YouSaid · the spoken record

Chris DeMuth Jr.

lines on the record: 62
first: 2021-12-03
most recent: 2021-12-03
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“So, if you're interested, I write on seeking alpha, I wrote as recently as today on planets. So you can look me up, Kristen Muth Jr. on seeking alpha and welcome to read anything there. And then I also have a community of long-term value investors called Sifting the World and sifting the world is from a Charlie Munger quote, and that is people specifically interested in event special sits, kind of quirky, weird value investments, stuff that I like. And you can sign up for that if you're interested, if you're really interested on a seeking alpha. So thanks for asking.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Thank you. Yeah, we can do the pessimistic side. I have a bunch of these that are, there's a lot of good short opportunities in the SPAC world. And the other two things is the dumpster diving on broken specs when they go from 10 to 2 or 3. There's some good dumpster diving cheapies. And then the future of public quantum companies. So those are the three things that are on my mind for some other time. But meanwhile, I really appreciate you having me on. Thanks, Trey. I really enjoyed the conversation.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Data point of the insiders, we're buying, but they're not really selling. We're just kind of combining it and becoming public.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and so you had the pipe in this case was 200 million, and so that was black rock strategic platform, Mark Bennioff, and then Google topped up, like Google was already big and they got bigger. Oh, the other thing I always like to see is I always like to see some kind of industry participation in a pipe, like a pipe can be a very good investment. People like me invest in pipes, but it's also important to see partner type roles in pipes. So it's kind of like nobody knows this better than Google does. They had a big investment. They saw this and like, yeah, we want a bigger investment. And so that can be kind of a good data point for kind of just the health of a deal that makes sense. 77% of the company will be the existing owners. And so this will be the inverse of that, which you don't know the whole thing, but you have the”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Million dollars of that risk cap. And so people have exposure that they don't get back. And that's that decision makers, that money goes away if you get liquidation. So that's kind of the lay of the land there. They actually have number six. They don't have number five. They have number six. And that hasn't found a deal yet. But those are the DML ideals.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Of contract, not fiduciary duty in the same way. So you'll get whatever the bare minimum deal you could imagine getting, but that'll be dealt with in the near term. So those are the kind of different silos, but it's a very good thing that the old guys will end up owning a significant amount. And that's how you can turn $345 million trust into a two and a quarter billion dollar deal size. Yeah, and they'll kind of lay that out a little bit more once that comes out. And then she say the other aspect of it, and it gets a sense, and this is kind of an interesting one once you get towards the end of a deal, but is the at-risk capital. And the at-risk capital is if you are an outsider, you put in 10, and at worst, if things collapse, you get back 10. You're an insider $345 million in trust, the inside”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Extremely well. Somebody like me is happy to go along for the ride and doesn't have a lot of negotiating rooms and say, hey, I'm demanding this, that, and the other thing. So every time he does one, you get less and less and less warrants. So this is kind of, you know, it'll be interesting to see this. I think it was kind of a third, then a quarter, and this was a fifth. But the warrant is a big part of the cap structure. So dealing with that and what happens is it's a five-year warrant. It's reasonably likely that at some point in the near future that there'll be a redemption deadline and if they redeem you, literally I think redeem for a penny so you don't ever let them redeem you exercise your warrant and that people will then exercise the warrant to 1150. So you'll have the warrant holders out a significant amount too. Rule of thumb, fiduciary duties always to the equity holder. So assume they're not your friend in terms of how you're treated as a warrant holder. Everything other than equity is a creature.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Equity holders are own some, and the public company holders on some. And then we also have to deal with the warrants because it's just complicating the structure a little bit further. I joked that one of the kind of shorthands force back experiences, just check the Roman numerals. The other one is look at what is nominally a generous structure to an outside investor can also be a bad sign. Like if you look for somebody who is inexperienced, somebody who doesn't have a track record, somebody who shouldn't really be sponsoring a spec, they have to kind of bibe the investors. So you'll overfund the trust. You'll put in 10, 25 instead of 10. You'll have maybe a full warrant, maybe rights and how rights tend to work is every 10 rights you get another share if a deal is getting them. As Nicholas history has been so good, as his DSPAC equities perform extremely well.