Sep 22, 2023 · 1h 42m · allin
E146: Did the Fed break the VC model? Plus IPOs, M&A, revaluing unicorns & more
Jason Calacanis · 27m spoken Chamath Palihapitiya · 26m spoken David Sacks · 18m spoken David Friedberg · 16m spoken Gwyneth Paltrow · 15s spoken
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In Episode 146 of the All-In Podcast, the co-hosts analyze the shifting venture capital landscape, examining recent IPOs, overvalued unicorns, and the Federal Reserve's 'higher for longer' interest rate policy. They also review the 2023 All-In Summit, debate political primary dynamics, and discuss groundbreaking research on inverse vaccines for autoimmune diseases.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The hosts hold 99.6% of the talking time here. How this is scored →
The hosts as informed peer 6.5 Guest teaching 1.6 Guest disagreement 2.5 The hosts pushing back 2.8
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 1:12:44 Sacks labels recaps predatory
Sacks forcefully interjects to reject any optimistic framing around startup recaps, calling them completely predatory maneuvers that wipe out common shareholders.
Hardest push from the hosts ▶ 6:19 Sacks rejects Friedberg's framing on fiscal prioritiesSacks firmly pushes back on Friedberg's contention that fiscal deficits take priority over geopolitics, insisting avoiding World War III is the sole critical issue because presidents have sole discretion over foreign policy.
Biggest teaching moment ▶ 25:56 Chamath breaks down broken US IPO mechanicsChamath educates the room by systematically contrasting Asian and European IPO six-month lockup requirements with flawed American float concentration.
The host holds their own ▶ 46:59 Chamath demonstrates VC alpha decay using Axios dataChamath presents structured data evaluating private funding rounds against S&P 500 benchmarks to prove venture capital alpha disappears in high-rate environments.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The hosts as informed peer | Guest teaching | Guest disagreement | The hosts pushing back | Why |
|---|---|---|---|---|---|---|
| Opening Banter: Cold Plunges and Pool Temperatures | 1 | 0 | 1 | 1 | Lighthearted banter among co-hosts regarding cold plunges, saunas, and pool temperatures. No real expertise or combativeness displayed. | |
| Hormone Replacement Therapy, HGH, and Celebrity Biohacking | 5 | 1 | 2 | 2 | Brief transition from hormone therapy to presidential politics where Chamath and Friedberg analyze Vivek Ramaswamy's polling surge and fiscal message. | |
| Geopolitics, Foreign Policy Priorities, and the National Debt | 7 | 2 | 3 | 5 | Sacks pushes back on Friedberg's question about fiscal crisis priority, arguing foreign policy and avoiding World War III is the primary presidential issue because foreign policy can be set unilaterally. | |
| All-In Summit 2023 Retrospective and Beverly Hills Hotel Banter | 2 | 0 | 1 | 2 | Co-hosts recap the All-In Summit, trade jokes about luxury hotel rooms, and recount banter regarding Summit organization. | |
| Summit Intellectual Highlights and Gwyneth Paltrow Clip | 3 | 1 | 1 | 1 | Review of top intellectual highlights from speakers at the summit and a audio clip played of guest Gwyneth Paltrow teasing David Sacks. | |
| Summit Production Behind-the-Scenes & Re-evaluating TED Conferences | 6 | 3 | 2 | 2 | Friedberg offers a structured critique of how TED conferences lost focus on technology and optimism, explaining why the All-In Summit was structured differently. | |
| Tech M&A Revival: Cisco Buys Splunk for $28 Billion | 8 | 2 | 3 | 3 | Chamath delivers a detailed breakdown contrasting European/Asian IPO allocation rules and six-month lockups with American bank-led float dynamics. | |
| State of the IPO Market & Post-IPO Value Accrual | 7 | 1 | 2 | 2 | Friedberg presents Ernst & Young data showing public market value creation and argues day-one IPO pop is a vanity metric. | |
