YouSaid · the spoken record

Darin Soat

lines on the record: 51
first: 2022-12-08
most recent: 2022-12-08
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

“Yeah, you can check out link to link2.com if you are an accredited investor. I strongly encourage you taking a look at some of the assets we have on there. You could reach out to our team if you're interested in investing. We'll bring you through every step of the process. Or you could check us out on Twitter. Our handle is link to L-I-N-Q-T-O. And then me personally, you can find me on Twitter at Darren So, D-A-R-I-N-S-O-A-T. And then if you want to check out how MoneyWorks, you can go to youtube.com, search how money works. It's a green logo with a dollar sign and a question mark. And there's a lot of content on there. So hopefully you can find something interesting.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Doing out, and that's being creative in a way that I can talk about something, be it economics or finance in an authoritative way”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Channel to how many works, and at the time it had, or like 3.8,000 subscribers. It really wasn't that much at all. And I basically changed my model to let's make it a lot easier to put a video together. Let's, you know, I'm going to speak like it's really interesting. I'm going to put together an interesting case study. And I'm going to try and streamline the video production process by using stock footage from story blocks. And that allowed me to create a YouTube channel while I was also doing banking alongside that. Eventually got to the point where the channel got large enough that I could hire an editor. So I did that. And all I had to do was speak into a microphone and write scripts at that time. But originally it started out as a hobby. I believed at one point it could end up turning into a nice bit of income. But in many ways, it's kind of turned into a second job for me. But I love it. And it's really interesting and it allows me to really kind of bring what I”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Interesting. So the approach of the channel I like to describe it is very much like a Malcolm Gladwell of money approach where I find an interesting case study that's not really talked about a lot. And I make a video about it. So one of those things David Graeber, he writes about bullshit jobs in a book. David Graeber is an anthropologist, some guy who I find incredibly interesting. And I figured, you know, I could make a video form of that just basically talking about what David Graeber thinks. I basically took that approach to the whole channel, making things that are interesting. So yeah, when I started the channel back in 2019, it was more so an experimentation thing, bringing some of my skills from animating that I did kind of as a freelancer in college and then applying what I learned in finance and working for that small shop. And now I kind of continue my career with banking. And in 2020 was when I rebranded the”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“So, I think you could kind of trace it back to 2019 when I was starting my first banking job. And I was working in a relatively small shop, just trying to get my foot in the door. It was one of those shops where I had a banker that used to work at a relatively big shop and has since just wanted to do his own deals. And I was kind of interning for him. And I saw the opportunity to build a channel and one that I could talk about money. And so the original channel was actually called Compounded Daily. And I was just going to just focus on really interesting like case studies around finance and companies. And, you know, through a lot of trial and error, I kind of figured out what didn't and didn't work. And then things weren't really working out for the channel in Compounda Daily. And so I started to switch my model to, I had a lot of interesting things to talk about, but the video production was what was taking me a lot of time. And so what I transitioned to then was essentially writing these things.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“You're enacting is really bad for some of these developing countries, right? I mean, a strong dollar is not good for a lot of these countries. Whenever you're borrowing in a foreign currency and it's denominated in dollars, the dollar increases in strength. That's more dollars that you have to buy in order to pay back that debt capital, right? So it's understandable why that's hard for some of these developing countries. It is really a tough position to be in. Kathy Wood also wrote to the Federal Reserve in an open letter from Arc Invest, suggesting to that their monetary policy is going to be really bad for the economy. I mean, maybe it will be, but we've seen is that the Federal Reserve will do everything that they need to do to restore the strength of the dollar and bring inflation levels back into the 2% range.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Issue, you kind of let it resolve itself in very free market response to this. But some people like Jamie Diamond makes the case that when you put $6 trillion into the economy through their combination of fiscal and monetary policy, then you're going to have a sort of inflation. And so that brings me on to the second mistake, which is that when they saw inflation and they saw as persistent and high, they didn't act right then. And now we're at the point where they're kind of late to the game. They enacted 75, three consecutive 75 basis point rate hikes. And now we're kind of hitting the brakes really hard just to bring us into restrictive territory, right? And there's reason for that. Inflation is driven by money velocity. And when you can slow the speed of spending down, you could ideally bring down inflation, which would negatively impact GDP.