The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
why aren't all 42 resolved? a statement only gets an assessment when the public record can support or contradict it. opinions and what-ifs never can, and 3 checkable ones are still open, waiting for their date. predictions held up or didn't; assertions are supported or contradicted. on every card: ▮▮▮▮▮ certainty · ▮▮▮▮▮ debate potential. speakers are clickable
Gerstner: LPs should mark down 2020-2022 late-stage venture portfolios by 50%
“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 do…”
Gerstner: Venture capital funds of $10B or more cannot generate alpha
“Deploying a ten billion dollar fund or, God forbid, a fifty billion or a hundred billion dollar fund like Masa tried to do, right? You already know you will not generate alpha in that. You are getting the beta of the global tech industry when you're investing …”
Gerstner: Portfolio diversification is a myth that fails to mitigate risk
“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.”
Gerstner: Altimeter invested over 30% of its debut fund into Snowflake
“Our first fund VC won hell. I couldn't even raise it. I was 20 or 25% of the fund. And I put, we put over 30% of that fund in Snowflake at a point in time that the world thought we were crazy.”
Gerstner: The bottom 20-40% of tech and VC workforces dilute results
“I would say the vast majority of organizations, ok, and I'm talking from Facebook and Twitter, all the way down to, ah, GPs. They would be well served, right, to be much smaller, to be essentialists in the people that they have. Because it's very likely that y…”
Gerstner: Average VC returns over 10-20 years underperform public market indexes
“And the fact of the matter is, I mean, if you look back 1020 years, average VC returns are not that compelling. In fact, they're worse than the indexes.”
Gerstner: Sequoia's early Figma investment yielded 100x while late-stage yielded 2x
“If you look at the difference between the Sequoia round in Figma or the durable round in Figma, right? It's the difference between, you know, having a hundred plus X outcome and a two X outcome.”
Gerstner: Investors will lose massive capital on low-revenue $1B+ software rounds
“Listen, these 1,000,000,002 1,000,000,003 billion dollar software rounds that are done with very little revenue, you have to assume a tremendous amount goes right. And then you probably have to assume an absurd multiple and everybody's counting on the greater …”
Gerstner: The 2022 growth stock crash merely returned valuations to 2020 baselines
“This is not a blood in the streets moment. It feels catastrophic because we have growth names that are down 40, 50, 60, 70% in the public markets. But look at where they are compared to where we were in January of 2020. For most of these companies, it's just g…”
Gerstner: More Tech Value Created Over Next Decade Than Prior 10 Years
“The secular curve around value creation and disruption, all data moving to the cloud, ML and AI applications like that, there will be more value created over the next 10 years than over the last 10 years.”
Gerstner: VCs must distribute shares unless projecting 3x-5x returns over 3-5 years
“So for us, when I think about distributing is, do we still have venture returns left in this over a reasonable period of time? And if the answer is we don't see a three to five X over the course of the next three to five years in that deal, then we're obliged …”
Gerstner: Snowflake will eventually surpass its peak market valuation
“The truth of the matter is, I think Snowflake will be worth a lot more in the future than it is today, and even more in the future than it was then.”
Gerstner: VC returns will compress as the industry scales
“The industry is going from highly fragmented to much more industrial scale. Returns are going to compress.”
Gerstner: Altimeter analysts will be fired for unvetted FOMO pitches
“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…”
Gerstner: Silicon Valley Investors Are Driven by FOMO Over Independent Work
“People love to take signal, follow others into deals because others did deals. It is very hard to resist. And I would say young analyst associates partners in Silicon Valley are filled with FOMO and follow too many others rather than doing their own work.”
Gerstner: Unchecked VC valuation frenzy severely damaged founders
“What has happened over the last 24 months has been a great disservice to founders and is the worst example, I think, of lack of discipline.”
Gerstner: Starting a restaurant takes as much effort as building Google
“And the truth of the matter is it probably takes as much effort, emotional and intellectual to start a restaurant as it does to start Google.”
