So I guess that would make one wonder Why do this when you could create a Private fund with these private Individuals and take 20% carry if you Had the 20% gain or even a 10% gain on a 100 million if that does turn into a Billion in shares you would get 10% of The $900 million gain that' be $90 Million so why go through all this to Not get carry and going through the Process to actually bring this to Market I was reminded of that fact many times Because it hasn't been an easy Journey With you know the regulatory process With all the Nuance of running a Registered fund and now a publicly Traded fund we take on a lot more Overhead than your average private fund Or private VC I for Less reward in terms Of why we did this um I'm a little Stubborn but I really wanted to see this Exist in the World this week in startups is brought To you by Squarespace turn your idea Into a new website go to Squarespace ./ Twist for a free trial when you're ready To launch use offer code twist to save 10% off your first purchase of a website Or domain vanta compliance and security Shouldn't be a deal breaker for startups To win new business vanta makes it easy For companies to get a stock to report Fast twist listeners can get $1,000 off For a limited time at
V.com twist and and the equinex startup Program offers a hybrid infrastructure Solution for startups including up to $100,000 in credits and personalized Consultations and guidance from the Equinex team go to equinex startups.com To apply today all right welcome back to This weekend startups today we're going To talk about pre-ipo tech companies Everybody is interested in owning tech Companies before they go public don't I Know it I'm an angel investor in Hundreds of companies and I frequently Have people say Hey how do I get in on SpaceX how do I get in on Uber or Airbnb Before they went public well uh the Answer is it's very difficult only about 6% of people in the United States are Accredited investors so it's been Incredibly hard for the other 94% to get Access to private companies why because The SEC the Securities and Exchange Commission wants you to be an accredited Investor which means you have a lot of Money $200,000 a year in Revenue uh Income or a million dollars in net worth There's a little bit of a higher uh Standard as well called a qualified Purchaser that's $5 million in liquid Net worth putting all that aside if you Were a professor at myu teaching uh Economics and venture capital or the Economics of venture capital and you Made
$150,000 a year you would be Unqualified to buy SpaceX shares let's Say or another private company stripe That's very popular but if you have had A trust fund and your parents gave you a Million bucks or you inherited an Apartment in Manhattan across from this Professor and you were a complete Degenerate idiot you could buy shares And companies why does this exist well We'll talk about it today with our guest Who has a publicly traded stock that you May have heard of in the news it's Called Destiny and you can look at the Ticker symbol it's a dxyz and his name Is soel prad welcome to the program soel Thank you for having me Jason okay I saw You on CNBC earlier this week the stock Has caught a little bit of attention but I want to talk not about the Sensationalistic stuff and it's been up And down and maybe it's caught a little Bit of that Meme heat that stocks Sometimes do on the Reddit uh Wall Street bet board or social media let's Start from Basics what if you created With uh Destiny 100 I think you I've Heard you refer to it as Destiny Destiny 100 dxyz so tell us about the name of The fund and the structure and why you Created it so the fund is called Destiny Tech 100 and we created it because I Really wanted this to exist for my dad My friends everyone else in the world
Stepping back uh I moved to Silicon Valley when I was 18 and I got to Participate in building companies and Investing in companies like you and Along the way I realized when my dad Asked me he said what should I invest in And this was uh about 5 years ago and You know it was this moment where he Realized I wasn't full of it and I had No good answer for him I told him you Know spy or QQQ because I didn't know How to recommend an angel investment or Late stage secondary stock and the idea That kind of came to mind is why isn't There an spy or QQQ for private Tech and What would it take to make that exist And so that's really what we set out to Create is um a vehicle by which anyone With a brokerage account from the Convenience of their brokerage account Can invest in the companies they know And the companies that are shaping the Future across Industries and that are Not yet public just to be C that are not Yet public these are private companies Uh and so you're going to put a 100 Names in there you've I think I Understand put maybe bought about 25 or So yeah 23 right now um and we'll be Growing that over time to 100 okay so What is this type of vehicle called I've Heard closed end fund I've heard a Couple of different names for it what is This structure called and then how does