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, you know, I fall into the ladder camp, I believe, the Federal Reserve is not a nefarious organization, and they truly are trying their best. And I think we should acknowledge that the Federal Reserve is kind of in a difficult position right now, right? In particular, I don't think that they are completely void of any sort of fault. You know, first, I want to recognize that the Federal Reserve is in a very difficult position in that I do believe that they are genuinely trying their best to make it better. I tend to subscribe to what Mohammed El Arian believes about this and that there were three mistakes that the Federal Reserve made. You know, the first one was seeing inflation as transitory and as something that will resolve itself. But, you know, in all fairness to the Federal Reserve on this, though, the textbook response here is that whenever you have kind of these supply-side issues and whenever you believe that inflation is driven by supply side A.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“The economy is not doing well. We need to do something about the economy. So they ended up decreasing interest rates. And what the resulting effect was that inflation shot back up, right? And the Federal Reserve, they're privy to this. And Neil Kascari had even said that, you know, he quoted this instance as something that they want to avoid happening altogether. So when price stability and maximum employment are at odds, it tends to be the case that they focus on price stability because there will be long-term effects if inflation does stay high that they want to avoid immediately.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Broadly into other areas as well. I think it's going to expand more broadly to other companies that are not just like the Facebooks or the Amazons of the world, right? Again, they probably won't hit the mainstream news for this, but they're definitely happening and they will happen if they haven't already. With the Federal Reserve, I mean, they have this dual mandate, right? Mandate number one is price stability in no particular order, at least, you know, in terms of how they lay them out. Price stability and then the other is maximum employment, right? And so when the two are at odds, ultimately, what does history tell us that the Federal Reserve will do is that they will maintain or that they will focus on price stability, right? You know, we saw this in 1970 where the Federal Reserve had increased rates, inflation was coming down, but they decided then to, okay, inflation's coming down.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“I do think that you're going to see a lot of these layoffs just beyond sort of the big tech companies. I do think that you are seeing these happen, but maybe they just don't make the mainstream like these big tech layoffs do happen. You know, I think the function of why these companies got so big really was because of cheap capital out there. When you tend to have typically high margin companies, software companies are in the case of Facebook, an advertising business. When these companies get to a, you know, a particular size and they have so many employees, they ultimately get to this point of inefficiency where there's probably employees, I wouldn't say probably, there's definitely employees that they just probably don't need, but they've hired simply because there was no repercussion for not, right? So that was primarily due to, you know, a cheap capital environment. So even though I think we're just the beginning of this, I think it's going to expand more.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“If we are in a recession, I don't want to get into the semantic. I particularly don't care definitionally. Are we in a recession or not? Where are we at in terms of the health of the economy more broadly is what I do care about.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Going to be some losers that don't make it. So broadly speaking, I think the issues with the crypto space are due to a lot of growing pains and lack of sound business models in many cases. So I don't think that in particular that contagion will be spread broadly to other spaces. I mean, hopefully not. Now if there was exposure, I know that there's a particular bank out there that did have exposure through offering lending vehicles to Bitcoin. Maybe that might have exposure. Hopefully that might just be a bank that's not way too, maybe there's not that many depositors there. It's definitely not the size of Lehman Brothers. But it's way too early to tell if this contagion is going to spread just beyond crypto and into other spaces like software as a service. I don't think it'll expand into software as a service at all, but it could, right? It really depends how bad the recession, if it does happen, exists.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, well, one of the effects of the Federal Reserve kind of pushing us into a higher interest rate environment. Think it's way too early to kind of make any sort of judgments. Now, for the crypto space, I would say that the contagion fortunately seems to be restricted to that. And I think a lot of that too just comes from some mismanagement of capital in terms of how you should be managing your company. I mean, it's why, you know, we had Basel III for banks after the 2008 financial crisis. It's why banks are so heavily regulated. But in this crypto space, you're seeing a lot of these companies go belly up, starting with FTX and you see that too with Voyager and Celsius. Part of the reason why you're seeing this is really because of either business models that really don't have businesses. You're seeing this because you have businesses that are either mismanaged, some kind of experimentation happening in this. I mean, the decentralized finance base is really a lot of experimentation that you're seeing happening right now. And so as that happens, there's obviously”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“To lead to is not a good reason for them to leverage up tends to be the case. But if the fundamentals make sense, then why not go for it?”