YouSaid · the spoken record

Gene Frantz

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21
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2017-04-26
most recent
2017-04-26
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1
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  1. “Our most recent public investment in a private company that's been publicly disclosed is Stripe, which is a revolutionary company in the payment space with an extraordinary team and traction that's quite unlike what we see in most companies out there. And it was considered to be a high-priced expensive financing, but into a company that we think has incredible long-term value and so got comfortable with it as a result of that.”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “I think team's crucial. And I think that for every, you know, it's such a competitive world, particularly in technology for large market opportunities that team is critical.”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “I think the information Jessica Vaselero's new online digital newsletters is quite interesting. I think they're doing a really nice job of developing proprietary content that is interesting. It's something I pay attention to. And then I'm a very regular reader of the Economist and the Wall Street Journal.”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “I'd say cons are very few, actually. The alphabet format does quite a good job of balancing what effectively an alphabet in Google is a very large company with having the independence and autonomy to be able to go drive a business independently. And that's a great advantage. I think the pro is that having this platform from which to go find great investments is totally unique and differentiated. And as I mentioned earlier, kind of a product, if you will, that the market hasn't ever seen before.”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “Oh, golly. Well, let's see. I have a hard time picking one favorite book. I have a book I'm reading right now that I'm finding quite enjoyable. It's been around for a while and I think it's more topical now than ever. And it's titled The Righteous Mind by Jonathan Hait. And in fact, the subtitle of the book is Why Good People Are Divided by Politics and Religion. And that seems like an immensely topical subject right now in the world that we live in. And so fascinating to me as I try to, as all of us do, figure out how to think about the current state of the world.”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Yeah, I think our history tells us that where we do best is when we have an awareness of a company and are able to track it over time, get to know management over time, and have conviction before we ever show up for the first initial meeting at the time a company happens to be raising in a cycle that fits with our mandate.”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Relative to other capital out there. And the reason we want to differentiate relative to the capital is that it'll enhance our returns. And B, it'll make us more of a go-to partner for other firms when they're raising money and make us more desirable than other sources of capital that they may have access to.”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “I think it's really hard, which again, for me personally, is a big part of why I came here to Capital G, was the view that you needed to bring something to the party beyond just smarts, money, and hard work. And so the prospect here to be able to build a business that could leverage Alphabet and Google to bring to startups what historically they'd never had, which is access to Google's expertise, knowledge, and know-how, was really distinctive and that that was something that the world didn't already have and could use. And in fact, if you look at our strategy, that model is totally core to what we do. And so we spend immense amounts of effort to ensure that we're bringing to companies that we invest in distinctive health and value add in the form of Google coaching, knowledge access, that sort of thing. And so that's something that's a big, big part of what we do. And to that point, the reason we do it is that we're trying to differentiate.”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “So, I would say that investing writ large across growth, equity, private equity has commoditized to a very high degree over the last decade in a way that would not have been the case in the prior 10 years to that. And in particular, it used to be a group of really smart professionals with money was differentiated and could go do things that were interesting and different. has meant that there is for any given situation you got a huge number of people that are very smart that have a lot of experience that understand sufficiently enough about operation of a business to be really effective with management where strategies that work are quickly replicated and and so it's very hard to differentiate and i would argue that within the investing world whether it's growth equity or private equity there's a very limited number of firms out there that are truly distinctive in terms of just we're smart”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “That's right. In terms of predictable results, where the management team hasn't, the business is mature enough where it lends itself to not perfect predictability because, of course, that doesn't exist, but at least having a good sense for the cadence of the business and the ability to guide Wall Street in the way it demands to be guided. And so that just takes time. I think the point on cultural maturity is really whether the manager team and the employee base are at a place where they're able to sort of thrive as a public entity and without being private, which of course has more flexibility and benefits versus being public.”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “Yeah, I think there are two dimensions to that. I think one is whether the business is at a sufficiently advanced stage of development that it makes sense for it to be a public company. And so scale is one dimension of that. Cultural maturity is another dimension of that. Predictability is perhaps the most important dimension of that. It sounds predictable.”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Poor reason to make decisions about how to try to get liquidity on investments. And what's much smarter is to be able to wait and access the public markets, think about selling the company, examine liquidity when it's appropriate for the business in light of its development, not when it's convenient or desirable for the investor in the company.”