IAC CEO Joey Levin: Why Value Investing is BS; The Most Insane Element of SPACs | 20VC #982

1. 0:00 – 0:44

   Intro

   1. JLJoey Levin0:00

      The way the SPAC works, you build a company for as long as it takes you to build a company. You get it to a position where you think it can maybe endure the public markets, and then in that critical moment, you give somebody else who doesn't know your company at all a free option on effectively selling that company to the public for three months. That is completely insane.

   2. HSHarry Stebbings0:23

      Joey, I'm excited for this. I've heard so many great things from so many of your friends. So first, thank you so much for joining me today.

   3. JLJoey Levin0:29

      It's my pleasure. And if you didn't hear great things from my friends, I don't know who you'd hear great things from.

   4. HSHarry Stebbings0:35

      (laughs) Well, I mean, they all said the same thing, which we're gonna dive into today. But I wanna start with a little bit of an abnormal start. But Joey, you have a fascinating position today,

2. 0:44 – 7:00

   Who is Joey Levin?

   1. HSHarry Stebbings0:44

      but what did you want to be when you were younger when you said, "Hey, what do you want to be when you grow up?"

   2. JLJoey Levin0:49

      I actually wanted to be a lawyer 'cause my dad's a lawyer. Uh, I wanted to be Clarence Darrow. That was the, the... I had read books about him and stories about him, and, uh, that was... He's from the Midwest and he's an iconoclast in a lot of ways, and that was what I wanted to be.

   3. HSHarry Stebbings1:07

      Did you fit in at, in school?

   4. JLJoey Levin1:09

      Uh, yeah. M- more or less fit in. I think so, yeah. I mean, I, uh, did... I wasn't a great athlete, but I had other things that I focused on.

   5. HSHarry Stebbings1:18

      You turned into a great golfer, that's what counts. Uh, I, I'm intrigued. You know, some people feel this kind of success was always, like, inevitable. They may not have known where it came from. Did you feel that you would always be successful?

   6. JLJoey Levin1:29

      No, but I, I do think that one of the things that's important I see in a lot of successful people is they come in clusters. I think that the reason they come in clusters is 'cause they have good role models or they, th- they see what's possible. In other words, if you're in a group where... And there's a sort of natural competitiveness, too. But if you're in a group where people are achieving certain things, you realize that that level of achievement is possible. I think I've been a, a beneficiary of that in a lot of the environments that I've been in.

   7. HSHarry Stebbings1:57

      Who's your closest mentor? You said about coming in clusters there and learning from people. Do you have a mentor or two that really stand out?

   8. JLJoey Levin2:04

      I have been very, very fortunate to learn from... closely from some, uh, amazing business people. Of course, Barry Diller, who I still work with every day. Jack Welch was a very close friend and advisor. I have my family. My dad has been a big help to me and advisor to me in business, and, and my brothers too. And my whole family.

   9. HSHarry Stebbings2:27

      So I think one thing that I loved about your background was also, like, duration. You know, you've been at IAC now for 20 years. Since 2003, I think it is? And so when we look back, like, that's... It's rare to have such duration, especially today. When... If you look at one to two elements where your career really propelled within IAC internally, what were they, do you think?

   10. JLJoey Levin2:47

       It's a series of things that build on top of each other, but if I was probably gonna narrow it to two traits, maybe. One is, I think, hard work. I, I have generally, uh, and continue to try to work hard. I try to, to know more and learn more, and that doesn't mean hoarding information. Uh, this is very important in an organization, that everybody shares information and uses that information as currency value internally against people externally. Uh, but doing the work to have the information to understand things better, I think is, is, uh, really important, and I, I generally did that, going back to, you know, individual deals where I'd try and learn everything when I was doing mergers and acquisitions. It was learn everything about a company that we were, uh, uh, considering acquiring. Reading all of their public filings, reading all their transcripts, reading everything that they've published to really understand it inside and out, and I think that that was important in terms of hard work and then having opinions. And my opinions were definitely not always right, but having opinions, I think, is a really important thing to advancing in an organization because you, you stand out with opinions. You know, you-

   11. HSHarry Stebbings3:52

       Do-

   12. JLJoey Levin3:52

       ... you take a position, and taking a position is an important thing to do.

   13. HSHarry Stebbings3:55

       Do you agree with strong opinions loosely held?

   14. JLJoey Levin3:58

       Uh, yes, very much so.

   15. HSHarry Stebbings4:00

       (laughs) Good, I'm glad. I'm very much one, too.

   16. JLJoey Levin4:03

       Very much so.

   17. HSHarry Stebbings4:04

       Uh, we mentioned duration there and, like, the length of time you've been at IAC. As I said, we don't see that very often today. When you advise grads, your children even, about coming out of school into the workforce, what do you advise them given the experience that you've had?

