new rounds intervene or down rounds occur, obviously we will make changes to the portfolio. But again, What's so important is I have that very clear expectation with my LPs. So I was having a conversation with the CIO of Harvard, and he asked me early this year, what do you, how do you think we ought to think about valuations? And I said, I would take everything in your portfolio that received a valuation over the last two years, over five hundred million dollars, and I'd mark it down by 50%. What do you mean? And I said, well, if I look at the average gross stock in the NASDAQ, it's down 50%. So, like, I think every LP needs to assess for themselves how they carry it, right? So, I don't think it's just a GP issue, right? Ultimately, I have different LPs. Some are longer duration. Some are shorter duration. Some have the denominator problem that you described because they're running an endowment model. Some don't because they're families and they want to double down. And so I think it's just important to talk clearly with your LPs about what your approach is. And then if you get the question,…

AI assessment note: “we don't spend a lot of time marking down our books when the NASDAQ's going down”

Q own family too, in terms of like losing the house, losing family money, and it really instilled this like downside protection in me and risk aversion, where I'm very scared even now of losing everything, and that still very much pervades my mind. How did seeing that and seeing, you know, your father lose the majority of, you know, his money, how did that impact your mindset, do you think?

A Well, I mean, my dad didn't lose the majority of his money because that presupposes he had money to begin with. Um, you know, as my grandfather used to say, he said, we don't have money problems. We have lack of money problems. Um, you know, that was, that was the environment in my family. So he had borrowed everything from these banks. And, um, I would, I would say for me, my grandfather made the grandkids promise that we would not be entrepreneurs. That we would be professionals. And the reason I went to law school is because I had to choose between law school and medical school. And I, I, I wanted to be a doctor, but really couldn't stand the sight of blood. So I decided to go to law school as an insurance policy, really to honor my grandfather and the commitment I made to him. And once I got the insurance policy, then I felt like I checked the box and then I could go be an entrepreneur, which is in some ways wanting to finish my dad's journey, I guess. Um, but yeah, profoundly impacts you as a kid. I think there are a lot of people in Silicon Valley, uh, you know, and elsewhere as entrepreneurs that grew up, whether, you know, they're first generation, whether immigrant, whether they grew up poor, that chip on the shoulder, uh, puts chips in pockets, as they say, you know.

AI assessment note: “I decided to go to law school as an insurance policy”

Q So we have this, um, uh, medic who's scared of blood, uh, turned lawyer. Um, how does that lead to bossing the financial world and founding Altimeter, Brad?

A Yeah, I, I, I, I know. I never connected the dots. Well, I mean, so I'm in rural Indiana. I'm growing up. My dad's growing broke. So I start reading a bunch of biographies Um, to try to understand the world, really. Um, I come across Buffett Munger. This is probably, um, middle school, early high school. Um, now I'm, I'm, I don't want to give this impression that I didn't have fun. I mean, I was partying. I was playing sports. I was doing all these things, but I would show up at school early. Um, and I started, you know, on graph paper, like charting stocks. Because I was absolutely in, you know, enthralled with this idea that people who kind of looked like me, Buffett was in Omaha, right, and, and seemed to live a kind of normal life like the life I lived, I would really want to understand these markets and these things called stocks and, and, and how companies work, perhaps in a way to help explain to me why it didn't work for my dad. Um, and so I, you know, like fast forward Right. Go to law school because I said, uh, you know, I had to get that insurance policy. Um, I actually did a stint in politics, thought I was going to run for office. That's a whole nother vector of trying to live a life of purpose and have impact on the world. But I realized I was poor, went back to business school, um, in law school in 1995. Right. I had gathered all of my friends around this compute…

AI assessment note: “I come across Buffett Munger... Go to law school... went back to business school”

Q analysis, we can look at, I don't know, enterprise compliance, massive freaking markets, but actually completely category creation markets and massive expansionary markets, you know, so many of these examples From your Airbnbs and your Ubers to your Twilios of the world in enterprise. They weren't big markets at the time. How do you factor in market creation and massive market expansion into that? It needs to be big enough.

A I think you have to be careful of commingling markets and what I describe as super cycles. Ok, so in my investing career, there have been three what I would describe as super cycles. The first was the internet, right? Everybody coming online. It was very clear even by 2000 that we were going to have hundreds of millions or billions of people online. So the question was who were going to be the biggest beneficiaries of that? And so I would describe that period of time for me investing or me founding companies. I concluded that search, making sense out of all this chaos, and e-commerce, which was really search for products, were going to be the two biggest areas of category creation. So seeing through that lens, Airbnb, which was making sense out of all the world's long tail inventory, right, in the way that Craigslist had done, for all properties that were not on bookie.com, like it actually fit, it wasn't a new market at all. That was a business prosecuting a strategy in a massive super cycle with massive tailwinds. Okay. I would say the second super cycle in my career was the move from search and e-commerce to mobile and, you know, and, and, and, um, applications that sit on top of mobile. And so what led us to Facebook in 2012 or what led us to ByteDance early was this idea That this device was going to be the principle and replacement mechanism for entertainment, for communi…

AI assessment note: “I think you have to be careful of commingling markets and what I describe as super cycles.”

