FULL TRANSCRIPT
Slava Rubin (00:01)
In this episode of Smart Humans, we talk again with Atish Davda, who's the founder and CEO of EquityZen. We discuss his predictions from a year ago and how he got them quite right. His prediction this year of having the stock market go up 15 % in the coming 13 months. It's pretty exciting to see what's happening in the pre-IPO space. We diagnose which markets are hot, which markets are not, and where you should be thinking about putting your money. And of course, predictions for three years out.
Slava Rubin (01:00)
Hello and welcome to the latest episode of Smart Humans. As always, I'm excited for today's guest. We actually have a repeat guest, somebody who knows all things about pre-IPO and where the equity markets are headed. So Atish Davda from EquityZen, founder and CEO. Atish, welcome back. Yeah, I'm excited to have you here. We're gonna dive right into some of the discussions that we had about a year ago.
Atish Davda (01:19)
to be here.
Slava Rubin (01:25)
For all of you who haven't heard it, you should definitely check out that podcast. It was an awesome, awesome episode with Atish. So let's just discuss some of the highlights. Some of the things you got right, maybe some of the things you got wrong, or some of the things that are evolving. And we'll obviously wanna understand how that has all kind of impacted and evolved versus what you thought. So first I'm gonna have to give you massive props because a year ago, Wiz, the cybersecurity company, was supposedly gonna go for sale at $23 billion to Google.
And then all of a sudden it got stopped. We weren't sure if it was monopoly discussion or negotiations. And you on this show said very clearly, you said, I think this is a negotiation tactic. I wouldn't be surprised if it still ends up with Google. Fast forward, here we are today. It gets sold to Google for $32 billion. So they were able to negotiate higher for another $9 billion. Atish, you nailed it. Nailed it. So tell me, talk to me what you were thinking there. What do you think about the result?
What's your thoughts on that?
Atish Davda (02:26)
Yeah, so look, obviously, fantastic results, one of the largest private to public acquisitions of all time. I didn't really see the, you just didn't buy the argument about, you antitrust scrutiny or, you know, monopoly risk or any of that stuff. I think obviously Google's got a lot of that going on, but in very different parts of their business.
⁓ It just seemed like it was going to happen and when Google is circling around, it's usually not the only one out of the Magnificent 7 that's circling around one of these companies. And so I just kind of had conviction that yeah, know, Wiz is going to get scooped up one way or another.
Slava Rubin (03:05)
funny thing is back then I think you were even saying like hey if you could get a hold of some Wiz you might want to do that and that would have been like a quick nice little you know step up from 23 to 32 is what is that nine over 20 I mean that's like a solid 30 40 percent almost so yeah no that's awesome okay you also said hey let's look out for the IPO markets they're starting to warm up this is a year ago
Atish Davda (03:23)
It's a big jump.
Slava Rubin (03:33)
Obviously, we're not talking about today 2025. You're talking September 2024. He said things are starting to warm up, which they have warmed up. And you said, let's look out for a few companies specifically. You you put yourself out on the spot, which is awesome, which is you mentioned Service Titan, you mentioned StubHub, and you mentioned Skim. I guess they all have to have an S otherwise you didn't believe in them. And so so talk to me. What happened there?
Atish Davda (03:56)
Yeah.
Well, Service Titan obviously has found its way out. The other two, not yet, although I know StubHub has filed to go public. Look, a big thing that all of us experienced this year, ⁓ it's only August this year, but I feel we've seen a very long movie already. I sometimes feel like I'm in the third hour of a Scorsese film right now, ⁓ where we saw November, obviously, the election results, the markets went on fire. ⁓
all sorts of animal spirit discussions. Q1 was one of the busiest that we saw in terms of discussions of deal activity. Obviously with Liberation Day kind of took a little bit of the wind out of the sails. That week, even out of our own portfolio, we saw four companies, three out of four companies that were listed to go public actually pull back right after that week. So 2025 should have gone a very different direction, but obviously over the summer,
⁓ the market kind of recovered pretty quickly and the skim hasn't ⁓ really gone public yet. But obviously we know that Service Titan has and subhub at least should pretty soon.
Slava Rubin (05:07)
Yeah, and let's talk about the markets overall, what you like and don't like in a second. For now, we'll just review versus the previous session. And then you had a couple predictions for, we always put everybody on the spot, one public markets company and one non-public markets opportunity that you'd be bullish on. And you said Microsoft. I believe Microsoft is up about 20 % from then. So that's a great result.
So yeah, what are you seeing from Microsoft? Why did you think that was good? Are you still in it? Meaning not personally, that's not really what I'm asking, but more are you a still believer on your three years out pick from before?
Atish Davda (05:43)
Yes, still a believer. I think you were very correct to call out for me, Slava. Are you sure you want to pick Microsoft that's trading at $3 trillion at the time? fortunately, it's trading around $4 trillion right now, and I'll take that. But look, I'm a big believer in Microsoft for the following reasons. They've done a phenomenal pivot from a consumer-first company into an enterprise-first company. I think they still have...
know, moonshots, if you will, on the consumer side of the business. The way they moved with OpenAI, I think just demonstrates time and time again that Microsoft has never been first to product, first to market. Microsoft is always just kind of first to product market fit.
And I think that has been something that they figured out, especially with the new management and, know, Satya Nadella's leadership obviously has done very well.
So I'm still a believer. Still, ⁓ you know, I'm pretty sure it's in my portfolio. think I would continue holding that in my portfolio. ⁓ But obviously, four trillion is a pretty rich valuation.
