Limitless: An AI Podcast

Josh:
Just last week, on March 19th, a fund called VCX was listed on the New York

Josh:
Stock Exchange at $31 per share.

Josh:
Less than a week later, just this morning, it hit $575.

Josh:
That is an 18 times gain in just five trading days. And the underlying portfolio,

Josh:
it's only worth about $19 per share.

Josh:
But those $19 include Anthropic, OpenAI, SpaceX, Databricks, Anduril.

Josh:
It's a 30 times premium on the actual asset. So we have to ask ourselves the

Josh:
question, has the market lost its mind or is it telling us something.

Josh:
Is this actually an opportunity? This story is pretty outrageous.

Ejaaz:
This is the most insane IPO or direct offering story ever. This fund,

Ejaaz:
Fundrise Innovation Fund, has a genius strategy.

Ejaaz:
So like you said, they own Anthropic, OpenAI, and a bunch of other top AI companies,

Ejaaz:
but their stock actually gives you access or exposure to these underlying companies.

Ejaaz:
So if we look at some of the percentages, Anthropic, they own 20% of the fund

Ejaaz:
is positioned in Anthropic.

Ejaaz:
17.7% of the fund is positioned in Databricks, 10% in OpenAI,

Ejaaz:
7% in Anduril, 5% in SpaceX.

Ejaaz:
Basically, all the big hitters that are private AI companies that are,

Ejaaz:
most of them actually presumed to IPO this year, they already own and give you

Ejaaz:
access to via their stock VCX.

Ejaaz:
And the trajectory has been insane.

Ejaaz:
Like you mentioned, they went public six days ago.

Ejaaz:
Within the first day, their stock price went from $19 to $125. dollars.

Ejaaz:
Four days later, it hit $350. And then just this morning, it hit $575,

Ejaaz:
which values them at $19 billion. Just insane.

Josh:
Yeah. And it's a testament to, I think, how much market demand there is for this stuff, right?

Josh:
Like when you think about your dream portfolio, all the stocks that you want

Josh:
to own, this is pretty much everything.

Josh:
It's the top AI labs. It is the top space company.

Josh:
All of them, like you said, are going public. And this chart is outrageous.

Josh:
I mean, Just this morning, it hit 575.

Josh:
It's cooled off now to only be 394. We have to ask the question, is this insane?

Josh:
Is this a testament to what's coming for the IPO market? I guess if people are

Josh:
interested, how can they participate in this? There's a lot of things we need to unpack here.

Ejaaz:
So before we actually tell you how to get access to this thing,

Ejaaz:
I want to break down their positions a bit more because I think their investment

Ejaaz:
strategy is pretty genius.

Ejaaz:
So if we look on the right side of the screen here, we have a sector breakdown.

Ejaaz:
This is from their official website, which explains the reasoning behind why

Ejaaz:
they bought these particular companies.

Ejaaz:
43% of the fund is invested in artificial intelligence.

Ejaaz:
So that's the actual model frontier AI labs. You can find that in Anthropic and OpenAI.

Ejaaz:
But then a bunch of their fund, 23% of the fund is invested in data infrastructure.

Ejaaz:
Now data is an extremely core part of AI. If you don't have good data,

Ejaaz:
and if you don't have a lot of good data, you can't really train good models.

Ejaaz:
You've got compute on one side and then data on the other side.

Ejaaz:
So their investment in Databricks is actually super smart in that way.

Ejaaz:
But then they also invested in aerospace.

Ejaaz:
And it's not like a small position either, like 5% of the fund is in aerospace.

Ejaaz:
So with a $650 million nav, that's like not insignificant.

Ejaaz:
And they're choosing SpaceX, which as we know, probably going to be IPO-ing

Ejaaz:
as soon as potentially the next couple of months and are launching data centers into space.

Ejaaz:
So they're also thinking forward as well as currently what the major AI labs

Ejaaz:
are. But then there's also some interesting investments in gaming.

Ejaaz:
I noticed that they have a 3.5% position in Epic Games, who just did mass layoffs

Ejaaz:
at their company just yesterday.

