Okay, Computer: Chatbot Killed the Google Star: A Conversation With FirstMark Capital’s Rick Heitzmann

**SPEAKER_1** (0:00)
Hey, Dan.

**Dan Nathan** (0:00)
What up, Guy?

**SPEAKER_1** (0:01)
You're into this fintech. What's all this I'm hearing about Current?

**Dan Nathan** (0:04)
You're going to like this, Guy. Current is a fintech company that's completely disrupting traditional banking.

**SPEAKER_1** (0:09)
Wait a second. Does that mean I don't have to drive to the bank anymore?

**Dan Nathan** (0:13)
Yeah, exactly. I manage an important part of my family's finances from one easy to use app.

**SPEAKER_1** (0:18)
Well, I got to get this app. But where can I learn more?

**Dan Nathan** (0:21)
It's super easy. Just go to current.com/ok, OKAY, and download the app. That's current.com/ok.

**SPEAKER_1** (0:28)
Current is a financial technology company, not a bank. Banking services provided by Choice Financial Group, member FDIC and Cross River Bank, member FDIC.

**Dan Nathan** (0:42)
Welcome to OK Computer. I am Dan Nathan. I'm here with Rick Heitzmann. Rick, happy New Year.

**Rick Heitzmann** (0:46)
Happy New Year to you, man. We're back in the saddle, excited for the new year.
Hopefully, fortunes change a little bit.

**Dan Nathan** (0:52)
Well, yeah. I mean, listen, I don't feel like we left the saddle. I don't know about you here. I feel like I'm in the saddle.

**Rick Heitzmann** (0:57)
Depends on the saddle that you're talking about.

**Dan Nathan** (0:59)
I feel like I'm in the same.

**Rick Heitzmann** (1:00)
Some of us left the saddle for a little bit.

**Dan Nathan** (1:02)
Yeah, same spot as I saw you last year. So let's get into a lot going on here, man. I mean, we've spent a lot of time, obviously, talking about the public markets. And again, the NASDAQ closed down a little more than 30% of the year. The S&P 500 closed down a little less than 20% on the year. We know some major damage had been done in the tech sector. And there was a rotation late in the year into value, into some non-tech areas in general, which kind of, I think, masked some of the devastation in the public markets, at least in the technology sector. We'll hit all that a little bit. But one of the themes I think was really interesting, going back a year ago, I mean, you were talking about the lag that you see in private markets to public markets, and you actually had some... I don't mean to say actually, I hate qualifying that way. You had a really good...

**Rick Heitzmann** (1:48)
Well, we also actually...
I'm doing it, it's contagious. We also saw was when the public markets cracked in about November of last year, a lot of people thought it might have been a headfake. It was actually people going out on Twitter, on TV saying, hey, this is just like that month of COVID where the markets are cracking. And some of us believe that, hey, this is a fundamental thing that's not going to unwind in a matter of weeks.

**Dan Nathan** (2:15)
All right. Well, here's a quote from Jan 5th, OK Computer, probably our inaugural OK Computer, 2022 from Rick H. What we are seeing, I think, as everybody's anticipating interest rates rising, folks are therefore discounting growth harder. And what I think is really interesting about that, I think to your point, is a lot of people didn't think that the Fed was going to stick to it and raise rates as high as they have over the course of 2022 And what's interesting about this comment here is that the stuff that got hit the hardest was anticipating higher rates. So when you think about high valuation tech stocks that had not great valuation support and rising interest rate environment, anything related to crypto and Web 3 sort of stuff, obviously, specs had a difficult time in that environment. So it was kind of an unwind of that easy money policy.

**Rick Heitzmann** (3:01)
And also long dated profits. So the discount rate on that profits went from zero to material. And if you don't think you're going to be able to generate cash for several years, DCF is going to pull back in those profits and significantly discount them. And this is after a period of years where no one really thought about that and only people were chasing growth.
And the interesting thing also was that the amount of time, it's probably not fully through the private markets yet. I think we've talked about we're about halfway across the lake, but it even took a couple months after this for the public markets to trough and that people didn't understand the implications. I would say management didn't fully understand the implications of what this incredible rise in the cost of capital would bring.