Hi, I'm Eric Newcomer. And I am Madeline Rinbarger.
And this is the newcomer podcast each week.
Eric and I discuss the VC deals and the drama that went down.
Let's do it. Here we go.
Welcome back and happy Tech Inauguration Week, Eric.
Happy I I'm happy, but I don't know if I think the inauguration
week is it's. A cause for celebration?
Sort of. I'm happy despite everything
that's going. On is it a cause for
celebration? I mean, the image is really
stuck with me. We've written a lot about, you
know, tech and politics over the last few months.
And we had all the tech CEO's sitting right behind the dais,
as if you will, if as Trump was inaugurated, Elon Musk, Jeff
Bezos and his wife Lauren Sanchez, Sundar Pichai from
Google all lined up ready in the front.
View you know, it's like the anti elite candidate, you know
the the guy who doesn't who represents the masses has got
you know all. His He's not the establishment.
CEOs on stage with his cabinet secretaries and we've got
governors sort of cast off to the side.
You know, I feel like the the conservative critique of the
left is always that, you know, where we have the left, which I
include myself with such a hive mind, we're we're sheep.
We're all sort of humming at the same tune.
And then to watch the inauguration where like
everybody's on message. It's like DI is over.
My Twitter feed is like singular in its message of this new
moment in time. Goodbye liberal groupthink.
Hello conservative groupthink. I, I, my Twitter, maybe I need
to get on blue sky. I'm sure some of the Democrats
on here will be like, get off Twitter and you'll see a
different world. But my Twitter is like so
unanimous. It's like DI's over.
It feels like the fight is whether it's like we're getting
rid of DI or getting rid of, like, the Civil Rights Act
itself. Yeah.
And we. And then at the same time,
you've got the sort of conservatives paying fealty to
Trump. You know, you've got Sam Altman
and Masayoshi Son doing the Stargate thing with Trump,
though, obviously, you know, if it's a $500 billion deal or
whatever, it didn't come together in the Trump
administration. You could imagine that.
Had to have taken a lot of time and effort to put together.
This is clearly a, you know, Trump jumping on something that
was already existing. Right.
So you've got in the works, you've got, you know, at once
sort of a collective decision that we're moving on from sort
of the cultural moment of the woke years.
And we're there's no resistance. All the elites are going to pay
fealty to Trump and hope that sort of kissing up to them,
he'll forget his hatred. You know, there was a point on
one of the interviews just I have to say this where Mark
Zuckerberg complained about how like Joe Biden had talked about
him. I think Joe Biden may be called
Zuck and oligarch where Trump has literally called for like
Zuckerberg to be like jailed. You know, it's just like somehow
it's like the tough talk from the Democrats was so mean.
They mentioned that we're very wealthy, like.
But in Trump, meanwhile, like, throws around the idea that he's
going to, like, jail his opponents.
And people are like, Oh yeah, like, you know, that's Trump.
He's just talking. Anyway, it's yeah, it's a little
too much groupthink for me. It's not just the ultra wealthy,
you know, business owners of VC class that are really in the
group think right now. I mean, there's a really good
piece by Margo McCall and TechCrunch this week about all
of the founders circling between David Sachs's crypto parties and
the crypto ball and all of the different parties in Washington
trying to get as close as possible to these bigwigs, but
also the Trump administration themselves for deals, contracts.
So it extends beyond just the people with the clearest
financial incentive right now. Yeah, why do you?
Think that is. Yeah.
I mean, so you know, groupthink, natural human tendency, but this
moment goes far beyond that. I think one, there are a couple
things happening. One which you just sort of
touched on is people want government contracts.
I think for good, it feels like this is going to be a great
moment for business. Let's do some business.
I mean, I think both of our concerns is that this could be,
I think we're calling it grit versus grift.
You know, in the newsletter, it's like hopefully this is a
moment of grit where everybody's building and doing real things.
You know, for all Elon's faults, he does build rocket ships and
great electric cars. Or it could be grift and the
Trump token and just sort of instead of government contracts
going to sort of boondoggle defense contractors now, they're
going to go to startups with fake products that are still
developing. So certainly here I you, we are
cheering for grit over grift. But I think we've got both, both
types of people sort of leaning in and hoping to get what they
can out of Trump. Well, you look at some of his
executive orders he signed this week, he repealed Biden's
executive order on AI safety, which I mean, we've talked about
there were good things and bad things in that order.
