Equity transcribed: Why Om Malik thinks ‘the VC subsidized life is over’

It’s time for another transcribed edition of Equity. This week for the regularly scheduled episode we had the whole crew pop into the San Francisco studio. Kate Clark, Connie Loizos and Alex Wilhelm were joined by Om Malik, former journalist and current VC at True Ventures.

They convened just after Uber priced, so they had a lot to dig into: The low price, would it pop and would the former CEO and co-founder Travis Kalanick be at the ringing of the bell in New York (he wasn’t).

But it wasn’t all Uber; they talked Carta, Cruise and Harry’s. Below is an excerpt. And come back soon for an emergency episode where Alex and Kate will go deeper on the Uber IPO. For access to the full transcription, become a member of Extra Crunch. Learn more and try it for free. 

Alex: Well, I want to go back to the price really quick because $82 billion is below the 90 we had heard after we’d heard the 120 back in October. So this is a dramatic downgrade in price, which I think as said Om said is actually pretty smart because they’ll have a nice pop and things will get better.

Connie: And also, when you look back, it never really matters that much. I mean, I feel like a couple of people have already pointed this out in the media today. But Google, Facebook, I mean, there’s been so many companies where their IPOs didn’t seem to even go very well. I just don’t think it really is going to matter in the long term what happens tomorrow.

Alex: Well, the difference though is Uber needs to raise a bunch of money to stay alive. I mean, Facebook when they went public had a relatively rough post IPO period, had $1 billion in trailing gap net income. They were fine. Their IPO wasn’t that important aside from the liquidity then. It wasn’t a fundraising metric. At this price, they are going to raise less money than they could’ve at a higher price, and they burn tons of it.

Kate: I think there are a lot of reasons why they probably did lower their targets, but I think one probably has to do with Lyft’s performance. So I think we should just quickly go over. Lyft did release their first earnings report this week, which was pretty interesting. The TL;DR is that they posted first quarter revenues of $776 million on losses of $1.14 billion, which did include 894 million of stock-based compensation related payroll tax expenses, which in other words, just major IPO expenses. So losses were huge, yes. The company’s revenues did surpass Wall Street estimates, which were 740 million. But of course, with all the IPO expenses, losses came in significantly higher.

Kate Clark: Hello and welcome back to Equity, the show where we unpack the numbers behind the headlines. I’m TechCrunch’s Kate Clark, and I’m joined this week with my colleague Connie Loizos.

Connie Loizos: Hello.

Kate: Alex Wilhelm of Crunchbase News.

Alex Wilhelm: Hello.

Kate: And this week’s special guest is Om Malik, a blogging pioneer and a long-time venture capitalist at True Ventures. Hey, how’s it going?

Om Malik: Hello, I’m well. Thank you.

Alex: Before we get into the actual topics, I have a little personal anecdote about Om and I’ve been excited about him coming on the show for some weeks, because way back when I was a teenager, there was a magazine called Business 2.0 or Business 2. I don’t know how you pronounce that.

Om: 2.0

Alex: 2.0. And Om was there when they did … I think it was a redesign of the magazine. They’d launched this new version of it and I used to read that religiously every time it came out. There was an instant companies issue back in the day. I recall vividly that the layout, and to me it was this portal into tech that was super inspirational and exciting and got me really jazzed about the business behind tech, and I think that’s one of the reasons why I’m currently here. So it’s nice to meet people you love.

Om: So I ruined your life. That’s what you’re saying.

Alex: Yes. The reason why I consumed all of my nails due to stress is because of you and your inspiration, so thank you for that.

Om: Great. Mission accomplished.

Alex: And welcome to Equity.

Kate: So let’s just jump right in. The biggest news of the week is that Uber, fortunately a few minutes before we started recording, priced their IPO. So they went with $45 per share, which is very much at the low end of the planned price range that they had said, which was $44-50 per share. So let’s just start off. I’m curious what everyone thinks of that price.

Alex: Feels low. Surprisingly low. I mean, we were hearing across the last week from Dan Primack and others that Uber was hoping to raise the range in price instead of a higher interval. So to see them this low on their original range seems very soft to me.

Connie: I guess I’m not that surprised just because of the argument for going low. Especially tomorrow is going to be a very complicated day because of these tariffs that Donald Trump has, I guess, not only threatened but already instituted. I saw that Flexport had warned its customers that it’s already … These tariffs are already being levied. So I think there’s going to be blowback from that. Not a great day to go public. Better, safer to come out at a low end and hopefully see a little bit of a pop. What do you think, Om?