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Ultimately led to this sort of environment that could push us into a deeper session. I think nobody really knows for sure if there's going to be a deep recession or not. But at the same time, if oak tree is putting out these nab loans, maybe it's an indication that they don't think that this is going to last all that long. So in two, right? Maybe all this means is these portfolio companies at these private equity funds, maybe, you know, I don't want to doubt to the due diligence that Oak Tree probably will put into these loans. Maybe the cash flows of these companies makes a lot of sense. Still, maybe the fundamentals of these companies still looks good. So a loan providing these private equity funds, loans in order to maybe scale up their portfolios, maybe there's some rhyme to this reason beyond it just being a high interest rate environment. Like maybe the fundamentals of these companies still make it make sense, even though the interest rate is higher. So I don't want to just immediately say that, you know, a high interest rate environment is going to be”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, I think that the saving grace for me is like, one, to your point, tree is a very conservative group. And then the other is that we're entering high interest rate environments, right? So a nav loan for these portfolio companies may not make a lot of sense. But at the same time, a nav loan for these portfolio companies might not be a good thing. But the thing is what I've really come to understand is I don't want to doubt that group. I mean, you know, for the most part, a lot of them are much smarter than I. There's probably a very good reason why they're doing this. I honestly don't think anybody has a good idea of whether or not we're going to be entering a deep recession or not. It's one of those things that it's kind of like forecasting weather. Everybody kind of has their guess, some of the really smart fixed income guys like Mohammed Elarian said kind of there were three mistakes that the Fed made that”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, that's exactly what I'm alluding to. Not only am I alluding to that, I think it's very much a real possibility. Now, granted that these private equity professionals tend to be pretty savvy just from working with them, but you never want to say that too soon. I mean, you see very smart people losing a lot of money or doing some things that probably weren't nefarious in nature, but ultimately had a bad effect, whether intended or not. probably had a bad effect even though that they really didn't intend it”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“That's exactly right. Yeah. It's like taking out a second mortgage. Just a provider of more liquidity, right? So yeah, actually you were spun on with that. Now, the loan to value of a second mortgage might be different because there's a little bit more liquidity maybe with a mortgage than portfolio private equity companies. But hey, that's kind of one of the advantages we have. The liquidity profile, being able to sell your equity. So at the same time, I too have just heard about net asset value loans as of pretty recently. For the most part, I would say that it'll definitely enhance returns, but it could be a problem if you're kind of facing a high interest rate environment and there might be a little bit of a liquidity crisis where you can't service this debt. And so if you default on it, well, what does that look like? Are you going to have to sell some of your portfolio companies? Are you going to sell them at a huge discount? Is there going to be, are you going to be then losing a lot of money for your investors? I don't know. So it's kind of one of those things that you want to just wait and see.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“These funds will do just about anything to continue to maximize their return so long that they can continue to raise another fund and they're not losing money for their investors.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, you know, that's interesting. It's something that I've just too become familiarized with. But the concept is actually really interesting, right? So what essentially they'll do is they'll take the net asset value of their company and they'll take some sort of loan against the portfolio companies that they have. So if you think about that, right? For a buyout fund, as their portfolio companies pay down their debt, what they're essentially doing is they're increasing the equity value, right? So they buy all these companies, they use leverage, they pay down that debt. And then they sell this company again, hopefully, you know, maybe increasing the enterprise value simply due to growth. Or if you had a company that didn't even grow at all after paying down the debt, you've still created value, right? But as you're paying that down, you could still try and maximize the return of your portfolio by continuing to give yourself access to this leverage. And so it might be a better use of capital to take on a piece of debt.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Investor out there who's really focused on making sure that they can go and raise a larger fund in the future, that they have this capital, that they can continue to deploy into their good companies instead of maybe making new venture investments. And that's not to say that they aren't making new investments. They are, but a good practice that they'll see is just making sure that their current investments stay afloat.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Then the question about why this is. And one of the interesting things that you'll see venture capital funds do during recessions is they tend to be a lot more conscious about where they're deploying their capital, not to say that they're not conscious at all, but what I mean by that is, you know, if they have a good company that they know was growing and can still continue to grow, but might have a little bit of capital constraints. What I mean by that is, you know, let's say that they raised three, four years ago or even a couple years ago and they're running out of cash. And at the same time, it's still a good business model that can very much survive beyond a recession. What they'll do is instead of deploying capital, a new company, they'll instead allocate some of their capital to making sure that those companies may stay afloat, right? So you kind of have this in a way this nursing of your portfolio companies during times of recession. And I think that could be one explanation for why this is, right? Is that, you know, thank goodness for the”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“So there's an interesting trend that you'll see in venture capital though. So with the increasing rate environment, I think you have to do a little bit of bifurcation of venture capital and kind of the buyout private equity side, right? And that's because buyout private equity tends to be very debt reliant. A good amount of what they're using to acquire these companies is leverage, essentially debt. And when you see the increase in interest rates, well, that tends to drive enterprise values down. There's a different trend, though, amongst venture-backed companies. And one of the things that a group called Kane Angel Network looked at was performance of venture capital during the 2008 global financial crisis. In the year 2008, the S&P 500 returned negative 38%, right? The NASDAQ composite negative 41%. Just take a guess where VC performance during that year. It was 14%.