   18. JLJoey Levin4:19

       A little bit like we were talking about before we got started here, but if you're doing something that you really love, that excites you, then you can do it for much longer. It doesn't mean you don't have to do anything uncomfortable. It doesn't mean you don't have to do anything that's challenging or... But if you're doing something you love and that excites you, it just feels different. You're, you're willing to do it. Uh, and if you find that, and it's very, sometimes hard for people to find, you're lucky to find it, but do that. And you sort of... To, to, uh, to help people find it, you ask them, "Well, what are the kind of books you read? What are the kind of websites you read, or magazines?" Or, or whatever it is, "What do you list- What are the podcasts you listen to?" And you pick up a theme. Maybe it's sports, maybe it's business, maybe it's art, maybe it's marine biology. Whatever it is, if there's something that really fascinates you, you're... Even if you haven't identified it, your, your actions are identifying it. Uh, and so, like, the, the books that I read growing up were... Not a lot of other people my age read these books, but they were business books, and I loved reading the business books, and that was the kind of thing that, that fascinated me and that's what led me into this kind of career and made it so I could stay a while and do it a long time, 'cause I, 'cause I love what I do.

   19. HSHarry Stebbings5:34

       Can I ask? You mentioned there about doing what you love. It's not always easy. Um, I, I think people often, like, get their chills with me, and they're like, "Oh, it just worked," and it didn't. Um, when you look back at IAC, what was the most challenging period?

   20. JLJoey Levin5:46

       Uh, I'd say we're going through a challenging period right now, in a sense. Um, it's, it's alway- And we've been through this, a similar period, in the past. It is when there is a big negative adjustment in the surrounding environment. Everything changes very quickly. Valuations change really quickly, which is probably what's most acutely felt, but...... everything changes very quickly. Your ability to generate revenue changes very quickly, your ability to manage your expenses changes very quickly, and your ability to get credit for things changes very quickly. And when those things happens, it's, uh, it's a big adjustment. It's a big adjustment because, one, just dealing with those things individually is hard, but two, the organization isn't used to it. Meaning, if for people who joined the organization in, you know, the prior 10 years let's say, it was nothing but up. Now, no organization goes up steadily forever, but they were in an environment where for 10 years they saw nothing but up and so you can develop habits and develop points of view that, that are related to that, and that are unhealthy and that need to be unlearned, and that need to be changed. And so managing that kind of change among people in an organization is a hard thing to pull off.

3. 7:00 – 10:13

   Most Dangerous Traits from the Boom Times

   1. JLJoey Levin7:00

   2. HSHarry Stebbings7:00

      I gotta ask this one: what behavior traits or attitudes do you think have been most dangerous that this generation have lived through only in the best of times, have picked up? What are the most dangerous traits?

   3. JLJoey Levin7:12

      I think the most dangerous one, and this is the same thing we do with our kids and I'm certainly guilty of it, the two biggest sort of macro events, if macro finance events of the last decade or so, more than a decade I should say, was 2008, the Great Financial Crisis, and the, the pandemic. Those were two very profound ones, right?

   4. HSHarry Stebbings7:36

      Uh-huh.

   5. JLJoey Levin7:36

      In both of those cases, there was a, uh, government bailout. And I think the government did the right thing, and, and saved jobs and saved the economy and did, did really important things in that. But the lesson that's learned is there's a bailout. So, whatever you do, there's a bailout. And that's, you know, not always available and not always true. You know, I'm, I'm all for long-term optimism but I think that, that, the level of entitlement that we see in, in the, the younger generation of that year, or those years, is, is I think related to that. A general bull market supported by when things go wrong, don't worry, uh, somebody else comes to the rescue externally.

   6. HSHarry Stebbings8:20

      But do you think that realization has set in? Sorry, I'm just going, going for this one. I, I, I hire for my teams constantly and people still want exceedingly high salaries, they still want exceedingly high bonuses, they still want work from home, they want work/life balance, they want equity. I want, I want, I want, I want, I want. Well, what about what the business needs?

   7. JLJoey Levin8:39

      Look, it, it, we're at a period where a lot of things are signical and I think, uh, cyc- cyclical and I think that will come back into balance, uh, over the next few years.

   8. HSHarry Stebbings8:48

      How do you manage that morale internally? 'Cause it is nerve-wracking for a lot of younger people who've never seen this before. Um, you know, you're a silver fox in the room with wisdom, um, how do you manage their morale and talk to them when they are shitting themselves about what could be their first working recession?

   9. JLJoey Levin9:05

      Well, we have a, uh, we're, we're lucky to have something at IAC which is a lot of people with tenure. So, they both are very familiar with IAC and the way we operate, and they've been through a lot of different cycles and markets and environments. And so you have a mix of people like that and people who have not had that experience, and I think having that mix in an organization is, is really helpful for, for striking balance and learning because if it's all the people who haven't experienced those things and then sort of one person who has the knowledge or did the research or has the experience, then it's, it could be, "Well that person's out on an island and, and they don't get us and they don't get what's going on." But if you have a, a mix of those things then I think you're, you've got a breadth of point of views where people can interact and have a dialogue around that.

   10. HSHarry Stebbings9:58

       You mentioned like changes in a lot of different things, but you mentioned changes in valuation. Um, I'm intrigued 'cause you said before to me that there's no such thing as value investing, um, as a reader of Benjamin Graham's book, I was naturally intrigued.

