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All In Podcast Episode 96 Notes September 16 2022

September 16 2022


  • Sacks calls off MAGA brigade for JCal 🙂
  • Adobe acquires Figma for $20B
    • Largest private company acquisition in history

    • It was valued at $10.1B last year

    • So doubled valuation in a year from crazy market previous year

    • Market hated the deal - Adobe lost entire purchase price in their lost stock price

    • Adobe is paying 50 times instead of 8-10 times normal SaaS company

    • But Figma is growing like crazy



    • Founded 2011-2012 - very long wilderness period - private beta 2015, public launch 2016 - monetization turned on 2017 - so first 5 years no money for a 10 year old company - turned on enterprise in 2019 - these are scuttlebutt numbers

    • This ARR ramp is phenomenal

    • Triple Triple Double Double Double - first 5 years

    • Figma is doing amazing - so not sure that its a bad deal for Adobe - they understand this market - they’re in the same market

    • Adobe paid 12% dilution of their company to acquire a potential competitor

    • $10B cash, $10B stock at the point the deal was announced

    • Huge win for Figma CEO, investors, employees - classic Silicon Valley outcome - keeps us going!

    • Adobe didn’t give so much stock that a shareholder vote would happen

    • With stock price drop, its almost a $30B-$40B market cap hit

    • Market is wondering if existing cash flows of Adobe are under too much pressure

    • Could be a great story for Adobe - their single player mode product growing at 12% is now multiplayer mode that doubles - also desktop goes to cloud

    • Adobe was charging $1000/year for creative cloud, now $25/month

    • Shantanu is one of the best CEOs (since 2007 masterful playbook) of the last few decades

    • Adobe could not afford a free cash flow hit in public markets - coz Figma has a free tier forever

    • So they did a one time 12% stock dilution hit

    • This is classic innovator’s dilemma - beyond a stage, you go from growth investors to value investors

      • They want dividends and stock buy backs
    • 2 kinds of SaaS companies

      • 1 thing - Workday
      • Everything - Microsoft
        • Can’t compete with Microsoft if you’re Slack
      • Takeaway for entrepreneur - bucket competitors into former (Adobe is that style) vs latter (Microsoft)
      • Compete against Adobe - monolithic vs Microsoft (bundle)
    • Microsoft is unique in their ability to bundle

      • Have Office
      • Active Directory
      • Outlook
    • If they see a new competitor they’ll clone the product and give it away for free and pull the rug out from under the competitors

    • They get you hooked on the bundle and then raise the price of the bundle

    • Its anti-competitive

    • Free until they drive out their competitor (runs out of business or can’t profitably make investments required to grow)

    • You don’t hear a word about this from Lina Khan or Washington except Social media

    • Google acquisition of YouTube is greatest managed of all time

    • Canva should go public instead of selling because they’ll have an easier time competing against their opponents

    • Its clear that anti-trust authorities in Washington have just a list of companies that they want to punish punitively - instead of stopping competition - their lens is only power

    • Operating Systems monopoly is bad - Apple iOS, Google Android and Amazon white-labeling products

    • Its clear Lina Khan is political - targeting Facebook due to political implications - not enforcing her own mandate of lessening future competition

    • This deal will close because it doesn’t intrude on the political hot buttons of Washington

    • Microsoft is a great company and great acquirer

    • But Yammer disappeared after acquisition because their promotions ended because there was no incentive for sales org because its bundled and there’s no price - so Slack came along and won

    • Promise to founder that you’ll be left alone lasts 2 years - golden handcuffs last that long - once you’re serious about integration, you lose your eyes and ears when you’re not actively selling into the market

  • Google acquisition of YouTube
    • Google just bought the skeleton of a growth engine and then rebuilt everything with their own people - backend, frontend, etc

    • They made a conviction bet into that business - invested billions of dollars for years before they started making tons of money later

      • They were able to do so because of their extraordinary growth rate even while they were doing this
      • Also dual voting for Larry and Sergey
    • Now they have a $300B-$500B business

    • Its a one-off acquirer and one-off acquisition

    • Google acquired a flywheel

    • Viacom CEO yelled at Google execs for stealing money off their content

    • Maybe only MSFT could have built the technology that Google developed to do automatic takedowns