Q There's a couple of points I have to pick up on. You said about the rate of change there of interest rates being so important. Talk to me, how does the rate of change of interest rates impact our jobs so profoundly?

A So if you think about it, in 2002 1001, 2002, rates were at six or seven percent and there was a tremendous amount of value creation between 2002 1005, right? Because we had this massive secular tailwind in the internet, but the rate was fairly stable during this period of time and was moving, the market believed, directionally lower, okay? When you have a period where we just went through something that is a major standard deviation event, which is going from basically 50 basis points to 400 basis points on the tenure, it leads to a state of paralysis because our job is to predict the future. We got to forecast the future for the company, but we also have to forecast what is the multiple the world's going to be willing to pay at a point in time in the future. And so I think when people see a huge rate of change, now we have Larry Summers saying we may go to six or seven percent. Well, your cost of capital is going up. You need to have some predictability about that cost of capital. Let me take it to its logical extreme, Harry. Let me tell you that you could earn 20% a year in a risk-free investment. Okay. How many fewer investments would you make?

AI assessment note: “it leads to a state of paralysis because our job is to predict the future”

Q publics and privates within LPs books, which is meaning they're going, whoa, I'm not allocating anything to venture for a while because it's so out of kilter. And it's because managers aren't either doing it at all or doing it aggressively enough. How do you think about the right way for managers to think about marking down books? How would you advise me on it? I'd love your genuine thoughts.

A Well, so we have a, you know, I think our policy is pretty standard with, with most managers, which is we don't spend a lot of time marking up our books when the NASDAQ's going up and we don't spend a lot of time marking down our books when the NASDAQ's going down, when the facts change or new rounds intervene or down rounds occur, obviously we will make changes to the portfolio. But again, What's so important is I have that very clear expectation with my LPs. So I was having a conversation with the CIO of Harvard, and he asked me early this year, what do you, how do you think we ought to think about valuations? And I said, I would take everything in your portfolio that received a valuation over the last two years, over five hundred million dollars, and I'd mark it down by 50%. What do you mean? And I said, well, if I look at the average gross stock in the NASDAQ, it's down 50%. So, like, I think every LP needs to assess for themselves how they carry it, right? So, I don't think it's just a GP issue, right? Ultimately, I have different LPs. Some are longer duration. Some are shorter duration. Some have the denominator problem that you described because they're running an endowment model. Some don't because they're families and they want to double down. And so I think it's just important to talk clearly with your LPs about what your approach is. And then if you get the question,…

AI assessment note: “we don't spend a lot of time marking down our books when the NASDAQ's going down”

Q do over the last few years, and Brad, me and you both know the dirty truth, which is, it is a fucking lucrative game if you want to do it and do it right, and some people have, absolutely, but you will, I think, obviously see a damage to, like, Multiples. So how do you think about this misalignment between fee collection and maximizing multiples on smaller pools of capital?

A Again, you know, you're right. It's structural. Um, one of the ways, like if I'm an LP and I'm allocating to somebody, I need to think about their economic alignment. Okay. So I think at altimeter, I'm 20% of the capital in altimeter. Okay. So the return to me of an incremental turn on the multiple Is a lot more important and dramatically more important on an after tax basis than return to me from fee, from management fee. Okay. And so I'm very well aligned with my partners that I'm going to size our funds in a way that I think balances maximizing return and building the firm. Um, and so like, for example, our fund started off at a hundred million, our first VC fund, VC six was closer to a billion and a half. We could have raised a lot more than a billion and a half. Why did we choose billion and a half? I think where the space we occupy at Altimeter, which is sitting in between the best seed and A investors in the world and the public markets and really helping invest in those companies like Snowflake, like Modern Treasury, like DBT pre-revenue and growing with them all the way to public markets. We need scale to do that, right? And so how much is enough scale But not so much as it becomes hugely dilutive or even meaningfully dilutive to our returns. Deploying a ten billion dollar fund or, God forbid, a fifty billion or a hundred billion dollar fund like Masa tried to do, righ…

AI assessment note: “I'm 20% of the capital in altimeter... return of an incremental turn on the multiple”

Q Do you see the structural, like, problem with LPs yourself?

