Thinking Ahead To 2019

In the last week, we have learned that Uber, Lyft, and Slack plan 2019 IPOs. I am sure that a few more highly valued private companies are also planning to go public in 2019.

It is something that I have been expecting and predicting for a few years now. Eventually these companies that have raised a ton of capital in the private markets will choose to go public and generate liquidity for the shareholders who plowed all of that capital into them.

And yet storm clouds are on the horizon for the capital markets in 2019. Rates have risen significantly in the last eighteen months, pulling capital out of the equity markets and into the fixed income markets. There are some leading indicators that suggest a business slowdown is on the horizon, which would be the first one in the US in a decade. And, of course, the situation in DC is getting dicey and that will weigh on markets as well.

Good companies can go public in bad markets so I am not saying that the long delayed IPO plans of juggernauts like Uber will be squashed by a bear market in 2019. 

But what I am saying is that 2019 is shaping up to be a very interesting year for the capital markets that power the startup economy.

There is a big difference between the private markets and the public markets. They do not move in lockstep. For years now, the late stage private markets have been trading at valuations that are well in excess of their public market comps. That is true for a number of reasons. First, private market investors have longer time horizons and are looking for a three to five year return, not an immediate one. Second, private market investors get a liquidation preference which in theory protects them from losses. Finally, deals in the private markets clear in an auction like environment where the highest bidder wins the deal. All of these factors mean that a hot company can raise capital in the private markets at valuations well in excess of where they can raise capital (and trade) in the public markets.

But the public and private markets are connected to each other. If the Nasdaq falls significantly, and it is down roughly 15% from its highs in the late summer/early fall, then it will eventually weigh on the private markets.

And, if Uber, Lyft, and Slack do go public in 2019, where they price and where they trade will impact startup valuations, both late stage, and ultimately early stage too.

These markets, public, late stage private, and early stage private, feed off each other and the participants in one look to the others for supply of deals and liquidity. So while they may appear to be disconnected, and often are, they do ultimately sync up.

And so I’m wondering if 2019 is the year they start to sync up again, after quite some time being out of sync. And if that comes to pass, what it means for our portfolio companies and their financing and liquidity options.

Fortunately for most of our portfolio companies, and most companies in the startup sector, we have had a number of years of very flush capital markets and many companies have strong balance sheets and a lot of staying power. The same is true of most venture capital firms as the past few years have been a great time to raise capital.

So if things slow down in 2019 and I am not predicting they will, but I think they might, the startup sector is in good shape to weather it. But at some level, the startup capital markets are a game of musical chairs and you don’t want to be the one who can’t find the chair when the music stops. 

#entrepreneurship#VC & Technology

Comments (Archived):

  1. William Mougayar

    Some of this feels a bit like 2000. Predictions for a US slowdown in 2019 are popular again.The unpredictable thing is geo-political activity. Let’s hope that 2019 doesn’t give us any such nasty surprises, as the markets are fickle at this point, having been knocked down a number of times in the past few months.On the positive side, a potential turbulence might lead to an influx of capital into cryptocurrencies that will offer a greater upside potential, given their still nascent nature.

    1. Girish Mehta

      You are saying turbulence in financial markets if they are down say ~ 20% from highs (common descriptor of bear market) will lead to an influx of capital into cryptocurrencies that are down 80% or more because of their greater upside potential ?I don’t think so. Thats not how human nature works.

      1. William Mougayar

        I’m looking at the upside potentials from the bottoms up. I recall when the Nasdaq hit 1,200-1,400 in 2002 and those who bought then and believed that tech wasn’t dead.The crypto markets did have a overshoot, and now we’re experiencing a similar fall down as when the Nasdaq went from 5,000 to 1,200 then it recovered very well.

        1. JLM

          .Huge difference is they are not operating companies.JLMwww.themusingsofthebigredca…

      2. jason wright

        It may seem perverse (to some), but would one buy at the top for a future return, or at the bottom for a future return? William’s positive point has credibility. Once the SEC finally gets its act together and we do get regulation of crypto institutional investors will then add it to their list of asset classes.

        1. Girish Mehta

          But that wasn’t the point…

          1. jason wright

            I think it is the point (if one is trying to predict the future of markets and where to put capital) if 2019 is the year of formal crypto regulation.

          2. Girish Mehta

            Was saying something else in regards to this point by William -“On the positive side, a potential turbulence might lead to an influx of capital into cryptocurrencies that will offer a greater upside potential, given their still nascent nature.”.

        2. Richard

          The odds that the SEC does anything to challenge the settlement value of the fiat US dollar are now slim and none and the slim who just left the building.The odds that the Chinese put their currency in the hands of the rebel Chinese Citizens is zero.

