00:00IPOs, 2026. It seems like we built that momentum as we talked about in 2025. We're not yet back
00:06to some of the peaks we saw in record years. Do you think that we could get there next year?
00:11I don't think we're getting back to 2020, 2021 levels until the next bubble happens. And I don't
00:17think that's anytime soon, maybe another 10 or 20 years. But I do think we're on a steady, gradual
00:23resumption of normalized IPO activity, and that'll continue into 26.
00:26What wouldn't be normal is if we saw SpaceX, if we saw OpenAI actually come to the public markets
00:33this year. And you think about some of the valuations that we're talking about, I mean,
00:37a trillion dollars, if not more, especially when it comes to SpaceX. How does the IPO market,
00:43the public market, even start to digest some of those figures we're talking about?
00:48Yeah, I don't think it's actually that big of a challenge. And the reason is, is that
00:52the only difference for these companies like a SpaceX or an OpenAI that will go public at very
00:58large market caps is that they've been private and now they're going public. But if you rewind
01:03the clock to even as recently as a decade ago, there were no trillion dollar public companies
01:07in the public market. And today we have companies like NVIDIA that are over four trillion dollars
01:12of market cap. So I think the market will be more than ready, willing and able to actually take
01:17those new names on and invest in those businesses. A dumb question, though. When you see these
01:21companies that have the revenue, have the profitability, cash flow positive and all this
01:26thing, I guess the question is, why do they need to go public? I mean, if they're already generating
01:29enough cash and they obviously clearly have a lot of private backing, is there a real need to go
01:34public? I think there is. And I think the need to go public is actually driven by, of all things,
01:39liquidity. And if you want liquidity to your investors, to your founders, to your employees,
01:45you can't really get it in the private markets because it's not deep enough. Just to put that in
01:50context, in just five business days, the private market takes in the public market trades transaction
01:59volume of a full year of private equity volumes. In other words, it takes five business days in the
02:07public market to generate the liquidity that the private market does in a full year. Wow, that's a
02:11great set. And I really thought about that. But it gets to this idea, too. And we just had the
02:15co-founder of Databricks on. And he kind of was getting to this idea of why we asked him why he
02:20was the state private for so long. And this idea that, you know, who wants to deal necessarily with
02:25the public markets and the quarterly earnings cycle and all the pressure from investors. You know,
02:29there's a transparency and a scrutiny that comes with that. And I do wonder if some of the founders
02:33that you work with, if they have that also sentiment that maybe that's a trade-off they don't want to
02:38make. They might have to, but do they want to? Well, I think it's a matter of not if, but when.
02:44And Ali is a great example of a company that I think will go public, but is choosing to go through
02:50its hyper growth phase in the private markets until it has predictability of earnings, predictability of
02:55revenue, and is at the point where it can say, yes, I can go public and I can actually benefit from
03:01being a public company with that liquidity, with that access to capital in the public markets,
03:06which is just not available on the private side.
03:08So you talk about predictability of earnings, predictability of revenue. It seems like those
03:13are things that you ideally would like to have in this IPO environment. That wasn't necessarily
03:18the case in 2020, 2021. Talk us through, you know, what you need to have at this point in time,
03:26if you are trying to go public in 2026 in order to get a sustainable, good reception here.
03:32So I think the key is this predictability of revenue and predictability of earnings.
03:36And I think that's true across no matter what sector you're in. And then when you start thinking
03:40about, okay, what do I need with respect to growth and profitability and other variables like that?
03:46I think it is somewhat sector specific, but I actually do think that the best thing you can do
03:51is balance that growth and profitability. And depending on your sector, maybe go for slightly more
03:56growth, don't need to be as profitable. And other sectors like consumer probably don't need quite as
04:01much growth, but need profitability. And that's really what the market needs today and more of
04:05a normalized market. If you think about where the market is at any given point in time, the market
04:09can either fluctuate towards growth at all costs, no attention towards profitability or profitability
04:16at all costs, no attention towards growth. And today we're kind of in the middle of that pendulum swing.
04:21Yeah, it's interesting. We were kind of having this conversation about Medline with Nora Melinda a little
04:27bit earlier that you think about Medline. It's been around since the 60s. You know, it's in healthcare supply.
04:33That's predictable. That I would imagine is a name that you need to have that sustainable, predictable sort of
04:40revenue metrics versus if it was, you know, somehow an AI data center play, for example.
04:46Yeah, I think it makes a big difference because the predictability of your revenue is obviously much more
04:52variable when you're growing, you know, in Ali's case at 55% year over year than something like a Medline
04:57that's growing at a different rate. So the predictability definitely factors in, as does the
05:02profitability, depending on how quickly you're growing. I am curious, though, too. I mean, one issue that some
05:07public investors have raised about these companies with high valuations in the private market is you talk
05:11about the hyper growth and all that. I mean, typically that hyper growth, at least in years past, that was kind of
05:17reserved for effectively the public markets to a certain extent. If all that hyper growth is taking place,
05:22in private, and these companies go public, I mean, beyond just, I don't know, cash generation and
05:29cash return, what else do they have to offer? And going public? Yeah, to the investors specifically.
05:34I think when they go public, they need to leave enough room on the table to continue to generate
05:38returns. So, for instance, if you saw some of these companies like SpaceX, it's rumored to be going out
05:44at, I think the latest number was $800 billion or maybe trillion dollar valuation. I think the belief
05:50has to be that the company will continue to appreciate from there, because if that's the
05:54maximum of the market cap of the business, obviously there is no incentive for a public
05:59investor to come in. But if you think you can generate a 2x because that one day you think
06:03SpaceX can grow from a trillion to $2 trillion in value, then there's a 2x return that the public
06:08market can benefit from.
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