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“They were defrauded of their investment. And it's hard to actually try and qualify that as kind of the norm for the industry, right? So yes, it happened. And yes, it's not good. And yes, it makes Sequoia look bad. But I would argue that there's a good chance that Sequoia actually did a good level of due diligence in that there was nefarious actors managing the company of FTX that ultimately kind of painted their investor or lost all the value in their investment.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“So look, I think the FTX situation wasn't necessarily something of a lack of due diligence. I think you could do as much due diligence as you want, but mismanagement of whenever they were doing their fundraising, their books were probably in order and made sense, right? But it was Sam Bakman Fried, you know, I would argue that you can't trust the guy whatsoever. But if what he is saying is true, then everything, then all the crumbling really happened and the cascading happened within the last few weeks, right? I will say that comes down to the fact that Juan, yes, there is an inherent level of risk with private companies and public companies too. Like, you know, you saw that with Enrom, but there's inherent level of risk, but fraud should not be accepted as kind of the operating standard. And there are some very smart people at Susquehanna that I personally know and Sequoia that, you know, maybe they were frauded out and, you know, maybe.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Investments or ride the wave of some of these really smart VCs out there, like Andreason Howettz and Lightspeed, who've typically outperformed a lot of these VCs even in the VC index, then I think that sort of might be able to level the playing field. Now, I will say there's also the drawback here of if you just open the doors to everybody investing into these venture-backed companies, then you're essentially going to see this mechanic where everybody, every retail investor, let's say that you open the doors to retail investors putting money into SpaceX, everybody would be every guy on Reddit would be investing into SpaceX. And essentially what you would be doing is you'd be driving up the price of equity far beyond its fundamental value. So there's an amount of capital that these funds tend to raise whenever they're doing their fundraising as a VCB company anyway. And you don't want that to be too much capital, right? You know, if I'm creating a software company and I don't”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Quicker rate than I can. And of course, you know, it goes without saying that these are riskier investments. But generally speaking, I think that I don't know what the future regulation looks like for something like this. Obviously, you don't want anybody to be able to put money into a company that their friend starts, right? Or I guess the regulation, an A plus offering does allow something like that. But you don't want somebody online to start a company and just be able to solicit a sort of investment. That's kind of what you're seeing in crypto right now. And it's not good because anybody can go out there, register an LLC, market it very well and advertise that it's something that it's not. And then they've just lost a bunch of people some money. I mean, sure, there's their repercussions of probably spending some time in jail, but you still lost investors a lot of money. So you do want to protect against that, but at the same time, if you could make so that you could tag on to some of”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“That they had, it was about 22.5%. In 19.1% for the entire BC index. Those numbers were relatively the same for 10 years before that. So the window between 2010 and 2020. But if you look at the past 25 years, again, the S&P around the 10% mark in the top quartile VCs had 25.1% average IRRs where the VC index had so broad VC index had 24.9%. And I find it interesting that the delta between the top quartile VCs and the broad VC index was literally 20 basis points. It was tiny. So that goes to show that this investment class altogether is just outperforming public markets. So that then brings into the question of, okay, so you're telling me that these large, that accredited investors, people who already have a lot of wealth can continue to increase the size of that wealth at a much”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, ultimately, you know, we would like to get to that point, definitely. And to the point of fairness, right, the bigger that the private markets continue to get, you know, the more scrutinized they become. And what I mean by that is the more the public is saying, why in the world am I not able to invest into this, right? If these private markets continue to get larger and larger, it increases the argument that mom and pop investors should have exposure to this investment class, right? And it ushers in the question of fairness. You know, just to mention a little bit about the numbers in terms of performance. So there's this group out there called Cambridge Associates, and they looked at the returns of the public market benchmarks. They looked at venture capital, and they kind of compared the two. So over the past five years, and this is looking back from 2020, the S&P 500 returned about 12% per year. So the top quartile of VC”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“It stands now, that's how it works. You essentially invest into the SBV and you're locked up until there's some sort of liquidity event, right? Now, I will say we are working on a feature that does allow you to sell your shares, right? So in the same way that, you know, you can go on to a brokerage for public equities, we are implementing a feature like that for private equity, where if you invested, let's say, early on into, or at least you had equity in Robinhood and say you got in at $18 a share, which is what we offered it on our platform at, then you could theoretically sell those for $30 a share before it goes public at what it did at $38 a share. So you could seek some sort of liquidity even at a capital gain before it goes public. But we're working on that feature and we hope to have more information on that later this year or if not into the beginning of next.