      3. LE

        I don’t own any crypto and don’t plan to buy any.However the point that William is making is valid and I can craft a retort to what you are saying using ‘how human nature works’ (which I regularly manipulate and know a thing or two about).a) People are gamblersb) People who drove up the price of bitcoin (as an example) were gamblers and/or impacted by the hype that they read. That is if it wasn’t manipulated up by some entity involved. Which we don’t have proof of…yet.c) Something that went to 17k (or whatever the top was) and is now at 3.5k is perceived as having a chance of going ‘up again’ … ‘alot’. More than if it is at 3.5k now and the peak was 4.5k. Nobody perceives that (going again to 4.5k) as a big win. A regular normal gambler will perceive (rightly or wrongly) that it could happen again. Once things start to roll in a predictable manner you will see what happens.d) People play lotteries. I chided people who play lotteries 1 week before my wife participated in an office pool where she won $5k (the group win was $1m, this was last month). We were literally discussing how foolish it was (other than the entertainment) a week before she won. People love to gamble when there is a chance of a big win. Nobody perceives buying some normal stock in the same way. There is no proof of that that they see or read typically.e) People are involved in startups to the extent they are now because of the big and visible win of companies like Facebook, Google and so on. Because it seems like a shortcut to riches to be involved in startups. Shortcut = gambling.f) On this blog (and I think in reply to William) when bitcoin was first approaching $10k I said specifically that $10k once breached would bring on a great deal of mainstream attention which would drive the price up even further. Because it’s a ‘magic’ number. The media and people respond to what I call ‘magic numbers’ very irrationally. Look even Fred did posts relating to blogging for X years and so on. Because some number apparently means more than that number less 1.Consequently ‘down 80%= ‘good’, not bad.

        1. Girish Mehta

          William was saying something specific which I was referring to.My fault – it is quite possible that my original comment was not clear…

        2. PhilipSugar

          Remember my quote about the plumber asking me while under the sink?

          1. LE

            If you told him today ‘price low – good oppty to buy’ most likely he would agree, right? Why? Because he knows zip about it and he trusts you and intuitively it makes sense to him seat of pants.

          2. PhilipSugar

            I don’t know. Here is the thing. Everybody (gamblers the most) talk about their winners, when winning.But generally those that do that get washed out by what we call the “big stack”.So let’s say you and I play a game (I have done this only one time once) Where I say to you, lets flip a coin and bet $100 bill. You get $80 if you win.Ok, if I have 500 bills in my pocket and you have two……you lose every time.Even if there are no odds you will lose.

          3. LE

            Ok, if I have 500 bills in my pocket and you have two……you lose every time.At first I thought ‘oh yeah, right!’. Then I thought ‘but wait if we both have 2 bills then there can only be 2 bets so why does it matter if you have 500 bills you can’t bet a third time’. What am I missing.Maybe the story needs to be adjusted to “I will bet a group of 20 people and I have unlimited bills in my pocket”.

          4. PhilipSugar

            We play until somebody has no money left. That is the definition of washed out.

      4. JLM

        .That investment thesis is — “OK, the stock market (real companies) is down 20% so let’s invest in some real shitty companies/assets who are down 80%”These are not the same investors. Not even close.JLMwww.themusingsofthebigredca…

    2. awaldstein

      Not seeing your logic here.Politics is going to get acceleratingly ugly–that is a reality not a supposition.As I sit here now and plan where to move my capital why in the face of all this is crypto a good hedge everything being what it is?

      1. William Mougayar

        When the fog clears, yes- crypto has a great future. It is real and will be long lasting.

        1. jason wright

          Couldn’t agree more.

        2. Vendita Auto

          “It is real and will be long lasting” Most would agree it is inevitable but twixt the cup and the lip IMO investing in the right exchange brand that will facilitate the seamless transition for future mass public investments is interesting

          1. Richard

            Most of who ? To date, it’s the biggest con game ever invented.

          2. Vendita Auto

            Respectfully “Most of who” The people who disagree with your opinion

        3. Richard

          You sound like a Sunday preacherSunday Sermon – brought to you be the church of bitcoin.Can you just point to one transaction this year that wasn’t drug and crime realared.

          1. aminTorres

            Coinbase gave me 10 bucks for preaching to my friends. No drugs or crime though I may have bought coffee with this. https://uploads.disquscdn.c

          2. aminTorres

            Yup, I’ve gotten quite a few. I used to give a blockchain talk at work and would offer people a bit of a bitcoin, 5, or 10 bucks if they signed up for a wallet just to get them exposed. Some of these 10 bucks referral fees were reused for the same.

          3. Richard

            That’s the technique my friends used to sell dope in highschool.

          4. aminTorres

            I am sure you know what you are talking about.

          5. aminTorres

            https://uploads.disquscdn.c… This was lunch or a gift, no crime tho. I counted about 52 transactions that not including btc purchases and other currencies. No crimes or drug.

          6. aminTorres

            Just noticed this one: https://uploads.disquscdn.c…Fred might appreciate it. I sent my brother 500 bucks to help “fund” his startup. A small ISP in the Dom. Rep. He went from 35 clients to 150 this year. Earns about 3.5k a month now. Not a lot of money in the US but not bad for the D.R. He started going to client’s home in a moped and just recently purchased a small truck to move equipment around. No crimes, no drugs.

          7. PhilipSugar

            I will be there next week

          8. aminTorres

            oh nice. I’ve been planning to do the same but things got tricky for me. What part of the country are you visiting?

          9. PhilipSugar

            Always Punta Cana, I know touristy, but we love

          10. Richard

            Why introduce risk into you brothers dream? If he held the 500 with of bitcoin and waited just months to start his business, his dream would have been over before it started. Next time, send him US currency.

          11. aminTorres

            Risk?The money was to purchase something not to hold.If I had used dollars and WU for example, he would not have gotten the entire amount. I would have paid a significant fee and he would have gotten each dollar cut down by 2 or 3 pesos. Thats actually risk. Because he may have not been able to make the purchase if the money received was insufficient as a result.I have an idea though. When you send money to your relatives I wont tell you which currency/service to use and you promise to do the same when I do. Cool?

          12. William Mougayar

            You sound like an eternal pessimist and a dramatizer.

