Levin: Private market participants are incentivized to maintain pretend valuations
Joey Levin · IAC CEO Joey Levin: Why Value Investing is BS; The Most Insane Element of SPACs | 20VC #982 · 20VC with Harry Stebbings · Feb 24, 2023 · at 14:23
Joey Levin, CEO of IAC, explains why private market asset valuations lag behind public market corrections during macroeconomic downturns.
0:00 / 0:28exact quote · 28.4s
▶ Watch the full episode on YouTube → 720p mp4 · rendered on demand · StarZero watermark
“Everyone in the ecosystem is incentivized and able to maintain sort of pretend valuations. Meaning the investors want to keep their marks where they are. Their LPs actually want them to keep their marks where they are because they don't want to look bad. The companies want to keep the marks where they are because they want to retain the employees. And there's nobody in that ecosystem whose, whose job or responsibility is let's make this more accurate and more realistic.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Joey Levin
Levin: Younger worker entitlement stems from bull markets and bailouts
“I think that, that the level of entitlement that we see in, in the younger generation of that year or those years is, is I think related to That a general bull market supported by when things go wrong, don't worry somebody else comes to the rescue externally.”
Levin: Valuation multiples will not expand soon nor snap back
“There's no snapback, you know, even if you say, earnings take time to grow. Earnings don't typically, at large, grow in multiples. They grow in You know, increments, percentages, and when that happens, markets grow and valuations grow, but there's no catalyst …”
Levin: Excessive cash reserves harmed more startups than they helped
“I do think it was dangerous for a lot of companies to be overstuffed with cash, and I think that that was a danger to more companies than it was a help to.”
Levin: The structural design of SPACs is completely insane
“The way the SPAC works, you build a company for as long as it takes you to build a company, you get it to a position where you think it can maybe endure the public markets, and then in that critical moment, you give somebody else who doesn't know your company …”
Levin: Elevated employee workplace demands will rebalance in a few years
“Look, it, we're at a period where a lot of things are cyclical, and I think that will come back into balance over the next few years.”
Levin: Buying high-multiple growth companies can still be value investing
“Value investing also can be buying something at a very expensive multiple or a very high, I shouldn't say expensive, I should say a very high multiple, but that there's value there because of what you believe in the growth and the future.”