The Exchanges

Q what do you think Philippe about the fed not taking any action and what's your general take on the markets? You know, the, the markets have seemed to recover largely from the Trump, uh, independence day, um, tariff announcement, but it's, uh, feels like pretty shaky out there. A lot of M and a on hold, a lot of hiring on hold, but what are you seeing on the streets?

A Yeah. Well, it hasn't been a boring year, has it? So I would say on the Fed, right, a lot of people are saying, oh, you know, the Fed should cut and this and that. I actually think that there's also the scenario that what if the Fed is cutting because things are not so great? Maybe that's actually not a good message. And what if the Fed is not cutting because actually the economy is really strong? And so I think that the Fed not cutting It's actually not that bad of a message, and I'm surprised just in general at how bad sentiment is, but how good the hard data is, and we have this ratio at GOTO where we sort of divide hard news as a numerator and sentiment as a denominator, and it's the first time where the news is so good and the sentiment is so bad, and I don't know if the sentiment is bad, Because just the market went down a lot or for other reasons, but I actually think the economy is doing really well. Uh, and we also learned two really important things. One is when the market did go down a lot, the government did budge and said, hey, we need to step in here. And the second part is the Fed did something that I thought was very clever. They basically said, we're not going to cut just to bail out the equity market, but if the market's liquidity Is no longer functioning. Emphasis on liquidity. Then we'll step in to restore liquidity, and I think those two things really broug…

AI assessment note: “I think that the Fed not cutting It's actually not that bad of a message”

Q you said there was a lot of good fundamental news. What would you put at the top of that list? And you said there were things in terms of sentiment that were making people quite negative. The, the, um, economy as viewed by consumers is really shaking. So what is the sentiment news that you are most tuned into and what are the hard data? That you're most tuned into.

A So on the, on the hard data, the part that's most surprising is that consumers have very, very weak sentiment, but in the meantime, consumer spending is remarkably resilient. And you can see this in a number of ways. You can look at the Visa and MasterCard earnings, but I also like just to listen to like little quotes, little tidbits that you pick up in the transcripts of, of, Of companies reporting earnings and stuff, and people will say, like, even in the month of April, consumer spending is very strong, and even in the last week when we adjust for the front loading, some people are pre-buying ahead of the tariffs. Even when we strip that out, consumer's really good. So I think the part that to me is most surprising, consumer's great. With respect to sentiment, it's really bad, but one thing that's funny is whenever the market goes down, Sentiment is bad. And so I don't think sentiment is necessarily a good leading indicator. I almost think it's like a lagging indicator. I bet you that now that the market's gone up, we look at sentiment in a month from now, and it'll be like, oh, sentiment's getting better. So I think that's what's going on.

AI assessment note: “So on the, on the hard data, the part that's most surprising is that consumers have very, very weak sentiment, but in the meantime, consumer spending is remarkably resilient.”

Q Philippe, what are your thoughts here on Google? You obviously participate in public markets. Is it a buy right now? I mean, I don't want to give investment advice, but do you think the company has the talent, the temperament to make these hard decisions and to turn this around or avoid the iceberg? Uh, if the iceberg being chat GPT and people getting answers instead of links.

A Well, I think you guys have summarized the situation pretty well. I would just add just a couple of small things. One is the market cap of Google is like, 1.8 trillion, and that of ChatGPT is, let's say, 300. So Google is worth six ChatGPT, and is that the correct ratio into the future or not? The second one is, I was around, sadly, in the times of the Yellow Pages. And I remember when the yellow pages, the way you go somewhere to bounce and go somewhere else, and basically these yellow links got replaced by the blue link, and the yellow page companies went away. Now part of the reason they went away is they were very levered. Google has no leverage, sits on a lot of cash, and imagine what someone like Elon would do if he had to re-engineer Google. I think they have, um, you know, uh, it's, it's a much larger company, let's say, than Twitter. So, Like, the part that I'm wondering about, I haven't made an opinion on Google, is like, hey, is this the next IBM? You're gonna stick around for a really, really long time, but you're just not going to be, like, a company growing as fast as you used to, and maybe there'll be little growth, and you just sort of struggle ahead. Or can they completely re-engineer their business? And they do have two great businesses. Waymo and YouTube and really cloud and all the cloud apps. So they have three great businesses and then they have this one s…

AI assessment note: “I haven't made an opinion on Google”

Q What's the number? Not top 10, what's the number, Philippe? What are the companies that matter the most?