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“With one that's been a train wreck of a public company so far. And I talked to some of the people who are involved in the bidding war for the company that he bought. And the second highest bid was 30% lower. It was not a spec. And that was a much more typical kind of market check for that. So he was bidding significantly above what anybody else wanted for a story, for a spec. the people who sold used a lot of the proceeds to cash out. And so that is not what's happening here. It's combining, but the current equity holders are going to be equity holders in the public company. And so they're going to be here for a long time. So the specific percentages kind of will get tweaked once you get through the votes. But this is a combination where hype olders will in some current”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“The IPO proceeds 345 million. And all of this is going to be, and the deal size, two and a quarter billion, but the deal size is also predicated on that we will have essentially no redemptions. And so one of the things about this sponsor, this team, and this structure is it's highly likely that we're going to be dealing with close to no redemptions. But the other thing that I always look for or kind of hope for is there are a ton of facts right now. And this worry that what you're dealing with is an exit for the people who are smart about it and a disaster for the people who are coming in. I mean, there is, I think I won't say which one, but there is a very popular SPAC sponsor.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Subscriber, what are you using up for? I think that there might be a higher level of comfort from people who are aware that that data is just in this one silo and not being shared with other functions at a bigger company. I'm not a conspiracy theorist about that. Google buys them someday. Hollywood would still be a customer, but there might be some preference to have it somewhat silent.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Hot engineer doing something cool, it's kind of cool to have a big stake in the thing you're actually working on. It's cool to own a lot of Google stock too. But if this thing really explodes, I think there'll be a little more public awareness. And I think the breadth of the type of customers, I mean, you'll have people like me who's going to be an investor customer. And I think you'll have a lot of people in that category. So I think there's just somewhere awareness. Imagine if Google wants to, Google could put a link on this to their homepage. I mean, they can do with this whatever they want in terms of the upside. Oh, and I should also say you asked about regulators. There might be some higher level of comfort with an independent company making decisions on the basis of this product than being more integrated. There's me sensitive data in terms of not just the imaging, but how the imaging is being used.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Well, it's kind of the best of all worlds because when planet needs capital, they get capital. So back to what's the point of a pipe, you can kind of top off. They have the capital that the smaller company needs, the bigger company has access. You have personnel that kind of have, you know, even you can get data off of like LinkedIn. It's all public, but that are kind of meshed back and forth. You need things they now have. You need grown-up finance people, SEC compliance, public company ready, even just IR functions, PR functions, they're 100% set for that. And that's one of the advantages of the fact that it's called DMY4 for a reason and the fact that Nicolo, who's going to be on the board and is, you know, he's a fairly young guy for being very seasoned as a public company CEO who had an entry and an exit who has had multiple of these before. It has all the upsides of kind of being kind of adult supervision. But if you're a young”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Be like that, I would bet on the market against the government every time in this case. It is going to be ubiquitous to have access to this and it's going to be necessary. And I think that as the customer base builds up, country more in peril than the market to try to stand in the way. I just think that's going to be very, very hard. Now, I mean, on the edges, we don't want terrorists to use this or something. Sure. But I think that the vast majority of customers will be indifferent to national security. And on the edges, will there be some issues? Sure.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“And a lot of the customer base is going to be civil and going to be industry and going to be NGO organization, not kind of security sensitive. I think as Need for this becomes almost ubiquitous. I think there could be growing pains in the national security side, but I think it's ultimately more fraught for the national security efforts than it is for the company. Sale. And when GPS first came out, they tried to scramble GPS so that it wasn't highly accurate. And you can always use words about national security to justify anything and you can kind of imagine you can say allegorically why it makes sense that private citizens shouldn't have their own GPS. And it was annoying if you're a sailor because having very accurate GPS is helpful for individual rocks and shoals and so forth. And they were actually really crude on how they scrambled it. And I figured out a way to unscramble it. But they tried it for a while and then they gave up. I think trying to limit Earth imagery, it might.