Prepare to be enlightened as Sumeet Jain, a distinguished venture capitalist, joins me, Rajiv Parikh, to unravel the economic conundrum of a potential recession and inflation's intricate dance with wealth. You'll get a front-row seat to our analysis of the current job market's enigma, where a labor shortage coexists with whispers of economic downturn. As we dissect the rise of interest rates from their historical lows, we promise you'll gain a fresh perspective on the financial climate and its ripples through Silicon Valley's innovative heart.
Venture into the intriguing world of markets and liquidity, where the private ventures of Silicon Valley clash and mingle with traditional stock exchanges. Sumeet and I delve into the reasons why today's tech giants might delay going public and how this decision impacts early investors and founders seeking liquidity. We don't just stop at theory; you'll be privy to real-world implications, including how pension funds and university endowments are the lifeblood of venture capital, fueling the future of innovation.
Finally, let's shift gears and merge personal with technological. Sumeet will share tales of how an old AOL username blossomed into a lifelong tech passion, and also recount his hilarious nail printing adventures and we explore the transformative power of AI and autonomous vehicles. We wrap up with insights on embracing your passions, whether you're building race cars or shaping the future of tech investments. Don't miss this episode; it's a rare blend of economics, innovation, and the personal journeys that shape our world.
Prepare to be enlightened as Sumeet Jain, a distinguished venture capitalist, joins me, Rajiv Parikh, to unravel the economic conundrum of a potential recession and inflation's intricate dance with wealth. You'll get a front-row seat to our analysis of the current job market's enigma, where a labor shortage coexists with whispers of economic downturn. As we dissect the rise of interest rates from their historical lows, we promise you'll gain a fresh perspective on the financial climate and its ripples through Silicon Valley's innovative heart.
Venture into the intriguing world of markets and liquidity, where the private ventures of Silicon Valley clash and mingle with traditional stock exchanges. Sumeet and I delve into the reasons why today's tech giants might delay going public and how this decision impacts early investors and founders seeking liquidity. We don't just stop at theory; you'll be privy to real-world implications, including how pension funds and university endowments are the lifeblood of venture capital, fueling the future of innovation.
Finally, let's shift gears and merge personal with technological. Sumeet will share tales of how an old AOL username blossomed into a lifelong tech passion, and also recount his hilarious nail printing adventures and we explore the transformative power of AI and autonomous vehicles. We wrap up with insights on embracing your passions, whether you're building race cars or shaping the future of tech investments. Don't miss this episode; it's a rare blend of economics, innovation, and the personal journeys that shape our world.
Hello and welcome to the Spark of Ages podcast, where we're going to talk to founders, innovators, CEOs, investors, designers and artists I'm talking game changers about their big world shaping ideas and what sparked them. I'm your host, Rajiv Parikh, and I am the CEO and founder of PositionSquared, a growth marketing company based in Palo Alto. So, yes, I'm a Silicon Valley entrepreneur, but I'm also a business news junkie and a history nerd. I'm fascinated by how big world changing movements go from the spark of an idea to an innovation that reshapes our lives. In every episode, we're going to do a deep dive with our guests about what led them to their own Eureka moments and how they're going about executing it. Perhaps, most importantly, how they get to get other people to believe in them so that their idea could also someday be a spark for the ages.
Rajiv Parikh:This is the Spark of Ages podcast. For our conversation today, we have Sumeet Jain. He's currently a managing partner at a secondary VC fund. I've had the great fortune of meeting Sumeet during the pandemic of all things, and we are both extroverts. We were both losing our minds at home and not being able to travel, and we, along with a group of other similarly minded folks, got to know each other and we just had spectacular conversations.
Sandeep Parikh:He has you guys podded, you basically created a pod of extrovert Silicon Valley bros.
Sumeet Jain:Yeah, created us. It's almost like a pandemic fraternity.
Rajiv Parikh:The one piece of learning I'd say I got out of the pandemic is that I know every bar that's open till two o'clock up and down the peninsula, thanks to Sumeet Right, don't blame me.
Sumeet Jain:I have others, I'll point the finger at others, but yes, yes, human yelp, that was one of the ones. By the way I think there's like three of them, so we know all three of them.
Rajiv Parikh:Amazing. So that's why I thought Sumeet would be great, because he could bring us some really interesting perspectives. He's done the traditional Indian route of growing up in Buffalo, new York, going to an Ivy League school, somehow doing really well there and getting a job. I think you were in sales at one point in your life.
Sumeet Jain:That's right. Sales and software company. So management consultant first and then sales and software company.
Rajiv Parikh:And then went to business school at a lonely place called Wharton at U Penn down in Pennsylvania and then, after many, had many different interesting roles but everything from investment banking to venture capital to eventually being his own entrepreneur as a venture capitalist. So I thought this would be super fun to talk about. He's got very interesting views on the market and the world and entrepreneurship and I just thought we'd have a lot of fun. So I was wondering, like Sumeet, there's like a recession, there's supposed to be a recession. Everybody kept saying we're going to be in a recession. Right, Stocks went to hell, or at least all the stocks got pumped up to nowhere went to hell, and we were supposed to be in this terrible recession. There's like the fricking Ukraine war with Russia. Russia attacks Ukraine, oil prices spikes a spike. We all who got into the stock club lose a bunch of money and we were supposed to be in this ugly recession. When's it going to happen?
Sumeet Jain:Yeah, I mean, look what technically we've had it. I think we had a little bit of a recession and we're back. I think that we've talked about this at length. Inflation is not a recession, but has somewhat similar effects. Right, it makes everyone feel a little bit less rich, everyone's got a little bit less stuff. And I remember when the pandemic first started, you know Wharton Professor Jeremy Siegel, he had a lecture and for the alumni and he said something like you know, look, the way we get out of this recession is and all the stimulus is to inflate ourselves out of it, and it's kind of what's gone on, right, and I don't, you know there's. You know you've. One of the things I've learned from you, rajiv, at some point, is that unfortunately, the US economy used to have a certain amount of unemployment to work, to work kind of correctly.
