Full Transcript
slava (00:04.187)
Welcome to another segment. Here we're talking about alternative investments. We're really excited about today's show. We have Joe Lonsdale, somebody who is an absolute legend in the Valley, a great investor, has been doing everything from being an entrepreneur, investing with a fund, and having lots of other alternative investments. This is gonna be a really exciting conversation. Joe, thank you very much for joining.
joe_lonsdale (00:25.794)
Slava, thanks for having me.
slava (00:27.643)
Absolutely. So the listeners always love to know where it all started. So obviously you've been an entrepreneur, but tell us about how you got into investing into different alternative investments.
joe_lonsdale (00:37.698)
You know, I think the first way a lot of entrepreneurs get into this is you work with very talented people. You know, Palantir, which I co-founded, I helped hire most of the first hundred people, spent a lot of time trying to get the very best people. And so when you're working with top talent, a lot of times after four, five, six, seven years, they leave and they build their own things and you just keep working with them. So I started backing great people I'd worked with before, started backing other great people in the ecosystem.
And so really angel investing was my first, what you call alternative asset investing that I did in my, in my twenties.
slava (01:10.927)
And was it really like, I know you, I'm willing to back you? When did you start going beyond that?
joe_lonsdale (01:16.042)
Yeah, you know, I still think my very best investments are I know you, I know how good you are, willing to back you, willing to help you out. Oftentimes that's how we make our best investments and people shouldn't, you know, people should really emphasize what they know and helping things close to them. I think that's a great way to invest. There's lots of ways to invest though. You know, I went beyond that when I started the fund and, you know, started having strong opinions about new opportunities in the angel space. And then as I had some more liquidity, you know, I
I guess when I was younger, out of school, aside from building companies, I was helping Peter Thiel with his macro hedge fund, which is another form of alternative investment. And I started to have some opinions on macro, so I started to make bets both on that as well as on entrepreneurs.
slava (01:56.967)
Can you tell us about some of those early bets?
joe_lonsdale (01:59.606)
You know, aside from the angel in this, you mean like the macro stuff. Like macro is a dangerous thing to bet on. I spent a lot of time, I probably read hundreds of financial books. I wouldn't recommend people take these types of risks normally if they're not really obsessed with it. Even being as obsessed with it as I was, I've met people like Stan Druckenmiller, you know, who did 30% annualized for 30 years and is one of the great all time greats, who's just so much better at it than I am, to be totally honest. And so he's really dangerous to.
slava (02:03.707)
Yeah, exactly.
joe_lonsdale (02:28.354)
do these things is the first thing I'd say. But when you're doing macro bets, you're trying to understand why something systematically mispriced. One of my favorite macro bets was when we were understanding how the jobs numbers that are reported at the beginning of every month from the Bureau of Labor Statistics, they were systematically being reported wrong. We found the seasonal adjustment was done incorrectly, and so we were able to devise a strategy based on that would make money 75% of the time.
betting based on how they were done wrong, which is pretty esoteric stuff. And so that was one. Another macro bet that I really thought was interesting is you had, there's these things called the GSEs, the government sponsored enterprises. They're called Fannie Mae and Freddie Mac. And these things were created to help with homeownership, to help give lots of loans in America to people to buy homes. And the home market, the mortgage market had gotten to be so big, there were for the first time tens of trillions of dollars in these mortgages and tons of money was going into it.
And so the balance sheets of the Fannie Mae and Freddie Mac were so big that when they had to hedge their portfolio, they actually were moving global fixed income markets between 2003, 2007. And so what would happen, this is a little bit esoteric maybe for our listeners, but they had to buy so many bonds to kind of change the duration of their portfolio back to match it that they actually moved the market and caused bonds to go up and therefore rates to go down, which caused more refinancing, which caused them to have to buy more. So they created this feedback effect.
by having so many trillions of dollars, and it was totally distorting the market. And you can measure this feedback effect and find ways to bet on it as it was going on and then fade it when it turned around quickly. I could talk a lot more about that, but it gets into convexity hedging, which I'm guessing it might be beyond the scope of the podcast, but there's all sorts of things like that, you know, that you could do in the macro markets.
slava (04:09.511)
I mean, definitely you have a breadth of knowledge across all of these assets. You know, you mentioned books that you were reading back then with Peter Thiel, like when you were getting exposed to some of this stuff. Do you remember any of those that you'd want to share with our audience?
joe_lonsdale (04:20.49)
Well, I mean, I think the first step is first, you have to like, get, you know, your equivalent of your CFA, right? Your equivalent of like, what are all the basic models people use in finance? Like get your MBA, you know, so there's all the sorts of books that you have to read. They'll get a CFA. I don't have a CFA myself, but I've read all the books, right? So first, read all those, understand how models work, understand how equity structures work and debt structures work and how to read a balance sheet. I think that's number one. I think for macro.