Slava Rubin (06:42)
And then in the non-public markets, you picked Arctic Wolf. A year later, what are your thoughts there? What's happened?
Atish Davda (06:50)
Yeah, Arctic Wolf, look, I still think it's got a lot of promise. ⁓ Arctic Wolf has not taken off the way I ⁓ expected, you know, at least for it to be possible to take off. The space remains extremely relative, right? Security, cybersecurity, especially in this world where more and more of our data is going into, you know, the cloud and the network. ⁓ think companies like Arctic Wolf and the security they offer very much remains top of mind.
Ultimately though, I think one of the things that when we talk about, you know, our picks this time, this year, you'll hear me talk about why. I'm actually pretty excited about a slightly new type of company that very much still has to do with cybersecurity.
Slava Rubin (07:33)
Yeah, and Wiz with cybersecurity as well, right? Yeah, and then in the public markets, you have like CrowdStrike and Palo Alto. In general, those companies are doing quite well too.
Atish Davda (07:35)
Absolutely.
They're doing really well. Crowdstrike became a household name, as we all remember, when a bunch of flights were down for about a day. But ⁓ they're doing extremely well. ⁓ And by the way, we're talking about cybersecurity right now. I think a similar trend is taking place in defense stocks in the public markets, obviously, with Palantir leading the way. But yeah, cybersecurity remains kind of top of mind in the public markets. I'm pretty excited about some private market ⁓ companies that have, ⁓ if not direct,
interplay and cybersecurity certainly an impact on that industry.
Slava Rubin (08:14)
Okay, before we segue into today's market and your opinions on today, let's just rehash in terms of your investment strategy. So I remember one of the first things you mentioned on our previous chat was you're a buy and hold guy. So a year later, any new thoughts? us and listeners your perspective on how you like to invest. Are you just doing the 60-40 public markets bonds? Or are you looking to get some alternative investment exposure? How much alternative investment exposure? What are your thoughts on crypto these days?
walk us across your investment philosophy.
Atish Davda (08:46)
Yeah, yeah. So first of all, still remain a buy and hold person. ⁓ I, you know, I'll say I've never really been a 6040 person. I think I'm a big believer in asset allocation. But I think 6040 is, ⁓ I believe it's been outdated for 15 years now. And I think ⁓ earlier this year, ⁓ Larry Singh kind of made it official ⁓ when he came out and said, okay, look, the BlackRock model portfolio will now include
alternatives and specifically private market assets. ⁓ And so I think a more appropriate portfolio is something closer to 40 to 50 percent, obviously depends on your age and a variety of other factors, but I would say about 40 to 50 percent equities, ⁓ about 20 percent in terms of ⁓ fixed income. ⁓ And then the balance, about 20 percent or so.
should go into alternatives of various sorts. So you have about 50, call it 25, 20, and then 5 % would be kind of really experimental stuff. That's how I would think about asset allocation. That's how we manage our own portfolio. About half of it is in equities. About a quarter of it is in fixed income. And then the rest would be in alternatives. And in terms of alternatives,
I have to admit, even a year ago, crypto was in the experimental slice of our portfolio and has now moved into the alternative slice of our portfolio. And so think one of the key things that we've seen, obviously, from this administration is a real support for championing, supporting, providing more tailwinds to the crypto and really, I would say, blockchain-based technology space.
And I think that has really given me and many others obviously a lot of conviction. We see Bitcoin at 110, 120,000 per BTC right now. But I think beyond just Bitcoin, there's just a lot more support for stable coins and blockchain based technologies generally. So I think that's been the big move from going from the experimental bucket into the alternative bucket. I think that's been a big one.
Slava Rubin (10:54)
So you're the first person who created this fourth bucket, which is alternative to experimental. So to get your numbers straight, it's about 50 % public equity, it's about 25 % fixed income, about 20 % what you call alternatives, and then 5 % experimental. The experimental for most people will be inside the alternatives bucket, but what is the line as to what makes something alternative versus what makes something experimental?
Atish Davda (11:16)
Yeah, it's a great question. think think about Bitcoin back in 2013, not in 2017 when everyone in the world wanted to get into it, but back in 2013, 2014, 15. I think that is the experimental bucket. We just I think we operate in a space now where innovation takes place so quickly. AI is really putting this in our faces right now that if we don't have the threshold to make it into our quote unquote
you know, standard portfolio is, should be really high. I'm a pretty high conviction fellow. I'm not really a contrarian for the sake of being contrarian, but I'm a contrarian because when you have high conviction and the world's going in a different direction, you're kind of painted as a contrarian by definition. I think my philosophy generally is I'm fine missing out on the first 25 % of the return, but I want to be aware of it. I want to, I want to consciously miss out on those things. And I think having an experimental slice in the portfolio
has really allowed our family to be aware of, what is out there? What should we be paying attention to? That doesn't quite make its way into, let's consistently deploy capital into the space, ⁓ into the ⁓ alternative segment. This is stuff that would include, obviously, some cryptocurrencies and ⁓ private companies, ⁓ early stage things, ⁓ so early stage investments, not quite in terms of
⁓ specific fund managers, but individual companies, individual companies. And I think when we get to it, we'll talk about it. I think there's a company called Mammoth Biosciences that's just doing completely out there stuff, right? They just brought back Dire Wolf. They're working on bringing the mammoth back. ⁓ You talk about some of the things that the cutting edge of science, trying to use quantum computing, ⁓ mixing all the new technologies together.
