Silicon Valley Can't Look Away from the Election

[00:00:00] Hi, I'm Eric Newcomer. And I am Madeline Rennbarger. And this is the Newcomer Podcast.

[00:00:09] Each week, Eric and I discuss the VC deals and the drama that went down. Let's do it. Here we go. Let's dive in.

[00:00:18] Madeline, you're in San Francisco at the moment. I am in San Francisco, yes. I'll be back here in a couple weeks, too, for Cerebral Valley.

[00:00:26] But this was a little preview trip. Applications are filling fast. But I'm here just partially a personal trip.

[00:00:35] My close friend throws very elaborate set-designed Halloween parties, so I had to make a cross-country appearance for this one.

[00:00:43] Has that occurred yet?

[00:00:45] Yeah, it was Saturday. So we're on team Halloween. If Halloween's in the middle of the week, you celebrate the weekend before.

[00:00:53] Because the weekend after is November, and that is no longer Halloween.

[00:00:56] Right, yeah. I feel like the timing of Halloween has caused a big existential angst.

[00:01:01] The New York Halloween party scene, which is ultimately a children's holiday that way too many adults, including myself, still celebrate.

[00:01:09] I know. Well, at 35, I feel like this was a zero Halloween. It's like, you know, no kids to force it and sort of no longer obsessively make sure to have a party.

[00:01:23] Yeah. Yeah, exactly.

[00:01:24] I spent Saturday door-knocking for Kamala Harris in Philadelphia. So that was an experience.

[00:01:32] How did that go? Thank you for spending your weekend contributing to society positively.

[00:01:38] Well, this is the – in high school, I went and worked for a summer, the summer before my senior year of high school for the Obama campaign when he was running for – in the Democratic primary.

[00:01:50] Oh, wow.

[00:01:50] And it was in Las Vegas. So that was a very formative experience for the young Eric Newcomer.

[00:01:56] But then I've basically not been politically involved since then.

[00:02:01] You know, Bloomberg is sort of famously sort of, you know, don't donate, don't, you know, do stuff.

[00:02:08] Famously removed, yeah.

[00:02:09] Very rulesy sort of reporter mentality.

[00:02:10] The view from nowhere.

[00:02:12] Yeah, exactly. And so, you know, when I launched Newcomer, literally in like the first piece about Sequoia, I said I thought – because it was about Doug Leone, who is, you know, a Trump donor.

[00:02:25] And I, you know, I said I thought supporting Trump was beyond the pale.

[00:02:28] So definitely one of the perks for me going independent and having my own voice was just like, man, Trump's terrible and happy to admit it.

[00:02:37] So that's all to say this is the first time in a long time that I've been able to canvas as a reporter.

[00:02:43] What did you learn? What did you see?

[00:02:45] I mean, you know, you're lucky if you like move two people.

[00:02:49] We helped one woman who sort of needed a plan to vote who was about to move.

[00:02:54] And it's like you can go vote, you know, right now and we showed her all the places to do it.

[00:02:59] I encountered somebody who was like clearly agonizing between being a traditional Republican and the sort of Trump threat to democracy thing.

[00:03:09] You know, and he was like Biden has really run up the deficit.

[00:03:12] And I was like, you know, Trump tax cuts have been – were terrible for – but who knows?

[00:03:19] You know, I just sort of said you get it.

[00:03:22] You know, you know, look it up.

[00:03:24] But –

[00:03:26] That's a different way of, you know, communicating I guess from the traditional reporter zone.

[00:03:30] But maybe not from, you know, our view over here, you know, in independent journalism and columns.

[00:03:37] Well, you know, some of our articles are to persuade.

[00:03:40] I do think in person you sort of have to – you know, you can't give people a lecture.

[00:03:44] You sort of have to say, oh, what matters to you?

[00:03:46] Anyway, there wasn't a lot of that to be honest and obviously the vast majority of people like aren't home and you're leaving like a little pamphlet in their door.

[00:03:54] People are like waving you off because if you're in Philadelphia, you're getting –

[00:03:58] Constantly.

[00:03:58] But it's definitely – you know, what Kerry Washington from Scandal made an appearance in the Philadelphia office that I was in while I was there.

[00:04:07] And one of the characters from Westworld.

[00:04:11] Honestly, we are very excited to talk about politics much less.

[00:04:16] Absolutely.

[00:04:17] Yes.

[00:04:18] We're kind of like begrudgingly discussing it still.

[00:04:21] I mean I love politics but like, you know, I just do think professionally we're trying to keep people informed about business.

[00:04:27] But then, you know, you look at All In.