Ejaaz:
And although that's not really great news, typically when a company does layoffs,

Ejaaz:
it makes them leaner and boosts the valuation.

Ejaaz:
Epic Games is still a private company, but is one of the biggest gaming IPOs

Ejaaz:
that are presumed to go ahead this year.

Ejaaz:
So they've really picked and chosen their companies very strategically here.

Josh:
It's a good portfolio. And the price action reflects that. I think I need to

Josh:
instill some FOMO. Again, this is not financial advice. At this point,

Josh:
this is just outrageous to buy into.

Josh:
But it is fun to look at the day-by-day insanity so we can kind of evaluate

Josh:
how much interest there really is about this stuff.

Josh:
On the first day when it opened at i think it was 31 it closed at 125 so it

Josh:
was already up like 300 and then by day two,

Josh:
it was up to just about $200. By day three, $315.

Josh:
And then by day four, it hit $575. With the market cap surging well past,

Josh:
I think $15 billion for something that's worth just about $650 million.

Josh:
So you're trading these things at about 30 times what they're actually worth.

Josh:
You're essentially spending $575 for $19 worth of Anthropic and SpaceX and OpenAI.

Josh:
This is crazy. So why are people doing this?

Josh:
Like, what is the actual cause? I mean, at this point, you have to assume maybe

Josh:
it's just a penny stock GameStop situation where people want to just pump something.

Josh:
But there was some truth to this, right? It's like, there has been this IPO

Josh:
drought that we've had over the past few years where all of these companies

Josh:
are creating a tremendous amount of value.

Josh:
Every day we talk about three companies, right? It's like, we're talking about

Josh:
Anthropic, we're talking about OpenAI.

Josh:
Google is publicly traded, but SpaceX isn't. And a lot of the companies are

Josh:
creating all of this value.

Josh:
There's trillions of dollars sitting in private assets that the public doesn't have any access to.

Josh:
The only way you could do this generally is to go through a third-party vendor

Josh:
who sells these things called SPVs and you could buy shares within them.

Josh:
But it's not a real legitimate way of getting on the cap table,

Josh:
getting real shares. It's not great. So clearly people are desperate.

Josh:
This is the first real instrument that I've seen to find product market fit.

Josh:
There are a few others. I know ARK Invest has one that's not publicly traded.

Josh:
I know you could buy into it quarterly and you get your quarterly dividends

Josh:
but there are some experimentations just this very clearly is the biggest winner so far.

Ejaaz:
It's a mixture of extreme and maybe treacherous financial engineering,

Ejaaz:
as well as desperation for the retail market to get access to these companies.

Ejaaz:
It is no secret, like Anthropic, OpenAI, SpaceX, Anduril, all these companies

Ejaaz:
are massively drooled over by

Ejaaz:
the retail market, but no one can get access into any of these companies.

Ejaaz:
And the major issue with private market valuations is typically they would achieve

Ejaaz:
a reasonable valuation and then IPO and give retail access. but now private

Ejaaz:
valuations just keep going on and on and on. I mean, look at Uber, look at Stripe.

Ejaaz:
They have remained private for years now and their valuations are extortionate

Ejaaz:
and we don't know if they're ever gonna want to go public because they just

Ejaaz:
have so much cash to spend on their existing business.

Ejaaz:
So the incentive to give retail access isn't really there but the financial

Ejaaz:
engineering is kind of crazy.

Ejaaz:
So only 10% of their shares are publicly available for float to purchase right now.

Ejaaz:
So the market is actually pretty illiquid. for the investors in the fund that

Ejaaz:
purchase shares before the direct offering, they're kind of locked up right now.

Ejaaz:
But I see that the lockup is probably around six months, which actually isn't that long.

Ejaaz:
Typically, it's like a year and then like a cliff after that.

Ejaaz:
So you're going to have a lot of this shares or the float increase pretty drastically after six months.

Ejaaz:
So there is a lot of financial engineering that's going on here.

Ejaaz:
To your earlier point, there are some similar funds that have launched recently

Ejaaz:
that are similarly structured like this.

Ejaaz:
The most obvious one probably being Robinhood's Venture Fund One.