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Boy, I just don't think you're going to see anybody leave. Planet is Bloomberg for Earth imagery. You just, you know, the second best is going to be too little too late. And for the scale of decisions you're making that are affected by it, you don't really care too much because the costs are going to be, and how it works is for a lot of the data that we would need, it's just the regular satellites. You can actually have ones that are kind of optimized for specific sites, but just the regular kind of slices it's kind of like an apple peel that goes around and it actually uses the rotation there. So it's actually just kind of going around and taking these image. I think the customers are going to be very, very sticky. And if there's competition, great. But I think, and this is the falsifiable claim, that in the next two, three, four years, I think you're going to see spectacular growth.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“My answer is that people shouldn't talk about being a monopoly or pricing power and that the General Counsel of every company should take a little seminar for all of the salespeople and say, don't talk about pricing power, don't talk about being a monopoly. So it's not something I would focus on even if I thought it had a monopoly-like characteristics. I think the speed at which they've gotten this far is a big advantage. I think there are more ways to get into space than there are networks like this in space already. I also think that there are data aspects to how they are able to optimize and use their imagery that makes it very, very sticky. I think that you're going to see spectacular growth in revenue and in the number of customers. But I think”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Because they go so frequently, they can pull out all the clouds and just show you the soil, show you the crops, and there's just some answer. And that used to be something a farmer would have to sweat. And now it's just, you know, it's just numb. It's not even. The good news is there's going to be so many interesting things to think about in terms of how to use this. The bad news is I'm sure there are a lot of people whose judgment created kind of a pre-money ball career. identity for guessing things where the value of guesses are going to have no market value anymore.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Early investor and their major in the pipe, and they sold a Google business to Plant Labs. And there's a lot of Google people back and forth. So Google is, you could mistake this for Google subsidiary if Google ever wanted to buy it, if the current owners ever wanted to exit, you could imagine it would go to Google someday. But they're happy as a separate company. It doesn't really need to be that either, but it's just, I think it's just going to be hugely important. I mean, I think it's going to be one of the most important companies out there. And it's going to be just one of the data sets that the customers will start to kind of define what it's for. And they don't have any explicit kind of program for customers bringing in other customers. But I think it's just going to go like a wildfire through agriculture. You can look through clouds.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Financial products, but there are certainly human rights equivalent people debating whether or not there is a labor camp in rural China, they have the picture now. People debating whether asbestos is being illegally dumped by a river, they saw it wasn't there yesterday and it is today. I mean, so many things that used to be Sherlock Holmes sleuthhing is just handed to people in almost every scenario you can think of. So it's kind of spectacular. The infrastructure itself is pretty cheap individual satellites. These were bought”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“The changes, especially because computers are really good at saying, like, oh, I'm looking at a million different data points, but here's where a road was cut legally or illegally. Here's where a roof was damaged or it wasn't. And these are two claims. I mean, this is the kind of thing that you're going to have the imaging and the analytics for. I don't know what else you do if you don't have that. But like you don't want to be the guy guessing, competing against somebody who has it. Everybody's going to have to be a customer. And then they'll figure out what to do with it. But you just can't bet against somebody. I mean, you're playing Texas hold on with your cards that the other person can see. I mean, it's going to be impossible almost immediately. And so every industry will figure out what the ramifications are of that. I can kind of figure out what the ramifications are as a hedge fund manager, thinking about finance, thinking about insurance, thinking about”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Besides being good at analyzing Data like that, but it's an incredible data set. And so as an investor, I can't wait to get my hands on all of it. I think I had four requests into planet so far today. But I mean, it's an amazing subscription. But think about this is something historically, it's the kind of thing that superpowers have. It was pretty much the US and the Soviet Union could go back and forth looking at things like this. But now it's going to be everybody. I mean, now you have any intelligence organization, any civil government, I mean, insurance after a hurricane trying to figure out who's defrauding you and who's a legitimate claim, you'll just look at it in that day. And so the difference between kind of getting to have overflight and seeing what's getting.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Every industry has their eye on something. Everybody's going to be a Planet Labs customer. My priority as a market participant, if you were looking at a retail opportunity, say, you can be a customer, you can be a data scientist that uses real-time data to know things, or you can get out of the markets, or you can get destroyed if you're coming up on an earnings report and you're guessing on some hunch and the people who are planet customers, they already know. I mean, they know. If you have credit card data and parking lot data and you're looking at a commodity business, you just say, well, our algos have just tracked how many trucks have left the factory every day. I mean, you get arrested for trespassing if you are doing it on the ground, but you just know. So I don't really know what else there is to do.