Jeff Wang
speaker
190 appearances
1 recordings
1 series
first heard Oct 2024
last heard Oct 2024
Jeff Wang’s voice in public audio — every appearance, attributed to the second.
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I do think there are more threats on Google's business than there have been ever in the company's history. I think Nvidia's price is reasonable if you think it's going to continue to keep going. For us, 70% of our research process is actually upfront on the theme and only 30% on the actual company. You have to be a pirate interpreting a treasure map. We need to sail to the right island.
Now, if we don't sail to the right island, it doesn't really matter which ship you picked. Those are just not good investments.
Oh, thank you so much for having me on the pod. By the way, I did see your tweet the other day about your frustration with folks going on the podcast circuit. This is my first podcast ever, and I don't expect to do them regularly. So I've been listening to your pod for a long time. Sequoia folks have had such good things to say about you. And so I'm super excited to be on.
Yeah. So it sounds like, Harry, you're asking me why I made the decision to join a hedge fund that hadn't even launched yet. Pretty much. So we started SCGE or Sequoia Capital Global Equities in 2009. And it was really hatched actually by Jim Getz originally. So he worked with Michael, Doug, and Ruloff to really get it off the ground.
And I joined a year later in 2010 before we externally launched and raised money from LPs. I think I joined for the same reason that most people join a startup. I believed in the mission, and this was to build a world-class public equities business, partnered with Sequoia Capital, which I believed at the time and still consider to be the best venture capital firm in the world.
And so I joined as an early employee. We had 50 million of internal capital. We now manage about 9 billion of mostly external LP capital, but that internal capital amount is also now about a billion. The portfolio is about two thirds public and then one third private. And that one third private is almost exclusively co-investments with Sequoia.
And so when the SEG opportunity came along, I was super intrigued because it was a chance to go build a public equities business that had true ecosystem advantages in technology. And I believe those advantages would translate into the public markets. I was also encouraged by the support and backing that SCG had from Sequoia's most senior leaders like Jim and Doug and Michael and Ruloff.
On the flip side, though, I was taking a 70% pay cut and there was a real risk of failure, right? Most hedge fund launches don't survive. And so my career prospects, if it failed, wouldn't have looked very good. And so I took the plunge to try to build something special.
Yeah.
The way we short is a bit different from how other hedge funds do it. So we are not looking for frauds. We are not looking for valuation arbitrage. We're looking to further express a disruptive thematic viewpoint that we hold on the long side, albeit on the short side. So it's really important to see these trends early.
And so the view into the private ecosystem is actually quite valuable for that. So for example, if you hold a positive view on SpaceX and Starlink, what does that mean for other satellite businesses? What does that mean for rural telcos? If you are bullish on AI, what does that mean about call centers?
So R-Shorting is really expressing further conviction in the longs, albeit in the other direction.
That's right. I think you would take risk in different formats, right? So if you are... If you are Citadel, if you are another hedge fund that takes a lot of leverage, I do think you need to have low volatility because you're amplifying with, say, 6x leverage. In our model of the world, we don't take a lot of leverage.
And so what we're trying to do is express more of a specific viewpoint with low leverage.
You can take leverage, but then you're taking more volatility. And I just don't think in technology where you already have a lot of beta, you already have a lot of volatility. You don't need to take a lot of leverage, especially because there is the power law.
And even in the public markets, if you get a stock right, there should be a power law that helps you deliver and drive great returns over time without a lot of leverage. It's not that we don't take any, but it's that we take low leverage.
There are definitely moments in time where the markets will say, we used to love growth. We now love value. And if you think about how we are positioned as a fund, it's generally long growth and short value, right? The value companies are in general, the ones that the growth companies are disrupting. So there are moments in time where the markets rotate and that's
typically a function of say rates or maybe macro scares where you want to be in more defensive companies. And that's tough for our portfolio. But that's why I think about performance over the longterm. Those, those rotations are very painful, but they happen in a pretty short period. Let's say it's three months.
We may have a very rough three months, but if I look out over the span of now we've been in business now 15 years, We've had one down year over that 15-year timeframe, and you build your business in a way that you can weather these storms. So one of the key things for us is we partner with an LP base that is long-term oriented. A lot of them, as I mentioned, are Sequoia LPs.
And so they know how we invest. They know our product. They know that technology can be volatile.
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