[00:04:29] You look at – you know, what are people in VC talking about?

[00:04:32] It feels like they're all talking about politics.

[00:04:34] You look at the endorsements and the donations.

[00:04:37] It's just on everyone's mind.

[00:04:39] Yeah.

[00:04:40] So you sort of rounded up the latest discussion in our Friday piece.

[00:04:45] Yeah.

[00:04:45] Give us some of the highlights of tech and VC world weighing in.

[00:04:49] Yeah.

[00:04:49] I mean basically people have already kind of drawn their lines in the sand here on the different issues.

[00:04:56] But ultimately a lot of what I found kind of just looking through it is that one, it's not as divided as people act like.

[00:05:02] There's, you know, their support for Trump or Kamala Harris on either side.

[00:05:06] But then outside of, you know, the tent pulling from maybe the loudest people in the industry, a lot of people are kind of quietly, I would say, on Team Harris, which seems to be what has happened in the past.

[00:05:18] But ultimately on the issues when it comes down to issues that matter the most, people are not as divided.

[00:05:24] It's just kind of in the weeds around, you know, crypto policy and how much AI regulation should be allowed.

[00:05:30] Either smart regulation that still lets business proliferate or none at all.

[00:05:34] Or, you know, taxing unrealized capital gains is incredibly unpopular across the board.

[00:05:39] That's not really dividing people.

[00:05:41] I think that definitely, you know, tech workers remain Democrats.

[00:05:47] I mean just by – they're living in San Francisco.

[00:05:50] They're white-collar elites.

[00:05:52] Yes, my point exactly.

[00:05:53] Yeah.

[00:05:53] I think that – I do think there's a little bit more debate on where sort of their bosses and sort of the venture capitalists and the wealthy elites sit.

[00:06:02] I mean Harry Stebbins, who we talked about last week, had that tweet basically saying that he asked people about politics on the show.

[00:06:10] They don't want to talk about it.

[00:06:11] And then when they get off, 90 percent of them say they're supporting Trump.

[00:06:16] I mean –

[00:06:17] That's right.

[00:06:17] I don't know if I believe that stat exactly, but I do think there are probably more quiet Trump supporters among the VC elites than quiet Kamala supporters, right?

[00:06:29] I mean there's –

[00:06:30] Oh, absolutely.

[00:06:31] A lot less to lose, I think, supporting Kamala Harris.

[00:06:34] So I don't know.

[00:06:35] I think there probably is sort of – you know, the all-in crowd does represent a demographic in Silicon Valley.

[00:06:42] Well, also, I mean one of the biggest issues in venture capital has been the lack of exits, right?

[00:06:48] And so the FTC chair hasn't been – Lena Kahn has not been particularly popular among this community.

[00:06:54] Am I wrong, Eric?

[00:06:55] Right.

[00:06:55] Yeah.

[00:06:56] I mean I do think, you know, if people have been able to sell their companies, they might be a little chiller.

[00:07:02] And yeah, definitely if you're a venture capitalist trying to see exits, you're mad about Lena Kahn.

[00:07:07] You know, I don't know – the lack of IPOs and the lack of M&A cannot be fully placed at the Biden administration's feet.

[00:07:17] And some of it, I think, has to do with the quality of companies.

[00:07:21] But yeah, I do think some of our VCs are a little disgruntled about exits and blaming some of that on Lena Kahn.

[00:07:30] Though obviously, you know, Gary Tan and Y Combinator and some other people are still on Team Lena Kahn.

[00:07:36] Yeah, they're very vocally supportive of, you know, seeing how this could be potentially beneficial for little tech, you know.

[00:07:43] So it's not a 100% sweep, but in the community.

[00:07:46] I saw the Duolingo CEO came out for Kamala Harris on Monday.

[00:07:53] Two successful companies in Pittsburgh, PA, supporting her basis to the economy.

[00:07:59] So that was interesting.

[00:08:00] The Pennsylvania company is weighing in.

[00:08:02] I did think also just – man, Josh Wolfe, who we both like.

[00:08:08] Yeah.

[00:08:08] Some crazy flip-flopping on Twitter, I thought.

[00:08:12] First he, like, came out and said he supports Kamala Harris.

[00:08:15] And then it felt like people got to him.

[00:08:18] And then, you know, a couple days later he's saying, actually, I'm just going to write in Mitt Romney.

[00:08:22] I don't know.

[00:08:23] Not the most political courage or – either a lack of political courage or a lack of, like, thinking through your stance before you articulate it.

[00:08:32] Before you post it on social media publicly.