Om: I think if you look at the ones which went at a more modest price, Pinterest, they’re doing well in the market. I think there is a … You got to give investors some room to buy in and experience the pop and hold a little bit. So I think pricing it low is actually much better. Their competitor, Lyft, went high and look what happened there.

Connie: Right, right, right. And the banks just look so bad when that happens.

Kate: So the main details here. They’ve raised $8.1 billion at a valuation of $82.4 billion. And I wasn’t on the show last week, so I don’t know if you guys talked about this, because I haven’t listened yet. But what do you think of them not allowing Travis to ring the bell next to Dara?

Alex: I think it’s very responsible and reasonable. He left the company under not great circumstances, and I don’t think because he was the second CEO he has unlimited privilege to the company’s brand and time in the spotlight. Sorry.

Kate: Well it did ignite a bit of debate. I noticed on Twitter that a lot of investors who really thought he should be up there with Dara.

Connie: I hadn’t really given it some thought, but I guess I agree that it would be … I would not mind seeing him up there. I know that’s maybe not a very PC thing to say, but I mean, he did grow this company to where it was. Dara is seemingly a great CEO, but he’s only been in place for the last year and a half, and I mean, I certainly don’t think he needs to ring the bell. But to not even have him standing up beside him seems a little bit … I don’t know. Maybe egregious is overstating it, but-

Kate: So you think he should be up there?

Connie: I think he should be. Yeah.

Alex: I think his reward comes in the enormous amount of money he’s about to make, and that’s enough.

Kate: I know, but I was also erring on the side of feeling like he should have been up … He should be up there, but I’m really mixed on it. What do you think?

Om: I think I am with Connie on this one. I have followed this company from day one, from the time it was … The idea was born in Paris. I was there at the same conference. And to where it is now. Yeah, there was a lot of mistakes which were made in the company. There are some terrible things which have happened, and they’re long lasting. Culturally, the company will have to do a lot more to overcome those challenges. But without Travis, a lot of things don’t happen.

Kate: Absolutely.

Om: And I think this is one moment where he’s not part of the company. He’s still a part of the board, and to not have a board member there. What kind of a message is … I think there’s a little bit of revisionist history there.

Connie: I was going to say, I just hate it when people try to rewrite history.

Om: I mean, look, is he the guy who should be forgiven for what he … The culture he created? I don’t know about that. I’m not judge and jury, but I would not like that to happen in my company. But on this one specific incident, I think he deserves to be up there.

Connie: Also, I mean, it’s grown so … It grew so fast. I’m not making excuses, although it sounds like I’m about to make an excuse, but I think it was probably hard to be driving the company forward, no pun intended, at the pace that he was, and also to manage all these other pieces. I mean, clearly he should have hired more people. He needed to hire much more help a lot earlier on. That was, I think, his biggest mistake.

Om: I think there’s a lot of people around him who are equally responsible for where the company ended up. I think the board itself is responsible for it. There was a lot of board members who were on the board then who are on the board now. They should be held equally responsible for what the culture turned out to be. I think you take all that away, I think in my mind the only thing I would comment on with this one specific incident of, should he be up there with the company he was so closely associated with? The answer is yes.

Alex: The only thing I’ll throw in on that, because I think I’m in the minority here, is that if you’re trying to close the chapter on a period of time in your company when things didn’t work well and you want to be able to change how you recruit and change your culture from the inside, putting up the figurehead for the period of time which things did not go well and were quite terrible inside the company, and often outside of it, isn’t a good message to send. It’s showing that you haven’t really left that behind. So I get that he did a lot of work for the company and it wouldn’t have grown as fast, but he gets paid. He gets a check from all that. He gets liquidity now. That’s the reward. Putting him up there is advertising the wrong message to people that may want to join the company.

Kate: From the Uber perspective of the PR side, I can completely understand why they don’t want him up there. But I think I’m looking at it from Travis and from the investor’s perspective, and the people that have been watching from the beginning, and it does feel like a revisionist history for sure.

Alex: That does make it that you’re actually agreeing with Jason Calacanis, though, which is always a dangerous place to be in.

Om: No, I think you’re right. I’m not going to disagree with the point you’re trying to make, but I’m also not going to back away from the point where a co-founder is not part of the celebration. Yes, there is a lot of things which are problematic with-

Connie: And there are other ways that they could help their reputation right now, including obviously paying attention to the people who are striking yesterday in the city.

