Mary Meeker has had an astonishingly productive career as an internet seer. As a tech analyst at Morgan Stanley in the 1990s, she became the sector’s most influential analyst, championing
and Dell. In 2010, Meeker gave up that gig to become a venture investor with Kleiner Perkins. She picked winner after winner, investing in companies like
Meeker and her team left Kleiner in 2018 to set up a new firm, Bond Capital. But she may be best known for her series of more than 20 iconic research reports on internet trends. The first, in 1995, warned that internet investors were likely to “vacillate” between betting on growth and worrying about valuation. That’s as true as ever.
Meeker recently agreed to discuss via email what she has been up to—and how she looks at the world. The interview has been edited.
Barron’s: Where has Bond been investing lately?
Mary Meeker: Some of Bond’s recent investments include Ironclad, which does contract management software; Saildrone, which builds autonomous marine drones; Retool, which makes software for app development; Multiverse, an apprenticeship and training platform; Import, a software platform for warehouses; and Genies, a provider of tools for creating avatars.
What’s your view on Web3, nonfungible tokens, crypto, and blockchains?
There have been nearly 300 million global purchasers of cryptocurrencies, which have nearly $2 trillion in market cap. Consumers and investors have voted with their pocketbooks. Also, the time and focus of software developers have migrated to crypto and blockchain at an extraordinary clip. These are foundational technologies, like mobile and cloud over the past decade.
More than 4.3 billion people spend about four hours a day on mobile devices, up from about 100 million people with negligible usage less than 20 years ago. In effect, people are already living in digital worlds, and they want immediate, frictionless payment systems, digital currencies, and novel applications unlocked with blockchain. In the physical world, money is being printed at fast rates and inflation is rampant—another reason consumers are excited about decentralized digital currencies that have finite supply. Most digital currencies will fail—but those that win should win big.
You’re a believer.
We have entered the fourth faster/better/cheaper computing revolution of the past half-century. We had the personal computer in the 1980s, the desktop internet in the 1990s, the mobile internet in the 2000s, and now we’re in the crypto-blockchain-metaverse era. Past tends to be prologue and each new revolution ramps faster than its predecessor. Generational changes in the world’s largest markets—finance, healthcare, government, and education—are accelerating. Covid-driven remote work has catalyzed pioneer ship and mobility in America. New takes on old markets—like NFTs—are evolving at rapid rates, often reimagined by a new generation of creators who are getting paid directly for their efforts, with limited intermediaries.
How are you feeling about private market valuations?
While the pace of innovation is exceptional, a lot of capital was put to work quickly, especially over the past 18 months—in a lot of companies and at high valuations. As is the historical pattern, a high percentage of these companies will fail to live up to expectations. Too much money, too fast, in too many similar companies can make it more difficult for the winners to build competitive moats, and break out. And, it’s worth remembering that too much cash can sometimes kill.
But you still believe in the venture model.
The traditional venture capital business in America has been very effective over the past half-century. Those with experience in early company-building days can attest to how wild-and-wooly it can be….They also have a keen understanding of start-up fragility and the amount of 24/7 effort that goes into helping the flourish winners. The good news is that today’s young technology—as a class—are exceptional entrepreneurs. The bad news: The time to gain competitive advantage has been shortened.
What macro issues worry you?
It’s a long list. Long-in-the-tooth perpetual quantitative easing with abnormally low interest rates. Especially high inflation. US government expense-to-revenue and debt-to-GDP ratios at the highest levels since World War II. Entitlements at 16% of America’s GDP with healthcare—Medicare, and Medicaid—at 6%. That’s up from 9% and 3%, respectively, just two decades ago. There’s war in Europe with rising global unrest. We have cultural and political divisiveness. We have an ineffective K-to-college education process. And, we are beginning to get recession signals.
But you’re still at it.
America remains the best country in the world. At some point these (and other) growing challenges will come home to roost and we will all be judged by how well we anticipate, adapt, and respond. Investors need to be especially thoughtful pickers and shrewd portfolio managers.
Write to Eric J. Savitz at email@example.com