Commissions are 30-40% of an auto dealer's costs as a % of gross profit. If salespeople don't have to negotiate price, you can cut a lot of that cost and focus on higher margin (e.g., financing) and subscription products (e.g., parts & services) that deepen customer loyalty. The big groups will be better at making these investments (and the investments needed to sell/maintain EVs) and will continue to consolidate what remains a highly fragmented industry (i.e., the two largest dealer groups, AN and LAD were each only 1.75% of new car sales in 2021).
I wouldn't cry for nor count the dealers out just yet.
FAANG companies will primarily be differenated based on network or software, rarely commodity hardware. They don't need to go all the way to silicon if they can just tune the designs for their workloads. We're early on in that process, and I think the internt giants will progress up the stack into the metaverse, not down into the physical science of it.
Semiconductors are a capital intensive and brutal business, as evidenced by Intel's recent fall - they basically made one architectural mistake and that slip up cost them the lead on multi-threaded performance for probably 5-8 years, assuming they can get it back.
Separately, Rockefeller's coercion of the railroads was not something he did because he was big, it was something he did to become big. He would strong-arm his way into controlling or coercive positions at railroads, then cut off his competitor's ability to transport their product. When they were struggling, he would buy them up at distressed prices and turn the rails back on.
I think the disagreement is with this claim from the article (2nd to last paragraph):
Sci-Hub, more so than RG, therefore seems to have a greater potential for disrupting the current order of things and poses a significant threat to publishers and librarians, who cling to the mistaken belief that the key to Sci-Hub’s success is its alleged seamlessness (a single sign-on), which if they can replicate will go away.
The author is arguing that seamlessness is not Sci-Hub's only advantage versus traditional channels, but that "Much of the growth of Sci-Hub is therefore ideological", "publishers are seen as the enemy, whose greediness erects unnecessary barriers, thereby obstructing the advancement of science" and that "Sci-Hub is seen as a ‘Robin Hood’ figure"
The editorial Batson is reacting to (by Yao Yang) makes the point that the largest economic development project that lifted the vast majority of people out of poverty over the past 20 years was orchestrated by China, and the RCTs/small scale interventions that Duflo et. al. won the Nobel for had no role or relevance there. He focuses more on the policies guided by the "classic" development economists like Solow which emphasize domestic savings and investment.
Batson's post delves into who in China actually was responsible for the economic policy changes that created that development.
Personally, I welcome the the addition of RCTs to the economic research toolkit. For too long, economics has wrapped itself up in a mathematically complex knot that bears no resemblance to the real world. Behavioral economics has started to crack that by applying common sense, though too often they have dramatically overextrapolated their hard-to-replicate results.
Hopefully economists can see RCT as a tool which can be used where appropriate, rather than an entirely new paradigm that much be applied to everything (as they did with highly mathematical economics).
Point #2 actually follows from Point #1. Hayek makes this argument very thoroughly in The Road to Serfdom:
Advancement within a totalitarian group or party depends largely on a willingness to do immoral things. The principle that the end justifies the means, which in individualist ethics is regarded as the denial of all morals, in collectivist ethics becomes necessarily the supreme rule. There is literally nothing which the consistent collectivist must not be prepared to do if it serves ‘the good of the whole’, because that is to him the only criterion of what ought to be done.
Overcast (a podcasting app) has great features to optimize the high speed listening experience. They have variable speed, a great silence trimmer, and a voice boost that makes speech clearer.
This is almost certainly not written the way it is because he is an asshole (though I have no idea, he might be), but rather because investors seeking to make an investment can be a massive waste of time. They'll say they are open to your terms, but then try to negotiate once you're down the path. A self-funding, growing company has no need for investors, and that situation is not where venture capitalists typically find themselves - usually the companies need cash and VCs have power. It is more typical for PE firms, but usually only when founders want to cash out (or at least begin cashing out) - obviously he's not there yet.
I've seen other companies who have clearly wasted a bunch of time with investors before and have to be super clear about their situation to prevent more wasted time, e.g.: http://buildinglink.com/marketing/public/investors
Overall, seems like growth is slowing, especially in the ridesharing business, and losses keep expanding.