Gosh, there's so many things out there. Whatever, I think, you know, there's books like More Money Than God, which is an obnoxiously named book. Actually, Drucker Miller gave me one. So it talks about him and some other traders early on. I think reading about the early hedge funds in the 70s and 80s and 90s is very interesting and it's good to learn. You know, I think having opinion on economics, I think there's probably a lot of really good books by Ray Dalio right now. I don't think Ray's right about everything, but he's obviously been one of the more successful guys. You know, one of my friends, Paul Tudor Jones.
slava (04:56.061)
Hehehe
joe_lonsdale (05:19.018)
was one of the great traders, the 80s and 90s, still doing very well today. He developed a bunch of models with Ray, and then they started using it, and then Ray took kind of the early 90s and did a lot of things with. So I think if you can learn what's going on in finance, I think that's pretty interesting too. These are not necessarily things, a lot of that I think most people should do. I think you have to kind of be obsessed with it if you're gonna be a macro person, but if you're gonna be a macro person, you gotta just.
read all about all these different funds, read all about how the economy works. I think understanding Austrian economics, I think understanding the New York-Keynesian stuff, and you kind of build models, build your own opinions. There's a lot of work to do. There's a reason I don't do macro full-time anymore is just because it's really hard, and it's hard to do part-time.
slava (05:58.899)
So obviously there's so many flavors, macro being one of them. Let's go back to the entrepreneur mode.
joe_lonsdale (06:05.462)
You know, venture, venture is what I'm best known for these days. I decided my best macro bet 10 years ago was a focus on venture. Cause I think I thought venture was a great thing to start really doubling down on 10 years ago. I think that trend was actually correct. Obviously.
slava (06:17.43)
Yeah, what did you see and how is that evolving today?
joe_lonsdale (06:20.778)
Yeah, so what I saw in venture, what I saw in venture is there's a lot of new possibilities thanks to the cloud, thanks to how all these industries were not, you're not digitized, we're not using their data to run better. So there's just tons of opportunities to build SaaS companies in all these different areas. And that's what we did. I've helped found 20 or 30 of these companies with my, I have a team that helps me found companies now. We've also invested in a couple hundred of them.
and we kind of map out, okay, what's possible in this industry? How should this part of healthcare actually work? How should this part of logistics actually work? What's it look like now? What should it look like? And then you have that conceptual gap and then you close that conceptual back gap. You know, I think it's frankly right now a little bit harder to do what we do than it was 12 years ago, because a lot of these gaps that were possible, they were created by big data, by the cloud, have been filled. There's still other areas, there's still esoteric areas haven't been filled. I mean, the way...
that like a golf, old golf course runs or the way that like, you know, people do their trust actually something looking at right now. If you want to do trust in estate planning, like there's not good software for that. There's so many things we're still building right now that could be much better experience. So there's still a lot of things to fix, but there's already been a lot of low hanging fruits been picked over the last 10 years. And so we saw a lot of opportunities and we went and ran with them as hard as we could. And that's why, you know, Ventures had an amazing return to the last decade.
slava (07:39.399)
So just to double click on that, so in the late 90s, early 2000s, people were like, oh yeah, we've done all the low-hanging food from analog to digital. So would they have said the same thing about today, what you've kind of been looking at low-hanging food, is there an equal opportunity now to try to go after what's innovative today?
joe_lonsdale (07:52.694)
Yeah, I think.
joe_lonsdale (07:57.13)
I think a lot of low-hanging fruit was picked for Web 1.0 and the Web 1.0 approach in 2000. There were a lot of ideas that were good ideas that didn't work because there wasn't enough penetration yet. There wasn't yet the mobile ecosystem. There wasn't yet the cloud ecosystem. Then you had Web 2.0 and you had a bunch of things come out of that like LinkedIn and Facebook and Yelp and all these companies, Web 2.0. That was a new thing that was powered a lot of stuff. Then you had the cloud wave. I think it's really important.
when you invest in things, you have to say, why is it possible? And by the way, anyone could build a small business, anyone could build a medium business, but to build a really big business, to build a giant business, you have to say, why is this possible now when it wasn't possible five years ago? And that's the trick to building a very big business. So I think today, there's new types of AI that are possible. There's things in Web 3.0 that are possible with property and ownership, and people argue about Web 3, but there's new things there.
