On this episode of Okay, Computer. Dan and FirstMark Capital’s Founder & Managing Director Rick Heitzmann discuss if market sentiment is suddenly turning better (2:04), Rick remaining a perma-bull on Pinterest after activist investor Elliott Management announced a major stake in the company (10:13), the white-knuckle earnings season outlook for beaten down tech stocks (15:15), what’s next in the Elon Musk-Twitter legal showdown after a judge orders an October trial (16:41), more pain to come for many crypto investors (19:35), and how Rick thinks Meta is the big tech stock most at-risk for competitive disruption (29:34) . Later, Dan is joined by his co-host Katie Stanton to interview Kevin Weil, President of Product & Business at Planet, about the company’s mission (39:36), Planet’s ethics board (46:39), private capital entering the space race (52:36), and tech stocks like Meta and Twitter getting crushed this year (55:45).
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SHOW TRANSCRIPT:
Dan Nathan: [00:00:36] Current Ad. Welcome to okay computer. I am Dan Nathan. I am here with my co-host, Rick Heitzmann of FirstMark Capital. Rick, how are you? [00:00:44][8.4]
Rick Heitzmann: [00:00:45] I’m doing well. How are you then? Long time no see. It’s good to be back in the saddle. [00:00:49][3.9]
Dan Nathan: [00:00:49] It’s been a couple of weeks here, man. And I got to tell you, a little bird told me you were doing something that I just can’t. As your friend and your co-host here, I just can’t agree with your choice of running with bulls. What’s that all about, buddy? [00:01:02][12.8]
Rick Heitzmann: [00:01:02] They don’t actually run with the Bulls, but I was on the balcony watching the bulls run beneath me and having some chores and chocolate and then dressed in all white with that Pamplona scarf. It was checking off the bucket list. One of the things just going down the bucket list. [00:01:18][15.3]
Dan Nathan: [00:01:18] All right. You were there with a mutual friend. I wasn’t sure if you were running or not, but you were drinking. It sounds like plenty of sangria, so you were probably having a laugh at all the guys getting gored. I don’t get that whatsoever. The videos just look so nasty. Whatever that rushes that you think you’re going to get, go to a Pearl Jam concert or something and do a stage your boat. You know what I mean? Yeah, I am a little bit biased. [00:01:38][20.1]
Rick Heitzmann: [00:01:39] Go to London, not to Pamplona? [00:01:41][1.3]
Dan Nathan: [00:01:41] No in the mosh pit. It felt a little bit like that, but a bit more safe. All right, man, you and I have a ton to get through here because the stock market is rip roaring. It feels like some of the doomsaying in private tech markets has kind of calmed down just a little bit. We’re going to hit all of that. We had a great conversation. So after Rick and I are done, stick around. Katie Stanton of Moxie Ventures and I speak with Kevin Weil. He is the president of satellite company Planet Labs. You’re going to stick around and hear all about that. All right. Let’s get into it here. As I said, it’s Tuesday into the close. We have Netflix reporting after the close, the stock is up 5%, ripping above 200 bucks for the first time. Remember, this stock in November was $700. So it’s 200 right here. And what’s interesting about this one is that it’s the first, I would say, major tech company to report. And it really set the stage a little bit for the main event, which will be Facebook, Microsoft, Apple, Google, Amazon, which all report next week. Just curious, you know, being away from your screens, being away from some conversations. I know it was a working vacation, if you will. Did you feel like there was a little bit of a sentiment change, being away from New York a little bit? [00:02:54][72.7]
Rick Heitzmann: [00:02:55] There was I mean, obviously, New York is the center and you could feel the energy or you could feel the positive or negative vibes from the market just going to dinner or talking to folks. And that’s obviously the further you get from New York and if you go to Europe, people aren’t living and dying by earnings results and therefore you get a different vibe, which also gives you a healthy separation from a little bit of Twitter, a little bit of just the day to day. So I think that was healthy and maybe came back with new eyes. And I also think the sentiment got better. I think we might have seen sometime during the second quarter kind of a trough out of sentiment and all the bad news was out there, people [00:03:34][39.8]
Dan Nathan: [00:03:36] Well hold on, let me push back. Not all the bad news. I mean, really, when you think about sentiment, it’s like, okay, how much worse is the sentiment than the news is going to get? You know what I mean? And one of the things while you were gone that I thought was really interesting, because you’ve been talking about this, you have this expertize in consumer related names here. Obviously, you also play in the SAS space. But one of the things that happened early last week was Bill McDermott, the CEO of ServiceNow, was on Jim Cramer show and he kind of sounded the alarm on a drop off in enterprise demand for some of their products. And, you know, a lot of SAS names got absolutely destroyed. And I just mentioned this on the day today where the Nasdaq is up 3%. The S&P is up two and a half percent, Microsoft up less than 2%. So there’s some underperformance. There still seems to be a slight trepidation, if you will, because we haven’t had too many companies in the public markets on the enterprise side confirm what we’ve already seen in consumer names. [00:04:32][55.7]
Rick Heitzmann: [00:04:32] I think it’s much easier to track transactions and that has a much shorter arc than SAS names which sign annual contracts. And I think you’re going to see the same swooning and the same recessionary factors you see on the consumer side, on the SAS side. Right. And a lot of SAS companies, they sell their product by the sea by the month or by the year. And for the last ten years the SAS has become more mainstream. A lot of SAS companies are selling into tech and they’re selling by the sea and all those companies were growing. So we’re just kind of staying where you are and everything’s good in the tech markets, the CFO is in pushing back on price. You’re able to increase price a little bit every year and just naturally, as your customer base grows in terms of employee count, you sell more software into that employee base. That’s all changed. So the softness you’re seeing and we’re seeing, even as buyers of software from the board perspective is, pay CFO be more vigilant and careful about pushing back on price. Be more vigilant and careful about what SAS applications are being used. And although our plan might have been to grow our employee base 20%, we’re currently flat. So even the best of the companies that we think can hold price and hold our business, still aren’t going to grow because they don’t have additional seats to sell into. So I think that SaaS is problem now. We haven’t seen it play out in the company results. But that’s the dynamic which you got to be worried about. [00:06:05][92.6]
Dan Nathan: [00:06:06] 100%, we have not seen it in the company results so far. And, you know, when you think about all of the major tech companies that have signaled that they’re slowing hiring or cutting hiring or are going to be making cuts altogether, and you’re also seeing it across large investment banks, too. I think that’s kind of the tip of the iceberg. In the last thing while you were gone, we had that June jobs number and the unemployment level did not tick up despite the fact that we’re seeing lots of companies signal that they’re going to be laying people off. So I guess, you know, when you think about, you know, SAS demand, I think it’s maybe a one or two quarter lag from some of the other data that we’re thinking about here. Let’s talk a little bit about what you’re seeing in the private markets because again, you spend most of your time there. You’re obviously got you got irons in the fire as it relates to public markets and you keep a close ear to the wall there. But, you know, for me, you know, I’m a public markets guy that happen to speak to a lot of VCs and also private operators here. And it really seemed like, I think you were calling it this a bit of a doom loop, if you will. And a lot of founders were getting a lot of guidance about kind of really battening down the hatches, making the cuts, do the sorts of things that they need to do to rationalize costs. How is that kind of played itself out over the last month and a half? And I guess the last point I’ll just mention there is like, again, when you see the Nasdaq rise 10% in a straight line in a couple of weeks, do people kind of say, all right, it’s not Armageddon here, or is that just not a barometer that’s being focused on too much? [00:07:31][84.5]