          13. Richard

            You sound a little defensive. Then again, you sold bitcoin bibles.How anyone living in the US wouldn’t be defensive about a product built and designed by anarchists is mind boggling.I can’t respect those building and investing in products who mission is not to blow up the wealth of so many. And it’s essentially controlled by Chinese Miners. Baffling.

          14. William Mougayar

            You are definitely misinformed. No point discussing further.

          15. jason wright

            His historical revisionism is breathtaking.

          16. jason wright

            Who blew up the world economy in 2007/ 2008?

          17. Pointsandfigures

            Fannie and Freddie

          18. jason wright

            Ah yes, that couple. Was Bitcoin their baby?

          19. sigmaalgebra

            Glad someone else understands this.

        4. awaldstein

          A studied non answer my friend.I’ve been buying and selling crypto for a number of years and don’t need to be proselytized on it. We all believe it will have a future, the question is how large only.You created a dichotomy of world unrest and it as a hedge as in now. That is your statement.If you care to answer I asked cause I”m interested in your answer.If not, all good.

          1. William Mougayar

            I thought I did respond 😉 In the long term, the size of the potential is big enough to make gains at the various levels of the opportunities.

          2. awaldstein

            Ha!You know that if you shake your Magic 8 Ball, one of the responses is “All shall be revealed”.Thought of you on two items recently:-the new vintage of Lewandosky Cortes Zero is out. One of my favorite skin macerated whites made in Utah, grown in Cal. Impossible to find this year.-Involved and fascinated with a PoS exchange that is fractionalizing investment potential across incentivized nodes with a dividend share. Hopefully a case where green is as well both democratizing and green at the same time,Have a great holiday season.

  2. kidmercury

    In my opinion, sustained rise in rates is bullish for equities, since it may mean that bondholders are dumping bonds (thus necessitating a rise in rates) and that capital will need to flow into other sectors instead. Specifically I think this will occur with public debt, and the flow will be into private assets (equity and debt). I think this will be bullish in nominal terms for equities

    1. Richard

      Kooky Econ too ! At least you are consistent.

      1. kidmercury

        Lol kookonomics is the foundation upon which the rest of kookology is built. It is the one thing that unifies the look diaspora.But the view I presented here is hardly kooky. You’ll find many fairly regular people, even conventional and successful, who essentially agree in broad terms.

  3. Salt Shaker

    A policy of perpetual denial wrt collusion, obstruction, trade warfare, Khashoggi, campaign finance violations, staff chaos, investments abroad, etc., is a terribly flawed strategy. Facts matter and facts will be presented. One can’t continually just shoo them away under a banner of denial, fake news and/or conspiracy claims. There’s already a quiet crack in the veneer among the GOP. They’ll continue to bail water until they no longer can. Will it be enough to turn roughly 20+ GOP senators to run for the hills? Time will tell, but 2019 will be mostly about political survival, particularly if the markets continue to roil (and they likely will). Clinton’s impeachment was serious, but that’s a pimple compared to what will transpire in 2019. Political chaos will overwhelm market fundamentals. Unprecedented territory.

    1. Richard

      Turn off msnbc, a rag that profits from hate. It’s just a president. It’s not a king. Read the feds beige book.

      1. Salt Shaker

        “It’s just a President…It’s not a King.”Wrong. You have a President who thinks HE is King, immune to customs, protocols, decency and legalities, with an inability to acknowledge when he is wrong. The Feds beige book doesn’t address psychological fragility among the masses.

        1. Richard

          The Feds beige book is the psychology of the masses. The point I am making is the president actually does relatively little in the long term to US economy and the equity markets. You are hyping the manic psychology of 1-3 million people, many of which have either make money off this noise, have no money in the US market or have too much money.Why would anyone hope for the downfall of the economy over khasshogi.You couldnt make this stuff up!

          1. Salt Shaker

            No one hopes for economic downfall over Khashoggi, but denying the facts makes us complicit (as we are in Yemen, btw).

          2. Richard

            Pick a lane, the facts are 99.9999 % of Americans are not going to loose sleep about a Saudi rebel being executed by the Saudi Klan in Turkey. They are barely moved by the crimes in our own neighborhooods.The facts are there are many a Khasoggi back in Saudi Arabia living large.

          3. Salt Shaker

            Sad but true, though it’s hard to reconcile today’s story in the WAPO that Jared Kushner was providing guidance to MBS on how best to weather the storm. Biased journalism? Of course, but what journalism today isn’t.

          4. Richard

            For 60 years our policy in the middle was rooted in stability in the oil markets and stability for the only democratic nation state in the region, the state of israel. Whatever Kushner said or didn’t say toward that end is just good politics for the US. That’s really all that matters. Except for the crazies! Enjoy this while it lasts, the anti-Israel anti-capitalist meme is again showing it’s ugly face in the US but this time from the leftist cooks.

          5. Salt Shaker

            Sorry, advising a foreign dictator how to handle allegations of murder is not “just good politics for the U.S.” It’s akin to aiding and abetting. Kushner has no right or experience negotiating or determining U.S. foreign policy. He’s a little boy who married the bosses daughter, and yet another soul w/ a spotty record in the private sector (See: 666 5th Ave). He’ll be the first to go when the shit hits the fan, via allegations and/or charges.

          6. Richard

            There is a pretty good chance that Kusher is wealthier than trump. Slim chance that he is an empty suit. I thought Break it and ask for permission later was framed and on the desk of all of us AVC contributors.

          7. Salt Shaker

            Both born on 3rd base. Kushner’s private school teachers were astonished (and appalled) he got into Harvard based on his academic standing. Not the first or last to do so. One’s daddy was convicted, the other likely got lucky. You reap what you sow. Trump’s biggest mistake in life will be running for office. The feds and/or the very least the southern district of ny are gonna do him in on several fronts, including likely tax evasion, money laundering, and/or illicit use of foundation funds.