[00:08:35] Right, yeah.

[00:08:35] Sort of bizarre to flip-flop so quickly.

[00:08:37] I mean, he was never giving her sort of a full-throated endorsement in the first place.

[00:08:43] I'm the most vocal, you know, supporter or fan.

[00:08:46] But it did seem kind of like, okay, you were at least making a long case for why, even if she's not your ideal candidate, you support her.

[00:08:54] And then, you know, switching to – right at the last minute, like, actually, I'm not going to do it.

[00:08:59] I'm going to write in Romney.

[00:08:59] And here's what she could do to win back my vote.

[00:09:02] And it's just the least pragmatic.

[00:09:03] Like, here you are sort of with the position that, like, we are building the world that we want.

[00:09:08] And we're really, you know, making the hard decisions.

[00:09:10] And then you're going to say, oh, no binary choice.

[00:09:12] I'm going to not take it.

[00:09:14] It's just – I don't know.

[00:09:16] Josh, I think that was a mistake.

[00:09:18] But anyway.

[00:09:20] Soon we will be free of the election.

[00:09:23] Can't wait.

[00:09:25] Hopefully for the better.

[00:09:26] Well, as much as we're ready for this to be over, I know, Eric, you made our newcomer publication official endorsement, which not a lot of publications are doing these days, it seems.

[00:09:35] Yeah, yeah, yeah.

[00:09:36] I was sort of half-joking.

[00:09:37] I mean it was sincere, but I said, oh, the official statement from newcomer, we – the editorial board endorses Kamala Harris unequivocally or enthusiastically, I think I said.

[00:09:49] Yeah, I mean I think it's crazy.

[00:09:52] I have a couple takes.

[00:09:54] So the context is the Washington Post and the Los Angeles Times.

[00:09:58] editorial boards did not endorse anybody for president seemingly very clearly in the case of the L.A. Times because of the owner and then somewhat –

[00:10:09] Well, also in the case of the Washington Post, it's been since reported, right, that there was an endorsement written that then ultimately did not get published.

[00:10:16] Right.

[00:10:16] So it's either the CEO or Bidysos himself.

[00:10:19] Yeah, yeah, yeah.

[00:10:20] Who's stopping this.

[00:10:23] You know, I – on the one hand, you know, I run a publication that has sort of like a unified voice where it's like, okay, we all have opinions.

[00:10:31] We'll do reporting.

[00:10:32] It's not surprising, but you sort of know even as we have more writers like yourself, it's sort of like you know where the point of view is sort of like emanating from.

[00:10:42] I do think with these newspapers it's sort of weird in the modern day to have like these editorial boards when you're trying to say we're mostly objective journalists.

[00:10:51] You know, I do think like sort of a single – like a voice from an opinion page or something or having an ideologically coherent publication makes more sense.

[00:11:01] That said, not – deciding you're going to change your policy like right before a key election that – where one candidate is like attacking journalism and is sort of like a strong man leader and a lot seems to be at stake is sort of the worst time to reverse your policies.

[00:11:20] Right.

[00:11:21] I feel like timing is such a big part of this conversation too.

[00:11:24] Like it's not in a vacuum.

[00:11:26] If they had made – you know, pre the election, you know, come out in January 2024 and said we're not going to endorse this year, I feel like it's been on issue.

[00:11:33] I'd be happy, but yeah.

[00:11:35] I agree.

[00:11:35] I mean is it the place for these publications like this to have, you know, endorsements?

[00:11:40] It feels kind of outdated like you said.

[00:11:41] But the fact that it's happening now kind of reads a little bit differently.

[00:11:46] And I know some people are going to think this is overblown, but I mean, you know, the path to fascism is first of all for people to sort of preemptively do things that sort of strong man leaders would like.

[00:12:01] And it's – if you have people like Jeff Bezos making the calculus that, man, we're going to have a really hard time in a Trump administration if we do this thing, which is endorse Kamala, which is not going to move any votes.

[00:12:13] Well, why do it?

[00:12:15] Like that sort of thinking is just sort of, you know, capitulation to somebody sort of treading over all sorts of norms and is pretty worrying.

[00:12:25] All right.

[00:12:26] Even with everybody only talking about politics, there was something exciting in tech investing world.

[00:12:32] General Catalyst announced they'd raised an $8 billion fund, which is insane given this is the era of, you know, downturn and small VCs calling it quits.

[00:12:45] Were you surprised?

[00:12:46] I guess not surprised with GCs since they've kind of landed in camp of the haves versus the have-nots, you know.

[00:12:53] They're saying that it's much more like a company than a fund, right?