| IPO Pricing Mechanics vs. Direct Listings | 8 | 3 | 3 | 4 | Chamath and Friedberg debate direct listings versus traditional IPOs, citing specific execution dynamics from Slack, Spotify, and Coinbase. | |
| Short-Term Market Price vs. Long-Term Fundamental Value | 7 | 1 | 2 | 3 | Friedberg shares a personal anecdote regarding Expedia stock in March 2009 to demonstrate how short-term market prices diverge from fundamental intrinsic value. | |
| Instacart Cap Table Data & VC Alpha in High-Rate Environments | 9 | 2 | 2 | 3 | Chamath presents Axios comparative chart data analyzing Instacart's series-by-series returns versus S&P 500 alpha in high interest rate regimes. | |
| Evolving LP Expectations & Venture Fund Strategy | 7 | 2 | 2 | 2 | Jason and Chamath detail changing LP expectations and the decay of take-rates in delivery platforms as suppliers gain pricing leverage. | |
| Klaviyo's IPO: SaaS Valuations & Shopify Platform Dependency | 8 | 2 | 3 | 3 | Sacks analyzes Klaviyo's financial metrics and highlights platform dependency risks given 70% of its revenue originates from Shopify. | |
| Airtable, Unbundling Excel, and AI Software Absorption | 7 | 2 | 2 | 3 | Sacks and Friedberg discuss how Airtable and spreadsheets capture long-tail enterprise workflows before specialized SaaS apps unbundle them. | |
| Unicorn Valuation Traps & Distressed Boardroom Recaps | 8 | 3 | 4 | 4 | Friedberg outlines how overvalued unicorns face painful boardroom recapitalizations and liquidation preference conflicts. | |
| Predatory Startup Recaps and Market End Game | 6 | 1 | 5 | 4 | Sacks forcefully labels distressed venture recaps as predatory transactions designed to squeeze out common holders and founders. | |
| Fed Policy, Inflation Lags, and Longer Startup Cash Runways | 8 | 2 | 3 | 3 | Chamath revises his previous economic forecast, instructing portfolio founders to extend cash runways through early 2026 due to hawkish Fed policy. | |
| Venture Capital Regime Change and Founder Realities | 7 | 2 | 2 | 2 | Sacks and Friedberg summarize the macroeconomic regime change from capital abundance to capital scarcity. | |
| Consumer Strain, Auto Union Strikes, and Automation Acceleration | 8 | 2 | 4 | 4 | Chamath explains how UAW strike demands pose an existential P&L threat to legacy automakers relative to non-unionized automated competitors like Tesla. | |
| Science Corner: Inverse Vaccines for Autoimmune Diseases | 9 | 1 | 2 | 2 | Friedberg explains groundbreaking Nature research on inverse vaccines using liver antigen presentation to reverse autoimmune diseases like MS. |
Statements from this episode (44)
Chamath: Vivek Ramaswamy will be number two in GOP polling soon
“He'll be the clear number two in about four, between four and eight weeks from now.”
Chamath: Democratic Party is railroading RFK Jr.'s presidential candidacy
“But I think it's been pretty clear that the Democrats have chosen to railroad RFK's candidacy.”
Sacks: Ukraine war approach is a litmus test for supporting presidential candidates
“For me, I'm viewing candidates as either being acceptable or unacceptable, and Vivek is acceptable to me. I think DeSantis is too. The ones who are unacceptable to me are the ones who would escalate this Ukraine war, because I think that avoiding World War III…”
Friedberg: 30% of US debt faces 5% refinancing within 12 months
“30% of our debt, I think is coming up for Refinancing in the next 12 months, and that's going to refinance at a five percent rate, because that's where the markets are at.”
Sacks: US fiscal restraint will be forced externally, not by Washington
“I think that that's where we're headed, is we're going to have restraint imposed on us from the outside. It's not going to come from inside Washington.”