          8. Richard

            I’ll stipulate to the 3rd base comment. But not everyone born on 3rd scores.

          9. JLM

            .Half the people you think were born on 3rd base run the wrong direction.JLMwww.themusingsofthebigredca…

          10. LE

            Kushner’s private school teachersMy private school teacher told me not to even apply to Penn/Wharton that I wasn’t “Penn Material”. A guy like Phil Sugar btw is “Penn Material”. Fred is “Penn Material”. She said ‘you are not Penn material don’t bother’.Here is the woman who said that btw (I come with full backup for what I say..) Note her qualifications, she is now not only a professor at a top private college but also has a chair no less. In education. Nice, huh?…And I didn’t get in by having family connnections. My dad was small time and owned a wholesale business (12 employees) and had zero connections. Never gave any money that is for sure. In fact a guy who I met who was important that he did know from some local Jewish cause thingy, essentially passed on the opportunity to help me. Was as if he was saying ‘your Dad is not important enough for me to pull strings for you’ (and he didn’t..)Top schools are looking for more things than top grades and academic standing. And you know that. I got in by doing some quite unusual things that distinguished me and made me stand out. Was definitely not SAT scores or high school grades for sure. I wrote a good essay and I did write the essay with no help from anyone at all or coaching etc. Plus I did some other things that made me recognized.Kushner had a leg up getting into Harvard of course. But there are various non quantitative ways that a top school uses to separate the people that they accept.In order to convict Kushner of ‘not deserving to get in’ you’d have to examine every single student who got in and see how many people who were accepted off the academic bell curve (such as me at Wharton) and then make a judgement.By the way explain to me how if someone excels at sports and that gives them a leg up to get into a top school (Ivy or otherwise) how that supports what you are trashing Jared Kushner for. Or someone who has some interesting life experience but sub par grades how is that justified?This is the article that you are referring to:…So now let’s flip the question. Why is Harvard so special if you can get into it without good grades but only either family connections or money or non academic reasons? (Hey what about affirmative action. You don’t think that Obama was helped because he was Black?. Well he was most likely..)

          11. Salt Shaker

            Agree, and good for you for perservering. The notion that Charles Kushner’s “gift” of $2.5M had nothing to do w/ Jared’s acceptance is bs. It’s prob not the sole reason, but he flipped the line like a mega-Platinum flyer at JFK. Jared didn’t need a campus tour or interview, Charles only had to make a call or two. When Jared bought the New York Observer and functioned as Publisher he was totally clueless about publishing. Just another LEGO toy to play with. (His former Editor in Chief sometimes comments on the AVC blog.) Both he and Ivanka (another Penn grad who actually is smart but in over her head) decided playing politics would be fun. The fact they’re “senior advisors” speaks to the ridiculousness of this admin. Quality, experienced people come and go, but they’re protected for all the wrong reasons.

          12. LE

            I didn’t say at all that it had nothing to do with it. I am implying that there are plenty of people who get in for various non academic reasons (including both family money and perhaps being related to a famous person which the school finds beneficial in some way).Ivanka was helped by the fact that her father was Donald Trump. I don’t think he gave money to the school. Any top school (and once again this is common knowledge) have way more ‘qualified’ applicants than they could ever accept. So they look for other qualitative reasons. Having a famous father helps as long as it doesn’t hurt. All else equal. Trump got into Wharton because his father was notable in some way. So what. You have to look at the total pool of people there are plenty in there for a similar reason.Look Fred got into MIT. Getting into MIT helped him get into Wharton. Graduating from Wharton helped him get his first job in VC.I am sure when he applied to MIT, in addition to, let’s assume, top grades he also had on his fact sheet that he moved 30 times (I thought he said that). I am sure the school thought that was just great and took it into consideration because it showed how he overcame an obstacle that handicapped him.But also his father was a Brigadier General. I don’t know if he was at the time he applied to MIT but he was probably high ranking. I am sure the school cared about that and it gave him an edge over a guy whose father managed a district for 711s. And it didn’t hurt him to have that on his application.The ‘move 30 times’ is significant but how is ‘father is X’ any different than ‘father gives money to school’?Well known that legacies have a easier time getting in as well. Just the way it is not everyone there is there for academic reasons.

          13. sigmaalgebra

            > The fact they’re “senior advisors” speaks to the ridiculousness of this admin. Quality, experienced people come and go, but they’re protected for all the wrong reasons.Nonsense. Total made up, cooked up, stirred up nonsense.Jared and Ivanka are there no doubt because they are (1) family, (2) trusted, and (3) getting an advanced education. They are not subject to being “fired”. And there is nothing wrong with this situation.

          14. sigmaalgebra

            Quite broadly, the teachers, counselors, principals, etc. at lower levels of education don’t have even as much as a weak little hollow hint of a tiny clue what matters in the highest levels of education or doing well in a career. Those teachers, etc. don’t have any way to know.Attributes good for the highest levels of education and the rest of life include some aspects of insight, a drive to understand, creativity, and determination, and the lower levels of education have little ability to appraise such attributes and even less understanding of them.Life is full of “chicken excrement” passed off as chicken salad, and each person needs to use their own nose and other means to tell the difference. In particular, formal education, even the best of K-12 and colleges and universities, are not one stop shops of tools either necessary or sufficient for a good life or to be blindly trusted. Still it is true that much of the best of civilization is in the high end research universities. At times some of that material can be powerful and helpful. Still, K-12, college, and especially the high end research universities commonly seriously damage their students.