Kate: Well, this wasn’t even in the script, so I shouldn’t spend too much more time on it-

Alex: Well, I want to go back to the price really quick because $82 billion is below the 90 we had heard after we’d heard the 120 back in October. So this is a dramatic downgrade in price, which I think as said Om said is actually pretty smart because they’ll have a nice pop and things will get better.

Connie: And also, when you look back, it never really matters that much. I mean, I feel like a couple of people have already pointed this out in the media today. But Google, Facebook, I mean, there’s been so many companies where their IPOs didn’t seem to even go very well. I just don’t think it really is going to matter in the long term what happens tomorrow.

Alex: Well, the difference though is Uber needs to raise a bunch of money to stay alive. I mean, Facebook when they went public had a relatively rough post IPO period, had $1 billion in trailing gap net income. They were fine. Their IPO wasn’t that important aside from the liquidity then. It wasn’t a fundraising metric. At this price, they are going to raise less money than they could’ve at a higher price, and they burn tons of it.

Kate: I think there are a lot of reasons why they probably did lower their targets, but I think one probably has to do with Lyft’s performance. So I think we should just quickly go over. Lyft did release their first earnings report this week, which was pretty interesting. The TL;DR is that they posted first quarter revenues of $776 million on losses of $1.14 billion, which did include 894 million of stock-based compensation related payroll tax expenses, which in other words, just major IPO expenses. So losses were huge, yes. The company’s revenues did surpass Wall Street estimates, which were 740 million. But of course, with all the IPO expenses, losses came in significantly higher.

Om: I think the reason to be concerned about it from a consumer standpoint is, 12 to 18 months we’re going to see the prices on car sharing going up. Pretty much. That’s what they said in their filing. You look at the Lyft filings, and they were just saying there’s less competitive pressure from their competition. That’s what they talked about, which is essentially both these companies are now looking at trying to raise prices. If you’re a consumer of Lyft an Uber, the happy days might be over.

Connie: I know. And also, I mean, they can’t … That’s also, you think these drivers were protesting in at least a dozen cities maybe more around the US yesterday saying they have untenable working conditions and they’re not making enough money, they don’t have benefits. But these companies are going to be so hard pressed to produce more revenue. Even though customers like all of us are going to be paying more, I wonder if the drivers are going to see any of that or … The things that they want cost a lot of money, so-

Alex: It’s going to be hard to tell in Lyft’s case because I think they stopped reporting gross bookings in their first quarter revenue, which is weird because they had that metric in their S1 to date, and now they’re not going to show us that metric because they thought it would confuse investors. So we’re not gonna be able to tell the aggregate platform spend on Lyft and see where that’s going-

Kate: That’s BS.

Alex: That is the biggest steaming pile of BS we’ve ever heard on the show. Critically, though, what happened to Lyft after the earnings was shocking. So Lyft when they announced actually went up a couple of points and then fell later on at after-hours trading, and it was down 11% in regular trading the day after its earnings report going into Uber’s pricing, which is just a rough place to be.

Connie: One other interesting wrinkle on this. I can’t remember where I read this yesterday, but somebody was just pointing out that given the job market right now, these guys could see there could be more attrition. The unemployment rate is so low that it’s becoming almost better to work anywhere else other than Lyft or Uber. You can find benefits somewhere. So if they start losing these drivers to other jobs because there is such a demand for labor, that could also really-

Om: Isn’t that usually the case that we have all these companies which have gone through unnatural growth tanks to growth capital provided by private investors go to market and the market finds the stability point for all these businesses? I mean, I think Fred Wilson wrote about this yesterday or day before in which he talked about market going … The market finds the true value of a business much more effectively than private investors do. And I think that’s what … I mean, I’ve written about that in my email as well, or newsletter, that I think it’s a great idea to go public because you eventually get a reality check on private market valuations and public market valuations.

Om: You remember Groupon? How much they were valued privately, they went up and eventually they met the reality. The reality of human beings wallet is untenable. You cannot overcome that. We all run out of money eventually. We can’t keep spending on Uber and Lyft and all these on-demand services. There’s only a limit to how much you can spend. So I think at some point all these companies will find that PR plateau and then their stable point, and then you see whether they are longterm businesses or they’re not. And some of them will be, some of them won’t be.

