E96: Adobe acquires Figma for $20B, TPB SPAC, FedEx CEO's recession warning, macro picture & more

This feels very political. It feels like they're going after Facebook because of the downstream political issues Facebook causes and they're ignoring the Microsoft issue and they're ignoring issues like this.

But if you want to feature a competition, if you ask me, if I was a betting man, I think this thing is going to close.

I mean, it closes. It closes because it doesn't intrude on the hot buttons of Washington, not because the merits of the antitrust are superior to the Roomba deal or to that VR deal that Facebook wants to have. This is all about political and cultural hot buttons.

And so, okay, so yeah, so Adobe is paying 50 times current ARR. But if you believe this, they're only paying divided by two, they're paying 25 times end of next year, so like 18 months from now. And then you figure, you know, within say two years after that, they're going to be, you know, at somewhere between one and a half and two billion of ARR. And as you guys know, there just aren't that many SaaS companies that even get to a billion of ARR. So I don't think Adobe is making a bad deal here.

you have this sort of parade of terribles for Adobe that they're going to have to navigate, right? They have a very large portion of cash. They have a large portion of stock. They have decaying earnings in their core business that they now have to explain.

It's a transformative deal in the same way the WhatsApp deal was for Facebook. It removes one of the two existential threats to Adobe, and it turns Adobe, I guess, into a growth story now.

And people thought they were overpaying. And then YouTube, everyone thought it was crazy. They paid a billion six for that business, and it's probably the greatest acquisition of all time.

We put two-thirds of our, these founder promote shares. They're, you know, the only vest if we can hit the stock price of $12.50 and $15 over the next three years. Otherwise we lose them. So we've really tried to align ourselves as shareholders and really put our money where our mouth is on this.

And it seems like a very good entry valuation, good margin of safety too.

That certainly could happen, but I think there's an equal and opposite chance that instead what happens is that we climbed the escalatory ladder. That Putin, I think we are backing him into a corner. Everybody says that he cannot survive the loss of this war, and yet we're not willing to give him an off ramp. So what choice does he have but to escalate?

So this is going to go on for as long, for much longer than people think. So I would just prepare for this inevitable outcome and just kind of, you know, manage.

And I would guess that all three continue to work against them. It's not like they have a lot of diversification in the business and other ways to expand out into. So you've got a key vertically integrated player, namely Amazon, that is investing heavily to replace whatever they use you for.

And to blame a recession is sort of a little bit of hiding the cheese. It's probably fair to say that their lunches get eaten by Amazon. So I could understand why FedEx is under a lot of pressure because of that.

Well, they could be losing market share while still growing because e-commerce is growing so violently in the world.

So what's interesting to me is you cannot effectively compete, as it turns out, against Microsoft at any point product. And Slack I think is the best example where, you know, Microsoft Teams was fundamentally cannibalizing this business, which is what drove Slack into the arms of Salesforce.

So basically they get you hooked on the bundle, they then use it to systematically kill or undermine a competitor and then they know you're stuck and then they raise the price. They basically have inflation of the price of the whole bundle. I think it's very anti-competitive. Actually, I think it's akin to dumping.

So you may be right about where things stand today, but this is about the trajectory right now of the economy and the trajectory is not good. Inflation is not coming down as fast as people were anticipating. It's worse than expected.

I think that rates are going to go somewhere between 4.5% to 5%. I think Stan Druckenmiller is right. And I've said this, I don't know, I'm now ad nauseum, so I'll just keep saying it. But I think everybody has consistently been wrong. And they have wanted inflation to be a transitory phenomenon that goes away and they've been consistently wrong. Even in our group chat, we see these forecasts, they've been utterly consistently wrong. So rates are going to go higher than people expect. It'll stay around longer than people want. This will have an impact to the economy.

But when you look at it historically, you know, even at 6% or even if it goes to 7% for mortgages, it's a lot less than we, our parents experienced and we experienced for the first half of our adult lives. So I think it's surmountable.

But either way, I think the Fed's interest rates are doing their job and less packages are being shipped because people are Chamath, you would think, spending less money. And that was the whole point of this exercise was to slow the economy down.

Now, this FedEx executive is saying we're headed for a global recession. So it seems to me that the economic news is just pretty grim here. And we're in stagflation. The Fed has to keep raising interest rates at the same time that we have persistent high chronic inflation.

So I think, Sacks, you are right that we will be there because you can only bring rates up so high until you break things.

It's been a long time coming. It's been a very hard process, as Chamath can attest. And as we all talk about, capital markets are very difficult right now.

I think that the thing with SPACs in general in a moment like this is that it actually performs better in periods of high volatility.

It hasn't turned out to be disastrous yet.

Yeah, we have a massive starvation problem. The UN told told everyone, I mean, no one writes about this stuff because it's seemingly not interesting in mainstream media, which I don't freaking understand. But the UN thinks that 345 million people now are incrementally marching towards starvation.

Yeah, Nat gas prices are still elevated, right? And Nat gas availability in Europe is obviously significantly restricted right now.