[00:12:57] You chatted with Haymont, right, Eric, about this?

[00:12:59] Yeah.

[00:12:59] I once called him the secret CEO of General Catalyst and then they made him a CEO like a year later.

[00:13:04] I think he took your branding pretty seriously.

[00:13:08] And so, yeah, I got on the phone with him right after they announced the $8 billion.

[00:13:13] And, you know, it was interesting.

[00:13:15] I mean, he doesn't want – you know, they're not purely a venture capital firm.

[00:13:18] They're certainly the venture funds.

[00:13:20] He doesn't want them to be seen as a private equity firm.

[00:13:24] I understand the logic there.

[00:13:26] The logic being that most of what private equity firms do is sort of come in, cut headcount, find cash flows.

[00:13:33] And GC is still very much in the creating and growing sort of new businesses.

[00:13:38] They've incubated around $1.5 billion of this new fundraise to, you know, creating new startups, right?

[00:13:44] Or sort of the incubation early stage phase.

[00:13:46] So not really what private equity does.

[00:13:48] But they did purchase a hospital, which is a lot of what private equity does, right?

[00:13:53] And private equity well understands that you raise a lot of money, you get a lot of management fees.

[00:13:58] And, like, sure, you need good returns because that's what gets the new limited partners to come back.

[00:14:03] But at the end of the day, you're making money on management fees.

[00:14:06] And clearly, firms like Andreessen and General Catalyst and Lightspeed sort of see the AUM game, assets under management game, whether – they don't want to admit it.

[00:14:19] So anyway, I pushed him on a little bit on that.

[00:14:23] Well, they have, you know, some investments in some of these, you know, really major banner companies from past waves and this current wave.

[00:14:30] I mean, they've invested in Mistral, Stripe, which, you know, has been in the news quite a bit recently as well.

[00:14:36] Right.

[00:14:36] He said they invested 14 times since 2010.

[00:14:40] I mean, definitely his ability.

[00:14:42] I think they were in Snap.

[00:14:44] They were in Airbnb.

[00:14:45] Yeah, they've gotten in some of these key deals and doubled down.

[00:14:48] So that certainly helped make the firm – I mean, I just think it's interesting that in sort of a time of fear, limited partners are going to the big firms.

[00:15:00] Like, on the one hand, that seems, like, totally intuitive.

[00:15:02] It's like if you're pulling back where you keep your money, you keep them with the giants who have done well for you.

[00:15:09] It's the flight to quality argument, right?

[00:15:11] Exactly.

[00:15:11] Exactly.

[00:15:13] The other side of that would be just, like, a lot of the best performing funds are early funds.

[00:15:19] So, you know, you sort of want to make a bunch of early bets.

[00:15:23] And it feels much more in the spirit of Silicon Valley to keep betting on a new generation.

[00:15:28] But now we're sort of entering this era where it feels like they're going to be these brands with so much money that they have sort of unlimited staying power.

[00:15:37] So we were mentioning Stripe came up in the news this week with their decision to acquire, what, stable coin company Bridge for $1.1 billion.

[00:15:49] Madeline, you wrote about that deal.

[00:15:51] I did.

[00:15:52] What stood out to you?

[00:15:53] Yeah, the $1.1 billion acquisition of Bridge.

[00:15:55] Well, one, it's a very welcome exit for BCs at this time with, you know, the M&A market more shut and IPOs fully closed out.

[00:16:03] People are very happy that there's –

[00:16:05] I know. It felt like –

[00:16:06] I don't know. It felt like 2016 or something to have venture capitalists thumping their chest so aggressively for a $1.1 billion deal.

[00:16:16] I mean, it's good.

[00:16:17] Hey, well, take what we can get right now.

[00:16:18] But it's not the Decacorn exits that many of these firms have been pining for with their massive funds.

[00:16:24] But, yeah, it's a good exit.

[00:16:26] It's also the largest crypto startup acquisition by a payments company ever.

[00:16:32] So in the sort of world of, you know, crypto companies playing either outside or inside within the traditional fintech markets,

[00:16:40] it's a bet that this is an area that's going to stick around.

[00:16:44] Crypto VCs and the crypto community obviously have a lot to be happy about with this deal.

[00:16:48] The other thing I think that, you know, we report on a little bit too is that it's a really big win for Sequoia as well because they've been in this deal, I think, since the Series A and have invested –

[00:16:58] Yeah, Sean McGuire.

[00:16:58] And then they led the Series A.

[00:17:00] And the only board member that's not a founder as well.

[00:17:02] Right.

[00:17:02] Okay.

