Risk Reversal OK Computer Sponsor - Current

Risk Reversal OK Computer Sponsor - Masterworks


On this episode of Okay, Computer. Dan and FirstMark Capital’s Rick Heitzmann discuss when the frozen IPO market may finally come back to life (2:52), JPMorgan CEO Jamie Dimon’s new forecast for the economy (6:44) the outlook for Snowflake & the battered SaaS sector (9:48), the brutal fundraising market for startups (14:19), SoftBank’s disastrous recent performance and how it’s paying for its investing “sins” (18:13), former WeWork CEO Adam Neumann getting a stunning $350 million investment from Andreesen Horowitz for a new housing startup (22:17), why more high-profile founders are leaving their companies (25:18), and Elon Musk attending a Republican retreat in Wyoming (30:25).

Please rate and review and share it with your friends as this will help people find it.

And as always we want to hear your feedback. Please hit us with any comments at contact@riskreversal.com, and follow us at @OkayComputerPod.

Show Transcript:

Dan Nathan: [00:00:36] Current Ad. [00:00:36][0.0]

Dan Nathan: [00:00:38] All right. Welcome to okay computer. I am Dan Nathan. I am here with first Mark Capital’s Rick Heitzmann. We are going to cover this FOMO rally in the Nasdaq. Maybe it’s getting a little long in the tooth. We’ll figure that out a little bit. Jamie Dimon, CEO of JPMorgan, had a whole heck of a lot of things to say about the economy and what he sees back from the dead. Adam Neumann with some new funding here, the cult of the founder. Rick. It’s back, baby. We got a lot of stuff to talk about. What’s going on? How are you? [00:01:10][32.6]

Rick Heitzmann: [00:01:11] Things are good. Things are good. Full rundown of a lot of great stuff in the world is kind of coming back to life as people in different parts of the country are going back to school and everyone’s going back to work and thinking about what you’re going to do between now and the end of the year. [00:01:25][14.3]

Dan Nathan: [00:01:26] Yeah, well, it’s funny, you know, I use the term FOMO, the fear of missing out as our listeners know what that means here. But when you kind of have the turning of the page, we had a lot of trepidation as I think investors headed into the summer. It seemed like we had this kind of build up of bad news that was happening throughout the first half of this year. We had geopolitical events, we had inflation at 40 year highs. We had a stock market that for the first time in a couple of years had been trending lower. And it feels like this summer there was a lot of things where maybe people had a little time away from their screens or away from investor meetings or LP meetings or wherever you live in this investment universe or tech ecosystem. Throw crypto in there too, right? I mean, crypto was careening lower. It seemed like all of those web3 narratives were falling out of place. And it seems like we’ve found a little bit of support, if you will. So we get to the end of the summer. People are optimistic about maybe what’s to come between now and year end. Is that kind of how your mindset that’s working? [00:02:29][62.9]

Rick Heitzmann: [00:02:29] That’s what I’m feeling. I mean, it was the old sell in May and go away, but I think in 2022 it was more like Don’t buy in January and then go away. [00:02:39][10.0]

Dan Nathan: [00:02:40] Well, do come up with something snappy, something that rhymes with January. [00:02:42][2.8]

Rick Heitzmann: [00:02:43] They’re never buying January and runaway. But, you know, we saw was you know, we had a company who was getting ready to go public in January this year. By the time all the machinery got working, there was no market for IPOs. And this entire year we’re getting into the end of the third quarter and we have, therefore, a lot of visibility for no IPOs this year. And once that stops, it’s the train that we had talked about when the IPO window stops, therefore, M&A slows down because there’s not that competitive tension there. Then later stage investors don’t get paid. They start to withdrawal. The growth stage investors start to withdraw, early stage investors start to withdraw. So it’s a gradual unwinding through the capital supply chain, which we saw happen actually beginning at the end of last year. But through this period and now, although we’re not seeing the exit windows open, we’re start seeing the kind of the world come back to life at these new multiples and at this new range. [00:03:44][61.2]

