The SpaceX IPO Report Card, OpenAI vs. Anthropic, and the Private Market No One Talks About | CJ Gustafson w/ Guest CJ Gustafson

Aman: First ever trillionaire on paper, at least

Host: the largest IPO in human history. The biggest raise.

Guest: I want to invest in whatever company is going to fix the data centers in space.

Aman: Foreign.

Host: Welcome back to another episode of our terrible, horrible, no good, very bad secondary podcast, Trading Places. We are both on the road this week in Romania of all places, for two geeks, such as traveling to Romania and Turkey. Aman, what did you get to do while you were in Romania?

Aman: Well, the morning was, uh, meeting a bunch of geeks and doing a little bit of a panel on the investment landscape in Romania. And then I just wanted a bit of a different perspective. So I actually joined the Romanian aeronautics team for an afternoon of dips and dives and barrel rolls and uh, aerial, aerial acrobatics. It was a, ah, pretty amazing experience. Nice, nice little experience like uh, a level setter. When you get to see all of Bucharest from 6,000ft up and you're inverted, you just get a different perspective on what the world looks like.

Host: We're, uh, doing a little maverick, uh, danger zone there. Well, we're going to go over some of our headlines for this week. We're going to talk about our updated private Mag 7 scoreboard. Who's in the top seven, who's in the next three read that are on deck. We'll talk a little bit about the big three who are going public this year. SpaceX of course is coming out later this week and we'll cover that very specifically. But looks like OpenAI and Anthropic have also filed and are going to try and go out this year. Google is raising another 80, 85 billion in equity, not in debt, to keep building out Data Centers. The SaaS apocalypse might be over. At least some of those companies are recovering in value and price. We'll cover the AI coding land grab, particularly Cognition, which just raised a bunch of money, and Cursor, which is potentially about to be acquired by SpaceX. And then lastly, we'll talk about a few of the center corns that have recently been announcing they're raising more money. Databricks and Revolut. Let's jump into the private mag 7Aman. We're looking at the augment power 20 here. Who's in your top seven? Aman?

Aman: Yeah, I think hard to argue with that list Stripe is just a quietly. They keep doing what they do, revenue's growing. They are uh, at or close to profitability. They seem to do periodic tender offers and manage them really well. Hard to argue with Alan. And then databricks and revolut are both doing new rounds. So, uh, Revolut's the one that seems to me a little suspicious. I've talked about them in the past about having a heavy dependence on banking revenue and banking multiples are not the same as fintech multiples. But the fact that they keep proving me wrong and raising at higher valuations. I guess at some point, I guess at some point I have to stop talking about them.

Host: I guess I would say that SpaceX, Anthropic and OpenAI are certainly the top three by valuation. Maybe OpenAI is a little bit overpriced there. ByteDance probably should be next on that list. I think at a half a trillion or maybe 600 billion after that. Then I think we've got Stripe Databricks, maybe Revolut at uh, north of 100 billion. Anduril is on this list even though the market cap is slightly below 100 billion. Again, I think we've got some others peeking in here. Ramp and Neuralink. I would probably put Canva on my list of just outside the top seven. Also ramp just recently raised at 40. I think Canva is priced somewhere in the mid or low 40s. But we're going to have three of these companies leave this list in the next 12 months, I think. See SpaceX, Anthropic and OpenAI go public. Those companies arguably all a trillion dollars or more. Maybe OpenAI is slightly below that. Uh, one news item that came out was that SpaceX inked a deal with Google to provide compute power for them, similar to the deal that they announced with Anthropic a few weeks ago. And Google is going to be paying SpaceX 900 million a month. $920 million a month. More than 10 billion a year, man.

Aman: And that's on top of the deal that they signed right as they were flipping the S1 public. They talk about a $15 billion, 1.25 billion a month with anthropic. So between, uh, 26 billion a year

Host: between just two customers, that's more than all of uh, SpaceX's revenue last year. Right.

Aman: I was going to ask, uh, if you knew how much revenue SpaceX. You do know this because you've gone through the S1 with me.

Host: Did it 2.7 billion less than 20 billion last year. Maybe if you throw in the cursor revenue, it might be just over 20 billion. But more than doubling their revenue just by signing those two deals.

Aman: Yeah, so cursor is going to be. They. When they announced the cursor option agreement, they said they were at 3 billion cursors is expecting 6 by the end of the year. You add 6 to the 26. And now their AI business, which really was nothing a year ago. I wouldn't say nothing. It was uh, I guess it was speculative, uh, but then they acquired xai, which included Rock, and then the Colossus supercomputer is part of that. And now the Cursor acquisition has put them at $32 billion in AI revenues on top of, let's say 15 to 20 for Starlink, on top of their space launch business. So most of the revenue comes from the um, AI business. And that's totally changed the game on their roadshow, the roadshow messaging and justifies the valuation. It's interesting that they've got those three business segments and the one that we were all talking about two years ago was starlink. The one that we invested in when we m. Left the company was the space business. And now the one that's taken over the roadshow is their AI business. So it really is three different business segments, but all seem to be growing, doing well and this deal is a game changer for them.

Host: A few weeks ago we had talked about the XAI acquisition by SpaceX at 250 billion, maybe being uh, kind of not the right valuation, perhaps a little bit overvalued, if not a lot overvalued. Do you uh, go back and revise that math now based on um, the anthropic um, and Google deals that just came in. Does that, does that sort of justify a $250 billion acquisition? Or is that still maybe a little bit too crazy?

Aman: So XAI was at the time, what we knew about it was, it was, it was grok, which was underperforming. It was a AI LLM, which was like third or fourth in class. They did have the Colossus supercomputer and the, the technology, the provisioning that's now along these other deals. If I add those two deals together, I guess Google and Anthropic, that's what we say, 26 billion. So they paid 250 and deleted the company which was already rich. And that's sort of now 10 times revenue. So now it feels like it actually was a pretty good deal.

Host: If you decided maybe justify.

Aman: Yeah, because at the time it was like 100 times revenue. And I don't think you or I could make sense of why you'd buy a company for 100 times revenue. But now that it's trading uh, at 10 times revenue and the margins on the revenue are Maybe a little bit low because of the cost of compute, but, you know, you've, they've sunk that cost.

Host: You're also, you're also talking about 15 billion a year worth of spend.

Guest: Right?

Host: SpaceX was profitable at around 5 billion, and then with the addition of XAI, was not profitable to the tune of losing 9 billion a year. So 14,15 billion of negatives there. Yes, but again, I guess if you're getting $26 billion of revenue, maybe not a high margin line of revenue, but at least that, uh, looks a little less crazy than it did maybe a few months back.

Aman: Yeah. So 26 billion covers a lot of sins. Dilution and Capex spend more coming. These are two whales, but there are a couple others out there that they may eventually sign as well. So this now in retrospect, seems like, uh, a good bet, but it snuck up on us because that wasn't how they sold it. It was grok. Right. That was the way that they, it was GROK and AI. And what they ended up doing was, uh, deprecating those assets, but have turned Colossus and the provisioning into the real crown jewel.

Host: Um, I don't know that that snuck up on anybody. I think that he signed those deals in the last 30 days. Maybe they were working on it a little bit earlier than that, but, uh, I think that was done explicitly to be able to justify the valuation for the IPO.

Aman: Fair enough.

Host: Well, speaking of IPOs, anthopic filed to go public June 1st.

Aman: Right.

Host: And then just a few days ago, OpenAI also filed on June 8th. They're both trying to race towards the public markets, uh, one ahead of the other. So if we look at polymarket, for which company is likely to go public first, it seems like Anthropic, uh, has a higher probability going out first. Um, I guess we kind of thought that was the case. Uh, maybe a few weeks back, there were some rumors of OpenAI filing. And briefly, for maybe about a week or so, the odds flipped. Uh, but then when Anthropic announced they were confidentially filing, the odds flip back. And then even though OpenAI also confidentially filed later, the odds didn't really change. So we're still expecting Anthropic to go out before OpenAI, correct, you think?

Aman: I think so. I think at the start of the year, I think the betting was probably more, um, OpenAI had the momentum, had the lead, and then they began to lose lead in Q1. And then the lawsuit happened with Elon. Right. And the lawsuit was not a clear, uh, win for, uh, Musk. But just the uncertainty around the governance stalled OpenAI a bit. So Anthropic, I think, took the lead and it's just a stronger offering. And I think it's their salutes. If they want to go first, they'll get there first because they have the stronger offering. But they have already raised a lot of money and they may just decide to wait and see how SpaceX goes and how the market responds. And OpenAI might be a little bit more desperate, so they might push a little bit faster. So my guess would be Anthropic is the better offering. And it's likely that if the market behaves, they'll be the first ones out the door. And, uh, it's probably as soon as SpaceX clears the decks, I guess.

Host: One other Note on that OpenAI filing is it sounds like there's an employee share sale that's going to be ahead of the ipo. It seems like the employee tender offer will be done at OpenAI's last valuation of 850 billion in March. Does that seem like a reasonable valuation to you? What do you think about giving employees a chance to get out the door ahead of the ipo? Uh, at that price?

Aman: Yeah, I would have thought they, if they were very confident in their ipo, I would have thought they would wait and just let the, let the liquidity happen at the time the ipo. Now the employees are going to be locked up for 180 days. What this says to me is one, they think they'll go north of 850 billion. They wouldn't buy back shares at 850 billion unless they were sure they could clear it in. The IPO was a little bit surprising. Right? We've seen OpenAI lose a little bit of momentum since the last round, but obviously, um, they're confident they'll go above 850. And then this also suggests to me they're going to lock up employees for 180 days. There won't be any early exits. And so this is the last chance liquidity before the 180 days. So that's, that kind of makes sense to me. I think Anthropics can go a lot higher than 850. Uh, they were probably looking at one and a half trillion or even challenging SpaceX's 1.77 trillion. So it does sort of make sense that OpenAI wants to get some of their employees out and do it and not have any IPO uncertainty hanging over the employees.