Rick Heitzmann: [00:07:31] There’s two parts to that. I’ll talk first about the operating side. So as we’ve talked about over the last year, people thought they were ahead of themselves. Then they corrected and then they took the expense medicine that they thought they should have taken and maybe even right sized their employee base. And from an operating perspective, the best companies are through that and they’re kind of through that, I was talking to a CEO today, he was feeling lighter that, you know, the company’s leaner, meaner, it’s able to move faster. And the best CEOs are seeing that when you get rid of that extra weight, you’re leaner, you’re lighter, and you move faster. And they’re seeing that on the other side of layoffs and they’re really empowered by that. And so, you know, they’re ready in the second half of 22 to play offense. So, you know, I think better companies have taken their medicine and have gotten through a lot of the hard things in the first half of 22. And although they know they’ve been rerated from a multiple perspective, they still are confident in just the fundamentals of their business. And therefore, if they’re playing the longest game in the room, they know they’re going to be able to get to that side. Separately, on the markets side, you’re starting to see a little bit of interest in the private markets. You’re starting to see the beginnings of slips of interest, folks taking tests in the waters, meetings, folks interested in hearing with stories and meeting with management teams that three or four months ago you were getting crushed and You didn’t want to hear from anybody about anything. [00:09:00][88.8]
Dan Nathan: [00:09:00] We’re still seeing, though, some big marks being taken. We’re still seeing some huge declines, some performance numbers to the downside. And, you know, we saw it in Tiger Global and there’s a whole host of others. [00:09:11][10.7]
Rick Heitzmann: [00:09:12] I think lot of people are going to have a terrible Q2. [00:09:13][1.3]
Dan Nathan: [00:09:14] Yeah, I feel like, you know, as a little pressure is released from the public markets, what you might have seen is a lot of these crossover folks anticipating, let’s say, redemptions or whatever it was, is selling what they could sell into the end of Q2. Right. And then obviously taking some of these marks. I’ve just seen some big ones of late, but I think regular listeners know. I do not think we’re out of the woods yet. And I will say that if you think about the public markets they’ve been correcting, especially in high growth, high valuation tech for over a year. Right. And the market, the Nasdaq in particular, topped out in late November. But at that point, some of your favorite tech stocks were already down 30, 40%. Right. And now we have many that are down much more than that. So I just suspect and again, not my market here, but the private tech market is going to bottom out after the public tech market does. I mean, that’s just my $0.02 here. But like, to your point, there are some green shoots here. You and I were texting last week. I was about ready to go on fast money. And this headline crosses the tape that Elliott Management takes a activist stake in Pinterest. Now, this is a name I think you were the first institutional investor in Pinterest, what, over a decade ago or so, a story that you know very well. I’m hitting you right away. When I see Elliott, I know that they try to like kind of get board seats and get rid of CEOs they think are underperforming, all this sort of stuff. And, you know, at the end of the day, this is not a company, their CEO founder had just left a couple of months ago, and I think you and I were both remarking, there’s no debt to speak of. And I think maybe 25% or so of their market cap was in cash, stock was down 80%. Importantly, a profitable company with 79% gross margins. That’s just facing massive deceleration in the growth that they had to pull forward from the pandemic. And you look at this thing and you say, well, it’s kind of obvious unless we’re likely to see another couple of really, really bad quarters deceleration. And your thought immediately was what, Rick? [00:11:09][115.4]
Rick Heitzmann: [00:11:09] I thought immediately was this this company is significantly undervalued, that I might be a little bit of a permeable on Pinterest, given the deep and long term relationship I have with Ben and the team there and my holdings, I still hold some as individual, but I thought the company is undervalued for a long time. If you take out cash, they were trading at, I think nine times cash flow and EBITDA for this year. So from a value perspective, it’s clearly there. And then in addition to that, bringing in Bill to be the new CEO who has a deep background in payments and shopping to be able to say, hey, what’s the next product on the journey for Pinterest? It’s How do you get deeper into shopping and make Pinterest shoppable and even more shoppable than Instagram? Okay, well, you have a half a billion users a month. You’re already monetizing them pretty well. And driving over $1,000,000,000 of cash flow through your monthly users isn’t growing very quickly, but if you can monetize them better, drive better margins. And really, this looks like a mid-single digit EBITA multiples. It’s cheap. It’s incredibly cheap with no debt, with excess cash. And it’s a great buying opportunity. Whether or not there’s some level of activism, it’s just a great stock to own. [00:12:34][84.8]
Dan Nathan: [00:12:35] But got me thinking that, Rick, there’s got to be a bunch of names in the Nasdaq that are just kind of washed out that are down 80% or so. The one thing that’s interesting about Pinterest, though, is that it is profitable. You know, look at like a Lyft, Lyft as a three and a half billion dollar enterprise value. They have about half their market cap in cash. They have a billion of debt. You know, this is one where when you think about there’s two players here for rideshare in North America and are number two down, there are decent number two to Uber like this is one when we’re thinking about data like you like to use that expression, the digitization of everything. I mean, you got to think that the data that Lyft drivers, there’s got to be something there. Anything on your radar, any of these names that have just kind of been kind of pounded out and kind of left for dead? [00:13:18][43.6]
Rick Heitzmann: [00:13:19] Yeah, I’m not bullish on Lyft as I think that that really is a network effect business. I think Uber is the verb in the space, you know, are you going to get an Uber to the party? Did you take it over here? I haven’t heard people use Lyft, at least in New York City in months, so I’m less worried about Lyft. But I do think that there are some form of growth now, value stocks that are really cheap. You know, we talked about Warby Parker when it went public was trading at a much higher multiple than Luxottica as a growth stock. But now after a retreat they’re trading at a lower multiple of Luxottica, although they’re growing faster or have higher gross margins and have some opportunity ahead of them. So I think the buy side is just kind of re catching up with being whipsawed, having to put their portfolio into triage mode and then saying, you know, the old thing we’ve been talking about for over six months now is where are the babies or where’s the bathwater? And how do I sort through this in a thoughtful, methodical way? [00:14:17][57.8]
Dan Nathan: [00:14:17] Yeah, well, and I I’m going to come back to the one thing that, you know, I’ve said through my experience, you know, trading through the financial crisis and obviously the post dot com phase 20 years ago. I mean, one of the things that you just can’t account for sometimes is time. The way some of this stuff has to work itself out is over time. And, you know, I just mentioned Nasdaq up 11%. Great. You know, we’ve had a bunch of 10% rallies in what is a very well defined bear market. And before a recession is called, obviously, a lot of the geopolitical issues that cause this kind of surge in inflation this year have not been resolved yet. And we’re going to have all of that uncertainty. And again, I’ll just go back to the last thing. I think that one thing that the market is not pricing in right now is a tick up in unemployment. And maybe this is just the most bizarre bear market we ever have and the bizarre slowing in the economy that has had a yield curve inversion, the two ten is at its widest it’s been in over ten years or maybe even 20 years ago, inverted 50 basis points is about 20. I mean, there’s a near certainty. And I don’t again, I’m not Nostradamus here that our economy is going to be in a recession, Europe is going to be in a recession. So you can get all geeked up. You can play some of these rallies here, but it’s not likely to end like this. There’s likely, you know, and I think you know, this I’ve been picking. Add a bunch of tech stocks and PayPal down 80%, snap down 80%. Netflix, Meta some of these names that I just think are one gap away. One earnings call, disaster and guide lower with maybe another 20, 25% gap. And then you kind of say, all right, then, how much time is it going to take for these things just to kind of work themselves out? So that’s my playbook here. [00:16:01][103.5]