So look at an asset class, the delivery mechanism, most people would put that in the alternatives category, but just how out there is the best. And so if it's like a forced standard deviation event, I would put that in the experimental bucket and I would still want to say, you know what, let's try to have a non-zero allocation to some of those.
Slava Rubin (13:32)
So today in your experimental, since BTC has moved outside of experimental into all-terrain, what is in your experimental today?
Atish Davda (13:40)
So it would be some of these out there companies like the Mamos Biosciences, like companies that are, you know, like trying to come up with a new way of creating energy. And so I, you know, ⁓ I can't really go into specific names too far on that bucket. And candidly, it's a pretty small sliver, like I said, but it is non-zero. I think I personally like that, methodology, because I like to therefore hold high threshold for, if you're going to make it in the alternative bucket, you're going to stay in the alternative bucket for a while.
And so before we kind of make a multi-year commitment, ⁓ know, I'd to see a little bit of, well, let's just see where it goes.
Slava Rubin (14:17)
Now that BTC has moved into your alternative bucket, what are your expectations? ⁓ What are you sensing? Today it's at 120 on BTC. Are you only in BTC or are you in other cryptocurrencies? Obviously the talk these days is Ethereum as well, also some Solana. ⁓ So first of all, what's your point of view as to where BTC takes you in the year or years to come?
Atish Davda (14:41)
That's a great question. I admit, I think BTC is very much still a defensive move on our part. I believe that ⁓ cryptocurrencies generally and blockchain technologies generally are here to say, I think I'm just using Bitcoin as a proxy for the rest of that, you know, to express that view. And in addition to Bitcoin, ⁓ you know, I also hold a little bit of Ethereum. ⁓ I think it's still very early days.
And with the amount of candidly ⁓ shifting sands under our feet, think personally, I think it's a little too early to call it on exactly what's number three, four and five on that list, whether it is Solana. And I'm not saying it isn't, I just don't really have a view on that. But I think exactly Bitcoin and Ethereum actually were both in my experimental bucket ⁓ previously. They moved in here because I just think, okay, we need to have consistent exposure to this.
Not only as it's grown to a hundred plus Where is it going to take us? You know, I don't know is it to be a million dollars for BTC I don't see that happening in the near future ⁓ But even if that does happen, guess what we have some allocation
Slava Rubin (15:57)
Give me a prediction on a BTC price three years out.
Atish Davda (16:01)
Three years out, good question.
Three years out is going to be an election year.
Yeah, you know what? think it's gonna be between 100 150 thousand still.
Slava Rubin (16:14)
Okay, so not significant growth there.
Atish Davda (16:18)
I don't think so.
Slava Rubin (16:20)
All right, that's a bold statement. Either in any direction you go, it's bold. All right, so thank you for covering ⁓ your investment strategy. Have you moved any more into real estate or any less into real estate?
Atish Davda (16:24)
Thank
Yes, this is more of a consumption move on our part. My family, you we live in New York City. We're generally city people. We got little kids. We want to get their hands dirty. We want to show them where food comes from, not just whole foods. So we actually bought a little farmhouse. So yes, we express a little bit more of a real estate view. ⁓ It's less of an investment move and more of a consumption one. ⁓ But yeah, it's, you know, a couple hours out of the city and ⁓
Slava Rubin (16:48)
Nice.
Atish Davda (17:01)
we get to generate some rental from off of it too, which is always nice.
Slava Rubin (17:05)
Yeah, it's always great to be able to use it first, but obviously there is a perspective that you thought that this is a decent, you know, uses of cash. So that's great. ⁓ So let's segue now to give me your perspective on today's market. You're already starting to go there, but you're such an interesting person to be talking to right now because the pre IPO markets are just so dynamic, right? Everything from people talking about open AI, Anthropic and SpaceX and Andro and Stripe every other day.
I mean, they talk about them like they are public companies, right? So these are massive valuations. And then you actually have the public companies, whether it's the core weaves that just went or all these other companies just had the Figma situation, which was like out of control. You have the actual public markets that are hitting all time highs. You have talks about whether or not we're going to go into recession or not. We're finally talking about rates getting lowered. I just set the table for you to take it wherever you want. So
Give me your perspective. ⁓ What do you think of the market?
Atish Davda (18:04)
Yeah, well, I think what I think of the market is, you know, I do feel like I'm in the minority here in that I'm admitting that I don't know what the heck is going to happen with the market. Although a lot of people seem to have very clear views as to what's going to happen. Where is this crystal ball store? You I want to go to it. I want to go shopping there. It is a strange market. know, PE ratios are climbing again, obviously.
with the amount of volatility we saw in the month of April, compare that to where the market is, that can be hitting kind of new highs again. It's a little bit of a head scratcher. I think the one thing though that very much remains consistent in spite of all the volatility and uncertainty that the administration's policies have brought is that this administration is business friendly. And when you have business friendly administration combined with a strong business, that's on the precipice of going public.
and you have market that's essentially signaling, yes, there's a lot of tariff uncertainty, but we are still going to drive the market up. ⁓ What you see is companies like Sigma ⁓ actually take the leap. Companies like Circle exit and actually have pretty relatively phenomenal ⁓ performance as a public firm. ⁓ Where is the market gonna go? Look, I think that's a really good question. We're gonna find out week by week in many ways.
