E85: SBF's crypto bailout, Zendesk sells for ~$10B, buyout targets, US diplomacy, AlphaFold & more

Three Arrows Capital’s collapse exposed a tightly linked crypto credit chain already forcing emergency rescues. The fund owed Voyager $650 million; FTX/Sam Bankman-Fried extended Voyager $200 million and BlockFi $250 million, with the BlockFi deal described as potentially wiping out existing shareholders.

The deeper failure was opaque, off-chain leverage that made ownership and systemic risk nearly impossible to verify. Exchanges, lenders and DeFi platforms recycled customer deposits through custodial accounts without clearinghouses or reporting, so users who thought they owned Bitcoin could discover they merely held a claim on an insolvent intermediary.

The panel’s strongest crypto conclusion was that stimulus inflated prices faster than real adoption while the supposedly transparent system recreated an unregulated securities market. Sacks said valuations detached from usage, customers and revenue; Chamath described tokens trading privately and reaching retail investors before the underlying companies had products.

Zendesk’s $10.2 billion sale after rejecting roughly $17 billion months earlier became the clearest example of public markets switching from growth toward cash flow. Zendesk still had $1.3 billion in revenue, 30% growth and $1.55 billion in cash, but shrinking SaaS multiples and activist pressure radically changed its options.

Stock-based compensation emerged as a substantial cost to shareholders even when a software company reports positive cash generation. Zendesk was issuing roughly $250 million annually in employee stock, diluting holders about 2.5% each year; the panel said many Silicon Valley IPOs also authorize evergreen grants around 4% annually.

Private equity can profit from mature software without restoring high growth: cut costs, tolerate slower expansion and harvest cash. The panel estimated Zendesk could fall from roughly 30% growth to 15–20% while potentially producing $300–500 million in annual free cash flow, aided by layoffs, lower R&D spending and financial leverage.

The market debate reduced the 2022 outlook to three unresolved forces: inflation and rates, recession risk, and the Ukraine war’s effects on energy and food. Sacks argued diplomacy over Ukrainian neutrality could have prevented or shortened the war; Calacanis disputed that certainty and emphasized Ukraine’s sovereignty and deterring further aggression.

The episode’s most concrete scientific advance was AlphaFold helping researchers construct a far more detailed 3D model of the nuclear pore complex. Combining predicted protein structures with cryo-EM data mapped machinery controlling traffic into and out of the nucleus, opening new avenues for studying cancer, viral disease, gene regulation and therapeutics.