Will be interesting to see how they frame that on the call, as 9% YoY growth in the ridesharing business (10% YoY on adjusted net revenue) does not typically garner a 4.5x+ revenue multiple when you're burning so much cash ($1B in the first quarter)
Full Text:
ALWAYS-ON WORK CULTURE CREATING ‘BROKEN’ PEOPLE, SAYS REDDIT CO-FOUNDER
Alexis Ohanian speaks out against toxicity of ‘hustle porn’ that glorifies ‘most absurd things’
Alexis Ohanian, venture investor and husband of tennis superstar Serena Williams, loves getting asked how he balances family life and his career as managing partner of Initialized Capital.
He and Ms. Williams became first-time parents in 2017, and in the months that followed, Mr. Ohanian frequently spoke out about why it was so important for him to take time away from the Bay Area firm he co-founded to bond with their daughter.
Parental leave wasn’t only a fun way to spend 16 weeks with their newborn Alexis Olympia Jr., he said at The Wall Street Journal’s Future of Everything Festival on Tuesday, but it was also a reminder of why work should never be the only metric for measuring success.
“I’ve spoken out quite a bit about things like ‘hustle porn,’ and this ceremony of showing off on social [media] about how hard you’re working,” said Mr. Ohanian, who previously co-founded online discussion forum Reddit. “Y’all see it on Instagram and you certainly see it in the startup community, and it becomes really toxic.”
Business men in his position are rarely asked about juggling the requirements of their roles outside of work, like in their family, he said, and that contributes to unrealistic expectations that a job can reflect the entirety of anyone’s identity as a human being.
“All of us who decide to start a company, we’re kind of broken as people,” because founders are often singularly-focused on the success of their venture, said Mr. Ohanian. Even with great mentors and investors supporting their vision, entrepreneurs tend to put a great deal of pressure on themselves to work harder than anyone else to achieve success and profitability. That psychological pressure is compounded by what he and others refer to as “hustle culture.”
“You have this culture of posturing, and this culture that glorifies the most absurd things and ignores things like self-care, and ignores things like therapy, and ignores things like actually taking care of yourself as a physical being for the sake of work at all costs. It’s a toxic problem,” said Mr. Ohanian.
This issue isn’t limited to technology companies, he added, noting that his acquaintances in finance and other industries also promote an unhealthy attitude that encourages 12-hour work days and few breaks.
“Social media has made it possible to weaponize it to the point where, if [bragging about your difficult workweek] gets hearts, you’re incentivized to keep pushing” the limits.
As those below mentioned, you have to use TEV here. Based on TSLA Q2 2013 vs. Q1 2019 financials, you end up with a TEV in 2013 of $28.2B vs. today of $44.3B.
The 2013 calc is:
$240/sh * 118mm shares = $28.4B market cap, less $746mm cash, plus $576mm debt = $28.2B TEV
The 2019 calc is:
$204/share * 173mm shares = $35.3B market cap, less $2.2B cash, plus $11.2B debt = $44.3B TEV
For those mentioning subtracting the debt, that's incorrect. A company is capitalized with equity and debt. To buy the whole company, you have to buy both. But when you buy the equity, you get the cash, so you subtract that out, since buying cash isn't relevant. You then have to add the debt, because you have to pay off all the debt to own the company outright.
1. This is a great way for Catalyst to get a potential rising star some operational experience in a low-risk situation (lots of other Catalyst people apparently involved, short timeline, etc.)
2. She said she was involved with the company since their investment (which, if it is PresenceLearning as others said, was 3+ years ago), and has been a board member either since that time, or for a while.
3. Senior leadership probably all knew her or at least of her, given her involvement as an investor.
4. I think the waitress line is a throwaway to try to be humble and build rapport with readers. Working in VC/PE is useful for keeping a company going from an operational perspective.
This focuses on just one source of plastic pollution, of which there are many. I found this resource helpful to understand more about the broader scope of the problem:
There are many industries where this happens. Biotech and drug development is particularly prolific in this regard. Often drug development companies spend tens to hundreds of millions creating a drug, only to have the whole company bought out by a large pharma company once it passes a certain testing/approval milestone. No profits for the company at all. [1]
Just because a business doesn't turn a GAAP profit doesn't mean it is not a worthwhile investment opportunity, nor that investors shouldn't have access to it so they can decide for themselves. There are many reasons why investors might want to back an unprofitable company - I won't go into them all here, as it differs dramatically by industry.
