Hello! Author of the article here. Thanks for the comments, and appreciate the discusssion. I'll start off by pointing out that I'm not left wing, and I have an economics degree so my old lecturers would be disappointed if I was still described as 'economically ignorant.' And I completely agree that PE isn't perfect and I completely agree that PE isn't a bogeyman of any sort. Like any kind of business, I'm sure there are good PE firms and not-so-good PE firms, and firms at every point along that spectrum.
I don't intend to at all imply that Center Parcs would be better off as a public company, or in the hands of a private individual. I'm pointing out that the surface level commentary of "bloody hell Center Parcs is expensive" is misleading, and the reality is much more nuanced than that, hence the need for a deep dive into the financials. Points I make in the article:
1) Center Parcs makes great gross margins on accommodation and food & drink, and EBITDA looks great, but that's a misleading way to look at the business precisely because it's capital-intensive, and the owners -- whether PE, public, or a private individual -- have to continue to reinvest maintenance or growth capex to keep it that way. And that requires either cash or debt, there's no way around that.
2) I contrasted it with a couple of capital-light businesses to show the difference in P&L and balance sheet dynamics, precisely because people often misunderstand capital intensity and the impacts on the business model.
3) I gave a restated measure of profitability (EBDAT), and show the normalised free cash flow which show that Center Parcs is a fairly normal performing business with decent but unspectactular returns. It's definitely not the case that the PE owners are simply pricing things high and raking in the cash.
4) I showed that the expected valuation of £4.5-5bn might be difficult to achieve at a time of rising interest rates, because both capital intense businesses and large PE deals require lots of debt. I make no value judgment on the use of debt -- debt is a tool to use in any business, and just like a surgeon's scalpel, it can be used for good or for harm.
Again, this is much more nuanced than 'PE bad, high prices bad' which is the surface-level analysis that I'm poking fun at in the title and in the piece.
Author of the article here -- kind of, but the idea here was just to write a piece about a capital-intensive business compared to the couple of capital-light businesses I'd covered in the prior articles I wrote, and how that difference in capital requirements plays through the P&L, balance sheet and cash flow statement. One effect of capital intensity is that EBITDA becomes a less useful measure, sure. Another effect is that the cashflow statement becomes incredibly important to running the business, as does understanding the difference between maintenance capex and growth capex.
Author of the article here. That's not what I mean at all. As I said in the article, I love Center Parcs. And I've been on a cruise and spent a ton of money there, and it was totally worth it. The point in here was just that it's interesting to look at the market dynamics of a captive hoilday business like this and how that flows through the P&L and balance sheet.
E.g. Center Parcs makes insane gross margins e.g. food and drink because prices for those ARE insanely expensive relative to other places you could go out and eat. BUT that doesn't actually lead to crazy levels of profitability because it's a capital intensive business that requires lots of capex and/or debt financing to sustain.
The whole point is to take a deeper dive than most surface-level commentaries of "bloody hell Center Parcs is expensive" and see what's actually going on under the hood of the business.
And calling it 'price-gouging' is a bit of a nod to that, and it's a bit of a joke about how expensive a crap steak is there, and it's a way to get people's attention. Like other people have said, Center Parcs is mostly just a function of supply and demand. They have a great product, and people like me are willing to pay for it.
But you're assuming all of the content is the same, except for one small change. It's not. Only the headlines are the same. Using your analogy, it's like taking another comedian's premise for a joke -- "a priest and a rabbi walk into a bar" or something -- and creating an entirely new routine from it.
I think it depends on the individual and what career season you're in -- and what the company wants too. There are companies that are in a strong market position that can kinda just sit there and harvest profits without doing too much, so there are more straightforward, leisurely jobs there.
On the other hand, if you want to work at a fast-growing startup in a competitive market, that's going to be different, and you need to be prepared for that.
No particular choice is 'better' than the other, you just need to figure out what you want, then pick appropriately.
I'm still in a career growth phase, so I'm happy to work hard, and I want to find a company where that's the norm, and that will allow me to grow. I'm sure that'll change in the future though.
I hope you're right -- that's one of the reasons I wrote this. Since when is self-awareness a bad thing?
I mean, generally speaking the type of people who think this post is a bad idea are the type of people who, when asked in an interview what their biggest weakness is, will say things like "I'm a perfectionist" or "I work too hard".
Those are ridiculous platitudes that anyone can see past. I'm much more impressed by the person who admits a real issue, how they identified it, and what they're doing to mitigate it.
