The Liquidity Event Podcast: Episode 99

 

Episode 99: My Big Fat Greek IPO

Shane and AJ are extra silly today. Shane's in Mexico and AJ's in London! We've got lots of good stuff for you on today's show. Including but not limited to the office mandate people are getting desperate about, the founders of Bitwise misleading investors, salary transparency, and finally an IPO we're actually excited about. Founded by three friends with Greek roots, fast-casual Mediterranean restaurant chain Cava made its stunning public debut last week and investors are excited. Is this the end of the IPO ice age? We shall see.

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Airdate: 06/23/2023

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Presenter:

This podcast is for informational purposes only, and should not be considered tax or investment advice.

Welcome to The Liquidity Event, a show about all things personal finance, with a laser focus on equity compensation. Hosted by AJ and Shane of Brooklyn FI, each episode will take you through the week's news on Fintech, IPOs, SPACs, founder wins and fails, Crypto, and whatever else these nerds think is interesting. Learn more, and subscribe today at brooklynfi.com.

Shane:

Hello, and welcome to "The Liquidity Event." We are your hosts, Shane...

AJ:

And I'm AJ.

Shane:

This is episode number 99. One more, AJ, until we hit the big triple digit here.

AJ:

Ooh, boy.

Shane:

Recorded on June 21st, 2023, airing on June 23rd, also 2023. This week we've got, White House is in your face with some AI prompters. We have an IPO. We have an IPO, people. It's been 14 long, cold years of famine here.

AJ:

That was the IPO market?

Shane:

Yes.

AJ:

Fine.

Shane:

I thought you were doing the Benny Hill song there for a second. What else do we have here? We've got some fair pay transparency, and crypto is coming to reality. AJ, how have you been?

AJ:

I've been great, man. How have you been?

Shane:

Also good. I am currently in Mexico, but in a remote part of Mexico, at surf camp.

AJ:

A remote part de Mexico?

Shane:

[inaudible 00:01:38]. Yeah. No, no, it's been good. I already surfed this morning. We're recording at 10:00 AM. I've already been in [inaudible 00:01:46]. I caught some nice waves this morning. Yesterday was great, too. This shit is hard on your body, man. I've taken a few dings to the head over the past... Few more dings to the head.

AJ:

So Shane is currently concussed folks, so please forgive his opinions. [inaudible 00:02:03].

Shane:

Oh, man.

AJ:

No, I'm so psyched for you. You're like living the life, right? This is like the remote dream, right? Work east coast hours, do some surfing in the morning, hop on for seven or eight hours, do some podcast recording with your business partner. We have some strategy meetings later maybe that I might not go to, because I want to leave early because I'm on a totally different time zone in London, but I feel like we're making it work. This is the founder, five years in. This is the life. Congrats to us.

Shane:

And we've got some, we got people all over the world. The sun never sets on the Brooklyn FI.

AJ:

Brooklyn FI.

Shane:

Empire. Keep calm-

AJ:

That's true.

Shane:

-and zoom on.

AJ:

We are eight hours apart, which makes scheduling a meeting with the two of us, literally impossible.

Shane:

Hey, [inaudible 00:02:53]. I'll be in Europe this summer though. Are you going to be? We're going to be there, I think, at the same time.

AJ:

For a hot sec.

Shane:

I have no idea. Who cares? Actually I care. We need to do a Parisian podcast.

AJ:

A Parisian podcast.

Shane:

What are we doing for our hundredth episode? Should we-

AJ:

I don't know.

Shane:

-give the listeners a preview?

AJ:

We haven't discussed yet, so...

Shane:

You should give me a preview, or I should give you a preview.

AJ:

Ideas have been batted around, but no plans have been made.

Shane:

No commitments.

AJ:

So listener, it's going to be awesome. We're going to have plenty of time to prepare, so don't miss number 100. It'll be special as you know. We will not fail you, listener.

Shane:

It's going to be fire. What are you doing in London? You're with your husband?

AJ:

Yeah, I'm just hanging out, honestly. My husband comes here four times a year for work, because he works for a British company and I love London so much. So I tag along. I've got great wifi and a great desk and comfy office chair with a high back. So that's-

Shane:

What is that?

AJ:

It's just like a...

Shane:

Dear listener, you can't see this, but it looks like a Washington Monument, a gray version of the... Very phallic chair back there.