Connie: I also wonder, I don’t think they break this up or even necessarily know, but how many of their customers are enterprise customers versus otherwise. Meaning people who are using Uber and expensing it. Because if and when there is another downturn in the economy, that could crush them. I wouldn’t be using Uber nearly as much as I do if it weren’t for the fact that I’m charging the company for the service.

Om: I mean, I would die without Uber, to be honest. I mean, I don’t have a driver’s license. I don’t drive. I don’t have a car. I will not get anywhere on time ever.

Alex: What did you do before Uber? Did you just walk everywhere?

Om: I remember every taxi company’s phone number, and I remembered their dispatcher’s name and their birthday and I was very clear to wish them-

Connie: But Om is inimitable in so many ways.

Alex: I don’t even know that many people’s names. I mean, my god. That’s impressive.

Om: There’s not that many cab companies in San Francisco.

Connie: No, there aren’t. Well, that was the problem.

Alex: Yeah. That’s why we got it.

Kate: We should really move on, but let’s just wrap this section up by saying Lyft is now trading at $55 a share down from the $87 that it opened at what, 6 weeks ago? How long has it been now?

Alex: Gosh, less than that. Four maybe.

Connie: Maybe about a month. I’m not sure.

Kate: But, so this episode’s going to air Friday morning, and then later on Friday, Alex and I are going to do a special episode on Uber’s first day trading on the market. So we’ll have even more Uber content.

Kate: But let’s talk about Harry’s, the razor startup that has just sold.

Connie: Yes. So the big story of this morning is Harry’s, which makes razors, face washes, and lotions sold to this company called Edgewell Personal Care. But it’s really better known for owning Schick. And it also has another razor brand called Wilkinson’s, which I guess is … I think it was founded in late 1800’s. So this is yet another razor company that has been acquired. So we had, I don’t know how many years ago, three years ago? Dollar Shave Club sold to Unilever. We also had Tristan Walker’s company Bevel, which makes razors. That sold to Procter and Gamble, I think, maybe last year. I don’t know if that was ever acquired … Excuse me. The price was ever disclosed.

Connie: I don’t know if this is a great exit for Harry’s. I think what’s interesting about Harry’s, it seemed a little bit more ambitious in ways to me. They had bought this factory in Germany. They had invested in [hymns 00:15:12]. I think they wanted to assemble a portfolio of majority stakes in some other company. So I guess I was … I mean, it’s not shocking. It seems like a pretty good outcome for them, but it seems like a company that maybe wasn’t necessarily planning to sell all along.

Om: It’s $463 million is what they raised. That’s a lot of money. I think from a brand standpoint, it was definitely a premium brand and it talked to the younger demographic. Whereas, Schick and Wilkinson’s are a little bit more older demographic. Wilkinson’s is the safety razors I used to use long before you could … You had those Gillette style blades. I don’t know. This seems like a good merger for the two companies. I think both Harry’s gets an exit and Harry’s investors got an exit, and Edgewell gets a good brand. I’ve been to their stores, I’ve seen their products. They look great. The packaging and everything looks very premium. So I think it’s a good product. Dollar Shave Club, as the name suggests, was not very premium. But for me, I think they’re all gunning for Gillette, essentially.

Connie: So I want to ask you both. As men who shave, Gillette has 43% of the market. Schick has, I don’t know, maybe 12%. Harry’s has 2%. As soon as this deal was announced, every man I know was like, “Well, those brands both suck.”

Kate: That’s what I heard too.

Connie: Schick don’t work very well and Harry’s razors don’t work very well, so what do you guys think? Have you tried all of them?

Alex: So I’m blind and I shave in the shower, and so I never really know what I’m doing. I just try not to cut myself and get most of the hair off my face, so I don’t even know what brand of razors that I have. They’re white and black, so I’m not really the target demo for this either, Om, what do you got?

Connie: Om is just sitting there scratching his beard.

Om: I have a beard now. When I shave, I actually use Gillette. I have the Gillette Mach Three. I have a subscription on Amazon, which is they deliver one pack every three months, which lasts me for three months and I never have to do anything. I never think about it. Gillette works and it’s pretty good. I don’t have to think about anything other than Gillette, because it just works. And when I’m growing out my beard, then I have to go to a barber and get it trimmed later.

Alex: But my thought here is, I never really cared about what I used to shave. It’s never been an enormous pain point in my life. Safety razors are so good these days and so ubiquitous and so relatively affordable and so available everywhere that I go, I never really needed help with this. It never seemed like something I was like, “If only there was a solution to this problem in my life! My face! It won’t shave!”