A Yeah. So, I have, I've thought about that a lot. I'm not sure, you know, great answers, but the first one is, I keep defaulting to the number 25. I can't explain you why, but they're not a hundred companies, but if you think there's only five, and all these money managers, you know, they have like five stocks that represent 80%, I feel the level of risk that you're taking is too high, and that one has to be, you know, I started with a, with a, Public markets. I would say most French people are not known to be particularly humble, but at least if you've been in the stock market as a French guy, you've been beaten up so bad. I started January first, 2000. So imagine what my first three years looked at. I got reduced to, you know, ashes, just beaten up by the market. You know, we, we did reasonably well, uh, uh, because, uh, thank God being a hedge fund, you know, you have different tools that you can do. And so, I think you need to have a certain number of stocks. You need to know that some stuff you get lucky, some stuff you get unlucky, some stuff you get right, and some stuff you get wrong. And then I think that there's a second phenomenon. Once you agree to the 25, you say, wait a minute, why are there no IPOs? Why are these private companies, amazing private companies, some of the best in the world, SpaceX, Stripe?

AI assessment note: “I keep defaulting to the number 25.”

Q you, so do you think, like, Sequoia and Dries and Khosla Founders Fund, how do they respond? That's question one, and then two, does it change the behavior of the fundraising cycle or process for you and your partners when you're evaluating companies? Or for the entrepreneurs? Like, does any of that change? So how do, how does, how does competition react? And then how do companies and CEOs react?

A Listen, um, when you start worrying about your competitors, in my mind, it's a bit of a version of the grass is greener elsewhere, and you have to focus on ourselves. It's such a hard business. There's so many smart people and this and that. We tried to design something that plays to our strength, and our strength was we got the public markets, we got the private markets, and then we've got risk management with the cash and knowing when to be in and out. I would suspect that other people will do the same. Hopefully, it'll be different because they have different strengths and stuff like that. And I thought that what was nice for us is to sort of, ah, do this a bit of a hybrid, ah, public-private. And frankly, in private, you guys think there's venture, there's the growth capital, there's private equity. This vehicle could own a hundred percent of a company. You could do that. You could go up and down the cap structure. So what is your plan then to do with private companies specifically?

AI assessment note: “when you start worrying about your competitors, in my mind, it's a bit of”

Q Robinhood, and E-Trade, Merging could cause the same effect. You're right. Philippe, what are your thoughts on just how to get the country out of this debate? Because big companies bad. No, we shouldn't let them do any M&A. The wrath of Lina Khan. Is there a, is there an off ramp here? Can, can Trump just unilaterally kind of make this happen? What are your thoughts? Or should he?

A Oh, I think that to me, one of the best part, um, being an investor of venture capital is When you have a really big idea and it works out, it takes care of a lot of sins, you know, there's a little aspect, like, would you like to play the lottery? If the lottery was capped, like, hey, if you win the lottery, you can't win more than thirty million dollars. Thirty million is insane amount of money, but I, I read that there's some lottery guys who make 1,000,000,002 billion, and the reason why people are willing to bet so much, and most people are willing to lose, Is they all think that they're going to have this one ticket that's worth a billion. And I think when you reduce the incentive, the financial incentive of, and I agree with Dave, like success should be rewarded as much as possible. But if you've done something wrong, then use these, you know, the existing laws to define what success is. I don't think you can cap because once you start capping and then what happens if the stock market goes down, do you then have to just recap? So But I agree with you, you bring up an interesting point, which is in these bundles, like Amazon Prime Bundle, Apple Bundle, There's a Costco bundle, right? We seem to be living in this world of bundles where the stock market is willing to pay 40, 50 times earnings just for the, you know, the membership fee, as long as whatever you do on the side…

AI assessment note: “one of the best part, um, being an investor of venture capital is”