Rick Heitzmann: [00:16:01] I would have said Meta. I would say the ad companies are challenged, but I also just see from a consumer acquisition perspective, TikTok, sucking a lot of the oxygen out of the room. Snap, continuing to be strong on the product side. And although Instagram is is a behemoth, it’s probably capping out in terms of DAU and MAU I think that the flagship Meta or the Facebook logo, whatever you want to call it, is definitely on the decline. So I think there’s going to be the double whammy of probably underperformance in terms of users and then underperformance in terms of monetization for those users. [00:16:40][39.4]
Dan Nathan: [00:16:41] This may come as a surprise to you, but I think Tesla is likely to be an absolute disaster. And I think that when you think about how good their first quarter was, their Q2 might be that bad. And I think the competition supply chains, I think Elon Musk in a situation with Twitter, I think Elon Musk is literally melting down before our eyes, sadly on Twitter and literally on Twitter to be a little meta there. That might have confused some here. But I just think that of all of the major names, still $750 billion market cap company is the only one that has not made a new 52 week low in this period. And something unusual is going on there. But I kind of expect that, you know, the court just ruled in Delaware that this Twitter or Elon Musk thing is going to trial in October, a little later than what Twitter was hoping for. They were hoping for September. He was hoping for February. It’s happening. And I guess, you know, if you read the tea leaves here, it sounds like that the judge wants to hear this case and could make Elon buy this company for 44 billion. And we know it’s not worth that. We know it’s probably worth maybe at best 20 or 25 billion to go private. So to me, I think this one get the popcorn out, man. I think Tesla is an accident waiting to happen. [00:17:54][73.1]
Rick Heitzmann: [00:17:56] What’s your call on that? The where does this settle out by end of the year, who owns Twitter and how much should they pay for it? [00:18:02][6.6]
Dan Nathan: [00:18:02] I think that the judge probably rules that he has to buy the company and I think he probably doesn’t buy the company. And I think that this is going to be the beginning of the end of Elon Musk. I really do. I think this this whole aura of him, I talked to so many really smart people in tech, whether they be operators or investors, public, private or whatever. Nobody really wants to talk any shit about this guy. It’s just kind of the old school Wall Street guys who are really good at figuring out where the fraud is that they have they’re kind of this guy’s number. And again, I know I sound like a tinfoil hat sort of guy, but in 25 years in my career, I’ve never seen a cult stock or a cult leader of that cult stock not blow up. I’m not telling you, he’s Bernie Ebbers or Jeff Skilling or anything like that, but I’m just telling you that this is one of the biggest investment bubbles of our lifetime. And it’s just, in my opinion, it’s just starting to unravel. And it’s starting to unravel because Elon Musk himself, if he’s ruled, if the judge in Delaware rules that he is in breach of this contract and he has to close it and he doesn’t, how the hell does Tesla’s board. Okay, keep him on their board? And as the CEO of the fifth or sixth largest market cap company in the world, I think he’s a huge liability to this company. And if you tell me if he’s not there and you take out all of his disciples, you know, investors, whether it be institutional retail, that’s probably a three or $400 air pocket in the stock. So I’m on record. I’m not shy about it. I do have a position. I’m probably going to continue to expire them worthless. I’m going to keep throwing good money after bad, but I’ve never seen one of these things not blow up in my opinion. So who knows? Let’s pivot to another Fugazi. Let’s talk a little bit about let’s talk about crypto because yeah, this was Derek Thompson and he is a prolific writer, I believe, for The Atlantic. He had a quote, tweet of Sam Bankman-Fried. You know him, the founder of f t x, a crypto exchange here. [00:20:01][118.6]
Rick Heitzmann: [00:20:02] Who is now supporting the entire crypto ecosystem through loans or investments. [00:20:06][4.5]
Dan Nathan: [00:20:07] Well, let’s talk about that for a second, because, you know, there’s been a number of blow ups, right, of some of these schemes as Celsius. There’s this guy Voyager, there was Luna, the tariff thing. And he’s he’s always listed as kind of the lender of last resort here. And you say to yourself, how has he avoided all the pitfalls of some of this yield farming and all this other stuff where he can kind of backstop all of these other hears that are going the way of the dodo? I’m just curious, like your thoughts or what’s the aura about this? He seems to be like a 20 something Warren Buffett crypto genius. [00:20:40][33.2]
Rick Heitzmann: [00:20:41] Well, I think he was very early and very aggressive and therefore made a tremendous amount of money and he therefore has a lot of Hodler fans and he also has always been able to build out a really good team and a really good ecosystem in crypto where he’s made billions and billions of dollars building out, market making, taking positions in crypto, doing everything you need to do. And because of that, because both his economic success and his tentacles throughout crypto, he has a lot of fanboys. And then obviously there’s a lot of people who are who appreciate him in this part of the cycle, need his economic support. So he’s been next in that line of above the law or beyond the law or whatever you were saying with Elon. So I think he could wind up being, you know, the big winner in crypto in that he’s going to become a consolidator as all this ecosystem is falling apart. The Jay Gold of the crypto infrastructure, if it’s worth anything, I think the key is he’s made a lot of money off the table. He’s doubling down to keep the railroad alive. But, you know, people who really need the railroad and that’s part of the battle that’s raging now of clearly there were not bad actors, but terrible actors in the ecosystem who were committing outright fraud. And what does it mean as this goes back and gets cleaned up with what’s really there? And I don’t think anybody knows at this point, you’re you’re seeing the news coming out about 3 hour or you’re seeing the news come out about coins that are falling apart, about lenders who are falling apart with and what that’s going to mean from on the other side of regulatory perspective. It’s all going to be fascinating, but I think we’re probably only halfway through the movie here on crypto. [00:22:32][111.5]
Dan Nathan: [00:22:33] Yeah, no doubt about it. I mean, I do think it’s interesting that another very early, successful investor in the space is Mike Novogratz, macro trader who founded Galaxy Digital, which is a digital assets like Merchant Bank. And he was speaking to Bloomberg, I think, at a digital assets conference today on Tuesday. And he said the recent turbulence in the cryptocurrency industry is a full fledged credit crisis and acknowledged that he was darn wrong about the magnitude of the leverage in the system and his lunar tattoo. No, he didn’t say that, but that is an accident waiting to happen. I’m sure he’s going to have that thing cleaned up. But he did say what I don’t think people expected was the magnitude of losses that would show up in professional institutions balance sheets, and that caused the daisy chain of events. I thought that was interesting. And The Mooch, Anthony Scaramucci, who runs SkyBridge Funds, you know, he had a fund that just kind of stopped redemptions for one of their funds. It has, I don’t know you ou think you said 25% of their assets exposed to crypto. So the point I mean, this is the point I think Novogratz was making that, you know, there was exposure in lots of institutional portfolios with leverage that people were just not acknowledging. [00:23:39][65.9]
