Ep5. Stock Comp, AI Cold War, Valuations for LLM | BG2 with Bill Gurley, Brad Gerstner, & Bob Mylod
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- Опубліковано 5 сер 2024
- Open Source bi-weekly convo w/ Bill Gurley and Brad Gerstner on all things tech, markets, investing & capitalism. This week, joined by Bob Mylod, (Chair of Board, Bookings.com & Managing Partner of Annox Capital) they discuss stock compensation, Google Gemini / Apple, TikTok US & the New AI Cold War, MSFT / Inflection & VC Valuations for LLM’s. Enjoy another episode of Bg2.
Timestamps:
(0:00) Intro
(2:07) Bob Mylod | Stock-Based Compensation
(58:03) Apple's Potential Partnership with Google on AI
(1:04:00) Tiktok The Future of TikTok in the US
(01:12:34) Microsoft's Acquisition of Inflection
(01:18:06) The Durability of LLM Business Models
Available on Apple, Spotify, www.bg2pod.com
Follow:
Brad Gerstner @altcap / altcap
Bill Gurley @bgurley / bgurley
BG2 Pod @bg2pod / bg2pod
Shownotes:
Bookings 2023 Notice of Annual Stockholders’ Meeting and Proxy Statement June 2023 (page 63 for Stock-Based Compensation Expense as a % of net cash provided by operating activities) bit.ly/3ISIauw
Michael Mauboussin - Stock-Based Compensation Paper: mgstn.ly/4cshBKn
Tom Hearden Tweet: bit.ly/4cqCoxQ
Apoorv Agarwal Tweet: bit.ly/3VumL2G
#BillGurley #BradGerstner #Bg2Pod - Наука та технологія
Coming from a big All-In fan, this pod is already the best value per minute available on the Internet today.
Amazing that we get to listen to these guys for free.
So happy they started a pod. Always enjoyed listening to them on All In
same. I was mesmerized by their talk in the all in summit
This is one of the best podcast in the tech / VC world.
still the highest value to subscriber count podcast in the world - we're going to need at least half a million subs before we start to even remotely consider moving the needle. so damn good
the level of quality education that is just available these days, for free too is insane...
people are innovating less
This is the best tech podcast in the game today!
These deep dives with industry perspective are invaluable. More convos like the stock comp, pleeeaaasse!
This is far and away best podcast about the tech investing out there. If you are not listening to these 2 guys and their guests (who are incredible) you are missing out.
This pod is a must watch!
Great pod. The chapters are a little messed up so if @Bg2Pod sees this you can fix.
1:04:00 Tiktok
1:12:34 Microsoft's Acquisition of Inflection
Done!
Thanks, guys.
Honest and thoughtful conversation.
Being an employee who is a recipient of RSU's, I find this conversation very nuanced. In that, as company grows so should employee compensation grow. I do understand the fact that granting this much RSU's dilutes shareholders takeaway but CAMON guys, employees do the actual work. Let's not get too greedy here, you're still going home with money you won't be able to spend in this lifetime. How much more do you need 😶
That's a weak way of looking at it. What if too much dilution occurs and therefore the cost of capital makes the company unsustainable. Noone wins. Most companies fail. Dilution is like a boat anchor that drags along the bottom of the ocean with the potential to limit upside and actually cause harm. It is the equivalent of a money printing in a currency no one has to buy but owners want to sell. It can kill the whole thing.
You won’t have a job without these investors. Probability of you having a job without rsu >>>>>> investors making billions out of your work .
BG2 >>>>> All In
pls dont compare, they are all friends and their probably wouldnt be one without the other
Apples to oranges
And it’s not even close
@@mtor9452who gives a fuck if they’re friends. Has nothing to do with podcast quality.
@@frederickkieley1606 no it isn’t. It’s two podcasts of Silicon Valley investors talking tech and the markets. Or at least that’s what the All In use to be.
Thank goodness my beautiful BGs release these episodes on Thursday, so they don’t clash with All-In.
Loved the 2nd half a lot more. Thanks
What a fantastic up and coming podcast. I love the pure VC/tech talk from industry leaders. They keep it simple but so valuable.