AJ:

It's like an obelisk shaped modernist desk chair, but it's actually quite comfortable. So usually in previous work from hotel stays I've caused a pinched nerve in my back, but not here. This is super comfy. I'm living the life here.

Shane:

That is London in a nutshell for me: expensive, modern, and uncomfortable.

AJ:

Dude, you hate London. London is one of the greatest cities in the world. So you've done London incorrectly is my hypothesis.

Shane:

The only time I've done London, I was poor. So yeah, on tour with my buddy's band.

AJ:

Right.

Shane:

Yeah. I need to go back. Maybe I should go back as an adult.

AJ:

Yeah, money will make you like the city a little bit more. I do have a complaint about London or more the UK in general.

Shane:

Oh, we go here.

AJ:

Cookies. Too many cookies. When you go on any damn website here it's like, "Do you want some cookies? Accept, reject." Cannot get past that. I've signed into everything, I'm still bombarded with. Yes, I don't care. Yes, track me on the internet. I don't care. Where is the universal, I accept all of your cookies. I will eat them. I'm frustrated. I'm not using the internet any more than I have to here because of that. Rant over.

Shane:

Well that's GDPR, right? They have to ask you for permission to track you.

AJ:

So annoying.

Shane:

So that's the quintessential America versus Europe. In America, the default is we own you and it's super convenient.

AJ:

We own you.

Shane:

We get all own your data.

AJ:

Yeah, please. So great.

Shane:

As you get to in Europe, you get to say no, but you have to say no over the consent issue in Europe, Jesus Christ.

AJ:

I'm trying to find out if this restaurant serves wine or not. Yes, no. Yes.

Shane:

When do you need to consent to disclosure of your social security number? If you want to know if this wine-

AJ:

Yes, take my social security number. I want to know about your wine list. That's going to have a bigger impact on my life right now than you having my social security number, honestly.

Shane:

I would thought that if that was actually... That's the exchange in 2025 when we've just totally sold our souls.

AJ:

This is like whatever.

Shane:

We're like, fuck it, whatever.

AJ:

Fuck it. Whatever. It's only what? 11% of our income in retirement, so who cares?

Shane:

Yeah. What else do you need? You need 10% of my 401k and perpetuity. Just let me know if the restaurant is open at 11.

AJ:

Yeah, really that's all.

Shane:

Kitchen's closing soon. You can have 5% of Brooklyn FI, just, I'm so hungry,

AJ:

But I really, really... That burger on your website looks so good. It's quick text to me with a burger. I'm like, yeah, it's fine.

Shane:

You got it. You been reading anything?

AJ:

Have I been reading anything? I was flirting with this new Salman Rushdie novel, which I can't think of the title. The problem with the Kindle is that I never remember the titles of the books I'm reading, because you just see it flashed on that page. And then I only see the text. The new Salman Rushdie novel. Pretty good. A little... Not that great, because I've been reading it for a month, so no. What about you?

Shane:

Well, this is actually, good reminder. I forgot. RIP, I've been meaning to read the new Cormac McCarthy books for a while and he recently passed away. We lost one of the big boys in terms of American literature.

AJ:

One of the greats.

Shane:

Yeah, for sure. So RIP to the GOA. One of the goats for sure. But in that same vein of Western and southern gothic, I've finished that book, Killers of the Flower Moon that is coming out as a movie pretty soon. I finished book five of Harry Potter. So pat me on the back here. And then I also finished this book called The Wage.

AJ:

What's that one?

Shane:

The reason I bring it up is because Killers of the Flower Moon, dear listener, is personal finance related. Now remember this, when you're watching this movie. It's a Scorsese flick. It's Leo, de Niro, Sturgill Simpson is in it. It's going to be a banger, absolutely. About three hours long, but it is an estate planning book. It's all about estate planning. So just keep that in mind while you watch Killers of the Flower Moon.

AJ:

Do you have a little tidbit for us, or is this too many spoilers?

Shane:

No, it's about inheritance.

AJ:

Okay.

Shane:

I'll tell you that. Yeah.

AJ:

Okay, cool.

Shane:

All right. Do you know the books? Do you know the premise of the book?

AJ:

I don't. I don't.

Shane:

I'll do it in two seconds. So we moved all of these Native Americans to a reservation.

AJ:

Its been two seconds, I'm just kidding.

Shane:

In Oklahoma. And we put them on these ragged rocks of land in northern Oklahoma and it ended up being one of the richest oil fields ever.

AJ:

Oh, yes. Okay.