It work to set one of these up and go Public we've heard of spaxs we've heard Of direct listings we've heard of the Traditional IPO somehow you've ipoed and You're able to trade these shares on the Market through your Robin Hood account Or your eade account so tell us about This structure and how you found out About it and is it common because this Is the first I've ever heard of it yeah So the technical name for the structure Is a listed closed end fund um but Effectively it's an exchange traded fund So it's listed on the New York Stock Exchange like another Equity security Maybe common stock in Uber and anyone Can buy or sell it uh from their Brokerage account in terms of kind of Where it fits into to this ecosystem a Lot of what people traditionally know as ETFs are open-ended funds where and There's a slight Nuance in terms of ours Being closed Ended as we uh brought it To Market and we looked at what are the Different structures people can create If we want to enable this there have Been folks in the past um like Kathy Woods Arc Ventures that have created What's known as an interval fund and That was pitched To Us by many lawyers And uh what it's also a form of Registered fund the challenge is it Doesn't have real liquidity it has what I call fake liquidity um so you can they
Price a net asset value every day you Can invest you know every single day but If you wanted to sell that stock they You actually only sell once a quarter When they generally do a repurchase Offer for about 5% um and so you know When I was thinking about that's called An interval fund that's called interval Funds yeah I remember Kathy Wood raised One and so you've raised a closed end Fund so you went out and you went to Private individuals to endowments who Gave you the money and then how does it Become a public stock um is the step I'm Curious about here yeah so we went out a Few years ago to a number of individuals Actually solely individuals over 200 of Them and they were primarily founders of Unicorn companies founders of successful Companies there were a number of VCS Personally rather than on behalf of Their funds uh figures in sports and Media and entertainment and they were All uh as you described earlier Qualified purchasers and they have made Money in Tech they've made money Investing and when we were talking to Them uh we asked like is the world we See a world where everyone can Participate in these companies do you Want to see that exist and they all Voted with their dollars um so we raised Just under 100 million and set out to Actually go and list this publicly um
That second part yeah that that's the Piece I'm sort of interested in okay you Get 200 people to put on average 500k in You get about 100 million now they own 100% of the shares in the company so if There were a let's just round it up to 100 million if there was 100 million and There were 100 million shares they'd be Trading at a dollar each or something to That effect am I am I ballpark correct How this works yep yeah then take us to The next part yeah and how this works Yeah so to actually then list that uh we Did something really interesting you Know in our listing we actually had zero Banks or financial institutions involved As Underwriters or financial advisers Okay and we almost took a DIY approach Um and we went and we figured out okay This is what we need to do to get our Registration paperwork out there this is The process with the SEC we spent um Over a year uh almost a year and a half In that process with the SEC going Through registration we worked with the NYSC who's been a great partner and then You know one day after we got approval Uh it started trading and kind of went Out with no Fanfare it went out a few People heard about it and over the last 3 weeks uh that it's been trading uh as People discovered that this is possible For the first time um for most people um It's kind of Taken on a life of its own
One thing that drives me crazy is when I Want to buy something on a website but There's too much friction when I go to Checkout right I want to make the Impulse purchase I'll be totally honest I see something I like I got these new Reader glasses you know what it was so Easy because there was no friction That's what I want I want to be able to Have a smooth and easy payment Experience but it's got to be safe and Secure right I don't want people hack in My credit card and I like to have many Different ways to pay I want to use my Digital wallet obviously and then you Know other people might be in the buy Now pay later period of their life no Judgments there if you want to be on a Payment plan that might be a good idea For you if you're a merchant you got to Be able to offer alternative payment Methods apms this is critical and you Know who's the best at this that's right Our friends at Squarespace Squarespace Payments makes it easy for customers to Make purchases which equates to more Revenue for your business super easy to Set up and it's going to keep your Revenue growth going up and to the right So check out squarespace.com twist for a Free trial squarespace.com Twi you get a free Tri trial when you're Ready to launch you just go to Squarespace.com twist and you get 10%
Off your first website or domain Purchase Squarespace has the best design They constantly release great features Like Squarespace payments they study Their customers you and I and they ask You hey how can we make this better and When they make it better they give it to You and it's for the same price that's What I love about Squarespace every day I wake up with new features in that same Affordable price squarespace.com twist For a free trial so you uh pull together This pool of capital those people own Shares in it now it goes public those Individuals who put up on average let's Say 500k each they can then sell their Shares in this entity correct exactly so It looks like a direct listing um that You mentioned earlier and so that was The means effectively we have these Shares in this closed in fund they start Trading on the NYSC um you have uh early Investors who are subject to a staggered Lockup um who can sell some of their Shares um you have uh members of the Public my dad actually finally closing The loop on the story he got to buy in In the open market and so that's kind of Our journey there and so it's been Trading um at a pretty high market cap When compared to the actual Holdings so You raised just under 100 million so Let's say it's 95 million you bought um How much in private Company stock these