Rajiv Parikh:I think it was like 5%, right, 5%. So five out of 100 people who are in the are supposed to be employed, who say they are, they want to be employed. Normally that's considered like an awesome economy because there's enough people who've quit, who want to find jobs, and there's enough people who who are have been let go and aren't like asking for too much money, so like there's this nice balance between how much companies are willing to pay people and how much people want and comp, and so that's considered great. And yet we've had this economy that says like labor shortage, like 3.4, now 3.7% unemployment. That's amazing.
Sumeet Jain:Right, yeah. So I just don't know how, and maybe I'm wrong. I don't know if, historically, we've ever had a recession with, with labor shortage. Right, the two to me are incongruous, right, it's, it's, you know, that Venn diagram doesn't overlap. So, and we've, we've tried, you know, we're ratcheting up interest rates, you know, and sitting Silicon Valley, it feels like oh gosh, there's layoffs. But, as we know, tech is such a small smart part of the economy that the overall economy is kind of humming. So I just don't, I'm just it's unclear to me that until unemployment shifts dramatically, you know, we'll really see. You know, a classic recession.
Rajiv Parikh:You go from interest rates right At almost zero, Like we were all what refinancing our houses? Yeah Right, we, I don't know, I think some of us got 30 year rates at like 2.5%, Like you know, which you think is you're just paying principal off at that point, right, the principal of your mortgage. And now it's cranked up from that zero to 5%, which means there's there's like interest rates now at 6%, right. So it's almost like in a four or five, three or four X rise in interest rates and that's just not. That's for low risk stuff like a house. But you know, if you're talking about car, it's higher. If you're talking about credit card debt, it's even higher. So that's opposed to slow things down, it's supposed to, just hasn't happened yet.
Sumeet Jain:Right, and look, you see, okay, this credit card debt increasing. Yes, you know you're probably seeing the same things. I'm seeing that. You know there's some, some replacement happening at places like Costco. You know, switching from beef to pork, and you know and no eggs.
Rajiv Parikh:No eggs, shut up.
Sumeet Jain:That's right. And so eggs to pork, they are buying staples at dollar stores, and so you know you're seeing some of that, but you know it still isn't. You know it's it's reduction in demand, it's reduction in people's spending, but it's not recession, right? Yeah, it's not. It's less than two jobs People are still getting jobs.
Rajiv Parikh:They still, if they quit, they could find something. I mean, I, our friends who may have gotten laid off from Metta or Facebook. They're not like they're not dying, they're finding other jobs, maybe. Yeah, I don't know if it's for less. I mean, I'm sure some of these folks and they, they want some big numbers, so I'm sure someone else is paying those big numbers or they're they're just resizing, but for the most part, it so like we keep seeing these forecasts and it affected the stock market for a long time. We keep seeing these forecasts which would say it was supposed to go, like it was going to be a recession, like you say, a real recession, people out of work, people suffering, and then those forecasts like they were supposed to be at 50-50. Yeah, and now I heard that Goldman Sachs is saying it's 25%. I know you talked to a number of folks there as part of your job. Yeah, what are these guys saying?
Sumeet Jain:You know, I think every quarter that goes by we don't see it. If you remember this. You know we talked about this Q3 of last year and, if you remember, we actually saw a bunch of slides from Goldman Sachs and the whole notion was, if you don't, basically every quarter you don't see a recession, the likelihood of a recession declines. So we didn't really see it Q1, q2, we're going to enter Q3 soon, and so every quarter where it's not there, the likelihood of actually happening declines. So I think that they're all in that same place, which is it's possible, but that possibility declines and I don't know if we're going to see it or if it's going to get worse. So the one thing that I still worry a little bit about is the overhang of real estate.
Sumeet Jain:Debt right yeah commercial real estate and residential after that and what you know. I think we're in the early innings of that and we see what's going on in San Francisco as an example. In the commercial real estate, which is not pretty. There's a lot of ripple to that, which I don't know, candidly, how bad that gets in terms of when those things get unwound, who's actually left hole in the bag or where the creditors are, and I don't. That could get unwound pretty bad. I just don't know yet and I don't think.
Rajiv Parikh:I don't know. So does that? Does that change the way people live and how they buy stocks and how they buy things? What is normal now?
Sumeet Jain:Yeah, Well, you know we I remember we looked at this chart once you know that just the duration of time between you know peak to trough declines every cycle. And I tend to think that you know what we see, for example, in the technology world, of just the pace of innovation and how quickly new trends take off. And you know I'm sure we'll talk a lot of stuff and tech, right, but that also is happening from a economic perspective. The cycles again shorter. You know the resilience and so if, if there is a shift and one part of this, one part of the economy, is challenged, you have another part of the economy that can. That makes up for it really quick, right.
Rajiv Parikh:So maybe it's like it was like a. It was like a rolling recession, right. It was like different sectors getting hit, so like shipping costs went up 80% or 100%, like the rolling blackouts that we keep having down in LA.
Sandeep Parikh:So why is the market up? Is that why the NASDAQ is up 30%? Because you know, in spite of knowing, that real estate is this problem is why is it happening right now?
Sumeet Jain:You know, what's funny is that you know I was my portfolio looking good we talked about this.
Sumeet Jain:I feel like we you know we had this. We looked at this chart Q4 last year and we actually brought it up in front of our stock club, which was, you know, the stock market reflects the future, not today, and what that means is if we think that the trough has happened or that the trough is even one quarter from now. The stock market is really reflecting where you think, where the market thinks the economy and valuations will be six to 12 to 18 months from now.
Sandeep Parikh:So is this sorry from the layman's point of view? Like is this because everybody just thinks AI is gonna be super profitable? Like what are we enthused about?
Sumeet Jain:I think the market generally thinks that one year from now things will be all right and what happens over the next year might be a little choppy here or there, but we're more focused on the future and I think that's the bigger thing.
Rajiv Parikh:Yeah, I think this is one of these really amazing phenomenons and usually one of the things Sumeet pointed out in one of those graphs was that in the third year of the first term of a new president, typically the market this is I think you had data going back to 1920. It goes up 8% that year. So other years were mixed because there's so many different variables, but that was the interesting one what happens in election years. So this is the year prior to the election year.
Sandeep Parikh:I know so what happens in election years?