Shane:

So the Osage Indians in the hills of Oklahoma became the richest Americans per capita for like 50, 60 years. And then they just start getting murked. They just started disappearing like 30 of them. And the FBI is essentially created to figure out what the hell is going on and they start... It's like the FBI's first big case. Jay Edgar Hoover's involved. It's pretty dope.

AJ:

Very cool story. Yeah, very interesting part of American history.

Shane:

Indeed. Yeah. The last remnants of the wild west.

AJ:

That we did learn. I did not learn about that.

Shane:

Oh, they didn't teach you that.

AJ:

Yeah. So weird.

Shane:

American history skipped over the assassin.

AJ:

Yeah, so weird. Yeah. All we learned about the Native Americans was that they used sycamore leaves as toilet paper. Sycamore tree, very beautiful tree, very soft leave. So they were very resourceful.

Shane:

That'll come in handy one day.

AJ:

Yeah. Super handy. Didn't lurk about the abuses of the... Anyway,

Shane:

If you can spot a Sycamore. I went to high school in Mississippi, so you can imagine what my US history course best for life. Okay. Definitely not the Howard Zen version of the Southern United States.

AJ:

I came over in a boat and here we are folks.

Shane:

We're just going to skip over the years 1860- 1865.

AJ:

Pull yourself by your bootstraps.

Shane:

Great stuff happened those years.

AJ:

And then we were all heroes in Iwo Jima. Next chapter. Anyway.

Shane:

Moving right along.

AJ:

Speaking of moving right along, let's get into some news for the week. Where should we begin?

Shane:

Well, I don't have a great segue here, but apparently despite the IPOs that we've been seeing, or the lack of IPOs in the general recession in the tech space, Facebook has been down. 71 had to draw down. It was over 75% during 20 22, 2023. There has been a drying off.

AJ:

Sorry, Shane. Shane, I got to stop you for a second. Something really crazy is happening. I'll be right back.

Shane:

So we're going to keep... All right, and we're back. Okay. All right. Dear listener, we just had a little bit of a incident there. My dear, dear, dear business partner just said, hold on a second. I think I'm having a heart attack and just went off camera.

AJ:

I came back. And said I was fine.

Shane:

What the fuck.

AJ:

I came back.

Shane:

You can't do that to me. You can't.

AJ:

No, I'm sorry. I was...

Shane:

If you're going to have a heart attack, do it on camera so that I can call somebody.

AJ:

I spiraled a little bit. Make sure you're hydrating folks, hydrating eating, taking all your pills, and then you'll be good to go. And don't have iced coffee.

Shane:

I can't tell if she actually had a heart attack or she just had an iced coffee. If those of you don't know, when AJ has a cold brew, if she becomes supersonic, super sane, can read the matrix, but also is on the verge of her heart exploding. Oh my God. Anyway.

AJ:

It's all good.

Shane:

Speaking of collapsing.

AJ:

Take care of yourself.

Shane:

Speaking of collapsing off camera, Wall Street Journal has this fantastic article about how startups are throwing in the towel, unable to raise money for their ideas. Yeah, no surprise anyone that listens to the Liquidity Event has known that tech itself has been in a spiral for the past three years in terms of valuations after their pandemic high. Post pandemic venture capital has been experiencing a dearth of funding from a height of 95 billion in Q4 of 2021 to a low of 37 billion dollars of funding in Q1 of 2023. We've seen about a 70% dip in terms of funding for startups. And when you can't get any money to continue the runway, to keep you extend your runway, your company either needs to sell or go out of business. So AJ, what's your take?

AJ:

Few takes here. So one is, all right, ready for this? Startups when they get going, not in the first six months, but once they have a few employees, need to have a starvation mode plan, and that needs to go in the deck to investors. So let's take the concept of...

Shane:

No, I like that take.

AJ:

Okay, let's take the concept of, you and I read all this stuff about Living Forever. What's that book on longevity, and there's this concept of autophagy, which is when your cells go into starvation mode and start eating the bad cells and regenerate. So I think startups should have as a like, "Hey, before we even get going, yes, we're going to take your 50 million dollars, but we just want you to know that we could survive. This is what starvation mode looks like for us, and we're always going to have this much cash in the bank to get us through this dip."