Ejaaz:
And if I look at that stock chart right now, I've got to pull it up.

Ejaaz:
It didn't fare well after the first month.

Josh:
No, it did horrible. And I think the reason why is because it's missing those crown jewels, right?

Josh:
When you look at the portfolio, what it's made of, it has boom aerospace,

Josh:
it has, I believe, Databricks in there. It has really impressive companies, but it's missing.

Josh:
The spacex it's missing the anthropic it's

Josh:
missing the open ai it doesn't have those companies

Josh:
that really everyone wants and it seems like the

Josh:
world really only wants these three things yeah and if you don't have that included

Josh:
you're not going to get reward for it and that's what happened with the robin

Josh:
hood fund now there is something that i do want to talk about briefly because

Josh:
anytime an asset goes up 18 times in five days you have to start asking the

Josh:
question how close are we to the top here.

Josh:
Like I know a lot of people listening to the show, they've been in the crypto world for a while.

Josh:
They've seen this happen many times. And we must ask the question to our Oracle

Josh:
here at Polymarket, what is the chance of a recession?

Josh:
Just out of curiosity, because generally this type of frothiness begins to happen towards the top.

Josh:
And thankfully, Polymarket is saying the chances are actually kind of low,

Josh:
35%. Now, granted, these have come up over the last few weeks from 20% to 35%.

Josh:
So this is a 35% and climbing.

Josh:
But still, there's only a one in three chance, according to the very brilliant

Josh:
people at Polymarket, who are saying that we'll even have a recession.

Josh:
So that does make me feel good. I think it feels hard to imagine the AI bubble

Josh:
kind of exploding prior to these IPOs actually happening.

Josh:
This can get us into our next news of the day about SpaceX. Thank you,

Josh:
Polymarket, for sponsoring this section of the episode.

Josh:
But SpaceX, we just heard news from yesterday that their IPO is actually far

Josh:
closer than we think. They just filed...

Josh:
The rumors are that they are going to be filing officially as early as next week.

Ejaaz:
Yeah, exactly. So there's a bunch of rumors that broke out today.

Ejaaz:
And actually, just this morning, rumors broke out that Goldman Sachs might be

Ejaaz:
actually leading the entire IPO.

Ejaaz:
So once they file, it's pretty much confirmed that they're going to be IPO-ing relatively soon.

Ejaaz:
The rumored date is, I think, June or July of this year.

Ejaaz:
So happening pretty quickly. and they're going to be raising a staggering $75

Ejaaz:
billion and will value them at IPO at around $1.75 trillion.

Ejaaz:
Now, earlier Polymarket that we looked at, I believe had the odds of them going

Ejaaz:
above $2 trillion by the end of the day, pretty high, like 52%,

Ejaaz:
I believe, I was looking at it earlier.

Ejaaz:
So this is going to be one of the biggest IPOs of the year, but it begs the question, Josh,

Ejaaz:
What is that going to do to Fundrise's stock price, right?

Ejaaz:
Like if SpaceX does go public, I know they only own only 5% of their fund is actually in SpaceX.

Ejaaz:
But if people can get access to SpaceX publicly, why would they own Fundrise's stock?

Ejaaz:
Now, maybe it's because they still want to have exposure to Anthropic and OpenAI.

Ejaaz:
But the point is, as these companies IPO and Anthropic and OpenAI,

Ejaaz:
by the way, are rumored to also IPO this year, I don't see the value of their stock keeping up.

Josh:
Yeah, well, I can't see it keeping up even today. Like, I would be shocked if

Josh:
by the time we publish this episode, the price is still high.

Josh:
Because I mean, this is just an unbelievable premium. And I can't in good conscience

Josh:
recommend anybody go and buy the stock at this premium.

Ejaaz:
No.

Josh:
But it is, I think, more than anything, a testament to the demand.

Josh:
So when SpaceX does IPO, I mean, that $2 trillion number is outrageous.

Josh:
That would have been the most valuable company in the world not too long ago.

Josh:
And that's what they're going to launch at.