A Of course. I mean, but I won't describe it as a problem. I'll describe it as just a reality in the world. So for example, when I got started in this business with David and Joel, sovereign wealth funds were not allocating to venture. Pension funds weren't allocating in any real way to venture, right? I mean, Swenson and Yale were in the vanguard. Of allocating to venture, right? So it's important for GPs to understand the world has structurally changed. I'm getting cold called from Middle East sovereigns who want to invest. Okay. This is going to mean that we have a permanent increase In the amount of capital that exists in venture capital, a permanent increase and pension funds went in. And by the way, their hurdle rate, what they need to make on that money is much lower than what MIT expected to make. And so, you know, now if you're, if you're Yale or MIT, you may say these guys are ruining the party. And to some extent they are. The industry is going from highly fragmented to much more industrial scale. Returns are going to compress. But you want to, the reason I still remain so optimistic, where we started, it's a power law industry. It doesn't matter that you're in 200 deals. Hell, you don't want to be in 200 deals. The question is, is the best founder, right? Is Mike Spicer and, you know, and Bob Muglia going to do that deal with Altimeter, or are they going to do it with…

AI assessment note: “Of course. I mean, but I won't describe it as a problem.”

Q Do you worry that hustle can get in the way of loyalty and discipline and loyalty and discipline? Like if you're so intent on that, you said that money making that, that hustle, that drive, then do they maintain the discipline when times are crazy? Do they maintain the loyalty to you, Brad and Altimeter when someone says, Hey, there's a shiny new toy over here.

A I would say a couple of things. Number one, um, Having figured out a way that you personally can build alpha is a condition required though not sufficient first, right? Like I know plenty of people have a good hustle, but they're actually not great thinkers. I know plenty of people have good hustle who don't have great discernment. So all I'm saying is when you're looking at recruiting somebody, is it plausible? Right? That they have alpha that makes them different from everybody else in the world. Number two, what I would say is, listen, my philosophy about people who work at Altimeter is that, you know, this place is not indentured servitude. You're all free agents. I say to everybody who comes to work here, you may work here a year, you may work here the rest of your career. The only thing I really care about is that it's an incredible experience for you and an incredible experience for us, right? I've had three analysts, including my first analyst, Dennis Hong, who, you know, um, Dennis, the day he agreed to come work for me, he said, listen, I want to work there three years. I want you to help me get into Harvard Business School, and I want to learn everything I can so I can start my own fund. And I said, deal. And we kept that deal. Went to Harvard Business School, he dropped out and he started his own fund and I'm an LP, uh, from day one in his own fund. And so, you know…

AI assessment note: “I don't view that as a breach of loyalty.”

Q I totally agree. What's the biggest challenge in firm building for you then?

A I would say saying no. Saying no to all of the, you know, I, I mentioned SPACs last year. Um, saying no to a Middle East sovereign who calls me up and says, Brad, you ought to set up a structured convert fund. We'll sponsor it with a billion dollars because KOTU is doing one and so-and-so is doing one. And, you know, we're gonna, all these deals are gonna be written down. We think you're really good at it. Like the, the opportunity for product proliferation, people proliferation, deal proliferation, I mean, it is incessant, right? And so for me, If I didn't have the conviction and the clarity that I do around essentialism, right, and practicing that every day, it would be a total distraction. But it's the same as Johnny Ive or Steve Jobs when somebody walking, hey, I got a new product feature. You ought to add this, add that, add this button on the home screen, add this. Like, they got shit every day. And you need to build a culture where people are afraid to suggest new things unless they've actually thought about it. Right? If you are an analyst who walks into my office with an idea a day because, you know, Johnny Mac down the street did the deal, like, you will be fired. Right? You better come in prepared, not with Dribbble, but you better have done your work because we're going to have a conversation.

AI assessment note: “I would say saying no. Saying no to all of the”

Q money. How do you think about your own ego and ego management? It's so easy, you know, you're top of the industry. Everyone will praise you. Everyone will tell you how brilliant you are. You have Saudi LPs wanting to give you a billion dollars. You think you're freaking great, naturally. It's a human response. How do you think about ego management, and how would you advise me on that?

A First, um, the number of people in life who surround themselves with sycophantic others, uh, who are their yes people. Right tell them what they want to hear afraid of speaking truth to them. Um, like, it's almost everybody at a certain level. Right, because you can afford to do that. You can fire the people who say mean things to you and. Or disagreeable things to you and you surround yourself with people who all agree with you. Um, listen, I, it starts with, I have three siblings and an 86 year old mother. And we have a culture in our family of speaking truth. So, you know, my sister, um, calls me fancy pants because I don't come back and visit her enough. Right. Um, you know, so there's a lot of, you know, siblings, dear friendships. Right. And, you know, you talk to, uh, some folks, you know, I, I, I know Lexi Reese, um, who's a dear friend. I mean, I get out of line on something or I, you know, I'm going to hear from Lexi. Right. Um, and she's going to remind me of my priorities. And so having friends in your life. Who remind you of those priorities, um, and then children. Right. My kids, the things that you think are important, your kids probably won't. And, you know, and I have kids now, um, I do, we do a service, a family service trip every year, uh, uh, with give power, an incredible organization that uses solar micro grids to light up schools and health clinics around…

AI assessment note: “having friends in your life. Who remind you of those priorities, um, and then children.”