Because a lot of these startups that are running out of money right now, if they had had this plan in place, they just need to batten down the hatches and get through this until the next cycle comes around. They're just not going to make it through the cycle. So they're closing shop, they're getting chopped up and sold for parts. The upside here is the parts that are getting sold. Let's say they took that 50 million, built tech, their competitors are going to be able to come in and buy that tech, maybe bring on that talent and be able to catapult just because they had enough cash at the right time to get through this downturn. So that's my take. Let's apply. Let's apply autophagy, starvation mode to startups. Let's put it in the business plan. Let's have VCs, coach startups, how to survive on less because we're spending too much money at the end of the day,

Shane:

Man, we didn't get to talk about this last... I love that take. We didn't get to talk about this last week or maybe we did, but the guys at Mistral AI that raised 115 million dollars as a CBO.

AJ:

Oh yeah.

Shane:

We should talk about it for a second, but this French startup in the AI space, and everyone loves AI now, and I think most VCs are not really making any bets until they get a... Or there's a trend in that space. VCs are making bets, but they can't figure out which AI startups to make bets on. And if you do not have AI in your deck anywhere, if you're not utilizing AI here, it's very hard to raise any money.

But we did see an AI startup in France raise 115 million dollars. The oldest founder, there's three founders, all French guys, they all worked at former Facebook and Google Deep learning teams. They're in their late twenties. So best case scenario, they have seven years of experience. So as somebody that has gone through an autophagy phase at a company, you and I have shrunk our workforce by about 15%. I just ran the numbers on that. We're down about 15% from our pandemic peak of late 2021. You hire for the expected capacity that you're going to need to support into the future. Then when it doesn't show up, you have to make some tough calls. Luckily, we are a profitable company, so if we're not making profits, we lay people off, and that's our autophagy phase until growth starts to come back again. Anyway, I just worry about these...

AJ:

I feel like, yeah, you made that sound like a lot easier than it is, but, yes. Yes. That's what we do. That sounded really harsh.

Shane:

Yeah, well it is. It's the case. Just bear with me one second.

AJ:

So Shane, how many episodes have we recorded of this podcast?

Shane:

99.

AJ:

99. And how many times have we done it in one take all the way through? 97. 96.

Shane:

Yeah. Yeah, that's true.

AJ:

How many times have we been interrupted in this episode here today?

Shane:

This is my third.

AJ:

Three?

Shane:

By the way, it took an hour and a half of trying to get the wifi to work and now I'm outside. Dear listener, I was just in a classroom and somebody broke in to Spanish lesson and they're like, "Hello, get out of my room now please." And now your boy is outside cooking.

AJ:

We started this podcast bragging about how easy remote work is, and it's all great, and all of a sudden we're unable to do our one half hour of work today. But anyways.

Shane:

No, anytime I travel and people are like, what do you do for a living? And I explain, I own a company, we've got employees all over the world. We're totally remote, and I get to work, and people are like, "Oh my God, that sounds like the most amazing life." I'm like, "Oh yeah, you ever lived out of a backpack for three months, and then your wifi is a constant source of stress." It's got its ups and downs, folks. Speaking of ups and downs, the founders of a collapsed job training startup, have misled VCs apparently, according to this investor. We got a great article from the information that AJ's going to walk us through.

AJ:

So surprisingly, this company is called Bitwise. What do you think Bitwise does? Just based on the name alone?

Shane:

Machine learning, crypto, AI.

AJ:

It's a job training startup.

Shane:

Oh, got it.

AJ:

So first of all, big misnomer in the name there. So my hypothesis about this company is that, like you were just saying, how if you put AI in your deck, you'll get funding in 2023. If you put bit or crypto in your deck in 2020 or 2021, you got funding. So it's a job training company. They build, or actually, they're kind of like boots on the ground. They go and train workers to do higher paying knowledge based work. They had a big office in Fresno, California, so not Silicon Valley, kind of outside. They were looking to bring lower paid workers up the income chain.

Now, investors are saying that they were misled by the two co-founders, and the financials were made up a little bit shoddy, and now 900 of Bitwise's employees are back on the job market. This company is dead.

Shane:

Oh Jesus.

AJ:

DOA.

Shane:

900.

AJ:

900. Yep. It's kind of like a too good to be true business model. I was looking into this company a little bit. Their revenue came from actually building software, so actually hiring these people to build software after they train them, selling their online training platforms, and then weirdly real estate. So it just sounds like bad business proposal, didn't have an emergency fund, didn't have an emergency plan, ran out of money. Probably going to be some fraud here it looks like. Some pretty big investors here, but yeah, my heart goes out to the 900 folks who are looking for jobs now.