Host: Uh, I guess if we look at a graph, uh, this was early in the year of opening on Anthropic revenue. There's some conversation about who's ahead right now, but the expectation is certainly that Anthropic has pulled ahead and is growing at maybe 10x per year compared to OpenAI, maybe only growing at 3x per year. Um, if you had to sort of guess at what valuations these companies would be going out the door, what do you think your numbers would be for those two companies respectively?

Aman: So OpenAI is. Their last declared number is 47 billion in arrow. They are growing at, what do you say, 10, 10x year over year.

Host: I don't know if that'll keep going, but yeah, that's been what's happened in the last year.

Aman: Yeah, I kept thinking that too, but they keep, they haven't stopped. So let's say they're at 60 to 70 billion by the, you know, end of the third quarter when, when they price. And would you pay, would you pay 20 times? Would you pay 20, 25 times?

Host: Uh, I might, Rabbit, I might, you know, I don't know if I'd pay 30, but I'd probably pay somewhere around 20 or north of 20, maybe even a little bit more. So where does that put the company?

Aman: Wouldn't you do a series a deal at 20x? You do series A deals at 20x,

Host: I'd certainly do a company growing at 10x per year at 20x. That, that's no problem.

Aman: Profitable in Q2. And I, I would, I would think we're in the mid one and a half, you know, two, 20 to 25 times.

Host: Arranging it would go public at less than one and a half. In fact, I might even wonder if Anthropic, uh, goes public at a higher number than SpaceX, depending on when they, when they decide to go out.

Aman: I mean, they've got more revenue and their, their growth momentum is, I mean 60, 70 billion. If they're, if they're at 5 to 10x here, like we're likely to be

Host: profitable in the near term anyway. Question for OpenAI, what do you, what do you think there?

Aman: You know, uh, before this conversation, I would have said below 850, but the fact that they're buying, if you're, if they're buying their employees out at 850, there are ways to, I don't want to use the word manipulate the offering, but there are ways to sell the offering by limiting float, declaring that we're going to go public and we're not going to raise 75 billion. Like SpaceX will raise 25 billion and half of that is going to be Amazon, uh, SoftBank, um, and some other big large anchor investor. And if they can provide a limited float and some anchor investors, they might get to 852. So I would, I would probably peg it at between 850 and a trillion is probably where Bill Price. I don't think I'm a buyer of that price, but, you know, but I, I think that's probably where it'll end up.

Host: I think both OpenAI and Anthropic employees had the chance to sell last year at around 3 $400 billion valuations. I don't think they were oversubscribed at those numbers. The, the tender wasn't fully filled. Filled, I believe. Um, I think the Anthropic employees are probably still bullish. At a price north of a trillion, Maybe north of 1.5 trillion, I bet you OpenAI employees would be very happy to sell at 800, 900 million. That seems like right now, given all the other stories we're hearing about OpenAI for the last quarter, that number seems a little on the high side for me. I don't know if I would be a buyer of OpenAI IPO and anything north of say, 700 billion, I might even prefer to see it more like 5 or 600 billion. But, uh, I don't think that's the number they're going to go out with. I think they're going to try and beat that $850 billion number. What do you think?

Aman: Yeah, I think so. Anthropic is declaring every month where their AR is. We haven't seen anything from OpenAI in months. The last number we saw reliably from them was 25 billion near the end of last year. You'd think if they were getting to 30 to 35 to 40, they'd be telling us about it. You know, think if they're at a billion users be telling us about it. They're not. We'll see it all in the S1 in a few weeks when it goes public. But assume those numbers are not, you know, or they're not. They're not yet at 40 billion, otherwise we heard about it. So let's say there are 30 billion. ARR. Um, would you say 700 billion? We're talking 25 times, you know, ARR. At those prices, I'd rather buy Anthropic than Open AI on a, on a

Host: relative basis, for sure, for sure.

Aman: You know, that sort of felt. The open air is going to struggle, I think, to get to um, the 850. Unless I'm missing something about. Unless something the financials we don't know about and we'll find out. It seems like they'll have. They'll be a bit more challenged to get to the even 700. But as I say, they're ways to manipulate the offering and limit the float and bring in anchor investors where maybe they, you know, maybe they get there. Um, but I don't think it's as strong an offering as Anthropics is.

Host: I think I'd probably be willing to pay twice. Uh, certainly at least twice. Maybe more than twice whatever OpenAI price is at for Anthropic.

Aman: Yeah.

Guest: There's the other ship tucked in nice and neat.

Aman: I wonder what she's doing.

Guest: I can't read anything inside. She's jamming us more.

Host: Book says she's a freighter.

Aman: My foot.

Guest: If she's jamming us, she's hiding something. I'm going around her.

Host: Well, um, other companies are also raising money, but interestingly, this one is already a public company. Alphabet announced that they were raising $80 billion in equity, not debt, equity, uh, to continue AI spending. And 10 billion of that 80 billion was going to be coming from Berkshire Hathaway. Amalia, does that strike you as a little bit different than what we've been seeing from all the other hyperscalers? They're doing this through equity, not debt.

Aman: Why not? It seems like a smart thing to do. If you can, you should. I think they are. Google is one of those companies that is, uh, trading at were 18 to 20 times their earnings. So they are the most profitable, probably the second most profitable company in the world, right behind Nvidia. So on a valuation basis, I think it's good for them to, if you can raise, to show up your balance sheet in advance of spending a ton of money on Capex over the next couple of years, which they've declared they're going to do. I think the number one capex spender now 150, $200 billion a year in Capex. So they're smart to raise equity. They can leverage it up later. If you raise debt now, you can't really raise debt later, at least not at the same capacity because you're leveraging your balance sheet this way. They improve their balance sheet. They create flexibility for debt later. And they're bringing in Berkshire. This is, I think, the first major investment without Warren Buffett as the CEO. The new CEO is Greg Abel. And so they're bringing in a strategic, a high, uh, quality investor uh, in Berkshire. I think it's a great move for Greg Abel, by the way. We haven't talked much about him on this pod. I mean, Buffett, if he had. If there's one thing I can say negative about Buffett, as great as investor as he was and one of the most influential voices in the history of investment. He kept a lot of cash on the balance sheet and he was always looking for. He was skeptical of technology. First of all, he reluctantly got into.

Host: He didn't buy very much tech until he got a large position in Apple, I guess for a little while.

Aman: Yes. And Apple kind of grew on him. And then he liked. He never went to Microsoft, he never bought into Google. He bought little pieces of Google and

Host: never bought in as much as Buffett. Used to hang out with Bill Gates and even play, uh, bridge with him and do a lot of impact investing. But he never bought a big position in Microsoft as far as I'm aware. Uh, he did buy a pretty large position in Apple, but deal on this, right? I guess the new CEO was able to get a discount. Hey, we're here all week, folks. Please tip your waiter.

Aman: Oh my goodness. Yeah, it was a very, uh, that was a very. That is his first major investment, I think as CEO he was able to get a 6% discount to the trading price. It's called the pipe. Private investment into public equity. Private, uh, placements are illiquid because you're not allowed to sell them out the way that public investors can. So there's usually discount. I think 6% is good. Companies at 18 times earnings. That's good. It feels like a Buffet ish type investment in a tech company because they can justify on the valuations. And so I think it's actually. And the one knock again at Evan Berkshire is they've underperformed the market in the last five years. I think they're up 60 or 70% the last five years. The S&P is up 100%. I know this because I'm a shareholder of Berkshire Hathaway. And the main reason they didn't make bad investments, they just had a lot of cash on their balance sheet. And that cash doesn't, when the market's going up, you want to be deployed. And he didn't deploy because he just didn't trust evaluations. And I think Abel is putting that cash to work, which to me makes a lot of sense. And he's taking, uh, a tech bet, which makes a lot of sense. These are things that Buffett just didn't do. So I Think it's great for Berkshire, great for Abel, good for Google and they can improve their balance sheet now and they can leverage it up later. I think it's a smart move all around.

Host: Meta is considering doing a very similar deal. They're now thinking about raising billions of dollars in a share sale as opposed to a debt sale. Meta did a fairly large debt placement uh, early this year uh, in raising for their own capex spending. It seems like there's a lot of people spending money on AI data center build out Aman that, that really hasn't changed.

Guest: Right.

Host: A graph of uh, the top four hyperscalers. Uh, I believe this article was back in maybe March or April and this was showing 500 billion a year projected to be close to 700 billion in 2026. Here's another graph on Bloomberg that's looking at estimates for 2026 again over 600 billion. Probably closing in on 700 billion.

Aman: I'm a little worried about Meta in this chart, like of the chart there's something that, that Amazon, Alphabet and Microsoft have in common and that is they have cloud businesses. There is, there is one player that doesn't belong. The where is Waldo of the chart is uh, Meta. They don't have a cloud business. They are still spending money on capex for AI. AI will help their business better ad targeting and there are benefits. But it's not like they have a demonstrable cloud business where they need this stuff. And so I think if Medic can raise money great. But I think if they're burning cash like this it's not going to be as well received by the market. I think the others are going to.

Host: Can't they use the same playbook that Elon is and if they overspend on uh, their AI data center build out they could just rent it out to other people, right?

Aman: I suppose they could, yeah. But they haven't done it yet. Elon is signing deals and maybe that's the backup plan that Met has. But you worry about a company burning cash flow like this without a real revenue plan. So the fact they can raise equity though is smart. Again back to storing up a balance sheet and giving yourself. If you're going to spend this much money on capex, you got to, you got to raise the money in advance of it. So good, good on them to do

Host: it I guess I would say that Meta is probably monetizing it themselves right, with their own advertising business. I don't know how much of that is apparent to us but still it does seem like Meta has been blowing the doors off on their revenue numbers and their own cash flow generation. But uh, they've probably been using every cent of that cash flow back in capex and more. Right?

