All-In PodcastE73: Late-stage VC markdowns and mistakes, market strategy, Ukraine/Russia update with Brad Gerstner
CHAPTERS
- 0:00 – 1:34
Brad Gerstner subbing in for Friedberg + show setup
Jason opens with the usual Besties banter, introducing Brad Gerstner as the guest filling in for David Friedberg. The group sets expectations: they’ll cover markets first, then the Ukraine war given its global impact.
- •Brad Gerstner joins as the “bestie-guestie”
- •Light banter about Friedberg’s absence and recent attention
- •Framing: markets and macro repricing first, then Ukraine/Russia
- •Acknowledgement they’re not a political show but can’t ignore the war
- 1:34 – 4:41
Public SaaS & internet multiples: from COVID bubble to normalization
Brad explains the recent market drawdown as a normalization from historically inflated COVID-era multiples. He ties valuation compression to rate expectations, inflation uncertainty, and an increased risk premium driven by the Ukraine conflict.
- •Repricing framed as mean reversion toward pre-COVID multiples
- •Zero-rate liquidity era pushed software/internet multiples far above averages
- •War + inflation fears increase uncertainty and risk premiums
- •Why rates matter: discounted cash flows and exit multiples shift quickly
- 4:41 – 7:53
What 2022–2023 could look like: Fed path, volatility, and risk asset appetite
Brad argues multiples are at or below averages, but the next 6–18 months may remain volatile as inflation and rate paths clarify. Capital allocators will likely pull back from risk assets until uncertainty fades.
- •Software near 5-year average; internet below it
- •Fed messaging implies still-negative real rates (as Brad interprets)
- •Higher uncertainty → less allocation to risk assets and lower prices
- •Brad’s base case: not long-term stagflation, but near-term volatility
- 7:53 – 10:54
Instacart’s 40% cut as the signal: late-stage venture is mispriced
Chamath uses Instacart’s valuation reset to argue late-stage private markets haven’t fully repriced versus public comps. He warns many late-stage companies may need 50–60% markdowns, especially “nth players” in crowded categories.
- •Instacart reset: ~$40B to ~$24B as a public-comp reality check
- •Public peers down 50–70% force private valuation resets
- •Late-stage companies without margin/profit paths face higher cost of capital
- •Crowded markets punish later entrants with weaker moats
- 10:54 – 16:06
Down-round IPOs, price takers, and the myth of “guaranteed” crossover returns
Sacks explains that some unicorns will IPO below their last private round, hurting late-stage investors expecting easy arbitrage. The group discusses how public multiples reverting to historical means breaks the late-stage playbook.
- •Definition: down-round IPO = IPO valuation below last private valuation
- •Crossover/late-stage investors assumed last-round-before-IPO was ‘safe’
- •Mean reversion in public SaaS/internet comps drives private markdowns
- •Disagreement nuances: are we already below averages or just reverting?
- 16:06 – 19:23
IPO ratchets and who really pays: employee dilution and stripped investor protections
Jason raises downside protections like IPO ratchets; Chamath clarifies they’re often absent in peak ‘go-go’ rounds because terms get stripped. Brad notes Fidelity/others can be pure “price takers,” and the pain flows to employees and earlier holders.
- •IPO ratchet concept: extra shares if IPO price is lower than private price
- •In late bull markets, governance and protections often get stripped
- •Brad: in some deals (e.g., Reddit per discussion) investors are price takers
- •Employee morale + equity underwater becomes a major second-order effect
- 19:23 – 26:53
Which business models break first: quick commerce, neobanks, and CAC-dependent SaaS
Brad and Chamath give examples of fragile models that relied on cheap capital and subsidized growth. Rising input costs (rates, ads, labor, logistics) make thin-margin, high-burn businesses vulnerable unless they quickly reach profitability.
- •Quick commerce/15-minute delivery: cash burn + questionable durability
- •Neobanks: rate arbitrage compresses as cost of capital rises
- •Bottoms-up SaaS dependent on Google/Facebook CAC gets squeezed
- •Survival recipe: strong gross margins + credible near-term profitability
- 26:53 – 40:41
“Lengthen runway” tactics: growing into valuations vs the down-round death spiral
The besties debate the practical challenge: to grow fast enough to ‘earn back’ lost multiples, companies must invest more, which increases burn. They outline the trade-off between maintaining growth and controlling burn to avoid destructive down rounds.