          15. LE

            He’s a little boy who married the bosses daughterWell by that token who deserves anything? Video yesterday, won’t mention names, but one of the people featured on it I see went to a top british boarding schools and interned for Tony Blair with a notable position. That peaked my interest so I found out that she comes from a very ‘noble’ British family. Never had heard of them (but why would I here in the US).I am sure she thinks she deserves everything she has (despite that) just like Kushner does (his family despite his father’s issues has made money from the ground up), not nobility. But yes Kushner has a leg up because of that. And why he was even able to marry the bosses daughter. Ditto for Fred’s kids, right? But also to a lesser degree our kids? Of course both Kushner and the person I am referring to had enough ability to make someone of their advantage. So sure that counts for something right there. But I’d rather have the gun than the smile.That said of course we think whatever help we give our kids is ‘ok and not over the top’ but anyone who has more (ie Kushner) obviously ‘didn’t earn it and doesn’t deserve it’.Oh well I might as well present the backup for my statement:

          16. Andrew Cashion

            Elvis Presley.

          17. creative group

            CONTRIBUTORS:sad but true the new generations priorities are more about money, career, and self. Who would have ever thought our Middah Ahu would be protecting a ruthless Wahabbi Sultan. Can’t make these stories up.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT

          18. Pointsandfigures

            If you are just waking up to the fact that Saudi Arabia is basically a religious fundamentalist state… about Turkey these days? China imprisoning Muslims? This precedes Trump. BTW, heard no massive outcry when Daniel Pearl was murdered…..

          19. Salt Shaker

            Pearl’s alleged killer or killers were sentenced to death, though subsequently Khalid Sheikh Muhammad claimed responsibility for beheading Pearl. There was never a denial of the facts by US admin. Saudi’s also got a free pass on 9/11.

          20. Adam Sher

            There’s been a decade and a half long lawsuit against the Kingdom of Saudi Arabia over its roll in 9/11. Saudi Arabia may not have been an invasion target but the lawsuit seeks trillions. The verdict is still out on this one but it’s still possible we’ll see a verdict against the Saudi Arabia.

          21. awaldstein

            What matters us how we act now.With all due respect, this idea or any idea, that justifies itself on the premise that that is how it has always been is BS.This is wrong.We are all aware.If you don’t fix it and you are in power you are complicit.

          22. Pointsandfigures

            I might have said the same for the previous occupant of the White House. Or the ones before that. Trump is not a fascist or anything near what the far left is accusing him of. At this point, virtually all Republicans are fascist, racist, homophobic etc. Bush 1 was a Nazi until after he died so that stuff falls on deaf ears. The danger of any President is that they make govt so big it becomes a tyrannic oppressor which is what the Founders didn’t want. See what they did to this kid in Chicago. https://www.chicagotribune…. Then tell me about fascism etc….

          23. Salt Shaker

            “Fascism (/ˈfæʃɪzəm/) is a form of radical authoritarian ultranationalism, characterized by dictatorial power, forcible suppression of opposition and strong regimentation of society and of the economy, which came to prominence in early 20th-century Europe.”Sorry, it kind of fits w/ out stretching the truth. Not sure you can say that about the previous occupant or Bush I, as you noted.

          24. awaldstein

            clueless where this came from honestly.sure we learn from the past but we make changes in the present.for someone who is one of the least polarizing people i know you are laying it on here.angry about something it appears.

          25. sigmaalgebra

            The Nazis and Fascists were/are much worse than even, say, The National Review and Bill Kristol, etc.I regard Trump as a centrist and not even a “conservative”. I hate it when Hannity or Gingrich call Trump a conservative.

          26. JLM

            .Nations have alliances.Leaders have relationships.Alliances operate at the military, economic, transportation, and trade levels.Leaders operate at the personal level.There are no indispensable leaders. Everybody can be replaced.We were allies with Russia when it was run by a guy — 5’4″ cobbler’s son — who killed millions of his own people.1. 20MM civilians, non-combat deaths WWII2. 20MM soldiers, civilians, combat deaths WWII3. 1MM, imprisoned, exiled 1927-294. 11MM peasants forced off their land in mass collectivization programs plus 3MM peasants killed directly during these programs5. 7MM, artificial famine of 1937-8 (Ukraine)6. 1MM exiled from Moscow/Leninrad forced back to the land 19357. 1MM executed as part of the Great Terror 1937-398. 6MM sent to forced labor camps9. 12MM forcibly re-located during WWII10. 1MM executed for political crimes i 1946-53We knew most of the pre-WWII stuff before we ever sent this bastard a bullet or a truck.Anything Joseph Stalin wanted we gave him, as long as he was killing Germans.As soon as the Iron Curtain came down, we cut them off.As soon as the Iron Curtain failed, we became friends again.Now, we are at each other again.This stuff changes constantly.What doesn’t change is our common interests which drive alliances. The leader relationships mean nothing.We have a good alliance with Saudi Arabia which is run by some first rate shitheads.The Prince is a punk, a young, impulsive, boorish, ill-mannered punk who ordered the hit.We have known about this kind of stuff — just like the Russians pre-WWII — for years.We will remain strong allies while we all think this guy is a POS.JLMwww.themusingsofthebigredca…

        2. JLM

          .The masses cannot discern the difference between chicken salad and chicken excrement.That is the basis for power of politicians and the media.”Look, that’s chicken salad.””You sure? Looks like chicken shit to me.”JLMwww.themusingsofthebigredca…