Aman: Revenue, yes. Cash flow, no. It's taken a negative because of that. So they've got a couple hundred billion in revenue from advertising. Let's say you left 10% of it, you have a 10% lift in revenue, 20 billion a year at 40 to 50% margins. That's good and I understand the ROI, but that doesn't justify 150 billion in CapEx. Whereas these other guys have 60, 70, $80 billion cloud businesses growing at 50% year over year, high margin. I'd much rather be a hyperscaler with the cloud business than Meta. So um, Meta will have to prove it with a continued increase in ad lift and probably better margins and maybe a, maybe it pencils out but the case isn't as obvious as it is for like Amazon for instance.

Host: All right, one other news item uh, this week, SaaS Apocalypse, uh, which has crushed the markets over the, maybe the last quarter or so. Is it over Aman, Are we, are we back and happy with SaaS again?

Aman: Well you gotta look at the uh, let's look at the earnings for a second. For the SaaS companies there's been a couple of generally I think good news uh, in what we've seen. This is just a chart of uh, I picked about 22 or 23 of the, the top companies and just went through Q1 earnings because I was, you know, we've been looking at this whole SAS index and the fact the market wrote them off near the end of Q1, early Q2 and so we were looking for clues in earnings to see whether performance was being affected. Every one of them beat earnings. There have been a handful of very clear winners in the overall market. I think um, the biggest one and maybe the most obvious one was Snowflake, uh, which had a big beat and then jumped 36% on one day last week.

Host: Crazy. One day, 36%. Amazing.

Aman: And this is a company that had dropped the stock price, had been hit this lot along with everyone else. But they were very clearly going to benefit from spending on AI because what they do is store and curate data like databricks. They're going to be a beneficiary from the AI boom but didn't act like it. And you know what they ended up showing was 33% year over year growth and blew away earnings and accelerated growth and profitable. Their net revenue retention was 126%. So they're keeping and growing their customers. So they are one of the winners in the space. But there have been a handful of others. So you can either, if you can beat revenue and you can accelerate your growth and then raise your guidance. What is that bar? Uh, if you can bar. If you can clear the bar, Dave, your stock price is going to go up. And we saw some of them pop 30, 40, 50%. There's others like Okta and, uh, maybe five, nine. Like, how did their stock prices go up? They didn't really blow away revenue numbers. They didn't really, um, accelerate their business. But they were able to demonstrate that the market skepticism was wrong because they were able to become efficient. Octet just had a huge increase in profitability. Um, they're a cybersecurity company. They got beat up right around the time of the Mythos attack, along with the Western cybersecurity space. They just demonstrated a huge increase in profitability and 11 to 12% revenue growth and guided to future 8 to 12% growth. So the damage from AI is not showing up with their numbers. Just to the contrary. This is your father's or your grandfather's S.A.A.S. company. Uh, it's not the new kid on the block. It's not AI native. But they're demonstrating that they can use AI to become more efficient. Five9 is a call center operator operating company. They also demonstrated they can grow 10, 11, 12% a year. But they flipped the profitability and are using AI for efficiency. And their stock price is up 50, 50%. So I don't know that the SAS apocalypse. The only loser was Zoom Info. I think that's the only company that missed guidance or missed earnings. And there's some noise around them and growth and, you know, if you can't demonstrate profitability, the market's basically saying, you got to give me growth and you got to accelerate earnings. If you can't do those things, you got to get into profitability. If you can't do those things, you're going to get creamed. And that's sort of where Zoom Info and maybe a handful of others went. But I think overall the market's showing you that there are going to be a lot of winners now that are using agentic AI to accelerate their business. And I think for the first, what I've seen in the earnings, there were more winners than losers. And the market's recovered a fair bit since the end of Q2.

Host: Do you think these companies should be valued on a multiple of revenue or should they be valued on a multiple of cash flow or profits.

Aman: I uh, feel like the um, days of these revenue multiples as being the primary metric are gone. I think it's now flipping to if you are able to demonstrate a cash flow margin of at least 10 to 20% and you're growing at 40% or more, then I think you can get that 8 to 12x multiple. If your growth rate is not like 30 to 40% then it's going to be much more of a cash flow driven metric. You might get a little bit of grace like you got a one year reprieve. Give me your forward cash flow for 2027 and then you'll get some multiple on that. But I don't think you're going to get a lot of grace in market right now. The skepticism on SaaS is still pretty high. The danger of disruption is still pretty high. So I think the bar is now pretty high for profitability and free cash flow positivity.

Host: Certainly seems like for companies growing less than 20% they'd better be focused on cash flow and profitability. Maybe for companies growing north of 25, 30% they could still get away with some kind of revenue multiple and the assumption that growth is still working.

Aman: Yeah. In fact, let me show one more chart which goes to this point. This is an XY scatter plot showing on the one hand, uh, revenue growth, that's the x axis and then stock price performance is the Y axis. And if the answer to your question had been hey, growth really still matters and you're getting growth multiple, the line of best fit would be like diagonal. Right. It'd be like a 45 degree line. It'd basically be saying if you're growing, you get a premium stock market performance. If you're not growing, you're going to get by the stock market. And you can see this line of best fit isn't really a line of best fit. It's sort of a flat line, meaning that there are some high growth players like Palantir way on the right, still growing but they're not performing well in the stock market. And then you got some lower growth guys like some of the cybersecurity companies or others that are not really, they're not showing 30, 40% growth but are demonstrating profitability or defensibility and have actually done well. And you can see there's, there's kind of, you know, companies are all over the map. So where you, I think where you really want to be is you want to be growing fast, not slow. All us being equal. But if you are not growing fast, you can still get good stock market rewards. But you've got to be able to demonstrate that you're efficient and driving cash flow. And then you can still be on the top left part of this chart. And a number, a number of companies did. You can see the red dots, by the way, are the cybersecurity guys. The Mythos attack. The whole anxiety about Mythos happened in February and they all got traded off. And I think what we're now realizing is that was a bit of an overreaction. And a few of these guys, like Palo Alto Networks, have bounced back since then and have recovered all of their losses and then some. So I think, you know, I think there's still a very, uh, positive story to be told around SaaS, but the. They've got their work cut out for them around these metrics that we're talking about.

Host: So maybe not a full recovery to where it was a couple years ago, but at least some recovery after an overreaction to maybe cloud releases in the last quarter.

Aman: Yes, the panic is over, Dave, but. But now they have to get back to work.

Host: I think there's still a good case of anxiety, even if the panic is cobbed out a little bit. Right. But maybe these companies can hold a revenue multiple that's between 5 to 10x. I don't know about north of 10x. Unless we're seeing a lot more growth and maybe a lot more profitability,

Guest: it's an ambush. And they've got enough firepower to destroy the entire fleet.

Host: All right, moving on. Let's catch up with some coding platforms. And in the news has been Cognition. Uh, this company just recently raised a billion dollars at a $26 billion evaluation. The round was led by Lux Capital, General Catalyst and 8 BC. Uh, other investors also include Ribbit, Atreides and Founders Fund. That's a pretty stellar list of investors. This company grew revenue from 37 million last May to almost $500 million recently. That's more than 10x in one year. Uh, and they're planning to cross a billion dollars in revenue later this year, so that certainly seems like a fast growth company. Cognition is the pretty much the only independent large Kodi platform player. Right. I guess we're waiting for the shoe to drop on Cursor. Anysphere being acquired by SpaceX. Uh, OpenAI has codecs. Claude has Claude code. Uh, I guess Microsoft has Copilot, but that's really reselling other people's platforms and products. But Cognition is probably the one notable Player here that's still independent and not owned by, by a large platform.

Aman: This company by the way just did around a $400 million round in um, September 2025 that was led by, that was a Founders Fund round and Founders Fund and that was a $10 billion valuation. So it's already a two and a half step up in a matter of nine months. And founders Fund led all the earlier rounds. And so this is, I think Coastal Adventures was in some of the early ones as well. So this is a founders fund 8VC property. Um, the revenue number has been flying. You said 4 to 92 million, targeting a billion at the, at the end of the year. So it's sort of a 26 times sales multiple for a company that's doubling year over year. Interestingly you, you, you talked about the co pilots or the um, the coding assistants. The one major player who's not in that game is Google. Uh, they do have Gemini, they do have Gemini Code Assist. So maybe they are in the game but they're not, they're not running ahead of the pack. And so maybe that means that cognition, uh, should be on the radar for Google's M and A team. What do you think?

Host: Yeah, that would have been my guess. Who needs this platform and who's left. But yeah, it seems like Google and Cognition might be uh, a future marriage, uh, if things go their way. But again given that growth rate, I'm not sure cognition would be willing to sell right away. Uh, unless it were a really amazingly large number, uh, probably larger than the 50, 60 billion that that cursor is being acquired for by SpaceX. I would, I would imagine.

Aman: Well yeah, cursor was uh, 3 billion in revenue, targeting 6. So I guess cognition isn't, isn't that big yet. But um, but I guess we'll see at the end of the year.

Host: Pretty fast.

Aman: Yeah, their growth rate could mean that at this, at this pace they could be, you know, they could be 5 to 6 billion this time next year. So maybe they are north of uh, north of Cursor.

Host: Our last topic uh today is going to be covering uh, Centicorns and I guess when we were going back to that list of uh, private mag, seven companies that were valued at north of $100 billion. Uh, there are really only two or three companies outside of our big ones, uh, that were valued at over 100 billion. Uh, that's databricks and uh, also Stripe, Uh, but Revolut was another one. Uh, and I guess both of these companies are raising um, probably more for secondary, uh, tenders than for their own needs. Uh, Databricks is in talks right now to raise at, I believe, above $165 billion valuation. Uh, databricks is quickly running out of letters of the Alphabet for their financing, uh, rounds. This is going to be a series M, M round. Uh, that's halfway through the list of Leonard Simon. Okay. This new round is likely, uh, to be between 165 and $175 billion valuation. Do they need the money?

Aman: It sounds like it's a secondary, uh, offer. For the most part, they are. I think they're close to profitability, but not quite so. I don't know if they really need the money. Uh, the fact that Snowflake is in the public market at 85 billion in valuation. It's interesting because Databrick seems to be able to raise at twice the Snowflake valuation. And Snowflake had to do a lot of work for the stock price to recover. So I guess given those dynamics, maybe it's just they want to stay private for longer. And if they can raise the money and buy out employees and create liquidity, they don't have to be in a rush to go to the public market.