4. 10:13 – 11:51

   Why “Value Investing” is BS

   1. HSHarry Stebbings10:13

      So, why is there no such thing as value investing?

   2. JLJoey Levin10:16

      Well, what I mean by that is people use the word value investing to be, to mean buying things at low multiples or buying things cheap or deep value or whatever. Uh, and, I don't, that is a way to invest but value investing also can be buying something at a very expensive multiple or a very high, I shouldn't say expensive, I should say a very high multiple, but that there's value there because of what you believe in the growth and, and the future. It's, I may, I maybe sensitive to this because people say IAC is a value investor and that doesn't bother me as a term but so is, I don't know, pick a name of, of, uh, VC or a growth equity fund that pays very high prices for growth things. Like, they think they're a value investor. They are a value investor. They see value there relative to what the, they believe the future value is and, and I'd call them a value investor too. And for us, we do both, so we are a value investor but we're not saying we have to buy everything really cheap or we have to buy, as a, uh, you know, as an absolute multiple. We could pay big multiples for things where we see big value and, and that can work out too.

   3. HSHarry Stebbings11:28

      It, it's funny, I remember when Sequoia invested in Figma. It was rumored to be a $400 million valuation which was 100 times revenue which was crazy at the time, it was 4 million, and everyone thought it was ridiculously high. I, I, I think they would argue that that was a value investment or a good value investment.

   4. JLJoey Levin11:43

      Correct, totally. And there's so many examples of that. I mean, there's obviously examples of the opposite but I, yeah, I would call that value investing. I would say they're a value investor.

   5. HSHarry Stebbings11:50

      Do you know what I

5. 11:51 – 13:44

   Be Greedy When Others Are Fearful

   1. HSHarry Stebbings11:51

      find hard though is there's this trait, you know, or saying, you know, be greedy when others are fearful and fearful when others are greedy. The trouble is if you want to be greedy when others are fearful you need other people, if you're reliant on cash, to share that greed. And what I'm seeing now is there's a lot of opportunities but people aren't willing to fund them because they share everyone else's fear.How do you think about having the courage to be greedy when others are fearful?

   2. JLJoey Levin12:18

      Well, you've, you've hit on a very important point which is you need capital to be greedy when others are fearful, and that means that you need to have been preparing for that moment in advance. Uh, now no one can time those things right, but you need to have been operating in a way where you have the ability and the capital to, to be greedy in those moments, and that's a very hard thing to do. But you're right, everybody right now is talking about, "Oh, there's so many opportunities, there's so many things that I want to buy. I just don't have enough... I just don't have enough capital to do it." Well, of course, that's what's happening. When capital is scarce, things are cheap, and when capital is abundant, things are expensive, where the, the opportunity is is when you've built up capital and been able to hold onto it through those periods to, to be able to take advantage of the moments to be greedy.

   3. HSHarry Stebbings13:05

      Do you feel you and IAC built up enough cash to be greedy when others are fearful?

   4. JLJoey Levin13:09

      I think we certainly have plenty of cash right now to... You know, we're, we're well over a billion in cash and no debt at the parent level, and so we're, we are well capitalized, uh, to take advantage. Do I wish we had more? Of course, I wish we had more, I wish we had a lot more right now, but, uh, I'm, I'm happy that we have what we have, and, and I think we'll make opportunities with that.

   5. HSHarry Stebbings13:30

      In, in the assets you're looking at now, are you seeing valuations reflect the macro? 'Cause I think the biggest challenge for me is I'm a seed investor predominantly. Seed investing is completely the same if not slightly higher prices than ever before. (laughs) The prices aren't

6. 13:44 – 16:21

   Private Market Valuations vs Public Market Valuations

   1. HSHarry Stebbings13:44

      reflective.

   2. JLJoey Levin13:45

      The, the private markets and the public markets are... can be very far apart in moments of tra- are generally very far apart in moments of transition, so, uh, I think public markets are reflective of the environment right now and private are not, and there's a bunch of reasons for the, the private not being. One, people raised a lot of capital when capital was easy, and so having that capital, chasing those deals, that still exists. Number two, you don't need to be honest on valuation every day. There's no one forcing that, so if you have enough capital in, uh, a business, you would not go and get a valuation right now. Number three, everyone in the ecosystem is incentivized and able to maintain sort of pretend valuations, meaning the, the investors want to keep their marks where they are, their LPs actually want them to keep their marks where they are 'cause they don't wanna look bad, the companies want to keep the marks where they are 'cause they want to retain the employees, and there's nobody in that ecosystem whose, whose job or responsibility is let's make this more accurate and more realistic, and that only happens when you, you're, you have to go access the capital markets and then tell s- get somebody new into that story. You also have nobody in the ecos- like public companies also have short sellers, so the people who don't believe get to vote in addition to the people who do believe, but in the private markets only the people who do believe get to vote, so that's gonna be a, a skewed vote.

   3. HSHarry Stebbings15:11

      I had Orlando Bravo on from Thoma Bravo yesterday actually, and he argued that, you know, bluntly, this is the new normal, and actually it's relatively reasonable. We saw the result of quantitative easing and, you know, increased capital supplies, as you said, from government intervention, um, and this is actually not bad. It's reasonable and it's the new normal. Do you agree with that statement, that this feels reasonable and the new normal?

