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- [00:00]
Imran
The power has shifted from investors to founders and God bless them. And the reality is you never want to be in a situation that you are in a relationship. You are in a disadvantageous position. Like I can challenge you when you x AI or SpaceX is raising money. Investors have zero power. All the power lies to corporate and that's in a situation like that. You know, you know, one company, two company, it might work out but if thousand companies doing that, the outcome cannot be great. And that's why you are seeing that returns are, you know, like companies are not investors are not getting their capital back. It's taking way longer to get capital back. And the other problem is, you know, if a company stay in a private, the risk goes up significantly because you can predict what's going to happen in three years, four years, five years. But it's very hard to predict what's going to happen. 12, 13, 14 years.
- [01:00]
Podcast Host
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- [01:18]
Interviewer
Was low leverage work that held us back.
- [01:20]
Podcast Host
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- [02:19]
Interviewer
Y' all have heard me talk about.
- [02:20]
Podcast Host
This company Better Pitch for a long time. FORT has been using them to build decks over the last six months and.
- [02:26]
Interviewer
I have to say I thought we.
- [02:28]
Podcast Host
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- [02:52]
Interviewer
Imran, thank you for joining me on the show today. It's a pleasure to have you on.
- [02:56]
Imran
Thank you for having me. I really, really appreciate it.
- [02:59]
Interviewer
I wanted to start back in the early days and don't mean to brag on you right out the gate but there was a time where you were rated by institutional investors, I believe one of their magazines, the second best research analyst in the investment world. And so I wanted to start by saying like what did you do that made you great at it? And are the same things that mattered back then in research? Do those matter today?
- [03:26]
Imran
Oh, great question. So long ago I think what got the attention of so Institutional Investor was a magazine still around and they still do this survey. They go back to all these buy side investors like fidelities of the world and the hedge funds of the world and ask for who the top analysts are in different sector categories. And I think what got me the attention of a lot of the investors I was very young and for a couple of reasons. I had some really good stock called right off the gate. I think in 2004 I had a great call on a company called Infospace. They're making mobile ringtone, you know and cell phone was growing and the mobile ringtone business was growing really really well. And I recommended the stock. You know Infospace was a stock if I remember correctly it was a really hot company in 2099, 2000 and then the company blew up in 2001 and went back to very very low price. And then they got into this mobile ringtone business and I started recommending the stock stock, you know the ringtone, you know I don't people, I don't know what's the average age of people who are listening to this call. But 20 years ago ringtone was a big deal. You know you would add this music ringtones and and. And people would pay 99 cents to download this music ringtone. And so I recommended that stocks we made a lot of money for a lot of clients. And the interesting thing is I think again if my memory is correct we got the stock right on both sides side because I downgraded the stock and because my thesis was we were moving on from the ringtone business was becoming more digital ringtone and that on that you had to pay a higher royalty share with the Music labels. And there was this famous call with me and the CEO exchange in an earnings call. I was probing him on this margins issue that hey, your gross margin is going to go down. And he, you know, whenever what I found that whenever a CEO makes fun of you or mean to you, that means you're pushing something that they are, you know, close to their heart. And he made a statement saying that, hey, something like that. You, Imran, I know you're very smart and you probably went to top business school. You focus on margins. But I take the gross profit dollar all day long, you know, and, but I was very right because the market squeezed and this really hurt the stock. So I think, Zach, first, you know, Johnson, your question got attention by the stock call. But the second thing is also to become a good analyst, you know, in addition to stock call, you have to have a good analysis, you have to have a good model and you also have to be good at client services, right? Because your clients are investors who are investing in a public market. You want to be available for them when they need to talk to you. So that, so you need all of those things to become get ranked, you know. And the answer is it's true even today, you know, like good stock call, good analysis and good research report and good marketing, right? Talking to your clients regularly and be available when they need you makes you a good sell set analyst.
- [06:41]
Interviewer
Okay, you mentioned gross margin. You talked about this before. Why are gross margins hard to control?
- [06:47]
Imran
Yeah, so I think, you know, it's really. I always said that if somebody hires me as a CFO and the board or the founder mandate me to, hey, go improve margins. Right? So I would probably first focus on sales and marketing. You know, if it's the B2B business, focus on how can we improve revenue target for salesperson, you know, and really focus on productivity of the sales team. I would focus on the marketing dollar. We're investing. Are we getting ROI on that marketing dollar? And also there's a lot of way to improve your sales and marketing budgets, you know, and then there's a lot of way to improve your gna, right? You know, early days of Amazon, they would have like small desk so that they can fit in more people on the desk. You cut your office space, you cut, you know, a lot of people are going to hate me for saying that. A great way to improve your GNA margins by increasing insurance deductibility, you know, things like that. So these are all controllable and can do it. But it's really, really hard to Improve companies gross margins because that your cost of your business, cost of your product is cost of your product. So you need some really step function improvement, you know, to improve your gross margins or something has to fundamentally change to your gross margins go down dramatically. So you know, when the companies have step function improvement in their gross profit margins on both upside or gross step function decline, that is something fundamental going on on the business and understanding that, you know, help you identify good stock or bad stock.