Host: I don't think they're in any rush to go public. Uh, they're doing over 5 billion in revenue and growing at 65% year over year. Uh, again, I'm not sure where they are in terms of profitability, but certainly seems like they're doing fine.

Aman: Well, at some point they'll have to go public, right? Because they will run out of letters in the Alphabet. If they're at M, they got, uh, they got about 13 more. Oh, uh, but, you know, this is the Chinese Alphabet. They can do 20, 26 letters.

Host: So maybe they read positive free cash flow over the past year. So I don't think they're burning cash.

Aman: Yeah, I don't think so. I don't think so either. But I think, I think if, I think if they are able to see, if they, if they see the IP market behave well in the second half of the year and these big IPOs get digested and Snowflake is their big comp and Snowflake performs, I wouldn't be surprised to see them in the market like a year from now, because it's going to be a, it's going to be a favorable valuation. But the fact that you can get, you know, a big, a healthy valuation now and stay clear of some of the traffic jam between, uh, between these big three players, uh, at least for the next six months. I think is uh, I think is smart just to take, take some liquidity, buy some time, raise a little bit of money if you need it. That, you know, that seems like it's good prudent management for them.

Host: Uh, I guess our most newly minted, uh, Centicorn is Revolut. The European financial player is raising at least $750 million for an Ah, employee tender offer, I believe, secondary sale. And that's a jump of almost 50% from Revolut's recent $75 billion valuation when they did a secondary offer last fall. Um, I know Aman, you had covered them in a previous valuation corner and you were a little bit skeptical that they were being valued more like a SaaS company than a bank.

Aman: Exactly. They're generating 6 billion in revenue, so £4.5 billion. They're a UK, primarily UK domicile company with a lot of European revenues. They're growing at 46% year over year, so that might justify the 20 times multiple. But they're profitable. But there's also know 2 billion in profit is nothing to sneeze at. But at the same time my concern would be that at least 2 billion of the 6 is really banking revenue. It's the, it's interest that they're collecting from balances. You know, it's not like payment processing or SAS or recurring revenue. And if you look at how banks trade, banks don't trade at 20 times revenue. They usually trade at like 10, uh, times profits. And so if you apply that multiple to that part of the Revolut business, I don't think that the 100 billion, to me that doesn't make sense on a straightforward sum of parts analysis. You'd have to really look at their card payment and interchange revenues and subscriptions and you know, anything they're making on wealth management, anything they're making on interest income I would probably discount. But uh, you know, but then again the market is telling me something a little bit different, that they're getting credit AS a FinTech SaaS company for the entirety of their revenue and I guess good for them if they could raise that valuation. I'd just be a little bit skeptical if I was an investor right now.

Host: Well, let's maybe push uh, the clock forward 612 months and we'll have SpaceX definitely out of the private mag 7, we'll probably have anthropic and maybe OpenAI out of the top 7. Uh, cursor, which is in our top 10 or 20 will probably be acquired or Listed, So we'll have at least half of those companies in the top seven or three of the top seven out. I guess we'll be looking for a new private Mag 7 sometime next year.

Aman: So who do you think is going to join the lists? I think we talked about bytedance being a likely candidate. Canva, you said was.

Host: It's pretty likely that, you know, we'd see Anduril in that list of companies. Um, I think you, you might look at probably Canva, maybe Ramp, that are valued at around 40 billion right now. It's possible that they could be north of 50 billion, maybe by the end of the year. But I don't think we'll have trillion dollar companies in the private mag 7 anymore. Uh, maybe Bytedance might get there, but outside of Bytedance, I think then there's a big step down to the next group of companies. Stripe and Databricks still south of 200 billion. Yes, I think it'll be, uh, a list of companies that are valued at between 50 to 250 billion for the most part, with ByteDance maybe being the one exception.

Aman: Anduril definitely thinks like, they're already in the top three. I think they're only heading higher. I guess we could see SHIELD AI jump into the top top seven if I had to pick another one.

Host: Maybe Tether. Maybe Tether. Although people don't really know what their finances look like. It hasn't been a great, uh, past six months for crypto, so I'm not sure that that's likely to be in that category. But we'll see.

Aman: Stablecoin may have its moment in the sun. You know, the one I'll actually pick is the Dark horse. Jump into the top seven and maybe, maybe right back out again. Because they'll be public is, uh, Perplexity. I bet they will be. If this, if these offerings go well, I think Perplexity is, uh, into the top seven and then out as a public company as quick as their little feet can carry them. And so, um, that would be my. Let me take that one. And, uh, I like Canva ByteDance picks. I think Perplexity is the one that might sneak in there too.

Host: Well, it's been an exciting week of news and we're all holding our breath until Friday. We'll probably do, uh, an emergency news item around the SpaceX IPO. I think Aman, you're planning to do evaluation corner coverage, uh, once they go public, right?

Aman: Yes, we will do it, uh, June 13th. So the day after we'll talk about how the IPO traded and, um, whether we feel good about the offering and the execution. And we'll be in, uh, Istanbul then, so, uh, we'll do it from there.

Host: All right, well, thanks for great news week.

Aman: All right, thanks, Dave.

Host: Cj, welcome to the show. We are so excited to have you.

Guest: Thank you, sir. First time, long time.

Host: I was wondering if you could give us a little bit about your past and how you got to where you are today.

Guest: Yeah, I'm, I'm a recovering tech CFO at this point. So I, I started my career in management consulting. I did M and A consulting because I didn't really know what to do with my life yet. But I knew that I could get some reps at learning about cool companies and learn about business models. And then from there I went to work for one of our clients, which was Providence Equity Partners. That's where I honed my skills around valuation particularly. So I was in the valuation group. I ended up cutting my teeth before becoming a CFO at a number of companies where I ran the FP and A groups. So much like aman, I was like the person they threw in to figure out like, hey, we need to buy

Host: their peas in a pod here with like, yeah, I know, and cfo, right?

Guest: So I was running the operating plans for a lot of these management teams and I was kind of like the guy behind the guy who had the numbers.

Aman: Learn a ton that way, don't you?

Guest: Yeah. And you get to like run around like, like Charlie and Willy Wonka's chocolate factory. You get the golden ticket and you can go to any department. And I was like, oh shit. Like, I can ask any question and part of it's for the budget, but part of it's just because I'm curious

Host: for our audience who are not familiar with fpna, what is that and why is it so special?

Guest: Financial planning and analysis. It's the budget people. So you determine what revenue you expect, what the costs are going to be, and how much the company is going to make or burn. Like, your number one job is to make sure the company doesn't run out of money, but it's also to come up with a plan that the management team agrees upon. So you broker this agreement amongst the management team of like, what our priorities are and what the resource allocation we're going to staff to, that is. And a lot of times it's on the go to market angle of, well, how many sales reps do we need? And like, Marc Benioff was famous of like the back of the envelope Math of like okay, so 10 sales reps, million dollars a piece. It costs 250 apiece. My capacity is $10 million in this. I'm going to spend two and a half million in that, blah blah, blah. So it's basically figuring out like what's the size of this engine, what can we produce, but like what's it going to cost us to do it? What's the time of like getting that money back?

Host: Has that changed in the last few years?

Guest: It's become way more specific so we can get to what I'm doing later. But like I ended up like having an offshoot of that. That's a recruiting company where I help place FP&A people at some uh, level with a lot of the CFOs I know. And when I started they were like, first of all I didn't know what FPA was. They just needed someone who's a financial athlete, who's good with his spreadsheet and like wasn't afraid.

Host: Financial athlete. Oh okay.

Guest: That's the nerdiest thing you'll hear today.

Host: Yeah, I don't usually think of those two words going together. Financial and athlete. That's not exactly Aman knows what I'm talking about though.

Aman: I might be on my resume actually. Financial athlete, a great way to market yourself.

Guest: But like it used to be someone who had investment banking or private equity experience, let them build the budget. I think the teams have become bigger now because the business models have become more complicated. You've got usage based pricing models, you've got tokens now, you've got tons of cloud costs. You got companies that have, I don't know, like say it's a defense company that's making tanks or uh, boats. But then they also have a software component to it that uses AI. Like what you're trying to do is optimize the whole business model. And before it was a lot more like just price times quantity deterministic modeling. It's a lot more complicated now, which I think requires probably a more nuanced view of what people do.

Host: So tell us a little bit about your experiences working for the two or three companies you had and sort of what went right, what didn't go right, what did you learn from those experiences that you're taking into today?

Guest: In order to be a good finance leader, you actually need to have more EQ than iq because like uh, when I came in at first I was just trying to wow people with my science. Like I can calculate that I can build this like fancy model and that's not really what they cared about. The CMO wanted to know how much money am I getting for these initiatives? How do I split it up? The CRO wanted to know how many salespeople they were getting and like how to incentivize them to hit the goals. So I think I learned pretty quickly that like it was a, was budgeting, but a lot of it was really getting people to do what you needed them to do and thinking that it was their idea and getting them bought in on it. I think I also learned that raising capital is a double edged sword. So one company I was at, we raised like over a billion dollars in 18 months, uh, which was exciting, but also like, you start doing some things that are probably unnatural when it comes to hiring, when it comes to the initiatives that you fund, when it comes to the number of people you have on board to do something. And so I think I learned a lot about like the good and the bad of abundance. You kind of back yourself into a corner too when you take on that much capital because you're priced to perfection. You cannot, you cannot miss your forecast.

Host: I, I'm reminded of the, uh, Silica Valley episode where the guys are sitting in a bar and okay, why the did anyone tell me I could take less?

Guest: I don't know, I don't know.

Aman: Ideas come up and then.

Host: And uh, that show came out before 2020 or 21, and it was so prophetic after 21.