There's new things going on with innovation in biology, things to new tools in biology and totally new possibilities there. So we've gone really deep on bio the last five or six years. And then, you know, there's new things that are possible because more processes have been driven online thanks to COVID-19. COVID-19 obviously and lots of downsides, but it's forced our economy to digitize certain areas that otherwise were too stubborn, right, to digitize. And now that they've been digitized, we can build things on top of that. So there are definitely lots of new things we're still working on.
I think that the core basic SaaS stuff that was harder than it was a decade ago.
slava (09:21.191)
You already hinted at some of these things, but you have a pretty big fund. I mean, it's not the largest fund in the world, but it's pretty big for venture. And what are the things that you're focused on these days looking forward for the next, you know, three, five years that you're investing in today?
joe_lonsdale (09:30.126)
trying to try to keep it the ideal size to keep returns really high while still getting to do a lot. Right. It's always a balance. I, we have kept it, like, you know, under a billion dollars pretty consistently. Cause I think that's the, you know, for all of our new funds, that's the thing that's the way to maximize returns for us and what we want to do. We do seed a some B man bees and even some A's are getting expensive. Now Slava, these big hedge funds are coming in. Yeah. You know, we have like over 50 people at our fun. We have people.
slava (09:55.003)
And for our audience, you're referring to like Tiger and others sort of thing.
joe_lonsdale (09:57.79)
Yeah, so there's hedge funds that are people I respect groups like Tiger D one, CO two. These are guys who had built tens of you know, Altimeter. These are guys who had 10s of billions of dollars in hedge funds and public markets, who are some of the more talented people in those markets. And they actually have hired people and really focused on going into the private tech markets as well and investing not only in like late stage tech, which was how they kind of first got into it, but really going earlier in tech as well. I think Altimeter does bees and later Tigers.
Did 80 series A's last year. Tiger wants to do 160 A's, I understand, this year. They've outbid me on a couple A's recently. So we respect them, we work with them. But it's really interesting seeing how they're doing this. I think it's gonna be hard for some of these guys to do that early, because to do an A properly, you gotta coach, you gotta mentor, you gotta help, you gotta build with people, if it's really an A that you're leading. And not everyone needs that, so they'll be fine for some, but it'll be interesting to see how that evolves. And it'll be interesting to see if they're still there when people need them, if the A doesn't work as well right away. But yeah, so I mean, our fund.
We go really deep on bio, on logistics, on healthcare, there's healthcare services, there's a lot of new things, but we're just, we're constantly trying to map out, A, where is the top talent going? So you need to bet on top talent, and B, what's newly possible in these areas? If you're betting on top talent, working on something newly possible, it's important in these business areas, that's a great way to do venture.
slava (11:13.299)
So beyond doing your own startups and obviously venture, what do you think about the other asset classes? What do you think about real estate? What do you think about art? What do you think about collectibles? What do you think about crypto? Or pick whatever asset classes you like in the alt world.
joe_lonsdale (11:28.018)
Yeah, I mean, for me, I like approaching art by buying what I enjoy, but I do think it's a good thing to do not only because it's fun, but because it has been something that's really performed very well. I tend to enjoy things from the, between like the 16th century to the mid 20th century. I'm not as much of a modern art guy myself. I know it's weird because I'm in tech, but you know, I have a few, I guess I have a few busts of Churchill that are newer, but you know, but a few Picasso's are the newest thing I like, I mostly.