- [08:18]
Interviewer
Okay, I want to go back to research real quick. So maybe the question is what is your process? But how do you know you've done a good job researching a company?
- [08:31]
Imran
I think you know, that has changed a lot over the years because you've.
- [08:35]
Interviewer
Learned more along the way or because the world's changed.
- [08:38]
Imran
The world's changed, right. So 25 years ago when I was a young analyst to learn a company you have to go to user conference, analyst it, try to talk to their customers, talk to their suppliers, talk to all sorts of different people. It's very labor intensive nowadays. You don't have to go anywhere because thanks to all the social media, all these informations are in public. People are debating about a stock and X people are debating about a stock on Reddit. You know, there's a lot more public information available. You know, SSE is now on the public website. I don't think SEC was as website friendly in 2000 and now you have AI tools. You can ask AI tools to go look at it and ask the agents to look for what you're looking for. So the research has become much more, you know, easier. It's an accessible. And then I think that's why you're seeing the retail, real strong growth of retail investors, you know, because I think there was a divide between institutional investors and retail investors because institutional investors would get access to the management meeting, they would get talked to people like sell set analysts like me, you know, who is talking to the company and following the companies a lot. You know, now you know a person who is financially literate and a lot of people are like that who can actually study and research a company without paying anybody a dime. And there are a lot of really smart people who not in a finance business as a job because they are either not from Northeast because a lot of people in finance are from northeast because you know, and. Or they didn't go to this target school where they recruit or variety of reasons. They were not like I was from Bangladesh. I didn't know about Wall street till in my sophomore year in college. A Lot of people don't get the exposure, but they're very good at what they do and they read a lot of books and they are becoming very good investors. And I think if you look at the recent drawdown we saw in the market in March and April, you know, institutional investors lost out to the retail investors. You know, again this is anecdotal. You know, if you look at institutional investors, you know, basically sold out, but the retail kept buying. At least the data I saw from third party broker dealers and it seems like they were right on catching the recovery. So I think, you know, it's really brought interesting dynamics in the market that small investors, the retail investors, you know, are in many cases quite smart and they're having healthy debate in the social media. So it's actually make the conversation about stock and research much more exciting than it was before because you only had to talk to professional investors who are paying attention to the market.
- [11:32]
Interviewer
Do you think they're smarter? Do you just think they have a higher risk tolerance than in previous generations?
- [11:38]
Imran
I think both. I think they're smart because that technology native, right. Because if you look at who got the crypto right, you know, it's not a lot of big institution, a lot of the small people, individuals, you know, so they're technology savvy. So they know, you know, I think I look at it why I was good at Internet early days because in 2001 I was 24 years old, I was digitally native. You know, I was using Google, you know, a lot of people were not using Google. Yeah. Now all this new digital product that's coming up, these are young people, they, you know, are more technology savvy and so they understand this company is better than a lot of other people.
- [12:21]
Interviewer
Okay. You've been covering call it the Internet and technology since the early 2000s. And one thing our mutual friend Fernando just talked about was you probably understand the inner workings of this industry as well as anybody. Okay, the 2001 bust, maybe we could characterize that as these businesses that weren't really making any money. There was a big dream being sold and so they pretty much went out of business because they really weren't creating a ton of value at that point. We're now 25 years later. Are there any similarities to what's going on in the world today that you could go back and say these are similar to 2001 as it relates to AI or some of these breakthrough technologies where you could see mass of bubbles forming?
- [13:08]
Imran
I fundamentally believe there's always a bubble somewhere and there's always a bubble bursting somewhere. The reality in the market is people always get excited than they should be and people always get disappointed, you know, faster than they should be. I, I also think there is a lot of fomo, you know, fear of missing out in the market. You see something going up, you people chase it, you see something going down, people get scared and then dump it. That's the human nature. If I look at last 25 years and also last six and a half years, me managing money, I think what makes you a great investor, obviously your stock picking, but also your stomach and your conviction, testing your conviction, I would say, because sometimes you are right, you might be a little early or it takes a little bit longer to your stomach cases to play out. So having strong conviction is really, really important. But I think, you know, to answer your question, you know, I think there are bubble now also happening. I think a lot of stocks are, you know, people thinking about future and they're getting overexcited about the future. The thing is that that's anything that's 10 years, 15 years out, you know, or even five to 10 years out. In technology it's very, very difficult to predict what's going to happen, you know, 10 years from now, you know, and maybe you might be right saying that hey, there will be more people going to use Internet, you know, that was my thesis in 2000. In 2010 then in 2000. Yeah, of course I'm right. But the companies that were benefited by that were completely different companies than I thought that would be in 2001. Right. So here we're sitting here, for example, AI we're talking about AI. AI will be a fundamental shirt. It's the fourth industrial revolution and I think that is accurate. AI will be incredibly, it will change our life forever and we're going to leave a completely different world that we are used to 10, 15 years from now. It's like thinking about, I was in a dinner last night and this gentleman was talking about how life was different in 2000 when cell phone was not prevailing and how camera phone changed the life. And so I think, you know, 15, 20 years, you know, the world will be completely different. You know, we like, you know, we'll see things that, you know, we probably can envision like self driving cars and lots of other things. More people probably going to go to space and all sorts of good stuff. But who will be the winner? It's very hard to say sitting here, you know. So I think, you know, there are a lot of excitement happens about this Future potential on few companies. And that creates bubble. And so you gotta be careful, right? Not everybody gonna win a blue winner. And, and you gotta figure out. And so that's how the boom and bust cycle gets created.
