“…the line between public and private markets continues to blur.”
Resetting the Table
// As we head into the new year I wanted to quickly reset the table. This is more for me to reassess and realign my processes and goals for this newsletter. Ultimately it’s a way for me to learn. And, hopefully, as a byproduct, I’ll meet like-minded people along the way. (Which has actually been happening, which is awesome.)
I know what I don’t know. And I know that I don’t know a lot. But I know where I’m going, but I don’t necessarily know how I’m going to get there.
I know that the ‘convergence’ of the private and public markets is imminent. I know the markets we see today will look completely different in the next decade. We’re at an inflection point where there will be enormous amounts of opportunity for all investors and entrepreneurs. To stack the deck in my favor, I’ll have to lean on both my private and public market experience. However, I’ll need to approach the future of these new markets with a ‘beginner’s mind.’
My plan is to continue to explore how these markets are evolving and analyze what the private market can learn from the public market and vice versa. I’ll focus on the new investors, the new markets, and the new technologies facilitating this change. But, at the same time, I’ll study the investors, markets, and technologies that got us where we are today to see if they offer any clues as to where we’re going.
Finally, as I compare and contrast the two markets I’ll inevitably miss the mark. I know at times I’ll be throwing darts in the dark, so please keep me in check.
// Quick housekeeping regarding the newsletter. Going forward, I’m going to pull the news and curation up and push my research, analysis, and diversions towards the bottom of the page.
Platform to Know
// Founders of Forge (formerly Equidate) Samvit Ramadurgam and Sohail Prasad announced their new company Destiny (D/XYZ). Not a lot of information yet, but it looks to be a platform for the public to access the private markets. From the website…
“But while we have thrived from the unparalleled growth and opportunity in the private market, the rest of the world has not. Instead, our friends and family stand outside, looking in as class divisions have widened, and a sense of inequality has become pervasive…As a society, we must make innovation accessible, because making sure that the next generation of innovators can have ownership of the future is the first step in inspiring them to take ownership of the future. Invest in access for everyone, invest in shared future, invest in progress. D/XYZ is a future for everyone. Own a piece of the future, today.”
Company to Know
// Sacra “your backchannel into the secondary markets” monitors and facilitates liquidity in late-stage VC.
A few weeks ago I talked about parallel (market) universes and how there is and will be an opportunity for ancillary services to fill in the private market gaps. One area is research. There needs to be a better way to help individuals navigate these new markets and also do the dirty work with due diligence and valuation. I’ve researched and written about a few early-stage companies, it’s yeoman’s work and takes a ton of time. It’s not only a big task to dig for information that isn’t easily accessible but also to tell the story as to what that data means. What Sacra is doing is smart (and valuable.)
// Co-founder Conor Gleeson also writes at The Cap Table.
Listen
// Carta recently started a new podcast, The First Close, New Voices of Ventures, with Jessica Straus. The first episode is a conversation with Kate Shillo Beardsley of Hannah Grey. Straus and Beardsley talk about the genesis of Hannah Grey and also their “proactive approach to liquidity by turning paper gains into cash returns with a strategic playbook they call ‘modern liquidity management.’”
Here’s my Bitcast clip of Beardsley talking about the “zeitgeist starting to take hold and private and public markets are just becoming so much more similar in their processes.”
Private & Public News From the Week
// Private
Phil Haslett of EquityZen talks to YahooFinance about 2021 IPO’s.
Tiger Global is Raising a New $3.75B Venture Fund (TechCrunch)
Stacklet Raises $18M For Its Cloud Governance Platform Led by Addition (TechCrunch)
Modern Treasury Raises $38M Led by Altimeter (Forbes)
Bond Platform Trumid’s Value Jumps 40% in DST-Led Funding Round (Bloomberg)
Cockroach Labs Raises $160M At $2B Valuation (Crunchbase)
Equity Management Software Company Certent Acquired By Insight Software (PR)
// Public
Walmart Creates Fintech Partnership With Ribbit Capital (WSJ)
Cathie Wood’s Vision for Space ETF Sends Industry Soaring (Bloomberg)
Goldman Managers Say Buy U.S. Stocks Despite Dot-Com Valuations (Bloomberg)
SPAC Mania Gives Early Investors Steady Returns With Little Risk (WSJ)
Quants With $2 Trillion Hit by Correlations at 20-Year High (Bloomberg)
Howard Marks Says Fed Moves Have Had Coercive Effect on Markets (Bloomberg)
// Longer Reads
Marc Rubenstein writes about The Private Equity Firms’ Private Equity Firm.
Matt Levine’s recent, IPOs Keep Going Up, is the best article I’ve read explaining all the sides of the IPO debate. “Valuation has nothing to do with it; it is just a law of physics in this ‘stocks only go up’ market.”
Great (long) Twitter thread from Frank Rotman of QED on a company’s path to IPO and the private/public dynamic.
Another good one from Joseph Pompliano, The NFL’s $100M Venture Fund.
Benchmarks: Demystifying VC co-investing with data from >5,000 SPVs from Welly Sculley.
From a few months ago, The Evolution of Cloud from Jerry Chen at Greylock.
CEO and founder of Roblox, David Baszucki, writes The Metaverse is Coming.
Poker and the Markets
// When I started as an options trader, ‘way back when,’ part of the education process was to learn poker. The reason why you were taught the game was not only to think about probabilities and expected value but also the behavioral aspect of trading. You need to know, or at least estimate, what hand your competition is holding. How is the trader positioned next to you? What investment bank is holding inventory and when do they have to roll their position to the next expiration?
Susquehanna actually is famous for their education program and specifically their poker players. As a side note, Susquehanna made a boatload of money in the options market and eventually got into the early-stage market in 2006 and started a growth equity fund. Here’s an article from last year on how they ‘hit the jackpot with TikTok.’ But I digress.
When thinking about the private market some of the same rules apply. You have to ‘think in bets’ and probabilities. What are the chances this investment returns 5x or even 10x? What information do I have that others don’t? Also, you have to respect the firms that have a bigger stack of chips. We know SoftBank trades “loose,” so adjust your strategy accordingly.
I started thinking about this because a smart trader I know gave me the heads up on Annie Duke’s recent books and subsequent podcast tour. (Thank you, Mr. Holiday.) She wrote ‘Thinking in Bets’ a couple of years ago and recently released her latest book ‘How to Decide.’ It’s a great framework for decision making, especially when it comes to investing.
// Here’s a podcast with Daniel Pink where she talks about “thinking in bets.”
A couple of takeaways from that conversation:
Poker, as compared to chess, is a better model for life.
What happens when you say “want to bet?”
Data
// I wrote about Julian Klymochko right as the SPAC craze started to take off. He’s a must follow if you’re playing in the space.
Data x2
// Pulled this from Benedict Evans's newsletter, Being an Amazon Seller in 2020; Year in Review. I was curious as investments in companies like Thrasio have been trending in the VC space. It’s an interesting look into an Amazon seller’s thinking and also the e-commerce trends through this past year.
// Thanks.
This newsletter is created and authored by Bryce Tolman and is published and provided for informational purposes only. The information in the newsletter constitutes the Author’s own opinions. None of the information contained in the newsletter constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You understand that the Author is not advising, and will not advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the information contained in the newsletter may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.