E156: Ivy League antisemitism, macro, SaaS recovery, Gemini, Figma deal delay + big Friedberg update
Dec 8, 2023
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The conversation dives into the rising concerns of antisemitism within Ivy League universities, examining the complex interplay between free speech and student safety. They also explore the state of the economy, revealing a disconnect between consumer sentiment and reality. Exciting news around Google's Gemini and Adobe's stalled Figma acquisition highlights the shifting landscape of tech mergers. With signs of recovery in the SaaS sector, they discuss the changing dynamics of leadership and innovation in a capital-rich environment.
SaaS companies show signs of stabilization and growth, indicating a potential rebound in software revenues.
Freeburg's decision to become the CEO of a company in his portfolio reflects his belief in the transformative potential of gene editing in agriculture.
There is a scarcity of ambitious founders willing to take on high-risk ventures, highlighting the need for experienced leaders.
Investing in ambitious projects and finding founders with expertise to tackle them is crucial for impactful, transformative ventures.
Deep dives
Private Company Market and Stabilization in SaaS
After a period of recession in the software space, SaaS companies are showing signs of stabilization and growth. Net new annual recurring revenue (ARR) experienced positive growth in Q3 after four quarters of negative growth. This indicates a potential rebound in software revenues. However, valuations in the private market may not fully recover as they were before the recession. Private equity investors are buying companies for a fraction of previous valuations, between three to five times ARR, indicating a more cautious market. The future of valuations in the public market remains uncertain, even if interest rates decrease. Overall, the software industry is on a positive trajectory, but valuations may not reach previous heights.
Gene Editing and Agriculture Moonshot
Freeburg has made the decision to become the CEO of a company in his portfolio that focuses on gene editing in agriculture. The company has made significant breakthroughs, and Freeburg believes in the transformative potential of using gene editing to improve agricultural productivity. By making specific edits to plant genes, crop yields can be increased, resulting in more food produced with less resources. Freeburg's decision to go all-in on this moonshot project reflects his belief in its potential and the desire to have a direct impact on its success.
The Need for Ambitious Founders
There is an abundance of capital in the startup ecosystem, but a scarcity of truly ambitious founders who are willing to take on challenging, high-risk ventures. Freeburg's decision to become a CEO in one of his portfolio companies exemplifies the need for experienced and driven individuals to lead and execute on difficult projects. This decision reflects the commitment and willingness to pilot a high-speed, high-risk venture amidst a landscape dominated by easier and less ambitious endeavors.
Allocation of Capital in Silicon Valley
There has been criticism in Silicon Valley for focusing too much on easy and low-risk ventures, rather than tackling the difficult, low-probability projects that require substantial capital. Freeburg's decision to take on a challenging project aligns with the recognition that capital should be allocated towards impactful, transformative ventures. This shift towards more ambitious projects emphasizes the importance of investing in the hard problems and finding founders with the drive and expertise to tackle them.
Regulatory Challenges for Difficult Technology Development in Silicon Valley
One of the main challenges in Silicon Valley is finding the right talent with the capabilities and experience to take on difficult and low probability projects. Many successful individuals opt for easy money by sticking to software development, while others are hesitant to venture into challenging projects. The dearth of talent willing to take on high-risk ventures is a significant obstacle for funding and progressing difficult technologies.
The Best Time to Start a New Company and the Importance of Experience and Management
There is an abundance of talented individuals starting new companies, but there seems to be a lack of experience and managerial skills among many of them. While starting a new company can be exciting, it is equally crucial to join an existing organization and learn how to be a good manager. The current market provides opportunities for excellent builders to become valuable contributors in existing companies. Ideally, startups should have a combination of experienced builders and co-founders, along with great ideas, to achieve success.
The Impact of AI and Gemini Launch on the Market and Business Strategies
Google's Gemini launch, a new chat GPT model, showcases impressive performance and advancements in AI. With Google's extensive access to data, their models have surpassed GPT-4 in various benchmarks. This launch signifies Google's commitment to competing in the AI market and their willingness to disrupt themselves. While some speculate about the potential revenue streams and implications, it is clear that AI will continue to replace traditional search methods, leading to new opportunities for monetization and advancements in AI capabilities.