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“I mean, tiny little cheap satellites with unbelievable fidelity, Earth imaging, and daily. So organizations that had to wait a year are now getting a daily imaging. I would say the company's product is A+ and a huge competitive advantage. And I don't know if anybody's ever going to keep up. And I think they're going to be the ones to disrupt themselves. I think they're way, way, way ahead in this product. I think their sales efforts have been good, but if their product is A plus, their sales efforts have been B, because they kind of have just raced ahead in what they have and kind of, if we build it, they will come. I don't know what it's good for. I can say as a future customer, I can think of a half dozen things that I'm going to use it for that they've never pitched me on. And I suspect.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“So Josh is going to be much smarter than I on the technology, and I hit it from having been involved on the SPAC side from day one or even before day one. I was involved in this from the beginning outside minority passive investor, but concentrated a position in this. And one that I came in with this with risk capital participated in the invested from the beginning and have a big stake in this at this point, assuming the deal goes through, which I think is highly likely shareholder vote on December 3rd should be public shortly thereafter, ticker PL. I guess this is an obvious and redundant disclosure, but I am an investor in the company. And it's just a vintage Nicola Domasi deal, the kind of thing he looks for, the kind of reason I invest alongside him. It is a network, actually a couple overlapping networks of fairly low orbit mini satellites.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“To 28, and their warrants, and the warrants are typically five-year warrants. Are at $16.41 right now. And so that's pretty dramatically good so far. And I think a bit of a Market check on what's happening in stacks and also what's happening in quantum computing.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“From the old Ticker related to the spec to its own ticker. So it is literally the name and the tickers I and Q. You have sell side coverage for the first time. And then some long only mutual funds in different investment institutions actually don't have a mandate that allows them to invest as a SPAC and they can invest as a public company. So sometimes that makes a difference in the supply and demand. I know in the case of air sale, we think it's reasonably likely that they're going to get added to the Jets ETF and then there's actually a new leveraged Direxian ETF that could get added to that. So there's some kind of just market supply and demand dynamics that are affected by the deal actually getting done. But when INQ got done, it's done extremely well. It kind of don't follow these things every day, but it kind of, well, since we're talking about it, I'll follow it. You know, trade it up from 10 bucks.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“I always had a phone number. I was like, just tell me why who are these people? You know, whenever something's 99 to 1. And so like people, they're always somebody who redeems for $10 even when it's trading at a big multiple of that. And so I think she's, you know, $12 is more than $10. But once they start trading really well, it has a little bit of a self-fulfilling aspect to it in that the vote goes through. And one change, by the way, in the decade since I started this is the vote used to be tethered to redemption. You can actually vote for the deal and still redeem. So you have no particular reason to have no particular reason ever to vote against the deal. I mean, the votes almost always go through. They did in that case. There were almost no redemptions. And then as a public company, it shouldn't really change that much because, you know, it should be discounted that it was probably going to happen, but it goes.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Banker from Goldman can just leak something to the Wall Street Journal and then kind of see for a few days hey, they like it or not, and then dump it if they don't do it if they do. But this is kind of just a overt market check. And one thing nice about INQ is in an overt market check, people were really interested. People wanted to invest in this. People were convinced by this idea as an investment. And so by the time you get to the redemption deadline, you get almost no redemption. you actually get for the company not only your own capital put into it, which is great because I wanted my capital in this, but I also wanted them to have the runway associated with a successful SPAC combination. So in this case, and there's always like, I always want to get a phone number for the people who, you know, whenever it's like the people who go to Berkshire and vote against Warren Buffett for his.