Q about it and touched on it a little bit. You've spoken before about being sufficiently concentrated. What does that look like in your mind in terms of the optimal concentration? Because I think I struggle more with it. I don't think people are that good pickers, and I think diversification is more needed, and you, I think, think concentration is needed. So help me understand why sufficiently concentrated is better.

A Yeah, I mean, when I think about concentration, you gotta know, again, I, I, uh, you know, I come out of this Buffett school, and I think, uh, you know, as, as Buffett has said, you know, diversification is a great way to preserve wealth, but a terrible way to create it. Right. And so I think diversification in many ways is the greatest myth perpetrated on the investing public. The idea that risk mitigation is the equivalent of diversification. Anybody who lived through 2008 knows that all asset and all pricing was correlated. Hell, look at a chart on the, on any technology company over the course of the last nine months. How much did diversification help you? Right? And so what I want to do and what people should pay me for or choose not to pay me for, right? Like they either believe or they don't believe, is can you, are you in a position intellectually, network, conversion, et cetera, to generate alpha? And if you are, right, if I find a company where I have a level of conviction, like I did in Booking.com and Priceline in 2004, Google in 2005 or Snowflake, Uh, you know, in 2000 and, and, and, uh, 14, if we find those opportunities and we re-underwrite them at every phase, mentally flexible, stay open to the idea that you're wrong, but I want maximum dollars. Again, it's my money. I'm taking my partners along for the ride. I want maximum dollars behind our best ideas. Why th…

AI assessment note: “Why the hell would I put an incremental dollar in my 10th best idea”

Q Final one. This is episode 7850. 10 years time, Brad. Me and you are sitting down again. What does Altimeter look like then? Where are we?

A Well, I think it's going to be a lot more of the same. You know, we may, we may be five or 10 people bigger. Um, The incredible partners and young people around here will have even more responsible responsibility, uh, doing all the things that we do today. I mean, in the fullness of time, I want to see Altimeter have an incredible generational transfer. They're going to end up owning most of the place. My money, I'm going to ultimately, uh, give away. We've started, you know, uh, uh, fast down that journey. Um, but to me, it's, you know, I will have done my job. If the altimeter 10 years from now looks very recognizable, Culturally, it's values around impact, around radical candor, around intellectual honesty, thought leadership, partnership first. If all of that is still pervasive here, and I think if we were a 500 person organization and look like the Blackstone of venture capital, I think we probably would have failed in that journey. That's not, that's not our North Star. It's not where we're headed. Other people may do it. They may make a lot more money than us. They'll certainly end up on the covers of magazines and whatnot. But knowing who we are and prosecuting that strategy and having a lot of fun along the way, um, if I don't do that, shame on me.

AI assessment note: “I think it's going to be a lot more of the same.”

Q own family too, in terms of like losing the house, losing family money, and it really instilled this like downside protection in me and risk aversion, where I'm very scared even now of losing everything, and that still very much pervades my mind. How did seeing that and seeing, you know, your father lose the majority of, you know, his money, how did that impact your mindset, do you think?

A Well, I mean, my dad didn't lose the majority of his money because that presupposes he had money to begin with. Um, you know, as my grandfather used to say, he said, we don't have money problems. We have lack of money problems. Um, you know, that was, that was the environment in my family. So he had borrowed everything from these banks. And, um, I would, I would say for me, my grandfather made the grandkids promise that we would not be entrepreneurs. That we would be professionals. And the reason I went to law school is because I had to choose between law school and medical school. And I, I, I wanted to be a doctor, but really couldn't stand the sight of blood. So I decided to go to law school as an insurance policy, really to honor my grandfather and the commitment I made to him. And once I got the insurance policy, then I felt like I checked the box and then I could go be an entrepreneur, which is in some ways wanting to finish my dad's journey, I guess. Um, but yeah, profoundly impacts you as a kid. I think there are a lot of people in Silicon Valley, uh, you know, and elsewhere as entrepreneurs that grew up, whether, you know, they're first generation, whether immigrant, whether they grew up poor, that chip on the shoulder, uh, puts chips in pockets, as they say, you know.

AI assessment note: “profoundly impacts you as a kid... that chip on the shoulder, puts chips in pockets”

Q There's a couple of points I have to pick up on. You said about the rate of change there of interest rates being so important. Talk to me, how does the rate of change of interest rates impact our jobs so profoundly?

