E73: Late-stage VC markdowns and mistakes, market strategy, Ukraine/Russia update with Brad Gerstner

The core market shift was a return from pandemic-era valuation inflation to normal pricing as rates rose. Gerstner said software multiples were near their five-year average, internet below it, and each 100-basis-point increase in rates historically cut growth valuations roughly 15–20%.

Instacart’s cut from $40 billion to $24 billion was treated as the first visible private-market reset, not an isolated event. With public delivery peers down roughly 50–70%, the panel expected many unicorns to face down-round IPOs as sellers finally confront lower public-market prices.

Many boom-era late-stage investors lacked the downside protections outsiders assumed they had. Chamath said IPO ratchets were often stripped from hot deals, meaning a $100 million stake bought at $10 billion could simply become $50 million if the company went public at $5 billion.

Late-stage private financing was effectively frozen because public SaaS had become much cheaper than last year’s private rounds. Gerstner said the market was only 10–20% through its psychological reset; Chamath said D1 was reportedly avoiding privates while Tiger was repricing deals.

A startup that raised at 100-times ARR could need roughly fivefold ARR growth just to preserve its valuation if the next multiple is 20-times. The trap is that generating that growth requires more hiring and spending, exactly when capital is scarcer and runway must be extended.

The operating rule changed from “growth at any cost” to growth constrained by burn and margins. Sacks advocated a burn multiple below two—under $2 burned per $1 of incremental ARR—and said some portfolio companies were capping it quarterly, accepting slower growth to protect runway.

The panel saw a plausible Ukraine settlement in neutrality, continued Russian control of Crimea and autonomy for parts of Donbas. They split sharply on Washington: Sacks feared a prolonged war to weaken Russia, while others said private diplomacy was unknown and sanctions could simply be leverage.

Gerstner’s larger macro concern had shifted from inflation to recession. He cited lost stimulus, higher mortgages, falling consumer confidence and China’s new tax stimulus, arguing demand destruction could force the Fed by midyear to balance growth risks against inflation rather than keep tightening.