⁓ What's going to happen with the various kind of tariff relationships between the US and other countries? One thing that is true though, ⁓ the S &P has continued to steady climb since essentially end of April. ⁓ And so how long is that going to last? Kind of depends on what inflation numbers look like over the next, you know, for the rest of the year, candidly. ⁓ I think the markets are currently still priced in two cuts before the end of the year. That should bring us to between 3.75 to 4%.
in terms of race, I'm not so sure. Personally, I'm not so sure that we're gonna see that. And I don't know that that's a bad thing. I think what we experienced as a country in 2022 was pretty scary, especially the folks that are not sitting on a ton of wealth, which is 99 % of the country. And what I mean by that specifically is the inflation. And so in order to kind of keep runaway inflation from taking hold,
if the rates have to be higher for longer, if that era kind of continues, I think it's okay and you've seen what the market ⁓ reaction to that is. Hey, the business-friendly administration is putting these policies in place. ⁓ No, it's not perfect. Yes, there's a ton of volatility, but generally there is still a good, strong crop of companies ready to go public.
Yes, if the independent agencies can continue to do their job and keep America's economy from burning out too much, I think we're going to start to see. So personally, I'm bullish on equities. I think we're still going to continue to see an uptick between now and probably for another year. ⁓ I think as we approach the midterm, about 15 months from now, I'm not really sure what that's going to look like. But for the next 12 months, I'm still pretty bullish on equities.
⁓ And I think we're going to continue to see more more IPOs kind of come to market. ⁓ And by the way, not just using SPACs, which we started to see a little bit of, but actually firms, solid foundation, filing us one, existing profitability or line of sight to profitability. I think these things are heavily rewarded in the market and we're going to continue to see them.
Slava Rubin (21:37)
So let's do lightning round on your actual perspective on these things. ⁓ in the next 12 months, recession, yes or no?
Atish Davda (21:45)
⁓ I don't think so.
Slava Rubin (21:48)
So ⁓ jobs, ⁓ you think employment's going to go down or up?
Atish Davda (21:57)
I think employment's not going to go down, not because of AI and also not because of recessionary fears. So it's going to hold steady or we're actually going to see an increase in job creation numbers.
Slava Rubin (22:11)
so what's been happening recently is some less job creation. You think that's gonna improve over the next 12 months?
Atish Davda (22:18)
I think so because I think once we start seeing the current uncertainty that's holding firms back from heavily investing go away and for us to see a bit more certainty, I think we have trade deals signed with I don't know 25 countries or something like that so far and let's say that means 100 more to go. I think when that number kind of flips and 75 are signed and 25 to go, we're going to start to see some investments kind of come back.
Slava Rubin (22:42)
You talked about the Fed. You said, might have a different opinion. What's going to happen in the next 12 months or by the end of 26? ⁓ There's already some signaling that there's going to be a September cut. ⁓ Give me more prediction beyond that. What's going to happen in the next 12, 15 months?
Atish Davda (22:57)
I would be surprised if rates are more than 50 basis points lower than they currently are in the next year. And so essentially what I'm saying is...
Slava Rubin (23:03)
wow. So only
only two cuts and most people are saying four, right?
Atish Davda (23:09)
Yeah, well, I think so. I know most people are saying two by the end of this year. I'm saying two in the next 12 months is kind of where I'm putting my chips.
Slava Rubin (23:18)
Okay.
Atish Davda (23:20)
And just to be clear, I don't think that's a bad thing for the country, especially since tariffs do tend to have inflationary effects. It's actually going to be a good thing for the economy long
Slava Rubin (23:30)
So you're only going with two cuts because you're concerned about the tariffs raising inflation. And if you go more than two cuts, it's going to accelerate the inflation even faster. Is that correct? Okay, great. And then assuming no recession, assuming improved employment, you said, assuming two cuts, where is the stock market at 12 months from now? Are we talking flat? Are we talking up 20 %? Are we talking down 20 %?
Atish Davda (23:42)
I think so, that's right.
boy.
Slava Rubin (24:00)
Give me a number.
Atish Davda (24:01)
Yeah,
yeah. 12 months from now, next summer during the summer low, I'm saying, okay, I'm saying we're going to be 15 % higher than where we are.
Slava Rubin (24:06)
Let's say September 1st.
wow, that's pretty significant.
Atish Davda (24:15)
Yeah, like I said, I am bullish on equities right now. ⁓ And that's to say that, you know, I mean, look, there's a reason 50 % is in equities, you know, in the portfolio that we allocate. And look, a big part of that is the American economy is extremely robust, ton of momentum, lot of innovation, have things been perfect? No, there's been a lot of footfalls and we've kind of shot ourselves in the foot a few times as a country. But the momentum is still pretty positive and I'm pretty bullish.
Slava Rubin (24:45)
And is the, is Nvidia, Microsoft, Apple still 21 % of the market or is it starting to flatten out a little bit and other smaller middle cap companies are starting to grow little faster? Or is it just like the Mag 7 just pulling it forward to get that 15 %?
Atish Davda (25:03)
I would not be surprised if the Mac 7 turns out into like the terrific 10 or something like that. ⁓ know, meaning I think it's going to expand. The terrific 10, here we go. But I think the haves are going to keep having it and the have nots going to keep, you know, having to work harder in order to get it. yeah, I think the largest names right now, Apple, Microsoft, Nvidia, they're going to keep ⁓ being the largest firms out there. The group's going to grow a little bit and where it's going to come from is the middle.
Slava Rubin (25:10)
You heard it here first, the terrific ten, got it.
