Mar 26, 2022 · 1h 36m · allin
E73: Late-stage VC markdowns and mistakes, market strategy, Ukraine/Russia update with Brad Gerstner
Chamath Palihapitiya · 26m spoken Brad Gerstner · 24m spoken David Sacks · 20m spoken Jason Calacanis · 14m spoken
0:00 / 0:00
▶ Watch on YouTube →
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In Episode 73 of the All-In Podcast, guest host Brad Gerstner joins Jason Calacanis, David Sachs, and Chamath Palihapitiya to analyze the tech valuation correction, venture capital markdowns, and macroeconomic headwinds. The panel also evaluates the ongoing geopolitical conflict in Ukraine, US foreign policy risks, and upcoming All-In Summit plans.
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 71% of the talking time here. How this is scored →
The hosts as informed peer 5.9 Guest teaching 2.4 Guest disagreement 1.4 The hosts pushing back 3.1
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 27:00 Brad rejects late-stage private valuations entirely
Brad forcefully rejects current late-stage private pricing, stating 'you couldn't pry a late stage dollar out of my hand right now' due to lack of price discovery.
Hardest push from the hosts ▶ 1:15:40 Jason confronts Sacks over favoring Putin's framingJason directly refuses Sacks' framing of the Biden administration's war strategy, explicitly accusing Sacks of taking Putin's stance over the US President.
Biggest teaching moment ▶ 4:53 Brad educates hosts on Fed protocols and real negative ratesBrad breaks down the technical mechanism of the Fed's 2% negative real rate projection, explaining precisely why equity growth multiples reacted positively despite rate hikes.
The host holds their own ▶ 12:27 Chamath lays down the interest rate valuation discount formulaChamath demonstrates authoritative mastery by distilling complex balance sheet mechanics into an exact numerical rule mapping every 100 bps rate increase to a 15-20% drop in valuation.
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 |
|---|---|---|---|---|---|---|
| SaaS Market Normalization and Interest Rate Impact | 3 | 6 | 1 | 1 | Guest Brad Gerstner leads off by analyzing macro market normalization, breaking down the Fed dot plot, real negative interest rates, and DCF model impact. The hosts listen attentively with minimal interruption beyond brief welcoming banter and a short child interruption. | |
| Late-Stage VC Markdowns and the Instacart Reset | 7 | 2 | 1 | 2 | Chamath takes center stage to explain the mechanics behind late-stage VC repricing, using Instacart's valuation reset as a case study alongside public comps like DoorDash and Uber. Brad agrees with Chamath's assessment. | |
| Down-Round IPOs, Ratchets, and Valuation Realities | 8 | 2 | 1 | 2 | Chamath formulates a crisp rule-of-thumb mapping interest rate increases directly to software valuation discounts, while Sacks and Brad discuss down-round IPOs and IPO ratchets. The hosts demonstrate deep technical knowledge of venture deal structures. | |
| Distinguishing High-Quality Companies from Unprofitable Startups | 7 | 3 | 1 | 2 | Brad and Chamath analyze which company models survive high-rate environments, contrasting high-margin SaaS like Snowflake with low-margin Neobanks and instant delivery startups. The exchange is highly collaborative and analytical. | |
| Crossover Investors, Market Standoff, and Cash Runway | 8 | 3 | 1 | 2 | Sacks and Chamath explain crossover fund behaviors and benchmark late-stage equity returns against the baseline 8% S&P 500 compounding rate. Brad contributes strong commentary on the psychological standoff between buyers and sellers in late-stage tech. | |
| VC Capital Allocation Failures and 'Burn Multiple' Metrics | 8 | 2 | 1 | 2 | Sacks outlines his proprietary 'burn multiple' metric as a governor for startup spending, while Chamath shares an anecdotal critique of junior VCs focusing on deal velocity over investment discipline. The hosts dominate the expertise delivery. | |