I mostly prefer impression and post-impressionists and a lot of these old tapestries from castles and stuff. So I think art's really fun. I think you should get what you love. And I think it's a great way to, it's a great way to, you might as well get stuff that you can buy at your house, I think, because why not enjoy it at the same time as owning it? It seems wasteful to, but you know, if there's something that is a really compelling art investor, sure, it's great, put it in an art fund. For me, I love owning it myself mostly. There's, I think,
There's some hedge funds that are run very well, it's a good place to go. Hedge funds are very hard to get alpha, so you have to make sure it's really exceptional if you're gonna do it. I'm more bullish on real estate and private equity as other safe places. Real estate is another one where I really like to own real estate you're gonna use anyway. That's actually worked really well for me. There's a lot of opportunity zone real estate stuff I've done, so opportunity zones are something where if you're gonna be selling capital gains you've held for a while.
you basically, so if you have to file yourself, rather than pay the taxes, you can roll the money into an opportunity zone. So I have made some investments that way with real estate opportunity zone funds.
slava (12:57.435)
And with Opportunity Zone, is that more direct investment or are you saying it's through a fund?
joe_lonsdale (13:01.718)
Sometimes through funds, sometimes through other things people are doing, but those have been opportunistic where I see when you have extra capital gains, I think it's good to put some of it away into these opportunity zones. Just tax arbitrage makes a lot of sense on that. Especially, Frank, actually I think there's short-term capital gains you could do it with as well, which is even better, right? Because you're rolling even more money. So for some reason you have short-term capital gains. You especially look at opportunity zones. And then listen, private equity done well has been a very consistent higher-turning asset class. I'm good friends with the guys to run the giant private equity funds.
I'm more skeptical of them right now. I think it's really hard. KKR is a great group, super impressive people. They've done really well. They've raised tens, I think it was like what, $70 billion last year they raised. They're not going to be returning 30% IRRs on that. That said, they're competent enough. I doubt they're going to be blowing it up either. They're going to be a safe, good place to compound your money. It's smart for people to diversify. It's smart for institutions to diversify into there. As a person, you might be able to find more alpha in smaller top funds as well.
slava (13:57.467)
When you say save good money for a KKKR return, what kind of number are you thinking?
joe_lonsdale (14:02.79)
I mean, it's really hard to know depending on, you know, and this is like a category that includes TPG, that includes, you know, Apollo, Apollo that includes all these groups. I mean, if you have really have too much money and they screw up, you could be getting down to single digits, you know? I think hopefully you're gonna see them, you know, for some of the better ones still get somewhere in the teens if they do really well. That's a, yeah, I think net, I think exactly. I think net of fees, if they do well, they'll be in the low teens. And if they do.
slava (14:22.563)
This is after fees.
joe_lonsdale (14:28.846)
poorly, they'll be in the low to mid single digits. I think it's probably not a bad way to diversify your money, although I'd much rather bet on the private equity funds that seem to be a little smaller and still have more of an edge that way.
slava (14:42.159)
Yeah, it's a great segue quickly that mixing between your venture life and these large hedge funds, you're actually working on a whole other startup, right? In the alternative investment space as well. I believe it's called Lit.
joe_lonsdale (14:44.822)
make sure you come here and turn on the...
joe_lonsdale (14:53.286)
Yeah, you know, you know, so we started at a par over a decade ago and out of power is a lot of family offices and RAs. So I've learned that space really well. You know, there's four trillion dollars or something more than that reported on throughout a park. So I started studying this space and I realized, well, there's all these big family offices and RAs and others who would like to be doing more on alternatives, but don't really have good frameworks necessarily for doing it. I mean, don't get me wrong. Lots of them do this very well.
but the amount, the percent of assets in America, so by the way, RAA stands for Registered Investment Advisors, right? These are wealth advisors in America. There's, I don't know, 10 or 15 trillion dollars at least, depending on some people, I might be more than that actually now, managed through these groups. And yeah, it's probably a lot more than that now. And so there's a very small percent of that money is actually in alternatives, like most of it's still in the stock market and bonds, and maybe, and the alternatives they do tend to be pretty typical, just real estate. And so there's a lot of opportunities they could have to go into different.
venture, private equity, private credit, I think super interesting right now. You know, there's all sorts of strategies right now they should be looking at. One of my favorite strategies right now is like buying SPACs that are under priced that you can just, I know we're gonna be able to say no to and go back to 10 and you could lever that up very safely because you're not gonna lose money on that. And that's like a, you have all these options. I mean, there's like this example of an alternative strategy, right? That's just like pretty interesting for yield right now for cash management.
slava (16:11.663)
meaning this back while it's still private before it actually quote unquote IPOs.
