USVC, Figma, Netflix, Padres
The Padres aren't a baseball team, how to best leave a board
USVC
USVC, the new closed-end investment fund launched by Naval Ravikant and AngelList, has some important nuances in its structure that are being overlooked. The fund is focused on US privately held venture capital investments.1 The fund invests from early stage through late stage and pre-IPO, including secondaries.
The fund controls when investors can get their money out, how much they can take out at a time, and whether there is a haircut (discount) when they take it out. This gives the fund the profile of the much sought after “permanent capital” that many funds have aspired to, but few have achieved.
Bill Ackman is launching a closed-end fund that is publicly traded in order to achieve this permanent capital. While Bill has a long history in fund management, he had previously tried to launch a permanent capital closed-end fund and found the reception amongst prospective investors wasn’t positive enough. His retry actually involves him contributing into the fund shares of his management company to provide additional positive returns. This additional foundational addition is enough to push the overall closed-end fund into a situation where the value of the fund is greater than the sum of its publicly traded parts. This is important because it means that he can raise more money cheaply to buy more stocks and make a profit as he does it.
Closed-end funds that are valued above a real NAV (net asset value) are a wonderful thing! It’s also exceedingly difficult to do for a prolonged period of time. What happens when the value drops below the NAV? Smart people start rumbling that the fund manager should start selling the assets and distributing the money as positions are exited. That helps close the gap between the NAV and the fund value by shrinking the base. If you keep doing that, eventually the fund has nothing left in it and shuts down. Since this fund isn’t publicly traded, if you go to sell and the fund won’t redeem you, you wait or try to find a buyer at a discount.
In USVC’s case, the NAV, which really is the current price (before any haircuts or redemption penalties), is set by the fund manager. There are many closed-end funds where that isn’t how it is done. The NAV could be set by a 3rd party auditor, marks from other sources, secondary trades, or in other ways. When it is set by the fund manager, they have an additional lever to limit liquidity at any point and obstruct redemptions by hiding some of the haircut in the form of a lower NAV. They also have a way to show higher returns (and earn higher fees) during the good times simply by adjusting NAV.
As of the March 31st, under 45% of the fund was deployed into investments in companies and the remaining 55% was held in the fund, typically in US treasury bills and notes.
There is another way to do this.
Let’s say you had a closed-end fund that was focused only on US commercial real estate and you had 80% of the capital deployed into various commercial real estate projects around the country, you could take some of the 20% remaining that hadn’t been deployed on projects and put it into public REITs that were focused on US commercial real estate.2 That way your investors would be more fully deployed with exposure to the sector and you could sell the REITs as needed when new investment opportunities came along.
For USVC, the remainder of the fund can be put into the Nasdaq index, or any range of publicly traded ETFs or liquid funds that would give investors more exposure to tech. Dumping the remainder into QQQ (Nasdaq index) would read as almost passive here and avoids the need to pick or diligence other funds if that is a concern.
If you don’t want to deploy the fund like that you could always lower the fees on the cash component of the fund.
None of this is financial advice. Do your own diligence and read the prospectus.
Figma, Netflix
When is a good time for a company to have a board member leave?
Two notable departures happened recently. Anthropic’s CPO, Mike Krieger, left the Figma board after nine months, having helped the company through its IPO. And Reed Hastings announced he’d step down as Netflix’s executive chairman — reportedly unexpected. The Figma departure was surprising for the brevity of service on the board, having served for less than a year. Both open the same question: how do you leave a board with minimal damage to the company you’re leaving?
Figma’s stock dropped 5% on the news, but that announcement coincided with Anthropic launching its design tooling to work with Claude — a directly competitive product to Figma Make. Netflix dropped 10%, but that came with earnings guidance warning of headwinds. In both cases, multiple news items landed simultaneously, making it hard to know how much of the move is about the departure versus the underlying news.
On the Figma side, the Claude Design tool wasn’t built in a day.3 The conflict was visible to the parties for a while. You can draw your own conclusions about whether the board member saw a stock down 75-90% since IPO and decided there wasn’t the same value to time being spent on that board or whether the blistering pace of AI acceleration made what were once separate swim lanes into a swirl of red ocean direct competition.
The Anthropic CPO isn’t close to 65, so you couldn’t pre-signal with a mandatory retirement plan the way you could have with Hastings. But one thing worth considering in these circumstances: naming a replacement director as part of the announcement. Either find someone who’s a better fit for this specific moment — someone with more time to devote, for instance — and make it a positive story. Or lean into “small tight ship” messaging, move quickly, and get back to work. What tells you something is wrong is the absence of a named replacement combined with surprise. That’s the tell.4
Netflix’s timing is tough. Hastings leaves right after the failed Paramount bid — Netflix made an offer, got passed over, stock was down during the bidding process, then recovered when it didn’t go through. Odd timing for a co-founder departure that could have happened cleanly last year, outside the bidding process.
Netflix has had co-CEOs in place for a while, so the chairman role is more optics than operational — but at this scale, optics matter. Again, the question is whether a different replacement announcement could have sent a different message.
There’s an interesting opportunity in understanding the flavor of these equity moves. Prediction markets on director and CEO departures could disaggregate signals. It would be useful to know, in retrospect, whether Hastings’s departure was priced in — whether the 10% move was entirely about revenue guidance, or whether the departure itself was the surprise. There’s probably econometric analysis that could work on this, but these events are one-off and person-specific enough that teasing out the signal is difficult without market-based disaggregation.