A So if you think about it, in 2002 1001, 2002, rates were at six or seven percent and there was a tremendous amount of value creation between 2002 1005, right? Because we had this massive secular tailwind in the internet, but the rate was fairly stable during this period of time and was moving, the market believed, directionally lower, okay? When you have a period where we just went through something that is a major standard deviation event, which is going from basically 50 basis points to 400 basis points on the tenure, it leads to a state of paralysis because our job is to predict the future. We got to forecast the future for the company, but we also have to forecast what is the multiple the world's going to be willing to pay at a point in time in the future. And so I think when people see a huge rate of change, now we have Larry Summers saying we may go to six or seven percent. Well, your cost of capital is going up. You need to have some predictability about that cost of capital. Let me take it to its logical extreme, Harry. Let me tell you that you could earn 20% a year in a risk-free investment. Okay. How many fewer investments would you make?

AI assessment note: “it leads to a state of paralysis because our job is to predict the future”

Q Do you see the structural, like, problem with LPs yourself?

A Of course. I mean, but I won't describe it as a problem. I'll describe it as just a reality in the world. So for example, when I got started in this business with David and Joel, sovereign wealth funds were not allocating to venture. Pension funds weren't allocating in any real way to venture, right? I mean, Swenson and Yale were in the vanguard. Of allocating to venture, right? So it's important for GPs to understand the world has structurally changed. I'm getting cold called from Middle East sovereigns who want to invest. Okay. This is going to mean that we have a permanent increase In the amount of capital that exists in venture capital, a permanent increase and pension funds went in. And by the way, their hurdle rate, what they need to make on that money is much lower than what MIT expected to make. And so, you know, now if you're, if you're Yale or MIT, you may say these guys are ruining the party. And to some extent they are. The industry is going from highly fragmented to much more industrial scale. Returns are going to compress. But you want to, the reason I still remain so optimistic, where we started, it's a power law industry. It doesn't matter that you're in 200 deals. Hell, you don't want to be in 200 deals. The question is, is the best founder, right? Is Mike Spicer and, you know, and Bob Muglia going to do that deal with Altimeter, or are they going to do it with…

AI assessment note: “I won't describe it as a problem. I'll describe it as just a reality”

Q What is so special about Burning Man for you, Brad?

A Uh, we could make it, we could make a whole show on this. Maybe we should get Rich and Bob will do a whole show on this. No, listen, I think there's this, there's this view in the world that Bernie man is, uh, you know, some hedonistic exercise of, you know, of, of drugs and orgies and, and, and whatnot. And, you know, that's fine because it, it just means there's a lot of self selection. Not everybody's going to go and not everybody should go for me. It's core value is no judgment. Like, truly going to a place where you suspend judgment about what you see, the things going on around you, the people, et cetera, and you see the art of the possible. It is a great open source experiment in humanity. It's an open source festival of 75,000 people that could not possibly exist the way it does. If it had a CEO or a head developer or architect who tried to micromanage what that event looked like. And so I think, you know, not only do I see great friends, not only do I have fun and I'm not saying crazy shit doesn't happen. It does. Right. But for me, I think it's embodies a real spirit that we could bring into our daily lives, which is suspend judgment about, uh, or people are quick to get to judgment about people or the way they do things. Um, you know, have an open mind and realize that that open design can lead to a lot of really incredible creativity.

AI assessment note: “For me, it's core value is no judgment.”

Q about it and touched on it a little bit. You've spoken before about being sufficiently concentrated. What does that look like in your mind in terms of the optimal concentration? Because I think I struggle more with it. I don't think people are that good pickers, and I think diversification is more needed, and you, I think, think concentration is needed. So help me understand why sufficiently concentrated is better.

A Yeah, I mean, when I think about concentration, you gotta know, again, I, I, uh, you know, I come out of this Buffett school, and I think, uh, you know, as, as Buffett has said, you know, diversification is a great way to preserve wealth, but a terrible way to create it. Right. And so I think diversification in many ways is the greatest myth perpetrated on the investing public. The idea that risk mitigation is the equivalent of diversification. Anybody who lived through 2008 knows that all asset and all pricing was correlated. Hell, look at a chart on the, on any technology company over the course of the last nine months. How much did diversification help you? Right? And so what I want to do and what people should pay me for or choose not to pay me for, right? Like they either believe or they don't believe, is can you, are you in a position intellectually, network, conversion, et cetera, to generate alpha? And if you are, right, if I find a company where I have a level of conviction, like I did in Booking.com and Priceline in 2004, Google in 2005 or Snowflake, Uh, you know, in 2000 and, and, and, uh, 14, if we find those opportunities and we re-underwrite them at every phase, mentally flexible, stay open to the idea that you're wrong, but I want maximum dollars. Again, it's my money. I'm taking my partners along for the ride. I want maximum dollars behind our best ideas. Why th…

AI assessment note: “Why the hell would I put an incremental dollar in my 10th best idea”

Q Is it difficult giving them the perspective? I mean, this respectfully given, you know, you do have a lot of money and you've earned it and it's very well earned, but they are brought up in a different life than you had. Is it difficult providing that perspective to them as a parent?