Okay, so let's talk a little bit more about the IPOs. So ⁓ which sectors should we be watching out for? ⁓ You know, what's hot right now in pre-IPO? You mentioned last time some areas that were cool, some areas that were hot. Give me a one year later perspective on, you know, what are three areas that are super hot right now in pre-IPO and what are three areas that are much cooler?
Atish Davda (25:57)
Absolutely. Look, this not going to surprise anyone whatsoever. Artificial intelligence is by far extremely hot. ⁓ 100 percent. It's been pretty consistently actually for ⁓ four straight quarters, more than four straight quarters, five straight quarters now, the highest ranking sector in the pre-IPO space. ⁓ FinTech's taken a dip and then it's starting to come back a little bit. ⁓ We absolutely have seen a big surge in defense or national security.
⁓ oriented companies. ⁓ Manufacturing and logistics companies ⁓ have definitely seen a decline. ⁓ And then ⁓ another company that unsurprisingly we're seeing this certainly in the public market is traditional software companies, the SaaS companies. ⁓ I do think ⁓ the SaaS companies have come down in the private market just as they have in the public ones out of concerns of what AI is going to mean for their business model. ⁓ Candidly one key concern I have
you know, in a similar vein as kind of content generation companies, know, service driven companies that tend to have high headcount ⁓ and a ton of kind of capex for maintenance and keeping up with the Joneses that they have to do. I think those businesses are going to continue to kind of get hammered. And we've already seen that being expressed in that the discounts are higher, that the trading discounts are higher for those sectors that have come down.
and their discounts are lower or premiums are higher for the sectors that I said are extremely popular. Crypto, surprisingly, is the one kind of exception ⁓ that had gone up in ⁓ popularity and then kind of came down, kind of ending up in the same kind of spot in the top 10.
Slava Rubin (27:39)
Got it. ⁓ So just to be provocative here, Figma really is more of a SaaS company, right? And you considered it in the cool category as a generic category SaaS, but then the IPO, mean, it was gangbusters. Would you say that's because it has AI pixie dust as part of its narrative or was it for some other reason that a lot of SaaS companies are struggling, but Figma was able to break out from that?
Atish Davda (28:07)
Yeah. So first of all, I do think Figma legitimately has some AI techsy dust around it. I think if you zoom back, remember 30 years ago, you had regular companies and then internet companies. And now all companies are internet companies. And then 20 years ago, you had ⁓ companies that had ⁓ regular companies and then cloud companies. And now all companies have clouds. I think some other things are to happen with artificial intelligence. You have regular companies and AI companies. And pretty soon,
all companies are gonna have AI. I think that's where there's a bit of a differentiator, where of course you have some firms providing the infrastructure for AI. You have the LLM companies, the NVIDIAs, the OpenAI, Anthropics, what have you. But then there's gonna be a lot of firms that are gonna have their make or break moment. Are they gonna implement AI appropriately? Or are they not gonna implement AI appropriately? I think we saw this in the cloud era. We saw this in the mobile wave.
Microsoft, know, just the company we've talked about before, famously ⁓ missed the mobile wave. It's an example of ⁓ a firm that had all the resources and at the time was a consumer-oriented company becoming an enterprise-oriented company. ⁓ There was this big wave, this shift. The iPhone had arrived and we were going to become a mobile economy. And Microsoft kind of said, no, I don't think it's going to be a big deal until a little bit too late and then tried to jump into it. I think something similar is going to happen here where most
Most SaaS businesses are going to struggle with integrating AI solutions well. Their pricing models are not going to catch up as quickly. And so most SaaS companies are going to struggle. ⁓ Those who are innovative, those who have shown the ability to be resilient, I Sigma famously ended up with a phenomenal acquisition offer that was shut down. And they had to kind of regroup. And guess what they did? They absolutely got
Thousands of employees thousands of shareholders aligned and in support of the company again So my point is I think if you show good execution capabilities if you've demonstrated track record of being innovative You'll probably integrate artificial intelligence in your systems well enough to continue to benefit from the trend ⁓ And it's just that all those qualifies that I described it's rare for that to happen and so most companies are going to struggle
Slava Rubin (30:28)
So yeah, let's just double click on Figma for a second. So CoreWeave went public earlier this year, up significantly. Circle went public, up significantly. Like you mentioned, Figma was gonna sell to Adobe for around $20 billion. That ended up not happening. It wasn't a Wiz Texas two-step where Adobe came back to buy it. They actually did end up going public and it was supposed to be maybe like $19 billion. It goes public.
⁓ you know, triples. Now it's like a like a $60 billion market cap for simplicity sake. What does that say right now? ⁓ Is this just, you know, the marketers are asking for some risk? Is this just the company getting taken advantage of by the bankers? Is this just a great opportunity for pre IPO investments through companies like yours before they talk about that IPO discussion because now there's going to be this automatic pop?
What's the takeaway from this Figma situation, which is almost like the third of the year, but the Figma one was really interesting because the private market has kind of priced it at 20 billion for the exit. And then all of a sudden, ⁓ not too long later, then the bankers priced it at 20 billion plus minus, and now it's trading a minute later at triple the price. So what's your take on all that?
Atish Davda (31:51)
Yeah, look, I think there's a lot of talk about how FIGMAs, bankers mispriced the IPO. ⁓ Yeah, know, bankers are always going to want to provide a little bit of a pop to the institutional investors that are anchoring the deal. These are meaningful sums that they're deploying. And essentially what they're saying is, the stock market's got a lot of wobbles right now. There's a lot of volatility. There's a lot of uncertainty. And so I essentially want to guarantee a little bit of return in exchange for a pretty meaningful amount of capital I'm going to put to risk.