Gerstner: Spray-and-pray venture strategies produce uninspiring index-like returns
“If you have a diversified portfolio across hundreds of hundreds of investments, you will have an index like return, which as we started off by saying, it's not very compelling in this category.”
Gerstner: VCs Must Give Honest Feedback Directly in Boardrooms
“I'm not being a good friend to the founder if I'm blowing smoke up their ass in the boardroom, and then the second they walk out of the boardroom, all the investors have a different conversation. Right? So I think that being willing to tell the truth as I woul…”
Gerstner: Altimeter passed on pro rata rights multiple times in 2021
“Sometimes you know, we'll have to pass on our pro rata in those rounds because we think that the price, like we did many times last year, the price has just gotten too far ahead of itself.”
Gerstner: Altimeter underwrites exits at 20% below pre-COVID average multiples
“Everybody on my team, for example, knows that we're applying a 20% discount To the pre-COVID ten-year average, right? So that is the exit multiple that we use.”
Gerstner: Series C, D, and E Venture Valuations Remain Overvalued
“I still think that valuations are full. I think valuations in venture and CD&E are still overvalued.”
Gerstner: Most of Altimeter's $6B LP distribution in 2021 came from Snowflake
“Most of that distribution, right, not all, but most of that distribution was Snowflake.”
Gerstner personally provides 20% of the capital in Altimeter's funds
“I'm 20% of the capital in altimeter.”
Gerstner: Institutional capital has permanently increased venture capital supply
“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.”
Gerstner: Altimeter could double AUM with same team size
“We could manage twice as much money as we're managing today with the exact same team, because this game is about picking the right ideas, making good decisions, thinking clearly, having conviction.”
Gerstner: High-status individuals almost universally surround themselves with sycophants
“The number of people in life who surround themselves with sycophantic others who are their yes people. Right tell them what they want to hear afraid of speaking truth to them. Like, it's almost everybody at a certain level. Right, because you can afford to do …”
Gerstner: SPACs Forced Innovation in Bank IPOs and Direct Listings
“They have forced more innovation, innovation in the traditional bank IPO. They have forced more innovation in the direct list market.”
Gerstner: Becoming a 500-person 'Blackstone of VC' would be a failure
“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 our North Star. It's not where we're headed.”
Gerstner: Kids learn values from parent behavior rather than verbal advice
“It's not what you say to your kids. Like you can say, Oh, be humble. And then you go into your 18,000 square foot home. 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 m…”
Gerstner: Having a chip on your shoulder puts chips in pockets
“I think there are a lot of people in Silicon Valley 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 puts chips in pockets, as they say, …”
Gerstner: Tiny fraction of VC deals generates majority of industry profits
“That's a tiny number of firms and a tiny number of deals that represent the vast majority of the gross profits that get generated in the industry.”
Gerstner: Proactive first-principles investors outperform passive trend-followers in venture
“The history in venture has really inured to the benefit of first principle thinkers, who frankly, rather than waiting for the founder to show up in their office, they identify what they want to invest in, and they go find them.”
Gerstner: Public market investing experience benefits venture capital investors
“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.”
Gerstner: An Altimeter software portfolio company missed its projections by 70%
“We have a software company, you know, where, where people, where they misplanned by 70%, right?”
Gerstner: Funding Startup Pivots Requires Entirely New Underwriting
“Will you support me in the pivot of this business or not? But that's a totally new underwriting. That's a different question.”
Gerstner: A 20% risk-free rate beats 70th percentile VC returns
“That's a higher rate of return than the 70th percentile in venture.”
Gerstner: Post-pandemic interest rates will return to pre-COVID levels
“So I suspect that the new normal is going to look a lot like the old normal, but we have to get through this period of massive uncertain and volatility so that you and I can underwrite to a predictable cost of capital.”
Gerstner: Not writing a bigger check into ByteDance was his biggest mistake
“Not writing a bigger check into ByteDance.”
Gerstner: Altimeter will grow by only 5-10 people and transfer majority ownership
“We may be five or 10 people bigger. The incredible partners and young people around here will have even more responsible responsibility doing all the things that we do today. I mean, in the fullness of time, I want to see Altimeter have an incredible generatio…”