Love the in person episodes!! Way better energy and discussion when both of you meet in person. Legendary 🙏🏻
You guys deserve 100 million subs!!! Can’t believe I have the privilege to listen to your wisdom. You both are legends!❤
Why are y’all the best podcast to come out in the last year
Best new pod in my routine. Thanks so much guys.
Brad to The Besties: hold my beer.
Nice work fellas.
Someone needs to build an AI partner for VC or private equity funds, so we can allocate early stage capital in a better way
we need you guys weekly man.
Holy crap. God bless the UA-cam algo for pointing me to this gem.
as a former tax provision manager i absolutely LOVED listening to Bob! his explanations are incredibly poignant! thank you, what a great podcast.
you guys hit publish. I click.
simple.
keep it up!
Excellent podcast, model future episodes on this. Including the camera angles. So good throughout.
wonderful discussion... I really appreciate this video. Do an example, AMD last quarter FCF was $242M, Their SBC was $374M, which means, long term investors got nothing in return....
@Graham_and_Dodd - Well NVDA 3X their revenue... not sure what AMD will do because they haven't really starting to sell their AI chips yet, just pre-orders right now.
We can't imagine how tough it is to release weekly episodes on top of having a full-time job, but please don't miss any more weeks. :)
Sincerely,
Your fans
Unbelievable, Bob is tremendously bright… what a thoughtful conversation
This is the most valuable podcast
Great show, loved the ai and llm conversation.
Though I have some difficulty understanding the topic and the business terms, I do agree with the common sense you guys talked about. Don’t know if some judges and senators are more educated than me, I keep my high hope.
Amazing podcast, incredibly valuable!
this was a delight to watch
Great discussions passing video on compensation to all my fellow board members to view.
im a little surprised ALL IN pod didnt mention their besties have a new podcast. thanks for youtube algorithm
Great conversation! Thank you!
Best podcast there is
The SBC conversation was so good 👍🏽🔥
Best value per minute!
The BEST podcast
Great episode boys!
As a founder of an early-stage AI company that runs on top of LLMs, Bill Gurley is 100% right about the switching cost problem.
Amazing pod, Bill = GOAT🐐
Keep them coming! ❤
Another 10/10 episode
Keep it up guys with guests
What an incredible podcast
Bill, good point on switching cost. I would disagree with your assessment of a 2 for open ai specifically. I work for a Telcom and we use office 365 for everything. Now we have but in co-pilot for all of our core apps. As well as a silo' browser copilot. It has been a wonderful experience. It's so awesome. I can't see my Telcom coop switching anytime soon. That is lock in.
FINALLY, another episode
Thanks for doing pod on RSU and options base pay. 🙏
Just fix the accounting rules. Great episode champs keep it up ❤
45:50 wow, huge point to note that eventually, 25% or 30% or 35% of Free Cash Flow as SBC dilution, means that in time that actually represents the dilution of the company 🤯 Mind boggling given that then how much dilution via SBC there is.
Appreciate this pod for going into depth on SBC, and wondering when/if companies will get SBC to a manageable level.
Great show!
I studied this extensively as an analyst and published a detailed report on annually for public Internet cos. My high level view is investors should account for options and RSUs for what they are - share dilution, not cash. Cash is a reasonable perspective, esp for mgmt but not as the core view for investors. Therefore you have to adjust FAS 123 accounting treatment.
Fantastic Pod, after the first two/three introductory episodes, which by nature needed to be a bit more generalist, I suggest you pick a topic (like you did in this case) and really explore that topic with a guest/expert and you two adding to it
And love your podcast
BG2, awesome deep dive into SBC 👏🏽 would love to hear your thoughts on disproportionate voting rights (Alphabet, Meta) and how these align to other shareholders (or not)
This is what u hoped all in podcast would be. Well done guys
Bay area salary is messed up. That's when Google acquired HTC, they realized HTC had far better engineers and at a huge discount. There are many examples of this...
I was a 20x engineer and my executives said they could just hire 50 engineers. I just became strategist/investor and get out of this rat race.
Good stuff
Moat interesting discussion towards the end on data gravity and LLMs revenue durability. If true that LLMs will only succeed where data resides then we already know who the winners are…hyperscalers. Then LLMs will be just part of the package when enterprises move their data into the cloud. Who else can compete on that level??
when these guys say ZURP or Serp (i don't know this acronym) what are they referring to? thanks
🤟appreciate you
Agree - this is better than All In for tech lovers.