Shane:

Jesus.

AJ:

Yeah, so bye bye. Bitwise.

Shane:

That is terrible management. First of all, fraudulently faking it till you make it as I think a bad idea nine times out of 10. Here's the thing, you don't hear about the companies that fade it, the ones that make it.

AJ:

Make it. That's the thing.

Shane:

Yeah. Happens all the time. It's like the opposite of survivorship bias.

AJ:

Yeah. I would love to hear from very successful company founders about what they fudged in their initial pitches to investors. What were the things that snuck under the radar? And I don't know if we would get honesty, we probably wouldn't, but I bet there was a few white lies told or some actual lies told in some of the billion-dollar companies that we see today and their initial promises to investors. My hypothesis.

Shane:

Yeah, for sure. When it comes to monthly active users, there's a lot of subjective things. Not everything that is being reported is purely gap based financials that have a standardized way of being reported. You could lie about monthly active users. You could lie about the growth of traffic, all types of stuff, or manufacture those things. What was the girl that lied to JP Morgan about the number of customers that they had? Charlie Gem.

AJ:

Yeah, she just bought a marketing list and said they were her clients.

Shane:

You hate to see it.

AJ:

You hate to see it. [inaudible 00:19:18].

Shane:

900 employees though. God. Yeah.

AJ:

It's not good. Speaking of, you hate to see it, returning to the office enters the desperation phase. We are in the phase of return to office where companies are saying, get your ass in the chair. In the case of Salesforce, they're saying, if you come to work, we will donate $10 to your favorite charity just for you showing up. So I don't know if that's bribery, because you're not getting the money, but what do you call that? What do you call charitable giving, guilt tripping? I guess that's what you call it.

Shane:

It's just that. Fuck that. I hate it. I don't hate it. It's better than no money going to charity, and I guess I think this is getting a lot of press because of how small it is or how desperate it is, obviously, but I'm sorry, $10 going to charity is not going to move the needle for me if I've got three kids, a dog, and I live 90 minutes away from the downtown office. And now I have to pay tolls, I have to pay to park, or take the god-damned subway or whatever it is. Commuting is a nightmare.

AJ:

Yeah. I designed my life around you letting me work from home. Has my job performance suffered? No. Yeah, it's going to cost me a hundred thousand dollars to hire the childcare I need to be able to continue to deliver this performance if you want me to come to the office, so no thank you. I'll go elsewhere.

Shane:

I don't know how to feel about... This was just, we can't really interrupt each other on this podcast because we're on Zooms. Right. And as an example, but on the CEO of one of the companies that's pushing for in-office work says that I need you guys in the office so that you can interrupt each other.

AJ:

Honestly, that's the only compelling reason I've ever heard from returning to the office.

Shane:

Just to shut someone up. I'm going to cut you off there, you fucking psycho.

AJ:

No, I mean, he is right. It is. It's like, wait, I need to interrupt you. And it's like everyone has to stop talking. Whereas in an office, it's a lot more like, yeah, it's not as rude to be like, oh, just question. Or raise your hand. Excuse me. Actually, I got that. I was not being sarcastic when I said, that's the only compelling reason.

Shane:

No, I gotcha. And you've got 10 people on a Zoom call, only one person can talk at a time. If you've got 10 people in a conference room, you can break away and have four different side conversations and it's ostensibly four times as productive.

One other thing that I think about is when we were working in the office, we designed all of these services at Brooklyn FI that we still, they have a really strong foundation and it's provided a lot of our growth, the process that we've built and the products that we have, but some of the newer products that we try to develop are a little bit harder to do so remotely, I think. It's just harder to get buy-in from people, harder to get people to understand what it's trying to accomplish. You can't look over someone's shoulder and say, "No, this, not that," and interrupt people.

And if they're not an owner, if someone doesn't own the company, I think it's kind of hard for them to think like an owner. I definitely... It's obviously... And act like an owner because investing in a new service line doesn't really impact them intrinsically, so unless they're just super curious or super hungry to learn a new thing, it is difficult to motivate someone to just explore it on their own, to get them to explore it on their own. Watch these, I don't know. This is just something that I'm feeling is difficult to get done outside of when working remotely.