   4. JLJoey Levin15:36

      I do agree with that, yeah. I, I think that this is... Yeah, we are where we are right now, and now we need to grow from here. There's no snap back, you know, even if you say earnings take time to grow, earnings don't typically, at large, grow in multiples. They grow in, uh, you know, increments, f- percentages, and when that happens, markets grow and valuations grow but there's no catalyst that I don't think anyone can define which is multiples are going to expand soon. You need interest rates to come down, you need tax rates to come down, and then things like, uh, like multiples can expand but I think we are naturally where we are, and I think it's fine and appropriate.

   5. HSHarry Stebbings16:16

      We, we've spoken a lot about kind of value. In terms of like digging a, a layer deeper to kind of actual

7. 16:21 – 18:55

   Simplification is the Key to Value Creation

   1. HSHarry Stebbings16:21

      value creation, I've heard you say before simplification is the most powerful tool in value creation. What did you mean by this statement, Joey?

   2. JLJoey Levin16:30

      We... Simplifying is our margin in all of our business. That's what entitles you to margin. If you take your customers, and a lot of our businesses have customers on two sides. We have marketplace businesses where there's a supply and demand side, and both of them are customers in a sense. Your job in the middle, even if it's not a marketplace business, is simplification. You are simplifying something on behalf of your customers, and they are paying you a margin in order to do that. The more you simplify, the more margin, uh, you're entitled to because that's how you create value for your customers, uh, but simplification also goes into, to, to well beyond to simplifying the product for your customers. It's like simpler pricing is easier for people to sell. Simpler decks are easy... Presentations are easier for people, uh, around you to understand and appreciate. Everything, when you simplify, when we have any process online where we're trying to sell something, anytime you take a step out of that process you increase conversion, you're simplifying, and if you use that as a tool there is not a moment in business where you can't think about that as a improvement opportunity and, and yield value from it.

   3. HSHarry Stebbings17:44

      What do you think are the biggest mistakes that people make that you see around you in failing to simplify?

   4. JLJoey Levin17:50

      Taking on too many projects at once, that's a huge one. Um, you know, people say, "Oh, I'm gonna..." th- they're... All people cared about if we go back to the prior market, all people cared about was TAM, total addressable market, and they said, "My TAM is so big that I can do so much in this TAM, and I have to get all of this TAM, and I have to launch all of these products to tackle the TAM." That mistake was spreading yourself too thin, taking on too many competitors or markets at once, and, uh, I, we saw a lot of people do that when they had too much capital to overextend themselves and complexify rather than simplify.

   5. HSHarry Stebbings18:26

      I think one of the biggest failings i see in simplification is messaging. How often do you see, especially at B2B, but how often do you see a website and you're like, "I..."... not quite sure what they do.

   6. JLJoey Levin18:36

      I get that all the time. I mean, I get emails from people who say, you know, "Would you consider investing in my business?" And then they say a series of eight words that I could not translate into any English.

   7. HSHarry Stebbings18:47

      Yeah. I, I think that, so what does great messaging mean to you? You have a series of phenomenal businesses within, you know, IAC that

8. 18:55 – 19:58

   What makes “great messaging”?

   1. HSHarry Stebbings18:55

      I think nail messaging very well. What's been your lessons on what makes great messaging?

   2. JLJoey Levin18:59

      My dad, when my siblings and I were growing up, forced us to, to read a book and then memorize a line or a, a portion of the book, which was William Strunk, Jr. and E.B. White, The Elements of Style. Th- Now, I, I might mess it up a little bit, but, "A sentence should have no unnecessary words, and a paragraph, no unnecessary sentences, just as a drawing should have no unnecessary lines, and a machine, no unnecessary parts."

   3. HSHarry Stebbings19:27

      I love that. When I think about, like... That's brilliant. I'm go- I'm gonna use that. Uh, the joy, the joy of this show is that I can just take other people's wisdom and pass it off as my own in the future. Um, but a fantastic... The joy of life, welcome to venture capital. Uh, the, the problem with simplification is you have to understand the distinction between an opportunity that you should take and actually a distraction, an unnecessary part, as you put it there. How do you think about that distinction between a very exciting opportunity or a distraction

9. 19:58 – 23:11

   Company Values

   1. HSHarry Stebbings19:58

      away from the call?

   2. JLJoey Levin19:59

      Yeah. This is something that I was, used to be very skeptical of and now I've, I've embraced, which is a company has, should have values. We just rolled this out at Angi. I, I, I've been CEO of, of Angi in addition to IAC for the past few months. And Angi did have values before, but uh, I'm not sure they were lived, uh, every day in making decisions. If you have values that are unique to your company that you believe in, it actually really does help in understanding the difference between an opportunity and a distraction.

   3. HSHarry Stebbings20:37

      Can I, can I, c- can, can I just ask? Sorry, I'm too intrigued. I have so many people say, like, "Oh, it's about values and uh..." And I'm like, well, everyone's values are kinda the same, aren't they? It's like, trust, honesty, truth, hard work, integrity. Uh, what- what's different?

