The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Why the IPO Market is not Closed | Why Revenue Multiples are BS and Founders Need to Change | Advice From Jack Ma, Jamie Dimon and Evan Spiegel | Lessons from Taking Snap & Alibaba Public with Imran Khan

Aug 26, 2024

Imran Khan, Founder and Chief Investment Officer of Proem Asset Management and former Chief Strategy Officer at Snap Inc., shares his expertise on the IPO market and startup valuations. He discusses why revenue multiples are misleading and emphasizes the need for founders to adapt their strategies. Imran also critiques the current M&A landscape and how regulatory pressures hinder deal-making. With insights drawn from his experience with Alibaba and Snap, he provides invaluable advice about sustainability and investor expectations in today's market.

01:04:38

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Imran Khan

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Quick takeaways

The current IPO market presents opportunities for companies willing to realign their valuation expectations with public market realities.

A shift from public to private markets has created challenges in operational talent, hindering the growth of innovative ideas in startups.

Founders should prioritize building solid cash flow-generating businesses over worrying about initial valuations to ensure sustainable long-term value.

Deep dives

Challenges in the IPO Market

The current IPO market is not entirely closed; rather, companies hesitate to go public due to inflated valuation expectations. Many firms raised significant capital at unsustainable valuations during the low interest rates of 2020 and 2021, leading to a mismatch with public market realities. While public markets may offer valuations based on cash flow that are more aligned with realistic earnings multiples, many private companies are still clinging to overly optimistic expectations. This disconnect results in missed opportunities for public offerings as founders fail to reset their valuation outlook based on changing market conditions.

Hire Missionaries, Not Mercenaries

00:50

Innovation's True Measure is Productivity

01:10

Predictability is Key to Investment

01:10

High Margins Drive Business Value

01:21

Intro

4min

Navigating the IPO Landscape

9min

Evaluating Company Valuations: IPOs and Market Dynamics

23min

Political Influence on Market Health and Regulatory Concerns

2min

Innovation Barriers and AI's Economic Potential

5min

Navigating Alibaba's IPO Journey

18min

Insights on IPO Trends and the Importance of Timely Information

3min

Imran Khan is the OG of IPOs having taken some of the biggest companies public including Alibaba, Snap, Box, Weibo and more. Today, Imran is the founder and Chief Investment Officer of Proem Asset Management. Prior to co-founding Proem, Imran served as Snap Inc.’s Chief Strategy Officer. Under his leadership, Snap’s annual revenue run rate increased to $1.6 billion from zero in less than four years. Previously, Imran was a Managing Director and Head of Global Internet Investment Banking at Credit Suisse where he advised on more than $45 billion-worth of Internet M&A and financing transactions.

In Today's Episode with Imran Khan We Discuss:

1. The IPO Market: When Does it Open:

How does Imran assess the state of the IPO market today?
Can companies really go out with $100-$200M in revenue?
Will we see revenue multiples reflate? Can venture continue as an asset class if they do not?
When does Imran expect the IPO market to really open?

2. Is M&A F******:

How does Imran assess the state of the M&A market today?
How do founders need to change how they think about M&A? Why are they to blame for the lack of M&A activity we have today?
To what extent can we blame Lina Khan for the lack of M&A?
Why would a company go do an M&A process today when it is unlikely to be approved by the SEC?
Why does Imran believe in the case of Wiz, it was a mistake for the company not to do the M&A?

3. AI's $600BN Question: Capex Spend:

How does Imran analyse the insane capex spend we are seeing from Meta, Google and Amazon?
How does Zuck not having his cash cow as the cloud business change how he can act?
How does this compare to Google's capex spend 20 years ago? What can we learn from that?

4. Going Public: The Process, The Players and Jack Ma & Jamie Dimon:

What is the literal process to take a company public?
Who sets the price? What do large institutions want in companies going public?
What are some of Imran's biggest lessons from taking Snap and Alibaba public?
What are some of Imran's biggest lessons from Jack Ma, Jamie Dimon and Evan Spiegel?

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The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Why the IPO Market is not Closed | Why Revenue Multiples are BS and Founders Need to Change | Advice From Jack Ma, Jamie Dimon and Evan Spiegel | Lessons from Taking Snap & Alibaba Public with Imran Khan

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Challenges in the IPO Market

Talent and Execution in Private Markets

The Importance of Going Public

The Role of Public Markets in Innovation

Navigating Investor Expectations

Hire Missionaries, Not Mercenaries

Innovation's True Measure is Productivity

Predictability is Key to Investment

High Margins Drive Business Value

Remember Everything You Learn from Podcasts