Om: I think that Gillette or all these safety razor … It’s the smartphone. Every year there’s a new one, except you don’t know why you need one. If you have an iPhone 7 it’s pretty good. And okay, maybe the camera’s a little better, but an extra blade … I don’t know. I think this is … But I just find the-

Connie: Well, Gillette’s are very expensive, aren’t they? I mean, I think for a lot of people they think, “If I could spend less on a razor, that would be great.” But I think because of the quality of the product, it’s market share-

Alex: The cost of a fancy Gillette razor is one Uber across SF, and we all just used about how much Uber we use.

Om: No, it’s much cheaper than that.

Alex: It’s cheaper than that?

Connie: How much is a Gillette Razor?

Alex: That’s a good question.

Om: You get a set of three blades for $5 on Amazon.

Connie: Okay. I don’t know what they are, but [crosstalk 00:18:50] high end.

Om: Something like that.

Kate: Yeah. I’m realizing how little I know about razors.

Om: I’m glad you don’t.

Connie: I guess they did start a women’s line called Flamingo, which I hadn’t realized.

Kate: I have never heard of that.

Connie: I know. I mean, maybe it’s very new. I did want to also ask, and I just don’t know if you, Om, would have a clue about this, but … So I mentioned that this company, Harry’s, had a stake in Hems, which is this wellness brand that we’ve talked about at length in this podcast. What happens now with that stake, would you imagine? So this is a cash and stock deal, I guess. 80% cash, 20% stock. I just wondered, where does that stake go?

Om: I’m pretty sure the parent company Edgewell ends up getting a piece of that. Whatever the ownership is goes to Edgewell. It’s a merger. This is not an acquisition. The Harry’s shareholders own 11% of Edgewell. So I’m guessing they also get something in the deal. We shall see. I didn’t read all the documentation just yet. This is where the old reporter in me comes out and the first thing I do is go to Edgar and see what documents they’ve got there.

Connie: Yeah, that’s smart.

Alex: Well, I think it’s a good moment for the broader D to C space. I think there was a lot of money that went into that category of companies over the last four or five years now. This is an exit of note, and also there’s been some talk on Twitter about how D to C has been fading in some investors’ minds as a place to deploy capital. An exit may help companies in the area that-

Kate: Is that true? Has it been fading? Because it feels like the opposite to me.

Alex: The guy who founded Circle Up, which is the company that helps other people fund brands, was talking about how D to C tax we’re going up, and some VCs that were really active in the space had pulled back. And I thought his commentary was really interesting about the changing dynamics of it. But not everyone can build a D to C brand and use Instagram to acquire customers longterm. That fills up.

Connie: Well, that’s one thing actually. I’ve talked to your colleague at True Ventures, Tony Conrad, about in the past, which is just that the social channels have gotten so clogged with new brands that it’s really harder to break out. How does True think about it?

Om: I mean, our approach to investing is not be part of a trend or anything of that. A good company’s a good company. A good founder can build a great brand. Look at, Amy has built a great brand. So has Brand Me and that with Blue Bottle. You don’t need to pull special tricks if you are selling something special.

Connie: And you’ve invested in companies that have actual brick and mortar.

Om: Madison Reed. Sorry.

Connie: No, that’s okay. So Madison Reed has a growing number of actual salons where you can get your hair colored, as well as a direct to consumer product. You guys were investors in Blue Bottle Coffee, which had stores.

Om: I think the one big takeaway for us as a group, and I think my colleagues Natasha and Priscilla wrote about this on our blog, which is essentially that all great D to C brands have the same dynamics as software companies or SaaS company. They have similar engagement, same daily active usage, same monthly active usage, and they have really high per customer revenues. And so, if you can see a good brand, you can see there is a lot of similar … If you look at Blue Bottle, you look at Madison Reed … We have another company, Peloton. All these companies have really solid daily active users, daily monthly usage.

Om: So if you don’t have that, then it’s just another consumer product. There is nothing more … There is nothing technology enabled in there because you’re only buying something … There’s a lot of products I buy … There’s a lot of mattress companies, for instance. You buy a mattress, you’re not buying a new one for five years, or at least seven years. Or if you buy bedsheets, you buy one, a set of two or three. You last 12 months, 18 months. That is a hard product to monetize on an ongoing basis, so it doesn’t really … So I think there is a subtle difference. So if you are a company which has the daily active usage in your product and people want it every day, I think you can build a brand.