- •If multiples drop 5x, ARR must grow ~5x to keep valuation flat
- •Sacks: runway extension is key to avoid down rounds and morale/recruiting hits
- •Chamath: growth requires investment—burn often rises, creating a precarious balance
- •Brad: late-stage financing is effectively ‘closed’ until real price discovery
- 40:41 – 44:55
Sacks’ burn multiple: a new discipline metric for growth spend
Sacks introduces burn multiple as a governance tool: dollars burned per incremental ARR dollar added. He proposes thresholds and explains how portfolio companies are using it as a ‘governor’ to keep growth efficient during the downturn.
- •Burn multiple definition: burn ÷ incremental ARR added
- •Rule of thumb: ≤1 amazing, 1–2 good, 2.5–3 problematic, >3 bad
- •Shifts board focus from pure growth to growth + burn + margins
- •Using burn multiple targets to force trade-offs quarter to quarter
- 44:55 – 53:56
Investor quality and selection returns: “must-own” vs long-tail, and why there are no layups
They argue the era of easy money hid bad selection and collapsed dispersion; now the market differentiates sharply between high-quality compounders and everything else. Brad emphasizes essentialism—own fewer, higher-conviction names—and warns there’s no ‘bounce back’ to 2021 extremes.
- •“There are no layups”: avoid clapping-at-the-blackjack-table thinking
- •VC mean returns are poor; outcomes concentrated in a tiny fraction of bets
- •Flight to quality: must-own names (FAANG-like) vs orphaned ‘nice-to-own’ stocks
- •Brad: no return to the last 18 months—best hope is a 5-year-average regime
- 53:56 – 1:08:58
Pivot to Ukraine/Russia: what a peace deal could look like and what the US wants
Sacks lays out the likely contours of a settlement—Ukrainian neutrality, Crimea remaining with Russia, and autonomy/independence elements for Donbas—then questions whether Washington prefers a prolonged conflict to weaken Russia. The group debates US leverage, public rhetoric, and whether a ceasefire is being actively pursued.
- •Proposed deal contours: neutrality, Crimea, Donbas autonomy/independence
- •Sacks’ concern: US strategy may prefer Russia ‘bleeding out’ (Afghan analogy)
- •Brad: economic warfare/sanctions as a new doctrine signaling to China too
- •Debate over influence: can/should the US condition aid to push for a deal?
- 1:08:58 – 1:24:19
Sanctions, offramps, and escalation risk: how does Putin exit without full relief?
Brad presses on the key sticking point—sanctions relief versus credible withdrawal—and predicts escalation before negotiations. Sacks worries an escalatory spiral makes peace harder over time, and the group discusses Zelensky’s hardline rhetoric and US red lines around chemical/nuclear issues.
- •Core negotiation friction: sanctions rollback vs trust/verification
- •Brad predicts escalation: harsher military action + possible oil embargo pressure
- •Sacks: longer war increases miscalculation and WWIII tail risk
- •Rhetoric concerns: chemical weapon red lines and shifting nuclear posture
- 1:24:19 – 1:28:52
China stimulus/tax cuts: recession vs inflation and demand destruction signals
Chamath and Brad interpret China’s tax cuts as a sign of contraction and stimulus needs, echoing 2018–2019 dynamics. Brad argues the Fed may be behind the curve on recession risk, citing demand destruction from energy, mortgages, and weakening confidence indicators.
- •China signals stimulus via tax cuts; exports make them sensitive to global slowdowns
- •Brad: Fed may be behind on recession risk more than inflation risk
- •Demand destruction examples: gas prices, mortgage affordability drop, QT effects
- •Macro indicators referenced: PPI surprises, PMI/consumer confidence weakness, oil/recession history
- 1:28:52 – 1:36:17
Wrap-up: Sacks on domestic stakes + All-In Summit announcements and comedy outro
Sacks closes by tying war duration to recession and political fallout, urging US leadership to de-escalate and pursue better outcomes. Jason then thanks Brad, promotes the All-In Summit, lists speakers, and the episode ends with extended summit logistics and playful banter.
- •Sacks: president’s job is peace and prosperity; war + recession is a major risk
- •Jason thanks Brad and confirms his All-In Summit appearance
- •Summit updates: tickets, scholarships, speaker list, TED-style talks format
- •Comedic riffing on swag bags, hoodies, parties, and booking musical acts