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Nightmare, but it would be pretty darn hard for us to actually make that happen. And it wouldn't be favorable to the company. With these SPVs, when you invest into the SPV, we essentially give you an allocation that's directly proportional to the amount of shares that you're purchasing or the shares that we purchased, the amount of shares that we actually purchase in the company that are sitting in the SPV. Let's say that we acquire, you know, to keep things simple, 100 shares, if you invest essentially 10% worth into the SPV, then you would be allocated 10 of those shares. That's how the mechanics work. The math works out. It's directly, you know, the math works out directly so that you are technically owning those shares. And then when there is a liquidity event, we make sure to settle those shares into your brokerage account.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“The way that we're investing into these companies is we're buying the shares essentially through an SPV, special purpose vehicle, essentially a holding company that allows us to acquire these shares. And then what we're doing is we're selling ownership in the SPV. Let's say that linked to creates an SPV in particular to go on to Robinhood, go on their cap table, which was one of the companies that we had before it went public, we would buy those shares through an SPV so that you only see link to, if you're looking at the Robin Hood cap table, you're only seeing linked to on the cap table, or at least the name of that SPV. And it would be like linked to Robinhood SPV or something like that, right? The whole idea there is typically speaking, these VZ-backed companies, the more names that you have on Captable, the uglier it looks for them, right? So they want to keep their cap tables as clean as possible and have them make a lot of sense. So if we allowed every single one of our retail investors to get a spot on the capt table, not only would that be a logistical”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“We are. That's one of the advantages for these companies that have already seen a return and they want to realize that return, we're helping them realize that return, right? And for them, that's additional capital that they can put into another company, right? If they are a lead investor in one deal, but they're just a part of a syndicate in another, then they're going to maybe want to put more capital into that deal that they're focused on and they're probably the more invested in, right? So they're going to want to decrease the position of a deal where they're not a lead investor and get that additional capital to help support this other company, right? Because their responsibility as a lead investor is going to be much different, you know, whereas if they kind of took a passive role behind syndication between, let's say, Sequoia and Dreason Horowitz, right? So I think, to your point, that is a big advantage that we offer, but not only is it an advantage.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“On the platform at a discount to its prior round valuation is typically because we're able to acquire those shares at a discount. And that happens with the mechanics of VC funds. Typically what some, you'll see some VCs is they like to shuffle around some of their capital and rebalance their own portfolios and put maybe more company or more capital in another company and try and decrease their position in one company for one way or another. It's not the case that it's a bad company. It's that they want to focus on supporting another company.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“So, monitoring the value in real time is actually kind of difficult, but what we are able to do is what we do is before we even make an investment in a company, we look at a few factors, right? We look at who are the names behind it, right? We want to make sure that the names backing these companies are well-trusted names in Silicon Valley and have done their due diligence. We look at the valuation. We want to make sure that there were no down rounds because it's typically a negative sign to us because we want to make sure that they're going to continue to increase their equity value. And then the last thing we look for is one of the other things that I think that's really important that we look for is we look to see that there's a short runway to actually going public. And we want to make sure that users, even though they can invest here, even though we're seeing these companies stay private for longer, the sweet spot for LinkedIn is finding these companies that are still just a short way out through an IPO. Now, the reason why we sell share.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“To be actually pretty bad for the company. And so, what they want to see instead is if for a company that wants to grow, they don't want that sort of pressure from Wall Street, right? If you still have market to capture, then for them, they think that they should be capturing that market. As a result, you're seeing more companies decide to stay private for much longer. In the past, you saw Google and Apple go public and most of their value was realized after they've gone public, you know, but for a lot of the companies that have gone public recently, like Uber, a lot of that value was created while it was still a private. So again, there's a lot of incentives to stay private for longer. A lot of it really has to do with the pressure from Wall Street investors and kind of the different incentives that they have compared to venture capital. I think it's a trend that we've been seeing. And I think it's a trend that we're going to see for much longer.