The bet Sam Altman lost and why Southeast Asia will drive future alpha

This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.

Earlier this month Sam Altman lost the US$100k “Bubble Talk” bet made in 2015. On the other side of the bet was Michael de la Maza and monitoring the results was Danielle Morrill. While he may have lost the bet as a whole he did correctly predict two of the three criteria and missed the third by a factor of 15-20%. The spirit of the bet was to call out the 2015 news cycle in which a percentage of investors and journalists would seek to frame the environment as a “bubble”. What better way to call out a misalignment in incentives between the parties holding the microphone than skin in the game and a good ole fashion wager.

Sam rightfully pointed out in 2015:

  • He understood that the easier content to create was to make comparisons to the 1999 bubble and subsequent nuclear winter.
  • Pointing out that if the chatter was unnecessary it would scare newer investors out and bring valuations down disproportionately.
  • Stating “I would much rather read about what companies are doing than the state of the markets.  The gleeful anticipation of a correction by investors and pundits is not helping the world get better in any meaningful way.”


The three propositions that had to be correct on January 1 2020:

Proposition 1

The top 6 US Companies - Palantir, Airbnb, Dropbox, Pinterest and SpaceX worth just over $100B in 2015 will be worth at least $200B in aggregate on January 2020. FYI I am leaving out Snapchat because I couldn’t get verification of its valuation.

Outcome: Not True

The group of companies as of 2020 is $30-40B less than the $200B.

Uber = $50.73B Market Cap on January 1 , 2020

Pinterest = $10.41B Market Cap on January 1, 2020

Dropbox = $7.44B Market Cap on January 1, 2020

SpaceX = $33.3B private valuation as of May 31, 2019

Palantir = $20-30B private valuation as of September 2019

Airbnb = $35B private valuation as of March 2019

Contributing factors include;

  • Palantir, SpaceX and AirBnB most recent valuations remain private.
  • Uber’s rollercoaster and the opening it left for Lyft to breathe new life with a market cap of $12.9B.

Proposition 2

Mid-stage YC companies - Stripe, Zenefits, Instacart, Mixpanel, Teespring, Optimizely, Coinbase, Docker, and Weebly worth less than $9B in aggregate in 2015 will be worth at least $27B in aggregate  

Outcome: True

Stripe alone is valued at $35B as of September 2019

Proposition 3

The current YC Winter 2015 batch—currently worth something that rounds down to $0—will be worth at least $3B on January 1 2020.

Outcome: True

GitLab* = $2.75B private valuation as of September 2019

Razorpay = $450M private valuation as of June 2019

Atomwise = $150M private valuation as of March 2018

Chariot = acquired by Ford for $65M

Note: Acquisitions at any point between now and the decision date are counted as their acquisition value.  Private companies are valued as of their last round that sold stock with at most a 1x liquidation preference or last secondary transaction of at least $100MM of stock.  Public companies are valued by their market capitalisation.

Full details of the bet can be on Danielle Morrill’s blog.


The crux of the bet was the hyper-rationalisation of a rapid increase in valuations and revenue multiples, and comparing it to the 1999 correction. This does not take into account the reality of present day factors including:

  • Developed consumer markets.
  • Mobile internet penetration.
  • Well established logistics and 3PL solutions.

The aforementioned points of difference are no more true than in SEA.

While the aggregate Total Available Market (TAM)of SEA may seem large, each market also has a level of friction that stands in the way of the style of monopolisation that we have seen in the previous decade.

A friction that is compounded by the current geopolitical environment which seeks to inhibit the disproportionate aggregation of the high growth service verticals that resemble search and social media.

Source: IMF October 2019 Data

Source: Google & Temasek/Bain e-Conomy SEA 2019

The Compound Annual Growth Rate (CAGR)  for the SEA internet economy is lifting disproportionately to early-stage investment with notable friction to globalisation. It stands to reason that we will not only see the Lyft style ceding of $12.9B from Uber (or Grab’s purchase of Uber’s SEA operations 2018), but increased M&A activity from domestic incumbents and a new generation of domestic listings as the retail investor market reaches new levels over the mid to long term.

A number of these markets continue to have a shortage of venture activity and terms for early stage funding-only investments which at times do not match best practice. (Outline in a recent post titled Dear Angel Investor). Some investors have been moving to the later rounds, which exacerbates opportunistic terms at earlier fundraising rounds where select investors have better the ability to source deals. The aforementioned provides an opportunity for those capable of relatively effective diligence and sourcing in nascent geographies, preserving effective governance and cap tables for the growth capital participants.

Accelerating Asia is an early-stage venture capital fund that focuses on investing in pre-Series A startups, learn more.

Nesh Sooriyan is Entrepreneur in Residence at Accelerating Asia, an early-stage venture capital fund and award winning accelerator. Connect with Nesh on LinkedIn


Invest in the future

Accelerating Asia invests in startups with scalable technology solutions and revenue generating business models that combine purpose with profit.


In making an investment decision, investors must rely on their own examination of startups and the terms of the investment including the merits and risks involved. Prospective investors should not construe this content as legal, tax, investment, financial or accounting advice.