A It is the most difficult. And I've discussed this with, you know, lots and lots of people on the topic. Um, and here's what I've concluded from wisdom from whether it's, you know, from Buffett to reader is it's not what you say to your kids. Like you can say, oh, be humble. And then you go, you know, into your 18,000 square foot home. Right. It's not what you say. It's what you do. It's the life you live. It's how they see you treating others. It's the choices that they see you making. And so, you know, I ended up, you know, saying that my life is different. I live in a small house. In fact, I had a, a founder, um, of a Decacorn, you know, who had visited other investors' homes and he came over to my house and he, he was so floored by it. He said, can I take a video of this? We're sitting around the fire in the back, you know, fire pit in the backyard. He said, I've got to show this to my wife. She won't believe that you live here. And, um, you know, and so for me, my children know that we could afford a much different home, but they know that we choose to live there. And, you know, and now my son says to me, dad, I love that we live here. My He's like, because I'm not embarrassed to bring any of my friends here. Like I love this house. Right. So, you know, I think there's something that we're doing right. Um, but yeah, I think it's about how you live your life every day. And l…

AI assessment note: “It is the most difficult. And I've discussed this with, you know, lots and lots”

Q I mean, this show is just the biggest combination of ballers. Now I'm so excited to hand over to the one and only Brad Gerstner at Altimeter. What is your relationship?

A Wow, this is deep, and I've done a lot of reflection on this. If you would have told me I have, was going to have what I have, let's say when I was 20, and then you would have said, describe to me the house you're gonna live in, the car you're gonna drive, the life that you're gonna live. I would have described to you a life totally different than the life I'm living. From as early as I can remember, sixth grade, I was like, I have to make a million dollars by the time I'm 30. It was a dragon in my life, because it destroyed our lives. When my dad went broke, destroyed his health, his marriage. So when you grow up in that, like, that is a real dragon. That's a beast you have to slay. Fortunately, because Fiocco and Cutler gave me a shot, I was able with NLG to slay that beast right at 30. Shortly thereafter, Bajal Samaya and I, Bajal's now running Lightspeed. We co-founded my second company, or our second company together, called OpenList, and we sold that. Another little base hit, double, and I'll tell you, when I had a few million bucks, I was like, good to go. Like, I had slayed the dragon. Because I didn't come from a life of accoutrement. Remember, when I started Altimeter, I started with less than five million bucks. I couldn't even convince my friends from HBS to contemplate being my partner in this thing. They're like, dude, you're embarrassing yourself. Go back to par.…

AI assessment note: “so to me, I slayed the dragon around money. My life and priorities totally shifted.”

Q Product, additional products provide additional revenue, more money. You have essentialism as a core strain of your mindset in life. You also have the, the childhood that you mentioned earlier. How do you think about all of these combining to your, your relationship to money today? Uh, what is your relationship to money stagey thing?

A Wow. This is, this is deep. Um, and I've done a lot of reflection on this. Um, If you would have told me I have, was going to have what I have, let's say when I was 20, and then you would have said, describe to me the house you're going to live in, the car you're going to drive, the life that you're going to live, I would have described to you a life totally different than the life I'm living, ok? From as early as I can remember, sixth grade, I was like, I have to make a million dollars by the time I'm 30. I mean, it was a dragon in my life because it destroyed our lives. Right. It, it was like when my dad went broke, destroyed his health, his marriage, like it was, you know, so when you grow up in that, like that is a real dragon. That's a beast you have to slay. Um, and you know, fortunately because Fiocco and Cutler gave me a shot, I, I, I was able with NLG to slay that beast right at 30. Right? And, um, shortly thereafter, Bajal Samaya and I, Bajal's now running Lightspeed, we, we co-founded, uh, my second company, or our second company together, called OpenList, and we sold that, you know, another little base hit, double, and, and I'll tell you, when I had a few million bucks, I was, like, good to go. Like, I had slayed the dragon, um, because I didn't come from a life of accoutrement. Remember, when I started Altimeter, I started with less than five million bucks. My, I c…

AI assessment note: “when I had a few million bucks, I was, like, good to go.”

Q I mean, this show is just the biggest combination of ballers. Now I'm so excited to hand over to the one and only Brad Gerstner at Altimeter. What is your relationship?

