Podcast Notes Playlist: Business

• It’s an end of an era for Big Tech: they’re transitioning from a phase of unfettered growth into their next phase where they must learn to operate like a cash-cow business 
• When the growth engines of Apple and Google slow, other tech companies don’t have to offer competitive compensation, extra benefits, and extravagant workplace environments to compete for talent as they once did 
• “Nobody is talking about a soft landing anymore. In fact, I think we’re all wondering who is flying the plane.” – David Sacks on the Federal Reserve 
• Financial markets have always had a “Fed Put”, which is a level of pain that is reached that forces the Federal Reserve to step into the market and be a buyer of last resort 
• “The investments that one makes in this period will probably be the best for many many years to come because they’ll have the most asymmetric upside.” – Chamath Palihapitiya 
• The Federal Reserve, in conjunction with the last two administrations, printed $10 trillion over the last couple of years which has caused inflation to soar 
• There is $300T of global debt; if interest rates increase from 0% to 5%, that’s an increase of $15T in annual debt service, which is 18% of global GDP 
  • Chamath sympathizes with Friedberg’s concerns over global debt but thinks perpetual bailouts will continue to negate the consequences of rising debt levels 
• The rate-setting process should leverage more of today’s technology; humans setting the rate in quarter-percent increments every couple of weeks seems archaic to Friedberg 
• “If you have these irrational central bankers that are willing to constantly bail people out, you will never get a high-functioning government because the policy is irrelevant.”– Chamath Palihapitiya 
• Europe slept-walked its way into WWI in 1914, which is something David Sacks thinks the United States could be doing today 
• David’s primary gripe inShould America Go All In On Ukraine is the U.S. media’s narrative that “Putin is bluffing”; we cannot know that he is definitely bluffing, and the stakes of being wrong are too high  
• Wealthy and powerful people in the U.S. might begin to put political pressure on their representatives to resolve the Russia-Ukraine issue because of the strain the conflict has placed on the markets and their portfolios 
• “I think that the markets would have reacted much much more negatively to a nuclear incident three months ago than now, and may not even react as much as we think it would three months from now.” – Chamath Palihapitiya on Sept. 30, 2022

0:00 Bestie intros!

1:36 Big tech starts making cuts, plus what this means for the broader economy and startups

31:09 Global debt numbers, Fed incompetency

54:06 RIP Coolio

1:00:30 Russia / Ukraine update

Follow the besties:

https://twitter.com/chamath

https://linktr.ee/calacanis

https://twitter.com/DavidSacks

https://twitter.com/friedberg

Follow the pod:

https://twitter.com/theallinpod

https://linktr.ee/allinpodcast

Intro Music Credit:

https://rb.gy/tppkzl

https://twitter.com/yung_spielburg

Intro Video Credit:

https://twitter.com/TheZachEffect

Referenced in the show:

https://www.bloomberg.com/news/articles/2022-09-29/meta-announces-hiring-freeze-warns-employees-of-restructuring

https://www.google.com/finance/quote/META:NASDAQ

https://www.google.com/finance/quote/AAPL:NASDAQ

https://www.google.com/finance/quote/GOOG:NASDAQ

https://www.cnbc.com/2022/09/28/stanley-druckenmiller-sees-hard-landing-in-2023-with-a-possible-deeper-recession-than-many-expect.html

https://www.google.com/finance/quote/NFLX:NASDAQ

https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/if-youre-going-to-build-something-from-scratch-this-might-be-as-good-a-time-as-in-a-decade

https://www.forbes.com/sites/jonathanponciano/2021/05/11/billionaire-investor-druckenmiller-blasts-feds-radical-stimulus-policy-warns-it-risks-stock-bubble-blowing-up

https://www.cnbc.com/2022/09/28/cnbc-transcript-duquesne-family-office-chairman-ceo-stanley-druckenmiller-speaks-with-cnbcs-joe-kernen-live-during-the-cnbc-delivering-alpha-conference-today.html

https://www.xe.com/currencycharts/?from=GBP&to=USD&view=1M

https://www.bls.gov/charts/job-openings-and-labor-turnover/unemp-per-job-opening.htm

https://fred.stlouisfed.org/series/JTSJOL

https://www.wsj.com/articles/a-nation-of-quitters-great-enabling-exodus-working-age-men-parents-stimulus-covid-quit-retirement-bohemian-videogame-11664112795

https://goop.com/subscribe

https://www.reuters.com/world/putin-host-kremlin-ceremony-annexing-parts-ukraine-2022-09-29

https://www.reuters.com/world/europe/zelenskiy-says-ukraine-applying-nato-membership-2022-09-30

https://www.reuters.com/world/europe/qa-nord-stream-gas-sabotage-whos-being-blamed-why-2022-09-30

https://www.aa.com.tr/en/economy/former-polish-foreign-minister-thanks-us-for-damaging-nord-stream-pipeline/2696530

https://www.theamericanconservative.com/should-america-go-all-in-on-ukraine

• Here is a summary breakdown of expected returns for alternative asset classes:

The type of assets which usually come to mind when considering investments are stocks, bonds, or cash, but what are the alternatives? And what kind of returns do alternative asset classes offer? In today’s episode, we delve into the returns which can be expected from alternative asset classes such as private equity, venture capital, angel investing, private credit, hedge funds, direct real estate, and cryptocurrencies. Hear an in-depth analysis based on empirical studies and the expertise of your hosts, Ben and Cameron, to discover whether there is any merit to alternative asset classes as investments. We unpack the extra layer of complexity associated with predicting returns on alternative assets, how to approach calculating returns, and why the associated fees are an essential consideration. We also hear details about an interesting conference Cameron recently attended and briefly recap cryptocurrencies as an investment. You’ll also hear our conversation with our 22 in 22 reading challenge guest David Senra about his reading habits, the books that most inspire him, and his advice for people who want to read more.

Key Points From This Episode:

• Outline of today’s main topic: expected returns for alternative asset classes. (0:01:51)
• Why predicting returns of alternative asset classes has an extra layer of complexity. (0:03:18)
• How to approach estimating the returns of private equity, specifically buyouts. (0:05:04)
• We unpack historical data regarding the returns of private equity. (0:07:35)
• Calculating the returns on venture capital and reasons to be cautious about it as an asset class. (0:16:35)
• The distribution of returns from venture capital based on the market numbers. (0:20:09)
• Learn what angel investing is and its associated returns. (0:20:54)
• What returns on angel investing are most dependent on and why. (0:22:21)
• The different types and the associated returns. (0:25:23)
• Hear about the fees associated with private credit. (0:27:42)
• We unravel the concept of hedge funds, the associated fees, and expected returns. (0:29:29)
• A limiting factor on hedge funds: capacity constraints. (0:33:38)
• The takeaway regarding private real estate investments. (0:36:25)
• How private real estate is valued as an asset class. (0:37:48)
• Cryptocurrencies and the returns to be expected. (0:39:34)
• We discuss some of the key takeaways from today’s main topic. (0:43:30)
• We follow up on a previous topic we covered: financial literacy. (0:45:10)
• Find out about an interesting conference that Cameron recently attended. (0:48:46)
• Hear about the recent reviews we have received about the podcast. (0:57:58)
• We introduce our 22 and 22 reading challenge guest, David Senra. (01:00:15)
• Where David’s passion for reading about founders originates from. (01:02:25)
• David shares details about his reading habits. (01:05:57)
• His approach to finding founders that he wants to read about. (01:08:49)
• David’s approach to note taking while reading a book. (01:11:07)
• We learn about the stories that have impacted David the most. (01:13:53)
• He explains the benefits of reading a book for a second time. (01:17:11)
• Books about founders that he thinks everyone should read. (01:19:20)
• David’s observation of the role of luck in a founder’s success story. (01:23:19)
• Advice he has for people who want to read more. (01:29:33)

Links From Today’s Episode:

AQR Capital Management — https://www.aqr.com/

BlackRock Asset Management — https://www.blackrock.com

Bank of America — https://www.bankofamerica.com/

‘The risk and return of venture capital’ — https://www.sciencedirect.com/science/article/pii/S0304405X04001564

‘Performance of Private Credit Funds: A First Look' — https://jai.pm-research.com/content/21/2/31.short

‘Do Hedge Funds Hedge?’ — https://jpm.pm-research.com/content/28/1/6.short

‘The Performance of Hedge Fund Performance Fees’ — https://www.nber.org/papers/w27454

‘Higher risk, lower returns: What hedge fund investors really earn’ — https://www.sciencedirect.com/science/article/abs/pii/S0304405X1100016X

‘Another Look at Private Real Estate Returns by Strategy’ — https://jpm.pm-research.com/content/45/7/95/tab-pdf-trialist

'The Characteristics and Portfolio Behavior of Bitcoin Investors: Evidence from Indirect Cryptocurrency Investments' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3501549

‘Beliefs and the Disposition Effect’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3516567

‘Once Bitten, Twice Shy: The Power of Personal Experiences in Risk Taking’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2506627

S&P Global FinLit Survey — https://gflec.org/initiatives/sp-global-finlit-survey/

Future Proof Conference — https://futureproof.advisorcircle.com/

Invest Like the Best Podcast — https://investlikethebest.libsyn.com/

David Senra on LinkedIn — https://www.linkedin.com/in/david-senra-278843236/

David Senra on Twitter — https://twitter.com/FoundersPodcast?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor

David Senra on Facebook — https://www.facebook.com/david.senra.1

The Founders Podcast — https://founders.simplecast.com/

A Triumph of Genius — https://www.amazon.com/Triumph-Genius-Edwin-Polaroid-Patent/dp/1627227695

Cable Cowboy — https://www.amazon.com/Cable-Cowboy-Malone-Modern-Business/

Titan — https://www.amazon.com/Rare-Chernow-Titan-Life-Rockefeller/

A Man for All Markets — https://www.amazon.com/Man-All-Markets-Street-Dealer/

Against the Odds — https://www.amazon.com/Against-Odds/

Estee: A Success Story — https://www.amazon.com/Estee-Success-Story-Lauder/

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/

Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/?hl=en

Rational Reminder on YouTube — https://www.youtube.com/channel/
Ben Felix — https://www.pwlcapital.com/author/benjamin-felix/

Ben on Twitter — https://twitter.com/benjaminwfelix

Ben on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/

Cameron on Twitter — https://twitter.com/CameronPassmore

Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

• When scaling a company: “You have to be constantly evolving your learning pattern. What got you here, won’t get you there.”– Reid Hoffman
  • Examples: how you organize your management (work vs management duties in each role), go-to-market strategy (how to get new sales), adjusting the cadence of hiring (promoting from within vs outside org)
  • This applies to our lives too, not just business!
• Want to be a better leader?“Root for better angels on people”– Shane Parrish quoting Reid Hoffman
  • Make everyone the hero of their own story—people often don’t realize their own potential to make the world a better place
• It’s timely and costly not to have a process for making fast decisions, here’s how to improve (continue reading for more detailed instructions):
  • Be an explicit leaner
  • Learn your set of decision-guiding questions
  • Identify irreversible consequences
• You should never try to optimize opportunity cost to be 100% efficient
  • Some of your decisions will seem like an opportunity cost upfront but turn out to be one of your most valuable experiences
  • You must leave yourself some room for exploration and serendipity

Few figures have shaped the way we think about business over the past 20 years more than Reid Hoffman. The co-founder of LinkedIn and former PayPal executive is also a wildly successful venture capitalist, author and podcaster, but he didn’t get to his place as a Silicon Valley giant without making plenty of crucial decisions. On this episode Hoffman discusses lessons learned from decades spent as a hands-on operator and investor, including what he knows about scaling that others miss, the three principles of decision making, how to constantly evolve your learning pattern, and why the best leaders adapt to the crisis at hand.

Hoffman is perhaps best known for co-founding the professional networking site LinkedIn, which he started in 2003 and later sold for a reported $26.2 billion to Microsoft in 2016. Prior to founding LinkedIn, Hoffman was one of the first employees at PayPal, where he served as an executive vice president. He is also a partner at the venture capital firm Greylock Partners, an investor in Airbnb, the author of a series of successful business books including Masters of Scale, and the host of the podcast of the same name.

Want to hear the entire episode with Reid Hoffman? Become a member today! Members get early access, hand-edited transcripts, member-only episodes, and so much more.

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Follow Shane on Twitter at: https://twitter.com/ShaneAParrish

Brian is the Co-founder and CEO of Coinbase, a leading cryptocurrency company on a mission to increase economic freedom in the world. He is also a Co-founder of NewLimit, a biotechnology company working to radically extend human healthspan, and ResearchHub, which is aiming to accelerate the pace of scientific research. In 2018, Brian launched a nonprofit called GiveCrypto.org and signed the Giving Pledge, committing to give the majority of his wealth to charitable causes throughout his lifetime. Follow Brian on Twitter @brian_armstrong.

[2:18] - Brian's origin story

[9:33] - Reflections on his early career and how it prepared him to start Coinbase

[16:02] - Coinbase’s mission to increase economic freedom in the world, and why economic freedom is important

[23:34] - The challenges of building through crypto's hype cycles and scaling Coinbase at a rapid pace

[31:08] - An introduction to The RAPID Decision-Making Framework

[35:36] - How years of experience with remote employees helped Coinbase become a remote-first company

[45:24] - Repeatable innovation and the rationale for Coinbase’s 70/20/10 strategy for resource allocation

[54:34] - Coinbase’s contrarian decision to work with regulators from the beginning, and how it is increasingly leaning in on decentralization

[1:03:38] - Extending the human healthspan, an overview of NewLimit, and epigenetic reprogramming

[1:15:25] - Prioritizing "new media" over mainstream media

[1:21:12] - How ResearchHub can enable more open science and help build a bridge from scientific research to commercial products

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