And so that's essentially me saying, yeah, the IPO pop is just, you know, rather than fighting it all the time, let's just consider it kind of stable stakes at this point and move on. Let's more focus on why is it trading at 40 to 60 right now instead of a 20 where everyone thought that's a pretty meaningful delta. Do I think the pop needs to be 100 %? No. Do I think the pop needs to be 0 %? No. So something in between there probably is reasonable. But I think to your point about what does this mean for private markets, public markets,
Look, there's a reason that on Equities and Platform, we're seeing essentially 100 % growth in activity compared to a year ago. By the way, this is activity on the sell side, 100 % growth. Activity on the buy side as well, we're seeing 80 % growth year to date. And obviously, if we keep extrapolating that, we're going to get close to 100 % on that front too. That's just in terms of activity in the pre-FBO space.
the number of IPOs that are listing, the S1s that are being filed, I mean, there's just a lot of, I think, general enthusiasm that, okay, the risk on mode is close. May not be here yet fully, but it's close. And I think Sigma in particular definitely happens to be, let's call it 25 companies in the private market that command 75 % of the attention. And so, know, 80-20 rule, 80 % of the attention is gonna go to the 20 companies. Sigma was one of those companies. And so you had a lot of,
activity in private markets. think one of the reasons why you do tend to see a pop between private valuations and public, especially for companies that are well scrutinized in the private market, is because not everyone has access to private markets. I think it's an important thing that equities ends played a big role in over the last 13 years. And one that we continue to kind of be champions of is how do we continue to grow access to more and more people responsibly.
I think that responsibly part is important because Figma happens to be a great example where all of a sudden you have the majority of public market participants who are not legally allowed to participate in private markets able to express their view and buy Figma stuff. They couldn't do it when Figma was private. And so I certainly think that is a non-trivial reason why you tend to see companies that are popular to actually be even more popular in the public market versus when they were in private ones.
I think this is something that, know, EquityZen over the years has brought our investment mechanisms down to $5,000 now. The reality is we can do a $500 investment. You know, we can facilitate a $500 investment profitably. We've been profitable for 10 years. We could do the same unit economics would apply to that. The challenge, the reason EquityZen's not doing this right now is that there's a risk element to it where by keeping it at $5,000, there's a signal that, you know, you
You should think twice before you kind of participate in this. This is not just a casino where you should come in and start kind of throwing some money around. ⁓ And it just makes people say, I ready to deploy at least $5,000 or more to it? I think that is at the heart of why I do think these pops occur, where in the private markets, you have a smaller population of folks that can access these investments, that can express their views in the public market, that kind of gets swung up or swung down.
Obviously, the most extreme examples of this is in the meme stocks that have also made a bit of a comeback. Yet again, why the risk on mode seems to be bad. But based on our platform, can tell you we're nowhere near the 2021 levels of I would say non-discretionary investments. Jeff, doesn't matter. One of the things Equity then does is we launch new offerings on Tuesdays and Thursdays.
You can almost set your clock by it. And in 2021, what would happen is we would see ⁓ our listings kind of get filled up from top to bottom, fill, fill, fill, fill, almost like water going from the top of the cup all the way down to the bottom. We're not seeing that kind of behavior in 2025, which I'm happy to say. We are seeing more deliberate moves. Yes, there's concentration and some investments. But like I said before, there's a shift in sectors. It's not all sectors that are rising. Some sectors are also falling.
I actually think that's healthy ⁓ for the health of markets generally.
Slava Rubin (36:43)
And so for everybody, as a reminder, EquityZen is a platform where you can buy or sell, you know, private shares before they go public. You've been around for 13 years, like you mentioned, $5,000 investment minimum. I love the fact you've been profitable for 10 years. Congratulations. Totally amazing. Awesome leadership there. Founder, founder, a lot of empathy there. That's awesome. What
if you can just share a little bit more of some traction and some numbers so that as the customers are trying to decide to use your platform, so they can understand a little bit the scale of what we're talking about. So can you give me an idea of how many customers you had or dollars for the platform or transactions or anything that you'd like to share?
Atish Davda (37:24)
Totally, totally. And yes, look, think Equity then definitely has been one of the original firms through this wave of private marketplaces. But it's always important to kind of highlight just how far we've come on that front. We have over 750, maybe 775,000 households on our platform right now. This includes over 350,000 accredited investors as well as
tens of thousands of qualified purchasers. Equities Unstabilitated ⁓ almost 50,000 private placement transactions. And these are transactions that are ⁓ not relying on kind of recent laws. These are essentially using 80-year-old law, so they're solid, they're not really ⁓ subject to reinterpretation. These are Reg D 506B transactions.
All of which is to say it's the same stuff that's been going on in private equity, private credit, private real estate for 50 plus years. ⁓ Also just to give you a little bit of a sense of equity's end positioning in the space, people may, as they their research, come across ⁓ large issuers, companies coming out and saying, no, we don't like secondary transactions or secondary transactions are, ⁓ we want to be very careful with it. Equity's end ⁓ is very much a very issuer friendly.
organization, our ⁓ platform ⁓ has now really learned how to work with issuers. Therefore, we actually get on the cap table of a lot of companies that will otherwise say no to many ⁓ platforms out there. We're currently on the cap table of over 450, almost 500 ⁓ of these largest private companies, ⁓ the high growth companies, the names that most people think of. ⁓ And I think one of the key, key, differentiators about Equities then in particular is that ⁓
we act as a marketplace and not a market maker, which is to say we do not buy and then sell off ⁓ the way some firms do. We wait until all the buyers and all the sellers have kind of come together. What that tends to do is it eliminates this kind of ⁓ concern or risk of like, how much is the stock getting marked up?