| Investment Discipline, Clapping as a Strategy, and Market Cycles | 7 | 3 | 2 | 5 | Jason asks whether distressed consumer names like Peloton represent buying opportunities, but Chamath aggressively rejects the premise as 'clapping as a strategy.' Brad backs Chamath by emphasizing fundamental company selection over broad bottom-fishing. | |
| Geopolitical Conflict: Ukraine War Peace Contours and US Strategy | 6 | 2 | 1 | 6 | Sacks outlines peace framework contours for Ukraine and quotes Niall Ferguson to warn that Washington prefers a protracted war. Jason pushes back strongly against Sacks calling Ukrainian resistance an 'insurgency.' | |
| US Geopolitical Strategy and the Economic Sanctions Doctrine | 6 | 3 | 3 | 7 | Brad introduces the concept of the 'Blinken Doctrine' of economic deterrence, while Sacks and Jason clash heatedly over whether American pre-war diplomacy failed or whether Putin alone bears responsibility for the conflict. | |
| Interlude: David Friedberg's SUV Drive and Gas Banter | 0 | 0 | 0 | 0 | A brief lighthearted interlude where David Friedberg calls in while driving his SUV. No substantive power dynamics or technical arguments take place. | |
| Peace Negotiation Framework and Escalation Risks in Ukraine | 6 | 3 | 3 | 8 | Sacks harshly criticizes President Zelensky's rhetoric regarding World War III, provoking an intense confrontation with Jason, who accuses Sacks of adopting Putin's narrative over the US President's stance. | |
| Doctrine of Economic Statecraft and US Nuclear Stance | 7 | 2 | 2 | 3 | Brad highlights economic statecraft, while Chamath quotes recent reporting from the Wall Street Journal regarding President Biden's subtle shift in US nuclear deterrence posture away from his campaign promise. | |
| Chinese Economic Stimulus, Demand Destruction, and US Recession | 8 | 2 | 1 | 2 | Brad and Chamath analyze demand destruction in the US economy alongside Chinese tax cuts and stimulus, drawing parallels to 2018-2019 monetary policy shifts. | |
| All-In Summit Announcement and Speaker Roster | 1 | 0 | 1 | 2 | Housekeeping and All-In Summit announcement segment. Jason vents about event logistics while Chamath and Sacks tease him about swag bags and hiring Drake. |
Statements from this episode (29)
Brad Gerstner: Internet stock multiples dropped well below 5-year average
“We're now, multiples are now below the five-year average. For software, we're about at the five-year average. For internet, we're well below the five-year average.”
Brad Gerstner: Global economy will avoid long-term stagflation and hyperinflation
“If I look out over the five, 10 year horizon, I don't believe in global stagflation. I don't believe that we're in this new hyperinflation environment.”
Chamath: Late-stage VC valuations must be marked down 50% to 60%
“Late stage venture is pretty badly mispriced. And I think you're going to have to knock these things back by 50, 60%.”
Instacart slashed its valuation from $40B down to $24B
“Yesterday, which was the Instacart print, right? We went from a forty billion dollar valuation to I think it was 24.”
Palihapitiya: Instacart public comps fell 50% to 70% from 2021 highs
“You know, the comps to Instacart are off anywhere between 50 and 70%. You know, takeaway is off 70%. Uber is down 60%. DoorDash was down 55%.”
Palihapitiya: Late-mover IPO candidates will pay a heavy valuation price
“If you have the nth business, nth being not the first, not the second, but you're the seventh or eighth or 10th trying to go public, and all the seven or eight before you are gas guzzling machines, you're going to pay a very heavy price to get public.”
Chamath: Software valuations drop 15% to 20% per 100 bps rate hike
“For every 100 basis point increase in rates, you decrease the valuation between 15 and 20%.”
Gerstner: Most companies IPOing in the next year will be down-rounds
“I think the vast majority of companies that come public in the next 12 months are going out below their last round's valuation.”