Author of the article here -- I think you're right to some extent, but if you can't handle that amount of autonomy, you shouldn't be working in a remote role at a startup. Also, I did a pretty good job of performing just at the level where I wouldn't get fired (in the short-term), but that I wouldn't have to work that hard either.
Author of this article here: thanks, that means a lot to me. I completely agree with you -- I'd much rather work with someone who acknowledges and admits their issues, so we can find a way to work around them, or make them non-issues. That's much easier than working with people who ignore problems, or try to patch over them, or try to mitigate all of their weaknesses without ever focusing on maximising their strengths.
You're totally right. You pretty much nailed it. I'm not one of those paranoid/neurotic people at all.
Funnily enough, this is why I've been a lot better at freelancing: I get instant feedback from the client if they're not happy, and I get instant rewards (payment) when I finish a job to a good standard.
I wrote at the bottom that they helped me write it. I literally showed early drafts of this to the guy that hired and fired me, and he urged me to be even more candid than I was originally. But then again, he has no problem admitting his own shortcomings either. For example:
I don't consider the root cause to be extroversion at all. That's one particular reason why I don't like working at home, but I could (and did) just rent office space to deal with that. The problem is that I'm afraid of succeeding -- so, for example, when I rented office space, I didn't go all the time. Or when my company offered to move me from the UK to Austin to be around them all the time, I said no.
2) is correct. I would have felt like I needed to do everything to the best standard because the people I was working for were around around me. I'd feel a much more personal connection with them, and I wouldn't want to let them down, so I'd get my work done, and do it well. And I'd be less afraid about speaking up, or mentioning problems, in person. It's also a lot easier to demarcate between work and not-work time when you're working at an office.
Hey, I wrote this article. Thanks - really glad you liked it. Remote jobs are fantastic for a lot of people, but they're not the be all and end all. Sometimes, they REALLY suck. Especially if you're not an introvert, and need other people around to recharge.
I wrote this article - thanks, your comment means a lot to me. I thought exactly the same. Everyone who writes online is portraying only the best parts, the highlights, without admitting that sometimes, things suck. It's about time we were honest about things.
I'm curious: what issues do you see with being honest about the ways that you failed, and how you're addressing them? I don't think it shows a lack of a filter, I think it shows an honesty and an awareness of my issues, and what I need to do to fix them.
I'm not particularly embarrassed by this article -- although it was hard to write -- and neither is the company that fired me (as they helped me write it). Although I do understand if you don't want to hire me after reading this.
Not even working for a larger company, but working for any company -- including and especially other startups -- would give people invaluable experience that they could then go and use later down the line.
Really good piece. Although it still seems like a bubble to me, but I understand his point about an anti-bubble of talent. There seems to be a "me too" aspect to this, where it's not just that doing a startup has become cool, but other routes for young people -- more studying, or getting a job -- are actively becoming uncool and unattractive, and carry a certain stigma.
I don't intend to at all imply that Center Parcs would be better off as a public company, or in the hands of a private individual. I'm pointing out that the surface level commentary of "bloody hell Center Parcs is expensive" is misleading, and the reality is much more nuanced than that, hence the need for a deep dive into the financials. Points I make in the article:
1) Center Parcs makes great gross margins on accommodation and food & drink, and EBITDA looks great, but that's a misleading way to look at the business precisely because it's capital-intensive, and the owners -- whether PE, public, or a private individual -- have to continue to reinvest maintenance or growth capex to keep it that way. And that requires either cash or debt, there's no way around that.
2) I contrasted it with a couple of capital-light businesses to show the difference in P&L and balance sheet dynamics, precisely because people often misunderstand capital intensity and the impacts on the business model.
3) I gave a restated measure of profitability (EBDAT), and show the normalised free cash flow which show that Center Parcs is a fairly normal performing business with decent but unspectactular returns. It's definitely not the case that the PE owners are simply pricing things high and raking in the cash.
4) I showed that the expected valuation of £4.5-5bn might be difficult to achieve at a time of rising interest rates, because both capital intense businesses and large PE deals require lots of debt. I make no value judgment on the use of debt -- debt is a tool to use in any business, and just like a surgeon's scalpel, it can be used for good or for harm.
Again, this is much more nuanced than 'PE bad, high prices bad' which is the surface-level analysis that I'm poking fun at in the title and in the piece.