But I think Marc Andreessen rightly pointed out that that
really favored big tech incumbents with the reporting
requirements and developments over startups in the AI field.
So for AI startups, for people, you know, pushing technology,
some of the regulations really did not favor them.
So in some ways that there's moves already happening that
could really be beneficial, yes, for the money makers, but also
for. Everyone Trump's going to
unleash energy development, but then seems to single out like
stuff like what wind farms and some other renewables where it's
like that's actually where technology could help.
So I, I hope the energy sort of regulation, I, I hope if he's
going to clear the way for reduce regulations on oil and
gas that extends to new forms of energy that could take us to a,
a better place. I mean, to me, though, the most
shameless reversal is just the abandonment of like diversity,
equity and inclusion. The problems with DI were it's
sort of run through human resources.
It's like heavy-handed. It's, you know, in some ways too
bureaucratic. And now we have those same
bureaucracies in the sort of big tech companies saying like, all
right, we now we need to root them out.
It's like you were the ones doing this in a super
heavy-handed way. In the first place, I think
what's most surprising to me, I guess that's surprising, but
just a little shocking coming right around now is it always
felt a bit like that could have been, you know, bureaucratic.
Like for all of the complaints we've had about these programs,
right? The swiftness in which every
single one of these organizations dropped them, I
feel like just revealed the game, right?
Like it was like, OK, you literally did not care, right?
I always. Thought like, oh, you know, I
support the effort of more diversity, certainly the sort of
ideas of uni role and like like you should think about sort of
diverse candidates and your pipeline.
That to me still makes sense and we shouldn't walk away from
that. Obviously.
I I felt like some of it, some of the talk moved away from
meritocracy and meritocracy did sort of become a more taboo
world and some of the more leftist circles.
I think that it's probably a mistake.
I will say besides Trump, I just think there's there's a reality
that like when we were in peak DI, there was sort of like a lot
of hiring. It was boom time, 2021
valuations. Interest rates were really low.
I was. Like, oh, we want to fire
people. We've got AI.
We don't need as many people. And so it's like, oh, we're just
going to hunker down with like, our sort of elite tech workers,
and we're a little less worried about who's getting on sort of
the boat with us. It's also been a big shift in
the media environment. I mean, Sam Altman was sitting
with Dio Vaughn in the podcaster row at the inauguration.
So this alternative media apparatus, especially on the
right, is now getting equal credence to a lot of these
wealthy tech donors right now. Eric, what do you make of, you
know, this kind of thinking that is spouted on these shows that
we've, you know, touched on occasionally in the newsletter?
As the owner of a media company, I do love this meme that
attention is the most valuable resource.
It's like fuck money, you need attention.
It's like, great, all right, I'm in the right business all of a
sudden. I love eating impressions.
Exactly. It's like, OK, we if you can
worm into people's brain, that's that's worth something.
I mean, it is worth something. But now, now people are saying
it's worth a lot. So certainly cheering for that.
I mean, I have no problem with like Theo Von.
I mean, I've only really consumed him through his TikTok.
But I, I, I enjoy some of these like podcasters.
It's like, fine, you know, I'm very interested in beset, you
know, there's so 1 meme is attention is everything now.
And Trump won because he controlled attention.
I think there's some truth to that.
The other meme is like the open sort of oligarchy.
I think part of what's happening here is, you know, the New York
Times ran an interview. Ezra Klein, you know, conducted
the interview with Curtis, Curtis Yarvin, who's sort of a
monarchist, the type of person that the, you know, mainstream
media would have said don't platform him.
But now obviously that Trump's in charge, you know, he's
getting interviewed. I think Marc Andreessen was
like, just because you read somebody doesn't mean you agree
with them. And I take him at his word.
I do think there can be an overcorrection.
But you, you know, you see sort of in the discussion people.
He's clearly very influential and very well read within these
circles. Tohrenberg, you know, was
writing tweets basically riffing off some of Yarvin's points.
So it's it's definitely in the air again, this sort of
contradiction that Trump runs as the populace, the everyman.
And now it feels like literally like the oligarchs are sort of
suiting up to like be be in charge.
And, you know, I don't know. Well, they're commanding fine.
They're commanding money. They have government power with
Doge, and they also have attention with this media
apparatus. Yeah.
And you know, I'm, I started off the Trump election by saying if
we're gonna, and I think maybe I said it on the podcast last
week, it's like if we're going to have a version of if Trump's
in charge, the version I want is the tech elites running it.