⁓ And instead it just kind of says, look, this is the market price. You've got a bunch of sellers ready to sell at this price. You've got a bunch of buyers ready to buy at this price. It's okay if you don't want to participate. And it's okay if you do want to participate. And I think by using this kind of clearing mechanism, we've learned that we can actually deliver a real value to a of these issuers by kind of giving them an arm's length answer to secondary transactions in between tenders that they may be facilitating.
Slava Rubin (40:10)
So if a customer wanted to buy $10,000 of Arctic Wolf like you suggested, not financial advice, what are the fees related to that?
Atish Davda (40:18)
Yeah, so this would be the buyer would invest $10,000 and then pay 5 % on top of that. So it would be $500 on top of that. And the larger the check you write, the smaller the fee you pay as a percent. And the idea essentially is it's kind of a one and done fee. You're going to write that fee, and then you're not going to have to keep paying fees every year or any at various points in time. We kind of bake it all in, and we absorb all the infrastructure costs.
associated with servicing that all the way until holding. just, know, Saw that's worth saying out loud. EquityZen is typically known as a single company marketplace. We also have an asset management arm. In fact, we just celebrated our 10 year anniversary of our asset management arm. Our asset management arm, as far as a potential client goes, all you need to know is if you don't really want to invest in each individual name, which can be intimidating, Scale AI, Grok AI,
Open AI is like 20 companies that, you know, to an outsider might sound the same. What you can do is you can just come on Jack Wiesenthal's platform, the asset management side of the business and say, I just want to put my money in a basket of funds. You can express your view in themes. I want to invest in AI, I want to invest in defense stocks. Or you can express your view as a broad-based product and just say, just give me, I just want my allocation to be higher than zero. Put this in my experimental bucket or put this in my...
alternative bucket. And so we offer that as well. ⁓ And one of the things that we've learned is issuers see the benefit of having a known buy and hold investor that's going to hold their stock until the IPO and likely through it. And I think with a 10-year history now, we can really go out and we can see the demand that we're able to. ⁓ And so on that note, Saba, it's worth saying to the listeners here ⁓ that
I really do think, especially compared to a year ago, there's real kind of growth and adoption of this space. ⁓ For some people to have the allocation go from nothing to something, and for some folks, have it go from something to something more substantial and reliable.
Slava Rubin (42:29)
Amazing. So transitioning over to what makes Atish Atish. What is it that you like to listen to, read, watch? Give us the latest as to what's keeping you smart or happy or balanced.
Atish Davda (42:44)
Yeah, look, I am a big fan of the acquired podcast, as I'm sure a lot of folks are. There's a lot of books that I like to read. I actually like to read a lot of fiction that have a historical component to it, so a lot of historical fiction. What I find, as the saying goes, is history doesn't repeat itself, but it does rhyme. And I find that
you know, whatever works for you, as long as it has elements of history in it, if you can find that, you'll probably start connecting dots to what things look like today. ⁓ And so one of the books I read recently was actually about the ⁓ Bolshevik Revolution about 100 years ago. This is back when it was still USSR and, you know, the king and queen, the czars used to rule it and, you know, the communist socialists took over.
It was actually a fiction book. It was a perfectly enjoyable read. ⁓ But there's a lot of elements in that about how ⁓ too much concentration of power by too few people can lead to a lot of people who ⁓ feel pretty ⁓ disenchanted, ⁓ disenfranchised, and there can be some frustrations to it. ⁓ Look, there's parts of it that are very relevant to the crypto boom. There's parts of it that are.
very relevant to the reactions we've seen in the markets today ⁓ in terms of the current administration's policies. So anyway, if that's something I recommend to anyone out there, if you ⁓ like fiction, pick up a historical fiction book. If you don't like fiction, look in the podcast like Slava's here, but also other podcasts like Acquired, which is the one I'll put for now that Ben and David.
Slava Rubin (44:27)
Amazing. So the part that we always love, which is the predictions at the end. So give me your two predictions or more for three years out. We always like to get one public markets and one that's not a public markets pick. So tell us what your picks are and of course the why for three years out.
Atish Davda (44:44)
Yeah, absolutely. So first of all, I'm just going to repeat this as anything we've talked about on this podcast, maybe in my portfolio, I may or may not have exposure to it. Number one, number two, anything that you and I are talking about, look sensitive to entertainment and not investment advice to anyone listening. ⁓ Look, last time, as you said, I picked Microsoft. I'm still a believer in it, but I'm gonna pick a new company now. And on the public side, I'm gonna pick Coinbase. It is ⁓ not a company that I was
⁓ I would say I had either misunderstood it or I had wanted to see more conviction built in the world about it. But Coinbase, obviously famously, is ⁓ kind of the go-to exchange for cryptocurrencies ⁓ that's both in a fight with the regulators and also the one that has made the most amount of headway with regulators.
