Gerstner argues large investors must be in private markets to capture value; notes inability to sell as advantage.
“If you want if you're Fidelity, if you're TRO, if you're one of these companies that wants to participate in all of that value creation, you can't not be in the private markets.”
Gerstner predicts private market valuations will normalize to match public market declines of 50%, not just 5-10%.
“There was some you know, there's a report out this week that lots of people comment on Twitter where public markets were down 50% and private marks were down, I don't know, five to 10%.”
Gerstner identifies deep private capital from sovereign wealth funds as structural change preventing companies from going public unlike past decades.
“And if you look at the private market alternatives for them for capital, we didn't have sovereign wealth funds that were writing multi billion dollar checks at that point in time.”
Gerstner says Philippe implied companies need $10 billion market cap to go public, calling this threshold problematic.
“He implied that in the modern era, you need to be $10,000,000,000 to go public. Yeah. Market cap. Yes. Which if it's 10,000,000,000 or bust, that's a bitch, man.”
Gerstner says OpenAI's $150 billion round with 10 investors created a dream IPO cap table, calling it a private IPO.
“If you looked at that, the cap table for the 10 investors in that round, it would be a dream day one IPO cap table for any company that wanted to enter the public markets.”
Gerstner says OpenAI's $10B raise at $150B valuation is essentially public but excludes retail investors.
“You know, it's just nomenclature to not call that public. The problem with it is, the only people who get access to that are accredited investors, and retail investors are completely cut out.”
“So we're three years into this recovery. We've got this incredible group of companies that are still private, you know, think of the Stripes and Databricks and SpaceX, etcetera.”
Gerstner says OpenAI and Anthropic deals are bigger than any tech IPO in five years.
“I was just looking at these. I think these are bigger private IPOs than any public IPO done in the last five years in the tech market.”