joe_lonsdale (16:15.174)
Or like IPOs and it goes down to 9.25 a share and you buy it knowing you could just reject whatever deal they do and get 10 no matter what. So therefore you're locking in a guaranteed return of some amount, which is good for cash management rather than just keeping the bank with zero yield. So there's just things like that. And if you do that properly, you can leverage it up. So this is one example. There's all these different things you could do that's clever for how you manage cash, how you manage stuff. And so given that we're trying to create, LIT is a company, it's...
creating content and technology to create frameworks, to teach the RAs how to work with their clients to do this better. And I think most people should have more exposure to smart alternatives than they do. So we're trying to help with that. I think obviously what you're doing to teach people and to help them engage with this market's very important. There's, the returns have been a lot higher in alternatives the last couple of decades than they have been in other areas. And I think it's dangerous if you do it wrong, of course, but I think if you do it right, this is very valuable.
slava (17:06.867)
Great. And then you happen to not mention crypto. What's your point of view on crypto and how do you expose yourself to crypto?
joe_lonsdale (17:13.614)
Crypto, I have been a, you know, I think crypto is a very cool, like kind of pro-liberty, pro-decentralization sort of thing. So I mean, ideologically, I think it's very important for the world. I'm aligned with it. I guess I'd be nervous right now, pushing people really hard into it just at this moment. The reason being is, first of all, it's gone up a lot. I've made some huge multiple on my money. I've been taking off a little bit of my exposure recently. When you have a Fed that's entering...
a cycle where it's going to raise rates and where people think there's been too much money printed. Like most people you talk to, they can agree there's a lot of money around right now, right? There's more money chasing things than usual. There's more liquidity in the world. The Fed has been kind of putting out more liquidity into the markets the last few years. And I realized that a lot of people argue, can you know this or not? But it seems pretty obvious, you know, to you and me building right now, hearing stories of our friends. You know, I've my last two years, I've had 49 financing rounds in my portfolio of companies that I'm in that were greater than 75 million, right? So 49 rounds greater than 75 million.
There's a lot of money coming into stuff right now. Wow, there's a lot of money in the world. There's all these different theories. I talked about reading Austrian economists. If you read the Austrian theories, which I think have some value in modeling the world, is whenever there's too much money, there's going to be some misallocation of capital. There's some places in the economy where too much money went. What tends to happen is when you raise rates and money comes out, it deranged from those areas.
one of my models of the world, the way I think of things, is that crypto is very good for the world. It's probably going to be a very big area the next decade. But if the Fed does end up raising rates and you do drain money from the system, it could very easily go down by huge amounts, because there's no natural bottom to these things. There's no fundamental value that stops them from going down a lot if we're in a money draining cycle. So even if I believe that crypto is a useful thing, a positive thing, as I do, that there's great talent in it, I'm building some things in crypto out of my venture firm.
I'm very nervous, keeping too many of my assets in something that could just have no bottom. Like it could swing down 95% before going back up to 2X. It could be very volatile, you could lose a lot of money. So do I keep some little bits of money in it still that are even, I guess, lots of money, but a small percent of my net worth? Yes, I'm still off some exposure. My exposure in this environment's not nearly as big as it was three or four years ago. That's my take on it. I could be totally wrong, I could keep going to the moon, but I'm just nervous in this environment.
slava (19:37.779)
So you mentioned basically allocation. How do you think about allocation across these asset classes? One, how much do you put into alternatives? And two, within alternatives, how do you think about the sleeves?
joe_lonsdale (19:49.282)
Sure, so first of all, I totally agree with like Buffett and Einhorn and others. The way you make money is you don't get too diversified. You bet on something you really believe in. Like you put all your eggs in one basket and you watch that basket. Like that's how great people make lots of money. Probably not a good idea if you've inherited a bunch of money and just put it all in one basket, you probably blow it up. But like if you're building wealth, you should be, you know, ideally you're just high growing startup company, something like your company, Slav, or other great companies.
and you get that equity and you work hard and you ask for more equity and you watch it and that's how you make money. Now that said, once you've made some money or if you have more liquidity or if you even have some you wanna save, it's probably good to be diversified amongst many things. I think having exposure to the stock market is a smart thing. I think trying to always time it is not a good idea. You probably, like the lesson in the last hundred years, if you just leave stuff in the stock market, you outperform a lot of people. So some of your wealth should be in the stock market in my view, even if it's expensive because like, it's just too hard to know what's expensive or not for sure.