On the Figma/Anthropic front, this is also the bill coming due on IPO positioning. Great board members cut both ways. Having Anthropic’s CPO — someone associated with Instagram and world-beating design thinking — clearly helped the IPO run-up. But the other side of that ledger arrives when they leave. The gain probably outweighs the loss here, but it creates a harder hill to climb right when you need to be rallying troops against an apex predator entering your market.
Focused independent businesses serving a single customer (in this case the designer) have history on their side. Anthropic serves tons of users for tons of use cases. Figma can still rally around winning the design battle.
Padres
The San Diego Padres sold for about $4 billion, which at first seems high for a franchise that isn’t typically considered prestige. It’s close to what Steve Cohen paid for the Mets. The Dodgers went for around $10 billion — that’s a proper prestige franchise. So what explains $4B for San Diego?
A big driver is real estate. Petco Park is owned by the team, and the ownership group owns significant real estate around the park. This follows a model established in the NFL: build a stadium, buy up surrounding land cheaply, create an asset that drives foot traffic, watch the land appreciate. Robert Kraft did this at Foxborough with Gillette. Jerry Jones did it around The Star in Arlington.
Baseball has a huge advantage for this model: the number of games. 81 home games a year plus potential postseason. Every game brings people into the area. Bars, shops, hotels in and around the park capture that traffic. If you can extend the lifetime value of each fan across the real estate ecosystem, revenue and profit compound — and you attract people who aren’t even going to the game, just because the area has buzz.
NFL works this less efficiently because you only have 8-9 home games. That’s a huge gap in how much you can activate the surrounding real estate. Baseball’s cadence is uniquely suited to this.
With the weather in San Diego, you have the opportunity for outdoor concerts all throughout the off-season. As investors are excited about live entertainment, this is a nice advantage that stadiums like MetLife or Gillette don’t provide.
The product isn’t the product. We think of baseball as nine guys on the field and the crack of the bat. The profit is coming from elsewhere.
West Coast teams have a structural advantage in the Japanese market. Japanese baseball is big, and the time-zone overlap is better than the East Coast. Limited competition among West Coast teams (Dodgers, Angels, Giants, Mariners, A’s) means that you have streaming and broadcast opportunities that aren’t open to every other team.
The Dodgers are a super franchise — back-to-back World Series, Shohei Ohtani as the biggest box office star in the game. Proximity to that creates value for the Padres.
In the regular season: 13 games against the Dodgers, 6 or 7 happen each year at Petco. Marquee games with higher ticket prices, season ticket pull, general enthusiasm around those big homestands. A strong competitor in the same division actually helps your business!
With a strong team, you have postseason potential: the possibility of playing the Dodgers in the playoffs, with home games, rivalry buzz, and national attention. This specific matchup has happened a couple of times in the past five years.
It’s 120 miles between San Diego and LA. Diehard Dodgers fans travel down for games. Hotels and businesses in the Petco area capture some of that Dodgers traveling spend. Games against the SF Giants add to the mix. The division structure, the travel-friendly geography, the time-zone advantage, the super-franchise rivalry — all of it drives premium positioning for the Padres regardless of their own win-loss record. Being moderately or very competitive layers additional value on top.5
This raises a question: how much value accrues to being the only major sports franchise in a city?
San Diego used to have the Chargers in the NFL before they moved to LA in 2017. The Padres are now the only big-four team in town. That’s worth more than it looks as it unlocks disproportionate fan and local business support, as well as leverage with the city on stadium deals. People want to support the team as an economic driver and as part of the city’s identity and there is only 1 major team in town.
San Diego with no major teams feels different from San Diego with a high-performing baseball team that’s a mainstay and aspiring to prestige.
Kansas City has both the Chiefs and Royals. The Chiefs are considering moving from Missouri to Kansas. If the Royals weren’t in the market, the stadium dynamics would probably look different. Oklahoma City Thunder is the clearest positive example — only big-four team in OKC, draws huge local enthusiasm, creates more franchise value than the city’s size would suggest.6
Being the only game in town — the San Diego Padres — you own the city’s sports branding. You don’t share it. That’s a valuable piece of what’s being sold at $4 billion.
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The American component of the investment criteria isn’t strictly defined. Legora, a Swedish company headquartered in Stockholm, is listed as an initial holding.
If you were running this fund, you would presumably have a good sense of which public REITs had good managers and holdings. Maybe this would also be a way to develop relationships so that you get a call if those managers are looking to dispose of assets?
If it was built in a day, this would be incredible and would have been the focus of all of Anthropic’s marketing efforts.
Apple did this exceedingly well with their announcement of Tim Cook stepping down as CEO and also naming John Ternus as his replacement.
Anaheim is closer to both LA and San Diego and has the Angels with Mike Trout, another box office star. But they’re in the American League, don’t play the Padres often, and don’t produce the same rivalry. The Padres have the natural I-5 rivalry with the Dodgers more or less to themselves.
It’s not guaranteed. Memphis Grizzlies have struggled despite basketball culture. Perhaps they are impacted by the popularity of Memphis’ college basketball team which enjoys deep rooted support locally. But when the dynamic works, it’s real.