Friedberg: TED talks have become overly focused on social justice
“I went to Ted for 12 years. I started going to Ted, I think, 2007, and I felt pretty disappointed over the last couple of years. And I actually spoke to the CEO of Ted and said, I'm not going to go anymore because so much of this, the talks became kind of soci…”
Calacanis: 21 months passed without a major venture-backed IPO
“21 months since the last significant venture-backed company went public.”
Calacanis: Most late-stage Instacart investors were underwater at IPO
“Most of the late stage investors in Instacart are underwater. The early stage folks absolutely crushed it.”
Palihapitiya: Arm, Instacart, and Klaviyo breached issue prices within days
“All three IPOs within a few days have breached their issue price.”
Calacanis: Instacart, Klaviyo, and Arm floated under 10% in IPOs
“Instacart's float was 6.7%, and Klaviyo's float 7.6. Arms float almost hit the 10%, 9.4”
Sacks: Tech valuations will never return to ZIRP-era bubble levels
“We're never going back to the valuation levels that we had a couple of years ago during a giant Zerp created asset bubble.”
Calacanis: Two-thirds of LPs in meetings are cutting VC fund commitments
“And I'd say, two thirds of the meetings I'm having, people are saying, we're not adding managers, we're cutting managers, and we're cutting commitments to managers, but we'd love to meet, you know, just to start the relationship, you know.”
Friedberg: 99.9% of market value for Apple, Microsoft, and Google came post-IPO
“99.9% of their total market value. Was realized post IPO”
Friedberg: Companies should go public via direct listings then follow-on offerings
“I believe the direct listing should be the way that you do this. And then you do a follow on offering once your share.”
Chamath: VCs distributed Coinbase stock to LPs right before direct listing
“Going into the Coinbase IPO, what all the venture investors did was distributed literally the day before and the day of the direct listing. So that you would get delivered your stock at the highest price so that you could sell.”
Friedberg: Spotify traded at or above its direct listing price
“Spotify went public via direct listing. The stock actually traded up after the direct listing. It went down a little bit after, but it continued to trade up, you know, into the 20, 21 era. And today it's trading at or above what it was trading at during the di…”
Palihapitiya: Future direct listings will top tick on day one and drop
“I think that the Slack and Coinbase particularly will be the example going forward. You'll top tick day one, and then the thing will spear down, find a bottom”
Calacanis: Sequoia Capital led four consecutive preemptive rounds in WhatsApp
“Well, everybody learned from WhatsApp. And you know, shout out to the Sequoia team. Doug Leone, I think. And they did every round. Jim gets to know. Yeah. They did every round. So it was an internal round for, I think, four rounds in a row. So they just made p…”
Sacks: WhatsApp's massive VC returns resulted from capital efficiency and low dilution
“The reason WhatsApp was a home run is because it was so capital efficient. They didn't burn that much. They didn't raise that much. So there's very little dilution for everybody.”
Sacks: Instacart investors in 2020 and 2021 lost money at IPO
“Series F broke even. And then everybody who invested in 20, 20 and 20, 21 actually lost money.”
Chamath: Weak VC alpha will reduce limited partners' fund allocations
“When people do the calculations on what the true alpha of venture capital is, they're going to come back with answers like this, which is, it's not that great. And I do think it will impact how limited partners have an appetite To give all of us, or you guys, …”
Chamath: High-GTV marketplace businesses cannot defend take rates long term
“History has shown that these kinds of businesses cannot defend take rate for a very long period of time, whether it's for competitive pressure, or whether it's because their suppliers actually develop more pricing power. Take rate tends to decay.”
Chamath: DoorDash has the biggest upside among delivery and platform stocks
“Now, I think of all the three businesses, Dash probably has the biggest upside, quite just like, again, Parm's length. I don't own any of these three stocks. I'm just saying business model quality, Dash seems infinitely scalable.”
Sacks: Klaviyo will probably reach $1B ARR in 2024
“Project that forward, they're probably going to be at a billion in ARR next year.”
Sacks: 70% of Klaviyo's business depends on Shopify
“The only vulnerability or negative, I think, about Clavio's business is the fact that 70% of it is on Shopify.”