23 companies equal 50 million 25 million Something like that um between 70 and 80 Million I believe and then you still Have cash reserves left I understand Yeah we have some cash yep so it becomes Public now it's become how many shares Are outstanding Ballpark and it's Trading at so the the ballpark valuation They're about uh 10.87 million shares outstanding got it And you know I haven't looked at the Closing price today but it's been TR 43 Bucks so if it's at 40 bucks that's 400 Million in so it's trading at about four Times and it was trading at more I think When it people started finding out about So it's about four times the book value Of those private companies and you would Attribute that towards enthusiasm and The pent up demand to own SpaceX and Whatever else is in there yeah so uh one Of the important things to note there is That we actually Mark the net asset Value on a quarterly basis so okay given How private Tech um has uh you know Sufferred a repricing over the last few Years we were investing through 2022 2023 and so a number of our positions Have been marked down um and so the net Asset value is actually as of December 31st $484 a share got it so it's trading At 10 times almost almost 10 times or Ball park and again is this is not Invested advice we're doing some back of
The envelope here math so that means There's a lot of pent up demand here for Those and then people um who put the Original Money in they must be selling Yeah so they must be taking some chips Off the table having had made such a Great investment uh I'm sure uh we don't Have direct visibility but um that is The kind of free market at work so what Happens now with you know this asset Trading can you it's a closed end fund So that sounds like it's kind of done But could you sell secondary do another Offering and say hey this thing's worth Whatever it is 400 million in terms of The market cap of it and we're going to Just raise uh another 100 million and Issue another I don't know 25% of shares So we're going to go to 12,500 shares or 13 million shares Whatever it is and then we'll have some More Capital to go then deploy in the Next set of companies is is that the Plan here or is that a possibility Exactly it's actually very timely Earlier on uh Tuesday April 16th uh I Posted a tweet about us filing a Registration statement uh with the SEC For a shelf offering um that once Approved and if effective um would allow Us to raise up to a billion dollars uh Through a series of actions got it so You could uh raise by issuing more Shares to the public and then or you
Could do it I guess through private Institutions and then you go uh look for Companies to purchase uh that are Private and add to this exactly now you Make money my understanding is you don't Get a like I do as a venture capitalist Other venture capitalist get 20% carry Uh you just get 2 and a 12% every year Of the value of the Holdings is am I Correct something to that effect that's Correct um we have a management fee you Know ours is 2 and a half% annual Management fee no carry versus Traditional Venture like you pointed out Is traditionally a 2% management fee and 20% carry so where does that two and a Half come from I'm curious do you issue More shares or do you have the cash Raised ahead of time because if you Raised 100 million if you had enough Cash for 22% you that would be 25 million it' be 25% of the principle that deployed so Where does that two and a half come from Uh because you're you're obviously not Charging shareholders right yeah it's Similar to other exchange traded funds In that the uh fees are coming from the Net assets uh of the fund every quarter So every quarter you get some amount of The shares you either sell them or not Shares uh it's paid in cash so it's just A management fee from the available cash Um by the fund so you have to in order
To get that two and a half sell some Shares every year uh we generally aren't Uh necessarily selling shares for that Purpose we have you know cash and So Based on whether it's exits based on the Available cash um just like paying for Audit costs uh things like that that's One of the expenses of the fund so I Guess that would make one wonder why do This when you could create a private Fund with these private individuals and Take 20% carry or maybe they in a Secondary fund would only pay 10% let's Say um one in 10 so you could get 1% Which isn't that different than the 2 And a half a million or 2 million a year Whatever it happens to be probably not Going to change your life or your team's Life but if you had the 20% gain or even A 10% gain on a 100 million if that does Turn into a billion dollars in shares You would get 10% of the 900 million Gain that'd be $90 million so why go Through all this to not get Carri I Guess the question actually started Destiny almost 4 and a half years ago And in going through the process to Actually bring this to Market I was Reminded of that fact many times because It hasn't been an easy Journey with you Know the regulatory process with all the Nuance of running a registered fund and Now a publicly traded fund um we take on A lot more overhead than your average