Sumeet Jain:I think it's still slightly up right, yeah, but this is the largest, and I think the reason is that there is typically not substantial, you know, major policy shift, because you've got an incumbent looking for reelection and they kind of want to stir the pot too much and that just sort of leads to a kind of confidence around what you know, that things will be okay, there's not gonna be a lot of change, and it's actually stood the test of time, so it may not happen this time, right?
Rajiv Parikh:These are things about averages, but it's a really interesting thing. So then here's the part, the second term. If the person wins the second term, then things get bad, right, just like that. So like you're in this whole secondary. You're a secondary VC right Now. You've been a primary VC and now you're a secondary CEO. What the hell does that mean?
Sumeet Jain:Yeah, so, and interesting enough, I feel like secondaries are now hot, are?
Rajiv Parikh:they just not loved.
Sumeet Jain:Are you guys just not loved enough?
Rajiv Parikh:You're kind of like the second wife, the second mistress. Okay, there's a lot about that one.
Sumeet Jain:But the you know how, to know what it is.
Sandeep Parikh:Why do you assume the second wives are unloved? I feel like the.
Rajiv Parikh:I know in all the Hindu literature. Actually it's pretty good to be the second one, yeah. So, maybe the third.
Sumeet Jain:You don't have to do more reading and do literature. I don't know.
Sandeep Parikh:Or we can let the patriarchy die out with that. That's cool, we can move on.
Sumeet Jain:Yeah, if you think of the stock market, the NASDAQ, New York Stock Exchange, etc. Those are basically secondary markets and what I mean by that is you're buying shares in one company from somebody else who owns those shares, and the vast majority on the public market side, the vast majority we think of of buying and selling shares in companies, it's all secondary market, Like somebody owns something and somebody else buys it Now and that's what that's the majority of the market On the private market side.
Sumeet Jain:When you think of venture capital, typically you're investing money and that money is going to the company. That company is giving you shares in their company. So it's called primary because essentially you're investing directly in that company and they're giving you shares. Well, what secondary investing essentially means is it's corollaries kind of the stock market, when I'm buying shares in a company, rather than going straight to that company and buying shares from them, I'm buying it from somebody who already has it, kind of the way that stock market may work. However, in the private market it's far less efficient, largely because there's a information isn't disclosed, you have to be credentialized, there's a whole bunch of restrictions, I mean you just can't go to your Schwab account and go sell.
Rajiv Parikh:That's right. You bought these shares. They told you what they told you. You believe what you believe. They can show you your other books. You can do a bunch of due diligence, which is expensive, that's right. It's not just openly disclosed. The same stuff you filed to the SEC that's been. It may have been audited, may not have been, but you have to believe it.
Sumeet Jain:And then you're making your purchase based on that and if you don't want it anymore, it's not exactly like it's a place where you could just dump your, dump your and usually there's a lot of restrictions, which is to say that when you first buy those shares from that company, you agree with that company on a whole bunch of stuff, including if you don't want those shares anymore. You either can't sell them or you can only sell them to certain people, or you can, and there's a lot of that stuff that you have to abide by. It's not just commentaries, so that's kind of that's what I do and the big. There's some big drivers around this, one of which is that a lot of the best tech companies today stay private longer, and one of the reasons they stay private longer is because there's a lot more growth capital available than there used to be.
Sumeet Jain:It used to be that a company, if you go back and look at companies like Microsoft or Apple or Intuit and these companies went public when they were hundreds of millions of dollars in valuation, much, much, much smaller from a revenue perspective, from all metrics. They went public and they needed to, because they needed to go access capital from public investors to continue to build and grow, and even Amazon, such a much smaller company, to tell the public. Today, what you end up having is lots of private growth investors who are able to continue to fund those companies till they get bigger and larger as private companies, and then, when they eventually go public, they might be a billion dollars or $10 billion or even bigger at that time. So, okay, all that makes sense. Well, what now changes is those first investors, or those first employees, or those founders they in the past.
Rajiv Parikh:They've been sitting on it for like five or like seven 15 years, 10, 15 years right, that's right.
Sumeet Jain:And a lot of those early investors you know, frankly, when that you know they might have invested in a company when it was worth $10 million and okay, and at some point in the future the company might be worth $100 million and they'll say, gosh, I would love to get 10 times my money back if I could. That's a great return for me, even though the company has ambitions of being a billion dollar company, growing another 10X. But that might take it to the five or 10 years and at a certain point somebody just may say, look, I would love to get 10X my money back. And as long as there's a buyer on the other side of that, which is me, I'll say, great, I'll have to buy you out at. I don't really care what you paid If I buy in at a price today that I like and I think that there's still a lot of upside from here.
Rajiv Parikh:That's great and it helps solve a problem for lots of people Right so that guy could, that man or woman, the founder could go buy themselves a house, they could pay for their kids, they could get some what they call liquidity. Because a lot of times when we start up, when entrepreneurs start up companies, they're taking, compared to the big companies, lower salary. They're not getting these yearly bonuses, they're not what they call getting these stock grants that even Tesla factory employees got, that they're not getting any of that and they can't do much with it. So they wanna go do something with it. And so your company comes around and says, hey, I got a deal for you.
Sumeet Jain:Right right right.
Rajiv Parikh:I got a deal for you. I love to buy you out.
Sandeep Parikh:Thanks, I'm just glad this is really so. This is like how founders are end up being cash poor kind of a thing, and this is the way they can. Is that the idea?
Sumeet Jain:Or, yeah, for founders to get and it's not just founders, but founders is certainly one group where they have a lot of their net worth tied up in their company and, frankly, it's good because you want well, it's good to get some liquidity because you kind of don't want a founder to have to be worried about feeding their family or paying for college for their kids.
Sumeet Jain:You'd rather than focus their time and attention on building their business. And if you can alleviate some of the stressors in their life, you also wanna still be aligned and they have still a lot of incentive to make that thing big. But taking a little bit of selling a little bit is totally fine and helps all of all. The other big group is just the early investors. Where early investors, at some point you need some capital back and some returns to keep investing right, and it's good for all involved. If early investors, angel investors, seed investors, if they have investments that are illiquid for 15 years, well they're gonna have to slow down their investing because they need some money back to kind of keep reinvesting and they wanna get some of that capital back, not just in part, so they can realize a return.