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so part of the reason why you're seeing a lot of companies stay private for longer is there's a lot of scaling that can happen that once you become public, the nature of your investor kind of changes the pressure of you as a company, right? And so what I mean by that is the incentives of venture capital, VC firms want you to continue to scale your company. Whereas once you're on Wall Street, the question then becomes is, okay, are you going to be profitable? And that's not to say that venture capital doesn't care about what future profitability profile of your company is. They absolutely do that. Otherwise, they wouldn't invest into your company. But while it's private, their big incentive is making sure that they increase the equity value of the company and they provide you enough capital to make sure that's the case. But when you are public, there's a lot more pressure to push for profitability. So when you see companies go quarter on quarter, you know, burning cash as a public company, you tend to have compressed stock prices and that tends to”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Likely going to be paying a sort of fee for investing in one of these funds, but at link two, there are no fees for investing in any of these companies. And our model allows that because essentially what we're doing is we're buying these shares secondaries from VC funds, former employees, and then we're essentially reselling them. So that's how our model works. And it allows for people to invest in some of these companies like historically we've had Robinhood. We had SoFi and it allows people to get exposure to this investment class without having to pay these excruciating fees.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Makes things more fair for everybody rather than just kind of limiting it exclusively to these essentially big funds, right? And to be an investor in one of these big funds, right, you typically have to write a check size of around a million dollars or more just to be a limited partner in one of these funds. In addition, you're also paying these really high fees. You're paying carried interest. And so one of the compelling things that stuck out to me about Link2 was you're not paying a carried interest and you're not paying these really high management fees, right? You know, Link 2's whole mission is allowing access to private equity in the form of typically billion dollar or more companies and making it so that any accredited investor can invest in one of these companies and pick where they invest, right? So you'll see other offerings out there where the investor will have the option to invest into a fund. Again, you're more”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“A lot of guys that have gone to some of the top business schools in the country and are probably the brightest when it comes to understanding not only the industry, but where the industries are going and kind of what makes for a good company in these particular industries. I guess what really brought me to link two was why is it that these investment classes are typically used only by private equity? So somebody is getting or modeling for 15 to 20 percent. Why is it that not more people can invest into something like this? And the truth is they can invest into something like this if they have enough capital, right? And so that's why you'll see a family office very often take the form of a buyout fund, right? But the reason, I guess, the most compelling thing for me of why, you know, Link2 made a lot of sense was that if you're allowing more people, retail access to this investment class, I only think that”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Investors into who essentially had exclusive access to these unicorns, these high returning companies. And we're saying, you know, hey, why not let the regular person participate in this investment as well? Joining Link2 was kind of based on this observation that I made working in investment banking. And that was these private equity funds, right? They're modeling, many of them are modeling from typically on average you'll see 15 to 20 percent return modeling, but in some cases you'll see the model for 20 to 25 percent returns, right? And that's in the buyout space. So you could argue that maybe buyouts might not be the highest returning, but at least on a risk-adjusted basis, they actually might be pretty well reliably returning, right? Now, what really stood out to me was that in order to really have access to this investment vehicle, you had to be an accredited investor. So what really stood out to me about the industry was that you have these investment professionals, and albeit these guys are really smart guys working for these private equity funds.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“So Link2 is a platform that allows accredited investors to get exposure to this investment class of typically billion dollar companies or more, usually later stage funding backed by venture capital, and allows people to get exposure to this investment class, accredited investors, that is, through a check size of around $10,000. So a lot of the competitors in our space will require an entry point of $100,000. We want to give accredited retail investors exposure to any of these venture-backed companies that they find desirable. And we want to do it for a low entry fee of $10,000, right? Typically, these are, again, late stage venture funds, usually a couple years out from a sort of liquidity event, be it ideally an IPO. But what we're doing is essentially we're taking this former game where it was venture capital funds who were the”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Well, the argument is that in any stable state company, the depreciation in amortization of a comparable company. So when you're using EBITDA and comparing