So in some ways I've come out in the pro oligarch.
You can't, you know, like, oh. Yeah, if we're going to have you
heard it here first, we're going.
To have the a given that it's. Strong, Eric.
Newcomer endorses tech oligarchy.
I mean, I'm just saying like of the options, like, and the
oligarchs all fight with each other and like, you know, I, I
think there is sort of the yeah, I mean, obviously I wanted to
mock. I want, you know, the American
people to vote on the next person.
I want as many Americans as possible to vote.
And I am terrified by sort of the unilateral presidential
power. I am somewhat annoyed with Biden
pardoning his family and with Biden at the 11th hour trying to
pretend like he could unilaterally pass a
constitutional amendment. Like, why would you want to be
seizing executive power right before you hand it over to a
president that every Democrat is terrified is going to take too
much executive power? So I I'm really worried about
executive power. I am not supporting any sort of
monarchy and oligarchy in terms of the president just doing
whatever they want. And that is deeply troubling to
me. But in terms of do I want Musk
and people running around? Yeah.
As long as they're not trying to find the way to make Trump, you
know, the CEO of America, then then, yeah.
I'm still right now think that's the best of sort of a nightmare
situation that America finds itself in.
Eric, I'm going to challenge your pro tech oligarchy stance
here simply just because this first week of the Trump
presidency, we've already seen in a crypto pump and dump scheme
from the president. Certainly the regulators that
he's been appointing around crypto, people are very excited
about because they're looking to deregulate the industry.
But this just sort of embodied everything that people criticize
the industry about, right? And that's coming in week one.
Yeah, I mean, so. The self dealing is going to be
worrying. I mean, it's, it's clearly like
lost. I mean, it's sort of like a lost
cause. They're so like openly corrupt.
I mean, I think part of the hope is that all the tech companies,
you know, are ultimately competitive with each other,
that Elon is dunking on Stargate and says they don't have the
money, even though Trump was announcing it with Sam Altman on
stage. I mean, that's.
True. That's a one good place where he
wasn't immediately, you know, kissing the ring and being, you
know, immediately, like immediately subservient to, oh,
this is so great. This is this great project.
He is willing to say things where he feels like it's.
Of course he has his own vested interest with you know what?
I mean, like if they all, if they're all just sort of
aligned, then we lose sort of all of capitalism.
We need the big companies to be sort of racing each other and
competing. I, I mean, I am very, you know,
and I'm somewhat sort of tongue in cheek about the oligarch.
I, I'm, I'm, I'm somewhat supportive of the oligarchs.
I'm not pro oligarchy. I want that to be very.
Clarifying point here on the newcomer.
Podcast I do worry that the sort of like tech, the tech CEOs in
some ways can lose sight of sort of what you're saying the
importance of like our norms and like good business practices and
all that and sort of this sort of running towards Trump and
just saying, oh, we're gonna have a business bonanza.
It's like we do need sort of, you know, like just my own
psychology, right. It's like I'm building a
business person. I'm building a business myself.
It's like what you should want in America is to build a real
business of substance. At the same time, it's like, oh,
we should have a fucking token. If it's like like grab money,
Well, it's like falling out of the sky, you know?
And there is like you can see in your own personal psychology
that sort of norms eroding, you know, I sound like a
conservative. It's like we need character and
values, you know, and we need. The rule of law.
Right, exactly. It's like I, I do think a lot of
the things the traditional conservatives believed in were
important. You know, if we had Mitt Romney
or his father, you know, talking about what America is about,
those are the things that I really worry we're losing.
Like, in some ways, the problem of Trumpism is going to be
losing the conservatism of like, good business principles and how
a business should operate in the sort of normal, the norms beyond
just like, get cash, do whatever you know, And yeah, so I want.
To bring up a point you've made in the newsletter before, Eric,
the norms and laws and rule of law are help what make America
the best place to practice business in the world, right?
And we have set rules. We have.
Lawyer. I know.
Yeah, Lawyers love this. Lawyers love me.
No, but seriously, the having the rule of law helps businesses
flourish and conduct and grow. And if you don't have that and
that's just immediately thrown out the door, that opens a whole
can of worms around whether or not businesses will operate
fairly under capitalism. But it's just straight to
cronyism, which doesn't make for a healthy tech ecosystem.