Rick Heitzmann: [00:23:40] There was a counterparty risk that they couldn’t have imagined. Some of the counterparties they were dealing with were either committing fraud or lending. It was almost the producers that they were lending the same assets against five different loans, thinking the market it was only going to go up. And little did they know as this thing starts to unwind, that the leverage will come after. Yeah, that’s why a lot of those guys are trying to disappear out. [00:24:05][25.3]
Dan Nathan: [00:24:05] You know what’s interesting is that, you know, Danny Moses, who you know is my co-host with Guy Adami on On The Tape podcast, that drops Fridays, check it out in the podcast stores people, Danny’s been calling this out with these stablecoins for over a year. If there’s legitimate concerns about what the collateral is for these coins, right, and the sort of leverage that a lot of these issuers are using to kind of get the yield. Right [00:24:27][22.0]
Rick Heitzmann: [00:24:28] Guaranteed yield. If you’re guaranteeing a 15% yield, what are you doing to do that? That’s why you’re putting a capital structure on top of that compounding leverage, which gets you in a terrible spot. [00:24:41][12.6]
Dan Nathan: [00:24:41] But but it was really hard. You know, Rick, on on fast money or on CNBC in general that I saw or conversations that I had or on our podcast to get any what I think are very legitimate players in the crypto space to kind of acknowledge that the thing that nobody is acknowledging right now, you know, so again, I just think that to your point, I think you said we’re midway in this move. You go take a break, come back because the things are about to get exciting. I want to go back to this Derek Thompson tweet really quickly because he’s, quote, tweeting, Sam Bankman-Fried. So so Fried had a tweet storm. I think they still call it that they still. [00:25:15][33.9]
Rick Heitzmann: [00:25:15] They still do do thats what the kids are calling it these days [00:25:16][0.7]
Dan Nathan: [00:25:17] That’s what the kids are calling it was number it was the 38th tweet it said great products builders have to focus on building great products, not on monetization of the core product. So then Derek Thompson said, I think crypto arrived at a particular moment in the industrial cycle when ad tech, cloud, etc. were matured and VC’s we’re looking for alpha and new frontiers, this inverted the typical product cycle by creating huge monetization opportunities before any great products were built. Talk to me a little bit about this, because I’m sure you at FirstMark have seen hundreds of crypto products over the last, let’s call it, ten years or so, and you’ve only invested in a handful. [00:25:55][37.8]
Rick Heitzmann: [00:25:55] That’s very true. And maybe even those are some of those which we think are some of the best names in crypto are still struggling now as they’re struggling for liquidity and counterparty risk. What does this mean? But I think the key part which Derrick hits out at the end is huge monetization opportunities before anything happens. And it’s a little bit of a perfect storm. If we think about what did Covid mean and what’d all the stimulus checks mean and would in forcing people to sit at home in front of their laptop all day mean, it meant that there was oversimplifying it just too much liquidity the market and it forced people to go try and find things to get rich quick on and everybody kind of coalesced around crypto and it became a thing. And if some was good, more is better. Your next door neighbor bought a 1000 and now now it’s 4000. So I’m going to get in and I’m a double down. I’m going to borrow to buy more. And this is going to be my retirement fund because this is going to be like last time that crypto is so different. And we’ve also all heard horror stories of people putting their retirement savings into crypto because they wanted to retire earlier and they thought it was an easy way to get rich quick. I think one of the key things that we’ve all learned is there’s no easy way to get rich quick, that there’s a fundamental risk return which exists in any product. So the ability to monetize early was the tremendous Achilles heel. And then sadly, the ability for certain bases to monetize by selling tokens to retail in a unregulated environment was really the cardinal sin of some was good, more was better that you didn’t have to have a product that created value or you didn’t even have to have a product in a lot of these cases to be able to take tokens which are basically unregulated securities and sell them to retail. So you’re effectively kind of doing the IPO before you before you actually had any revenue. And it was it was a way to backdoor into retail demand at a high price and make a lot of money because crypto was going crazy. And I think that’s probably one of the things regulators are going to close because it wound up it’s going to wind up being really bad for a lot of people and probably circumventing a lot of things, including consumer protection laws. [00:28:23][147.9]
Dan Nathan: [00:28:24] Yeah, well, I guess like every kind of bull cycle where you see the overexuberance at the tail end, I mean, really, we saw it into the end of Q1 2021. SPAC issuance was equal to or greater than that of the prior ten years combined. We saw, you know, what was going on with NFTs. We saw all the crypto tokens and secondary sales. And you know, you think about all these Nasdaq stocks that are down 60, 70, 80%. You know, I’m looking at my screens right now. I see Shopify down 76%. I see snap down 70%. That’s just on the year. Lyft down 70%. Netflix down 70%. I mean, these are companies with products that we use every single day. So you don’t even think about being a bag holder there. You’re buying into this kind of new world order about how we’re all going to operate. I guess at this point, we’d all much rather buy any of those names with a longer term time horizon than some Fugazi tokens here. All right. Lastly, Rick, Guy and I are going to speak with Gene Munster of Loup Ventures. Gene is a mainstay on fast money. He’s a great tech analyst and also a VC That’s going to drop on Friday. We’re going to do a little preview of Microsoft, Apple, Google, Amazon and Meta, which I’ll report next week. You just mentioned that you’re most worried about meta as far as the outlook they’re going to give. I’ll just say this is really interesting. You know, Apple, which is up two and a half percent today, is only down about 15% on the year. Just think about that. So when you you think about the fact that we’re in this bear market, we have all of this uncertainty about, you know, inflationary pressures all over the world. People are, you know, kind of convinced that we’re in a recession. I certainly am. And that, again, is not the end of the world, that we have a recession. It’s kind of a natural order of kind of economic cycles here. But what that means, I guess, for, you know, investor interest is really the issue. But just curious, your thought, you know, when you think about those names, they’re obviously not all the same. Let’s just focus on the, you know, the four big ones, Microsoft, Apple, Google and Amazon. Do you think that these will also be the leaders on the way out of this? And therefore, when you think about there’s no company that has actually even with the pandemic and the pull forward as demonstrated their inability to kind of disintermediate any of those. You know what I mean? So are they likely to show good relative strength, I guess is my question. [00:30:45][141.5]
Rick Heitzmann: [00:30:46] We haven’t seen here. Then there’s usually that new guard who’s who’s going to overtake it. Is that the Google that’s going to overtake the AOL and the Yahoos? And you’re seeing something that has just incredible metrics and it’s just a force of nature in the market. We just had our partners offside FirstMark. We talked a little bit about what are we seeing there? Is that next generation force of nature. And, you know, I think Stripe is in the payments system. There’s a couple companies, but nothing that we really see. It’s going to unseat a lot of the fangs. They all have their separate effects. I think as we talked about before, Meta is the most exposed. I think if you look at either other networks, other social networks like SNAP, if you look at Tik Tok, that’s just going to suck out a lot of that demand. You’re going to see Facebook is probably the one that’s most at risk. And I think Apple just given their ecosystem and their brand, as well as Microsoft’s ability to be deep on the enterprise infrastructure software all the way through the consumer on their gaming side, especially with the acquisition of Activision, looks like it’s going to go through. I think they’re in a really amazing spot. I think they’re built to last and part of the reason they haven’t gone down is they, they, they also still seem relatively cheap. [00:32:07][81.3]