Dan Nathan: [00:03:45] Well I mean, I guess the key point there and we’ve covered it a lot on the pod over the course of this year, was really what the Federal Reserve decided to do with interest rates to combat inflation. And that kind of changed the name of the game. And you just used this was expressed in valuation multiples as rates went higher, valuations came down, which limited the options of a lot of companies that had been doing just fine, but then threw in the probability of a recession both here and abroad. And a lot of these companies growth prospects, whether they be public or private, they start to change, causing investors to rethink valuations. So it’s kind of this virtuous cycle. When you talk about the stock market, though, it is interesting, the Nasdaq’s up eighteen and a half percent this quarter. The S&P is up 13 and a half percent. It’s still down both of them. The Nasdaq 100 still down sixteen and a half percent and the S&P 500 is down about 10%. So we have a scenario here where the jury’s still out on the stock market. Are investors chasing a little bit? We know this. We know this behavior, man. As soon as it kind of feels like maybe we’re out of the woods, we don’t have a protracted bear market. We’re not going to crash, if you will. I think the Fed changing their tune a little bit from more aggressive rate hikes that we’ve become accustomed to over the last couple of meetings to maybe a little less at the September meeting, at least. It’s giving investors in the public markets a little optimism that some of that valuation expansion may come back. If rates are going to moderate, at least the trajectory higher is going to moderate or maybe even go down. Thoughts here how you’re thinking about that? [00:05:22][96.3]

Rick Heitzmann: [00:05:22] There’s probably two things that we’re seeing. I think you’re exactly right. On some of the macro and public market thoughts in the private markets, we’re seeing two things that really matter. First of all, a lot of our companies are continuing to perform. We were concerned about the consumer six months ago. We were frankly concerned in our direct to consumer businesses about the changes in privacy and Apple’s changes and the ability to acquire customers at significant scale. We were concerned about a lot of these things rolling through the system and on the enterprise side we’re concerned about the end of unlimited hiring and with less employees, you might need less seats for all your enterprise applications. Those things have come to pass and we haven’t really seen a degradation in performance in our companies. So in a very positive way, although you’re seeing the clouds remain on the horizon from a macroeconomic perspective and we might be in a recession now depending on how you define a recession, but we’re not seeing that show up in our company’s numbers, which makes us feel really good about that. [00:06:26][64.0]

Dan Nathan: [00:06:27] I guess the point is, again, going back to the macro, where are we? And none of us know, none of us have a crystal ball. I think that if you’re looking for anyone who’s got probably the closest read on that would be Jamie Dimon, CEO of JPMorgan. He was quoted Yahoo! Finance had this long piece will throughout the show notes on this call that he did with some of their wealthy clients. He was talking about the economic outlook. He said it’s a strong economy, which I think is interesting because back in June, this is my comments here. He was saying he sees storm clouds on the horizon. [00:06:57][30.1]

Rick Heitzmann: [00:06:58] He has not been consistent. But it’s always interesting given the data points, he has to see what he has to say. [00:07:03][5.5]

Dan Nathan: [00:07:04] That’s a really good point. He has actually been all over the map, I think, in 2022. But this is what he’s saying. I guess as of the summer, consumer balance sheets are in good shape. Businesses are equally in good shape. When you forecast, you have to think differently. What is out there? There are storm clouds, rates QT oil ukraine War china. If I had to put odds on a soft landing, I’d say about 10% harder landing, mild recession, 20 or 30%, harder recession, 20 or 30%, and maybe something worse at 20% to 30%. Okay. I don’t know if all those percentages add up to 100%, but they can’t go much higher than 100%. Some of the headlines that I saw, I guess this morning was that last bit something worse at 20 to 30% or so. And something worse really means a protracted bear market means possibly a double dip recession. And when I think about what you just mentioned, that’s not showing up in your companies, Rick, is it fair to say that you’re just taking one snapshot over this period of time where a lot of preemptive action was taken on rationalizing costs? We’ve been talking about that. You said to me back in the spring on the pad, something that I’ve seen echoed a lot by a lot of your peers in D.C. since then. But you were saying cut and cut hard. If the visibility is this poor after a period of just really easy monetary policy and a consumer that had been really in good shape because of just all of the stimulus, if things are going to get worse, it’s not likely to be a one quarter thing and you’re going to have to fix your cost really rather than off it. [00:08:41][97.3]

