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Ravi Mehta's avatar

I think you can look at holding companies like IAC and Liberty Media for an example model for what John is proposing -- i.e., companies that have treated consumer Internet growth as partly an exercise in R&D, but with SG&A-based growth playing a major role. Interestingly, many of the consumer Internet companies that have operated in this way are headquartered outside Silicon Valley (MTCH - Dallas, Booking - Amsterdam, IAC - New York, etc.). They have had to take a different approach to capital because they operated outside the Silicon Valley VC ethos.

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Gabriel Schillinger's avatar

Most founders have very little experience in dealing with investment banks on structuring unique financial structures for their companies. As much as I despised working in the "crypto" world, I learned a lot about all of the different financing options, tax optimizations, and how much support/leverage a good banker can give a company. All of these tools have been available for most large industries with historical data backing them up. I don't know if we are there yet for the internet right after covid - but getting close - Vista, ThomaBravo, and KKR's new tech fund are pretty much paving the road for this and I kind of agree with one of the comments that GS is in a position to really dominate here. I feel like the VCs are not as well equipped compared to what GS offers: global govt connections, unique non-equity financing, and a history of offering these products. It would be really nice to see a VC or fintech in the valley pioneer this.

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