I think some of your wealth should be in something very liquid because it's stupid to have everything not be able to be taken if you need it. You should always have enough liquidity put away. You're good for a while if you can. And then some of your wealth should be in bigger bets. And like, you know, I put a lot of money into smart people I know whenever they're doing something. I used to, I had a lot of friends who built companies that I passed on in the old days that ended up being very famous companies you've heard of now. So now whenever I meet smart people doing things, I just try to give them a little bit, you know, because I don't want to be really stupid to.
I mean, I met the guy doing, Vitalik doing Ethereum as a Patil fellow right beginning before Ethereum was a thing. I was helping the Robinhood founders with something before it was Robinhood and I passed on that because I wasn't into consumer finance. So I've done a lot of dumb things over the years. So now I'm more expansive giving small checks to smart people I know. And then, I think it's good for everyone to diversify and have exposure to intelligent alternatives coming up with at least 5 or 10% of your net worth if you have some liquidity.
slava (21:44.403)
Okay, great. And then in crypto, you say you're concerned about the floor, that obviously makes sense, but I just want to segment that out. So one Bitcoin, two layer one protocols, three of the web three apps, four NFTs. How do you think about those four categories? All the same and just let's move on or differently?
joe_lonsdale (22:02.486)
You know, Bitcoin, being honest, my kid's trust is at an exposure there for a long time, and I've trimmed it a tiny bit, but I think it's just a great thing to own for a long time. Ethereum and Solana have a good exposure too. I think those are the two most legit things. The smartest people I know are building on. I think there's other layer one on our protocols I might dabble in. They're smart people. If I see great people doing something, it's worth exploring. And then, NFTs.
I think NFTs are cool for gaming. I think they're cool for brands. I think they're fun. I think kids love them. I think some of them could end up just being really valuable because they're fun and they're cool. I think your apes might go down in value a lot at some point, but that's just me. I think it's a little bit silly, but I respect that they're a cool part of the ecosystem and that there's good uses for them. And I think brands should be doing more with NFTs. I just think we should be very careful putting lots of our money into them. I think it's dangerous.
slava (22:58.515)
Okay, great. Now, you on a day-to-day basis, constantly getting incredible information. If we wanted to be like you, what are you reading? What are you watching? What are you listening to? Can you give us any specific examples of things that the listeners can follow?
joe_lonsdale (23:11.634)
Yeah, I mean, I mean, there's just different economists you follow, like Tyler Cowen's Marginal Revolution, I think is great. You know, you have to hear both sides, you want to see like CNBC as well as Fox News, you know, just see what people are saying and these things. You know, I follow smart people on Twitter. I'm not replying on Twitter anymore, it's too controversial, but I'll follow smart people on Twitter and put things out. You know, to be honest, my team just sends me a lot of stuff. I like reading good tech blogs when people put smart things out.
I like reading good macro pieces, opinion pages, Wall Street Journal opinion page, you learn a lot from it. It's really good for more people to read that, it's like a train of opinion to the valley. So think things like that, financial times sometimes.
slava (23:53.531)
Here we are in Q1 of 2022. What's gonna happen this year? Where do you see the market at?
joe_lonsdale (23:59.19)
You know, it's really complicated because Powell needs to raise rates or the Fed needs to raise rates pretty aggressively to head off the inflation that we've been seeing and some of the issues that causes inflation is particularly bad for poor people. It makes life a lot tougher for them. It already has started to do that and we need to fix that. At the same time, I don't think this Fed has the courage. There's this Fed that these guys aren't a vulgar. They're not going to be able to just go hard and crush it. I think they're very political. They don't want to. It's already going to be probably like a landslide against the current regime.
They don't want to make it worse by crushing the economy by raising it. So my guess is they have to raise rates, they start to do it. And then they kind of back down because things fall too far because there's too much stuff that comes out of the economy. And I think they're kind of caught between a rock and a hard place. The analogies I'm hearing from smart friends is that sometimes in the 70s when they go back and forth and try to raise it but can't and don't really kill inflation. And I think you can have this like muddle through thing where like growth stays below inflation for quite a while. And then eventually someone with courage comes in.
maybe the beginning of a term where they can crush it for a year, really have a little bit of a recession, get rid of inflation, and then start growing again. And that's really what you need is that kind of courage. Maybe you'll see that in 2025 where they finally crush it, crush through a recession and grow. But I doubt they're going to have the courage to like crush the inflation like they should in the near term right now.