- [15:54]
Podcast Host
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- [17:11]
Interviewer
So when you think about AI, do you think about investing it through a, through a lens of how AI could make for example Tesla a better company? And that's kind of your bet on AI is that Tesla has massive tailwinds if they get self driving cars. Right. Or do you think about it more from investing in companies like Nvidia or OpenAI or companies that are directly kind of building the products that make AI happen, if that makes sense.
- [17:41]
Imran
Yeah, I think the value creation of AI would be many, many places, right? People who are making it happen, people who are making chips, people who are building application, people who are building hardware, devices. I think the way I think about it is that one what is the opportunity. And then you have to think about, okay, who is going to be winner at that opportunities. And then the third, you have to think about it, how much you are willing to pay for the risk that this company may or may not be able to execute. Right. Because execution is key. Right. You can have the best idea in the world. If you cannot execute, it will not be great. So as a public market investors, you are sitting on a back seat, right? You are an observer of what's happening. So without the management team will execute or somebody will outsmart, then you just cannot predict that. So you have to taking the risk. And so you have to think about it that yeah, while I believe in AI, few things I don't cannot predict right timing, you know, between 10 years and 20 years, it's a long, you know, massive difference in your irr, right. What's your investment rate of return is. You cannot predict exactly who is going to be the winner and how that's going to play out. So I think be sensitive about the valuation. How much you're willing to pay for it is incredibly important. And then the other thing I love is, I like to call it AI arbitrage because I think if you look at what makes an AI business successful is you need a lot of data, you need a lot of distribution. You can have the, like this podcast could be world's best podcast, but if we don't have the distribution, you know, nobody will hear about it, right? So you need to have a good product, right? Also you need to have a good distribution and you need to have a good data. So. So there are a lot of companies that are sitting on a lot of data. There are a lot of companies who has this great distribution and maybe they're building the product or they should be building a product. Those are, I love those kind of ideas, you know, because. Because that potentially can create, I call it AI algorithm.
- [19:56]
Interviewer
Do you think there is a further battle and maybe I'm getting a little bit ahead of where I wanted to start on as it relates to China. But when you think of things like Deep Seek, is there two different games being played or is there an unfair advantage that America has over China or China has over America in this kind of race to AI?
- [20:15]
Imran
I think China and US are very competitive, right. I think both countries has incredible talent group, massive talent group, right.
- [20:23]
Interviewer
Whose is better?
- [20:25]
Imran
I think, I don't know. I think the US has better universities, but China has, but US has more bigger university. I think our capital system is incredibly beneficiary because we reward success. We have less government, you know, oversight on those kind of things. But then on the China's case, you know, you know, I think not to get too political, I think our education system is probably lacking high school and middle school on a STEM site, you know, and you know, I grew up in a third world country, you know, grade matters, you know, and you know, now we are, we're trying to be less focused on grade and more focused on other stuff. You know, I think that's probably not. If you want to build the best engineers, you got to build best, you know, like you have to be best at messtep. So I think academic, rigorous, you know, in the country is very, very important. And you cannot compromise that. And I think, look, all the other things that we care about, they're important. It's not like they're not important, but it cannot be zero sum game, you know, so that's one area. So I think that were Chinese on the stamps, all these things are doing really, really well. So. So I think, I don't know if we can say good or bad, you know, but. But I think China will be very, very competitive, right? And compared to like a lot of the other countries. And they also have a big domestic market to support it, which also helped them. So. But you know, I think US has competitive advantage, in my opinion at this point, because we have the chips that they don't, you know, we have the capital system that they don't. So I'm a big believer in America and I think ultimately US will win, but China want to be a formidable competitor. And it's not about winning and losing. They're going to be a big player in this space in AI and honestly that will probably make us better.
- [22:16]
Interviewer
Do you think there's a different set of goals or is it just like you said, it's not winning and losing, but do you think we have different goals than they do, or they have different goals than we do, or we're both kind of fighting for the same thing?
- [22:28]
Imran
So I think AI is all about productivity improvement. And if you can improve productivity, that will drive GDP growth, you know, so that's one big area. I think both countries want that. China probably on top of both China and US, it's also going to be a very important play for defense. I think AI will be a very, very important play for defense. So that's obviously very important for the United States and not yet China feels that way. And the other thing hopefully we're not going to see in the Western world, but probably going to happen in China. The way they use the digital to create surveillance of the population, AI probably going to create more surveillance of their population, and that's probably not a great thing, but hopefully that that doesn't become the case in the Western world. Can.