Dan Nathan: [00:32:08] Yeah, I’ll just say this about Meta and this might be a bit contrarian. I think it’s probably one gap away. Maybe you see this thing down somewhere between the 2019 low, which is like 125, and that’s 2020 low. It’s about 137. One more gap, one more guide. This is a company that has 3 billion monthly active users, $125 billion revenue base, 79% gross margins. And they are in the process of a major pivot away from declining, like you just kind of labeled them the main page and some of the other services as kind of melting ice cubes. I think about things like WhatsApp and their ability to monetize those, go back to maybe digital payments and all this sort of stuff and that basically say this thing south of 150 I think is a layup longer term because there’s never been a company in the history of the world that’s been able to have 30% of the population on their platform and being able to monetize. [00:33:02][54.0]
Rick Heitzmann: [00:33:02] They should have been, to your point, the super app, right? Like what you see in China, the concept of the super app, you live in that app, you message in that app, you share with your friends and you buy your car insurance all in that one app. And Facebook, probably because of regulatory scrutiny, hasn’t pulled that together as quickly. But they were in the shop and I don’t know if things are starting to unfurl too quickly for them to pull that back together, because if you had a Facebook logo, tried to reach out to you and sell you car insurance today you will unsubscribe immediately or kill your profile. [00:33:38][36.0]
Dan Nathan: [00:33:39] One more gap, Rick. Mind it. Okay, mind the gap. I think PayPal has one more gap. I think SNAP has one more gap. I think Meta has one more gap. [00:33:47][8.3]
Rick Heitzmann: [00:33:48] And then you’re all. [00:33:48][0.8]
Dan Nathan: [00:33:49] Know I to be honest with you, I’ll just say one last thing here. We got to get out of here. Okay? I just say that you think about those names. If you can get them down 70, 80% with the management, they have the install base, they have the revenue base, they have all this right. Let’s assume that there’s no one nipping at their heels. Forget Tik Tok. Right now, I think there’s a good chance that Tik Tok has a lot of regulatory scrutiny over here at some time in the next few years. I think that this is the probably the best way to get sort of VC returns in the public markets over the next five years. Might be scooping up some of these names, down 80%. [00:34:20][30.9]
Rick Heitzmann: [00:34:20] Again, I agree I completely agree that the best companies are going to double and triple from here. [00:34:26][5.5]
Dan Nathan: [00:34:26] Yeah. All right, man. Well, listen, I appreciate it’s great to have you back in New York City and catch up here. Let’s do it IRL very soon. [00:34:33][6.5]
Rick Heitzmann: [00:34:34] Next week we have a special guest. [00:34:36][1.3]
Dan Nathan: [00:34:36] Oh, we’re sitting down with Josh Wolfe. I can’t wait for that. Lux Capital. [00:34:39][2.5]
Rick Heitzmann: [00:34:39] That’ll be great. It will be real life in New York City. And I’m talking to another great thinker. [00:34:45][5.9]
Dan Nathan: [00:34:45] Yeah, we’re going to get our Tesla Elon on. He’s got lots to say right there. [00:34:49][3.6]
Rick Heitzmann: [00:34:49] I don’t know. It’ll be tough. It’ll will be tough to protect him from the two of you. [00:34:52][3.0]
Dan Nathan: [00:34:53] All right. So when we come back, stick around. Katie Stanton and I speak with the president of Planet Labs. Kevin Weil. [00:34:58][5.4]
Dan Nathan: [00:35:44] Current Ad. Masterworks Ad. Taboola Ad. Kevin Weil is the president of product and business at the satellite imaging company Planet, which he joined in April of 2021. Prior to that, Kevin was the vice president of product for Novi, Facebook’s Digital Wallet Project, and the co-founder of Facebook’s Diem Digital Currency. He also served as the vice president of product at Instagram and was Twitter’s senior vice president of product for nearly seven years. I’m here with Katie Stanton, my co-host, and Kevin Weil. He is the president of Planet Labs of Product and Business. Kevin, welcome to okay Computer. [00:37:53][129.3]
Kevin Weil: [00:37:54] Thank you so much for having me. [00:37:54][0.9]
Dan Nathan: [00:37:55] So first things first, Katie, since you and I met, we’ve done a lot of pods together. We’ve done a lot of dinners together. We’ve done a lot of COVID together. But I will tell you this, that you, for some reason, up the ante when we have dinners together. I kind of bring dumb people and you bring really smart people. And you didn’t even give me a heads up when we had dinner in Miami in April, I think it was. You said you’re going to bring an old friend of yours used to work at Twitter and then you bring literally like a rocket scientist to the dinner. Right. Tell me a little bit about your history with Kevin. We got to get into what he’s doing at Planet Lab. [00:38:26][31.4]
Katie Stanton: [00:38:27] So it is a life lesson for me that you always want to be the dumbest person in the room because you always learn. And I was one of those lucky opportunities for me when I was at Twitter and Kevin was one of the first persons I met. And I remember vividly meeting you, Kevin. I forget what floor we were on, but you are an icy product manager and you had talked about your prior job at Cool Iris and we had a few friends a comment and I remember walking away like, Man, that guy is smart. He can like download my brain just looking at me. And in fact, I think your kids carry that certain genetics. I remember holding your firstborn, Matthew, thinking the same thing. But anyway, so we met at Twitter and it was just really such a honor and a great learning opportunity for me to see Kevin grow from this individual contributor of building product to basically leading the entire product organization. And we had many ups and maybe a few down together and the Twitter universe as basically every Twitter employee has. But I’m really grateful that I’m here today and share more about your story. [00:39:25][58.1]
Kevin Weil: [00:39:26] Yeah, and I learned so much from you over the years as well. And I’m grateful for all the time that we got together and that we are continuing to be friends. I’ll just say for folks that are listening, that restaurant that we met at in April, as they talk about me potentially being smart, I’m the one that showed up to that restaurant in shorts, the restaurant that did not allow shorts, and the restaurant gave me some pants and then got mad at me when I changed into those pants in front of the rest of their guests. I don’t know about Smart, but we’ll go from there. [00:39:54][27.7]
Dan Nathan: [00:39:55] They did not know what they were dealing with. Well, here’s the deal. So I was reading up on you a little bit after we met here and I was reading an article in CNBC. They called you a renowned product guru. This is when you left Facebook to join Planet Labs. So talk to us a little bit about because this quote that I guess you tweeted this when you made the announcement, you were leaving Facebook, you said, I’m joining Planet because the more I learned about it, the more I found myself unable to think about anything else. Planet is at the intersection of so many of my passions. So like we said, you spent a lot of time at some of these consumer social apps running product. How did you find yourself on a mission like this at Planet? Which seems a little different than getting people hooked on likes and the like there at Twitter and Facebook. [00:40:38][42.6]
Kevin Weil: [00:40:39] Yeah. So if you go back far enough, I was actually a physics grad student. I was studying particle physics. So there’s some connection and I’m still a math and physics nerd. I read math books in my spare time. My wife makes fun of me endlessly for it, but actually it’s a Twitter connection because it was Adam Bane who connected me to Will Marshall, who’s the CEO and founder of Planet. I wasn’t looking. I was happy doing what I was doing, working on the crypto project at Facebook. And Adam came and just said, You have to meet this guy. Will Marshall from Planet. Adam was the CRO and then ultimately CEO at Twitter. He’s been a mentor and a friend of mine, good friend of Katie’s as well. And for me, it was like, okay, you have an opportunity to go talk physics and satellites and sustainability with like an ex NASA rocket scientist. Sure, sign me up. So I did. And the more I learned about Planet, the more I was just like, I have to work here. I’m a big believer in following your gut and working on what really excites you. I’ve been kind of wanting to come back more toward science in my work because I hadn’t really had that and the other jobs that I had and Planet is this amazing mix of science, climate, sustainability, geopolitics. I found myself waking up in the morning thinking about Planet, and if you do that too many mornings in a row, it’s time to make the call. You should just go work on it, you know? [00:41:52][73.2]