Guest: Well, I go back to this one meeting that we were having with this crossover investor because remember, everybody thought we were going public at the time. And he said something along the lines of like, listen, I know you want this valuation. And this was like high single digit billions of dollars. And I know you have this revenue forecast. Now what's his name over there? I think he was pointing to me. He was like, has given me, as the forecast says, this amount. That's like, I, I hope you can do that. That is a great number. That is a very high number. It is actually saying that you're going to grow above a hundred percent for multiple years from here on out. We were over a hundred million at the time, but we were not a billion in revenue. And he said, I can give you the valuation number, I can give you the forecast, but it sounds like you want both and if you take both, there's no wiggle room. There's no wiggle room.

Host: Yeah.

Guest: That moment just sticks with me a lot.

Host: There's an often quoted sound bite of, you, uh, could set the valuation, I can set the terms, uh, yeah, uh, that usually implies structure and some kind of hurdles and other things going on. But it, uh, uh, AMAD and I were having this conversation recently about how different the anthropic raise process has been from the OpenAI raise process. We kind of felt like OpenAI has been raising above realistic target for, I don't know, forever. And Sam's been a master of that maybe up until recently. Um, on the contrary, anthropic always seems like they're raising it under what the valuation should be. And it happens like, like that, and it's done. Do you have any thoughts on those? You know, two worlds?

Guest: Well, evaluation came out yesterday. The series H, they're running out of letters there. Um, the Series H965. OpenAI would have said, fuck that, we're not taking 965. It's got to be a trillion, right? Of course. I think that tells you everything. There's no way they couldn't. If you can get to 965, there's no way you can't get to a trillion.

Host: Yeah.

Guest: And so there's something in just that, I don't know, something about.

Host: Mario does not seem to be obsessed with round numbers the way that Elon and Sam, um, are. I guess I thought we would have learned this lesson in 2021 and not getting too far ahead of ourselves. But, you know, starting maybe like two years ago, it seems like we were just back to the races. Certainly for AI and probably for chip companies and defense companies and space tech companies. Everybody sells in the future. Robotics companies. Do you still feel like, you know, financial discipline and raising capital is a good thing, or that people should be selling the dream and trying to raise as much as they can?

Guest: I think it's an art and a science because to raise any amount of capital, you need to be a good storyteller and sell the future. Yeah, but how much of that future do you want to pull forward? We talking, uh, three years, we talking five years. We talking colonizing Mars with one million inhabitants? I. I don't know.

Host: CJ. Both you and my business partner Mon, have done S1 breakdowns for SpaceX, what's for real and what's not. Let me start this off by saying, are you a buyer of SpaceX at, uh, $1.5 to $2 trillion?

Guest: I don't know. Can you guys get me some secondary shares below that?

Aman: I don't know. I don't know.

Host: Not in that one, buddy. Not in that one.

Aman: No. That would come with a premium, and we're Going to charge Terry on that

Host: one for sure, for sure.

Guest: I'll give you year two and 20. That one's too rich for my blood. And I don't know, I spent a lot of time with the 300 and somewhat pages of that. And it is just riddled with the contamination of parties that like, probably shouldn't be working so close together. But at the same time, like, what, what I can't score is like if you do own the only railroad tracks to space, like that's a, that's a pretty cool monopoly to have. You can do a lot of shit. And like maybe starlink isn't the end all be all and they just haven't come up with what the next thing is. But it's just, I'm just not uh, comfortable underwriting, like I said, pulling the future forward that much of the future. Like we thought it was cool when MongoDB IPO'd and they were gonna come uh, up with a new database. Right, like that, an unstructured way to organize data like that. That's ambitious.

Host: Wow.

Guest: Then we're looking at SpaceX and we're saying you're, you're going to put a million people on Mars and colonize it and you're also going to like, like there's some word in there about the earth's consciousness and like finding the secrets,

Host: the light of consciousness.

Guest: Yeah, like that, that part was like,

Aman: you lost you, we lost you there.

Guest: Yeah.

Aman: What, what uh, is the right valuation? How would you have approached the valuation as an investor? Let's, let's, let's stipulate it's a great business and there's three segments that you can get into it. What, what valuation were you expecting or where, where you, where you would be a buyer and where do we, where do we lose you?

Guest: The right way to value would be like if you were looking at Bloomberg, right. You'd probably separate the media business out, uh, from the terminal business out, uh, from the data business. Right. Like, yeah, there's all these different branches and so like I would have separated out uh, the space business from the connectivity business from um, the AI business and then also from the social media business if possible. Cause these all have different revenue streams. And like I would argue that a dollar of advertising revenue on Axe is worth a lot. A lot. It's a very different dollar of revenue than the juicy, ah, accretive 65% EBITDA margins of Starlink. So I don't have an exact number of how, of what the valuation should be, but I Think we should have taken a more nuanced approach, just splitting it out. In doing some of the parts there,

Host: they're just clearing the planet's atmosphere and entering the ionosphere.

Guest: Computon readout shows them to be armed

Host: devices of some nuclear type.

Guest: We've got to destroy them, Commander.

Aman: They're going to blow each other up. Battle stations, standby.

Host: I guess I feel like the, the connectivity business and the launch business are somewhat inextricably linked, no pun intended, um, in that, you know, people may not have understood what the launch business was going to bring to the table because, you know, the only thing you could look at in the past was, hey, NASA launches rockets and maybe European space agencies and others, you know, might launch rockets. Ah, that's kind of interesting business to put satellites in space. Okay. But I don't think everybody kind of connect the dots and say, oh, what about launching our own satellite network, telecommunications network and having an advantage there because we can put more satellites up faster than anybody else. And so now I think people understand, oh, yeah, that was a path to get to the connectivity business. Are there other businesses that we haven't thought of that that launch capacity could bring in the near future? And let's just suggest that maybe data centers in space is the next one that's kind of like five years out.

Guest: So you guys are smarter than me. Can you explain how data centers in space, how do you get the compute back from space? Like, I felt so dumb reading that. Like I get the sun is hot and it generates a lot of energy,

Host: but it lost above my pay grade. But I believe that Gavin Baker is smart enough to tell me that it makes sense. And assuming that people don't think data centers in space are a crazy idea. And it seems like in the last 18 months we've all come around to that being a possibility. Now it's more just a question of when does it happen, at what scale does it happen, what cost structure is required to get there. Everybody seems to agree that, okay, data centers in space isn't crazy. Ten years from now, maybe it's not going to happen two years from now.

Guest: I want to invest in whatever company is going to fix the data centers in space.

Host: Well, I guess again, you know, trying to figure out where reality, you know, disconnects from the valuation. I feel like, you know, SpaceX is a great business, is a monopoly business, has the potential to bring other businesses into being in the next five to 10 years that we haven't really thought about before. But $2 trillion is a lot of money. Probably the difference between a great company and a great stock price. Right. SpaceX is clearly a great company. Is it really worth that? Price is maybe the question.

Guest: So that would put it as the number 7 highest enterprise value company out there. Right, so in the top 10 trillion. Yeah, but you compare the revenue of everybody around that to what its revenue

Host: is, uh, number one or two with revenue multiple.

Aman: You know, Google's what, 400, uh, 400 billion. Microsoft's 300 billion in revenue. Tesla. I guess Tesla might be your other Elon Premium. They're, uh, between 100 and 120 billion. And SpaceX would be lucky to break 30 billion this year.

Guest: Exactly.

Aman: Well, let me ask you this, CJ. A lot of the S1 you noted, and I think I did, too, they used common ownership accounting to pull together the three different segments and that. And that makes it easier to forecast the business. Then you got cursor coming in. You're dropping in new acquisitions. And so this is a hard one to break down just using a spreadsheet and current revenue multiples. Have you ever. Or what is your take on when companies come along that are once in a lifetime, once in a. Maybe once in a generation, do you ever feel like I got to put money into it, I got to put the spreadsheet down and I got to make the bet based on what I know of the company, the technology, the entrepreneur, the tam. I don't have all the details figured out, but this is one that I want to. I want to ride. Have you ever bet on a company like that?

Guest: I had taken some money in secondary out of sneak back in the day. And I remember I was like, you know what? I'm the, uh, smartest man alive. I'm going to buy a bunch of. I'm gonna buy a bunch of these, like, get labs, go in public. They're gonna be the largest thing since. The best thing since sliced bread. And yeah, I. I got burnt on every single company that I picked. So, I mean, it's not investment advice, but you shouldn't take my advice anyway, because I wasn't very good at picking them. But, like, I agree to a certain extent that sometimes it's like, do you want to take it to the show or not?

Aman: Right, Right.

Guest: It's the Ocean's eleven of, uh, what Cooney is saying to, uh, Matt Damon, like, you're either in or you're out.

Aman: What.

Guest: What do you want to do here? You're either in or you're out right now. So I agree to a certain extent but like, what worries me is you're buying in when there's not enough float for it to like truly price what I think the market going to think it is within a year. And then the people and the people who are pumping up that price, 30% of them are retail investors, which is a nutty percentage to allocate another 20.

Host: 30% is being driven by NASDAQ 100 for SPY.

Guest: Exactly. So even if I didn't want it, it's probably going to end up in my portfolio because it's going to end up in all these mutual funds and indexes in the first 15 days and

Host: maybe even the S&P 500 by the end of the year if they bend their rules enough.

Guest: Yeah, yeah. So I guess it doesn't really matter because I will end up with it,

Aman: be in your 401k, it'll be 10% of your 401k before long.

Host: Yeah. Well, uh, let me ask you this question. Given what you just said, do you think that the first year post IPO or the last year pre IPO is more irrational in pricing?

Guest: Ooh, well, I think, I think the stats show that like 14 out of the last 18 companies to IPO since they IPO are down below their price. Right. So that's pretty irrational to me. I think the whole 18 months before and after an IPO, the pricing just like it's in outer space.

Host: Well, it seems like we're going to have this continued sort of pre IPO illiquid market for quite some time. And um, there's more and more companies that sort of fit into this, let's say between 100 million to 500 million in revenue and maybe it's a billion to $10 billion valuation where they're not really big enough yet to go public. Median revenue at IPO maybe in the last 12 months was almost a billion dollars.