A Wow, this is deep, and I've done a lot of reflection on this. If you would have told me I have, was going to have what I have, let's say when I was 20, and then you would have said, describe to me the house you're gonna live in, the car you're gonna drive, the life that you're gonna live. I would have described to you a life totally different than the life I'm living. From as early as I can remember, sixth grade, I was like, I have to make a million dollars by the time I'm 30. It was a dragon in my life, because it destroyed our lives. When my dad went broke, destroyed his health, his marriage. So when you grow up in that, like, that is a real dragon. That's a beast you have to slay. Fortunately, because Fiocco and Cutler gave me a shot, I was able with NLG to slay that beast right at 30. Shortly thereafter, Bajal Samaya and I, Bajal's now running Lightspeed. We co-founded my second company, or our second company together, called OpenList, and we sold that. Another little base hit, double, and I'll tell you, when I had a few million bucks, I was like, good to go. Like, I had slayed the dragon. Because I didn't come from a life of accoutrement. Remember, when I started Altimeter, I started with less than five million bucks. I couldn't even convince my friends from HBS to contemplate being my partner in this thing. They're like, dude, you're embarrassing yourself. Go back to par.…

AI assessment note: “I slayed the dragon around money. My life and priorities totally shifted.”

Q analysis, we can look at, I don't know, enterprise compliance, massive freaking markets, but actually completely category creation markets and massive expansionary markets, you know, so many of these examples From your Airbnbs and your Ubers to your Twilios of the world in enterprise. They weren't big markets at the time. How do you factor in market creation and massive market expansion into that? It needs to be big enough.

A I think you have to be careful of commingling markets and what I describe as super cycles. Ok, so in my investing career, there have been three what I would describe as super cycles. The first was the internet, right? Everybody coming online. It was very clear even by 2000 that we were going to have hundreds of millions or billions of people online. So the question was who were going to be the biggest beneficiaries of that? And so I would describe that period of time for me investing or me founding companies. I concluded that search, making sense out of all this chaos, and e-commerce, which was really search for products, were going to be the two biggest areas of category creation. So seeing through that lens, Airbnb, which was making sense out of all the world's long tail inventory, right, in the way that Craigslist had done, for all properties that were not on bookie.com, like it actually fit, it wasn't a new market at all. That was a business prosecuting a strategy in a massive super cycle with massive tailwinds. Okay. I would say the second super cycle in my career was the move from search and e-commerce to mobile and, you know, and, and, and, um, applications that sit on top of mobile. And so what led us to Facebook in 2012 or what led us to ByteDance early was this idea That this device was going to be the principle and replacement mechanism for entertainment, for communi…

AI assessment note: “I think you have to be careful of commingling markets and what I describe as super cycles.”

Q I totally agree. What's the biggest challenge in firm building for you then?

A I would say saying no. Saying no to all of the, you know, I, I mentioned SPACs last year. Um, saying no to a Middle East sovereign who calls me up and says, Brad, you ought to set up a structured convert fund. We'll sponsor it with a billion dollars because KOTU is doing one and so-and-so is doing one. And, you know, we're gonna, all these deals are gonna be written down. We think you're really good at it. Like the, the opportunity for product proliferation, people proliferation, deal proliferation, I mean, it is incessant, right? And so for me, If I didn't have the conviction and the clarity that I do around essentialism, right, and practicing that every day, it would be a total distraction. But it's the same as Johnny Ive or Steve Jobs when somebody walking, hey, I got a new product feature. You ought to add this, add that, add this button on the home screen, add this. Like, they got shit every day. And you need to build a culture where people are afraid to suggest new things unless they've actually thought about it. Right? If you are an analyst who walks into my office with an idea a day because, you know, Johnny Mac down the street did the deal, like, you will be fired. Right? You better come in prepared, not with Dribbble, but you better have done your work because we're going to have a conversation.

AI assessment note: “I would say saying no. Saying no to all of the”

Q Penultimate one. What's your biggest insecurity today, Brad?

A That my kid, you know, I would say two, two that I really have. Number one, I'm terrified that I will do a bad job as a dad and that my kids Will grow up being entitled and not living to their full potential, and I will have deprived them of that really arduous but beautiful journey up the side of the mountain. Um, and I would say related to that is this idea that whenever I die, whether it's tomorrow or 40 years from now, that I'll have regrets. And, you know, I really, if there's one thing that I feel great about is, you know, just the intentionality that I'm living every day with. I'm doing exactly what I want to do with the people that I want to be doing it with. And that freedom, right, the freedom that comes from Uh, the economic freedom, which is a total privilege and not a lot of people have. Give me the opportunity to have the impact, whether it's Board Challenge or Invest America, whether it's Give Power, all the things I dreamed of doing and having impact, and that's the, that's the challenge I put in front of myself, I put in front of our team, organizations, in front of my friends, which is We live at one of those privileged times in the history of humanity. I think capitalism is an incredible force for good, but it doesn't just happen. Like we've got to fucking show up and we've got to leverage all of this goodness, the technology, the resources, et cetera, and th…

AI assessment note: “I'm terrified that I will do a bad job as a dad”

Q ask, you know, when you look at that and then, you know, your father's passing also, did, did you, did you feel like that you had to grow up much faster? My mother's got MS and since I was like 11, I felt like I'm 25. And now I'm 50 then. Um, did you feel the need to grow up faster and look after your family because of that acceleration?