   4. JLJoey Levin20:54

      Yeah. So I, I pushed hard when we redid them at Angi to make them unique. So for example, the first one now at Angi is build lifelong customers. That changes a lot of decisions that you make in an organization. If you're trying to get a customer for one transaction, you can make a whole series of decisions, uh, to do that, and if you're trying to get a customer for life, you make different decisions in each of those situations. And what, what you really want, and this is, uh, I've said to the organization and, and, and I say repeatedly, the values should make you uncomfortable. Not always, I mean, but there should be times where they force uncomfortable decisions and uncomfortable discussions, where you have to call out colleagues, not in a, a mean way, but where you have to call out colleagues and say, "Wait a minute, has this been through the values filter or not? Because to me, it seems like it hasn't been." And you're right, things like integrity, like, that's an obvious one, but things like build lifelong customers, there is different ways we prioritize a product roadmap. There are different features you'd release. There are different ways you'd communicate and present if you're trying to do that first. Again, in the example of Angi, it was previously customer first. Okay, customer first, I get it, but then what's second and third and fourth, and when do you come back? Like, build lifelong customers is, is a very challenging thing to do, and it has absolutely changed our roadmap and our priorities and will going forward.

   5. HSHarry Stebbings22:22

      You mentioned being CEO of Angi and IAC. If there's one thing my investors are worried with me about, it's that I do too many things between media companies and funds. I naturally tell them that it's not a problem at all. Um, (laughs) CEO of two companies.

   6. JLJoey Levin22:36

      Well, you're right about that, I think, when you tell them that, because you're doing things that you love that are, are, that, that feed each other. If you were doing something that you didn't love, that you, uh, just had to get done, some obligation, whatever, I'd say they're right. But what you're doing is things that, that naturally, uh, feed upon each other and are, are, uh, they, you're, you're doing these things in your free time because it is your free time, you know? It, it's the, the... Otherwise, you'd be, you know, playing golf or something. I don't know.

   7. HSHarry Stebbings23:09

      (laughs) Uh, so my question, I, I really appreciate

10. 23:11 – 24:32

    Being CEO of IAC and Angi at the Same Time

    1. HSHarry Stebbings23:11

       that and I feel guilty turning this on you then, but like, are your two CEOships inbuilt as mine are, and how does that work then for you with the interplay?

    2. JLJoey Levin23:19

       I have the time to do it. I've, I have colleagues at IAC who are, uh, highly capable of helping out in other areas, and they've stepped up to help, in particular, our CFO, Chris Halpin. Barry Diller, the chairman, has stepped up in other areas to, to help so that I have made time here. And, you know, I just... Work-life balance is, is a challenge, and so it's definitely taken from, uh, away from personal life. But as I said, I love doing it. I enjoy, uh, both the Angi business and the Angi job and the IAC business and the IAC job, and I'm lucky that I get to do both and I figure out how to make time for both, and I do.

    3. HSHarry Stebbings23:58

       I, I, I totally agree. I think work-life balance is a little bit of a, a myth, to be quite honest.

    4. JLJoey Levin24:03

       I agree. It's, you have to make... Look, you, nothing is so extreme it's, uh, it's one or the other, but there are people just fundamentally that make a choice, and some choose work and some choose life. And I don't begrudge anybody which one of those two things they choose, but that's a choice. That's a fundamental, I think, dividing line.

    5. HSHarry Stebbings24:22

       We, we mentioned kind of opportunities that one should or could take. A- an opportunity that many took over the last couple of years was to SPAC, um, obviously an alternative

11. 24:32 – 29:03

    The Problem with SPACs

    1. HSHarry Stebbings24:32

       mechanism of going public. Um, when you look at SPACs today, I think like 98% are trading abysmally below their trading price originally. Why did they not work as a mechanism, Joey?

    2. JLJoey Levin24:44

       There's a bunch of concepts in the SPAC that are flawed, but the most underrated in, in my mind, but also the biggest flaw, was the way the SPAC works, and we looked at this with one of our, uh, companies that we're involved in. The way it works is you, you build a company for as long as it takes you to build a company. You get it to a position where you think it, it can maybe endure the public markets, and then in that critical moment, you give somebody else who doesn't know your company at all a free option on effectively selling that company to the public for three months. That is completely insane. That does not make sense, I don't think, for any great company. It can make sense for other things, but I don't think it makes sense for any great company. It can make sense for, uh, an idea where you need somebody to help go fund an idea for you. So, uh, these, these things actually, a lot of the things that went out early that are sort of ideas or a little bit more of an advanced idea, but have no business yet, haven't built a business around it, that's just saying we need help fundraising. Go figure out how to, to fundraise this for, for us so that we can continue building s- this idea into something that may be a, a business. But if you have a business, you'd be crazy to give somebody a three-month or multi-month option on selling your story to a new set of investors.

    3. HSHarry Stebbings26:08

       But I would argue, if you don't have a business and you have an idea, we saw many kind of early ideas, very, very early products with no revenues for sure. Uh, SPAC, you're placing all the pressures, demands, and expectations of being a public company on a very early product team org structure that's not ready, that distracts it from building product, that distracts it from messaging, from you name it. It, it, it's a completely suboptimal structure, isn't it?