Aman: Yeah.

Host: And so like if you're only $100 million company growing at 30, 40, 50%, you might still be private for another five years, seven years. We have this kind of very significantly sized illiquid market. Let's take OpenAI and SpaceX and Anthropic out of the equation. You still got 2, 3, 4 trillion dollars worth of illiquid assets. How do you price that? The market is fairly opaque. There's, there's not a lot of information about how those companies are performing. Is it just vibes? Are we, are we going to let you know the last buyer's price be the determining value for what the next buyer should pay?

Guest: I Think the last price has probably been thrown out the window if it happened within a very specific three to four year period that people are probably right, uh, thinking about. So I, I think you do have to run your own model on it. Like what people aren't saying is many of the management teams at these companies have changed over since then. So it was like pretty awkward for the first two years. But now you got other management teams who are there who actually probably got options that like, you've seen this with a number of companies, they reprice them and so they're not actually gated towards that. So this is also where like the incentives come in. But you have to run your own model on that and then figure out what's the discount for marketability there, what's the discount for illiquidity and work backwards. And then honestly, if you're a buyer of these companies, I know this is a space that you look at more than I do. I bet there are some deals to be had for these companies just because there is no off ramp. So if you can create an off ramp, I think you get a prize for helping.

Host: Well, uh, you were preaching our sermon or singing to the choir and I will take the opportunity to sort of show a little bit of how we look at the market and then I like to hear what your, you know, take is on that. You show this almost every episode now we talk about secret stallions and particularly these sort of five horses of secondary here. I think that Private Mag seven, this says two trillion a night. I put this slide together probably six months ago now I think that's more like five trillion. Uh, in that top right quarter, the next group of companies, premium decacorns. I think this is like companies that are valued at sort of between 10 billion to 100 billion. There may be more than 40 companies in that category. Those are still what I would consider to be premium sort of stories. And a lot of people know about those companies, but it's that next group, the group in the middle, where I think there's a ton of arbitrage, a ton of value, where these companies are just like off the radar for most people. They're just fundamentally mispriced, at least in the secondary market. And then at the same time you have those other two circles on the left that I think everybody wants to stay away from, which is, you know, busted unicorns that maybe got valued in 2021 may have raised too much money. And then companies that are just too small or too slow growing to really get across the Finish line. I don't know if you kind of buy into this analysis of the market cj but if you were going to be trying to bet money in the private market, where do you see the opportunities? Where do you see the mispricing? Are you still going to go for those upper two right hand buckets where growth and visibility is a premium? Are you going to know, try and find some Goldilocks stories?

Guest: I would try to find some Goldilocks stories. I think like what gets in the way is people love to have like the LinkedIn crush of like being able to say that you invested in sexy company

Host: and an investor in SpaceX and Databricks and Endol and uh, notice they don't say at what price.

Aman: Yeah, what price.

Guest: It was a series H, you know and it's in triple layered spv but nobody talks about that. I think the arbitrage, if there is any companies below 500 million but above 50 million, right. Like they've proven product market fit in a monetization model that works.

Host: That, that's exactly what I was saying is that I think these companies, they're not like questionable startups trying to figure out their business model. They, they've gotten to 50, 100 million in revenue, they got some growth, maybe they're even you know, know getting to profitability but they're just like off the radar if they're not in the top 30 companies. You know, latest stats we've heard is that the top five companies in private markets are half the overall transaction volume. The top 2030 companies are 80, 90% of the transaction volume. You really have to get to the, the last 10% of the market volume that takes up the next 500 companies.

Guest: That's crazy.

Host: But you know, again we, we worry about whether that arbitrage mispricing continues. Right. That uh, that bet only works if you make the bet where they're you know, mispriced and then eventually they get priced rationally and then you get out when they're priced rationally if they're still mispriced when you're trying to get out that that's not a great thesis.

Guest: Yeah, I was like explaining to my dad, he's a physical therapist so he's not in like tech or anything. I dated the companies I used to work for. We were trading in 100x forward revenue at one point it just like blew his mind to think like imagine my physical therapy company fixing people's ACLs, trading at that. And then I said, and now these days, you know, they're trading at three times revenue. I think he's. And he said something along the lines of like, you know our friend Tony? I'm like, yeah. He's like, oh, he just sold his concrete mixing business for 3x revenue. I'm like, holy shit, how far have we come?

Host: Yeah, actually that's something we, we haven't touched on, but I guess you might have some visibility in this too. You, you've heard of entrepreneurship through acquisition eta, right? It was kind of like micro pe and everybody who was in business school was like, oh yeah, I'm gonna go buy out some boomers business for 1 times revenue, pump it up and then sell it for 3 times revenue and I'll make a fortune.

Guest: I heard a crazy story about this guy who's in investment banking and he said, I, I'm gonna buy some boomers garage door installation business. And then he did a roll up of like you got 50 million in revenue. And I think he sold it for like 280, 300 million or something. So like pretty incredible. Good work if you can get it. But like to your point, what you get in at is really cool, but you also have to know like what you can get out at.

Host: Can I get out? Can I get out?

Guest: Hey, I'm a, I'm a buyer man at 3x revenue, you know, But I don't want to be a seller at 2.5.

Host: Yeah, yeah. Well, this is something we also run into a lot is that I feel like people equate the private market and the public, public market as if they're the same animal. When there's so many differences about how, you know, you make decisions in the public market, you make decisions in the private market. Uh, in the public market you have regular financials. Everybody has access to seeing those financials. You could make trades on a pretty much 24, 7 basis. I don't know if you call it a level playing field, but at least it's a playing field that has numbers and markings and scoreboards on it. And if you look at the private market, people think there's all these sort of numbers and valuations, but unless you're on the board of those companies or running the companies, you may have no idea what those numbers are. And price doesn't get set very frequently. It probably gets set every year or so. Um, but there's a lot of opacity in that market. There's a lack of liquidity. Um, I guess we could view that as both an opportunity and, you know, a problem. Um, but you know, do you see those two worlds of public and private markets as, you know, similar or different in terms of how people play those markets.

Guest: So uh, what you said, I agree with. And then just to drill in on the private market side, it's even murkier when you're talking about the difference between raising it some amount and selling at some amount. And so when I, uh, was selling parts tech as cfo, I found out like the conversations were very different around what our series C was. For someone to come in and buy 15% of the business versus selling 100% of the business at a price to a strategic who cannot afford to F this up. Like it has to go right. People conflate those two things. Like anthropic is raising 965 billion. I'm sure that they could sell for a large amount. But like what you raise 5% of your business for is different than if you were to go out and sell the whole thing.

Host: Absolutely. And uh, to relate that to our world, I would say, you know, there's a very different price for a company when they're doing an organized financing round. There's even a pretty, you know, reasonable price when they're doing an organized tender offer for their employees and investors. There's a very different price when a single isolated investor is trying to sell a piece of, you know, the, their ownership. When there isn't that auction based sort of story or information going on, you know, without a lack of, you know, multiple buyers, without you uh, know, transparency on uh, well, how the company's doing. If you're a small seller, if you're in a complex structure, really, really difficult to get an efficient price. Transactions in the public market probably, you know, large and small transactions in the public market are not that dissimilar in the private market. They're way different.

Guest: I'm curious how it works for you guys. Like when you go in and you're interested in a company who, who puts the first number on the table? Do you ask management like, what would it be to buy in? Or do you have to, do you have to be like, I would be willing to pay this?

Host: I think it depends a lot on who the customer is that we're talking to. And again, just to frame the issue, we're not buying a company, we're not leading rounds. We're buying smaller tickets that are 1 to 5 million in companies that are valued at, you know, know, a billion to, you know, 50 billion. Uh, so we're like rounding errors in terms of how much equity value is happening. You Know, I think we look a lot at whether the person is selling all of their position or a portion of their position. Um, it's a very different story if you're talking to a founder where 90% of their net worth is one company, but they're, they're maybe only selling 5 to 10% of their positions that they can get a down payment of a house. That's different if we're talking to an LP in a fund who might have a position that's interesting, but is only 5% or less than 5% of their overall story and they don't have to sell, maybe they want to get a more efficient price. Or again, if we're talking to a GP of a fund where when we're talking to them, the transaction is on behalf of all of their LPs, that's a different story than when we're talking to one isolated lp. Maybe they're going through some family or life change where there's death or divorce or retirement going on. There's just a lot of different customer psychology. And again, to the point that you made previously, there's a different price if that person is selling 100% of their position versus they're selling 3% of their position or even like they don't have a lot of cash right now, and they might sell you that first 3%, first 5% of their position at a big discount just to get some cash on the table.

Guest: Wow. This is like the game behind the game.

Host: Uh, and that's a story that's very personal because I was in that situation five or six years ago where I wanted to sell a piece of my carry interest in my first two funds. And it was probably 80, 90% of my net worth in 2000 positions to fund positions. I didn't want to sell all of it, but I, but I wanted the first five mil off the table to go buy a house or, you know, put some money in the, in the bank for the kids. So it's just a different, you know, way to think about how much do I have liquid? Do I have a market of buyers, is an efficient market, and am, uh, I selling, you know, a lot of my stake or just a little bit of my stake?

Guest: That makes it really fascinating too, when you're looking at like, that list, say it was printed from like, Forge or something, like, of all the secondary shares in demand, you start to go down past 50, past 100, and you're looking at it, you're like, there's a story

Host: behind a lot of this super uh, inefficient market. Yeah, I mean, I, I think that's why, you know, we get excited about the secondary market when it isn't the big sexy story that everybody's paying attention to. Because honestly, that's where we feel like it's more of a seller's market when everybody's paying attention to the company. It's growing super fast and everybody wants to jump in. It's hard to think that you're going to get a deal there unless you got some specific angle. But the rest of the unwashed masses out there, I'll tell you, cj, I'm just looking out my window at Silicon Valley. I'm probably overlooking two or 300 companies that nobody has any idea about that are all doing 50, 100 million plus. And those folks need to buy a house in Silicon Valley. And those houses cost three to five

Guest: million dollars, which is crazy. I heard a stat that in the last secondary that anthropic ran, they put a guardrail on it that you could sell up to. I think it was 30 million, not more. Uh.