Rick Heitzmann: [00:08:41] I think we saw that in Q1 and Q2, the best companies in Q1, the laggards in Q2, maybe what we haven’t seen is the impact of that. That would be one of the storm clouds. It would be concerning if folks are going through layoffs in Q2. You might not see the impact of that on the laid off employees spend in the Q2 results and that would come through in the second half of the year. But even in things like hospitality, where we were investors in Airbnb and Vacasa in those results, everybody’s concerned. But people are putting up Airbnb on July 4th had had their record day of all time. You’re seeing rev par continue to trend up and especially in cities that were left for dead. So you’re starting to see historical results being excellent, although people can still concerned about going forward. [00:09:34][53.0]

Dan Nathan: [00:09:35] One of the things that I guess the shoe that hasn’t dropped yet is some sort of warning about enterprise spending slowing down. We’re starting to see some of these big tech companies cut jobs. I just wonder, when I look at a company like Snowflake, which was obviously a huge bull market darling in the private markets and then came during that pandemic period and was trading at a multiple of sales of like 25 times. [00:09:58][23.3]

Rick Heitzmann: [00:09:59] 44 times at the height I think was the highest SAS multiple for a time. [00:10:03][4.3]

Dan Nathan: [00:10:04] Right. And so, you know, when you see this stock, correct, 65 something percent and analysts are still downgrading the stock, yet there are 26 buy ratings, Rick, on this stock. There’s only eight holds and two sells. And there was a downgrade today. And one of the fears is about enterprise spending. So I guess my point here is that even a stock like this that has been cut in half its multiple is down dramatically, still trades at a multiple like 26 times sales this year. It’s not profitable on a gap basis. You’d say to yourself, Rick, there’s a lot of room. The downside on this one, huh? [00:10:38][34.2]

Rick Heitzmann: [00:10:39] There is. There is. I think I mean, that’s an exceptional company with Frank Slootman being maybe one of the best CEOs out there in technology. So that has premium built into it and huge TAM and basically everything that going for it. You know, I’d probably be more concerned with non differentiated companies that are still trading at high multiples. But if you look back at some of the SAS multiples, the median SAS company is trading in 5 to 6 times revenue, which is back to historical averages, maybe even a little bit worse in historical averages. So maybe one of the reasons I think folks are starting to get back into the market and dip their feet in is saying, hey, we’re back to reasonable pricing, not chasing momentum anymore. I don’t think we’re necessarily, to your point, seeing a value based market, but what you’re seeing is somewhere in between that valuations have been reset and now there are willing buyers or willing sellers and you’re starting to see certain companies with our baby in the bathwater, analogies establish themselves as the winner that shouldn’t be thrown out with the bathwater. [00:11:44][65.3]

Dan Nathan: [00:11:45] I guess where I push back a little bit is like, here’s a company again. You just said, you know, with this tremendous Tam, I look at a company that did $2 billion in sales are expected to do this fiscal year and 3 billion next and maybe four and a half the year after that. And fine, here’s a company that has gross margins of 72%. I know plenty of SaaS companies that have much higher margins somewhere in the low eighties and are doing five, ten plus billion. And I look at 26 times the existing sales, 17 times next and I say to myself, if you have an enterprise slowdown, this company will get cut in half again, or at least the stock will get cut. [00:12:26][40.8]

Rick Heitzmann: [00:12:27] Yes, I mean, that’s the case. I mean, they’re trading at that multiple because they’re growing 50% plus year over year and they anticipate to continue to grow at that rate. If there was a enterprise slowdown and they got cut back to sub 30%, that multiple will get cut in half also. [00:12:42][15.2]

