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
She got fired. So the new CEO came in. That time we approached Yahoo and said, hey, listen, we're going to buy back 20% of our stake. We're going to pay $14.40, which is, I think, valued at $40 billion. So you're going to get $8 billion or so cash. So that's great for Yahoo. You can return the capital to your shareholders.
At first they didn't, but after a lot of negotiation, we had to come up with the price. And at that time, Yahoo went through a lot of problems themselves. So we bought back the share and then we had to go raise the money, raise the $8 billion to buy back that 20% stake. Was it an easy process? It was difficult in a sense like, you know, getting Yahoo to do anything was tough.
And then raising capital was tough in a sense. There were a couple of issues. In 2012, Facebook went public and the stock literally just went down 40%. It tanked. Yeah. And so when we decided to go raise money from the private market, investors were not interested. Look at Facebook, that went down 40%. I don't want to put Alibaba.
And then also some of the investors were concerned about the whole Ant financial issue, the corporate governance. So the way we solve it, this was one of the most creative transactions, and I'm very proud of it because all bankers were against me doing that. Basically, Joe and I talked about it, and he agreed on it, obviously. I cannot do it. I said, the whole issue is the lockup, right?
Because all these investors were concerned that, hey, we bought the Facebook shares. Facebook went public. I have six months lockup, and the stock went down 40%. I don't want that situation. We looked at Alibaba. I said that, listen, this is going to be a $25 billion transaction. And the amount we are raising, let's say $8 billion transaction, $4 billion is dead. So that's not a problem.
$2.5 billion is a common stock that came from the Chinese investors. So that was not a problem. So the really issue is we're raising $1.75 billion from global investors who are concerned because of the Facebook situation. So we looked at it and said, look, it's going to be a $25 billion public IPO.
Who cares if we sell 8%, 9% of that offering to a group of investors who we know will have to buy more at the IPO and give them no lockup? Because we know we can go to Fidelity saying, hey, I'm going to give you $200 million. But by the way, this company is going to go public at a $25 billion offer.
offering the offering size is 25 billion the market cap going to be much higher based on the trajectory you probably want to buy two and a half billion dollar and there's no way you're going to get two and a half billion dollar allocation so this is your way to get two billion 200 million and if you're worried that's not going to go down like facebook there's no lockup you can sell the same day
But we're comfortable because we knew that a company that size, they will have to buy it or at the post-market, even with the IPO allocation. So that lockup, while it was incredibly valuable to investors who bought that security, had zero cost to the company. So those are very creative transactions. What were the biggest lessons for you from being part of that?
The biggest lesson is simplify the story. So one of the things that Jack and Joe did, they simplify the stories, right? Because, you know, the challenge for the global investors is they don't use Alibaba. They don't know Alibaba, like what is Taobao, Tmall, all this thing is, right? But, you know, the story was positioned very simply. It's the China consumer play.
And they are the eBay plus Amazon plus PayPal of China. You know, one of the biggest thing that a lot of the founders makes or CEOs makes, they use a lot of jargon. If it takes a portfolio manager more than 30 seconds to understand the story, they will never going to work, do work on that. You got to keep it story simple so that it gets you interested and then they will do the work.
Nobody does the work based on that narrative. I don't think anybody bought the stock because it's a China consumer play and things like that. But it got people interested to do the work. So I think the simplifying story is important.
what would you say the challenge in china is again what drive valuation consistency and predictability so right now there is no predictability on regulations so it's hard to invest this is why i think that regulations could be very challenging primarily when there is no predictability so i think it's hard you know till we have more visibility what's going to happen with the regulations what can happen and that those things will be more of a consistent pattern
He has deep understanding about his customers, very, very deep understanding of his customers. And that makes him so special. And then the second and third thing, I think these are actually true for every great CEO. One, they understand their customers. Number two, they have deep conviction. Because the reality is return is a function of quote unquote risk.
That everybody thinks it's risky, but you don't because you have the conviction. And that's why you can underwrite that. And the most people don't do it makes you special. So Evan from a day one had a very deep conviction on his product. And, you know, like the lenses acquisitions that we acquired, you know, Evan looked at the product and he knew exactly how people are going to use the product.
We finance guys. I'm like, why are you paying so much money for this deal? But he had a very good hike or with maps.
or with stories everybody was like why even creating stories isn't that like anti you were trying to do but he had a deep understanding how his consumers how his customers use the product and he was able to build a product and he has a very deep conviction on it and the other third thing i think what makes great founder is your pain tolerance it's true for founders it's true for investors it's true for a lot of people because the reality is it rarely going to be right overnight
When you make a bet, primarily when you're running a business, it takes time for your thesis to play out. And during that time, you take a lot of pain because everybody talks negative about you. You're doing wrong things. But he is a wonderful human being. He's a great friend. And I'm very grateful that he took a chance on me.
One of the things, I think we grew too fast too quickly. I think, you know, if you look at in January 1, we did zero revenue, 2015. Q4 of 2018, so four years later, our annualized revenue was 1.6 billion. Today, Snap will do what, 5 billion plus minus revenue. So in 14, they had almost no revenue. So in 10 years, their revenue went from zero to 5 billion plus.
So the challenge is, and this is actually a good lesson for all the CEOs, and again, I think, I don't think I wish, but that it created a lot of stress. But the thing is that when you grow really fast, a couple of things happen. Expectation goes out of hand. Everybody always expect you to grow that way.
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