That said - even though the point on counting the cash is absolutely correct - The irony is palpable. Investors who have jammed employees & founders with liquidation preferences and other fine print for years chirping about getting the short end of the stick.
🔥🔥🔥🔥
Perhaps an additional KPI for “getting fit”: instill discipline if not policy to execute a annual buyback program to offset annual comp-based dilution?
Excuse if already addressed but I think it would be helpful to use precise options language when referring to (stock) options. For example, “intrinsic” value refers to the difference between the market (PV of the forward) price and the strike price - the “in the moneyness”. The problem for employees receiving stock options struck at market is that the intrinsic value is zero. The implied or Black Scholes price of the option is in this example 100% “time value”. If the stock does not increase this (time) value decays to zero at expiry. Worse, it is often the case that employees are not permitted to sell stock (as a hedge) ,exercise the option and sell stock (until it vests or at expiry), or sell the option. i.e. the theoretical (and accounting expense) value of the option may not be realised by the employee. The employee is (not) incentivised accordingly. Happy to expand.
Love you guys for what your topics are as a thought to both of you for a future pod is a interaction with Raoul Pal from REAL VISION I think it would make for some thought provoking thinking thanks
Tnx
Wish the 1st hour of this episode was mandatory content for cfo and ceos
Not sure how you can fix this exactly, but it looks awkward when the guests camera is in the center of the screen while hosts are giving eye contact in the opposite way.
from the thumbnail thought this was scott galloway lmao
i just listened to an advanced accounting class!!
The camera angles are confusing
Are RSU same as profit interests ?
consulting business in one sentence: "no one else is doing it"
40:30 "There is no one thinking in these committee about share-holder perspective" who is thinking of these compensations based on employee perspective. making sure they have decent wage to live on? Share-holders get multiple forms of voting these committee 's but employees dont get a single vote.
Not to mention having comp consultant that has data on all the other companies basically means prices are fixed for employees but not for C-Suite and investors.
Does HOOD have too much stock based comp? Or is that because its market cap is so low due to the sell off after IPO?
I love bill ….. the way he says shut up brad
nice black shirts
Brad is a big believer of Snowflake. With the CEO leaving and the Stock Comp so high as a %, does this change his opinion?
Without the engineering brains what is cash ?
Worthless paper. VC can put under the mattress and sleep 😴
So saying VCs will have all the upside and the ppl putting sweat will get cash 😊
Good luck 👍🏼
Would be worth looking at SBC for twilio
Can I invest in this channel?
In addition to the iphone, the other piece of hardware that uniquely positions Apple in the AI race are airpods. They're discrete, great battery life & are already iconic... A true GPT/LLM-enabled Siri + personalization is going to truly set apple apart. They own the HMI (human machine interface --> handset + airpods & eventually vision pro)
Greed to the sky
Greed of VC is like sky is the limit
maybe look at fcf per share. if sbc happens share count goes up
The question should be, will AI create an application that as dominant as Google or Facebook or Apple or Microsoft in their respectable space. The algo is open sourced, and it's significantly smaller to get to a product that works fairly well. The data models are trained and available, that's relatively good enough. The cost to run new training is expensive for the startups. Perhaps we, human as consumption, can only have this much capacity for imagination.
Yes, I know, you know.
basically what they are saying is to hoard equity. but with microsoft doing 11 billion in RSU's a year. or basically having that much stock sold. that changes so much in the ecosystem. the stock becomes a currency almost. that may be a new norm. what is does water down the stock though. guarantee something is created that is above a stock soon.
Good pod men. Helped me better understand all sides
Google is a bad example for RSU craziness. They expense them all and only report GAAP numbers.
But this is the bash Google pod. It's literally 90% of what they do
It takes you guys forever to get any point across...
Lots of delta in this pod, All-In has been midder and midder lately
Device voice AI integration and specialist chipsets that support an effective local AI personal assistant is going to be the lock-in. Thst means AAPL keeps it's consumer relationship.
Wheres the market analysis ? :(
What's the point of this whole conversation? If you don't like how a company compensates it's employees, don't invest. What am I missing?