AJ:

Yeah, there is something to be said for that in office [inaudible 00:22:43]. I don't think it's water cooler conversations. I think it's honestly trying to impress your colleagues. There's accountability in being like, "Oh, I'm busy right now and I'm working." And it's not just to show your boss, it's just like it's wrapped up in your self-worth. And I think there are some people who have not thrived working from home, being off camera, sitting through boring meetings. Yeah. That's not productive at all. Those people probably would be more productive in the office.

Shane:

Speaking of...

AJ:

Just so you know, listener, we can't really hear each other, so hopefully we're talking about the same thing. You were talking about Chipotle, right? Okay, cool. Anyway...

Shane:

Speaking of... Fuck, I had a great segue and it's froze for just two seconds and I lost it.

AJ:

No.

Shane:

Anyway, women don't get paid as much as men and New York City and certain jurisdictions have implemented an attempt at fixing that via pay transparency laws that require all jobs within certain jurisdictions to post a pay range. Apparently, according to the New York Times, we have, it's effective when the pay ranges or the bands are tight enough to give you insight into how much people are getting paid. So this is an article. Honestly, this article, it's called A Job with a Fair Salary: What Pay Transparency Laws Are Revealing. There's some stories in here, a little bit of anecdotal stuff, but essentially, if the paid bands are tight enough, like a paid band could be super wide, we'll pay you between 100 and 200,000. That doesn't really help you too much when you're looking for a job. It gives you a minimum, I guess. But if it tells you, "Hey, we're going to pay you between 60 and 75, depending on experience," it is helping younger workers and women and minorities to find jobs at certain pay ranges and helping to even the odds. AJ, what's your take?

AJ:

Yeah, this is a complicated issue. I found it interesting that about one fourth of the whole US labor force is now covered by these salary transparency laws. So this is significant. It's not just like, oh, New York City and Portland, Oregon have this. It's a quarter of the whole labor market. So that's cool.

Shane:

Is it all of California?

AJ:

It's all of California. It's all of New York, and I forget the other states. Yeah, I think there's an interesting point here. It's like, is it the companies saying, here's... Like, are these salary bands actually helping people? The higher paid, bigger discrepancy jobs where we're going to have the man making a dollar, the white woman making, what is it, 84 cents and the woman of color making 77 cents. Right? That's typically what we see across the board. How did we get there? Was it the job offer? Was it the actual years of experience because she had to take five years off to raise the kid? Was it that he negotiated? Did the white man negotiate and was granted that. She didn't know how much to ask for? We don't know. There's so much complexity that goes into these conversations. I am pro salary transparency. I think we're in the very early days of getting it right. So yeah, companies are throwing up. Yeah. This senior director job pays between 70 and $450,000. Cool. Thanks. Super helpful.

Shane:

It pays between $1 and half a million per year. Yeah.

AJ:

Yeah. Depending on experience, of course.

Shane:

Right? Babies.

AJ:

So I think this is good. I think this is so... Look, it's like every industry is going to be like, we're different. Every company is going to have different ways they pay people. Maybe it's going to be all base. Maybe there's a commission for certain roles that aren't reflected in these jobs. So let's keep talking about it is my take here. Keep coming back to this. Let's check in on how everyone's feeling about their pay, and let's get that 84 cents up.

Shane:

I'm down. You want to talk about crypto or do you want to jump to CAVA?

AJ:

Let's jump to CAVA.

Shane:

Yeah, let's do IPOs.

AJ:

Crypto. SEC. Yeah. Lot of news. Yeah. Let's do IPOs. Hummus saved the IPO market. No?

Shane:

I'm down.

AJ:

So you've never been to a CAVA. You've never been to a CAVA. You've never seen a CAVA?

Shane:

My take is that the simulation put CAVA in recently, and I have not seen it yet. That CAVA was not a real thing. The simulation inserted it for this IPO. I'm fine with it. I get an IPO, I'll take whatever the simulation gives me.

AJ:

CAVA. I've probably had CAVA 15 times. It's like the Chipotle of the Mediterranean food, right?

Shane:

Sure.

AJ:

You get your bowl, you walk in the line, you add this, you had that. You add some tahini, little falafels, little hummus, little harissa. It's delicious.

Shane:

Yeah. I get it. Still think...

AJ:

So? Why are we talking?

Shane:

It didn't exist six months ago. I don't... I know this is a Bernstein bear situation. It's not a real company.

AJ:

Okay. Anyway, all right. Shane does not believe in this IPO.