Sacks: Craft Ventures avoids capital-intensive physical startups in favor of SaaS
“I think part of what's going on with the companies you mentioned is that they're physical world companies. They are very capital intensive. They burn a lot of money. They're operationally intensive. I have sort of sour, I soured on those businesses years ago. …”
Gerstner: Snowflake will grow free cash flow over 100% in 2022
“Snowflake this year will grow its free cash flow at over a hundred percent a year. Next year, probably, you know, 80 or 90%. Free cash flow. Not just revenue. Free cash flow.”
Chamath: Snowflake belongs in the "must-own" category alongside FAANG stocks
“Well, I would put snowflake in the list of these must own high growth software businesses, right? You know, the fangs tend to be in the must own category.”
Gerstner: Late-stage private venture financing market is closed
“Broadly speaking, the late stage private financing market in venture is closed because there hasn't been, right, we're in this buyer-seller standoff.”
Gerstner: Real late-stage VC price discovery will begin in fall 2022
“This fall is when we'll start to see real price discovery.”
Gerstner: Altimeter is withholding investment from late-stage private rounds
“You couldn't pry a late stage dollar out of my hand right now because I don't think that we have real price discovery going on.”
Chamath: Social Capital does at most one deal per partner per year
“We have a permanent capital balance sheet, you know, we do, you know, at most one deal a year per partner”
Sacks: A startup burn multiple above 3 is bad
“If you can spend a dollar or less to generate an Incremental dollar of ARR. You're doing amazing. And between one and two is good. So in other words, if you're burning twenty million in a year to add an incremental ten million of ARR, you're doing quite well i…”
Gerstner: Warren Buffett has only bought two tech stocks: Apple and Snowflake
“What are the two technology companies Buffett bought in the public markets? Apple. Apple and Snowflake.”
Gerstner: Altimeter cuts exposure and consolidates into 5 to 6 positions during downturns
“And so, for us, in moments like this, and I've lived probably through five of them in the public markets, we always do the same thing. Degross. Take risk down. First thing is, like, have less chits on the board. Number two, reduce the number of outliers. Pull …”
Gerstner: Valuation gap between top and bottom software companies collapsed in 2021
“Dispersion collapsed between the best cohort and the worst cohort of software companies last year.”
Gerstner: Tech market valuations will not bounce back to 2020–2021 peak levels
“Let me be absolutely clear. There is no bouncing back to where we were the last 18 months. That was the outlier. That was the make-believe.”
Sachs outlines three mandatory terms for a Russia-Ukraine peace deal
“The broad contours of what a peace deal would look like, which is there's three main pieces. Neutrality for Ukraine. The Russians insist that it not be part of NATO. They get to keep Crimea, which they annexed in 2014. That's been a fait accompli. And then som…”
Sachs: US should broker a ceasefire in Ukraine, not bleed Russia
“What the US should be doing is leading, they should be pushing for Lead, not bleed. Lead the way to a ceasefire, not to inflict maximum damage on the Russian regime.”
Sacks: Zelensky revealed Blinken privately ruled out NATO membership for Ukraine
“Just this week, Zelensky in an interview with Fried Zakaria admitted he was told by Blinken You will not be part of NATO, but we don't want to admit that publicly.”
Chamath: US strategy is baiting Russia into egregious actions
“I think we're moving into the second phase of this war, which is effectively trying to bait Russia into doing something really egregiously bad.”
Palihapitiya: China and Saudi Arabia negotiating oil trade settlement in Yuan
“China and Saudi Arabia are negotiating, settling a huge oil trade in Yuan.”
Gerstner: US will not send military to defend Taiwan or Ukraine
“Everybody knows we're not gonna go defend Taiwan. Everybody knows we're not gonna send our military to Ukraine.”
Sacks: US should use nuclear weapons only in self-defense against nuclear attack
“The United States of America should never use nukes except if nukes are used on us.”