Host: OpenAI. OpenAI.

Guest: OpenAI. Sorry. And 75 people maxed out on it.

Aman: Right.

Guest: Forget how different it is out here.

Aman: This is nothing.

Guest: When the war is officially over, we may be able to get back to deep star exploration. That's the challenge. Zack, let's roll over and take a look at Lenius Vector.

Host: Well, I think this is really one of the big stories that people don't quite understand about the secondary market is San Francisco Bay Area is an expensive place to live and you can't use equity as an asset for borrowing for a loan. It's not a tradable bankable security in most cases. So people are equity rich on paper, sometimes in a very concentrated position, but they don't have much liquidity or ability to use that as a financable asset. That now I think that's going to change in the next 10 years. But right now it's still pretty difficult for people to use their on paper wealth, uh, to finance the purchase of everyday items like a car or a house or pay for college or retirement for your family.

Guest: What's your take on the rise of basically pledging your stock for whenever you do have a liquidity event in the future? I think a lot of people are calling it forward contracts, right?

Host: Yeah, we do that in about 20 to 30% of our transactions and we're seeing that use happen more often. It's a very interesting tool, I think for a couple of reasons. You know, one, for people who want to avoid a taxable event and maybe people who want to preserve QSPS treatment for their position. Um, it's certainly an issue that comes up when, you know, companies are restricting transfer of sales or have rofers out there. I won't comment on things that might be borderline legal, illegal, but I would just say that there is certainly a need for more financial instruments and structure in how people manage their wealth. Because it's not tenable to have 80, 90% of your wealth in one asset that is not liquid.

Guest: Uh, right.

Host: And frankly, I think we're seeing tender offers happen more frequently as a retention vehicle, as an employee benefit, even if the company doesn't need money. I think that companies are starting to look at tender offers as a way to sort of like, you know, be competitive in the market. If you're a talented, you know, engineer or employee, are you going to work for a company that does have a regular tender offer in place or one that doesn't have a tender offer, you know, regular tender offer in place? I mean, I think people really do need to look at what's the competitive market for how people pay with equity when it takes 15 years for companies to go public Sometimes.

Guest: Yeah, yeah. And I look at what you, you two do is being kind of the pressure release valve for a lot of these companies that don't have the.

Host: We are nowhere big enough to do that. But, uh, I would say we are somewhere between ambulance chasers and maybe, you know, between insurance salesmen.

Guest: Hey, we need those people in the ecosystem as well.

Host: Uh, C.J. i'm wondering if you could take a look over the horizon and let's guess, for the next two to five years, what do you see that's changing or different in how companies are structuring their finance and how people are thinking about the market?

Guest: Yeah, well, apparently it's cool now to have your investors be your lenders who are also your customers. So we're in that brave new world. I was reading through Cerebras IPO, and 85% of the revenue comes from two companies in Saudi Arabia who are also investors, who also have warrants who also prepay in advance for chips to be made. So, I don't know, but, like, maybe I'm the one who's jaded and that's just what you need to do to get stuff off the ground that is so capital intensive and to bring something into the world that doesn't exist. I don't know. But I'm cautiously optimistic that all the circular finance will work out and that OpenAI doesn't cause Oracle to go under. That uh, the anthropic contracts with SpaceX or XAI are going to be a net good. I don't know, it's a financing world that I didn't know could exist.

Aman: Do you feel like those relationships are going to continue for especially some of the really big, as you said, capital intensive in particular. Do you think that's just a, uh, that's something investors will have to get used to or do you feel like that's a red flag in the current market that's probably not sustainable.

Guest: I think we as humans take something that's meant to be a feature and not a bug and we'll play with it until it becomes a bug and something breaks. So I think this trend will continue. I think we're on the edge if maybe we have crossed it, of what is cool and what makes sense to do and what you can add back into EBITDA along the way with all these deals. Sure, I think it'll continue, but I do think that there's gotta be a couple blow ups. You see it in every market when this type of stuff happens.

Host: Yeah, I don't know if we've seen a big blow up, uh, super recently, maybe. Figma was a little bit of a tough story post IPO, but still companies being valued at 9, 10 times revenue. I don't know if it's as much of a blow up as people think, maybe just relative to the initial price that was set in the market.

Guest: Tough comp for them too. Like you have 10% or less of your company floating and then you got the long shorts getting in and out and pumping up the stock. You got retail who's excited because they haven't seen an IPO in a while, like just set up for failure. And like I was actually pretty vocal about blaming the bankers, but then I talked to a couple of bankers and I felt bad because they're like, well what do you want us to do? Did you really want us to price them at 50x revenue? Because that literally makes sense on no comp sheet. So I'm like, yeah, you're kind of right. So like it kind of just sucks for everyone involved. And then you got the employees who are sitting there like, well I'm locked up for 180 days, I don't get to do much about it. But like you just got their Q2 earnings, like they blew the doors off. They're growing at close to 50%. Yeah, best numbers they've ever had.

Aman: So like, order still amazing company, 10 times revenue. So let's say you are a SaaS company and you're watching these big guys get out ahead of you and like, you're a good, you know, let's take Sigma. Like, you're good, Fast growing, profitable SaaS company, and you've got these sexy AI stores ahead of you, maybe sucking up capital and attention. What do you do? Uh, how do you play that? Do you try to go out and just let the market set the valuation? Do you sort of stay private longer and try to build more of an AI story yourself? Or what's your advice for like a Mid Market SaaS CFO?

Guest: Right now, I would stay private longer and try to get over a billion dollars in revenue. Figma was right on the precipice. Their ARR was over a billion dollars dollars. But like, okay, it shows, like, you need a big enough boat for some of these waves that are going to come. If you're a company that's only doing 300 to 400 million in revenue.

Aman: Yeah.

Guest: You could quickly become a sub one billion dollar market cap company if you're. So it's like, it's this, uh, it's like the reverse snowball where you're actually melting because you can't get sell side coverage.

Aman: You don't want to be the melting snowman.

Guest: No, no. It's like Olaf from, from Frozen. Right, kids?

Aman: Thank you. Thank you.

Guest: You don't want to be in that scenario where now you can even get attention to feel like you can tell the story again and like, you look at, like a wealth front or someone like that or a couple of these other companies, like an ethos that recently went out. And these are good companies. They have great metrics, they're, they're profitable. But, like, if you fall under a certain amount, it's hard to get attention.

Aman: Yeah.

Host: Hey, C.J. i have one more question for you. Uh, I'm sure you're familiar with the quote by Ben Graham. Um, in the short run, the stock market is a voting machine machine, but in the long run, it's a weighing machine.

Guest: Yeah.

Host: Is the job of a CFO to sort of, uh, predict the vote or predict the future weight?

Guest: Ooh, I think it's to predict the vote and shape the weight to look like what the vote wants. So what I used to always say to my CEO is, listen, we're running company with a P and L, X, Y and Z. Now you got to tell me what party we're going to. So we're wearing the right Thing. Right. We don't want to show up in a hoodie. We got invited to a black tie event. We don't want to be versa.

Host: Right.

Guest: So, like, uh, we got to know what we got to look like for this party and to build a durable business within that construct. Right. Like, yes, you could go out and just say, we're going to do whatever we want to do and build it that way, but you're gonna have to wait for, like, the wave to come back around. I think part of it is trying to play into your strengths that align with wherever the macro cycle is.

Host: Yeah. Well, I used to think that that sound, uh, bite could be applied to the private market. And I would have said, you know, in the early stages, it's a voting machine. Um, but in the later stages, it should become more like a weighing machine. Like the closer you get to ipo.

Aman: Yeah.

Host: More, your evaluations, numbers sort of have to reflect, you know, traditional, you know, pricing models in the public market, which, you know, maybe it's not dcf, but it's at least some somewhat based on realistic comps. Now I just. I'm just not sure. It just feels like, you know, several companies, both private and public, are detached from reality for extended periods of time. Some folks can make that distortion field go for a very long time.

Guest: We often forget that it is just simple as, like, make more money than you spend and then try to forecast that out. And what's that worth to somebody? Like, there are a lot of ways to be like, oh, look over here. You know, and some companies can keep that up for a longer period of time, but at the end of the day, it comes back to the fundamentals of business is valued on. On its future free cash flows and bringing that back to the present.

Host: Well, cj, thanks for spending some time with us today. It's been a really fun conversation. We love your podcast. Uh, we really like the stories that you tell and seems like you're helping educate a whole bunch of CFOs on how to play the game in the future.

Guest: I appreciate it. I've, uh, I've looked up to you guys for a while from afar, so I appreciate you having me on.

Host: Thanks a lot, man.

Aman: Thanks, EJ.

Guest: Oh, Mr. Trillionaire.

Host: Can't wait to see you there on

Guest: your throne

Aman: in space.

Host: Yes, it actually happens. The largest IPO in human history. The biggest raise. A new trillionaire, I guess.

Aman: First ever trillionaire on paper at least. I guess it's, uh. He was locked up for 366 days. It still. Still Counts in the league table. So, big day yesterday. Seems like we, uh, set a lot of records yesterday.

Host: I guess it went pretty well, you know, right, right about where you want it to land. 20% pop. Not too big, not too small.

Aman: I think it went great. The price they set on the roadshow was 1:35. That was a bit unusual. Usually companies do a roadshow with a range, so you find a rate, you find a conversation with investors and figure out where to price. But Elon kind of gave it a take it or leave it. Here's the price 135 giving your allocation. And it looked out. It, uh, opened at 150. That was the first ticket. And then it went up to close to 161. They traded about 20 to 25% above the IPO price all day yesterday. So overall, I think a great outcome for the company really couldn't have gone much better, honestly.

Host: The IPO itself was oversubscribed by 3x, almost 4x. I guess that was the rumor that we heard.