Katie Stanton: [00:41:52] That’s awesome. I mean, Adam Bane is literally behind every major movement. Silicon Valley, I think. I mean, he is such a change maker. So that’s an amazing connection. [00:42:01][9.0]
Dan Nathan: [00:42:02] Well, let’s take a step back here. Can you just give our listener a little bit of background on the mission of Planet and what they do? And obviously, you and I, when we spoke with Katie at that dinner, was pretty fascinating. It was a great dinner conversation that I’m just fascinated with it because when you think about space and you think about satellites, you think about big, big problems that you guys are a startup and you’re doing this in a manner where. It’s kind of turning the whole satellite business upside down for at least the way that I can think about it. Just the size in which you’re doing it and the designs that you have. You have got 200 satellites in space right now. [00:42:32][29.9]
Kevin Weil: [00:42:33] More than 200. We’ve launched something like 450 or 500 into space over the course of the company. It is the coolest origin story I’ve ever heard. Let me start there. So the founders, Wil and Robbie and Chris were at NASA and they were watching NASA. And basically everybody else in the space industry launched these school bus sized $800 million satellites. That took many, many years to build. And they were like, man, there’s got to be a better way. And so they kind of skunkworks this project, and they literally launched an Android phone into space. So they strapped a solar panel to the back of an Android phone, stuck it on a rocket, launched it into space, and when it popped out, it was orbiting Earth. And with its phone camera, it took pictures of Earth and with its little radio, your normal radio and a phone was able to send those images back down to earth to one of the ground stations, totally off the shelf parts. And they were just like, there is a better way to do it. We just proved it. And so that was the genesis of Planet. They went off and they started building satellites a completely different way. So our satellites are rather being school bus sized and $800 million and take years. Our satellites are the size of a shoebox. I mean, they literally weigh five or six kilograms and they use a lot of off the shelf components, which means we keep up with Moore’s Law. We can iterate as fast as the technology world iterates on our satellites. We’ve upgraded them like 18 times over the course of the last five years, which is just dramatically different than the rest of the industry. And the fact that you have tiny satellites that are relatively cheap means that you can launch lots of them into space. And if you can launch lots of them into space, then you can image the entire earth every day, which is what we do and nobody else does. So our 200 plus satellites are going around the world north to south, basically, while the world spins west to east and they effectively line scan the planet every day at about 3 to 4 meter resolution. And so to think about that, think about a square like ten feet on a side that turns into one pixel and the resulting image. And we have that over the entire landmass of the Earth every single day. And now I’m smaller than a ten foot square. You’re smaller than a ten foot square. So we can’t distinguish individual people. We can’t read your newspaper, we can’t read license plates, but we can see is how the earth is changing and how humans are shaping it on a day to day basis. So whether you’re talking like agriculture or border management, mining, maritime floods, insurance, commodities, finance, we can see that and see how it’s changing on a daily basis. An interesting thing, we’ve talked a bunch about the satellites here, but it’s ultimately a recurring revenue SAS business. So we have over 800 customers, partners, governments all over the world who purchase the data. The analog of like the perceived model in SAS is that we charge per square kilometer, but they’re typically yearly multi yearly contracts. So it’s just this fascinating business. It’s like a normal SAS business, except our data centers are in space. [00:45:29][175.7]
Katie Stanton: [00:45:30] That’s fascinating, especially the origin story of just kind of shooting their own rockets. I assume they didn’t have regulatory approval. They just kind of did it and then proved it. [00:45:39][9.4]
Kevin Weil: [00:45:40] They went on an existing rocket, but they had this payload in there that I think was a little bit skunkworks. I’ve heard they got into a little bit of trouble. [00:45:46][6.2]
Katie Stanton: [00:45:47] So I don’t want to rat anyone out. So move on in that intersection with geopolitical issues. Can you talk to us a little bit about that? When you’re selling to government, how would you face all of that? And what if the Ukrainian government is like, yes, I would love to get this data. And the Russian government was like, Yeah, we’d love to get this data too. Can you talk through some of those interesting issues a little bit? [00:46:08][21.4]
Kevin Weil: [00:46:09] Yeah. So we’re unique, I think, among most of the companies in our industry and that we have both a commercial and a government business. Most satellite companies that you see are primarily government and we’re pretty close to 50/50. And our government business is split between civil government and defense and intelligence. But we’re really proud and I’m really proud to serve the government, to serve the U.S. government and allied governments, because it’s really important. I mean, it’s a dangerous world out there. We have a strong belief at planet Earth. Theory of change is that transparency actually creates more peace and security. If more people understand what’s going on around the world, more nations can see what’s actually changing on a daily basis, and that will lead to ultimately better outcomes, more peace. And there are a bunch of examples of this. So, I mean, I guess I’ll say before I jump in two examples, we also have a very strong ethics process at this company that I really respect that has been in place honestly, since before we even had data to sell. It was just something that Ravi and Will and the early employees of the company felt incredibly strongly about. And so, for example, we are not in Russia at all. We’ve completely divested any of our relationships there. Basically, any employee can sort of call stop aline and we’ll go through an ethics process that often involves us referencing NGOs, multilateral organizations, third parties that are experts on whatever the particular ethical subject is. So it’s a process that I really respect. So we’re working with Ukraine and Modi and with other allied governments on the ground to help Ukraine preserve its sovereignty. And that’s really important. But the interesting thing about planet, I mentioned it’s government and it’s commercial. The other thing that’s coming out of Ukraine that will be kind of a second order effect is they’re going to have major food crises around the world. There are going to be wheat shortages because they were the fifth largest exporter of wheat in the world. And so we’re working with a bunch of NGOs, multilateral organizations. NASA’s written about this actually using planet data to understand what’s going on with crops. You can understand a lot about agriculture from space. And so knowing as much as you can about what’s happening with what crops are being planted, where, how, what’s the yield looking like and how is that going to get to other countries can help us get ahead of that. We’re working with third parties to evaluate things like are there war crimes being committed, looking at civilian damages? You can look at day, on day, on day and look at what’s happening and where are you saying what? You combine that with other forms of data. Tik Tok, Twitter, social media telegram. And you can start to get a really accurate picture of what’s happening on the ground. And again, transparency here in shared truth is really important. [00:48:45][155.9]
Dan Nathan: [00:48:46] So, Kevin, you just mentioned this ethics board that you created and really is focused, obviously, on the data that’s collected by your satellites. And when you think about just your time at Instagram, at Facebook, at Twitter, and how trust and safety and ethics really kind of protecting the data that’s collected on the platform. So important here, we’ve obviously learned a lot of lessons. I’m just curious how you guys think about just being really vigilant about the data that’s collected by your satellites, obviously not being co-opted by nation states. [00:49:14][28.0]
