Imran Khan
speaker
171 appearances
1 recordings
1 series
first heard Aug 2024
last heard Aug 2024
Imran Khan’s voice in public audio — every appearance, attributed to the second.
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Appearances
There's a vast amount of wealth is owned by average Americans. So you cannot go to this vast amount of Americans and charge them unrealized cap gain. So then you have to say, okay, that's not the intention. We're going to exclude all these things and And then also asking that, are you setting up a dangerous precedence? Now we are doing that to go after a small group of people.
It sounds very popular that we're going after these 20 people who are ungodly rich. Are we setting up a dangerous precedence? Like now we're going after 20. Now next we're going to go 2,000. Then we're going to go 200,000. Where does it start and where does it end? So I think when you have to think about the policy is that what sometimes feel right could set very dangerous precedents.
And that's what we need to be very, very careful about. What is the unintended consequences of those things?
Listen, I think one of the things that happened with internet, people always underestimate how big these businesses can be. Not for the companies, but how it will change the economy. I think people get too focused on technology cuteness, you know, how cool this tech is. I think what's important is not how cool the tech is. What's important is, is this technology improved productivity or not?
Because at the end of the day, what is a GDP? gdp is number of people who are producing inside your map right in your country so ultimately the higher productivity will drive higher gdp growth so if the technology improved productivity that has incredible an opportunity to unleash value so us gdp is what 25 trillion or something like that or 30 trillion five percent improvement is 1.5 trillion
of economic value creation. So the big question to really ask is that is AI going to create 5%, 10%, 15% productivity improvement in the economy that can unleash so much the value? I would say that's reasonable because how much productivity was created by internet? Definitely more than 5%, 10% to the society.
You have to, because if you don't spend, your business goes to zero. So look at Google versus Yahoo situation. So what happened? Google spent the CapEx, Yahoo didn't. Again, I was an analyst at that time. I was Google's IPO analyst. I covered Yahoo since 2002. It was a heated topic among investors. What Yahoo's lack of spend versus Google's spend?
Yeah, people are loving Yahoo because they don't spend that kind of money. 60% of the EBITDA was translating into cash flow, but Google was spending so much money on CapEx. People just couldn't figure out, like, why is the ROI? But 20 years later, we see the ROI. You know, like when I worked on Google IPO, we had this analyst meeting as part of this IPO. You go meet the CEO.
So there were like 20 analysts from different banks. We went to see Larry, Sergey, Eric Schmidt. And I remember one thing that really stood out. Larry said that the most transformative thing Google did was the AOL deal. Because AOL, they gave them 95% revenue share when AOL search box was powered by Google. AOL search was powered by Google.
The sign and all the Google powered the search on the back. And Google gave them 95% of the rev share. And I think 5% of the companies weren't. And Yahoo walked away from it because saying that this Google is never going to make money. But Larry said that that was the most transformative deal because that put Google on the map. People saw Google name and built Google's brand.
So if you look at AI, current cash cow is obviously cloud because all these guys are using the cloud businesses. And by the way, they're making great money. If you're Amazon, if you're Google, if I were running those businesses, my biggest concern would be now, I know the demand is not a problem, so I should be building it. But the risk I'm taking is that this demand is not sustainable.
Five years later, this demand is going to diminish dramatically. And then I'm going to get stuck with all this capacity I built. And look, that happened with Amazon in 2020. They built massive capacity thinking that the COVID buying patterns is the patterns going to sustain post-COVID. It didn't. And they had huge margins pressure.
So there is more than reasonable chance that this could happen, that we are seeing pretty significant demand. And at some point, demand going to stabilize or flatten. I don't know if it will or not. Only time will say. But that's the risk they are taking. And that's the risk you have to analyze that all my customers who are asking for this demand, do they have the power to pay me in a long term?
On Meta's case, I look at AI, I think people focus too much on LLM, but I think, okay, what are the areas that AI going to unleash value? At least, you know, I'm not the smartest guy. I'm the finance guy. I see humanoid robots. I see self-driving car. I create better recommendation engines. Defense, I think AI gonna play significant role defense. So there's a lot of categories that work.
The LLM is just the browser. It's the entry point to what you want to do. And what Facebook's case, you know, the opportunity or Snapcase and others, the opportunity is, is this AI can help you drive better engagement, better content, better recommendation. You can show less ad and make more money. So that obviously has value.
It's a funny story. You know, I'm an immigrant. I came to this country as an immigrant and I came from Bangladesh and I saw this internet thing is not a US thing. Ultimately, you know, it's going to empower everybody. And so to me, at that point was number of people and what's the revenue per person you can generate on the internet transaction that's going to create your internet economy.
So I was really interested about the global opportunities of these internet companies. So in 2004, I go to China because they have a billion plus people and internet is very nascent. So I took a group of investors, my clients, public market investors to go visit all these Chinese companies. And Alibaba was one of the company, but that was private at that time.
The only reason we wanted to meet with them because Yahoo made that investment and all of my clients were interested in Yahoo. So I met Joe Chai, who's the co-founder and now chairman of Alibaba, in Shanghai. And we really hit it off. And over time, we became friends. And in 2010, I became very bored with my research job. It was the same day, you cover the same companies, talk to the same clients.
I'm like, I need something more to do with my life. And I was like, hey, should I go to move to China? Seems like a lot of happening. My wife was working for L'Oreal. And Joe's like, no, why don't you go become a banker and help these companies? Three days later, he called me, said, hey, can I introduce you to some banks?
And that's how I ended up going to Credit Suisse to run the internet banking. So Joe not only made the introductions, but then also, you know, when I became a banker, he hired me to help buy back 20% of his stake from Yahoo, help finance the transaction. What was that process like? That was a pretty wild M&A. I think it's the day Carol Bartz got fired. You know, Carol Bartz was Yahoo's CEO.
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