Aman: There was a retail book and there was an institutional book. I think overall it was about, maybe 3x oversubscribed, but the institutional side was more like 4x forex oversubscribed. I was just going through the list of things that you worry about when you're an investment banker and a cfo. Taking a company public and the execution risk, I think was actually quite difficult. I think it was a relatively tough market to price in. And you might say, well, wait a second, the market's been up and tech's been on fire. But I think I told you, Dave, at the start of the year, SpaceX is going to try to go public in June and raised more money than ever before. And between now and June and the first half of the year, you're going to have hot inflation reads, you're going to have a Warner on, you're going to have the Fed more likely to increase rates than decrease rates. Software stocks will be down in the first half of the year. I think you would have said, I don't want anything to do with that market.

Host: Let's wait a little bit. Maybe we'll. Maybe we'll wait. Screw that. Damn the torpedoes. Full speed ahead, right?

Aman: Yeah, they absolutely did. And the other factor is CapEx drove the free cash flows for the Mag 7 down 80%. If I told you that at the start of the year and then to want to go public anyway as a company, I think you would have said, you would have called security and stepped slowly away from me. Elon Perfectly positioned the company and got in, I think, in a real tough market. So I would say they navigated uncertainty around some tricky things around the allocation. Tough market, big size, only an A minus.

Host: Why they had an A or an A plus.

Aman: I was trying to, you know, I, I guess lectured at Harvard University and they just changed their grading policy to cap the number. So I went through training this week and I have now I'm trying to be a tougher, a tougher grader. I guess they can talk me into an A. If you, if you really think about it, I mean, they did pop. They did trade up at the open. They filled the retail allocation. The nicest part of it I think for them is they filled their order book with some big anchors like BlackRock, and then they had a few other unidentified anchors at similar size. I think we know Fidelity is one of them that's been a longtime investor on the cap table at SpaceX. So they did that with the void again on the ipo. It looks like they did. I think they also did a good job of getting, uh, not only BlackRock but also American Funds, which is the very big active manager. They run the Growth Fund of America, a new perspective fund. It seems like both of those guys came in between 4 and 6 billion in a very aggressive offering. And then they also got the T. Rowe Price Blue Chip fund, slightly less. The rumors were around 3 billion and they got filled. And it's really important to have these long only buyers coming in in an offering like this to anchor. So I think they did a good job of managing the size of the float, getting some active managers in filling the retail allocation. And uh, I guess I'd give them an A if the price pop was a little bit more than that. 18, 19%. They might have preferred 25 to 30%. But you know, but now I'm, now I'm nitpicking. And I think overall it went, it went really well for them.

Host: Um, I guess we'll see how next week goes and maybe they'll earn your A or A, depending on how the rest of the week goes, huh?

Aman: Absolutely. Just one more thing on the degree of difficulty. This chart just shows how much IPO proceeds has been raised over the past, uh, going back to 2019 for seven years now. So you can see prior to Covid 2019, the IPO proceeds in the market were around 50 billion a year. That was the average for a long time. There was a big increase in 2020, 21, 22, 23, 24, 25. We had a slow build back in IPO proceeds. But even 2025, it was an okay year. The entire market, all tech back, all VC backed tech stocks together raised about 44 billion. SpaceX by itself was 75 billion. And on top of the other ones that have gone to the share right now.

Host: Crazy, right?

Aman: So we're already at the second biggest year on record and that's with uh, OpenAI and Anthropic in the wing. So it looks like we're on our way to a record year. It just shows how hard they had to work in order to fill the allocation. So I got to give them props on execution and managing the price. The question he asked, what happens next? I honestly don't know. I want to go through. This is a chart that came from the altimeter earlier on and um, this week from Brad Gerstner and he was showing all the IPOs. It's a selective group of IPOs on the left. But you can see how in the first week some companies do really well trade up, but then they give up a lot of those gains in subsequent months. Um, Facebook's an example that kind of goes the other way. They're the ones that are at the top of the list. I remember in 2012 they went public, they traded very aggressively on opening day, but put it in a lot of soft hands out of retail. Um, some hedge funds got in, they didn't get the same long only book. And the result was as soon as people started to trade the stock and sell, their price went down by about 45, 50%. At one point in that initial window, their initial market cap I think was something like 45 billion. They went down to 18 to 20 billion at one point. Well, now they're a multi trillion and a half dollar stock. So it all worked out fine. But they definitely created some volatility headaches. And so, you know, it's just a lesson here that it isn't. Just because your first day, your first couple of weeks go well doesn't necessarily mean the company, the stock price will go up or down in the long run. I bet. In fact the correlation is pretty weak. All else being equal, you want to avoid the volatility. But it does seem, you know, it does seem like they did a good job of getting some long only buyers. And so I think that's, I think that's a positive.

Host: Do you feel like we're going to see more likely upside in the next three to six months or more likely downside in the next three to six months?

Aman: I think the next three to Six months, It's, it's really hard to tell. This chart sort of tells you that there's no way to, no way to know. I think the thing to remember here is that there's not a lot of selling in the lockup schedule. This, there's most of the employees and Elon himself who owns 40% of the company and is therefore a paper trillionaire. They're all locked up for a year. So if you're looking at the next three to six months with that long only book, I think they ended up with a pretty solid set of investors and not a lot of selling pressure. There's also going to be now in the next 15 days some index funds coming in. The NASDAQ 100 is the, the big one. There's an IERS ETF and a few others that are tied to the index. Russell, uh, and the um, some of the other indexes that are based on global indices are going to be forced buyers and just take the price as it is. Actually BlackRock is another really big uh, index fund. As well as being a big passive manager, they're an index fund as well and they own the iShares group. So I think you'll get a lot of buying in the next, uh, let's say the next four to six weeks. They've got earnings coming out in Q2 and then the lockup begins to release. But that's going to be offset by some of that index buying. So I'd be thinking it'll probably bounce around between 1.5 and 2.5 trillion over the next six months and then it'll just depend on how they execute and if they could hit their numbers and demonstrate on the key metrics of companies doing well, then I think they'll be okay. So I think they did everything they needed to in the IPO to set themselves up for a, uh, you know, a, a good six months. A lot can happen in the macro environment that's also going to be NOISY. You know, OpenAI and Anthropic are going to go public and that means that this will be the biggest IPO year on record. And a lot of money has to move out of tech in order to get into those stocks. So the, in the short term money moves around and that could, you know, create volatility to share price as well.

Host: It wasn't a great week for the rest of the stock markets. Heard rumors that other people thought that some folks might be selling to free up cash just so they could buy into SpaceX.

Aman: I think that is very Likely I think to get folks like BlackRock and some of these active money managers there is a large amount of capital floating around but it's not infinite. And if you're going to put money 75 billion worth, which is like essentially think of that as like three years of IPOs, right? The last three years of IPOs, 75 billion. So to bring three years of IPOs into one week probably means that these guys were reallocating from their other holdings and rotating out of maybe the Mag 7 or maybe uh, even other non tech stocks into the space. So that probably did put some short term pressure on the rest of the market. I think other retail probably sold crypto and sold other stocks as well. So there's probably some short term movement. But if the stock does well and when money's not scared and people are bold, there seems like there's infinite money in the medium and long term. So I think that's what the SpaceX guys were thinking. Get the money into some long only funds, into SureHands and then execute the game plan. Just highlight some of the winners. So Antonio Gracias and Valor Equity Partners, I think they are the big winners. Something like their current stake is about $81 billion in um, value. His entire market cap is 60 billion or his entire AUM for the fund is 60 billion. So this is a not even a fund returner, it's a firm returner. This one made up uh, for any other mistakes they might have made. This one made up for it. Uh, Luke Nozick who we know uh very well on the board, he has a personal stake now at 5 billion. He was the first institutional check into SpaceX from founders fund at a 400 million valuation. So basically um, 400x multiple Google um, was actually a really big winner. I think they might be the biggest winner. Over 105 billion in estimated stake. They made a very bold bet in 2015 along with Fidelity and that little check of a billion dollars turned into 105 billion for them. And then Founders Fund is the uh, other big winner, $60 billion position for them. Again that's a firm returner for them. And these are the only winners. DFJ Growth and Sequoia and Andreessen and uh, as I mentioned Fidelity have been one of the anchors and then Thrive Capital sort of snuck in. They weren't a big backer of SpaceX, but they were a big backer of Cursor which will now be, seems like a part of SpaceX. So if you give them credit for that, that's the roster. So kudos to all those firms for being at the right fund at the right time.

Host: Also 137 Ventures, which is run by Justin Fisher Wolfson, who is also ah, ex founders Fund and was involved I think with Luke in helping manage their relationship there for the first couple of years. They were a big winner I believe as well. Um, maybe up to a $20 billion position. None of that's liquid right away, but um, probably over the next two, three months we'll start to see some of that distribution get rolled out and I guess the rest of it over the next six to 12 months, right?

Aman: Yeah, right. The first 20 to 30% would release in uh, end of July, maybe early August and then dribs and drabs after that. And I guess that's a lot of liquidity back into the VC ecosystem. So that should also fuel those firms, continue to invest from. Probably makes fundraising a little bit easier too when you have some dpi, right.

Host: A couple of uh, Prinata is going to get popped. I think probably sometime in the September timeframe. Maybe some of that money might go back into new funds for all those people that you just listed on there. I think, uh, there'll be some celebrations happening in Silicon Valley and New York and other places where uh, people put money to work. They'll get some very large DPI back and I guess one of the shares is us. So hopefully we'll be able to make some distributions here in the next six months uh, as well.

Aman: That'll be our big position in our, in our second fund. Well the, the company's been private for over what, 23 years now. So it's been a long time coming. You know, it has been a while, but it's a, it's a nice reward. And all those funds that were, that were in early, you know, they had a, they had to stick it out. There were visionaries that came in very early into a company that was still trying to figure it out more than once, almost went bankrupt. It was probably one, you know, one rocket launch, one explosion away from being bankrupt essentially more than once. And so that risk taking spirit paid off today.

Guest: Oh. Cause I'm a trillionaire.

Host: You're a trillionaire.

Guest: We're all trillionaires. Can you feel it?