Rajiv Parikh:And some of these funds are like so you're like oh, these are just rich people trying to get more money to be, continue to be rich people.
Sandeep Parikh:I'm not gonna say that's exactly how it sounded to me, but it did sound a little bit like that. It's all the same.
Rajiv Parikh:Oh for God, he needs to buy a Tesla. But actually a lot of those funds who invest in venture capital and some of these seed funds are actually pension funds, like union pension funds. They're actually college endowments and not just like Harvard, stanford, u-pen, but like regular colleges. They put some of their equity in that. So there's a lot of money being cycled in that is now getting a chance to get that money out and put it into other things maybe return it back, maybe use it to fund scholarships, maybe use the fund retirements. So that's like you guys are performing, like this efficient market function. Like well, okay, you're not gonna go public for a while or you're not gonna get acquired for a while, but you're gonna cut us a deal. Cut us a deal compared to what you previously got, and then we're gonna wait till you go public or get acquired and then you're gonna make. Then that's how your investors are gonna make a bunch.
Rajiv Parikh:That's right that's right, and those are. So maybe the same pension funds, helmets and all the whatever. That's right and then. So this is how the whole machine keeps running and, in many ways, funds the innovation economy. Right, that's right.
Sumeet Jain:And there was actually an investor of ours who the university, who during the pandemic had significant reduction in enrollment, so significant decline in tuition revenue, and was relying on their endowment to help fund school operations while there were cash flow negative, while they were losing money and needed returns on some of the private investments that they were making to provide actual liquid cash so that they could pay teachers and pay professors and do all the things that they needed to do. So you're exactly right, there's all sorts of different pockets of capital that all funnels into downments, pensions, into hospital systems, all these different things, and then the job of those groups to try to maximize return and they'll allocate it and say we're gonna put some stuff in real estate, put some stuff in public stock, put some stuff in government bonds and put some stuff in venture capital, which provides a different risk award, and all these things are balanced in different ways. And for venture capital, at some point you'll say, well, it'd be nice to get that cash back, and that's where I think that's really helpful.
Rajiv Parikh:That's cool. So you're in this part of the market and you get to see all these. Like, when you pick these companies, you're picking companies. Are you just buying a basket of companies that are super cool and super hot? Are you like, what makes you pick a company that you wanna buy private equity for? Yeah, maybe even use one of your examples, like I think you had a bunch of good exits.
Sumeet Jain:Yeah, I think ultimately it's not, as a look, that different than the way you would if you were just I should say just but venture capital investor, right, where you have a thesis and you say, look, I'm really interested.
Sumeet Jain:Or then let's say today it's in AI or in the past it might have been security, or maybe it's consumer marketplaces or whatever it is.
Sumeet Jain:And then you'll spend time understanding the businesses there and which businesses are performing and why are they performing and where are the market dynamics and where is the technology important and what are the management. So all the typical vectors you would look at as a private equity investor to get to your thesis and build some conviction around individual companies. It's just that at that point, rather than saying now I'm gonna go talk to the company to go see if they will accept my capital, I'm instead talking to existing investors to say, could you use a little bit of liquidity? And that's a little bit about how that works. So you sort of start from the same place that you would as a typical private equity investor and maybe even a public investor. Right, you know a lot of deep conviction public investors start with the same thing of what are. Why do I have conviction around investing in a certain company, and then we'll go by those public stocks.
Rajiv Parikh:So, your approach is kind of different, right. You're not just looking at every company, you look at particular companies. You really love them, yep, and then you go to make friends with people who may hold their stock.
Rajiv Parikh:That's right and you say to them hey, I want to buy that and you're going to be friendly to the current investors. And so there's like, oh, maybe we'll work with. I like that guy Sumeet. He's kind of a fun guy, he's a good guy and he's going to be friendly to the people who are still running the show.
Sumeet Jain:That's right, that's right and so, yeah, and the thing about these things happen at different layers, right. There's the companies that invest directly, People who directly own those shares, which could be employees, could be founders. There's one level up, which is the venture funds oftentimes have them, and so you might do a transaction where you're buying a bunch of different kind of investments from a venture firm. And then there's one level above that, which is the investors in those venture firms, the limited partners, and those are the pensions, endowments, hospitals, all those groups where they might say, gosh, I would really love some liquidity. I've invested in this firm and that firm's got underlying investments and you could buy it out at that level, right, so there's all sorts of different levels.
Rajiv Parikh:So there's lots of clever ways of playing it. So like, how do you charm people into this stuff, sumeet? I mean like there's a lot of people out there with money Like what's your? How do you make? How do you get people to live by or to sell their shares to you? I mean, is it just being a value guy or are you just like showing them a bunch of numbers, having a career that started in tech and started in venture and about.
Sumeet Jain:Actually they started in tech and then went to venture. It goes a long way, which is usually folks like to talk to people who understand the business and understand what they're doing and aren't just sort of saying I wanna buy because I think it's cool or because I think it's sexy, but actually understand and the reason that matters is they have confidence in what you're getting into and while I'm not gonna force myself into having an active role, but it could be helpful if needed, right, and so that ends up providing a lot of comfort to a seller as well. That won't be a pain in the butt to the company. I know what I'm getting into, I understand the business, I understand the tech, I understand the risks. I understand what's going well. I understand what's not going well. Great, I know you're not gonna be a pain in the butt to the company if not everything goes according to plan every single day right?
Rajiv Parikh:No, because no investor or no board member wants that long ass letter from some random shareholder. That's right. I'll jump in all over them. So to me you could have. This is the part that I love learning about what drives people and what gives that spark of innovation. You could have been an investment banker, maybe gold bid. You maybe had gone to Morgan Stanley, jp Morgan, you could have gone to a bunch of these firms. They seem to be living pretty nicely, sure. I mean, they may be pretty stressed, but they seem nicely. But you decided that you would still be stressed and deciding maybe I wouldn't want any salary for a while. And just because I had this dream of what, like, what drove that initiative to kind of create this. Yeah, to go do something on your own, like this, or with a couple partners?
Sumeet Jain:Sure, sure, yeah, yeah, yeah, good question, I think a couple things. So, by the way, I wasn't a Vesemekar goldman sax and had a great experience there.
