That entire podcast has gone completely down the drain. Was an awesome pod that I followed weekly for industry insight. But it has become a platform of self-aggrandizement, overstating one's life achievements and pandering to the emperor without clothes in the hopes to get a cut of the action. Declining viewership numbers seem to support this view.
So, let investors in. Let them take the risk. Offer up the opportunity to invest at least. Sure, most SPACs are scams. I would never buy anything without knowing what I am getting in return. But so is PE and VC just that higher ups get all the cheese whereas with SPACs is the b or c level brigade like Chamath. Let's be honest, PE and VC does not provide strategic advice or any benefit above and beyond a) hard cold cash, and b) hard cold people who have zero emotions to fire people, something, the CEO and management was too chicken to do. The cash can be as well funded by the broad public and the firing, well damn, CEOs and boards and management should perhaps grow a pair or get fired themselves.
Was curious and checked, I think SoFi can be counted as a success? But Chamath surely is a crook, through and through.
And what if I put a bucket on my head and ignore it? What is the impact on those retail traders that they are warning not to join? Do we have to care at all?
This isn’t strictly true. There’s someone’s VC’s and a lot of bad PE, but there’s a reason smart rich people get VC money when they launch their third or fourth successful startup. And why PE firms are successful in building shareholder value. It’s more than just money.
I don't follow your argument: Of course there is a reason why smart and driven and successful individuals with proven track record attract funding. That's not contentious. But what is contentious is that those funding opportunities are monopolized and anyone on the outside does not get a fair shot investing in those individuals. PE firms don't build shareholder value whatsoever, I must strongly disagree with you. Great business ideas and execution increase shareholder value. The funding and advisory roles can be stripped apart and separated. If a company struggles with strategy and execution then it can hire a consultancy at a much lower cost than selling away ownership for cents on the dollar. Explain how otherwise those PE and VC firms extract 5x,10x sometimes 500x. I get your previous point that higher returns are required when risk is higher, sure. But why not let ordinary investors make their own choice how much risk to take? After all we let them binge on alcohol, casinos, and weekly options.
It’s a long post that I don’t want to spend the time writing but: Good PE firms (there’s a lot of bad PE firms) don’t just provide capital. They will find ways to increase the value. Often that involves trimming the fat (firing) or reorganizing or creating a more profit centric culture. Good PE’s are good are execution. A business doesn’t have to sell the PE. They choose to because PE pays the owner up front some of that potential value creation. There are many consultants that will do similar work, at this level though picking the right person who will pick the right strategy is like 300percent of the value creation. You can compete for deals with PE if you have the contacts and access to the funds. In my day job, I’ve competed with lower middle market PE firms for acquisitions. There are posters here who run PE firms. VC firms are the same way. The reason Kleiner Perkins gets all the good deals is that 1. They provide a stamp of approval (40 years of making good investments), but 2. more importantly they provide high end consulting services and knowledge on how to scale, contacts to good executives, etc. that’s why successful people still get VC backing even when they can bootstrap themselves. SPAC’s are not the same. SPAC’s are designed to avoid the regulatory hurdles of an IPO listing. They are a marketing gimmick for retail investors to think they are getting into the PE space but really they are getting in on the exit where the founders make all the money. there’s a big difference between Chamath and Blackstone.
I agree that SPACs and PE/VC are fundamentally different. I don't think I tried to make a point to link the two, if that came across as such then apologies. What I am concerned about is the downward spiral in our entire western world civilization. The reason why so many of the youngest 2 generations are so deliberately disconnected and disillusioned is because they don't find ways to participate. For most a decent home has become out of reach. Investing in the market has become somewhat extremely risky given the much more pronounced black swans, the fact that equity returns hover around 8% pa at best (depending on which metric and approach you take to derive) and the fact that real inflation is definitely around 5% if not slightly higher. That leaves the average long term investor with only roughly 3% of excess real returns. So, tell me what hope younger folks should have ever becoming stakeholders of society/life. If I was them I would also pay for experiences and hope to die by 50 to avoid the dreadful rest of a life of someone that most under 40 nowadays consider out of touch and untouchable (in the past we consulted the wisdom of the elderly). The picture for those elderly who chose to stick around does not look good either, financially speaking. In the past fixed income paid a healthy 5 to 6 percent. Now, all central banks are racing each other to the bottom all over again. So, do tell me why the wealthiest and richest deserve their own private funding vehicles that they shut everyone else out of? They are doing their utmost best to throw the average men a few bones here and there to avoid a full scale uprising and revolution, they make sure booze and drugs are around for the entertainment and to keep everyone high. Top priority is to not let them roam the streets, because that's when things heat up. Call me idealistic but I believe we as broad based society deserve better than the cleptocracy, corruption, backroom deals, nepotism, and revolving doors in the highest offices of most countries and in most boardrooms. Most regulators should feel ashamed to call themselves such, they have turned into lame ducks that have all but abandoned any type of supervision. All in the service of corporate greed. How that gets me to PE and VC? I believe when we give ordinary folks again similar opportunities to invest that some will take their chances. Those multiples simply do not come from expert advice or primarily from stamps of approval (as you imo rightly pointed out) and connections. In the end you got an unproven, immature entity that is begging some to give them a chance through funding.