Keep in mind that a large part of the public market capital is from institutional investors who have just as much experience, if not more, as private investors.
No one has to buy shares in these companies. It is all a choice. "The public" is not some block of sorry schmucks who keep getting stuck with toxic investments pawned off by VC funds, and I'm not exactly sure why you seem to think "the public" is getting a bag dumped on them...
[1] Endocyte acquisition by Novartis for $2B, December 2018. Endocyte had ~$300m of accumulated losses and zero revenue prior to acquisition
[1] Ablynx acquisition by Sanofi for $4.8B, May 2018. Ablynx had ~€370m of accumulated losses prior to acquisition
SoftBank Founder Masayoshi Son Lost $130 Million on Bitcoin
Japanese billionaire made a huge personal investment in the digital currency as prices peaked
By Rachael Levy and Liz Hoffman
April 23, 2019 7:00 a.m. ET
Masayoshi Son, the billionaire founder of SoftBank Group Corp. 9984 0.31% , made a huge personal bet on bitcoin just as prices for the digital currency peaked, losing more than $130 million when he sold out, according to people familiar with the matter.
Mr. Son, who launched the world’s biggest venture-capital fund on the strength of his long-term investing acumen, made the investment at the recommendation of a well-known bitcoin booster, whose investment firm SoftBank bought in 2017, the people said.
The investment came at the peak of the bitcoin frenzy in late 2017 after the digital currency had already risen more than 10 fold that year. The exact size of the bet couldn’t be determined, but bitcoin peaked at nearly $20,000 in mid December 2017 and Mr. Son sold in early 2018 after bitcoin had plummeted, the people said.
Bitcoin closed Monday at $5,381.05.
Mr. Son is known for quick investment decisions and big risky bets, most of which have paid off. He decided to back Alibaba Group Holding Ltd. after spending just five minutes with its founder, Jack Ma. He took a half-hour to greenlight a $200 million investment in a startup that grows vegetables indoors.
Mr. Son’s previously unreported loss shows that even some of the world’s most sophisticated and wealthiest investors got caught up in the frenzy. With a net worth estimated by Bloomberg LP at $19 billion, Mr. Son will hardly notice, though it dents his reputation as a patient and prophetic investor.
A SoftBank spokesman declined to comment on Mr. Son’s behalf.
Mr. Son was encouraged to make the investment by Peter Briger, the co-chairman of asset manager Fortress Investment Group, the people said. SoftBank bought Fortress in February 2017, inheriting the asset manager’s bitcoin reserves along with its more traditional investment funds.
Fortress under Mr. Briger first bought bitcoin in 2013, when it was still a fringe technology used mainly in the darker corners of web commerce. By the time the SoftBank deal was completed, its holdings were worth more than $150 million.
Mr. Briger declined to comment through a spokesman.
Mr. Son built SoftBank mostly on long-term technology investments and used his record to launch the $100 billion SoftBank Vision Fund. The fund, backed by the government investment fund of Saudi Arabia, owns big stakes in Uber Technologies Inc. and WeWork Cos., and has been credited with driving up valuations of some of the biggest private technology companies.
The Vision Fund is facing a test of its success with the coming initial public offering of Uber, which is aiming for a valuation of as much as $100 billion, below previous expectations but still above where the fund invested.
Even as it looks ahead to futuristic technology, SoftBank’s most immediate problem is its controlling stake in U.S. mobile phone company Sprint Corp. The 2013 deal has weighed down the conglomerate with debt, limiting its investing options.
Last week The Wall Street Journal reported that Sprint and T-Mobile’s merger had been challenged by U.S. Justice Department staff lawyers, who expressed concerns that the all-stock deal would threaten competition.
Sprint, hoping for approval, said in a regulatory filing last week: “Sprint is in a very difficult situation that is only getting worse. Sprint is not on a sustainable competitive path.”
I wouldn't cry for nor count the dealers out just yet.