In this episode of "20 VC," host Harry Stebbings interviews Joey Levin, CEO of IAC, exploring the divergent realities of public and private market valuations and the challenges of navigating a shifting economic landscape. Levin reflects on his career, emphasizing the importance of having strong opinions and the ability to adapt to rapid changes, particularly in periods of financial adjustment. He discusses the role of capital in seizing opportunities, the flawed nature of SPACs, and the impact of upbringing on work ethic and ambition. Levin also touches on the concept of value investing, arguing that it's not confined to low multiples but includes growth potential, and stresses the power of simplification in business. Additionally, the conversation delves into the importance of company values in decision-making, the intricacies of work-life balance, and the influence of familial values on personal and professional development.
"People raised a lot of capital when capital was easy. You don't need to be honest on valuation every day. There's no one forcing that when everyone in the ecosystem is incentivized and able to maintain pretend valuation."
This quote emphasizes the discrepancy between public and private market valuations, highlighting the lack of daily accountability in private markets which allows for inflated valuations.
"But I'm so excited today to be joined by Joey Levin, CEO of IAC, where he's overseen the constant evolution of the company, including the initial IPO and subsequent spinoff of Match Group, the spinoff of Vimeo, and the acquisitions of Angie's list and care.com."
The quote introduces Joey Levin and his significant accomplishments as the CEO of IAC, setting the stage for the discussion about his career and insights.
"I actually wanted to be a lawyer because my dad's a lawyer. I wanted to be Clarence Darrow. I had read books about him and stories about him, and he's from the Midwest and iconic last in a lot of ways."
Joey Levin's quote reveals his early career aspirations influenced by his father and Clarence Darrow, suggesting the impact of family and role models on career choices.
"One, doing the work to have the information, to understand things better is really important. And when I was doing mergers and acquisitions, it was to learn everything about a company that we were considering acquiring."
This quote underlines the significance of thorough research and understanding in career advancement, particularly in the context of mergers and acquisitions.
"Valuations change really quickly, which is probably what's most acutely felt. But everything changes very quickly."
Joey Levin's quote highlights the swift and significant impact of market changes on business valuations and operations.
"Both of those cases there was a government bailout. And I think the government did the right thing and saved jobs. But the lesson that's learned is there's a bailout."
The quote reflects on the impact of government interventions during crises and how it shapes the expectations and attitudes of the younger workforce.
"We're lucky to have something at IAC which is a lot of people with tenures."
This quote speaks to the value of having experienced employees at IAC who can help balance morale and provide guidance during challenging times.
"What I mean by that is people use the word value investing."
The quote introduces a discussion on the concept of value investing and its relevance in the modern investment landscape.## Value Investing
"But value investing also can be buying something at a very expensive multiple or a very high, I shouldn't say expensive, I should say a very high multiple. But that there's value there because of what you believe in the growth and the future."
This quote explains that value investing is not just about the price paid, but also the anticipated value based on future growth potential.
"They think they're a value investor. They are a value investor. They see value there relative to what they believe the future value is."
The speaker emphasizes that anyone who identifies potential future value in an investment, regardless of the price paid, can be considered a value investor.
"We could pay big multiples for things where we see value, and that can work out too."
Here, the speaker acknowledges that their investment strategy includes paying high multiples if they believe in the underlying value of the investment.
"You hit on a very important point, which is you need capital to be greedy when others are fearful."
This quote highlights the necessity of having capital on hand to exploit market opportunities when others are acting fearfully.
"When capital is scarce, things are cheap, and when capital is abundant, things are expensive."
The speaker is explaining the basic economic principle that the availability of capital influences market prices.
"I think we certainly have plenty of cash right now, well over a billion of cash and no debt at the parent level."
The speaker is confirming that IAC is financially prepared to invest during market downturns due to their strong cash position and lack of debt.
"The private markets and the public markets are generally very far apart in moments of transition."
This quote indicates that valuation discrepancies between private and public markets are common during economic shifts.
"But in the private markets, only the people who do believe get to vote."
The speaker is pointing out that private market valuations are often more optimistic because they are determined by those who have an interest in maintaining higher valuations.
"I do agree with that are where we are right now. And now we need to grow from here."
The speaker agrees that the current market conditions are the new normal and suggests that growth will be gradual.
"Earnings take time to grow. Earnings don't typically at large, grow in multiples. They grow in increments, percentages."
This quote emphasizes that earnings and valuations are expected to grow steadily over time, not through sudden expansions in multiples.
"The more you simplify, the more margin you're entitled to, because that's how you create value for your customers."
The speaker suggests that simplification leads to greater value creation for customers, which can result in higher margins for the company.
"There is not a moment in business where you can't think about that as an improvement opportunity and yield value from it."
This quote underlines the constant opportunity for improvement through simplification in all aspects of business.