Private fund or private VC I would think For Less reward and in terms of why we Did this um I'm a little stubborn but I Really wanted to see this exist in the World and I actually do believe that Regardless of us existing this would Have been how the world goes towards uh It might have taken another five or Seven years and we kind of drove that And brought it forward but I believe you Know over the last decade people have Thought of different ways to uh let People invest in privates you've seen Crowdfunding and Equity crowdfunding Style approaches syndicates as you're Well familiar with you've SE you've seen Um you know icos you've even seen spcs Um yeah when you think about a SPC uh It's not necessarily A Dream product in My personal perspective you know you you Find uh someone influential uh give them A bucket of money um and then you say Hey I hope you go find a good deal um And take a good chunk of fees while Doing it you know we saw the huge boom 2019 2021 and my view is a lot of people were Investing in those because they Recognized that by the time you're Waiting until a company goes public as An individual investor you're last in Line and so the notion of a spack is Okay there's an attractive deal Potentially that the spa sponsor can go
And find and by investing in the spa I'm Getting to move forward one step and so That drove a lot of demand but you know As we've seen shake out um there are a Lot of challenges with the model and I'm Totally biased but I think if Destiny Tech 100 had existed that is actually The product I think a lot of people have Been looking for listen a strong sales Team can make all the difference for a B2B startup but if you're going to hire Sharks then need to let them hunt and You can't slow them down with compliance Hurdles like sock 2 what is sock 2 well Any company that stores customer data in The cloud needs to be sock to compliant If you don't have your sock too tight Your sales team can't close major deals It's that simple but thankfully vanta Makes it really easy to get and renew Your sock 2 compliance on average vanta Customers are compliant in Just 2 to Four weeks without vanta it takes three To 5 months vant can save you hundreds Of hours of work and up to 85% on Compliance costs and and vanta does more Than just sock 2 they also automate up To 90% compliance for gdpr Hippa and More so here's your call to action stop Slowing your sales team down and use Vanta get $1,000 off at v.com twist That's v.com twist for $1,000 off your Sock too well you would get Diversification uh built into it because
You're doing a 100 or even if you just Did 10 you would get diversification and You are not just buying one company I Mean if you look and obviously my friend Schoth did a bunch of these spacks some Of them turned out great some of them Didn't and some of the companies we had I think two companies of ours go uh buy Spack one of them desktop metal we love The company but maybe it was a little Too early for it to be publicly traded And my fear became realized which was Hey private companies you got to really Take a five 10 year view of them if You're a seed stage investor you're Taking a 10 15E view if you're a late Stage investor you're probably taking a Five year View and if you're somewhere In between you might be taking a 10- Year view people started buying the Spaxs looking to them and trade them you Know far too frequently you know day by Day and became more like gambling like Joby vertical takeoff and Landing Desktop metal 3D printed metal these are Great ideas these are really amazing Venture Investments if you can sit on Them and you've got 10 years of patience Man if 3D printing of metal and you know Other materials and vertical takeoff and Landing Vehicles these are great but I Agree maybe people would like to have a Little bit of diversification yeah That's the main reason to to do it in
Your format exactly and so you get to Have a broader exposure and also you Know 25 years ago technology meant Internet primarily uh today some of the Companies you just mentioned it is Across vertical so it doesn't matter if It's AI or Aerospace uh at Enterprise SAS or Healthcare or Finance they're all Impacted by and shaped by technology and So now Venture back tech very much is Driving a lot of growth across all Industries and so part of Destiny Existing is okay with people who are Whether it's ride sharing or delivery or Um many of these companies that people Use every single day you know you might Use figma every single day or you might Use um another tool how do you actually You believe in the company you know it You love it how do you actually own a Piece of these companies that are Shaping the future that's really what it Comes down to yeah it and it's been Pretty hard um I think there should be Just a sophisticated in test then you Could let people prove that they Understand the risks uh associated with These things let's talk a little bit About what it's like to have the stock Um not follow maybe logic or you know The the valuation and what that's doing To your day-to-day because I don't think Anybody who is doing something like You're doing here wants to see it