Right. Yeah.
I mean, you know, we, it's competing interests.
Clearly there's too much sort of bureaucracy.
There are a lot of organizations that seemed designed to say no,
some of them lawyers themselves. But.
But yeah, I, I believe in the rule of law.
And I think sort of Elon and Trump both represent sort of
just a total disregard for the right way to do things and that
we should have certain procedures.
And it's deeply troubling. I mean, my, my high level
message is like, I think the mood is way too optimistic about
Trump. This is just sort of like kiss
the ring. It's what makes sense right now.
You know, I've sort of embodied the stance as sort of the the
opposition that it's like we need to give them time to sort
of fuck up enough without otherwise we just sound like
whiners, right? It's like better for us.
So like Duke, I mean, do a couple things have real, you
know, real objectionable stuff that we can.
Well, we want the future of the country to be good and for tech
to succeed, so if things workout, obviously that would be
great. Right.
You're right. It's not even a it's not even a
pose. It's like if you are great, like
godspeed, but I'm skeptical. And when you fail, then we will
seize on that as a good point of how this has been totally
misguided. But until then, giving you a
second, you know, it's like we're not even really, you know,
the, the whole Musk hand gesture, like, I don't know
what's in his heart, but I think it's a losing political fight.
You know, it's just sort of like I, I want to do something that,
you know, Nick Fuentes thinks is like a signal to to me, but
right you. Know, but if certain audiences
view it a certain way, that kind of tells.
You exactly that it's a mistake, but but yeah, I I don't think
it's the message that we should be fighting on.
I mean, we're waiting for terrible treatment of human
beings. I mean, I, I'm deeply worried,
just like I hope that the left wing response to this is sort of
that sort of love and taking care of our fellow person and a
lot of honestly Christian values that, you know, are important
and like that Trump doesn't embody any of them.
I mean, that's sort of unfamiliar language to the left,
but yeah, I think that's going to emerge eventually that we,
you know, it's just so mean spirited to me.
Yeah, that he's complaining about like the Bishop just
saying, like, care about people like that.
That would be so. That was just.
Ridiculous. Yeah, yeah, that was that was
just ridiculous anti Episcopal slander.
But why? I don't know that I was raised
Episcopal. Yeah, actually.
I'm I'm an interior universalist, so I'm even more
left wing. You're even more than this.
Practice. Nice.
Yeah, We want tech and tech business to succeed.
We want the golden era of tech and venture returns.
And on that note, let's shift gears to actually talking about
business for once on this podcast.
We'll do our jobs, not talk about politics and just just
call balls and strikes on on business what's what's on the
slate. Well, on the slate today jumping
in. Let's jump in.
Let's dive into the deals. No, on the slate is fresh data
from you, Tim. We've got the data from the
University of Texas and Texas A&M Investment Management
Company internal rate of. Return, we've got, we've got how
the venture. Firms are doing.
Tracking over time. We have to reel down.
Nerdy venture shit. This is real in the weeds.
We have the we have the fund return metrics as reported by
FOIA requests. Let's get into it.
You care how GGV was doing pre China split.
We have the answers. Right here.
Subscribe Now No. Seriously, I mean, you should
subscribe. This is good.
This is the classic newcomer story you should subscribe for
because we're going to touch on some of it.
But ultimately we have, you know, charts of USB's
performance. We have the actual filing
screenshots so you can see what you Tim is telling people.
This is definitely we're going to give you the themes here.
But if you if you're want to get into numbers, you should become
a pain subscriber to newcomer. What were your takeaways from
digging into this report? Jumping in some top takeaways,
the biggest things, I'll give you some high level stuff
because again, you should subscribe to see the full charts
and the full data. Thrive Capital was the biggest
outlier in Utimco returns. They've only been in Thrive for
a couple of years. So there it's a newer investment
for Utimco, but they are rapidly outperforming a lot of other.
Bricks Carvana open AI turns out invest in very valuable things.
I mean I called them like the I give them the SoftBank Tiger
Global award for top tick investing or whatever the end of
this year. Now we're saying they're they're
doing a great job because it turns out if you make
investments at huge late stage rounds and they get marked up,
you look like a genius and yeah, you get to skip the whole J
curve. So.
You do and one and one point also too.
One piece I also got from talking to pitch book analysts
for this piece was that because Thrive's portfolio is so heavily
indexed in a lot of these later stage AI companies, these
companies are hot. They've been going back to
market multiple times a year sometimes.
