David Rosenthal: evaluation

Transcript context

…Exactly, and look, we all live through the dot-com bubble. We thought we were going to be so successful. We had all these huge gains and it just disintegrated on us. We were all burned by that and LPs are burned by that. The thing is LPs really don't know if something is a fraud or if something is for real. They're trusting us. They're trusting the fund managers. They see all this gain after gain after gain, but it's all paper. At some point, they have to convert that to cash. Otherwise, they never know, and if you've been around for a long time, you know it could go to zero. Anyway, we had these pressures and said maybe we should increase the DPI to help us raise our next fights. That’s how a lot of fund managers think. We decided to sell 15% of our Roblox position. We were still the largest shareholder at that point after that. It makes our LP's pleased. We said as we were selling that little piece, it was such a tough decision. We were saying, I think that's going to end up being a $200 million mistake. A $200 million mistake in the context of an $86.5 million fund is a pretty big mistake. We still did it anyway. We still did it even though we thought it might be a $200 million mistake. It turned out to be more than a $1 billion mistake. Just member that, because it was the pain of that mistake that really let us down this whole different path where we became an RIA. We sold a little bit at that point. Then fast forward a year or two later, a much bigger around happens, $2.5 billion pre. Before that $2.5 million pre round led by Tiger and Greylock also came in that round, we had a number of other people start to get really interested in this company. People are just begging, can we have a chance to look at the company? We weren't really looking to raise money because the company, again, after the first $10.5 million of equity, we got to a point where we were cash flow positive and we just didn't need to raise any more money. People could be knocking on our doors and we just kept saying no, no, no. But at $2 billion, we thought maybe we should sell a little bit again. We thought that worked okay last time. At $2 billion we could sell maybe only 10% of our position and still return a big chunk of the fund. Why not? We actually talked to some folks at $2 billion and they came in at slightly below. Our asking price was $2 billion and they, for some reason, couldn't quite get there. They're offering like $1.7–$1.8 billion, and we just said we’re just going to pass. This is like when Buffett bought Berkshire-Hathaway where he wanted to sell and it was the Chase family. They came in at, I think, an eighth of a dollar below the price that they had agreed, shook hands on a tender offer. That's when Buffett said, I'm not going to sell. I'm going to buy it. I have another one of those great stories for you later, remind me, Woowa Brothers. You're just off by a little bit and it's just so dumb to be off by a little bit. Just go for it. Those guys were off by a little bit and it’s a lucky thing for us because we waited a little bit longer and we got to the $2.5 billion valuation. If we were going to sell at $2 billion, we should be willing to sell at $2.5 billion. But it's all relative to how much progress the company is making. The other key difference was by the time we got to $2.5 billion, we had registered and become an RIA. That was a key difference. Once we registered to be an RIA, we could do these SPVs and we could a purchase secondary…

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