Connie: Well, Casper is going public. Do you think it’s overvalued?

Om: No, I’m not saying any of those things. I’m just saying they have a much higher hill-

Connie: To climb.

Om: To climb, because you can’t buy a mattress every day.

Connie: Well that’s also why, I guess, everybody breaks into other services eventually, like furniture. I remember, we’ve talked about other strange seeming things that Casper’s taking on.

Om: Can I say one thing about Casper?

Connie: Absolutely.

Om: Casper lights, they have the nightlights. It may just be the best product I’ve bought this year. I have no affiliation with Casper, but if you’re looking for a nightlight, it is amazing.

Kate: I made fun of that on the podcast.

Connie: That’s really interesting. What’s so special about it?

Alex: Little did we know.

Om: Just the UI, the interface, and how you interact with it. Oh my god, they must have a great product team and they must have a great UX engineer.

Kate: Now I want one.

Alex: That might be the first useful consumer advice on the history of the show. Thank you for that.

Om: This may be the first time I’m saying something nice about something.

Alex: We’re breaking all sorts of records today.

Kate: Well, talking about consumer goods and products that we understand and don’t understand. Luckin, this China-based coffee company that we have talked about at some length in the last six to eight months as it’s been blowing up, just announced its IPL plans on Monday.

Alex: I think it was Monday, yeah. They filed a new F1 and F1A, which is the foreign version of an S1 that we see often in the United States, and they’re targeting between $15-17 per share in this IPO. At the low end without underwriters options, about $450 million. At the upper end with the option, it’s just under $570 million. So they’re coming to raise an enormous amount of capital here, but they’re also shockingly unprofitable and their growth is slowing in China. So I don’t know how to price this company. I think that share price puts them around a $3.2 billion valuation, and we will have more notes about this when they get closer to actually debuting. But it’s a fascinating IPO if you want to take a look inside of a company that’s spending heavily to expand brick and mortar sales around a really competitive country. So as a nerd, I love it. I want to leave it there so we can move on to Carta. But it’s a really fun IPO and we’ll have more notes really … Probably about two weeks from now. So hang tight.

Connie: Great. Well, Carta is a really interesting company. It announced $300 million in series-e funding on Monday at a $1.7 billion valuation. The round brings the company’s funding to just under half a billion dollars to date, or $447 million. So these days that kind of money doesn’t seem so notable. In this case, I think it is because there’s … This company touches so many players in Silicon Valley that everybody has an opinion on it. It started by helping startups more easily track their equity and manage their cap tables, which is something that’s happened forever, but was very much a paper process and not seamless as it could have been. Then I think maybe last year it started doing the same for venture funds, helping them manage their relationships with their investors, including by distributing quarterly reports, making portfolio analytics more seamless, blah, blah, blah.

Connie: Now the question is, what’s next? So the company raised all this money and they pitched it to me as the creation of a private stock market. They said, “Look, we’ve got all these portfolio companies on the platform. We have all these venture capital investors on the platform. We’re going to make it a lot easier for people to buy and sell their privately held shares in these companies,” which is great, but that’s also what secondary firms do. And so, Om, I’d be interested in knowing what your thoughts are about this. If it’s really a stock market or a secondary player who maybe has more access than the secondary firms that we’ve seen in the past have had.

Om: So the way to think about Carta is that it’s one company which has all the data and all the assets throughout the lifecycle of a company. They start at a startup level and now most of their first cohort of companies are going public, like Slack. And I don’t know if Uber is on there or not. There’s a bunch of others. So you look at that, they can actually create a private exchange in a more effective manner. They have much more data density, they have much more clarity. There is a more longterm relationship with these companies. So they actually are a viable contender to be a marketplace, or a stock market compared to secondary market and all those other places.

Connie: What I wondered, and candidly the company wouldn’t answer for me. I’m not sure if they just haven’t decided yet, but I wondered if … How open it’s going to be. So can any accredited investor … A true stock market, there is first some transparency into pricing, which I don’t know is going to be the case with Carta. But also, if somebody came on who doesn’t have a tie to a venture firm or a portfolio company but wants to participate in an investment in one of these portfolio companies, is that going to be possible? To me, that’s really what a stock … A truly fluid, liquid marketplace would look like.