[00:17:03] So, yeah, a big win for Sequoia.

[00:17:05] Proof that we will not take our Trump haterade and not – we'll still celebrate your wins even if you were like Sean, an insane manic Trump supporter on Twitter.

[00:17:20] Yes.

[00:17:21] It's a good exit.

[00:17:22] We will still congratulate you.

[00:17:24] So big win for Sequoia, Ribbit, a big investor, Index, Crisson.

[00:17:29] Han Ventures as well.

[00:17:30] Yeah.

[00:17:31] Crisson, I think, invested at Index and then he moved over to Han and they invested – what?

[00:17:36] You said it was a 90X revenue multiple though?

[00:17:40] Pretty crazy for what's supposed to be a tough time in FinTech especially.

[00:17:47] Absolutely.

[00:17:47] I mean the last reported measure of their revenue was around $12 million, although they are growing really rapidly, sources are telling me.

[00:17:54] So, I mean, there's potential there.

[00:17:56] But, yeah, it's pretty shocking multiple.

[00:17:59] It kind of reminds me of some of these AI deals except it's, you know, an exit.

[00:18:03] Congratulations on a great exit.

[00:18:05] We're happy to see it in this time.

[00:18:08] Sean did make the point, which I appreciate.

[00:18:10] Sequoia has like a history of companies selling and then going on to do well, right?

[00:18:15] I think he said YouTube.

[00:18:17] Yeah.

[00:18:17] I mean WhatsApp.

[00:18:19] So, I do think, you know, you build a good brand with acquirers if you're like – you know, these companies perform afterwards.

[00:18:26] And I do think Stripe is very serious about taking what's bridges built and implementing it in their business.

[00:18:34] Cool.

[00:18:35] Well, that's our show.

[00:18:37] Next week we will have the Cerebral Valley podcast, which you might remember from last year.

[00:18:45] We're going to do three episodes.

[00:18:47] It'll be me, Max Child, and James Willsterman, my co-hosts of Cerebral Valley and the co-founders of the AI voice games.

[00:18:55] And Vali, they're also my great friends.

[00:18:59] You know, you've heard the story of how we were going to my bachelor party, so we wanted to use their office to start Cerebral Valley as an experiment.

[00:19:09] You know, they're super close friends and co-hosts of Cerebral Valley.

[00:19:13] So, we have a fun time.

[00:19:14] I know last year we did a draft pick of some of our – you know, we did a sort of fantasy draft of the AI unicorns.

[00:19:26] Yeah, exactly.

[00:19:27] And so, we're definitely going to check in and see where those are and maybe do some trades.

[00:19:30] I was going to say, yeah, I want the stats updates.

[00:19:33] I want the updates on your sheets.

[00:19:34] Right.

[00:19:34] And also, notably, you know, I was Polish on OpenAI, and now I just was bearish.

[00:19:39] Am I going to have an opportunity to sort of – I don't know.

[00:19:42] So, James is still coming up with whatever the new element of the game is, but I'm interested to see if I'm allowed to somehow cash in on the gains I've made and then sort of walk away from the back.

[00:19:53] Can you make a trade?

[00:19:55] Yeah, I don't know.

[00:19:56] We'll have to see.

[00:19:57] And, yeah, we're generally going to sort of try and preview some of the big themes for Cerebral Valley.

[00:20:04] So, we're going to do three episodes.

[00:20:05] I think the thinking right now is sort of looking back at the past, what's happened in the past, including our bets, sort of giving you a state of today and the themes and some sort of future casting on where things are going.

[00:20:19] And then we will bring you an episode after Cerebral Valley with some of the highlights and our takes.

[00:20:25] So, even though the vast majority of you cannot be there, you will get the good stuff.

[00:20:32] Obviously, if you are interested in attending, you can still apply at cerebralvalleysummit.com and get all the networking in person.

[00:20:41] If you're an AI founder, we'd love to have you there.

[00:20:43] So, Madeline will be back December 3rd.

[00:20:46] And I think we want to start – we've got the format down, right?

[00:20:51] And we want to start figuring out how to bring guests into the mix.

[00:20:56] Yes, we'd love to have – we're going to bring in some great guests for you on the show.

[00:21:01] So, stay tuned.

[00:21:03] Christopher Gates, our producer, is going to help field some of them.

[00:21:06] If you're interested in coming on the show, you can email Christopher at podcasts with an S-P-O-D-C-A-S-T-S at newcomer.co.

[00:21:18] All right.

[00:21:19] That's it for me.

[00:21:20] Well, see you all in December.

[00:21:23] Bye.