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Part of Amazon and Honeywell, actually, and some much bigger companies. But INQ, if you look at the IP, if you look at the engineering talent, it just has a lot of the smart people who are going to figure this stuff out. And so it's an important company. It was a company ready to go public and a company that I think is just going to have a lot of market interest. If you look at the mechanics of how these things work, As soon as the market sees the deal and you have, because you have the normal SEC process of going from a deal announcement to a shareholder vote, redemption and close. As soon as you find something in the market that gets a positive market check, in a lot of M&A,”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“That would take 10,000 years with any traditional computer. We're at a point in quantum that if you look at the physical spaces, if you look at the kind of spaces that these guys are working in, it looks like something from the 1940s and 1950s geniuses in these crowded rooms with all these wires and so forth. Separating the scientific challenge, the physical engineering challenge of getting these computers set up is quite a brainer and so you're inventing almost every step of the way. And so, I mean, there's years ahead of challenges. But if you start at the end and work back and say, who's going to have an important role in solving these, there is currently one and eventually one other pure play quantum computing opportunity. And then the rest of it is a very small part of Google, a very small”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“It's an extremely important company. There's kind of two modalities of how quantum might work in the years ahead. And there are huge companies that are working on this, like Google and Amazon, but in terms of standalone investable companies, there's only a couple. And in terms of the ion capture technology, one of the two ways as opposed to superconducting, which is kind of the other modality, it's INQ. What's that worth? As a value investor, I'm a lot more comfortable buying something at a discount to book value. And that's not this kind of thing, but it could be a spectacular investment. I think it's spectacularly important as a company. And we're really, really happy with that one. And that's just the last one in kind of this litany of success that you've had. I think that quantum has an incredible market opportunity just this past year Google for this first time was able to do something with quantum computing.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Past the trust. So once you kind of beyond the arbitrage games, trust value and this or that, and you're just looking at what's the equity actually worth, he's the most successful ever. There's more famous ones, Shamath and Ackman and Richard Branson, but in terms of outside minority passive investors making money. Nicolo's the best SPAC sponsor in history. And I think by far, I mean, I think there's others, maybe one-off ones, but just these have all worked. They've all worked really well. And so, and I would have been involved, I kind of coincided in things that happened to have been happen to have been kind of things that got good market reactions. I didn't really expect it. I wasn't, that wasn't why I was here. And then some of these are very kind of by their nature long term. You know, I encourage the first public freestanding quantum computing company.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“That one's trading now over $20. So just they've taken out the warrants. So it's much better than a double because you had warrants that came with it. But like just call it just the equity. You paid $10 for and you got other stuff with it. It's been more than a double. And that was fairly recently. Their second one was a genius sports, things like $14, something like that. And then you got warrants too. And so those both were quite good. INQ, their third one. And that's at that point was the one we were by far most involved with over 25. And then the next one is a planet DMYQ disclosure. These are investments of ours. But Nicolo is the most successful SPAC sponsor based on the DSPAC equities value. So not based on kind of short-term trading during a SPAC, but like once”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“He's very savvy on tech. My focus has always been on finance. I am not a tech specialist in some of the areas that we've gotten very big investments in, but he's somebody who I've always liked his judgment, trusted him on higher tech deals. But he's had a really good record, Lou Mobile, professionally, the CEO, and his deals he's found have been, you know, we just like them all.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, they're my favorite, they've been my favorite for a long time. And my interest really in them is not the thing that's kind of coincided subsequently, which is my interest is really on the technology and business side, they are very thoughtful and they're very long-term oriented. And if I'm stuck in something because of how we get set up in these were, Yes, we're getting in at a very advantageous time in a very advantageous way, but we're going to own these from the beginning to the end. And we frequently have more and more of our capital come in through different means through the IPO, through the pipe and elsewhere, and often in risk capital. These are the guys we want to kind of be in for the long term. Nicola Demasi is, I don't know that you need a separate disclosure for saying he's a friend, but he's a friend and somebody I quite admire.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“And then there's some other good news is the kind of one you want to be involved in. You might get the cash or not. And then there's some other bad news because we're kind of a mess on our side. And we're all as it exploded. It kind of has a lot of both. We've had an era as recently as the first quarter where everything was trading hot and then an era in the summer where everything was trading cold. And now it's kind of gotten to be meritocratic where the market's starting to pick out winners and losers and it's doing so in a way that makes a lot of sense to me. And I think it's really healthy and it's kind of serving well the kind of ones that I'm in and like and it's kind of starting to sort out some of the irritants of people who have no business touching this much money and are going to do wacky deals and distorting prices and so on.