So the markups happen a lot quicker than traditional venture
like that really is inflating their performance metrics just
by the sheer number of times these companies that are in
Thrive's portfolio are going back to market.
That's one thing that helps them stand out, but otherwise there's
kind of Thrive and then there's kind of everybody else is the
other thing I'd say. From these attractions,
literally if you look at it, it's like, you know, because old
funds do well and then we look at newer funds and they take
longer to to do well and thrive is sort of pretty new and in the
positive where everybody else, if you look at the chart is sort
of negative if they're a young fund, so.
If they're 2020 or later, yeah. I mean, the other big theme that
came out of this was just when as funds get older, you
generally expect their IRR to improve, but that's not what we
saw. What's going on there?
Yeah, some are pretty steady. I will say Union Square Ventures
only had mild declines in some of its older funds.
So that, so if you have the strength of a portfolio, it's
not guaranteed that you'll see big depreciation.
However, across the board even some of these older vintages are
their IRRS are going down, some are remaining positive.
So that's great. And the lot haven't fully
slipped into negative return territory.
But it is looking overall like the curve from the downturn is
very visible in the data in a way that it wasn't last year.
Like we've now had about three years of the venture downturn
and you can see it in the downward slope of IRR across all
these funds, The only exception. Your portfolio companies in 2021
the boat like that was the that was the exit opportunity moment
and if you didn't do that, like your portfolio is going to keep
getting worse. I mean, that's.
Another exception I will give though, I have to give credit
where credit is due. Sequoia we mentioned a lot and
their returns not looking as great because U Temco only got
in in 2020 and 2021. So again it's a recency bias
kind of thing. But a lot of their US and
European vintages that are the funds you know pre split before
they pulled out their China and India holdings, those are now
switching into positive IRR. So they're starting to see that
typical J curve, the returns are coming in for those funds, so.
They're good at what they do. So take away from this bullish
on Sequoia, but for the rest of the data you should like and
subscribe. Yeah, cool.
And we're going to have more. Honestly, we have I think a lot
of data coming in the next month inside venture, both macro and
sort of at the firm level. So yeah, I feel bullish on.
Stay tuned. You're going to want to pull out
your checkbook by the end of the next.
Month. All right, let's wrap up with
our deal of the week. Madeline, you, you track these
closely. What What was the big deal in
tech this week? Divvy Homes property tech
Company announced Wednesday that it is getting acquired by
Brookfield Properties, the real estate mega corporation, for
about a billion dollars. Divvy Homes is a property tech
company. My understanding is that they
help people with a rent to own model where they can rent A home
and move in right away and then you know, build in savings for a
down payment over time in that sort of zone of the property
tech space. A good exit.
Not a great exit considering its valuation in 20/21 was 2.3
billion, but it's not 0. So that's good.
Don't raise too much capital along the way.
They also had a lot more debt than a traditional venture
backed company has. They raised around 700 million
total, but that's a combination of debt and equity they raised
from the former GDD Capital, which has split, but also
Andreessen Horowitz and Tiger Global.
And their last big round was in 2021.
So it's kind of a classic 2021. Story I would.
Say Most likely not, but it is an exit I will say one part that
has some you know some a little frustrated with this deal was
after repaying its debt and transaction costs, no common
shareholders in divvy homes will receive any consideration from
this exit which. Brutal for the employees you
build. Brutal for the employees.
A billion dollar business, though, you know, I guess if it
has all that, you know, very complicated to say that it's a
billion dollar business, but still you build something of
value to someone and you're not getting any money out of it, but
you're paid in shares. That's brutal.
Yeah. It's been a tough couple years
for property tech as a venture backed category overall.
So this exit, at least there's something there, but it does
feel also sort of indicative of this being a tough category.
All right, that's our episode. If you want us to publish more
venture performance, you can be part of the solution.
E-mail us at Newcomer at newcomer.co or.
Send us your venture returns. You're gonna reach us both at
our first names at newcomer.co. Yeah, send us stuff.
We're always happy to take anonymously sourced.
We prefer anonymously sourced information, so do your part.
Keep the information flowing and we'll talk about business and
not spend the whole podcast talking about Trump.
Otherwise, I can't promise if we don't get the numbers, we might
just talk politics all the time. Back-to-back to business on the
Newcomer Podcast. See you next week.
All right. Thanks.