I think Coinbase has phenomenal tailwinds obviously with the administration that this policies this administration has put forth. They have a history of good execution. I still think there's a bit of a cult following and perhaps like hype investors in Coinbase. But personally I think Coinbase both because of the size of the audience it serves and because of this recent kind of adoption of stable coins and the potential that unlocks. I think that in five years it has the potential to be
affirmed on track to be like the JP Morgan of ⁓ our era. ⁓ so Coinbase is one that I'm a big believer in and certainly would ⁓ love to see kind of how it continues to grow.
Slava Rubin (46:20)
love it. It's definitely not Microsoft. ⁓ Way to keep it diverse. What's your non-public markets pick?
Atish Davda (46:27)
That's
right. Yeah, so I'm going to go private. I'm actually going to make it a little bit challenging to myself and limit this to non-AI firms. And I've got two. So on the more established side, Databricks, I think increasingly in this world of AI, what we see is data makes a big, big, big difference. And Databricks is pretty established firm ⁓ as far as private companies go.
I think it was founded in 2013 as a similarly 12, 13 years old, but they've just done phenomenally well. ⁓ And in addition to having strong management team track record, having won enterprise clients they've actually managed to pivot more than once, especially three years ago when AI really started to take off. They kind of built their own picks and shovels kind of business in order to serve AI kind of in the cloud.
And so that has just been phenomenal. A second company, this kind of goes back to the cybersecurity trend we were talking about earlier, PsiQuantum, it's actually a quantum computing company, PSI Quantum. It is not a cybersecurity company. It's very much using old technology, old technology, know, a few decades old, and marrying it with new technology and repurposing it in order to build quantum computers. And not just...
single the most expensive quantum computer out there, which is what the Magnificent 7 are doing. ⁓ But I think all of these firms are working together. You can almost think about PsiQuantum as like a grassroots version of what the Mag7's R &D arms are doing, and I'm a big fan of that because as we all know, encryption is kind of the unsaid underpinning. It's kind of like the blood plasma of this organism that is the Internet.
that allows us to have this conversation, check our email, have payment transactions. And encryption historically ⁓ has relied on the traditional computing mechanisms. Quantum computers put that at risk. ⁓ And so I think whoever figures out the right structure for future of computing, which I think is certainly going to involve quantum computing, ⁓ will also have opened up multiple new industries on top of that. Okay, what does encryption look like?
in the quantum computing world. And so I think not only is PsiQuantum an example of a company that itself is going to be a fix and shovels firm, it's actually going to breed a lot of fix and shovels firms. It's like a platform for platforms. And that I think generally is just absolutely fantastic businesses. then my kind of, you know, I just like, have to do it personally because I'm a believer in it. My family, you know, definitely is a believer in this too. We have exposure to this. Is an equity zone a diversified fund?
Again, it's something we talked about a minute ago, but you don't have the time to pick these individual names, getting access to a basket and just making sure your allocation is not zero. Sometimes it can be daunting to make these private investments and you know, a lot of the work that Vincent's doing, lot of the work EquiZen is doing, it's really education. Just getting people comfortable with like, it's not as hard as you think, you should still be careful, but it's more accessible than you think. And so for that reason, I would say a diversified private fund like many we offer, it's certainly something that
⁓ I would say is worth it because you never know fun like that includes both the data bricks as and the psi quantums of the world right and so you can kind of get a little bit of a little bit of everything
Slava Rubin (49:57)
Awesome on Databricks and PsiQuantum. What are the prices we're talking about? So Databricks was last value like around 55 billion. What's it at right now?
Atish Davda (50:07)
You know, I don't know what the current price would be for Databricks or PsiQuantum. ⁓ In fact, I'm actually not allowed to comment on pricing ⁓ in case we have ⁓ active transactions in them. However, great businesses. ⁓ What I do know I'm allowed to say are ⁓ they're solid businesses and ⁓ ones that at least I personally, not equity zen, but I personally have lot ⁓ of belief.
Slava Rubin (50:16)
No problem. No problem.
All right, Atish, we've covered so much from your prediction from a year ago and getting Wiz exactly right on the $32 billion exit, you know, having prediction for service time going public and of course saying Microsoft was gonna go up. We then talked about that you're still buy and hold. BlackRock since then has already gotten into alternatives, but you've been in alternatives for a while, so I guess they're following you. You like a 50 % equity, 25 % fixed income, 20 % alternatives and 5 % experimental. I love the idea of experimental.
You move BTC from experimental into alternative. So it's a big graduation there, but you still have crazy stuff. That's right. But you still have crazy stuff like mammoth biosciences in your experimental. You're only predicting 100 to 150 K for Bitcoin three years from now. So not a huge pop, but you have a little bit more into real estate. You're lightning round. You said no recession, improvement on employment, only two cuts in the next 12, 15 months. And the markets are going to be up 15 % by September 1st, 2026. Pretty bull, I say. I like it.
Atish Davda (51:07)
Graduation party, yeah.
Slava Rubin (51:31)
The hot markets these days are of course AI, fintech is coming back, defense is hot, cooling down is manufacturing, logistics, SaaS, content, et cetera. Equity's end has been seeing a lot of growth because of what's been happening. Maybe the risk is starting to come back on. You guys have had 775,000 households, 50,000 transactions, doing tons and tons of deals, $5,000 minimums, and now you have a diversified product that is 10 years old.
which congratulations on that AUM capability. And of course you gave us your predictions, because I think you love doing predictions. So we should have you on Regulate. You gave us Coinbase, Databricks, PsiQuantum, and of course your own fun. Thank you very much.
Atish Davda (52:13)
this is great Slava, thank you so much. I'll see you next August.
Slava Rubin (52:15)
Absolutely.