- [23:17]
Interviewer
Can you tell me a story? You. You've said two things that, that lead me to want to talk about the Alibaba ipo and then we'll tie it back to China. But can you just describe to me or tell me the story of kind of how you got to know Joe and how you got to working on what became the world's largest IPO at the time. Alibaba.
- [23:36]
Imran
Yeah. You know, China was obviously, you know, post WTO was really opening up to the Western world, and the country was growing incredibly fast. And there are a lot of young people. You know, 30 years ago, I got really excited about China because the Internet was all about having a lot of number of people and a lot of microtransactions. Right. If you have a large country with a lot of people, a lot of young people who are adopting digital and they're doing microtransactions, you know, you will generate a lot of revenue that are going to be a bigger revenue. Like, listen, I don't think in 2000, I thought the Internet, what it would become today, right. I didn't realize that six or seven companies will represent half of the nasdaq. Right? But. But we knew it's going to be big. How big? We didn't. I don't. I don't think anybody realized that. So I was like, okay, which other country has, like, obviously us Was growing really fast. Which other country? And we saw China was growing really fast, so we started going there. And the other thing was the US Companies were going to China at that time. Yahoo went there. Ebay went there. Amazon, I think, also went there. So, you know, given it's such a big market and I was covering those stocks, so I went there. So in 2005, I think I went to China, took a group of investors, and we met Joe at that time, I think Alibaba was doing 80 or $90 million revenue at that time, was valued at $4 billion market cap because of Yahoo. They just did a deal with Yahoo, and everybody was saying, wow, they're paying like 50 times revenue multiple. But he's a great guy, very thoughtful, you know, and that's how we met him for the first time.
- [25:13]
Interviewer
And did he, after that meeting, invite you to work on the. The ipo, or was that just a relationship that built? Or is that just where you were at Credit Suisse and it just so happened to fall in your lap?
- [25:24]
Imran
No, no, that's that relationship builder, you know. And, you know, the interesting thing is at that time, all these Chinese founders, you know, they were. And I'm sure it's even today, you know, they are very mesmerized by Silicon Valley innovation. They're very envious of it. And so they would read all the sell side research to report. I don't know if they do it now, but at that time there's not much research available on Internet. If you want to learn about Google and Yahoo, you have to read Goldman research, JP Morgan research, Gary Swiss research. Going back to my earlier point, how the world has changed and the research was just not available. So they would read my reports and so we would sometimes time to talk about it and try to learn what's going on in their business. And so in 2010 he called me up and said, hey, I really like how you think about the world. Would you consider go become a banker? Because then maybe you can help us do some transactions and things like that. You know, to an analyst who can't really work with you. So that's how I end up going to banking and ultimately they became one of my clients.
- [26:28]
Interviewer
Is China as investable today as it was back then or have things changed? Like if you were doing the Alibaba IPO today, would it be radically different just based on where we are geopolitically and just kind of how China's evolved?
- [26:42]
Imran
Yeah, for sure. China always had the risk, right? They had this VIE structure. People who don't know when an investor is buying at Chinese stocks, oftentimes you're not buying the company, you're buying a Cayman island company who owns 100% entity of the Chinese company. Because the Chinese digital licensing rights, those are not allowed to sell to foreign investors. So there's always the risk of the VIE structure for these Chinese companies. And some of the VI structures are better than other vie structures. And you have to Read through the S1 document on things like that. So there's always a risk but you know, but there was always that, you know what? Chinese government will always protect the international investors interest. They will not do something that is so arbitrary that could potentially impact investors trust investing in their business. I think at the end of the day investment I always tell about it when somebody give you money, they give you the trust. And it takes a long time to build a trust. But when you break the trust, it's very hard to recoup that trust. And so they built that trust. But I think over the last five years what happened in many different instinct, the way the decisions were made at least that was very opaque to the foreign investors. So I think rightfully a lot of foreign investors lost trust on the Chinese government that do they have the interest to protect foreign investors. And so that made the investment challenging itself. And then obviously on top of that you have the geopolitical risk that is incredibly heightened now than it was 15 years ago.
- [28:27]
Interviewer
Knowing what you know about China, do you have any thesis on how this plays out or how this even maybe from an investment standpoint, do we end up on solid ground with China? Is this prolonged? Is this a longer thing for someone that just knows the inner workings of China as well as you do? How do you think about it?
- [28:45]
Imran
Yeah, like, I don't know if I know inner workings that well. I know the companies, but I don't know their government at all, you know, so it's kind of some. By any means, I'm the expert of the CCP or Chinese government or Chinese foreign policy. So it's kind of hard for me to answer the questions. I. I know the businesses well, how those businesses work. But, you know, the risk with those businesses is that that was not, you know, at least as profound 15 years ago that, you know, I don't think you can be completely sure that when you invest in Chinese businesses, you know, your rights will be protected by. It was protected 15 years ago. You know, there are at least unwritten rules that, you know, the rules will be not that arbitrary, you know, or as opaque. And then the second is, obviously it is now much more clear and much more in people's forefront of their mind than it was 20 years ago that China is a much more adversary relationship between other states than it was 15, 20 years ago. And so combination of those, it makes it very difficult. I don't see anything changing anytime soon. So I always say of the investment that you always have to think about what futures look like, but you also have to understand the future changes very quickly. So you have to have an open mind about it. Sometimes. Big overconfident about the future, you know, could destroy your performance significantly.
