Spearhead with Naval Ravikant and Babak Nivi: IPOs Are for the Last Investors in Line


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Podcast Notes Key Takeaways

  • “If you’re buying a tech company when it goes public, you are literally last in line”
    • By the time a company goes public, anyone with any connections/capability probably got a bite at it
    • “It’s not to say you can’t make money, but the odds are way down because this fruit has been picked over many, many times”
  • Silicon Valley is turning into the new Wall Street
    • Wall Street used to be where people went to get capital for their startups – there was no other market for fundraising until you had the metrics to go public
  • “This is going to fly in the face of conventional wisdom: the average person should be saving for their retirement. But I never set out to save anything; I reinvested almost everything.”
    • 401k money gets reinvested into “safe” but unproductive parts of society (like the government)
      • “You’re investing in the DMV and the Defense Department. Their returns have not been spectacular.”
    • “It’s probably a better bet, if you’re in the tech industry, to invest back in the tech industry, especially if you’re young and especially if you can get diversified.”
      • “Invest in the smartest, best and brightest people around you, rather than people in far-away lands with far-away motives.”
      • $50k contributed to your IRA won’t make a difference to the U.S. government, but $50k invested into an entrepreneur will make a HUGE difference
        • “If you can find 10, 20, 30, or 50 investments like that, at least one or two of them will pay off”
  • Most of Naval’s net worth is illiquid and invested in startups
    • That said, he sleeps well at night knowing he has hundreds of teams of brilliant entrepreneurs building things that could be massive and change the world
    • Only a few of these investments need to work out for the whole portfolio to balance out
      • If you invest in 100 companies and one investment produces a 1,000x return, the other 99 investments could go to 0, and you would still see a return of 10x

Read the full notes @ podcastnotes.org

Subscribe to the Spearhead with Naval Ravikant and Babak Nivi Podcast

Financiers now come to Silicon Valley to invest in companies before they get to Wall Street.

If you’re investing in the IPO, you're literally last in line

I sleep well knowing my net worth is invested in the best talent

Startups can compound capital faster than public companies

A 401(k) plan is like investing in the DMV

$50,000 invested in a smart entrepreneur will change their life

Transcript: http://blog.spearhead.co/ipo

379 episodes