Om: I mean, yes, the individuals can participate probably. But the large investment groups can be part of this, whether it’s mutual funds, hedge funds. They can all be part of it. They are the ones who bring the real liquidity to a lot of the secondary market right now, and I think they … These guys actually have a good shot at being a real legitimate player for this startup tech ecosystem.

Connie: They seem to have more pieces together than anyone. But I wonder. So now TPG, this private equity firm, just this week announced a $1.6 billion fund that is going to be used to buy secondary shares. So how would TPG work with Carta?

Om: So I don’t know exactly how Carta plans to do what they’re going to do, but I mean, in theory TPG could just be part of the network and-

Connie: Spend its money on that network.

Om: Spend its money on that network, and I think Carta could take a very tiny cut from it. I think this is where the big potential is. I’m just trying to imagine why Marc Andreessen invested in this company, and I don’t … I will never underestimate that guy.

Connie: I think he’s brilliant, but he does make mistakes.

Alex: We all do.

Om: But in this company’s case, they have what? Close to 15,000 companies on their platform?

Alex: That was my question. What percent of modern Series A and above startups are on Carta? I mean, what, 80% in Silicon Valley?

Om: Yeah.

Connie: A criticism I heard, which I thought sounded … It made sense to me. Was that this is very much of a service as business. So there’s lots of… It’s very people intensive. So right now Carta has … It’s on an annual revenue rate of $55 million, but it has 600 employees already over 7 offices. That’s a lot of people.

Om: How many people do you think somebody like Silicon Valley Bank employs?

Alex: A lot of people.

Connie: But how much is Silicon Valley Bank worth? I mean, I’m just saying it’s as valued as a software company, and maybe increasingly it will be, but I think it’s really been more of a services business to now.

Alex: $13.1 billion. Silicon Valley Bank.

Om: And what about guys at Uber? How many employees they have?

Alex: I can’t Google everything on the show.

Om: I mean, you can.

Alex: More than one and less than 10,000. No, actually, more than 10,000.

Om: That’s just hard for a company too, right?

Alex: I think Connie makes a pretty good point. I mean, 409A valuations are not something you can always systematize, and there’s a lot of things that require hands on work, but if they do build this market on top of their platform … Maybe the platform’s the hard low margin work and the exchange is the high margin software’s component to it. But I think it’s fantastic, and I think Carta … As an employee of a startup, Carta is a cool tool to use. It makes things a bit more easy to understand, and that I think unlocks value for people that might not have bought their shares if they had to do it all on paper before, and spreading the wealth around is good.

Om: That’s one company I wish I was a stock holder, I like it that much.

Alex: Maybe you can buy some on Carta.com eventually.

Om: No, it’s too expensive now.

Connie: I asked the CEO, Henry Ward, and they have had liquidity events for their employees, so there.

Om: I take my risk very early.

Connie: I’m sorry?

Om: I take my risk very early for true companies. But I said, I wish.

Alex: I want to throw one more note on this before we get to cruise and we close up, but I was on Twitter and I saw a promoted tweet from Carta showing off their round evaluation and that was a new thing for me. Companies used to not share their valuation because they wanted to keep it private and as a trade secret. They were promoting it in their new capital round.

Kate: They want everyone to know.

Alex: They want everyone to know how rich and how valuable they are.

Om: Well done, TechCrunch. You have made it legit for people to announce their funding round. Come on.

Kate: It’s all our fault.

Alex: I mean, that’s more like a decade ago. But I mean, I like the chest beating, if you will. It’s a change.

Om: I think they just may have promoted it to you.

Alex: That would be some microtargeting. I do not matter even 1% enough for that to be clear.

Om: All your followers don’t agree with you on that statement. I think you matter a lot.

Kate: I agree. Alex matters.

Alex: Moving on to the cruise round. I do not. Cruise raised a bunch of new money this week at a new much higher valuation, and if you recall, Cruise is now part of General Motors, I think. But there was a lot of external capital going into the company, and now it is worth an amazing $19 billion, which for a nearly revenue free, I presume, autonomous car startup group, collective, division, whatever it is-

Connie: It was brought in and then it was spun out again, wasn’t it?

Alex: There was this weird corporate dance going on, but I do know they raised something like $7 billion now to date. So an insane amount of money.

Connie: I think that might just be in the last 12 months. Maybe I misread that, but I feel like they raised a ton of money in the last year.

Alex: Is anyone surprised with the amount of capital it’s taking to get these various autonomous car startups or groups off the ground? Because I feel like every month or so we hear about another 500 billion or $1 billion round going-

Kate: It’s a capital intensive business. They need tons and tons of money. They’re burning through the cash.