- [30:06]
Interviewer
Is the entrepreneurial spirit, though, kind of alive and well in China from knowing the businesses and knowing the founders, or has it been kind of, you know, again, these are headline things. But I think of Alibaba, I think of Jack Ma and kind of what happened to him, or I don't even really know what happened to him. I know he just kind of disappeared, but that seemed to send us. That would send a signal to the rest of the country that entrepreneurship's great up until a certain point.
- [30:32]
Imran
Yeah, I would think so. Right. I haven't been to China. Geez. For six years because it's a less of a focus for the reasons I kind of identified to. I would have to think so. Right. You know, I think, you know, I'm a big believer over government regulations is not good for a sector to go, you know, So I think, you know, it cannot be good for the entrepreneurship. You know that if your success is, you know, if you're successful and if you speak up or if you're trying to say things that, you know, the consequences is that harsh?
- [31:06]
Interviewer
All right, so you leave Credit Suisse and you go and you have a. At some point along the way, Evan Spiegel from SNAP calls up and says, imran, we need to have a meeting or something of that nature. Can you give any color to what you guys talked about the first time you met and what kind of the vision and the goal is he set that attracted you to snap?
- [31:28]
Imran
Yeah, so it's funny story, I got an email to go meet Evan And I was 37 years old, you know, Alibaba went public, I believe, third week of September. And then a week later I got an email to meet with Evan and I was 37. This is 2014. I was not using SNAP. I don't think anybody at my age were using Snap. Anybody if you're using Snap was probably another question. It was a question of behavior. But I heard about Snap, obviously it was in the paper all the time and it's very popular. So I remember I got the email and I was in a taxi going to office. And so I went to the office and asked all the first year and second year analysts. So these are the people, right, just graduated from college, they said, hey, do you guys use Snapchat? And 100% of the first year and second year analysts raised hand, said, yes, we use Snapchat. I was like, wow, 100% of. And these are smart kids, right? Graduated from top schools, coming to investment banking are using the product. There must be something to it. So I called them up and said, hey, show me how to use the product. You know, just a messaging app and people would send pictures. But you know, in a consumer, it's really hard to build a product that has that kind of vitality. So when I went to Evan, you know, I think what I was really impressed by him was how mature he was. Right? He was 24 years old at that time. We have 13 years age gap. And he was incredibly mature for a young founder and how thoughtful he was. And he had a lot of great insights, right? To build a consumer product, you need an incredible insight where the consumer, you know, consumer product is really, really hard. Right? Because if we built a B2B product, you can go to a customer and so, hey, do you want to take this Product, what it needs to happen to have this product, you know, and you get one or two or three customers and then you can scale that. But a consumer product, you have no idea whether it's going to work or not. So you have to have an incredible insight what consumers will like or not like. And you know, I remember Evan liked to walk and we went for a walk and he walked really fast and under the look, heavier. So I worked slow. So it was kind of hard. But it was pretty clear that he had incredible insight and understanding of his generation and the consumer insight. And that is very, very rare. And it's really, really hard to find a product with a great product mind like him. And then so that's really attracting and that's really. Let me be joined it.
- [34:02]
Interviewer
Okay, this is a dumb question, but. And this is so you could say he had a credible in customer insight. Was his customer insight that young people love sending disappearing messages or was there something he said that you recall that was like he really gets. It was. It had to have been way deeper than that at that point.
- [34:21]
Imran
His insight was that the generation of people who grew up with Facebook, they understood the consequence of Facebook. So you post something, it never goes away and ultimately it can harm you. So his insight was that you need a communication method that you can. It's not forever, not everyday life has to be perfect. So Facebook is at that time Instagram was not there. Facebook was. Facebook is your bragging platform, which kind of where Instagram is, you know, or Snap is your everyday platform that you can talk. So that was one insight. His second insight was Facebook is for your friend that you met once in your life or twice in your life. But Snap is for your closest friend. You know, the number he showed was that average Snapchat users at that time opening the app 24 times a day. So that was a very interesting insight. Third, his big insight was that the communication because of that time, remember you and I'm assuming your age, so forgive me, but you and I grew up in a pre cell phone era and then the cell phone came along. That's not the camera phone right now. This is. You are meeting a guy in 2014. He is 24 years old. He grew up in a world, you know, when Ihon came out when he was 17 and he grew up in LA, which is more people are adopting that. So he understood the power of camera on the phone and how that would change the communication, the value of the video and the messaging. That was not so obvious either, you know, so those are Some of the insight that he had that was really, really interesting, you know, that really choked this, you know, this product creation.
- [36:12]
Interviewer
So you go on that walk or you, you meet that time, was it how, how quickly between then and you actually taking a role there? Was it pretty quickly thereafter or was it a lot of back and forth?
