Venture Capital And Google ...The Disdain Is Palpable and Social Leverage is Growing

Good morning from Coronado…and HAPPY MOTHER’S DAY!

In our house everyday is father’s day because of Ellen.

Ellen and I are here at at our home for the summer. ‘Porch’ Howie is the best Howie.

Max and his girlfriend Amy are here with us and we are getting ready for Max’s graduation this week and also for a big family trip to Japan. We have a full itinerary but if you have a fave place in Kyoto or Tokyo that you think we must visit, hit me up.

It has been 10 days since our first Stocktwits Cashtag awards. Max and Keith who run Stocktwits video put together a 24 minute ‘clean’, ‘safe for work’ edit of the night which is great. You can watch it here…

Once again, here is my 30 minute interview with Vlad about the future of Ribinhood

I am seeing some of the pictures for the first time. It was such a fun night. Our Social Leverage partner Gary could not make it across country nor could Kordell (VP Finance and Compliance), but we got the rest of a team in a photo along with Etoro founder Yoni on the far left).

Ethan Berk on the far right joined a few years back as my chief of staff and has become a full time analyst while still finishing college at ASU. Ethan is helping turn our firm inside out (ok mostly me as the others don’t need help) learning/adopting AI. On my right is our new venture partner Evan Rapoport. Evan started SmartX which is a well know company/product in the financial advisor industry. My founding partner Tom on my left and my partner Matt Ober to Tom’s right.

Long story short, Social Leverage is growing and getting much younger and very PRO hair.

Onward…

In my opinion…we have reached the point where there is ‘too much disdain’ for venture investing, and that means seed investing too.

How did we get here?

If you read me, you know I love seed investing but the ZIRP, Softbank, Tiger era that began in 2016 has probably changed the venture industry maybe for good. Despite the weak returns dogging venture the last 10 years, the money has not stopped pouring into the venture industry through the biggest funds. We did not rid ourselves of the Softbanks and the Tigers, but they just became ‘oligarchier’ the last few years as Silicon Valley merged with the White House.

Too big, too sloppy is the easiest way for me to package my description/disdain for this new venture era. The big funds can’t afford to miss any new bright shiny object and their LP’s are ok with this.

These changes at the top/large funds has bled into all stages of venture and even public markets.

Cash on cash return have slowed to the point where podcasters/grifters like Chamath, who failed at building a successful venture firm, now point their finger at the industry. Chamath ‘the investor’ is not wrong. He is sharing all the frustrations his own LP’s shared with him that forced him out of the business he now points fingers at. Chamath the investor is mad that he made such bad venture/private equity investments because he was eating and drinking the same Kool-aid he was shilling…momentum investing disguised as venture investing.

Why now so much vocal disdain for venture investing?

Everyone with a hint of expertise wants to be the Joe Rogan of their expertise/industry which means they all visit one anothers podcast and whip each other into a frenzy with misleading data and drama. That is the game and we can’t change the game.

The world is different if you ‘recognize’ the game. I have been covering this topic and how Social Leverage sees this new landscape a lot over the last year.

At Social Leverage we have battled through the ZIRP, Softbank overfunding era and the rising rate era and will thrive in this new ‘venture oligarch’ era by adjusting once again how we invest for ourselves and our LP’s.

Recognizing the game means that Social Leverage continues to focus on founders with incredible domain expertise and structuring cap tables at reasonable prices. Reasonable prices means optionality for founders and investors. Reasonable prices means we have to hunt off the beaten paths which is a feature not a bug in this era of mobility and AI. We have long assumed that later stage money will wreck cap tables and have built a network of laters stage investors that we like to work with that respect how we like to work and how we think about the seed and venture ‘math’.

So, like I said in the title to this post…we are confident that ‘fading’ the disdain for venture capital and seed stage investing feels right.

Next up…Google.

The podcasters and analysts have about given up on Google.

I will keep it short by saying I bought a little more $GOOG ( ▼ 0.88% ) this week.

My friend Shay who is a young investor and does the Stocktwits Morning Rip shows live with Katie had a good summary of all the reasons he thinks the Google disdain is overdone. He uses ‘math’ which of course for valuing companies is subjective, but when great companies are being tossed aside, math helps bring things in perspective. Click on the link for the full read.

Have a great Sunday.