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Yeah, I think absolutely. And even though funds are 10-year funds, which sounds like a long time, the average investment period for most funds is probably three to five years. And so what that means is that every three to four to five years, you've got funds out raising capital. And when funds are raising capital, they want to show results. And so on average for a company that even a company that enters at the very beginning of a fund has that kind of a clock on them over four to five year period. And so if you under on average, of course, you enter midlife into fund, so you end up having that conversation three years into your ownership by private equity firm. And again, I'm generalizing, of course, this isn't always the case, but sort of there's a pressure there from a timing perspective that has nothing to do with the business fundamentals and then has everything to do with the fundamentals of the firm that's invested. And that's a”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “It doesn't in the sense that we, and this is somewhat a virtue of our structure, is we have in our LP here at Google alphabet the ultimate and very patient capital. And so if we can find companies to invest in that we can be in for a very long period of time that are growing and doing the things that they want to be doing and building value, having a longer time period before one goes public is totally fine from our perspective. And in fact, we're eager, we're much more interested in a company developing long-term sustained value than we are in the particular timing of an IPO in light of sort of Google is as patient a company as there is. And so from an LT perspective, we have a very, very patient capital base and therefore much more interested in the long-term value creation story.”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “Yeah, well, I think to go public, I would say it seems like companies need to be a bit larger and a bit more developed than would have been the case 20 years ago. But I think a great deal of the consideration whether they go public is driven by management teams who may or may not be as enamored of going public as they would have been in years past in a recognition that there is liquidity in the late stage market in a way that there hasn't been. And so as a result of that, companies electively will wait longer to go public and stay private and be a little bit more cautious about the decision to go public, even if they can go public.”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “I think it matters. I think particularly later stage where in the market that we've been in, prices obviously do matter. And for the record to be involved with any high quality company, you will be paying a full price in the market that we live in today. So it's really a question of which companies do you want to pay a full price for? And so I think selecting a high quality company is absolutely the most important first step. But I think you need to have limits on how much you're willing to pay for that as you think about making money over the long term and sort of how your returns will come to fast.”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Set of convictions on what long term is appropriate for thinking about ultimately how one exits an investment, sort of what valuation should be considered at that point in time is an important part of the overall thinking that goes into that.”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “I think cycles are a business reality and always will be, and there's no way around that. And I think we, for our part, and this would be true, of course, for anyone in the investment business, have as our mandate the responsibility to invest wisely through cycles. And so if times are hard or it's a cyclical peaky kind of time, it's still our job to figure out appropriate places to invest capital. And so the need to invest, you could certainly modulate your pace of activity, but sort of not investing in something that we're in the business of doing. Google expects to invest capital and do that wisely. And so I would say that sort of getting creative and finding ways to make money and invest wisely, even if times are brought to you, is something that we certainly think a lot about. Beyond that, I think just trying to keep as long a term a view as you can and having a strong”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “Private equity was a little bit later too, and that represented a really big opportunity. And so my thought was that the opportunity to be able to do that, particularly in a really interesting platform, which is what we think we have here at Capital G, made for a very interesting dynamic. And so as much as anything, it was a call on an interesting trend in the investment landscape that I would comment since. Then, of course, many of the private equity firms, including TPG, have actually done a good job of addressing that market opportunity and are paying attention to it and active in that place. But sort of that wasn't the case if you go back to the sort of 2010-11, 12 sort of timeframe.”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “Focus on software service and that sort of thing, but primarily targeted at more mature companies that were sort of ex-growth in terms of their development and where cost reduction and other strategies that were more appropriate for mature companies made sense. And so TPG and other firms did a good job focusing on that and investing very successfully. What started to become even more interesting with the passage of time, though, was sort of the increase in opportunity for investing in growth companies larger scale. And so when one considers a lot of the companies that grown up during the 90s and prior to that, they were venture-backed, they were successful, but for the most part, when they needed a meaningful quantum of capital, they would access the public markets and through 2000s there were for a variety of reasons the public markets still were there, but there was really an opportunity to invest at much larger scale in the private markets. And that was something that I think”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “So, why don't I start back with a little bit of commentary on the state of private equity when I joined in the late 90s, which represented a large category of investment. Still at that stage was fairly new to technology, but a few firms like TBG were quite forward looking at identifying tech as an interesting area and having reached a level of maturation where it actually made sense for the more traditional private equity kind of investing. And so joining TBG in the late 90s, we focused on the kinds of companies that represented a very good target for private equity, which meant that they were appropriate for leverage and banks would actually give you loans to help buy them. And in tech, that primarily meant hardware and semiconductor companies, i.e. asset-based businesses. And over the course, of course, the 2000s and thereafter, what we saw is a dramatic increase in the scope of lending activities with a lot more”

    2017-04-26 · The Twenty Minute VC · 20VC: 2 Signs That A Company Is Ready For IPO, Why Fund Cycles Are Too Short & Why Management Teams Do Not Want To Go Public with Gene Frantz, General Partner @ CapitalG · IDENTIFIED FROM THE TRANSCRIPT · source