slava (25:16.211)
So does that mean December 31st the stock market and alts are down or they're up or they're flat?
joe_lonsdale (25:23.39)
I think it's muddled through. I think it's going to be a volatile year. I think, I think, you know, right now Slava 40% of the NASDAQ has already fallen 50% from its highs. So you have a lot of these as I was talking about on CNBC this morning, you have a lot of these growth stocks that are really, they've really been crushed. And, you know, I think some of them are already pretty interesting buys, but I think they can fall a lot more just because of the macro. And then I think what will happen though is as soon as it's clear, they're not going to raise rates as much because he gets scared of something.
that a lot of these things go back up again. I was talking to Peter Thiel recently, and he's still very interested in crypto, obviously. He's doing a lot there. He thinks, like other macro people I know, that if they don't raise rates enough, if they don't crush things, the crypto still outperforms. It still does really well. So it could be the case that this bubble keeps going for another couple of years because they don't kill it, and then only really falls later. So what do I think? It's really hard to know if the market's up or down. I'm pretty neutral. I think it can go up a lot, then down a lot.
or down a lot, then up a lot. I think it's gonna be a muddle through thing. I'd be surprised if it has any one really steady direction. It's been really steady up the last three years, right up until a couple months ago. I'd be surprised if it just continues that way. I expect more volatility, I guess, if I have to bet on something.
slava (26:37.419)
And I forgot to ask you as part of content that you like listening to you actually have created your own content So now you have a podcast as well. Can you tell us about what inspired you to do that?
joe_lonsdale (26:45.318)
Yeah, we have a podcast called American optimist, so American optimist.com. I work a lot on all these really cool tech things with amazing people. I work a lot on a lot of policy where we're trying to actually solve problems that help everyone and kind of avoid partisanship for the policy and just work on fixing things that are broken. I think people need to hear more optimistic things that are going on and need to hear more about the solutions that are going on. We have a pretty good following to getting my getting brother celebrity friends or
and talking about cool solutions we're working on.
slava (27:17.907)
Amazing. And I think you moved recently as well, right?
joe_lonsdale (27:20.522)
We are, I am looking at the Texas flag outside my window here next to the American flag here in Austin, Texas. We have moved here from California a year and a half ago. That's right.
slava (27:31.052)
Oh, you're in a half, how's that going?
joe_lonsdale (27:33.246)
I love it. Texas weather's more volatile. It's cold right now in the winter. It'll swing by like 50, 60 degrees, man, in a day, it's crazy. But other than the volatile weather, there's really nice people, there's good barbecue, it's great culture here. We're building a lot here, so I really like living in Texas. I'm a Texan now. We bought a bunch of guns, you know? That's what we do in Texas.
slava (27:53.888)
So our listeners always love to hear some practical advice and predictions. So as my last question, if you were to say an actual thing, an actual asset class, an actual bet three years from now, what's a good investment today? Our listeners have an extra thousand dollars, an extra thousand dollars, $10,000. What is it that you say three years from now, this is a great...
joe_lonsdale (28:18.946)
I'll give you a funny one. I think alternatives are super important, Slava. I'm more than half in alternatives overall because I'm doing all this venture stuff and everything else I do. I think right now, there's been a bunch of companies that went public, there are small tech companies that are public that the market doesn't understand very well and it's the stuff I've been involved in for a long time so I'm biased like Oscar, like Blend, stuff like I mentioned today on the TV, like my friend runs like Big Commerce. I think these stocks are
really cheap and that these are well-run companies and they're growing well. Could they fall a lot more? Yes, but if you're gonna hold something for three years, I'd be shocked if these things aren't up a lot in three years. And so, I in general, you asked me almost any other year, I'm gonna say alternatives because I'm obsessed with alternatives and people should be exposed to alternatives. But right now you got some really cheap, small early growth tech stocks the market hasn't learned enough about yet. So that's something I'm looking at.
slava (29:11.635)
Amazing. So from one of the best entrepreneurs and investors that is out there, thank you very much, Joe Lonsdale. We heard Austrian economics, we heard about opportunity zones and the weather in Texas. We had a great conversation. Really appreciate your time and coming onto the podcast.
joe_lonsdale (29:23.042)
Ha ha ha!
joe_lonsdale (29:26.594)
Thanks Lava, great to chat. See you soon.