        3. sigmaalgebra

          Character assassination propaganda, repeated often, no evidence.Do yourself a favor: Refuse to listen to garbage such as the usual list, in alphabetical order, ABC, CBS, CNN, MSNBC. NBC, NYT, WaPo. Just turn them OFF. You will lose nothing of value and save your nerves, stomach lining, etc.Then relax: Get one Kg flour, 700 ml water at 115 F, a package of dry yeast, 1 tablespoon of salt, mix it, cover it, let it rise maybe 24 hours, roll to a log, divide into 8 equal pieces, pick one and form into a disk about 5″ in diameter, top with some tomato sauce and mozzarella cheese, place on the shiny surface from a DiGiorno 6″ frozen pizza package, microwave at 100% power until the cheese is melted, enjoy, and f’get about the mainstream media.Then practice with the other seven pieces of dough.

    2. LE

      Note that France has riots now because the President of that country is prioritizing green issues (long term) over the ordinary everyday person that is impacted by what he thinks is important. [1]So note that people are selfish. They care about what impacts them NOW (and personally) not something that matters way in the future.By the way while you make valid points, and yes it’s a clusterfuck, the vast majority of people don’t give two shits about what happened to Khashoggi by Saudi Arabia and “MBS”. That story has legs because it happened to a journalist. I have never seen a video played as many times as that guy walking into the embassy. More than the zapruder film. It’s over the top.[1] The mafia got away (mythically at least) in the US because that while they murdered, stole and engaged in illegal activities, they always made sure the little guy was taken care of. Hence they would overlook things and thought they were heroes for them (Gotti in particular was well loved, right?)

      1. creative group

        LE:We agree in whole but LE if your father or mother were killed your statement wouldn’t have been nothing but revenge.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT

        1. LE

          Actually no. I think that if someone puts themselves in harms way in the fashion that he did, by speaking out against someone like that, (as history has shown; ditto for Putin) then they are taking a risk and that’s that. Tell me where we are taught to do foolish and dangerous things that impact others (our family). Why do we celebrate that?It’s the same with that Otto guy who went to North Korea and stole a poster. First going to North Korea is a big risk in itself. Second doing something foolish like that, when you have been warned against doing it (in a place like that), is just plain stupid.Ditto for that idiot who got shot by the tribe on that Island trying to sell them on Jesus. (When specifically warned apparently not to do so).…None of this should have happened. But it certainly isn’t the type of behavior that should be considered normal in any way. It’s not. (By definition of ‘normal’ that is). In a way it’s actually almost narcissistic because it appears to be done on purpose because someone thinks they are above any danger.

    3. JamesHRH

      I think Mitch McConnell has read the Pew Research that shows that America is no longer dominated by a centrist majority. The median views of liberals and conservatives have shifted away from the centre.The next Presidential election will be won by the person who can get their voters to the polls. I have no idea who that is for the Democrats and I am not sure the GOP has an answer too.Sadly, what typically unites Americans at times like these and creates a centrist majority…. a good sized war.

      1. Salt Shaker

        Frank Bruni’s column in the NYT on why Biden should bail is spot on. The Dems have no real strong candidate currently to choose from. Still early, but nonetheless unsettling.…Edit: I’m neither Dem or Rep. All I want is a good alternative, irrespective of party. I’d vote Kasich (a true pragmatist) or even Romney, if either was in the hunt. Wouldn’t have been the case in 2016, but my perceptions have changed dramatically based on where we are today.

    4. JLM

      .Happy holidays. Merry Christmas. Happy Hanukkah.Everything is going to be fine.JLMwww.themusingsofthebigredca…

      1. Salt Shaker

        Where you been all day?

        1. JLM

          .Church on Sunday. Been praying for you, friend. God was undecided said he’d get back to me.Powerwashing the stone house, the driveway, the patio, the pool, the fire pit, the fireplace, the hot tub — company coming.New 11 month old granddaughter.Be well.JLMwww.themusingsofthebigredca…

    5. sigmaalgebra

      I’ll take just one:> Facts matter and factsYes, a former assistant AG just said that Trump will be indicted for campaign finance law violations.Total fake news. Repeat it on TV news 1000 time a day for 200 days and maybe, as in Nazi propagandist Dr. J. Goebbels “If you tell a lie often enough then people will believe it.”But, from what I’ve heard about the issue, it is perfectly legal for Trump to tell his attorney to cut a deal with some Vegas bimbo where she gets a check, she shuts up, the attorney gets a fee, and Trump pays for all of it from his personal funds. Perfectly, 100%, rock solid, granite hard, iron clad legal, no question.Net, we’re talking just fake news, truly an “enemy of the people”, trying to build a “narrative” in the sense of Bernays, for media gang-up and pile-on, and Goebbels style propaganda.And in this case, it’s not clear that Trump even did any such thing. And again, once again, over again, yet again, one more time, even it he did, there was nothing, nichts, nil, nada, zip, zilch, zero, that was illegal in any sense.Once voters understand the situation, they will, like I did long ago, lose all respect for the media and conclude that on paper it can’t compete with Charmin and on the Internet is useless for wrapping dead fish heads.That such nonsense is apparently the worst the Trump haters can come up with, even less good than that Trump had an extra scoop of ice cream, is in effect a unique, world class clean bill of health for Trump.Such fake news, exploiting the assumed ignorance of the voters, reminds me of a political attack in Louisiana where a politician seriously, with extreme gravity, accused his opponent of the despicable act of “committing nepotism with his daughter”. Heck, we could get Trump on that one. right???? Heck, we could add in that we have pictures, pictures of Trump with his daughter when she was about 10!!!!”Chaos in the White House”? So many unsupported and nearly meaningless words. A claim of “chaos” needs rational, objective support.Yes, there has been some staff turnover at the White House. So what? Who expected something else? No turnover? That would be strange.For some rational thinking, how does the Trump turnover compare with that of other presidents? Elsewhere in organizations in government, military, academics, Congress, business? We don’t get such data, and eventually we conclude why — more data would kill the fake news scam.