Dan Nathan: [00:12:43] What’s interesting a juxtaposition here is on the flip side, I mean, look at Microsoft is the only down 12% of the year. Apple is down 2% on the year. Google down 15% on the year. So you’re starting to see at least some investors crowding towards the size and monopoly again. But maybe the jury’s still out on a bunch of these other names that, again, have not been proven during periods of recession. And again, we don’t know if we’re going to have a recession. I think the probability is very high in the next year or so. And some of the trends or at least some of the slowdowns that we’re seeing. If you start cutting Salesforce, if you’re a big enterprise company like this, you’re going to see sales growth slowdown, correct? [00:13:23][40.4]

Rick Heitzmann: [00:13:24] Yes. And that’s kind of what’s the crisis of confidence that’s happening now. And even we see in our companies, people are trying to figure out, is this 2001, is this 2008 or is this the three months of dark COVID? Where should we be cutting? Obviously, everyone’s cut the dead weight already. How much should we cut into it? And are we going to have our slightly underperforming our average sales people? Should we cut them because they’re going to be less efficient or harder environment, or should we be leaning in because there’s nothing in our business which is said even the average sales people aren’t efficient. There’s a bunch of different signals and it will be interesting to see if anybody is going to lean into that level of uncertainty. [00:14:07][43.3]

Dan Nathan: [00:14:08] Yeah. So we’re talking about what some of these companies that have already raised what they should do to conserve capital a little bit in the private markets. Let’s talk about those that actually still need to raise our friend Jeff richard’s over at JGB. He had a tweet thread out this morning I thought was interesting. You and I chatted about it briefly here, but in quotes here, positive fundraising Twitter he’s speaking to them does not reflect reality for founders. Last 2 to 3 months most brutal fundraising in market I have seen since the early 2000s post-crash optimistic we will see things improve with market bounce and people returning from vacation. This is kind of what you were just kind of saying, but it’s been rough for clarity. This is primarily for growth, stage valuation 100 plus and especially to relate straight valuation, less than 500 million, lots of activity inches that early stages, albeit with some recalibration on valuation. We just mentioned that. But the thing last thing here, as I’ve said, I’m optimistic because in my humble opinion, sentiment reached a low in May, June, July, plus 20%. The Nasdaq bump has a funny way of shifting mindsets, thoughts there, because that’s really what we’re talking about here. [00:15:15][67.7]

Rick Heitzmann: [00:15:16] I generally agree. I mean, I think Jeff is a great guy and sees a lot across his portfolio, but generally it’s been a little bit more bullish. Know I think you saw trough sentiment in probably March and April where companies couldn’t even get meetings. And then folks, when the second quarter started to turn, you were starting to see more people take meetings, although not invest. And now you’re moving to the point where the machine starting to get a little bit unclogged. But what you haven’t seen, which really drives investment, is exits. So in absence of exits, I think there’s people who have dollars to deploy, who want to deploy. I think there’s folks who have maybe sat on the sidelines and now are getting itchy and therefore want to deploy. But you haven’t seen the biggest driver. And what that leads you to be susceptible to is kind of that dead cat bounce of, hey, I’m sitting here, I’m tired of not deploying capital, so maybe I’ll start deploying capital because I feel good about a valuation reset and I feel good about historical numbers. If you start to see real results in Q3 and Q4, not be strong and either mark ups not happening and the IPO window not opening, those folks will look for cover again and they’ll be back out of the market. And that’s where you talk about the double dip. [00:16:36][80.0]

Dan Nathan: [00:16:38] Current Ad. [00:16:38][0.0]

Dan Nathan: [00:18:17] Masterworks Ad. [00:18:17][0.3]

Dan Nathan: [00:18:57] Taboola Ad. [00:18:57][0.0]