Appreciate that quickly and then come Down and have 20 30% swings that's What's happened the last couple of weeks So let's talk about the swingy nature of This and what's happening with it and Then you know what your plan is to kind Of get to normaly here um and and is That kind of a goal to have it be Appropriately valued or do you just Think hey if people want to overvalue it A bit or they get super aggressive That's just the market um or are you Concerned about hey maybe people are Getting ahead of themselves here yeah It's a good question you know people Have been telling me over the last few Weeks that oh this is very timely what You're doing or they look at it oh it's A sign of the times it's a sign of Excess or froth in the market and and um You know I always smile when I hear that Because in my perspective I've been Working on this for a decade you know I Founded a company called Forge which is The largest secondary Market uh for Private Tech shares um you know Destiny We started four and almost four and a Half years ago and so this wasn't about Oh today is a very opportune time to List this is about kind of seeing a Longer term view on how I want the world To look uh what kinds of products should Be out there and working hard to create It so when I zoom into to the last three
Weeks I I still think it's just uh a Market Discovery you know two years ago Most people hadn't heard of Destiny Today many more people have um two years From now even more people will have and And so we take a very long-term view on You know what does the world look like Whether it's for the tech 100 and what We need to do to achieve the goals there Or more broadly um and how do we go and Shape and create that yeah and I mean This is one of the aspects of having a Democratized financial system is that People can make bets um without doing Any research they can make Bets with Doing tons of research they can miss Things they can catch things they can They can figure out their own stories And we've seen this happen many times With you know GameStop GameStop and AMC And here you know the majority of the Fund is in SpaceX I think that's the big Winner yeah so I think maybe people who Want access to SpaceX this is just a Convenient way to get in there correct So when we brought this to Market we had A really important decision which is Okay we have this idea of Destiny Tech 100 existing I believe it can be done From everything I've seen in the market And and help Drive in terms of private Market liquidity now we've raised the Capital but as we go through that Process are we going to go and list this
Publicly with an idea and zero companies In the portfolio then you might you know We might be having this conversation you Would say hey it looks kind of like a Spack but for 100 companies not one on The flip side if we'd waited until we Had all 100 then by the time individual Investors and the public were able to Participate they would in in effect be Last in line again and so we had uh you Know this tough decision to make and What we decided to do is okay let's get 20 to 25 uh companies in the portfolio To start at in our case 23 let's go Bring this to Market and list it and Let's build build the rest in public While we're public and so that does mean That even our portfolio composition you Reference SpaceX as one of the portfolio Companies but that's going to shift and Change over time as we keep building out The portfolio um so it's not meant to be Um anything more than a point in time Representation of the portfolio and it Also means you know as investors are Learning more about private markets and Late stage Venture Capital as they're Learning more about Destiny and the Destiny Tech 100 they're going to kind Of watch how we build it in public and Uh you know for some people it might be The right investment for them today Again not investment advice uh for Others it might be something to watch
And follow and learn about and track Over a year or two or five um because we Have a long way to go to deliver on the Ultimate Vision yeah it does seem to me You know if it's trading at 10 times Whatever the book value is that's Probably not a great idea but if it was Trading at two times or three times you Didn't have access to it hey maybe you Make the case for it but you have to do Your own math as chamath always say do Your own underwriting and the price and The entry price is super important there Were people you know who uh didn't want To invest in Uber when it was a $300 Million company that thought that was a Ridiculous valuation it turned out it Was an okay valuation to get in at the Series B uh shout out to Sherin who did That okay one complicated issue here and You I guess when you were doing Forge Face this and second Market face it a Bunch of people private companies Sometimes don't like people buying their Shares and doing stuff with them uh now Elon and SpaceX um according to my Understanding of it which is public Knowledge um they have like an orderly Process every six months people buy and Sell shares but I do think they approve Them I did read that there were some People maybe who weren't happy with you Buying some of their shares and putting Them into the destiny 100 maybe you
Could speak to the laws around and the You know the uh what manners around Manners might be around I wouldn't say Ethics but manners like hey I want to Buy your shares and then put them into This and essentially you aoxy to a Certain extent on some percentage uh for Their shares trading publicly so maybe You could talk a little bit about how You acquire the shares and then when People get upset how you manage that and Then any legal issues around it sure uh A number of questions there so to start With in terms of how we invest how we Acquire the shares what we did is we set Up a pretty flexible mandate and we view Our mandate as for the fund and the end Investors best execution um that means We're not tied to any one uh way to Acquire this shares and so we Participate in primary rounds uh of Companies so imagine the later stage Series whether it's CD EFG and so on We've um participated and can Participate in Bridge financing Convertible notes or other things that The company needs as part of their uh Journey uh and growth uh we've done Secondaries um from Founders or Management early employees we work Directly with uh VCS or other early Investors who might be looking to drive Liquidity and some of their portfolio uh Realize some of their markups uh we also