- [36:24]
Imran
Evan moves very quickly. But, you know, as soon as I got out of the meeting, I called my wife and said, hey, maybe I'll take this Snapchat job. It sounds super interesting. I think you'll be offering a job and I think I'll take it, you know, and my wife was like, whatever. Why are you moving to la? You know, because we're living in New York. Yeah, no, it happened very quickly, I think within a month, you know, because without. We got the email end of September, I think I met him sometimes in mid October and he gave me an offer by mid November. Yeah. And then I joined.
- [36:57]
Interviewer
Okay, and what was the job? What did you have to do to be successful there?
- [37:01]
Imran
Yeah, so that was a great, you know, my official title was chief strategy Officer. And I was like, what is a chief strategy officer does in a 50 or 60 people company? You know, I, I, you know, it's interesting. My title doesn't really reflect what I did, you know, I, at the beginning, you know, my first role job was to go. We had to raise some money from the company. We raised like around $1.8 billion at that point. You know, in January 20, 2015, we had zero revenue. So I was responsible for growing our revenue. So I ran all revenue and revenue product because you have to build that, you know, what the ad product will look like. You know, I would like to say that with Evan's direction, we build the ad product that is now the standard. Right? Because in 2015, if you had ad product where, you know, on your mobile phone, those horizontal ad creative that you see on YouTube where, you know, if you're holding the phone, you know, you'd see blank space at the top, blank space at the bottom. And everyone said, why does the ad unit has to be like that? Because when people take videos, that's a full screen. The ad needs to be full screen. So we had to create those ad unit and I had to go convince the, you know, Madison Avenue that that is the right ad unit, you know, and it was a tough one, you know, because advertisers don't want to do extra work. But, you know, so then we ran all, I ran all revenue, revenue product, revenue partnerships, overall, company partnership strategy, hr, real Estate, all sorts of stuff. Yeah. So it was quite a run. And you know, we went from zero revenue and then I think the quarter I Left in the Q4 of 2018, we did $400 million quarterly revenue. So 1.6 billion annualized revenue.
- [38:45]
Interviewer
Can you still sell ads? The same today after Apple's update is that. I know a lot of it was talked about, you know, Facebook was having trouble tracking people the way they used to, so ad sales were. It wasn't as appealing. Is that the same case for all the consumer apps?
- [39:01]
Imran
Yes, I think that is still the same way. You know, there was the tracking that changed, but it's still the same way.
- [39:09]
Interviewer
Why did you decide to leave and start your own firm? Was it you gone public? Your job was kind of done by that point?
- [39:15]
Imran
No, I love, you know, I feel like after being an analyst, I was an analyst expert, as you pointed out. And I love stock. I always love stock. I always wanted to start a hedge fund and I never just had the time right. Because 2008 was global financial crisis. And as we kept coming out of the global financial crisis, I ended up becoming a banker. And then after the banking I was going to go start the fund. But then Evan came along and, and it's really interesting and I was talking to Joe Child, you know, my client, about the Snap job offer and he. And I said, you know, I really want to go become a investor. So I don't know if I want to like, should I take it or should I go become an investors? And he said, listen, you should go take the job because it'll make you a better investors. And so that, that. So I talked to a lot of other people also. And so I held on studying the fund for four years. So but after that I feel like I owe it to myself to go start a fund. And I like investing, I like stock and you know, Snap success gave me some financial freedom. So I'm like, you know what, let's just go do it.
- [40:26]
Interviewer
Have you structured your fund differently from most funds? Do you have different incentives or different time horizons or is it a typical type of hedge fund structure?
- [40:35]
Imran
No, I think one, we are long term investors. So I'm very upfront with the market that hey, we're a long term investor. So what are those market neutral funds of the citadels of the world, which I have a problem with because I think, listen, those are great but to me those feels like a fixed income substitute. You're going to market neutral funds or 4%, you get 8, 9%. But if you look at the technology world, the amount of innovation is happening, you got to be long term and it might comes with a little bit higher volatility but you can generate so much higher return, you know and I run a long. So I'm a long term investors and and I also believe that a hedge fund manager should get paid unless they beat some sort of hurdle rate. And so we do have those kind.
- [41:19]
Interviewer
Of stock you've mentioned you have 30 to 40 kind of check marks that you'll look for. We don't have to go through all 30 or 40. Are there one or two that stand out? That's like hey, this is something I look for that most people don't. Maybe that's proprietary, you can't share it. Or is there something that comes to mind that you must check that maybe a lot of people don't think about?
- [41:39]
Imran
No. So one gross margins thing we talked about. I love companies that have strong pricing power and raise prices when I, I love when the competition decreases. I love when the revenue growth accelerate because it's really, really hard for a mature business. Revenue growth acceleration. I love new product upgrade cycle because if you have a big install base and a cleaning product upgrade cycle, your salesforce has more product to sell. I always say always invest with government. Government is the world's biggest monopoly. So if Fed is cutting interest rate, that's good. They want to stimulate the economy. Invest with government. If the Fed is saying the economy is too hot, you don't need to be trying to be questioning the Fed or I think the market sold the same thing. When President Trump was saying that hey, we have to have a hundred years view. It's fine to have a recession because we're trying to turn things out. We saw what happened to the market. So government is the world's biggest monopoly, so you gotta invest with government.