Om: How much money do you think Waymo spent? We don’t know. I bet you it’s over $5 billion.

Connie: Well, see, that’s why Waymo was talking about raising money from outside funders last.

Om: I don’t think all this is cheap. A lot of this in building an autonomous platform is going to take a lot of money. A lot of money. But you were talking about this earlier, that there’s $16-18 billion have gone into the whole autonomous sector since 2016.

Alex: No, since 2018. I think it was about 16 billion in capital globally has gone into autonomous car startups of various types, which is an insane amount of money. But keep in mind, Uber just raised a billion in change for its autonomous efforts, and there’s more capital here and we have more in the bank from before.

Kate: Did you guys see the report today that Uber was in talks with Neuro to actually handle their autonomous food delivery, despite having raised so much for their own autonomous vehicle business?

Alex: Is Nuro the ground up car and software company that was building both the vehicle and the-

Kate: It’s got those cool little robots that drive down the street and-

Connie: Or it will. It’s very early days. I think they’re just working on a prototype. This is a company that raised $1 billion from Softbank last fall. Uber has a lot of money from Softbank. So I guess that’s the connection. I think these food delivery things are so strange, because they don’t really hold that much.

Alex: In the actual robot carrier itself?

Connie: Yeah. I think robots are so strange. I think the ground robots like Marble and those, I can’t quite make out whether that’s a huge waste of money or really smart.

Om: The way I think about autonomous is how I thought about the optical stuff in like 2000, 2001. There’s all these companies who got funded and everybody was doing one tiny piece of the innovation, and they raised 100 million, 200 million. Well, the longterm impact of all that crazy spending showed up in 2010, and now we all enjoy the benefits of what happened then. And so, I think 20 years out, all of this will just look normal. But a lot of pain might be felt in the middle. But this is an expensive endeavor. Autonomous will not be easy. There’s a lot of technology to be built, a lot of new semiconductors, lot of new other technologies which need to be ground up built for this. So it’s going to be a lot of effort.

Connie: And it doesn’t make sense. I think companies finally realize it doesn’t make sense to have everybody try and reinvent the wheel themselves.

Alex: Well, going back to Om’s point about how early some of this stuff can be. So the first palm pilot came out in ’97, which was 20 years before the iPhone came out. And the iPhone was probably what we all actually wanted originally to begin with, but there was so much work they had to go into the market of building these things through time until they reached the point of hitting the mainstream all at once. So I think that’s a good point. I do agree with you though, they’re too small. You can fit like two cheeseburgers in that thing and that’s it.

Connie: Yeah. Here are the two pizzas, and have they really-

Alex: What if I want extra fries?

Om: But it doesn’t move fast enough, so if I’m walking alongside, I’ll just pick it up and just run away with it.

Connie: That’s the thing. People are tempted to … Right. People are tempted to knock it over. They’re trying to anthropomorphize them so people feel a little bit worse about defacing them.

Alex: Well, I didn’t think that was going to be a big problem until we had the scooter boom and everyone was throwing scooters into the lake over in Oakland. I mean, people really abused those and sabotaged them and hated them. So maybe there’ll be more backlash because robots [crosstalk 00:36:47].

Connie: I still hate seeing all that stuff. To me, it just looks like garbage on the streets.

Alex: The scooters?

Connie: Yeah. Especially when you see them in neighborhoods. I think it looks terrible. I mean, who cares what I think?

Alex: I care.

Connie: But I really prefer docked stuff. I think leaving the stuff everywhere is just bad.

Alex: So the docked bikes in front of the TC office, totally fine?

Connie: Yes.

Alex: Okay. I got it. But falling over in the middle of the sidewalk?

Connie: Not fine. Right.

Alex: That sounds pretty fair. Anyways, we should-

Om: I do like the bikes.

Connie: But do you like the bikes just left anywhere? Or is that just me and my own little-

Om: No, you can just tie them up. That’s all.

Kate: Okay, well let’s not get carried away talking about scooters. We’ve talked about scooters enough on this podcast. I think that’s probably good for the day. What do you guys think?

Alex: Yeah.

Kate: Wrap things up? We’ll be back tomorrow talking about Uber.

Connie: So fun to see everybody.

Om: I’m going to take an Uber back.

Connie: Of course you are. Well, thanks for joining us.

Om: Thank you for having me.

Kate: All right. Bye everyone.