Sacks: SaaS startup ideas come from unbundling complex Excel spreadsheets
“I tweeted many years ago that the way I saw Excel was the long tail of use cases that hadn't moved into a dedicated SaaS app yet. And that the way that if you want it to be a SaaS founder, you're trying to come up with ideas, find some really complicated Excel…”
Friedberg: Most unicorns are worth less than their preference stack
“Most Yeah, most of these unicorns are worth less than their total press stack.”
Calacanis: Airtable's 78x revenue multiple far exceeded public peers
“If you look at the Ford price to sales multiple, 78 acts, For an 11.7 billion dollar valuation at a hundred fifty million ARR. And you compare it to the trailing price to sales multiples. In the project management space, Monday's at 12 X plus, Asana, 6.6 X, an…”
Sacks: Excessive funding creates boardroom warfare between early and late investors
“Well, to Freeberg's .1 of the downsides of taking all this excessive capital at these ridiculous valuations is that it produces a dynamic in your boardroom where your board members are at war with each other. The late stage investors are going to be at war wit…”
Friedberg: Many overfunded unicorns face painful unwinds and recaps
“And I think that's the scary scenario that's likely going to play out at not all, but a good chunk of these companies that are, there are still businesses, they have decent value to their business, but they just raised too much capital relative to the valuatio…”
Sacks: Distressed startups undergoing recaps will eventually go public again
“It's predatory, but that means they're going to be able to go public again.”
Sacks: Startup recaps led by new CEOs turn into disasters
“And all these recaps turn into a disaster.”
Palihapitiya: Markets pushed back expected Fed rate cut timeline by one year
“So I think what happened this week is actually pretty important because I think the markets were really trying to force Jerome Powell to start the cutting cycle, and now they had to move the date at which they could expect cuts out by a year.”
Chamath: Fed rate stance benefits Big Tech while hurting broader market
“So it's really good for the magnificent seven. I think it's really bad for everything else. And we're going to be in a holding pattern for awhile.”
Chamath: Startups must extend cash runway into 2026 to survive
“I think now you got to be Q one of 26. And maybe even mid-twenty-six.”
Sacks: Prolonged high rates will constrain risk capital and depress valuations
“So as a result of that, interest rates are going to stay higher longer, which means that risk capital will be less available. So valuations are going to go down, or at least they're not going to be racing back up like they used to.”
Friedberg: LP capital and startup funding will fall significantly in aggregate
“On a day to day basis, it means there's gonna be less companies that are going to get funded, but more importantly, it's gonna be less LP money going into venture. And there's going to be less capital available to fund startups in aggregate by a significant am…”
Calacanis: Seed startups are raising $250k–$1M instead of $3M–$5M
“I'm seeing it across the board in the seed stage. Two, three, four founders raising two 50 to a million instead of raising three to five.”
Sacks: Markets won't return to capital abundance anytime soon
“And I think that the fed here has dumped a bucket of cold water on the markets, basically saying, we're not bouncing back to capital abundance anytime soon. We're going to be in this environment of more capital scarcity.”
Calacanis: Consumers will skip iPhone upgrade cycles due to economic pressure
“They're going to skip an iPhone cycle. Instead of going from, you know, 13 to 14 or 14 to 15, they're going to go 13 to 1614 to 17. They'll just skip”
Chamath: Proposed UAW labor deal is an existential risk to US automakers
“I think that the labor deal is an existential risk to the unionized auto industry in America.”
Chamath: UAW strikes are handing Tesla the entire US auto market
“It's great for Tesla. I mean, it's giving Tesla the entire US auto market.”
Chamath: Tesla Model Y Performance price will drop to $40,000 soon
“And yeah, that'll be a 40,000 dollar car in the next three years.”
Friedberg: Inverse vaccines present a powerful way to eliminate autoimmune diseases
“This represents a very novel and seemingly super impactful and powerful way to think about eliminating autoimmune disease going forward is that we can take the antigen, and we now know the antigen or the protein that causes almost all of these autoimmune condi…”