David Rosenthal: belief

Transcript context

…No, those were mine too. Into the section of what would have happened otherwise, if we were looking at transactions here of acquisition, this would be what would have happened if the big company hadn't bought the little company. Here, the way I want to analyze this of what would have happened otherwise if Tencent had not invested. And before we talk about if they hadn’t invested, I want to talk about their investment for a moment because I ran some numbers and holy everything, you guys. This is a crazy investment. We’ve covered some crazy investments on the show. I think Naspers’ Tencent is one of the all-time best, but this one is—let's just run through some numbers. In 2012, Tencent bought 40% of the company for $330 million. That 40% stake—played forward six years, in October of 2018—when they raised the round on the valuation of $15 billion, that's now worth $5.4 billion, if I did my delusion math right there. It took them six years to turn $330 million into $5.4 billion, which I think is a 60% annualized return on that money. One way to contextualize that is if you're a VC and you're listening to this, let's say you're a smaller series A firm, and you've got a $330 million fund. That's like investing the whole fund and generating a 16X only six years into the life of the fund. Yeah. The crazy, crazy, crazy thing though about Tencent—and why they're just on a whole another level than anyone else out there—is this is far from even their best investment. We covered what's probably their best right now. I haven't run the math on Meituan, but in Pinduoduo, two episodes ago, that stake (I think) is worth $20 billion some odd now. And they've invested less than $1 billion. Yeah, it's wild.…

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