- [42:32]
Interviewer
What's the world's biggest monopoly telling us? Right now it's a bit chaotic right now.
- [42:37]
Imran
It's a bit chaotic now. But I think, you know, they clearly. I don't know if the intention has changed or not. It always intention. At least the communication has changed. That's definitely much more pro market and pro market sensitive, which is a good thing, you know, and I think that's what you saw. The market has recovered, got a bit.
- [42:55]
Interviewer
All right, I want to go through a few things that you've said just on investing that I thought just was interesting. You said having a good relationship with a management team is a terrible thing or not a good thing is that because you can get drawn to bias 100%.
- [43:08]
Imran
We all have biases, right? And I always talk about it, right. Think about it. And by the way, I want to correct, it's not good relationship with management. Of course you should have a good relationship with management. It's like talking to management all the time to invest is a terrible idea, right? Because think about it, who are the founders? You know, people who are incredibly charismatic. Because nobody gives a young 22 years old money if they're not charismatic. You have to be charismatic to age 24, 25, 26, 27, 30 to raise money from bunch of investors who are always worried about losing money. Right? So you are incredibly charismatic, incredibly convincing about your vision. Who becomes a CEO again, somebody who's very charismatic, who can, you know. So when you go hang out with those people and keep hearing their person, you will be influenced by their charisma and you will be influenced by their convincing ability. So you obviously you want to spend time with them and you want to have a good relationship with understand to understand their vision. But you really have to understand the vision versus execution as a completely different thing. If you look at Hollywood, you know, I'm in LA today, everybody in Hollywood has a movie script. But you know, Forrest Gump is my favorite movie make once a decade, right? So great movies don't need not only a good idea, you need a great team, you need great execution, you need great timing. You know, a lot of things has to come together. So you need to have a good relationship with management team. That's a, you need to, you know, once in a while talk to them. But spending too, too many times time listening to the management team is the fastest way to lose money. So I actually don't really like, like I, I know I never really request one on one meeting with any management team. I, I like listening what they're saying publicly. I like going to the group meetings, you know, conferences, what they're saying, you know, as opposed to. Because I don't want their charisma rubbing.
- [45:04]
Interviewer
At me on hiring teams. Mercenaries or missionaries, what are the difference and why does it matter?
- [45:12]
Imran
Definitely missionaries. Because the thing is that life is not linear. It's never linear. You look at, I wish life was linear. I had so many hard years. And you need people who really love the mission of the business. Like the way you want to marry somebody who really likes you. So I think it's really important that people are missionaries about their business, about their ideas and things like that. So I think the problem with mercenaries is they will jump the ship as soon as you hit a bump, you know. So I think having missionaries is important now time to time in some areas mercenaries are helpful, you know, so if you want to move something really fast or you want to have a salesforce, you know, building a salesforce, you know, you drive. But you got to be careful with those mercenaries because one, they will leave you when they hit the bump and number two, they, you also got to make sure those mercenaries have good ethics because nothing can ruin your business when you don't have a good ethical standard. So I'm a big believer of go hire the best missionaries as possible. But you know, listen, if you're building a 10,000 people company, 20,000 people, you gotta end up getting some mercenaries and that's life. But, and you gotta know how to use them and you gotta be careful.
- [46:35]
Interviewer
Mercenaries would tend to be maybe a little more pessimistic also and maybe bring a different attitude to the team. Whereas like, you know, I know like I think sometimes a missionaries like you believe so much in the mission that you're willing to overlook kind of basic blocking and tackling a business and basic rules of business because you're so in love with the mission.
- [46:58]
Imran
Yeah, I agree with that and I think that's why having people who are not completely like who has healthy dose of skepticism emphasize healthy dose of skepticism is a good thing.
- [47:08]
Interviewer
You said the market likes to fool the greatest number of people.
- [47:11]
Imran
Yeah, I don't think it's my line, it's someone else's line that I'm copying but I forgot somebody else's line. Yeah, somebody else said that but. Yes, but that's accurate. I believe that.
- [47:21]
Interviewer
But what does that mean?
- [47:23]
Imran
It means that if everybody believes something that probably not going to happen or.
- [47:30]
Interviewer
If so if everybody believes that rates are going to stay higher for longer right now you think rates possibly could come down.
- [47:37]
Imran
Yes, exactly. You know, or, and, and there's a nuances. If everybody believes that AI going to happen, is it? I actually think it is. But, but it might take longer or shorter. Right. You know, and, or it might be in a different form. So I think the key thing is that one of the reasons is actually. Let me take a step back. One of the reasons is that if everybody believes the same thing, it is more than reflected in the price. So by default it's not everybody is wrong. If everybody believes something, it is by default it is completely reflected on the price. So if anytime some sort of divergence happen, you're going to see a correction and that will make that market Likes to make fool of the greatest number of people. So it's not like everybody's wrong with something. It's everybody is wrong, everybody's believing something. Then that security or that whatever it's a real estate or security, it could be asset, it could be whatever. You know, if everybody believes that one artist is going to crush it, bad art prices going to reflect at a price point that has built in zero risk. And so any kind of times there's any kind of bump things that has zero risk will correct significantly.
