E65: VC markup dynamics, Russia/US tensions over Ukraine, Altos Labs raises $3B, Stripe mafia & more

Market Sentiment & Investment Psychology

• David Friedberg describes a shift in personal investing strategy following market declines, emphasizing two core lessons:
  • Strictly separating "investments" (long-term ownership) from "trades" (short-term speculation) to avoid emotional errors.
  • Insulating oneself from portfolio volatility to prevent taking financial losses out on loved ones.
• Friedberg notes he has stopped checking his portfolio to desensitize himself to market red, a behavior influenced by his clothing choices (switching from jeans to luxury cashmere) as a sentiment indicator.
• Jay Hogue reflects on past trading errors, specifically selling positions in late 2022/early 2023 due to emotional panic after Jeff Bezos and Elon Musk sold shares, which he now views as a successful move to lock in cash.
• Bill Gurley acknowledges that public market corrections have finally trickled down to venture capital, creating more reasonable pricing for new deals despite lower valuations for harvesting old investments.
• Chamath Palihapitiya admits to a "break-even" net result in his public portfolio for the year, but reports a $1 billion unrealized gain in his private book that had to be written down for audit purposes, resulting in a net return of only ~15% for the year.

Venture Capital Economics & Valuation Artifacts

• Panelists highlight a structural disincentive for VCs to mark down portfolio companies, as doing so reduces the firm's reported net asset value (NAV) and complicates raising the next fund from Limited Partners (LPs).
• David Sacks defines "paper markups" as the lifeblood of the venture industry, necessary for companies in years 3–4 to raise capital and appear successful to the market.
• The group agrees that requiring 10–12 years of consistent stock price growth is unrealistic; historical data shows successful companies like Apple, Google, and Amazon have all experienced significant, prolonged downturns.
• Venture firms generally use the most recent private financing round to set marks, with complex rules governing secondary market transactions (often using a blend of 409A valuations or latest preferred round prices).
• Jay Hogue critiques the reliance on IRR (Internal Rate of Return) for early-stage micro-funds, noting that high paper IRRs driven by crypto markups do not translate to actual cash returns ("You can't eat IRR").

Geopolitics: Russia-Ukraine Crisis

• David Sacks argues that the prospect of direct US military intervention against Russia is historically unprecedented and irresponsible, citing a lack of vital national interest in defending Ukraine's territorial sovereignty compared to the existential risk of nuclear conflict.
• David Friedberg suggests the crisis stems from NATO expansion in the 1990s and 2000s, which he describes as a defensive reaction by Russia to being encircled, comparable to the US reaction to the Soviet presence in Cuba during the Cold War.
• Friedberg posits that Putin's primary demand—blocking Ukraine from NATO—is a rational security concern, and that de-escalation would require a US commitment to refrain from Ukrainian membership.
• The panel identifies Germany's energy dependency on Russian natural gas (via the Nord Stream 2 pipeline) as a critical weakness in the Western response, noting Germany's potential to "blink" due to economic self-interest following the decommissioning of nuclear reactors.
• Chamath Palihapitiya argues that economic sanctions and the potential closure of Nord Stream 2 are more effective de-escalation tools than military posturing, as they create internal economic pressure within Russia.
• Jason Calacanis suggests the "Washington Blob" and military-industrial complex are using humanitarian rhetoric to drive the US toward conflict that would manufacture economic growth via defense spending.
• The group agrees that admitting Ukraine, Georgia, or Moldova to NATO creates a "mission creep" risk under Article 5, potentially dragging the US into conflicts over ethno-nationalist breakaway regions (e.g., Donbass, Crimea, Abkhazia) without tangible US security benefits.

Macroeconomic Outlook

• The Fed's pivot toward hawkishness, signaled by the FOMC meeting and expectations of five 25-basis-point rate hikes, has caused a market sell-off driven by fears of a hard landing.
• Chamath Palihapitiya warns that while rate hikes typically precede market rallies as investors anticipate the cycle's end, the current risk involves an "overcorrection" that could induce a recession unnecessarily.
• David Sacks argues that supply chain disruptions, not interest rates, pose the most immediate threat to the US economy, citing specific examples like GM's inability to produce EVs due to chip shortages and widespread delays in hardware/biotech sectors.
• Sacks predicts supply chain issues will persist through 2023 but will be resolved faster than expected, as major tech companies (Apple, Tesla) have signaled confidence in resolving these bottlenecks by early 2023.
• The panel contrasts strong macro data (record low unemployment, high wages, record personal savings) with the reality of a "labor participation" drop due to the pandemic, where many workers exited the workforce and have not returned.

Corporate News & Startup Drama

• Bill Ackman's increased position in Netflix and Tesla is cited as a signal that strong fundamentals remain in growth stocks despite a ~60% correction in the sector.
• TCV's 2011 investment in Netflix (at ~$10/share adjusted) is highlighted as a benchmark for opportunistic buying during market dislocation, having grown 60x.
• The panel discusses the "Stripe vs. Bolt" PR war, where Bolt CEO Ryan Breslow accused Stripe of being a "mob boss" that blocked competitors from funding; the panel views this as a successful PR strategy that elevated Bolt's profile.
• Jay Hogue and David Friedberg admit they passed on investing in Bolt due to valuation concerns, with Friedberg later admitting "picking the company" should have outweighed "pricing the company," noting they could have missed a potential 222x return.
• Chamath Palihapitiya critiques the $3 billion funding of Altos Labs for age reversal, viewing the "Monte Carlo" approach of funding hundreds of parallel research paths as historically inefficient compared to focused startups, though acknowledging the underlying science (Yamanaka factors) shows promise in reversing aging biomarkers in mice.

Forward-Looking Statements

• Markets: The consensus is that while sentiment is currently negative, the ability to identify fundamentally valuable businesses amidst the "bucket" selling of growth stocks presents significant buying opportunities.
• Geopolitics: The panel anticipates that without a diplomatic solution regarding NATO expansion, the US risks a dangerous escalation, potentially driven by domestic political needs (midterms) or the "foreign policy playbook" that defaults to militarization.
• Technology: The Altos Labs investment signals a major shift in biotech toward commercializing age reversal, with the panel predicting widespread media coverage and potential paradigm shifts in human longevity within the year.
• Supply Chains: The resolution of global supply chain issues is projected to occur more rapidly than public discourse suggests, with major corporate guidance pointing to a 6–9 month resolution window.