Josh:
So I think it's just a testament to how much demand there

Josh:
is for this new paradigm of company for the spacex

Josh:
for the open ai for the anthropic and how big of a deal it is going to be once

Josh:
they actually go public it's looking right now based on the general timelines

Josh:
that if they do file next week it's going to be an early june early to mid-june

Josh:
ipo for spacex yeah and i'm i'm putting my money on june 9th which is six slash nine.

Josh:
I think just mimetically speaking, very strong. But yeah, I think it's...

Ejaaz:
Yeah, actually so, right? What do you think is the over-under of Fundrise being

Ejaaz:
above its peak that it reached today?

Ejaaz:
575 bucks by the time SpaceX IPOs?

Josh:
Oh, 0%. This thing is worth $19. I mean, that's what this is worth.

Josh:
It's worth $19. It's not worth $575.

Josh:
Everything on top of it is just hype and craziness and insanity.

Josh:
Sure, there does deserve to be a premium on this, right? It's because you get

Josh:
private access to, or you get public access to private shares,

Josh:
but that premium should not be 30 times. I mean, that's just crazy.

Josh:
Particularly because, I mean, the fund, what, has 5% SpaceX allocation?

Josh:
So as we begin to wrap up this episode, I think if you're not buying this crazy

Josh:
premium priced asset, how can you actually responsibly get exposure to these companies?

Josh:
And there are a few answers that are pretty interesting. The first one being Google.

Josh:
We always talk about Google on the show. We love Google here.

Josh:
And Google is actually a majority shareholder of SpaceX. They own a ton of shares for a public company.

Ejaaz:
Yeah, I think they own around between 7% to 10%, which is nuts.

Ejaaz:
But also Amazon is the other company, right? They own about,

Ejaaz:
I believe, 17% or actually 22% of Anthropic.

Ejaaz:
So these are publicly traded companies, arguably more robust and stable than

Ejaaz:
Fundrise's latest IPO or DPO.

Ejaaz:
So it might make more sense to own

Ejaaz:
these companies to get exposure to the potential biggest IPOs this year.

Josh:
Yeah, I mean, Fundrise, the fund has 20% exposure to Anthropic,

Josh:
Amazon has just about the same amount, except they own the actual equity on

Josh:
the cap table in a meaningful way.

Ejaaz:
Wait, wait, wait. There's an important distinction here. Fundraiser's fund has

Ejaaz:
20% of the fund positioned in Anthropic, but Amazon owns 20%.

Ejaaz:
Actually owns 20%. They're very, very different things. Much bigger position in Amazon. Yeah.

Josh:
Yes. And I think Amazon is a really interesting company too,

Josh:
as we head into IPO season, because they stand to benefit from all of the headwinds

Josh:
of this on the robotics front, where we see humanoid robots.

Josh:
What is their primary use case right now?

Josh:
Working factory, sorting packages. We see the like,

Josh:
All of the Anthropic annual run rate doubling every couple of months.

Josh:
They're making a tremendous amount of revenue.

Josh:
They'll start to get close to what Amazon is doing if they continue to grow at this rate.

Ejaaz:
Well, there's also Amazon's AWS business, which inferences most of the AI queries that are sent.

Ejaaz:
Like all of Claude's stuff gets sent to AWS servers.

Ejaaz:
OpenAI is structured to deal with them, which they're launching soon.

Ejaaz:
All of like Google stuff also kind of routes through them as well.

Ejaaz:
So they're just a beast and people are valuing them as a retail e-commerce platform,

Ejaaz:
which is still the most ridiculous thing ever.

Ejaaz:
Look at Amazon's next quarterly earnings. I'll bet you now that AWS revenue is through the roof.

Josh:
And crazy breakthrough that we might have to talk about. We'll definitely be

Josh:
talking about on the roundup tomorrow.

Josh:
But Google just released this unbelievable paper that shows how they're able

Josh:
to compress these models, use what, six to eight times less memory and still

Josh:
get the same output with no loss.

Ejaaz:
But also 8x faster. So you could have the same number of GPUs,

Ejaaz:
but run a Frontier model eight times as fast just because they wiped out memory. It's just insane.

Josh:
So now Amazon Web Services, because far more powerful, I mean,

Josh:
GCP becomes more powerful with Google. everyone is just becoming far more powerful.