  4. jason wright

    “private market investors get a liquidation preference which in theory protects them from losses.” That’s not ‘investing’. Where’s the skin in the game? I like modal verbs. As Tony Blair famously once said, “ambiguity is my friend”.

  5. JaredMermey

    But will KD come to the Knicks?

    1. fredwilson

      I sure hope so

      1. Pointsandfigures

        All about the Benjamins and if he has a team to join that can compete.

  6. Michael Aronson

    I’m telling our companies that are potential IPOs to get ready in case Uber, Lyft etc make it through the storm and come out cruising on the other side

    1. Richard

      Storm? 2018 was a heathy ipo year.

      1. Michael Aronson

        yes it was! and as i told one of our companies when they asked me in august about when they should go out “last week”I meant the clouds, thunder, lightening we are seeing now and prompted Fred’s post

    2. LE

      Funny because this reminds me of the political saying which is ‘never let a good crisis go to waste’.In this case the idea is to tell startups that this may be the last window to go public for a long long period of time. I kind of get that point in Fred’s post as well. You create fear of the unknown and uncertainty. You use the current political climate to get an action that in less turbulent times wouldn’t be as easily possible.This is no different than how companies used to use a sale to get a buying action. Say by putting a time limit on an offering. Open ended, nobody gets off the fence. “I can take advantage of that anytime”.In this case the idea is that IPO’s might only be possible NOW as in NOW. Later? Maybe not for another 5 years! Maybe longer! Better get in the pipeline. And then ‘it might actually be to late already’.

      1. kenberger

        great point. Reminds me of how in post-2008, MANY banks and other big financial co’s gutted lots of their staff, ending leases and moving, way beyond anything they’d normally get away with, using the crisis as an excuse.

        1. LE

          As a kid I employed this a few times with my parents. The ‘crisis’. Yes I knew about this even before the saying got popular. And when I was under 10.The first time was when my parents took me to a child therapist to find out why I was unhappy. As the therapist probed me I spotted an opportunity. I wasn’t really upset over anything in particular, but my parents, trying to be good parents, figured they would take me to ‘a professional’. So as I sat there I decided it was a good opportunity to say that I wanted a dog. Not right away. After he did a bit of questioning and not in the first visit etc. And presto the therapist got my parents to get me a dog. Wow that was easy. And he was a Ph.d. Dog was a golden retriever.Another time I was upset that my parents wanted me to go to hebrew high school. Religious school was boring as shit I couldn’t stand it. To me it was a complete waste of time. Anyway one day my parents decided to not get McDonalds. (Really was a big deal when growing up when you eat your mom’s bland food). So I was kind of moody and pouting.My mom comes around and says ‘what’s wrong’? So I spotted my opening. I said ‘I am really upset and I don’t want to go to Hebrew High school. I was in total ‘upset’ character. So viola. She told my Dad and I got out of going. Just like that. Will point out that if I could have said the same w/o a crisis I would have done so.Many other cases those are the signature moments though.This is where I developed my ‘method acting’ theory of negotiation. You get into a role. And you go from there. You are an actor playing a role. The first few times it wasn’t an act but it got me thinking how effective it was.

          1. kenberger

            What a story!

          2. sigmaalgebra

            Yes, watching politics, it finally dawned on me how can do excuse making: No matter what want an excuse for, no matter what the crisis, no one really knows the causes, how may causes there are, or what the important causes are, so can pick darned near anything and claim it is the cause, a puppy, trip to McDonald’s, why votes for ObamaCare, why didn’t vote against ObamaCare, why we shouldn’t build The Wall or why we should, etc.I’ve always thought that such exploitations were dishonest and, thus, would cost me my potentially valuable reputation for honesty, but maybe I was wrong and should change!!!

      2. sigmaalgebra

        Yup, these may be the last donuts, oops, tech IPOs, for years!!! When these are sold, there won’t be anymore! The tech gold mines are played out!!! There’s can’t be anymore hot stocks with big first day pops!!! No one knows how to make more donuts, oops, tech stocks — lost art, never to return. So, get’m while they are hot!!! Cyber Monday comes only once a year, and maybe we’ve seen the last one in our lifetimes!!!Do I have the hot air for soapy Wonder Bubble bottle bubble blowing about right?

  7. Richard

    You are correct Fred ! Those short term investors like Warren Buffet and those million of inverted with 401 accounts have ruined everything! Why can’t we have Long term investors investing in reals productive assert like bitcoin!Let’s teach kids to invest and save for the long term in Bitcoin! Do it for the kids.

    1. fredwilson

      It’s called HODL and it’s nuts. I warned against it last year at the top if you recall

      1. Richard

        Too little too late. I’ve talked with too many black 22 year old millineals over the last year who put their only 10k into crypto.The real question I have is why would any wealthy insider sell at the so called top that they don’t believe it is the top?When you started pitching bitcoin, I believe you did so thinking that it was a disrupter of micro-payments. You didn’t pitch it to the kids to get rich, but to build products.People with your influence should be more responsible with your messaging when it comes to speculative bubles, patuculalry when trading on the opposite side.