Rajiv Parikh:I think, you're like. I'm sure they'll hear that and say oh yeah, we still like Sabi.
Sandeep Parikh:Yeah, yeah, I hope so yeah gotta pay homage to the overlords. I also like you, mr Goldman, and sax.
Sumeet Jain:Yes, there are two of them yes, yeah, I think sometimes things are planned, sometimes they sort of happen. And I will say, after undergrad, prior to business school, was an operator, worked at a bunch of startups when I went to business school. One of the reasons was I felt like I was always on the tech side of things but didn't really understand or wasn't even invited to the conversations around what was happening from finance business raising capital.
Rajiv Parikh:Yeah, knowing the whole picture of how this thing comes together.
Sumeet Jain:And so that was a driver for business school and then ultimately, right after business school, a driver to go to investment banking, which is just a great place to. It's almost like if you're an technologist, you're way deep in building, and if you're at the investment banking level, you're way in the opposite end the raising capital, exiting companies. So it's two almost extremes of this thing and super interesting. And then this venture capital thing is somewhere in the middle right, when you're certainly involved in the technology, yet you have to really understand what companies are doing, but you're also thinking about how to finance these things and whatnot. So I think to me it was just a great hybrid and a place that I could still geek out on the tech but also geek out on the numbers and the finance, and that was the natural sort of hybrid, the levied adventure capital in general, and I loved every bit of it.
Rajiv Parikh:Was there any roots from your youth? I mean, you grew up in Buffalo. Nobody lives in Buffalo.
Sumeet Jain:So, yeah, well, there's some, but don't worry, I grew up in New Hampshire, I know, I know. So I think like roots from my youth, more from a tech perspective, less from a finance perspective, I think from a tech perspective. I was nerd in Buffalo online bulletin board systems spent a lot of high school time doing all that.
Sumeet Jain:And it was always interesting because a little bit of an outsider Indian guy in Buffalo and you get on these little online things. All of a sudden you're connected to a whole bunch of people around the world who are like like you, which you didn't have in.
Sandeep Parikh:Buffalo. So what was your AOL? I am name Like Jim Kelly, lover 49.
Sumeet Jain:I think it was something cheesier. I think it was like Stingray, because I've always been a Corvette guy, so I think I was like Stingray. Something was my handle that checks out. It could have been Jim Kelly lover too.
Rajiv Parikh:Stingray 73.
Sumeet Jain:Yeah, it was something like that, but it was Stingray, I remember that. So, yeah, I think that was it. It was just like it's always cheesy, but the connectivity force of the early, early, early days of internet was at least for me as a kid was really empowering. You're all of a sudden you're like wow, there's all these other people that I can connect with that were interesting, more like me and kind of hang with and that was, I think, a little bit of at least a tech driver.
Sumeet Jain:I don't think there's anything that was like a finance driver, just sort of happened, I think, being a part of the startup companies and you started to see that there's these fancy people that will walk into board rooms and just curiosity and intrigue of like, what do they do and how do they do it.
Sandeep Parikh:But I find that to be really cool, like just that feeling, like in terms of a spark. I really identify with that, like that feeling of getting on Instamesture for the first time, or that feeling of ICQ and like all these ways of just immediate or IRC chat, like I don't know how deep your nerd goes in terms of that stuff, but it was that instant ability to find community and anything that you were interested in was like I'm powering such a great word. It just felt like oh wow, I'm not alone here in Northern for us, new England, new Hampshire, surrounded by all white people.
Sumeet Jain:Right right in Buffalo in the snow, surrounded by yeah, yeah.
Rajiv Parikh:And the lake effect.
Sandeep Parikh:How did that part specifically translate into you diving into tech Like what it?
Sumeet Jain:Well, I think that was sort of a like all these little mini steps.
Rajiv Parikh:How could you become a doctor? You're supposed to be a doctor.
Sumeet Jain:Yeah, I know, we all were.
Sandeep Parikh:None of us. We were all we're all failures on this podcast.
Sumeet Jain:Yes, that's right. Well, I think, like it just sparks other things, right. Like, well, you know, built games, right, because it was fun to do and there's people that I could share them with, who would play them and try them, right, so that was fun and entertaining and got people to engage around. So I think that turned into like programming, and programming, you know, was developed interest in computer science.
Sumeet Jain:And you know, like early days of shareware stuff, where you're like, well, you know, build a game and see if someone will pay for it, right, and so all that is, you know it's like one step to another, to another, to actually go study, to be a computer science. And then I was like, well, I'm a computer engineer. You know that time is called computer engineering is what I studied, right, and it was the mix of those things. But it was all started from those little steps to you know programming and writing games. I remember like I remember like one summer, you know junior high summer, like I went to like summer school to go learn, you know, learn to program in different things, right, so it was hyper nerdy, but you know what did it do and it was super fun.
Rajiv Parikh:Was there a thing where, like because you were doing this, you met people like you you could all of a sudden go from being like? In a lot of our life, I can tell you in my life, when I all of a sudden felt accepted growing up this happened really during my 16th birthday I felt super accepted. All of a sudden I burst out and wanted to be more connected to people. So did you have the same kind of experience at that camp? Or maybe when you got on your first bulletin board that you know? You went from maybe like well, I'm being judged and people are looking at me in a particular way, but no, but now all of a sudden, you're like, you found people like you and you felt open and accepted. So now you wanted to give back to them.
Sumeet Jain:Yeah, a little bit, I think I think it's right, or just, or. It was just like a wow, this is actually okay to do, or I, you know I could do this with friends. You know, like you know, I think at some point you started to gravitate and and have more of a community, like you said, of people who are interested in the same things. You are right, and writing a game and then having your friends try it, which is a very, very small, small group of people, but nonetheless, yeah, I think I think you're right, like feeling accepted, but feeling like you know, this thing doesn't have to be something you do as a hermit in a closet. There's actually other people like this as well. It's just harder to find them. Once you find them, you've got, just like I said, acceptance and and and yeah, I think you and I both are extroverts, it's?
Sumeet Jain:you know, sometimes it'd be hard to be an extrovert in something that's very nerdy.