Buy through secondary marketplaces or Brokers like Forge and its competitors And and so our goal is taking a look at The entire market and saying okay for The companies that we wish to have in Our portfolio what are the best methods To access this what's the best prices What's the most effective efficient way To do this and then going and executing There and so that's super important Because we're not just focused on Primaries or secondaries and I think um You know it's one of the trends we're Going to see over time in the next 10 Years across Venture as a whole it used To be either you're a VC or you're a Secondary fund and now what you've seen Already behind the scenes at many VCS And I think you'll see more of is no You're just an investor and you might Buy some secondary whether it's a tender Offer whether it's from an employee uh You might buy primary um and those kind Of lines are getting blurred just in Terms of people thinking about this as Exposure into um the underlying company I I totally understand that there are Shares available in a company like Stripe one of the founders might want to Sell their shares doubt you're going to Get them to do that they probably have Their VCS on the board you know handling Those transactions but there could be or Early employees or seed investors who
Maybe want to clear part of their Position and then yeah you might have Some company that's doing their series C Or D and you could participate in it Just like any other VC and I guess you Just have to make them aware that you're Going to do this that could be a priced Round or it could be not a priced round It could be convertible which means you Don't actually own the shares just yet You have basically given a loan I don't Think that has much of a a legal issue Does it um owning convertibles Convertible notes versus owning actual Equity no as long as from from our side We have to disclose publicly and we have Audited financials and everything else So the disclosure is super important but That's one of the benefits um of us Being you know registered and listed is We do have these obligations to be Transparent and our disclosures are Reporting people can go and look you Know what are the underlying Holdings That we have okay cloud computing has Revolutionized startups over the past Decade you know that but the reality is Hey a fully cloud-based solution is not Right for every startup sometimes a Hybrid solution is your answer like if You're working with sensitive data that Can't be trusted to cloud or if you need To connect to multiple Cloud providers At once or maybe you just want a much
More cost-effective solution in that Case you need to check out equinex Equinex metal will give you direct Access to physical servers but you still Get all the benefits of the cloud so no Need to rack and stack your own servers No equinix provides on demand Infrastructure in over 25 major cities And here's the best part they have an Amazing startup program for you the Equinex startup program offers Personalized consultations and guidance From the equinex team and of course You'll get up to $100,000 in startup credits so here's What I want you to do head to equinix Startups.com to apply and when you apply James from equinex is going to reach out To you directly that's equinex Startups.com to apply Eqix startups.com there there were a Couple people who were upset who got Upset about you owning the shares and And how do you manage that I guess is The final piece of the puzzle yeah the Story there it's it's an interesting one Because it's never again just a point in Time when you zoom out at the secondary Markets as a whole right you had like You mentioned second Market uh and this Uh first era of secondary markets that Were uh transacting in Facebook and Twitter and a number of the companies of That time then you had this lull post
Facebook where uh secondaries were Almost a bad word um inventure and um You know the deals that were done were Done in back rooms kind of privately Lawyered and negotiated agreements when Uh I founded Forge in January 2014 it Still wasn't considered kosher to be Talking about secondar it wasn't yeah That's a very good point I mean Mark Pinkus uh with Zinga and I remember some Other companies uh we had invested and We were invest in Zinga they had Actively started writing into their Documents and into stock agreements that There couldn't be a secondary sale but Your position is hey you people should Be able to buy and sell shares no matter What they do yeah I think our goal is to Enable the companies but there's also Reality when you think about companies That have been private now whether it's 8 10 12 14 22 years without naming any Names yeah that is a very long time yeah They have obviously um you know Controlled their Capital stack and their Investor base but they now have at least Hundreds if not more employees thousands Of employees who are shareholders you Have um you know dozens if not hundreds Of funds that are shareholders you've Also seen spvs and other uh Vehicles by Which people get access and so what Happens is these companies end up being Pretty widely held so to go to your
