Mary Meeker has had a surprisingly productive career as an internet watcher. As a technical analyst at Morgan Stanley in the 1990s, she became the most influential analyst in the field, championing
and Dale. In 2010, Meeker left that gig to become a venture investor with Kleiner Perkins. He chose winner after winner, investing in companies like
Meeker and his team left Kleiner in 2018 to set up a new firm, Bond Capital. But she is best known for her series of more than 20 prestigious research reports on Internet trends. The first, in 1995, warned that Internet investors were likely to “loosen” between betting on growth and worrying about valuations. It’s true as always.
Meeker recently agreed via email to discuss what she’s up to — and how she sees the world. The interview has been edited.
baron’sWhere has been investing bonds lately?
Mary Meeker: Some of Bond’s recent investments include Ironclad, which makes contract management software; Seldrone, which makes autonomous maritime drones; Retools, which makes software for app development; Multiverse, an apprenticeship and training platform; Stored, a software platform for warehouses; and Genies, a provider of tools for creating avatars.
What is your view on Web3, non-fungible tokens, crypto, and blockchain?
There are approximately 300 million global buyers of cryptocurrencies, with a market cap of approximately $2 trillion. Consumers and investors have voted from their pocketbooks. Furthermore, the time and focus of software developers has moved to crypto and blockchain at an extraordinary clip. These are fundamental technologies like mobile and cloud in the last decade.
More than 4.3 billion people spend four hours a day on mobile devices, up from the nearly 100 million people with negligible use less than 20 years ago. In fact, people are already living in a digital world, and they want instant, frictionless payment systems, digital currencies, and novel applications unlocked with blockchain. In the physical world, money is increasingly being printed and inflation is rampant—another reason why consumers are excited about decentralized digital currencies that have a limited supply. Most digital currencies will fail – but the winners should go on to win big.
You are a believer.
We have entered the fourth faster/better/cheaper computing revolution of the last half century. We had personal computers in the 1980s, desktop internet in the 1990s, mobile internet in the 2000s, and we are now in the crypto-blockchain-metaverse era. The past leads to prologue and each new revolution ramps up faster than its predecessor. Generational change is accelerating in the world’s biggest markets—finance, healthcare, government, and education. COVID-powered remote work has catalyzed unprecedented entrepreneurship and mobility in America. New grips on older markets—such as NFTs—are rapidly evolving, often re-imagined by a new generation of creators, who are being paid directly for their efforts with limited intermediaries.
How are you feeling about private market valuation?
While the pace of innovation is exceptional, a lot of capital was put into action at a lot of companies and at high valuations, especially in the last 18 months. As is the historical pattern, a high percentage of these companies will not live up to expectations. Too much money, too fast, too many similar companies can make it more difficult for winners to create a competitive moat and exit. And, it’s worth remembering that too much cash can sometimes kill.
But you still believe in the enterprise model.
The traditional venture capital business has been very dominant in America over the past half century. Those with experience in the early days of company-building can attest to how wild and woolly it can be…. He also has a keen understanding of the fragility of start-ups and the amount of 24/7 effort that helps winners thrive. The good news is that today’s young technology entrepreneurs—as a class—are exceptional. Bad news: The time to gain a competitive advantage has been shortened.
Which macro issues concern you?
This is a long list. Long-lasting quantitative easing in teeth with unusually low interest rates. particularly high inflation. The US government’s expenditure-to-revenue and debt-to-GDP ratio are at the highest level since World War II. With healthcare at 16% of US GDP – Medicare, and Medicaid – at 6%. This is up from 9% and 3% respectively just two decades ago. Europe is at war with rising global unrest. We have a cultural and political divide. We have an ineffective K-to-college education process. And, we are starting to see signs of a slowdown.
But you’re still in it.
America remains the best country in the world. At some point these (and other) growing challenges will come home and we will all be judged by how well we anticipate, adapt, and respond. Investors especially need to be thoughtful selectors and astute portfolio managers.
Write Eric J. Savitz at [email protected]