Sandeep Parikh:Yeah, Does this does this translate to the stuff you do today, like in the sense of like okay, you're, I assume you're looking at all these pitch decks or these you know companies or or entrepreneurs, right, you're probably looking at thousands of this stuff to decide who you're going to invest in or make these you know offers to you to offer liquidity. It's like, are you looking for that same spark in them you know that you had as a kid into like in their ventures, like how, how does that translate to what you're doing today? Or is it just you know, yeah, money, money, money. We're all you know.
Rajiv Parikh:I always want to say a different twist on that question is how did that translate for you to get every corporate discount code? Oh well, wait wait, what's that?
Sandeep Parikh:Hold on, I got to write this down, yeah, so this is the.
Sumeet Jain:That's a whole different ballgame, which is, you know we talk about this all the time, but and actually I'll come back to I had to see Pifny just this past weekend, which we talked about. But you know, I think like I've always been cheap, I've always been frugal and I always joke around but also somewhat serious about this. You know, one of the things about the second world is you're typically buying these things discount and I'm always like I don't pay a full price for anything ensures I don't want to pay full price for for stock as well. Maybe it's the same hack. You know, when I was in high school we'd call you know, you call people who are kind of writing software hackers and you're sort of you know hacking and hacking commuter. So maybe it's that same mentality of just hacking the system and finding life hacking travel hacks like people do yeah looking for the.
Sandeep Parikh:I think there's a dopamine rush when you, when you get you know a great deal right Totally and it doesn't matter what it is. Yeah, you feel like you got the purse, even if you're like bargaining and in in in a barota for a chachaki that you want to bring home to your kids or something you're like oh man I they started at 30 and I got up for three. You get that little dopamine hit of like of the wind.
Sumeet Jain:Right, yeah, yeah, yeah, I think that's, I think that's accurate. It's a game.
Rajiv Parikh:So, even like with here's a good one. So is that, like when you you talked about what are your user names? Was the stingray? Yes. So your dream, I think, was to get a stingray. I did, yes. Yes, and did you appreciate to get that stingray.
Sumeet Jain:Like the car, but it wasn't. It was like it was within my strike zone. But yes, I had like a poster of this old Corvette in my wall when I was okay.
Rajiv Parikh:Get the car yellow, yellow.
Sandeep Parikh:I was thinking you was the, an actual pet stingray. But okay, go on.
Sumeet Jain:No, no, no, no. In some beats cases could be actually no, no, no, no. The Corvette stingray. And yes, I have a you know that same old Corvette now, which is not a fancy car by any means, but it's, you know, it's a cool car that I like.
Rajiv Parikh:It goes zero to 60, and how many seconds About it down Minutes minutes. But it's a lot of noise doing it.
Sumeet Jain:It's so cool. It takes four and a half hours to go to 60 miles an hour Going back to your epiphany, because you feel like you're going somewhere.
Sandeep Parikh:Yeah, we're at it.
Sumeet Jain:So this past weekend I was at. I was in the Bahamas with my wife on our 20th anniversary.
Sandeep Parikh:Congratulations, thank you, thank you. Super fun time to her for picking it up.
Sumeet Jain:And so, and so I'm going to come back to this and I'm going to put it, put a pin in it and then come back and step aside for one second. One of the things when I first met Rajiv and we were on the stock stock club, I would joke around about this great advice, especially the advice I have A great investment advice is by low, so high, isn't that brilliant?
Sandeep Parikh:Right, that's the advice I've ever used. I've never heard that before so high. Sorry, I got to write this down Bye so high.
Rajiv Parikh:Well, the reality is okay, Sumeet and I, I'll tell you a little about the stock club thing. So a bunch of us, bored during the pandemic, couldn't travel places, couldn't go out, couldn't do much of anything. So Saturday mornings at 9am some one of our close friends, tom, organized a stock club so that he's like, well, if we can't go out, at least maybe we can profit by this pandemic and and talk about our notions of where businesses should be, and so it was kind of a business geek fest and we had fun with it, right and so. But I'll tell you, one of the things I found is people love to buy high and then sell low. That's right, that's right.
Sumeet Jain:People feel we get excited at the wrong times, feel we get excited at the wrong time that, wow, this thing is really hot Bye, and then it can only go one way once you bought it at the peak right. So so, yeah, and I'd always say simple advice by those sell high, so that, so that. So I want to come back to that now. I'm going to come back to this weekend. So it was sitting at at a bar before dinner and we were at this resort where there's lots of people celebrating anniversaries, people just got married and there was this, this, this guy, who had just gotten married a couple days ago, was there on their honeymoon and he's like, what, what marriage advice do you have? You've been married for 20 years. And I was thinking about it, trying to think about like something, and then try to come up with something super profound.
Rajiv Parikh:Yeah, yeah.
Sumeet Jain:And then I was like you know what, here's my advice Don't sell low. And he's like what do you mean? And, and my wife was right next to me, like you know I, you know, I student of Warren Buffett and etc. And and one of the things I saw at his annual meeting was that I just went to was you know, the best opportunities are when other people do stupid things. So that was one. And then, and then, to you know, I was just saying, look, one of the things I'm most thankful for is in my marriage. When there's times I've done stupid things, my wife didn't sell low and said you're out of here, kick me out of the house, right, but you know, and I would say that she's really appreciative and I am to that you know, you don't give up when things are really bad. Quote sell low, got a good shot. And then the other you know this, this other social social light is the lightest one after it's the most dark right, which is so.
Sumeet Jain:So that was correlated to other things right, which is it's kind of in the secondary business. You know, frankly, a lot of what I do is is buy low, right, when somebody else has to sell low, and they have to sell low because you know there's a life event or it's the end of their fun and that, and I kind of want to take advantage of it. But that's that's what you leverage. And then you know I was thinking about that from a venture capital and a business perspective which is there's only one reason companies go out of business that they run a money. And you know, and what's the implication of that? You know, don't run out of money because when you run money you have to sell low. And so you know, anyhow.