like an auto manufacturer, the amount of machinery that they have should be comparable across the board between other auto manufacturers. So that's why you can kind of use the profitability profile to kind of do an apples-to-apples comparison. But at the same time, it's hard to argue against Warren Buffett in that case because I would say that depreciation and amortization for companies that do require any sort of capital expenditures, you cannot ignore it. So at least when you're comparing similar companies in those industries, I would argue that you do need to include a sort of depreciation and amortization. You can't really take that out to really kind of get a meaningful measure of cash flow. So I don't disagree with his understanding with that. And, you know, to be honest, I think it really depends on the type of company that you're looking at. But for capital intensive companies,”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, you know, as you mentioned, private equity is a pretty broad term. And to its truest definition, it's really just equity that's private. So ownership in a company that is not publicly listed, right? So that could take the form of anything from early stage seed to a privately held company at a late stage series round. You can think of SpaceX for kind of the broad audience. It's a company that you won't find on a publicly listed exchange, but it's still a big company. But kind of on the alternative side of that, you have very early stage companies maybe seeking a couple hundred thousand, maybe to a million dollars just to get up and running. So private equity in terms of its broad definition is really just ownership, private ownership in a company. Where that was for me in an investment banking was generally speaking, private companies that had EBITDA. And, you know, I like to use EBITDA as a proxy for cash flow. Warren Buffett's actually against the idea of using EBITDA.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, part of the diligence process is the investment bankers aren't really doing that. They're bringing in other professionals anyway. So if Warren Buffett can do those diligence things himself or hire an accounting firm or hire somebody to”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Bankers are collecting files and providing that information. And on a billion dollar deal, when you're taking 3% of that transaction, it's a lot of money. That's $30 million in a fee that is a lot of money for arguably not that much value provided. So I think his criticism comes down to the work that's actually contributed. I mean, you're paying $30 million to an investment bank on a billion dollar transaction where these guys created a pitch deck. I mean, for a billion dollar company and a billion dollar transaction, the company most likely had well projected financials. So the chances that the bankers actually had to go in there and recreate that probably not. There's also too the fact that these strategic companies probably also are these companies also probably had a list of buyers lined up and an idea of who they wanted to sell to anyway. So if you're paying a bank or $30 million to get on the phone and make that transaction happen, yeah, I can see.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Think it comes down to how he views the fees in terms of what the banks do, right? What are investment bankers doing? I mean, for the most part, it's a high energy environment. You'll hear the horror stories about junior bankers having to spend 80 to 100 hours a week working on probably four or five, six deals at once. And so in a perfect world, you know, you could look at that as these investment banks could hire more people. But the problem is right now as it stands, it's a relatively good margin business where their big cost is just however much they're paying their people. So when Warren Buffett looks at something like that, he's probably looking at the fees and actually trying to consider what investment bankers are doing in terms of providing value. So you have junior bankers who are going out. They're creating these sorts of pitch decks. They're advertising them to private equity funds and strategic buyers. And after that, they're kind of just sitting along for the ride during the due diligence process, sometimes of June.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Some offerings that can add to one medical to maybe bring some of the cost down in the supply chain, such as Pillpack, which is essentially a virtual pharmacy in a way where you're getting your medicine delivered directly to your door. And maybe there could be some sort of overlap with one medical. But in some cases, these acquisitions happen just for sort of cash flow play. I question that in the case of one medical, but because one medical was not profitable, but they could make it profitable and they could make it make sense given any sort of existing infrastructure that they have. So the whole motif of what investment banking is it's providing liquidity to people who have investments in current companies, whether that's an IPO, whether that's a sale to another company or a private equity fund.”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT
“Be that to private equity fund or a strategic buyer. You could think about this like in the case where Facebook acquired Instagram. But the whole idea generally is in companies seeking some sort of liquidity event. And ultimately, in some cases, advising buyers, maybe be it a private equity fund or perhaps that took the form of strategic buyer, essentially a company that was looking to add to their product offerings or maybe it's for a financial purpose, right? Maybe they want to acquire a company because it has good margins and they can get it at a good value and they could use any sort of existing synergies they can to increase profitability. I think you're seeing that right now with one medical and their acquisition by Amazon. And it's true purpose. Amazon was never intended to be or never intended to be a healthcare company, but they went out and they acquired one medical in many ways. They have kind of”
2022-12-08 · We Study Billionaires · TIP502: How to Run Your Own Private Equity Portfolio w/ Darin Soat · IDENTIFIED FROM THE TRANSCRIPT