- [48:50]
Interviewer
Besides AI, is there anything that's obvious to you right now? Just personal conviction?
- [48:56]
Imran
No, listen, I think, I think AI will happen. It's fundamentally going to change the people and I think I don't even know if everybody believes what I believe on AI so. So I don't know if it market completely likes but yeah, there are areas, you know, I don't think there's a prevailing things. But the rate thing you talked about, but you know, like everybody thought there would be a recession two months ago. Now people think now, you know, so, so it happens time to time. There's no prevailing idea I'm seeing.
- [49:22]
Interviewer
But what do you, you just said something, I have to ask, is there something, what do you believe about AI that maybe everybody else doesn't or is it just more you've studied it, know more about it or do you actually have a different kind of thesis?
- [49:33]
Imran
No, I think average person is probably not thinking about how AI will completely change their life. I think the world in 20 years going to be completely different. How you do work, how you go to office, how everything going to change. You know, how you interact with meetings. And it's not like I know what is going to happen, but you know, like I know a company that's building AI tools that can do this podcast instead of me. So you will have my agent doing this podcast saying the exact same thing. I say it's the way. Exactly. I say, you know, now is it going to happen? I don't know. But there's so much innovation is happening. It's going to be chaotic and sometimes, you know, a lot of exciting things going to come out of it.
- [50:15]
Interviewer
Okay, I want to finish on private versus Public. Do you think that we've gotten too ahead of ourselves in private market investing and there's going to be a swing back to kind of public, more liquid type of investing?
- [50:29]
Imran
I completely agree with that. I've been very vocal about it. One of the things, again, listen, I'm a small potato. Relatively newer investors doing it for Six and a half years. But my observation is talking to a lot of allocators is that there is this big doing to the world that they all want to avoid volatility. So I'm going to go invest in public private market. I'm going to get the same kind of return as a public market, but I don't have the volatility. And that's how the market neutral funds became very big also. But the risk is when everybody start doing the same idea, that good idea becomes a bad idea. So I feel like there's too much money going to cap private. And I already seen that. You know, as a result the power has shifted from investors to founders and God bless them. And the reality is you never want to be in a situation that you are in a relationship, you are in a disadvantageous position. Like I can challenge you when Xai or SpaceX is raising money. Investors have zero power. All the power lies to corporate, you know, and that's in a situation like that, you know, you know, one company, two companies, it might work out. But if thousand companies doing that, the outcome cannot be great. And that's why you are seeing that returns are, you know, like companies are not investors are not getting their capital back. It's taking way longer to get capital back. And the other problem is, you know, if a company stay in a private, the risk goes up significantly because you can predict what's going to happen in three years, four years, five years. But it's very hard to predict what's going to happen 12, 13, 14 years.
- [52:15]
Interviewer
Is the reason why most private companies aren't going public is just because being a public company kind of sucks. Like it's just got a lot of demands on you and extra governance and. Or is there other reasons for it and people need to get comfortable going public quicker?
- [52:28]
Imran
No, those, that's the case. But you know, used to be it was worth going public because you would get liquidity and your valuation was higher. But now it's opposite, right? You go to public, you cannot get sell your stock because of, you know, investors don't like founders selling stock so you can't sell that much. And then the second is you get higher valuation in the private market. So why would you go public, you know, as God bless the founders, right? And you can get the liquidity now through secondaries. You know, all these companies are doing secondaries. And I just think that's not a great place as an investor when you don't have choices. So any kind of investment you at least have to be that you have an equal, like footings with the counterpart and ideally better. Better footings, but at least, you know, at a minimum, equal footings. And I just don't think that's the case in private because there's so much money going to the polymer.
- [53:21]
Interviewer
So what's like if you just had to have a crystal ball, how does this, how does this kind of private super cycle end? People just start allocating money into publics or a lot of these. You know, just the mentality shifts like how do you get out of this cycle and, and kind of normalize it back to where it should be.
- [53:38]
Imran
I think at some point people have to get cash back and if they don't get the cash back, at some point people have to write some of these zombie unicorns down. Right. I think there's 2,000 companies in the US capital market in between NASDAQ and NYC, over 2 billion market cap, something like that. And you have 2,000 private companies over a billion dollar in the venture industry. That doesn't mean take into consideration somebody's building an elevator and his company is earning $100 million EBITDA. That's, you know, that's totally fine, but just in the venture industry has 2,000 of them. Right. So it just doesn't make sense.
- [54:15]
Interviewer
All right, Imran, this was great. Thank you for your time today.
- [54:18]
Imran
Oh, I appreciate it. Thanks. Really enjoyed the conversation.
- [54:21]
Podcast Host
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- [54:31]
Interviewer
If that's what you'd prefer.
- [54:32]
Podcast Host
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