Kevin Weil: [00:49:15] Anything that we do, we think long and hard about the implications of it and try to make sure that this is all in service of good. If you look at Western competitors, if you look at China, they have a burgeoning space industry. And for sure the things that we’re looking at doing, they’re thinking about as well. But there’s a really interesting angle to this geopolitically, where at least my belief and I think many share it, that transparency, it’s a much more kind of western way of thinking about the world. Right. If you’re China, transparency is not your friend. And so the advent of space and the increasing amount of technology and ability, we have to shine a light on what’s happening and what’s changing all over the world on a daily basis is very much in line and I think benefits the Western philosophy and way of thinking, way of life. And so more of it, in my opinion, is going to do a lot more good than that. [00:50:07][52.2]
Katie Stanton: [00:50:08] Yeah. You also touched on the intersection of climate protection, and I just saw a tweet a few seconds ago that said the UK government has shut down the runway at Heathrow because of record setting temperatures, which is insanely depressing and I imagine you’re seeing a lot of this real time data come through and giving us more insights on how we can both help adapt to climate change and mitigate climate change, and wondering if you could share more examples of that. You’re also on the board of the Nature Conservancy, which I want to talk about later. So we’d us here you have more examples of how Planet data is being used to help save our planet. [00:50:43][35.5]
Kevin Weil: [00:50:44] What planet produces is ground truth for the world, right? And you can’t manage what you can’t measure. So if you want to understand how the world is changing, how we’re shaping it, and then you want to start doing things to mitigate that, you’ve got to understand if they’re having an impact. And so fundamentally, we believe that our dataset is a key part of understanding how the world is changing and how we are changing it. We’re partnering with customers and partners around the world to make that real. So one thing we did is we work with the Norwegian government and produced an open data set. So a public good for the world of all the world’s tropical forests between 30 degrees north and 30 degrees south latitude. So it’s at Nicfi.org and any researcher anywhere in the world, any member of any one of those governments can come in and understand whether it’s looking at deforestation, whether it’s looking at the economics of forest regions, understanding permitting, and where there’s illegal deforestation. It’s an open dataset, and we’re seeing thousands of people using it to improve their lives on a daily basis and improve the health of our planet. I’ll give you one more quick example that I think is really interesting. And it gets also this transparency notion. We worked with Paul Allen’s Foundation to do a similar thing, but for the map of the world’s corals. So basically every piece of coral in the world, we mapped all of them and it’s up at Allen Coral Atlas dot org and after having done that something like five or ten different countries protected their coral regions. And it’s not that they didn’t know they were there before. They totally knew they were there, but the rest of the world didn’t know they were there. And so having this transparency creates a sense of shared accountability that is actually leading to climate action. And we hope to be a driver of a lot more of that. [00:52:34][109.5]
Katie Stanton: [00:52:34] That’s incredible. And one quick note for our listeners, it’s Nicfi.no, because Nicfi.org which I went to is the National Institute of Certified Floor Covering Inspectors. [00:52:43][9.2]
Kevin Weil: [00:52:45] Is also a very important organization. Nicfi.no, okay. I should definitely remember that going forward. [00:52:50][5.3]
Dan Nathan: [00:52:51] Kevin, talk to us a little bit about you were going back to how Planet started here, and I read an article in Axios that last year there was like $47 billion in VC capital that found its way into space startups here. And I’m just curious, what is the reliance on private capital versus working with, let’s say, NASA or something like that to kind of get off the ground here? I’m just curious. I know that’s slowed down a bit, at least some of the data so far in the first half of 2022. We know the Bezos and the Branson and we hear all about that stuff. Is that important for the growth of this industry? On a private level? [00:53:25][34.5]
Kevin Weil: [00:53:26] I imagine funding in about every industry is slowing down right now, but I think it’s really important. I mean, obviously I’m biased, but one of the reasons that I was excited to join Planet is I think this next decade is the decade where space becomes a part of everyone’s lives. We’re already seeing it from the launch front. Elon and SpaceX, they land another rocket. It probably happened this morning and like we don’t even think about it. Right. I mean, it’s still gives me goose bumps when I watch. It’s unbelievable. But it’s become so normal and they’re bringing costs down. They’re making it easier to get more into space. And I think it’s fundamentally important. First of all, there are companies like Planet that are using Space to help life here on Earth, and that has to be our first priority. And then you think about using Space to go and do more advanced things. You’re manufacturing things you can’t manufacture on the planet. You’re thinking about going to Mars. I think it’s fundamentally important. So I sure hope that funding continues. I think the best companies, as in any industry, the best companies are going to merit that funding. It’s an area that it’s harder to build a space company than it is to build a SAS business probably takes a little bit more money to build satellites, but it’s absolutely worth it. [00:54:30][63.8]
Katie Stanton: [00:54:31] Okay, Kevin, so we have one last question for you before we move on to a few other topics. If you could snap your fingers, what would you want people to know about the industry? It’s not an industry that we really learned too much about and now you’re at the forefront. What would you tell us? [00:54:46][14.9]
Kevin Weil: [00:54:46] Fundamentally, I would just want people to be aware of everything that we can do. Like, I don’t think most people have a sense that there are satellites going around the world every single day, imaging the entire Earth every single day, and that that information can tell us so much about what’s going on and what’s changing in our world that’s relevant to everything from like agriculture and growing more food to insurance and finance and defense and civil government. I just think fundamentally awareness is the thing that we’re lacking because this dataset is brand new, it’s a new capability for humanity, and so few people know about it. They see Space and they think rockets versus what Space can do for us here on Earth. [00:55:23][36.2]
Dan Nathan: [00:55:23] It’s interesting just putting my fast money hat on. That’s kind of the CNBC through like the public market lens here. And I see the excitement that you have in the sort of people that are being drawn to Space. Obviously, Elon and Branson and Bezos, they catch a lot of the big headlines, but there’s a lot of capital going there and there’s genius people like you who are going to fix these big problems going forward. Now, all that being said, Kevin, it looks like you guys all left a big mess here in social media and in the public markets here because I’m looking at my FactSet and my Bloomberg here and I see Facebook Meta down 50% on the year down more from its all time highs. I see snap down nearly 80% from its all time highs. So Twitter would be down 80% if it wasn’t for Musk’s bid for it. Now that’s just a fact, but it’s down about 60% or so. And when I look at this sort of devastation and these are companies that are other than Twitter operating fairly well, I think in a difficult environment, we may get some more data about that when they report their Q2 and their guide for the back half of the year. I’m just curious, now that you’re over there, you’re focused on much bigger problems here. What’s your take about what’s going on, at least in some of these public social names? Because this is the sort of devastation that if you were around 20 years ago, you remember seeing some of the biggest tech stocks of that era being down from their all time highs. I’m just curious, what’s your take on that? And let’s talk about Meta a little bit here. [00:56:50][86.5]