A Yeah, no doubt. Um, no doubt. Uh, I, You know, I had a very, um, uh, you know, a very trying, uh, you know, period in middle school, in high school. I lived with my sister. I lived by myself. Um, I had a loving family. My mother, 86, beautiful, still alive, incredible. You know, sadly, she feels guilty about my childhood, but she was working two jobs trying to hold things together for four kids, and so I have I mean, she was extraordinary as a mother, and the one thing our family always had, my dad had this tradition, my grandfather had this tradition, ah, they would always say whenever they signed off, love you and like you. Right. There was this idea that I have to love you because we're family, but I also choose to like you. And we had, you know, I'm super close to my siblings today. Couldn't be closer to my mother. And so there was never a question about love. Right. It was really just financial security. Um, and I think that held the ship together when the times were toughest. Yeah.

AI assessment note: “Yeah, no doubt. Um, no doubt.”

Q developed theses in my mind about how I see markets playing out in certain ways or, you know, super cycles developing in different ways. And then I find the company that aligns to my thesis and I jump on it. And actually my thesis just could be wrong. I worry that it just falls very much victim to confirmation bias. How do you think about that as a potential flaw?

A I, you know, I think as, you know, we, we often say around here, we're anthropologists who just happen to be investors. So we, we really have a culture and we spend our days challenging each other, thinking, inviting people in to opine on the subject that we might have, um, you know, around, for example, the modern data stack, you know, that we've obviously written a lot about, uh, you know, on Twitter and Substack, et cetera, discord. Um, but every day we're pulling together the most interesting founders, engineers, and others and study, right? Like drinking the Kool-Aid is a recipe for disaster. But if you really have a culture of continuous learning, right? Because there are plenty of things that we invested in where the facts change or where we were just wrong and throwing good money after bad when you were wrong is a really bad idea. Um, and so for us, it's, you know, it's, it's that constant study. Um, I think being a public market investor is really a value add in terms of that type of culture when you're investing in a venture.

AI assessment note: “drinking the Kool-Aid is a recipe for disaster. But if you really have a culture”

Q Do you worry that hustle can get in the way of loyalty and discipline and loyalty and discipline? Like if you're so intent on that, you said that money making that, that hustle, that drive, then do they maintain the discipline when times are crazy? Do they maintain the loyalty to you, Brad and Altimeter when someone says, Hey, there's a shiny new toy over here.

A I would say a couple of things. Number one, um, Having figured out a way that you personally can build alpha is a condition required though not sufficient first, right? Like I know plenty of people have a good hustle, but they're actually not great thinkers. I know plenty of people have good hustle who don't have great discernment. So all I'm saying is when you're looking at recruiting somebody, is it plausible? Right? That they have alpha that makes them different from everybody else in the world. Number two, what I would say is, listen, my philosophy about people who work at Altimeter is that, you know, this place is not indentured servitude. You're all free agents. I say to everybody who comes to work here, you may work here a year, you may work here the rest of your career. The only thing I really care about is that it's an incredible experience for you and an incredible experience for us, right? I've had three analysts, including my first analyst, Dennis Hong, who, you know, um, Dennis, the day he agreed to come work for me, he said, listen, I want to work there three years. I want you to help me get into Harvard Business School, and I want to learn everything I can so I can start my own fund. And I said, deal. And we kept that deal. Went to Harvard Business School, he dropped out and he started his own fund and I'm an LP, uh, from day one in his own fund. And so, you know…

AI assessment note: “I don't view that as a breach of loyalty.”

Q ask, you know, when you look at that and then, you know, your father's passing also, did, did you, did you feel like that you had to grow up much faster? My mother's got MS and since I was like 11, I felt like I'm 25. And now I'm 50 then. Um, did you feel the need to grow up faster and look after your family because of that acceleration?

A Yeah, no doubt. Um, no doubt. Uh, I, You know, I had a very, um, uh, you know, a very trying, uh, you know, period in middle school, in high school. I lived with my sister. I lived by myself. Um, I had a loving family. My mother, 86, beautiful, still alive, incredible. You know, sadly, she feels guilty about my childhood, but she was working two jobs trying to hold things together for four kids, and so I have I mean, she was extraordinary as a mother, and the one thing our family always had, my dad had this tradition, my grandfather had this tradition, ah, they would always say whenever they signed off, love you and like you. Right. There was this idea that I have to love you because we're family, but I also choose to like you. And we had, you know, I'm super close to my siblings today. Couldn't be closer to my mother. And so there was never a question about love. Right. It was really just financial security. Um, and I think that held the ship together when the times were toughest. Yeah.

AI assessment note: “Yeah, no doubt. Um, no doubt.”