Dan Nathan: [00:19:00] Yeah. All right. Let’s talk about some of the late stage sort of funding that might not exist from one player that was driving up valuations for years and that SoftBank. There was a headline the other day that hedge fund Elliott dumps SoftBank stake after souring on Masa Son. Talk to me a little bit about this because I think as a VCcompeting for deals and access for years. I think that SoftBank and all the capital they had and they’re just kind of indiscriminate investing in later stage, really distorted the market a great deal here. But we’ve seen this thing kind of come all the way around. And I do think it’s interesting. And we’re going to talk about Adam Neumann in his next act here a little bit. Masa was an enabler of Adam Neumann for years. And they saw just the absolute crumbling of a valuation of 48 billion to 8 billion on the eve of that expected IPO in September of 2019. And if you remember, three years ago at this very time, I mean, all anybody could talk about was WeWork going public north of $50 billion or something like that. And weeks later, the deal is called off and the thing is being scrapped and Adam Neumann is gone. [00:20:09][68.7]

Rick Heitzmann: [00:20:10] That we’re still in a bull market. That was not hey, the market’s falling apart. We’re looking for profitability, not growth. This was a market still looking for growth, not caring as much about profitability. And they still couldn’t hit those hurdles. [00:20:25][14.7]

Dan Nathan: [00:20:25] Yes, the writing was on the wall. The capital kept on coming in, I guess, from the Mideast to SoftBank here. Talk about what this means to you, though, to see funds like Elliott, which are activist funds that were invested in SoftBank. But just some of the other kind of marks that a SoftBank is taking in some of the comments that they’ve made, maybe about retrenching a little bit and these kind of growth tech markets. [00:20:46][21.1]

Rick Heitzmann: [00:20:47] Masa Son came out in earnings this week and did a full mayakoba. He did a full apology of, hey, he got way over his skis and is probably as close, especially as you’ll see Japanese CEO take the blame for what is clearly a disaster. And they write the book on this phase of a bull market, especially in tech and especially investors. That’ll be the chapter of Shouldn’t We Have Known it was the top when there was a guy who was willing to give people who were writing billion dollar checks, who didn’t want to do diligence, and they were the poster child of low diligence, too much capital. One of the cardinal sins, we think, in venture capital and private markets of are you trying to use capital as a competitive advantage because you’re really not going to be able to scale like that? They committed all of the sins, no work over funding companies, not being capital efficient through all these things. So they’re going to be that chapter in the book of maybe we should have known it was a peak then. Then they commit another sin. They didn’t sell at the top, so they actually had certain public positions, DoorDash, Uber, which they could have sold in the public markets but heldon. So it really is a disaster. They are retrenching. They are, you know, kind of the penultimate late stage player, as we’ve seen a lot of late stage players kind of retrench, not participate in this market, trying to figure out how to tell their investors that it’s going to be different this time. They’re going to be thoughtful. They’re going to take diligence seriously. They’ll think more holistically about capital efficiency. All those lessons which we’ve talked about over the last year they’re trying to absorb. So if they’re writing the book in three years, this might be the beginning of a bottoming out, right, where the excesses have been identified. People have apologized for it. Whatever the 12 step program of getting back to a normal market is, it feels like we’re getting through maybe the first half dozen steps of the drunkest guy at the party apologizing for things that he did and said. [00:22:59][131.6]

Dan Nathan: [00:22:59] Yeah, well, let’s talk about that. Okay. Because again, it’s a pretty decent book. And Adam Neumann in the press this week, his new company, Flow. He wants to do what he did to the corporate office space. He wants to do that to retail rentals for consumer, you know, apartments and homes and the like here. Andreessen Horowitz investing, I guess it’s reported, 350 million at a 1 billion valuation. Marc Andreessen is going to join the board here. And again, you know, this is an interesting scenario. I don’t know what Andreessen is looking at. They obviously have to be fairly well enamored with Adam Neumann and trust him to invest that amount of capital in this sort of thing. After the fabulous blow up of the last, when you think about how much capital went poof in wework, you could say it was a best idea, maybe kind of just this executed or the cult of the founder allowing him to kind of conduct himself and his organization the way they did. You know, at the end of the day, that’s what cost investors billions and billions of. Here. So curious is like quick thoughts on this. Was this like a friendly sort of deal or has the Flow deck been going around here a little bit in the VC ranks? [00:24:08][68.8]