"That mistake was spreading yourself too thin, taking on too many competitors or markets at once."
The speaker is identifying a mistake businesses make by overextending themselves, which can lead to a lack of focus and simplification.
"A sentence should have no unnecessary words and a paragraph no unnecessary sentences, just as a drawing should have no unnecessary lines and a machine no unnecessary parts."
This quote from "The Elements of Style" is used to illustrate the importance of conciseness and simplicity in messaging.
"The values should make you uncomfortable, not olds, but there should be times where they force uncomfortable decisions and uncomfortable discussions where you have to call out colleagues, not in a mean way, but where you have to call out colleagues and say, wait a minute, has this been through the value filter or not?"
The speaker believes that company values should be challenging and actively used to evaluate decisions and actions within the company.
"I pushed hard when we redid them at Angie to make them unique."
This quote indicates the speaker's commitment to developing distinct and meaningful company values that influence business decisions.## Product Roadmap Prioritization
"Build lifelong customers is a very challenging thing to do, and it has absolutely changed our roadmap and our priorities and will going forward."
The quote emphasizes the difficulty and importance of the goal to build lifelong customers, noting its significant impact on the company's strategic planning and future direction.
"I have the time to do it. I have colleagues at IAC who are highly capable of helping out in other areas, and they've stepped up to help."
This quote highlights the speaker's ability to manage multiple CEO roles due to having time and support from competent colleagues who can assist in various areas.
"The way it works is you build a company for as long as it takes you to build a company, you get it to a position where you think it can maybe endure the public markets. And then in that critical moment, you give somebody else who doesn't know your company at all a free option on effectively selling that company to the public for three months."
This quote captures the core criticism of SPACs, where a critical decision about taking a company public is handed over to an outsider who is not intimately familiar with the business, creating a risky and potentially disadvantageous situation for the company.
"Money is around. Sometimes it rolls towards you, sometimes it rolls away from you, and you got to remember that that's true."
The quote reflects the speaker's philosophy on money, acknowledging its transient nature and the importance of maintaining perspective on its value.
"It's easy to look back and regret not having sold something, but people do this to themselves and it's very unhealthy and I don't recommend it."
The quote advises against the common regret of not selling assets at their peak value, emphasizing that such hindsight is unhealthy and unproductive.Investment Philosophy
It relates to investments, is it a business that you believe in? Is it a team that you believe in? Is it a market that you believe in? And if it is, then over time those things will balance out and you want to hold on to the long term winners and over time they'll continue to win.
The quote emphasizes the importance of belief in the fundamental aspects of an investment (the business, team, and market) for long-term success.
Family Influence on Leadership
My mom was and remains incredibly frugal and did a wonderful job forcing that upon me and my siblings in ways that did drive us.
This quote explains how Joey Levin's mother's frugality was a key influence in developing his values and drive.
Persistence and Knowing When to Quit
In a lot of the things that we do, you got to go back to, what is your thesis? And do you have a viable thesis that you believe in it can't be because you believed in it previously. It has to be. Do you believe in it?
This quote underlines the necessity of continually re-evaluating one's business thesis to determine whether to persist or to give up.
CEO's Role as Resource Allocators
It's balancing short term and long term. That's the hard part of the job. Anyone can do all short term or all long term. But balancing capital and resources against short and long term is the hardest and most important.
The quote highlights the difficulty and importance of a CEO's role in managing resources for both short-term and long-term objectives.
Work-Life Balance and Entitlement
We live in an entitled generation. Do you agree? I do.
The quote reflects Joey Levin's agreement with the statement about entitlement in the current generation, suggesting a perspective on societal attitudes towards work-life balance.
Adaptability and Market Conditions
I was expecting and in some way looking forward to the market reversal that we've seen and now in it. It was much more pleasant before that.
This quote reveals Joey Levin's change of perspective on market conditions and the associated challenges.
Strengths and Weaknesses
Sometimes it's a strength, sometimes it's a weakness. For sure.
The quote acknowledges that the trait of persistence can have both positive and negative implications.
Ideal Board Member
Jack Welch had the best instincts on things and quickest instinct on things and understanding of things. Incredible empathy.
The quote expresses admiration for Jack Welch's qualities, which Joey Levin considers ideal for a board member.
Secret to a Happy Marriage
You don't need to lob in opinions when it's not necessary to have an opinion.
This quote suggests that restraint in expressing opinions can contribute to harmony in a marriage.
Venture Industry Reflections
I do think it was dangerous for a lot of companies to be overstuffed with cash.
The quote criticizes the excessive funding of companies, suggesting it can lead to negative consequences.
Long-Term Business Planning
In planning our business, we do think multiple years ahead... we think about businesses in a forever timeline.
The quote illustrates the focus on long-term planning within Joey Levin's business strategy, despite not applying the same approach to his personal life planning.