        1. jason wright

          we’re all grown ups, and making mistakes is a necessity.

    2. creative group

      Richard:Apparently no one picked up on your sarcasm. And Fred responded.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT

  8. Tom Labus

    Shareholders are not as patient as VCs. It could be a rough ride for companies not even close to making some money.

  9. Pointsandfigures

    Two potential IPO’s I am watching for are Robin Hood and Coinbase. Will be interesting to see how the broader market would value each.

  10. george

    I’m very upbeat about the future and this group of tech companies (Uber, Lyft and Slack) entering the public marketplace. These are great companies who provide relevant products and services that are fundamental and enormously important to our future.When markets correct, we often see investor myopia, which often creates some short-term downside. It’s somewhat agonizing, but I try to remind myself to keep my focus on the long view and continue to evaluate my investments, their underlying IP/assets, their team, and their market opportunities (size) – will this company be relevant in the future?2013 Valuations:Uber $3.5BGE $272B2018 Valuations:Uber $72BGE $67BThe public market may set the current price but performance sets the future price…

    1. JLM

      .Very astute comparison. I don’t agree with your conclusions, but I applaud the factual basis upon which you operate.Well played.JLMwww.themusingsofthebigredca…

    2. sigmaalgebra

      Interesting but anecdotes, 20/20 hind sight, Monday morning quarterbacking.To be useful should have, say, some general statements that promise to have good predictive value in the future. So, how to predict the next rise in an Uber and fall in a GE?For an example, once I knew a guy who liked bacon. Yes, he liked to eat it, but more importantly he liked to make money with it, right, in the commodity markets. So, e.g., he understood summer BLT sandwiches!He was a friendly guy, knew a lot of people, including some people, good ol’ boy, blue collar, Bud beer or PBR, TV sports, Dolly Parton, 9-ball pool type guys — liked Corvettes but didn’t yet own one — who happened to work at some big commercial meat freezers and could give a reading on the current inventories of bacon, right, in CME terms, pork bellies.So, with such information, ahead of the USDA official announcements, he’d take a “position” long or short, maybe 50 freight cars worth of pork bellies.He lived well, apparently knew what he was doing.

  11. David Albrecht

    Truthfully, I’d love to see someone do a PhD on this topic (a nuanced comparison of how equities behave in public vs private markets).I’d expect valuations to be higher in the public markets, since the supply of capital is much larger. But it seems the exact opposite is happening. Maybe Fred is right, that preferences and such have a lot to do with it. Any idea how common trades against each other in these two markets? (public vs private)

  12. JLM

    .What is going to be interesting is to see whether any of these companies have any current earnings or the prospect of creating earnings any time in the near future.There are some companies out there which do real stuff, but Uber and Lyft are real just like diet soda.I think Slack is real and their customer counts are real, but are they making any damn money? Indications are they are not.The VC money in these companies has gotten way out over their skies. These valuations are not related to actual earning capacity.A smart guy could make a lot of money shorting the Hell out of some of the tech illuminati. SNAP — talking about you, pal.JLMwww.themusingsofthebigredca…

    1. sigmaalgebra

      Wondered about such shorting. For a hint, in the 1999 bubble there was a remark:Never be between a VC and the door when the lock up period is over.So, get a collection of past “tech illuminati,” and plot their stock prices in percent of their offering price and the average and find the best two times, when to short and when to close out the short position.I have to guess that plenty of people do this, but maybe not!

      1. borisstainoff

        That’s an excellent remark. The substitutability between ride sharing apps is enormous and public capital markets aren’t going to value Uber as a logistics company when it is horizontally competing across a bevy of industries which it intends to disrupt when all of those industries have variously different scaled solutions and thus different areas for competition (private business delivery, yelp, grubhub/seamless, postmates/ubereats). Also the gig industry is changing and the price of employment may include traditional worker benefits associated with payroll categories as a larger portion of the labor force are categorized as “gig” workers.

        1. Lawrence Brass

          “substitutability”, spot on.However, brand recognition is also factor as it makes substitution slower.I think that those who provide the lowest cost of operation for users and gig workers will win in the long run. The cut will get smaller.

    2. Lawrence Brass

      I think that Slack has enormous potential but it has to evolve.It could turn into a remote worker market hub, or a B2B interconnect.Incredibly enough, my main team moved to MS Teams.

  13. Adam Kowalski

    Companies that have raised a ton of capital in the private markets will choose to go public and generate more profitable and customers. Good idea to start a business

    1. sara_darling

      morfeus12 already

  14. Faisal Khan

    Wrote an article on a similar theme – talked about how some of these IPOs business models may not be mature enough (esp. slack and wework) as they’re too dependent on small customers. Might be interesting to you.

  15. Josh Meta

    Slack is the most negatively disrupting workplace technology….badly conceived / designed and even more terribly used. As is people were irritated with the incessant flow of emails and some genius thought it was important for everybody to read everybody else’s inboxes?? D*U*M*B: my sh*t has more IQ! People moving AWAY to Yammer, MS Teams, FB@Work. People are asking in interviews if the company / team uses SLACK as a way to avoid getting sucked into the quagmire.Impacting organization culture through tech has to happen by careful design (humans still use it) not by moral hazard ridden KPIs and valuation rushes. Very surprising how the market has adopted it so fast and not revolted against the fungal stress it virally infects intro people’s lives. Hopefully the real markets will vote it out with its dysfunction.