    4. JLJoey Levin26:33

       It only depends relative to your alternatives. You ignore the thing that they got out of that, which is very important, which was capital. Now, if you say they could have gotten capital somewhere else, then I'd say, uh, you're right. But in many of those cases, actually they couldn't get as much capital or nearly as much capital as they got in the public markets, and now they need to endure all those difficult things which, which are a real challenge, but they got something really important, which is the, the capital to fund the business.

    5. HSHarry Stebbings26:59

       What do you think are the biggest misunderstandings or misnomers that people have or carry towards SPACs?

    6. JLJoey Levin27:04

       I still think the biggest one is nobody understands this, this... Or not nobody. Few appreciated the reality that you're giving away an option on your company for an extended period of time, and it became so clear. It becomes crystal clear in volatile markets. But, and it's also like, oh, it... Well, like options are, it's a, it's sort of a one-way option, which is if things are going up, you gave away the option too cheap. If things are going down, you get it back. And so it's, it's in every case worse for you. But there, there was a good that came out of the SPACs, which is a lot of these companies that did SPAC now have to confront the public markets, now confront more sort of realistic, uh, valuations. And I think that's an opportunity for people with capital to find real opportunities.

    7. HSHarry Stebbings27:48

       So, what, what happens to, when we look at the generation of SPACed companies, what happens to them? Do they get taken private at much more realistic valuations? Do they-

    8. JLJoey Levin27:56

       Maybe, or they grow out of it. But I mean, one of the problems which I didn't appreciate until somebody who, who knows this well said it to me... It was Henry Ellenbogen who said it to me. Th- and this was, he predicted this three years ago or whatever it was, very early in the SPAC thing. He said, "The problem is going to be, there's only a handful of investors who invest in company, public investors who invest in companies of this size." And to be a thoughtful investor, obviously it takes time to do work and analyze a company. The volume of companies coming into this size, it way exceeds the capacity of people to analyze and, and invest in those companies in the public markets. So, what, what happened is they just have no home. The lea- so which means they'll either have to grow out of that, uh, by being big enough that people have to pay attention to it, or yeah, they'll probably go back private and, you know, try and work things out there.

    9. HSHarry Stebbings28:49

       Can I ask you, you know, we, we see a lot of changes in, you know, markets. Uh, one thing I would like to discuss is also changes just in, in you, as well. And over time, we have changes to our financial profiles, and one that's always an interesting one is

12. 29:03 – 36:00

    Joey’s Relationship to Money

    1. HSHarry Stebbings29:03

       kind of one's relationship to money, I find. How do you think about your own relationship to money today, Joey?

    2. JLJoey Levin29:08

       It certainly evolved over time, but somebody I knew well once said to me, "Uh, money is round. Sometimes it rolls towards you, sometimes it rolls away from you." And you got to remember that that's true. I mean, never did I have a more distorted sense of my net worth than, than probably in November of 2021. And, you know, you look at things on paper, and then you, things change. And, and I always sort of had a sense or the knowledge that that was possible, if not likely, that, you know, things go up and down. But when it happens so severely and so quickly, you, you appreciate how real that, uh, truism is. And I do. But also, you know, you got to put things in perspective. I remember the first time I made money. The fr- I was running a business for IAC, and I had a deal where I got, uh, paid a certain amount if we hit a certain amount of metrics, and what, or a certain level of metrics. And when we did that, I and my colleagues got paid very well, and that was very exciting, and I felt like the, the richest person on Earth. And I did a fun weekend with my friends, and, and I said, "This is, like, top of the world." And then, you know, you go on to do more things, and you earn some more, and... But then you, you have this crash, and you say, "Oh, I, I feel like I've been crushed," and whatever. But if I look back, I say, "Well, I'm doing much better now than I was when I felt like I was the richest person on Earth." Uh, and you, you, if you put those things in perspective, I think you can get a little more, uh, relaxed about these things. Money is a... Another friend of mine said to me, you know, "... above a certain level, money is just a scorecard, and I don't think it ... and, and he wasn't saying, saying that it should be a scorecard, he's just saying that's what it is, and it- it's not that important in that context.

    3. HSHarry Stebbings30:59

       I think one thing that's also very challenging is when you have children, um, and, you know, they're brought up with, you know, bluntly nice financial surroundings, but wanting to instill the same level of hunger and ambition and drive in them. How do you think about instilling that same kind of moral compass and, like, discipline, drive, hunger i- in children when, you know, money is less of a, you know, daily thought and concern?

    4. JLJoey Levin31:23

       Yeah, I think that's a very hard thing to do as parents, and I'm not sure we've figured it out. I will tell you that my wife is much better at that than I am, and she does a very exceptional job keeping our family and our children grounded in things. We're very lucky in that sense to, to have that and have her relentlessness in that area. It's still a hard thing to do. You- when you think about what, what builds strength of character, whatever it is, adversity. Another thing, another friend said to me is, "We know that adversity builds th- these things, and these im- these important features," and all we do as parents, spend all our life making sure our children avoid adversity at every, uh, possible turn. And that's a, uh, conflict that, that I haven't really reconciled, and probably need to do a better job reconciling.