Original question the sentiment has Always been on a company by company Basis some Founders you know view it as Something that they want the ultimate Say over some are much more open to a Liquid and kind of price Discovery Happening in the market there's not one Right answer but I do believe that the World is going towards a place where This is there's just more and more of This again you've seen it whether with Spvs whether with secondary Market Transactions whether um any other type Of uh transaction and so part of our job Is educating companies and Founders and VCS hey what does it mean if you're a Part of the destiny Tech 100 what kind Of obligations do you have does it mean That your financials are being disclosed Publicly and I actually see it as a Pretty exciting opportunity for us do They have to put their do do you have Access to their financials and do you Have to pass those through if you own SpaceX or stripe uh I I we definitely Don't pass along any company Confidential information and so from our Perspective one of the places we see Ourselves is being being able to bridge The private and the public Capital Markets and so in working with Founders And CEOs and Boards now there will be Tens of thousands hundreds of thousands Millions of individual investors who can
Be small beneficial owners in their Company and that is an incredible Audience to start engaging one two 3 Four years before a company goes public Start sharing their story not in the Form of quarterly reports or earnings Calls but in the form of here is our Company this is our vision these are the Kpi we feel are important one of the Interesting things you saw in uh the Late uh 2010s is you saw spot companies Like Spotify companies like uber Actually voluntarily start to disclose Financials in the leadup um to uh going Public and that was completely voluntary And that's part of the maturation of a Company and so again over time I just See this as being hugely beneficial to The companies and part of our job along The way is helping educate the companies On what that like for them yeah looking At it I mean you have uh superum we're Investors and superum um and for me Thinking hey you're trading some shares In superhuman you're explaining to People what superhuman is every time People talk about Destiny if one of the Hundred you picked was superum hey That's good for us as investors in Superhuman and I'm sure you know maybe Some people will try the software and if It works for them you know pay 30 bucks A month for it how do you deal with like Selling positions have you sold any of
The positions yet cuz I know some of This and I won't say which names but I Know some of them have had a rough road And you mentioned that earlier how do You decide to exit a position yeah it's A good question so we have uh right now One of the first companies to list Publicly was instacart uh from our Portfolio and and so that is now Publicly traded and generally once a Company uh goes public we will look to Hold it for a while and then um you know After a certain amount of its public Existence start to systematically divest Uh the position and then dividend um the Uh resulting uh Capital to shareholders And then some can choose to Automatically reinvested through a Dividend reinvestment program others can Keep the dividends but that's the kind Of general idea with exits in the Portfolio yeah over time you get killed On that one because that was a bit rough Like they were had a 3040 billion Valuation they went out at whatever 7 Eight billion that one didn't work out I Take it yeah in the portfolio it's Definitely one of the positions um that Currently is below where we bought it But that's you know part of the like Cycle from the last two years and it Looks like it's only 2% of the portfolio So back to diversification here even if You lost two-thirds on it you know it's
It's overall if you if you lost 90% of It you'd still have you'd have lost 1.8% Of the portfolio deploy Capital Hopefully you make it up with some of The other Investments and then top of The list 30 almost 35% in SpaceX yeah is That because it's appreciated in value So much or was that the initial Investment was a third of the fund no it Definitely has appreciated in value um Especially over the last few years and So that's definitely part of how it Became such a large part uh today um in The portfolio well listen I I think this Is a really clever idea I wish you great Success with it I'm fascinated by it um Have you thought about buying there's a Thing called strips buying strips or Buying secondary inventure funds and so There's always been this tension like Should a venture firm sequoia be a Publicly traded company obviously that Is not kind of how it works but it's Kind of what you're doing so how do you Think about the fact that you're going To be competing in some ways with late Stage Venture capitalists and then there Are Venture capitalists who might have Some seed fund $100 million fund and It's worth 500 million on paper they've Got a bunch of equities in there they Don't want to sell you the individual Equities but you could buy a portion of A venture fund not asking for myself but