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“The story you want to be telling, and really anybody that I would want to put a lot of my own money with is this deal is going to get done and we're going to be helpful and relevant to you. We have people with public market experience, which you might be a genius business founder with some spectacular technology who's never even thought about public markets before. So we've just put five of these through a pipe that has investor relations and public relations at a public ready CFO because those are the functions. I mean, the regulatory functions kind of a grown-up finance person is the function that even a spectacular multibillion dollar tech startup might not have really thought of that much. I mean, especially if your growth has been meteoric, you might have been kind of a startup fairly recently. And so the world of dealing with the SEC is new, well, SPAC sponsor is probably an experienced one might have done it five times in a row. So it's kind of like you're definitely getting the cap.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Not a law against putting a number at the end of it, but I guess the market would find that out, you know, have some kind of history makes a difference. But a pipe says, hey, we have the money. We have private investors coming in. This deals can get done. And so you can perhaps get a better deal or pay a little less than if it was in flux where there was the cheesier deals that have a minimum cash requirement and that cash requirement is not covered is dicey to the last minute and not clear why a really high quality company would put up with that.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Is it kind of backstops getting the deal done? Because if you don't know for sure, if it's back sponsoring with the founder and say, hey, I have whatever it is, typically something like $300 million in trust, I'll pay you the $300 million, except if people want it back, right? So there's that kind of strange aspect to negotiation where strong hands with the sponsor can make the negotiation go a lot better. So if you have the top tier, top performing experienced SPAC, one way to glance at it is if there's a Roman numeral in it, if there's a Roman numeral in the name, it's probably the dumb guy on the board whose dad gave him the job. But if there's a Roman numeral in a spec, it's probably an experienced sponsor because they've done something before. And I've always thought it was funny. You could always just name your spec, you know, ABC spec 7 or something like that.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Don't have to be tied together. The reason why they are often thought of in conjunction with a SPAC is that a SPAC has raised some peculiar finite amount of money, then you find some target, and there's no particular reason why if it was my spec and your company and you want to combine with my SPAC, like why should your company be worth the precise amount of cash that I have in my trust? Now, one of the ways you can tweak that is how much of your equity you roll over. Because so the predecessor will own some of the equity. The sponsor will own some. The SPAC equity holders will own some, but the pipe is kind of the flux. I mean, it accomplishes two things, really. One, it then lets you scale to hit the right size of the consideration for that company. The other thing it does.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Be coming in at eight, or you might have protection down to eight or some other virtues and how it's structured. And the cool thing about that investment is it also kind of protects your earlier investment. If you're already pop committed, you can come in and make something push over the finish line. So if you own a lot of warrants, you come in with a pipe investment, you can kind of push those way into the money.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Encourage him to roll over his equity. I create this problem. And so it's kind of like short-term greedy, long-term, stupid in a way that I really try to say, no, I want to be a good partner. And so that's kind of how we get into the best deals at a smaller scale than most of our peers would, just trying to kind of think like a SPAC sponsor to get really good deals. And the problem with really good deals is they have pushy founders because they have a lot of inbound interest. So pipe, you negotiate, you come in, you get to see the deal. So it's much more fun due diligence. You can't trade at the time or talk about it at the time clearly. And then the economics vary, right? So, you know, sometimes in a difficult situation, in difficult market, you're also getting a combination of securities and terms that might actually be at a big discount. And so where an IPO might be $10, you might”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“To be helpful to the sponsors. I have to, and one of the ways we do that is we're very flexible. So a typical demand for somebody who's an outsider investing in risk capital would be, I want to be senior, whatever you find, you can't negotiate my equity. I always tell them opposite. Negotiate my equity. Have it period pursue with the actual sponsor insiders. And the reason is I want the pie to be really, really, really big. And even if that constrains precisely how I'm set up, you're negotiating the same thing for yourself. The problem is I'm very inflexible, then you have to be ultra flexible with your own economics. And what I mean by that is you find a company bounder, you're negotiating with them, and I have this like chunk of your equity, he has to deal with that.