    5. HSHarry Stebbings32:13

       You mentioned, uh, you know, bluntly looking at net worth in 2021 and on paper feeling very, very rich. My biggest mistake over the last few years was bluntly not selling positions when I could've done, um, and bluntly made a lot of money where I didn't, because I didn't sell them. When you look back over the last few years, what do you think back on as your biggest mistakes in, in doing or not doing in the height of the good times?

    6. JLJoey Levin32:38

       Look, again, would it be nice to have more capital right now? Yes. To take advantage of more opportunities? For sure. It- i- i- it's easy to look back and, and regret not having sold something, but people do this to themselves and it's very unhealthy, and I don't recommend it. Everyone says, "Oh, I had the opportunity to buy that, I certainly would've bought it at the bottom when I was thinking about buying it," and, "I had the opportunity to sell that, I certainly would've if I had known X, Y, and Z, I would've sold it at the top if I had sold it." It is very, very, very rare that you pick the absolute bottom and the absolute top for any of those decisions. The reality is, you would do somewhere near one of those things and somewhere near another one of those things w- if it works out exceptionally well, but you're never gonna get those things perfect, and the important part, uh, the way to govern it is, a- as it relates to investments, is it a business that you believe in? Is it a team that you believe in? Is it a market that you believe, believe in? And if it is, then over time those things will, uh, balance out, and you wanna hold on to the, the, the long-term winners, and over time they'll continue to win.

    7. HSHarry Stebbings33:45

       You mentioned earlier, that we said about the role of money there, you mentioned earlier family, um, and your brothers and your father. Can I s- how has your family impacted your mindset, impacted how you think as a leader today, and have there been some prominent takeaways or lessons from them? I loved what your father made you read out, but have there been some big takeaways?

    8. JLJoey Levin34:06

       Well, yeah, I- I- I mentioned them, I didn't mention my mom yet, but another huge influence on me, my mom was, and remains incredibly frugal and did a wonderful job forcing that upon me and my siblings in ways that, that did drive us. I mean, when we would go, uh, out to dinner, we would go to the food court at the mall and we would get one drink at the place that had free refills and then pour it around and then go get a refill and, and pour it around to each other, and like, wherever there was a deal to be had, we were- we had to get the absolute best deal. You could not possibly pay full price for anything. When we went to a restaurant you could never get soft drinks at a restaurant because the margins were too high on soft drinks, you could never get the add-ons because the add-ons would, would add up too quickly, and there was a section of the menu where the prices were too high where you couldn't look at that section, you could only look at the other section. Like, those were, uh, and this is- I'm not suggesting we had any hardships in, in that sense, but that was building these values which is, "Well, what do I have to do to be able to look at that other section of the menu?" or, "What do I have to do to be able to, to order a soft drink or whatever?" And, and those were the values that, that we had growing up, and that had a real impression on us.

    9. HSHarry Stebbings35:23

       And that might be really divisive. Do you agree with that? Like, isn't that a bit harsh on kids? Like-

    10. JLJoey Levin35:30

        No, look, I- I do agree with it. I haven't had the, uh, fortitude or whatever you wanna call it to do it myself with my kids.

    11. HSHarry Stebbings35:39

        (laughs)

    12. JLJoey Levin35:40

        But I do think that is, uh, uh, good. There was- we would go out to dinner with other families. All the other kids would order a soft drink and we would have no soft drink, uh, and we love soft drinks like everybody would, but we, we didn't, and so that created some ambition and drive and I think that was healthy actually.

    13. HSHarry Stebbings35:59

        You said about ambition

13. 36:00 – 38:50

    When is the right time to give up?

    1. HSHarry Stebbings36:00

       and drive, final one before our quick fire, the biggest commonality that everyone told me about you, Joey, was your unwavering persistence, your inability to give up, whether it's, uh, a bunker shot or business, um, my question to you is, there is sometimes a time to give up. How do you think about when to give up versus when to continue and push through the hard times?

    2. JLJoey Levin36:23

       Yeah, it- it's a very important question in a lot of the things that, that we do. You gotta go back to what is your thesis and do you have a viable thesis that you believe in? It can't be because you believed in it previously, it has to be do you believe in it today? We've told this story a lot with, uh, a business that we have called Dotdash, it's now merged with Meredith, it's called Dotdash Meredith-... but, uh, we origi- that evolved from what was originally an acquisition called About.com. When we bought About.com, we had a thesis it was gonna be part of ask.com, actually, and we had a view on what we could do with it. And Neil Vogel, who was running that business, had a plan, whatever, went out with a plan, bombed. Came back in and he said, "Well, that plan bombed," and he said, uh, "But I've got a new plan, and here's why I think it's gonna work." And everything he said makes sense, made sense to, to us. And we said, "Okay, go do that." Bombed. Comes back in, he says, "That one bombed, but I got a plan. Now this one's gonna make a lot of sense, and here's why it's going to work." Everything he said made sense. And we said, "Okay, go do that." I think... I can't remember if it was the third or fourth try, I think in one of 'em I said, you know, "We're not gonna..." I think after the third try I said, you know, "We're not gonna have a fourth try, uh, on this." But whatever it was, the, the, the third one worked, or whatever, whatever it was worked, and each one of those decisions independently was the right decision. But you can also be at a point in these businesses where you say, "That thing bombed," and then they come in with a plan that, that doesn't make sense, that doesn't resonate, and is just, uh, you know, let's keep doing the same thing that we were doing that wasn't working, and then it's, now it's time to get out, or find somebody else who could come up with a plan that makes sense. But, but you, you, you can't let it be burdened by the sunk cost of the history. You can't let it be burdened by the, what your thesis was previously. You gotta evaluate it fresh on, on the merits, and if it works on the merits then you can swing for it again.