You know that's our decision to do that But I could see you know a market for That as well where you said hey you know We put If you do raise the billion hey you know We put a 100 million into these 10 Venture funds just to get you know even Earlier access to the next cycle have You thought about that yeah we've Definitely considered that there are Regulatory restrictions around that in Terms of what registered funds can do And how they can access it so uh I'd be Remiss if I didn't Point those out but You know over time with with our mission And vision of bringing public access to Private Tech doing so in as broad away As possible we've thought about how are The what are the different tools we can Use in terms of the regulations that Exist today to be able to provide this Kind of access and exposure across the Board all right I have to ask you as we Wrap here you did a public tweet storm I'm was a little bit spicy uh you did This back in January uh two months ago I Fired my co-founder best friend his Shares along with those of all minority Shareholders of our startups were cashed Out at fair value as determined by an Independent third party through a Process known as reverse forward stock Split we built a $2 billion company Together made over 150 Angel Investments
Together and lived together for 6 years For most in Tech this is the part you Don't say out loud that's precisely why I didn't want to share and you went on To detail you know this breakup what did You learn and uh from this process and Is there a way to protect yourself Against your founder basically phoning It in if if that's you know how you felt About it I'm sure he might feel Differently yeah it's really tough I I Think you know it's one of those things That I'm sure you as an investor and a Number of companies and anyone who's Been around the ecosystem has seen not Just one or two but many examples of This because at the end of the day You're dealing with individuals and Humans and for me it's been one of the Most challenging personal and Professional experiences I've ever been Through um and likewise I'm sure it has Been for uh my former co-founder as well And all of that said these things most People don't talk about usually somebody Hears one side of a story um and so I Felt it was an opportunity to actually You know make sure that it wasn't just a One-sided story that we could actually Um you know transparently share um you Know what happened um and how to protect Against it I think it's really tough I I Think it's not any different than any Other relationship personal or
Professional that we all enter into uh Where you go in with the best of Intentions um and you have to you know Always make sure that you're trying to Make the right decision do right by the Other person um but I it's something I Still think about and grapple with if You have any solutions I'm all ears um But in a way when when you start a Company together or you start a family Together you do anything with somebody You're taking a risk you're taking a bet On that person um and that comes with uh You know everything around that and this Is you know one of the challenges you Have to incent a team with Equity if Somebody's got a large portion of it and They're not working hard you know it's Kind of demotivating for the rest of the Team they're all working for this person I'm not saying in this case you know uh Taking either side but in the Hypothetical situation which I've seen Many times yeah somebody's just you know They're not there they're not even Showing up for work or they're phoning It in they're just an employee punching A clock you do have to figure out a way To incent the rest of the team to stay And and keep growing typically people do That by maybe issuing more shares in This case you bought them off the cap Table they were forced or did they Participate and just say yeah I'm
Willing to sell my shares let's just get An evaluation done here did were they Forced to do it or did they opt into Doing it so in the details probably Can't go in more than what what I I Wrote there um but um it is definitely Something that you know it's just been a Learning process a lot of people have Accomplished um you know a lot of people Have dealt with it in different ways um And so part of it was learning about you Know how do we do what's best for the Company drive it Forward because you Know as we're seeing now there is a ton Of opportunity I have since day one Believed in this mission and vision um Day one of Destiny day one of Forge uh I I don't know how my entire adult life Has been spent kind of building the Private markets um and so I feel like There's a lot left to be done and had to Keep driving forward all right well Listen I appreciate your cander on all These issues uh congratulations on Getting this thing public buying some Stock uh looks like it's going to be Quite Innovative and we'll be watching Uh the stock ticker Dxyz good luck uh I'm sure I'm going to See you on a cap table soon when one of Our companies breaks out I'm sure you'll Be buying some shares uh continueed Success and thanks for coming on the Program thank you for having me Jason
And hopefully many cap tables one thing I forgot to ask you how many people does It take to run this are you just like a Solo GP you're just you and your all the Service providers or do you have like Some crazy team of people sitting there Trying to make decisions on this cuz Buying 100 tech companies that sounds s Like a job for one or two people so we We actually have a full-time team of six And supported by a great team of kind of Partners and service providers and so uh Trying to keep it super lean um but also We have a lot to do uh to grow the Business and so it's not just about Investing in 100 companies it's doing That well making sure we're getting into All of the top uh companies and Opportunities making sure we're doing so At the best possible terms um and so we Have you know a lot to get be done all Right continue success and we'll see you Next time on this weekend startups Bye-bye