Kevin Weil: [00:56:50] Sure. I mean, at the end of the day, so much of it is driven by consumers. And my belief and I’m biased, of course, every single person that I worked with at Twitter, every single person that I worked with at Instagram, and on the crypto side, everyone’s trying to do the right thing for the user. And we get caught up talking about free speech this and these are important issues. I don’t want to underplay them, but at the end of the day, these products allow you to connect with people all over the world that you never would have the. They help families stay together when they’re far apart physically. And I think as long as that’s still fundamentally what they’re being used for, and that still matters in people’s lives. Stock market’s going to go up, down, right, left and center. But if the products are important in people’s lives, that’s what matters. [00:57:33][42.9]
Dan Nathan: [00:57:34] Well, it’s just fascinating. When I look at like a Meta, for instance, it’s got a $450 Billion market cap. It was about to be $1,000,000,000,000 six or seven months ago. A company that’s going to maybe do a $125 billion in sales with a 79% gross margin and then 3 billion monthly active users. So like a third of the planet. All right. So you say to yourself, now here’s a stock that’s trading at 14 times earnings. So for some reason, public market investors are basically they’ve just moved on and it’s just pretty fascinating. So I’m curious, what are some of your thoughts because you’re working on some really cool projects. You’re working on the digital wallet. That would be you were working on DM. It sounds like you were a co-founder of that product, working for a guy that’s also thought to be a genius. David Marcus, former CEO, right, of PayPal. And it seemed like the stuff that you were working on was the path forward. It was how Facebook was going to go into this web, whatever that comes after 2.0 I’m just curious how you think about that now going forward, because Zuckerberg’s clearly stated that there’s going to be a different company, whatever the metaverse is. Curious your thoughts on that, because they seem to like left the digital currency stuff behind, but I have to assume they’re going be circling back to it. [00:58:44][70.5]
Kevin Weil: [00:58:45] So I loved my time working on our digital currency efforts. It was a really big mission. The starting point for us was it’s really crazy expensive to send money. It’s hard, it’s regressive, right? It costs more. The less money you have, it often puts people in physical danger from every dimension you look at it, and the more that you learn about it, the worse it gets. And there’s no reason that we shouldn’t be able to send money as easily, as cheaply, as quickly as you send a text message. And being Facebook, having Messenger and WhatsApp, which are the apps that are connecting exact kind of people that you would want to send money to from every corner of the world to every other. It just felt like a huge opportunity to improve the state of the planet, frankly, and we were trying to do it in an open way. So you also would never have to use Messenger or WhatsApp if you didn’t want to use a Facebook product to get value out of this crypto thing. And obviously it didn’t work and that would be its own podcast unto itself. But I will say the thing that I respect a lot about Mark is when he bets, he bets big. So he gave us a ton of room to run and we had a lot of amazing people working on this project. You see it now in all of the VR stuff. The company is putting billions and billions of dollars into a bet and a lot of people think he’s crazy. And we’ll learn over 5 to 10 years whether he’s right, but he’s not going halfway. He’s betting big. And Katie, when I think back to our time at Twitter, this is criticism for me, not criticism for anybody else of the company, but like, I don’t think we took enough big bet. And when we did take a bet, we kind of would go halfway. And one of the things I really learned from Instagram and from my time at Facebook was you make a bet. It doesn’t always bear out in three or six months, but you stick with it and that’s when you see the returns. So I think it’s really going to be interesting to watch. [01:00:30][105.6]
Katie Stanton: [01:00:31] I think that’s a cultural thing that’s not on you. I think that was a cultural thing to Twitter, that it was hard to make these big bets and changes. And that stems from, I think, a lot of the early days. But it is what it is. And we could talk about Twitter, I think, for hours, but we. [01:00:45][14.2]
Kevin Weil: [01:00:45] Whoa, that’s a whole other podcast. [01:00:47][1.5]
Dan Nathan: [01:00:49] Well, you guys could tune in to Fast Money at 5:00 today. We’ll be talking about that now. But the fascinating thing about that is when you think about Twitter, you think about SNAP. These are small businesses now. They’re tiny businesses. And so it’s just when you think of the scale in which Facebook or media is operating on, I would really love to hear people who worked at that company say the things that you did because he’s going all in and he’s not going to fail. And it’s kind of like Reed Hastings, who’s pivoted a couple of times over the last 20 years and some other very successful tech executives operate in very difficult environments in changing and fast changing times, I guess. [01:01:20][31.4]
Kevin Weil: [01:01:20] Yeah, there’s the whole thing about wartime CEO. Peacetime CEO. Mark is the single best person I’ve ever encountered at turning peace time into war time. And I say that with a huge degree of respect. I mean, that is a positive thing. Even when everything was going great at Facebook and up until the right there was Mark would find an area where Facebook wasn’t performing up to his standards or where something wasn’t happening, or we felt like we were missing a trend and would marshal people and rally everybody around it. I mean, Facebook executed really, really well, especially for a big company. So now it really is wartime and it’ll be fascinating to watch. But I think there are few people who know how to execute that playbook as well as Mark. [01:02:01][40.1]
Dan Nathan: [01:02:01] Sounds like Mark needs a space company too, so maybe he should call you. [01:02:04][3.3]
Katie Stanton: [01:02:06] Maybe a climate company. [01:02:07][0.8]
Kevin Weil: [01:02:07] Yeah. There you go. [01:02:08][0.5]
Katie Stanton: [01:02:08] You’re on a number of really impressive boards in addition to your day job and being a super dad and running ultramarathons. So I think you’re on the Nature Conservancy boards, drivers board and block product managers board. So a quick question for. Any startup founders out there. What advice would you give those founders who are looking to create their boards? What kinds of people or what kinds of attributes should they be looking for? [01:02:30][21.6]
Kevin Weil: [01:02:30] I think the best thing is to bring people on who are going to push you and challenge you. You’re the CEO. You run the company, but your boards there to help refine your thinking and challenge it and make you better. So find the areas where you’re weak and look to compliment yourself and find people that you also really can build a good relationship with because you don’t just leave a board overnight. These are long commitments. You’re getting in together for a long period of time. So it’s sort of a unique combination of someone who’s going to push and challenge you and somebody who you’re going to have a strong enough relationship or you’re going to want them to push and challenge you. And I’ve fortunately been able to find a handful of organizations where I know for myself, I’m learning every bit as much and probably far more than they’re learning from me. So I just feel fortunate to be involved. [01:03:11][40.6]
Dan Nathan: [01:03:12] Well, Kevin, they’re lucky to have you. We were lucky to have you join us on okay computers. Katie, thanks for the intro to Kevin and I hope you come back and we’ll talk all about those Internet stocks. [01:03:21][8.9]
Kevin Weil: [01:03:21] Absolutely. Thanks so much for having me. [01:03:23][1.5]
Katie Stanton: [01:03:23] Thanks, Kevin. [01:03:24][0.3]
Dan Nathan: [01:03:24] Thanks again to our presenting sponsor Current and our supporters Masterworks and Taboola for bringing you this episode of Okay, Computer. If you like what you heard, make sure you hit, follow and leave us a review. It helps people find our show and we want to hear from you. Email us at contact at risk reversal. Com. Follow and connect with us on Twitter at. Okay Computer pod. We’ll see you next time. [01:03:24][0.0]
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