Sumeet Jain:So that those are all the different things that I started to connect and I was like that's my advice is don't sell low if you can in life. And you know, and, and you know, and I was, I was actually thinking of you, Rajiv, as well, when I was driving here and I was thinking about this. This other example which you'll appreciate, which was, you know, patriots in 1994, right when Robert Kraft bought them and that was when the bills were on top of the world. They were crushing the patriots. Every year went to four suples in a row and I believe Fox Borough Stadium was bankrupt or was or was about to, was declaring bankruptcy and Robert Kraft jumped in, bought the team for I don't remember exactly around $200 million, which actually was a high price at the time.
Rajiv Parikh:At the time.
Sumeet Jain:But I'd argue he bought low. The other company or the team has never won. The stadium was basically bankrupt, piece of junk and now it's one of the top five most valuable franchises. You know, multi billion dollars in 20 years, it's not. I mean, it's a long time.
Sandeep Parikh:Anyhow, another example seven years from then, he would draft a quarterback in the sixth round. That would be the best player of all time.
Sumeet Jain:But I don't know who he bought it from. But whoever he bought it from, is man himself. Yes, yeah, so low right, so you know so so you know I was thinking, if you can't buy low and in life try not to sell low. And those are my, those. That was my epiphany for my wedding weekend that I'm now applying to other things.
Rajiv Parikh:There you go, I love it, I love it. So now is there, like nowadays, you're still investing in all these firms and you're looking at the next thing Do you think AI is a? Is a is a high, or is it at a low? Or is it in a? Is it in that crazy territory, like crypto was last year or the year before? Where would you put that?
Sandeep Parikh:from what you see across all these technologies? Yeah, are you? Are you saying by crypto, that's a low, it's had a little high, right, it's had a local high, Like after the banks, Silicon Valley Bank.
Rajiv Parikh:after that it kind of Bitcoin peaked a bit.
Sumeet Jain:I think we're in this. You know the classic Gartner curves, you know the net I don't remember the exact terms, but it's like the trough of inflated, inflated expectations, and then it goes to trough illusion, and then so I think we're in that peak of inflated expectation, which is there's something very real. I should say something. We've all used these things and it's incredibly powerful and it's all blown away. It's blown us all away about what we can do and how fast it's evolving, how we're adapting business around it. I think the peak of inflated expectation is just around how quickly we're building another bubble. It's amazing I don't know if I can think of another time when one bubble is collapsing, at the same time, another one is being built. Right, we're seeing all of these companies that were overfunded, overvalued during the pandemic quickly collapsing or compressing and at the same time, we're building a brand new bubble and this other thing.
Rajiv Parikh:You're not buying any generative AI large language model companies.
Sumeet Jain:They're still early, they're not mature enough. They're not mature enough. Yeah, they're not mature enough.
Rajiv Parikh:Even though some of them have gotten $10 billion Of capital, hundreds of billions of dollars, yeah, of capital.
Sumeet Jain:That doesn't mean they have hundreds of millions of dollars of revenue, but they have capital. It's easy to use your imagination and see how these things can displace all sorts of things Companies like Google, who not just displaced, but just from the search perspective to traditional marketing, all sorts of different things that we see all over the place. I think it's very real, unlike crypto, where great we bought didn't change anyone's life, no one's day to day was impacted. It's not like I went to work when crypto was here and anything.
Rajiv Parikh:Unless you bought money at the peak, unless you bought this stuff at a peak. Sure, but even then it didn't change your world.
Sumeet Jain:It didn't change what I was doing. It didn't change nothing other than it was just another asset that I was buying and selling. It wasn't like the promise of Web 3 and blockchain and all the stuff. The promise of it all was we're going to reinvent businesses without there being an intermediary, where everything can be peer to peer. None of that really happened. Nothing really changed. I think what we're seeing now is stuff is changing. I'm using chat GPT all the time. I use everything to help my kids with their homework, to help me compose emails all over the place. I want to incorporate it more. I think that's very, very, very different. The adoption and the utility there's other things we probably all adopted just because it was cool for a little bit, but it wasn't providing any utility. Everyone, for about two weeks, was in audio chat rooms, clubhouse, etc.
Rajiv Parikh:The clubhouse who wants to go sit there and listen to a bunch of guys? We listen to a bunch of guys.
Sumeet Jain:I'm not that quickly degraded. It was the quality was low and it was a waste of time. So that's use that as an example. This is not where I'm like. This is actually useful and productive and there's real utility.
Rajiv Parikh:So now you're thinking about so AI it's on its rise. It may be something you look for. When they get to a certain point, you may be actually able to take care of or be engaged in a situation where they rise enough before they go public. There'll be people wanting to get out and you'll be able to help them. So now that's a huge opportunity situation. So now, how does that all relate to buying a nail printer for your dog? I have no idea.
Sandeep Parikh:So Sumeet's into all kinds of innovation.
Rajiv Parikh:Sumeet, as you know, is into all kinds of innovation and, like your fingernails, yeah, he and I were at South by Southwest.
Sandeep Parikh:That was last year.
Rajiv Parikh:And the great part about going with Sumeet is that, because he's an adventure, I get it to all the good parties Right. So we were at his party and there were people there selling hocking this new technology and Sumeet ever, the innovator, said I got to have this.
Sumeet Jain:It was a. It's basically like an inkjet printer for fingernails and it was like this is March and my daughters my middle daughter's birthday is April 5th. So I was like what a great birthday present to come home with like a little nail printer. So first of all, we went there and I had her print the bill's logo on my nails. So that was my first step. See, it worked, and it worked great. I had, like, the bill's logo on my fingernails.
Rajiv Parikh:And he had to show everyone when he was there, showing all the women there.
Sumeet Jain:Yeah, that he had his nails painted and he was like sorry, Jimin and man, he was showing them his real printer. Yes, the bill's logo.
Rajiv Parikh:And then I think you even had me put on a Patriots one on mine?
Sumeet Jain:I think so, and then Josh.
Sandeep Parikh:Allen faces on all your nails, yeah.
Sumeet Jain:And then yeah, then I'm like I need to you know I need to buy one daughter's birthday and she's like, well, they're still in prototype mode. I'm like that's okay, I'll write you lots of great reviews, whatever you need. She's kind enough to see. Other company you know sold me one, sent it to me. It was awesome.
Rajiv Parikh:So so who uses it more, you or your daughter? Is it kind of like that amazing margarita machine you bought for your wife?