    3. HSHarry Stebbings38:26

       Are the best CEOs the best resource allocators?

    4. JLJoey Levin38:30

       Yes. It's balancing short term and long term. That's the hard part of the job. Anyone can do all short term or all long term, but balancing short and long, balancing capital and resources, again, short and long term is, is the hardest and most important part of the job.

    5. HSHarry Stebbings38:46

       I would love to move into a quick fire round, Joey. So, I say a short statement, you give

14. 38:50 – 42:16

    Quick-fire Round

    1. HSHarry Stebbings38:50

       me your immediate thoughts. Does that sound okay?

    2. JLJoey Levin38:52

       Sure, let's do it.

    3. HSHarry Stebbings38:53

       So, work/life balance. We live in an entitled generation. Do you agree?

    4. JLJoey Levin38:57

       I do.

    5. HSHarry Stebbings38:58

       (laughs) Good. Uh, what have you changed your mind on in the last 12 months?

    6. JLJoey Levin39:02

       I was expecting, and in some ways looking forward to, the market reversal that we've seen, and now in it. It was much more pleasant before that.

    7. HSHarry Stebbings39:16

       (laughs) What's the shittiest part of it?

    8. JLJoey Levin39:19

       It's just the, the adjustment that everybody, uh, needs to endure, in particular, a- around jobs.

    9. HSHarry Stebbings39:25

       Biggest strength, biggest weakness. What's yours?

    10. JLJoey Levin39:28

        I guess I probably agree with the, the folks who told you what they told you, which is, I can... I have trouble giving things up.

    11. HSHarry Stebbings39:36

        (laughs) Is that a strength or a weakness? (laughs)

    12. JLJoey Levin39:40

        Sometimes it's a strength, sometimes it's a, sometimes it's a weakness, for sure.

    13. HSHarry Stebbings39:44

        You can have one board member, okay? Just one. Who's the board member and why?

    14. JLJoey Levin39:49

        Well, I would go back to, he's no longer alive, but th- the Jack Welch was the, had the best instincts on things and quickest instinct on things and understanding of things, and also could tell how other people were think... Incredible empathy, and could help you divine how other people were thinking. And, uh, that was an exceptional trait that I think made for a, an exceptional board member.

    15. HSHarry Stebbings40:21

        What's the secret to a happy marriage, Joey?

    16. JLJoey Levin40:23

        My wife's uncle has this saying that if I say something and my wife's not around to hear it, am I still wrong? So, I, I have (laughs) obviously have appreciated that. And I, I think it's important to, uh, of course love each other, respect each other, but also have opinions when they're really important to have opinions. But, uh, you don't need to... This is the opposite of my work advice. You don't need to lobby in opinions when it's not necessary to have an opinion.

    17. HSHarry Stebbings40:57

        I love that. Uh, what would you most like to change about the world of venture? You see venture almost from the outside. What would you most like to change?

    18. JLJoey Levin41:05

        I don't know. I don't really think or care that much about it. Oh, not to, uh, uh, criticize it all, I just, I don't spend time thinking about what I'd like to change in venture because I don't spend a lot of time thinking about, thinking about that. So I don't know. I, I guess maybe one thing that came out of the last environment was I do think it was dangerous for a lot of companies to be overstuffed with cash, and I think that that was a danger to more companies than it was a help to.

    19. HSHarry Stebbings41:33

        2028, we do another show. What, where are you and where's IAC then?

    20. JLJoey Levin41:37

        I can't think that far ahead. That's a, that's a long... I'll still be at IAC, I think. Uh, how about that? (laughs)

    21. HSHarry Stebbings41:43

        How far ahead do you think?

    22. JLJoey Levin41:45

        Oh, l- look, in planning our business, we do think multiple years ahead. In planning my life, I c- I can't think that far ahead. But for sure in planning our business, we're on a, uh, we, we think about businesses in a, uh, forever timeline, and so that's the balance of short term and long term. But we want to think about what the market is multi-years out, for sure.

    23. HSHarry Stebbings42:05

        Joey, thank you so much for putting up with my questions on parenting, cash, uh, (laughs) financial markets. I so appreciate it, and you've been a fantastic guest, my friend.

    24. JLJoey Levin42:14

        Thank you, Harry. This was great.

Episode duration: 42:16