Rick Heitzmann: [00:24:09] You know, people knew he was working on flow does kind of rhyme with we work a little bit as you know, they’ve already signed a lot of leases taking control of a lot of multi-family residential properties. I don’t have any idea what the scale of that is. Right. So people are claiming it’s $1,000,000,000 pre-seed round. No different than the other character of the era, Travis and his cloud kitchens. Those guys made enough money on their other businesses that they were able to deploy some of that capital and get the business going, especially both physical world businesses, signed leases and prove some things out. The billion dollars was a post-money valuation, so it was 650 pre, which is even if this was a seed or a series A way outside the bounds of what’s normal. Not knowing enough about it. I don’t feel as strongly about as as the thousands of people who’ve opined on Twitter over the last 24 hours. But what I do know is he’s probably as good of a salesman as anybody as we’ve seen over the last 20 years in venture in being able to sell things. He obviously was able to raise a lot of money and was able to sell people on a dream of this weworld. And frankly, this sounds a lot like welive, which was part of that plan. We had known when we were investors and wework through an acquisition. So it’s kind of is part of the same playbook and we feel like it could be interesting, but clearly a character, clearly someone who, you know, you’ve had many series about you on Hulu. There’s a lot, a lot to unpack there. [00:25:46][97.5]

Dan Nathan: [00:25:47] Yeah, no, I get it. And, you know, it’s kind of interesting. This week there was an article in The New York Times which again, it seems like they were trying to make up for maybe some poor titling a few weeks ago. They caught a lot of heat about that Girlboss article, but this one was the Boy Bosses of Silicon Valley are on their way out. And I thought this would be interesting because I know that you know Ben Silbermann very well. You are the first what institutional investor in Pinterest. You were on their board for years. But Ben Silbermann, a co-founder of the Digital Twin Board Service Pinterest, resigned as chief executive. Joe Gebbia, a co-founder of the home rental company Airbnb. Also one of your portfolio companies, announced his departure from the company’s leadership and Instacart’s founder, CEO Meta is also departing here. So I thought this was interesting because their contention is obviously the resignation signifies the end of an era at these companies, which are among the most valuable and well-known to emerge from Silicon Valley in the past decade. So talk to me. What does this does it mean anything to you or are they all individual situations? Does it mean something about where these companies are relative to kind of the growth trajectories when they went public on those exits? Because, again, it’s a different market here. These were companies that, until they went public over the last few years, were a bit of a darlings, and now they’re all been at least cut in half from those highs. So just thoughts here, if these companies are kind of do they need new leadership to kind of navigate these, what are going to be, I think, difficult public markets for some time here? [00:27:16][88.9]

Rick Heitzmann: [00:27:16] It’s very clear. And, you know, having worked with companies have gone from starting all the way through the public markets. Is that being a founder CEO is really, really hard and you’re working almost all the time, dawn till dusk, weekends, not taking vacations. Many of those founders, you know, didn’t have a lot of money when they were started. So living hand-to-mouth. And then you have to evolve. Your job as the CEO of a seed company is different than in a company, is different than a growth company is different than a late stage company is massively different than a public company. So just to be able to stick around in that seed for that arc means that you have to be able to develop a lot of skills. Oftentimes these guys have had to turn their team over two or three times as the team members might not have scaled. As they’ve gone through this arc, you’re basically sprinting a marathon over this ten, 12 years. And I think what you’re seeing is Joe was there for probably 12 or 14 years. Ben, about the same. I’m not sure about the Instacart situation. There was an investor there. What you’re seeing is it’s really hard to be a public company CEO and it’s even harder if you’ve been there for that period of time. I think the average tenure for a public company CEO is a little over three years, so these guys have held that seat for 3 to 5 times longer and therefore it’s unsurprising they transition. I mean, the same thing said, hey, what happens to Oracle when Larry Ellison leaves or Salesforce or Marc Benioff leaves? I’m sure it’ll be a lot of ink spilled when Zuckerberg leaves Meta. But I think all of these guys, he. When they talk about it now or Bill Gates is that, hey, it’s really hard. You get really tired and at some point you’re tired, you have other interests. And you also have to create space for folks who have been with you for a long time to be able to come in and grow. [00:29:13][117.2]