Sumeet Jain:All the stuff, you know all the things. Definitely she does, it actually works. She uses it when she has like friends over. It's like an activity, she's like you know friends over they're like hey, let's go print our nails, and they go do it, but then she's super cute she's.
Rajiv Parikh:she was starting up a nail gloss business and online.
Sumeet Jain:That's right. That's right. We had Rajiv over to. I said you know what? Luckily for you, I have friends who are great at different walks of life and I have a great person who's like a phenomenal digital marketer and, you know, starting online business. Get some advice, and Rajiv has kind of come over and provide lots of advice on AB, testing, different things and yeah, yeah, she's like the consummate operator.
Rajiv Parikh:She came up this amazing glitter, glitter nail polish so I was pretty excited, yeah, pretty excited. So like, okay, before we close up, one thing actually have some personal things. So you came out of Buffalo from what I hear from your friends, you were somewhat of a shy guy, but things changed and maybe now that we've talked about it, we've learned it's rooted in this whole network the solability to bulletin boards. So when you, one of the amazing things to think about you is that when you go to parties, all of a sudden you become the life of the party. How does that happen?
Sumeet Jain:I think like I somehow just see the hilarity in everything and somehow there's always comedy available and it's not an act for anyone, but just always laughing about the stuff around and there's always something humorous right, whatever it may be there's. I can't relate.
Sandeep Parikh:As a comedian. I'm a tortured soul.
Sumeet Jain:I don't A lot of times it's self deprecating, right? It's just the funny things that you see, the funny things people do are the funny things amongst our friends, that we know the different mannerisms and I don't think I think what everyone's laughing, it's good and, as you know, sometimes the ridiculousness of those silly observations work.
Rajiv Parikh:Well, that's it All right. One final question If you say you were not doing venture anymore, what thing would you do? I think it would be.
Sumeet Jain:Other than having a beer with Rajiv. Yes, yes, yes, that would be amazing always. So there's two answers. One is maybe a little more serious, but I think so Thing. One would be building and repairing cars. I would love to be like you know I still I have a very hands on with my own cars and, do you know, change oils and do all the all that stuff. So I would, I would love to go build, race, drive so cars, so that that that that would be one which I think I still love to do and would love to do more of. And then the second thing is maybe a little more serious would be you know, I'm super fascinated by, certainly, all the AI stuff, but also everything's happening right now around robotics and drones and autonomous driving.
Sumeet Jain:And you know, you go around San Francisco and you just see these like just amazing vehicles by crews and Waymo and all these things that are just like it's just just so much amazing technology, sensors on stuff. So I would try to go back up on my engineering hat back on and find some way to, you know, get involved in the engineering building something of that part of the world of the, you know, whatever it is drones, vehicles, autonomous, all those sorts of things I think are super cool and the engineering part of me. Every time I see one of those, my jaw drops. I'm like see these cars with, like you know, all their LiDAR centers spinning and all that stuff and you're like that is just so cool. I'd like love to.
Rajiv Parikh:It is the most fun ever to see all this change and transformation right before our eyes, software and hardware coming together, making amazing stuff happen. Drones that can see, drones that can act together.
Sumeet Jain:Yeah, I think, like if I go back in time, if I go back in time to when I was studying engineering in college and I saw, like what is what you can do today? I think I probably would have just stayed an engineer, maybe, maybe.
Rajiv Parikh:I think when I graduated, yeah, I wonder the same thing, like had I not been in New Hampshire and been here in Silicon Valley, maybe I would have actually stayed in engineering.
Sumeet Jain:Yeah, because I think at the time when I graduated it was like, well, you know engineering, it wasn't that exciting. It was like you know, there was power lines.
Rajiv Parikh:It was a grime man.
Sandeep Parikh:Yeah, it was painful.
Sumeet Jain:You know, go work on ship design and like and not that exciting, you know it was like. Or you go work at an auto company. But working at auto company, working on, you know, seat belts or something, right, incremental improvements yeah. So now all the stuff that you can do. You know awesome right? You can imagine like graduating from engineering school and go work at SpaceX Like that'd be so cool.
Rajiv Parikh:So yeah, see a spaceship land itself. It's amazing. Right, right, right. Is AI going to be the great hope for civilization, or has it already killed us and we're just sitting in a simulation?
Sumeet Jain:I think it's. I think it's gonna be a good thing, I think it's a great hope. I think I hope that AI will drive us to more truth and to more fact, and I think that'll be good.
Sandeep Parikh:Awesome, yeah, simulation, it could be fun.
Rajiv Parikh:We might just be in a simulation. So I think our next simulation is going to be enjoying Sumeet's Margarita making machine. So I think that's what we're off to next.
Sumeet Jain:All right.
Rajiv Parikh:Thank you so much, Wasn't that fun. We get to learn all about friends that you can make during the pandemic and how you get to learn about how they're changing the world. So in Sumeet's case, I got to learn all about the investing world in a fundamentally different way, a different sector of the economy not just stocks and startups, but the intersections between startups and how they get to market and how there's so many players in between and how there's so much innovation in between. And I think he does it in a way that most people have never thought of, Like he was motivated by his youth and how that innovation came from being this kid Indian kid in Buffalo that happened to find bulletin boards and write code and use that to find so many people like him and so many friends like him that he's made a whole living and life off of.
Sandeep Parikh:Totally. I think I honestly feel like we like a little bit reconnected him with his to that moment in his life. So I'm patting myself and you're and you on the back a little bit of being like, oh, this is cool, this is a cool thing we're doing, I think, reminding people like what is the thing that that brought you in here? Because I think it's easy to get lost in balance sheets and assets I'm sure in finance, probably very easy to get lost in that stuff and forget why you're there, and bringing people back to that thing. And I think what I did learn from Sumeet is like and I try to do in my life as a comedian right, he's like keep it fun, be loud, be proud, and I think that can make all the difference of the world.
Rajiv Parikh:So that was super fun. Thanks for listening. If you enjoyed the pod, please take a moment to rate it and comment. You can find us on Apple podcasts, google podcasts and everywhere podcasts can be found. We'll catch you next time and remember folks be ever curious.