Former CAA Talent Agent Turned Investor with $70B in AUM on AI and Venture Strategy | Ep. 29

I looked at maybe the top ten to fifteen P&L winners that I've had over my career on the private side. Without exception, my first opportunity to invest was a no. It might have been a no from me to the company passing, or vice versa, the company passing on me. [upbeat music]

I am really excited to be here with you today, Thomas. Thanks so much for taking the time for this.

Very excited.

Um, so my note to myself on this first topic is, uh, this time it's different, and, um, a lot of people recently, in the, you know, last few weeks, have been saying things that are, you know, implying that a bubble might be going. And, you know, it's like, you know, there was a tweet from Brian at Sequoia that was like, "You know, this is a good time to sell your company." There have been a lot of blog posts written, you know, behind, you know, closed doors. It's a frequent topic of conversation, like valuations are expensive. We're back to twenty twenty-one multiples for a certain flavor of company. Obviously, you know, Coatue has gone through, over its last twenty-five years of existence, a bunch of cycles, so you've seen this happen many times. And so I'm curious, sort of your spot temp check, it's fall twenty twenty-five, how do you make sense of where we are in, in the cycle and sort of in capital deployment?

Yeah, so I've been lucky to be doing this for a while, um, almost twenty-five years now, and there are a few seminal moments that I recall as a tech investor. Um, the first was the iPhone and Apple, and the quarterly earnings that would come out, and the absolute blowout. You know, if, if consensus was one, they would print three or five. You just didn't see those kinds of beats and the magnitude of [clears throat] the transformation that Apple was, uh, bringing into the market with the iPhone. So that was kind of one, right? Um, the second I remember, like it was yesterday, was NVIDIA, when it guided its data center business to be up one hundred percent year over year, and no one thought that that could be possible. So that was obviously, um, that and the, the ChatGPT moment kind of happening at the same time, right? I do think the Oracle announcement from two weeks ago was, um, [lips smack] really profound and important as well. Um, just a fascinating story of how long Oracle's been around and how it's been able to shed its skin and reinvent itself. Um, what was interesting about that, um, specific company is, if you look at the AI infrastructure build-out up to this point, had really been funded with, um, cash flows from big companies, right? So, um, Meta, Google, Apple, uh, Microsoft, generating incredible amounts of revenue, having very high operating margins, very high cash flow margins, and the ability to, um, invest, right, uh, some of those cash flows into this, uh, AI, uh, build. What was different about the Oracle announcement, um, [lips smack] is now you're seeing kind of some leverage come into, right? Where it's actually not just the free cash flow-positive companies that are investing, it's actually free cash flow-negative companies that are investing, right? So OpenAI, as an example, right, is making a, a huge bet, right? It's not producing free cash yet, um, but it kind of sees, uh, a version of the future where it- demand for its products kinda keep increasing. So, um, I do think that's something that, um, we spend a lot of time kind of looking at and thinking about. Uh, the question now will be: Does the competitive intensity between the hyperscalers really start to intensify, right? We kinda had a staid oligopoly, I would say, where Amazon kind of started, then Microsoft, and then Google kinda crept in-