Dan Nathan: [00:29:14] Yeah, I guess there’s no playbook for that. And if you think about some of the massive tech companies that you just mentioned, there’s been some really good succession. There’s others where the jury’s still out. I think the one that we’ve talked about a bunch and I can’t really wait to see what happens here is just Amazon. When you think of what an absolute revolutionary CEO founder Jeff Bezos was in the early mid-nineties and what he turned that company into and turning over the reins after 25 years, the jury’s still out on how that one works out. It’s been a little more than a year. You know, Amazon’s stock and the corporate performance is something that I think will be debatable for a while because of this post-pandemic period. But if you think about Microsoft in that move as Satya, Apple obviously Tim Cook taking over the reins ten years ago and then Sundar at Google, they’re all doing okay right now. [00:30:03][49.4]

Rick Heitzmann: [00:30:04] So yeah, about 50% of all new CEOs fail, obviously Sundar obviously Satya a lot of the guys who started ten years ago had the benefit of momentum from a bull market. And we’ll see if, Bill, in this next generation of CEOs of these companies can have a little bit of the same benefit of some tailwinds. But in general, those have been great businesses. Satya I think will be one of the great non founder CEOs of all time in tech from what he did there. And people always try to read too much into it, but you could have picked any era and there’s always, always folks who are ready to move on to their next challenge. [00:30:41][37.6]

Dan Nathan: [00:30:42] Yeah, I would just say that as a public markets investor and someone who’s kind of watched a lot of these transitions in tech over the last call it 25 years or so, I think one of the most consistent themes to success is taking over for a founder. Obviously, Satya did not do that. Ballmer was essentially a founder, but it wasn’t Bill Gates. Is they all put their own imprint on the company and their path forward here and so that’ll be really important. Andrew Jazzy or Andy Jazzy has already made an acquisition of one medical, and there’s probably some other things that they’ll kind of go in a different direction of Bezos, what he might have done. All right. Last thing before we get out of here. It wouldn’t be okay, computer, if we didn’t have a fun story to report on of Tesla CEO Elon Musk. Bloomberg just now saying Musk among guests as McCarthy raises money on Liz Cheney’s home turf, Elon Musk is among the guests at a Wyoming event hosted by House GOP leader Kevin McCarthy, the same day that Representative Liz Cheney faces a likely primary loss to a challenger backed by the Republican establishment. And you know what’s going on here, Liz Cheney, this is basically, I think, payback for her leading the Jan six inquiry, a Republican doing that. Kevin McCarthy very much in bed with Donald Trump. So this is a candidate chosen to oppose Liz Cheney and oust her from her seat. I guess the only point here is that I’ve made this point on many occasions here over the course of 2022, Musks alt right turn is very quizzical to me. It doesn’t really seem representative of the kind of customer base that you would expect to keep Tesla moving forward here. Thoughts here? Because again, maybe this is just a throwaway story, but it’s just another example of him acting in a way that I don’t think is really in accordance with the beliefs of his customers of Tesla. [00:32:24][102.4]

Rick Heitzmann: [00:32:25] Yeah, I think he’s acting inconsistently. He’s been somewhat volatile. He’s been a little out of the news after they scheduled the Twitter hearings, probably trying to keep evidence out of the public domain. It is an odd choice given his customer base, given the ideals of Tesla and SolarCity to go alt right. I’m not sure of all of his customers really understand his politics or their thinking. Through all of that, I figure we are over under his Dan on Elon Musk being the CEO of Tesla. [00:32:56][31.3]