Josh:
And what's interesting about Google and Amazon is they both have their specific

Josh:
TPUs or accelerated GPUs that they're using that are kind of out of the NVIDIA sphere.

Josh:
So there's a lot of bullish catalysts that are coming.

Josh:
As we wrap up, maybe we could talk about just a few ways that you can actually

Josh:
get exposure to these companies, because I've spent a lot of time trying to

Josh:
acquire shares. There's really three.

Josh:
You go to a company like Forge Global or Hive, or there's a few others,

Josh:
and this is by no means an endorsement.

Josh:
I i haven't used them but they offer these spvs you

Josh:
can go in a lot of times the minimum investment size is like 25 50

Josh:
000 you can try to get access to these shares at a premium but there's pretty

Josh:
high fees it's not the best way of going about it the second way is you can

Josh:
just buy into these funds like vgx from fundrise and they give you public exposure

Josh:
i know arc invest has a fund that's very similar where it's not publicly traded

Josh:
on a daily basis but you can collect quarterly dividends,

Josh:
And then the third way is just getting exposure through the publicly traded

Josh:
companies that have exposure, like Google, like Amazon.

Josh:
That's probably it. And then we just hope that all these companies will go public

Josh:
and create true alignment, because that's not fair.

Josh:
Anthropic wants to align everyone, but what about the financial alignment,

Josh:
dude? They're just raking in all the cash and not giving any to us.

Ejaaz:
There actually is a fourth option, in my opinion, which is you can just wait

Ejaaz:
for these companies to IPO.

Ejaaz:
I do think a lot of them can IPO this year and relatively soon.

Ejaaz:
We've got SpaceX that might IPO in early to mid-June.

Ejaaz:
And then Anthropic and OpenAI are kind of racing together right now to IPO by the end of the year.

Ejaaz:
OpenAI yesterday announced that they shut down Sora and are condensing and rediverting

Ejaaz:
compute and team resources to build the best coding and chatbot LLM.

Ejaaz:
This isn't insignificant. The

Ejaaz:
reason why they're doing this is they're prepping themselves for an IPO.

Ejaaz:
Anthropic's doing the same thing. They're on track for, I believe $80 to $100 billion ARR this year.

Ejaaz:
So all the numbers look great, and they want to go public as soon as they can. So

Ejaaz:
Maybe the best strategy is also to wait. You can see where the public values these companies.

Ejaaz:
You can buy it maybe not on the first day, but second day, third day or fourth day.

Ejaaz:
But also these companies could shoot up. So if you do see a good opportunity

Ejaaz:
to get access to, you know, the SPVs or through Fundrise, as Josh just mentioned,

Ejaaz:
just be aware of the risks before you do so.

Josh:
And I think that wraps up the episode today. I mean, it's just a crazy story

Josh:
that's happening right now with this fund of going 18x.

Josh:
It's just a testament to how crazy the rest of this year is about to get with

Josh:
all these companies going public.

Josh:
Um, I am not participating. EJS, do you have any interest in participating in this?

Ejaaz:
I will not be. No, hang on. Let's, uh, let's do one final check.

Ejaaz:
And Josh, we are at 422, close to 420. It's up 35%.

Josh:
So by the time this episode goes live, is it higher or lower? What are we thinking?

Ejaaz:
Okay. Uh, I think it's higher because I think the hype will catch on for a couple more days.

Josh:
That's my bad. Okay. Well, I, I cannot advise anyone touch this with anything

Josh:
more than a hundred foot pole,

Josh:
but that is the episode today just

Josh:
a fascinating story i thought it was really fun to just check in share

Josh:
this like crazy news catalyst that's going on how to get exposure

Josh:
if you are really curious and what the likelihood is that we're in

Josh:
a bubble which is lower than i think most people expect so all good things happening

Josh:
here if you enjoyed this episode please don't forget to share it with your friends

Josh:
um comment on youtube give us a five-star rating subscribe to our sub stack

Josh:
where we publish newsletters twice a week they're very helpful very informative

Josh:
and yeah thank you so much for watching and we'll see you guys in the next episode see you guys.