Shane:

I want to believe,

AJ:

But Shane did not, but every single other investor apparently did because for the first time in almost a year and a half, we have had a successful IPO. CAVA's IPO price was $22, and on its debut, we saw the shares open at $42. So almost double. Does that mean the investment bankers priced it too low? Probably. They probably wanted to be cautious, but yeah, we like this happened. Everyone was like, what the hell is going on? Are we back? Are we back? Or was this just a fluke with an exciting restaurant chain backed by VCs with a really nice PR story to tell? I don't really know. I feel like it was a nice little ripple in the water. Okay. Maybe leaders of companies now can say, okay, we've had one successful IPO. Who's to say? They were the first. We don't have to be the first. So I think there's something in the popping of the cherry of the IPO market returning.

Shane:

Jesus Christ. Okay. All right. I didn't say that for the record. I need the transcript to reflect that phrase came from AJ's mouth. God.

AJ:

We haven't seen anything.

Shane:

No.

AJ:

Someone had to do it.

Shane:

I agree with you. Yeah, I think some CEOs are definitely talking to some bankers now about filing S1s now that CAVA had a successful IPO, at least so far. The IPO index is performing a lot better than it did over 2022 and 2023. Those prices are definitely rebounding. We're trending back up from disastrous draw-downs that we saw throughout 2022. So the boat is righting itself. I think we're going to see more people put buy signals on tech companies, and I think the liquidity is going to flow. I think the second half of 2023 is going to see a Reddit IPO. The Reddit drama is still going on. Speaking of Reddit and IPOs and drama, are you following this UFO situation that we're experiencing? Let me take a left turn here real quick.

AJ:

Oh, wait, but I have more things to say about CAVA.

Shane:

No, I'm taking this off the rails here.

AJ:

Okay.

Shane:

No, no. All right. You do your CAVA thing, and then we'll close down with UFOs.

AJ:

Just quickly, just, yeah, just to kind of talk about this IPO. Okay, so this was not a tech IPO, right? This is a restaurant fast casual IPO which we've seen a few successful ones in the past. Right?

Shane:

I'm sure they use AI though.

AJ:

Definitely. AI was definitely mentioned in the S1.

Shane:

Let's check the S1 yeah.

AJ:

I looked. Digital ordering. So how do we determine if this is a successful IPO? Chipotle is one of our fast casual, super successful IPOs. Sweetgreen, a super unsuccessful IPO. They're down significantly. So I was looking at where Sweetgreen was at when they went public versus CAVA. So when Sweet Green went public in 2021, their revenue was 243 million, and CAVA's already almost double that, and by the end of the year, they're going to have 320 stores, whereas Sweetgreen had, I think it was like 150 stores. So CAVA's almost double the size of Sweetgreen. They raised a shit ton of money in this IPO. It's like 318 million just in that initial public offering. I don't know. I feel like this could actually be something. I feel like this is not a Sweetgreen. I feel like this is more of a Chipotle situation. That's my take.

Shane:

Well, here's my take. There's only half as many Sweetgreen as there are CAVAs. I've been to Sweetgreen a hundred times. I've been to Chipotle 500 times, and you're trying to tell me a CAVA has twice as many stores and was not inserted by the simulation just moments ago to make sure that we have an IPO. This Truman Show situation about Shane's life needed an IPO so that we're back up on top in the second half of 2023. I see you.

AJ:

Tell me more about those IPOs. Tell me more about those IPOs. Wait, did I just say... I meant UFOs. UFOs, IPOs, who knows.

Shane:

Who gives a shit. Gold jacket, green jacket.

AJ:

For the record, we are not drunk, by the way.

Shane:

It's 10:00 AM here. I missed the old Liquidity Event days when we would be drunk on set.

AJ:

Wait. Speaking of drinking, I have a little Charmander sparkly soda that I found at the store. Anyway, close this out with UFOs.

Shane:

Okay. Are you sure you want... I don't know if listeners are ready for this.

AJ:

We're not going to hear about the IPOs. Thanks for being a wonderful audience, folks. We will see you next week. We have an IPO. We should have one more next week, too. You've been great. See you later.

Shane:

Bye.

Presenter:

Thanks for listening to the Liquidity Event, hosted by AJ and Shane of Brooklyn FI. Head on over to brooklynfi.com where you can subscribe to the podcast or YouTube channel, or if you want to learn about their full service, financial planning, tax, and investment firm specializing in tech professionals and creatives on the path to financial independence. We'll see you next time on the Liquidity Event.