20VC: Figma's 250% Pop - The Greatest IPO Mispricing Ever | Meta and Microsoft Blowout Quarters: Broken Down | Cognition Raises at $15BN and Ramp at $22BN | CRV Downsizing and What It Means for LPs and GPs
🎯 Summary
20VC Podcast Summary: Figma’s Pop, Tech Earnings, and VC Shifts
This 80-minute episode of 20VC, featuring Harry Stebbings and guests Jason Lampkin, Rory Driscoll, and special guest Brian Halligan (Founder of HubSpot), provided a deep dive into recent market events, focusing heavily on the mechanics and implications of high-profile IPOs, recent tech earnings, and shifts within the venture capital landscape.
1. Focus Area
The primary focus areas were General Tech/Venture Capital, specifically analyzing the mechanics of IPO pricing (using Figma as the prime example), dissecting blowout earnings from major tech players (Meta and Microsoft), and discussing significant recent private market valuations (Cognition and Ramp). A secondary but crucial theme was the internal dynamics and pressures faced by founders during the IPO process.
2. Key Technical Insights
- IPO Pricing as a Negotiation of Access, Not Just Valuation: The discussion highlighted that the final IPO price is often a micro-negotiation between founders, bankers, and anchor investors (like Fidelity). The goal is often to secure desired long-only investors at a slightly lower price point to ensure long-term stability, even if it leaves “money on the table” in the short term.
- The “Controlled Pop” vs. Euphoria: A standard, desired IPO pop (e.g., 15-20%) is engineered to make initial investors feel good and encourage holding. The massive 250% pop seen by Figma is considered an anomaly or an “earthquake”—a natural phenomenon resulting from extreme supply/demand imbalance and market euphoria, which may not be solvable by alternative structures like Direct Listings.
- Direct Listing Limitations: While direct listings allow companies to raise capital, the analysis suggested they might not prevent massive initial pops if the underlying asset quality and market sentiment are exceptionally high, as the initial price discovery mechanism remains susceptible to retail/speculative rushes.
3. Market/Investment Angle
- Figma Mispricing Debate: The consensus was that the massive pop was not due to a fundamental, accessible mispricing (i.e., no one was willing to place large orders at $98 pre-market). Instead, the high price was driven by low supply, high demand from retail/speculative buyers, and the subsequent euphoria once the stock began trading.
- Long-Only Investor Behavior: A sobering insight was that even “long-only” institutional investors often have internal price targets. If a stock doubles or triples immediately, many are forced to sell significant portions to lock in gains, meaning the desired long-term stability might be undermined by extreme initial pops.
- VC Downsizing Context: The mention of CRV downsizing suggests a broader market correction where VCs are adjusting fund sizes and expectations, impacting future LP/GP relationships and potentially leading to more conservative deployment strategies.
4. Notable Companies/People
- Figma: The central case study regarding the extreme IPO pop (pricing around $33, hitting ~$145).
- HubSpot (Brian Halligan): Provided firsthand experience of the IPO pricing night, detailing the pressure to choose between hedge funds and long-only investors, and the internal conflict with bankers over pricing points (e.g., Fidelity’s $24 vs. $25 target).
- Meta & Microsoft: Mentioned for their blowout earnings, signaling strong performance in the core enterprise and advertising tech sectors.
- Cognition & Ramp: Noted for recent high-value private raises ($15BN and $22BN, respectively), indicating continued high-stakes funding in AI infrastructure and fintech.
- Zendesk: Used as a comparative example to HubSpot, illustrating how timing and securing a strong initial institutional investor base (long-onlys) can significantly impact a company’s trajectory post-IPO, especially when facing activist pressure later on.
5. Regulatory/Policy Discussion
The discussion touched upon the SEC amending rules to allow capital raising in direct listings, making that structure more viable, though the practical impact on preventing massive pops was debated.
6. Future Implications
The conversation suggests a market where timing and investor selection are paramount for successful public debuts. While the IPO process remains fraught with last-minute conflict and potential for massive mispricing, the underlying strength of top-tier assets (like Figma) will continue to attract speculative fervor. The industry is likely heading toward a period where founders must be acutely aware of the behavioral economics driving IPO pricing, recognizing that a “perfect” outcome is elusive.
7. Target Audience
This episode is most valuable for Venture Capital professionals (GPs/LPs), Investment Bankers, Founders preparing for an IPO, and Senior Tech Executives interested in market mechanics and strategic financing decisions.
🏢 Companies Mentioned
💬 Key Insights
"I think you're someone like Jensen or OpenAI, you say our Dario, we've created the new world. The two categories in the stack that didn't meaningfully exist at scale in SaaS and cloud land that exist now are the GPUs, which is all Jensen, and the models."
"The CapEx to build that is running between $400 and $600 billion a year to enable a $25 billion ecosystem to go and keep doubling... My takeaway is the long-term trend is almost certainly real, and if you fast-forward 10 years, you can get $25, $30 billion of apps, wherever you can easily be $300, $400 billion. That's why in the long term, it's not a bubble."
"This isn't the AI-enabled success. This is, 'I have an awesome existing business, and it kicks off so much money that I'm allowed to spend that money on building these great AI vision,' and I can probably do that for as long as my existing business kicks off cash."
"I'm looking for SMB companies in AI. Is how do you self-train? How do you solve the unsolvable issue? How do you solve the fact that it can take six months to roll out a Palantir-grade deployment? How do you do that in 60 seconds? And any founders that crack that code, I want to invest this hour, this second."
"I guess today Cognition laid off 30% of the folks they bought, and they offered to buy out all the other 200 employees, give them a nine-month package. They told them they either had to work 80 hours a week, six days a week in the office, or they should take a nine-month package."
"I think what it says is demand is high for premium assets. So it's a little like, it's the private IPO. You float the price at $100 and you end up at $150. You close the price at $10 billion and you end up at $15."