    • Salar Kamangar #9 had amazing job at Google YouTube - him and Susan W were first 30 employees at Google - did a great job

    • Figma growth rate is awesome - cool story of how VC tracks ARR - hockey stick took so long to get going



    • They kept grinding for 5 years

    • Grit is huge for entrepreneurial success

    • 2013-2014-2015 was hard to get a Series A, so easy for a young person to quit and go to Google

    • Enterprise SaaS you need ultimate customer focus - which this CEO had

  • Friedberg TPB SPAC
    • For 30 years we had reduced global undernourished to 600M, but now its spiked back up to 800M
    • Brazil and Latin America are largest ag export market to the world
      • Farmers there lack technology adoption
    • So they are partnering with local ag retailers to drive up productivity in the region
    • Agronomists are technical sales people - understand science and technology of farming - work with farmers - the retailer can influence farmer when new technology comes to market
    • Big ag industrial companies - don’t sell direct - have to go through retailers
    • US retailers make a lot of money - very advanced - this sophisticated behavior is concentrated in the US - need to expand this around the world
    • $1.2B valuation
  • Title 6 lawsuit filed against Pfizer
    • If you take federal money you can’t discriminate
    • Happening 1 month before Affirmative Action case against Harvard doing race based admissions
    • 2022
      • Roe v Wade
      • Open carry
      • Affirmative action repeal
      • Huge change in 2022
      • Conservatives are so organized, progressives are all over the place
    • Karl Rove wrote this all up in 2000s - they will raise money and go after all these issues - they are going to do it
    • Now gay marriage is going to be put to vote?
      • Smart play for republicans is to just vote for it
        • Don’t let the democrats change the issue from the economy that is out of control
      • Democrats want to fund raise off of it
  • Fedex stock drop
    • CEO said yes there’s a recession
    • Probably new CEO reset expectations
    • They have reduced their outlook
    • 3 things going against them
      • Amazon continues to build out local delivery infrastructure at great pace - they already have 25% market share
        • Fedex has seen market share drop 8-9 years straight
        • Vertically integrated player (Amazon) is putting a lot of pressure on them
      • People do stuff digitally now so don’t ship stuff
        • Docusign vs letters
      • Recession is causing fewer orders
  • Recession
    • Inflation report is much worse than people were expecting - its 8.3% instead of 8% (worst day in stock market since June lows)
    • Stagflation - high interest rates and high inflation
    • Biden is the first US president that says recession is necessary to keep Russia out of Ukraine
    • Hard to say recession is now here - retail sales are very high
    • Things might be good now but trajectory is bad
    • American Generals were taking credit for this Ukraine counter-offensive (they never did this during the Cold War) - they are giving them intelligence and weapons and hand correcting the battle plans, re-writing their plans for them - doing everything except pulling triggers - this seems like playing with fire
    • Reuters report says Putin rejected Ukraine peace deal from aide - happened as soon as war started
      • Offer came only after invasion started
      • Not only did it happen too late but it also didn’t come from the Americans
      • Russian position on this - they gave ultimatum in December 2021 - they wanted written guarantee from Washington
    • UN thinks that 345M people are at risk of starvation - so food crisis is real
    • Corn is at record high prices
    • Famine definition in UN is <1200 cal/day for a year
    • We might be retracing our way all the way back 30 years to hunger crisis
    • 10s - 100s of millions of people will starve
    • If Putin can’t suffer loss of this war we can’t push him into a corner and not give him an off-ramp
    • US needs to be thinking of “what is in our interest” - identifying so much with Ukrainians that losing sight of American interests
    • If America is risking war with nuclear powered state there better be a vital interest at stake
    • Rates will go 4.5-5% - Stan Druckenmiller is right - everyone who said inflation was transitory are wrong
    • High rates will stay longer than people think - impact into 2024-2025 will not be great
    • Putin has used 3rd parties and spartan troops in central Russia so its obscuring impact on main Russian population, else risk wrath of Russian mothers who are very well organized - so he is quite good at managing perception inside Russia - so war can go on for much longer than people think
  • Sacks premiering new film on Salvador Dali with promotion from OpenAI GPT-3 DALL-E 🙂

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