Dan Nathan: [00:32:57] Listen, I’ve said under five. I’ve said under two. I mean, it depends what podcasts you catch me on. But let me ask you this. You have a Tesla, you love the car. At some point, is there some sort of behavior like, for instance, if this is true, he’s backing a candidate that believes in the big lie. He’s backing a party that believes in the big lie. I believe this to be a destabilizing sort of movement for our democracy. And at some point, do you say, hey, listen, I’m not going to do things that to enrich a guy like this, he’s the richest guy in the world. His company has a $900 billion plus market capitalization, and it’s totally divorced from the reality of the fundamentals of this company, in my opinion. How much of this bullshit behavior are you going to put up with as a customer I guess? [00:33:45][47.4]

Rick Heitzmann: [00:33:45] As a customer is him going to wait and see? I like the car. It’s a great product. I’ve enjoyed it. I enjoy the first generation. I’m enjoying this generation. If he really comes out and is pro January six or does something. Stream. It might force my hand a little bit more, but until this all plays out, I’m going to enjoy my car and see what happens. But I agree with you. I think my over under would be Jan 1 ’24 that he’s not going to be the CEO of Tesla and whether if he’s running Twitter, which he owns at that point because it’s forced upon him or he’s moved to a different phase of his life, he’s definitely got to move on from Tesla at that point. [00:34:24][39.6]

Dan Nathan: [00:34:25] Yeah, well, listen, if that is the case, at some point there’s a multi $100 billion air pocket in the stock to the downside, because I think the cult of Elon has driven a lot of this kind of excess valuation, in my opinion. But I’ll also say that we’re talking about what would be bookends to this bear market. We kind of use that example of Adam Neumann in 2019, right before we kind of had the crash in 2020. [00:34:48][22.7]

Rick Heitzmann: [00:34:49] Another crack before the straw that broke the camel’s back of the Ukraine, maybe. But I would say yes. Putting all your sins to bed meme stocks and overvaluing people who are CEOs of multiple companies. [00:35:02][13.2]

Dan Nathan: [00:35:03] Crypto NFT is you know what it would be Rick it would be like the end of a Godfather movie where The Godfather just cleans up all the messes here a little bit. [00:35:11][7.8]

Rick Heitzmann: [00:35:11] So taking care of the family business. So this is Dan’s family business list of Newman, Kalanick, Musk, who who else has to go? [00:35:20][8.8]

Dan Nathan: [00:35:21] I mean, as far as I’m concerned, you just named a bunch of shysters. I mean, these are people that raise billions and billions and billions of dollars, enrich themselves massively. They did it. And it’s not just their fault. They had plenty of enablers and people were willing to give them that capital. But we’ve seen this in every market cycle here. You always see these sorts of ills be corrected. And I think until that Tesla ill is corrected, I don’t think we’re done with this period of euphoria. So how’s that? All right. Listen, we covered a lot of ground here. Rick, I appreciate you being here. [00:35:50][29.3]

Rick Heitzmann: [00:35:51] Always great being on even in even in the dog days of summer, being able to get on and have some real conversations and prep people for as they’re thinking about what’s going to happen when we all go back to school. [00:36:02][11.4]

Dan Nathan: [00:36:03] That we got a baby. I know it. Like as your friend Josh Wolf likes to say, suits, suit, suits you. You better get yours to the dry cleaner come September, buddy. You got to put your suit on. [00:36:12][8.8]

Rick Heitzmann: [00:36:12] Have to make sure it still fits. [00:36:13][1.0]

Dan Nathan: [00:36:14] All right. I’ll talk to you soon. Thanks. 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 dot com follow and connect with us on Twitter at okay computer pod. We’ll see you next time. [00:36:14][0.0]



Learn more about how Current improves its members’ lives at current.com/okay

Check out Masterworks, the world’s premier art investing platform masterworks.art/okaycomputer