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Deal certainty really matters to the target. And one of the things I try to provide, I always try to be the most sponsor friendly outside minority passive investor. The typical way to get good allocations is just to trade a ton with Wall Street. So if you're, you know, say, if you were my broker, I was like, hey, I do a hundred million dollars of fees that you get every year, give me this allocation. You do it just as a kind of payola for fees. We're not active traders. We're kind of a research shop. We're not really a trading shop. And so if I can't get close to Wall Street because Wall Street doesn't have any particular reason to care about me because I'm an annoying, I'm like the worst client. I have tons of corporate actions and complexity. I probably have the greatest ratio of complexity to fees of any investor in the world. So we're doing a lot of complicated stuff, but we're not really doing a lot of trading that really benefits Wall Street that much. So if I want to be relevant, I have”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Sure, so it's a contract, you negotiate it back and forth, the parties to it are kind of, it's a creature of the parties to it, so it's more like buying a house than buying a stock, right? So it doesn't scale down just like buying a house won't scale down that much. So it's typically a small one's millions of dollars or tens of millions of dollars per investor typically, I guess you could do smaller. I've never really done one that wasn't a pretty substantial amount of capital that they were raising. And I can't talk about any of the current ones because of, you know, you sign NDAs and the ones you're working on. I can kind of talk about past ones and the kind of the situation. So something like air sail is one that we took a significant stake in their IPO and then they found a deal that we really liked disclosure and we're very invested in it. And then when they find the deal”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“And ideally, because we do a lot of due diligence, there's a lot of research involved in each of these deals, and there's a lot more to look at once they actually find something and you decide if you want to do the pipe and invest in the company for the longer term. But ideally, you find a team you really like. So instead of kind of doing a lot of background on that person, you can do it once and then do four or five deals. And so we've had a couple opportunities with our biggest pipe investments, with our biggest back investments where we can do that.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Do you have a back and forth and say, hey, I would like to invest, but this is what I need to make it make sense for me. And that's why they always have minutely different structures. So in terms of how much cash and trust, because more recently when the market was hot, you had the advantage of you got these big pops. So you'd put in, we had a big investment in Liberty's corporate spec. I don't recall exactly, but I think that was trading up like 20 or 30 percent above trust almost immediately. So yay, you get to make all this money in these pops. But the flip side is when it gets really cold, they do things like overfund the trust. So you put in $10 and you don't get $10 back, you get $10, $20 back. And so you actually get a bit of a yield, a little bit lame, but by the standards of two-year paper, not bad. It's better yield than the treasuries. And so you kind of have one advantage or the other. So we have kind of all of those different ways that we approach it. And then we find a team that we really like.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Five more frequently 10% of a offering. This is something that it's very sensitive to us because it's only opportunity cost. I mean, all the risk is opportunity cost, but we like to go in with teams. And we try to be very flexible capital. So we have a lot of available capital coming later to do a pipe later, to do other types of things so that when we show up with the dollar, I'm really thinking about $10 in the back of my mind of different ways that we might want to be involved. And we sometimes also have risk capital. So we sometimes also are on the SPAC sponsor side as well. We sometimes come in when they find a deal, then you sign an NDA and you have NMNPI, so you can't trade, but I don't do that much in the stock market anyway, so that's not a constraint. Doesn't really change my life that much, but that's where I can actually look at the deal. And that's a lot more fun. I mean, analyzing a shell company is kind of pretty boring S1. I like reading SEC filings, but that even stretches my entertainment value of reading about somebody you know in a structure that you negotiate.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT
“Sure. I mean, I love stuff that is kind of a Swiss army knife of investing where you have the cash-like aspect on the downside or treasury-like aspect on the downside and equity-like aspect on the upside. So kind of in my personal account, I love mutual deposits where I have kickers on options to participate in equity offerings. I have a big portfolio of refundable deposits on all sorts of zany stuff that can catch bids when people are really very time sensitive want an OEM, planes, trains, automobiles. And they sometimes get equity offerings too, as Rivium had recently. And professionally, I love SPACs for the same purpose. So I can tell you how we do it, and different people can certainly structure things different ways. We typically come in at some significant percentage of a SPAC IPO.”
2021-12-03 · We Study Billionaires · TIP401: The Most Important Company Is Going Public w/ Chris DeMuth Jr. · IDENTIFIED FROM THE TRANSCRIPT