Alvin's Newsletter: No. 27
Weekly newsletter on what I saw interesting in tech, venture capital and business.
📰 News
Salesforce buys Slack: The big news of last week and this. Great acquisition for both parties. Slack was in need of some firepower taking on Microsoft and now they have a deep-pocketed partner. Not the greatest outcome for Slack shareholders - the stock has been trading well below its IPO end-of-day price since IPO. Link
Ultimately, Slack was ripe for the taking. Entering 2020 it had lost around 40% of its value since it went public. Consider that after its most recent earnings report, the company lost 16% of its value, and before the Salesforce deal leaked, the company was worth only a few dollars per share more than its direct listing reference price.
Charli Damelio hit 100M followers on TikTok: The loops are getting faster. She took less than 18months to hit this milestone. For context, only last year did a channel on YouTube surpass 100M subscribers - 10 years after joining. Fun fact - that channel is T-series - a channel you likely have never heard of from South Asia run by 13 people. Link
She’s the first by some distance, too — only two other creators have cracked 50 million. On TikTok, that makes her more than twice as big as Will Smith, three times as big as The Rock, four times as big as Selena Gomez, and five times as big as Kylie Jenner and Ariana Grande.
Spotify testing stories: Didn’t see this one coming but makes sense they test to try and build deeper connections between artists and users. Link
📚 Reading
What is gold for: Crypto hawks like to paint Bitcoin as the new ‘Gold standard’. Given Bitcoin’s huge rally over the last few months - timely to take a deeper look at Gold and its history as it relates to money. Link
It subsequently crashed, and underperformed relative to other assets over an extended period. Perhaps the most striking comparison is that the Dow was at 860 when gold was at $850. Today, the Dow is at 29,483, and gold is at $1,866. Four decades after the peak of the great inflationary gold bubble, a gold investor is enjoying capital appreciation close to what an equity investor had clocked in 1986, ignoring dividends.
Junkyard billionaires - Copart story: Great story of taking an unsophisticated business like car wrecking and digitising it. Link
Counterintuitively, all the cutting-edge technologies designed to reduce crashes are good news for junkyards. Sure, bumper-mounted lidar sensors and autopilot systems may result in fewer accidents, but vehicles that do get totaled are in much better shape and easier to resell to new buyers. And since the high-tech gizmos in newer cars are expensive (or impossible) to fix — even after minor damage — insurance companies are increasingly scrapping them, even for fender-benders that would have been easily repaired a decade ago.
Curse of scale in funds management: I didn’t realise until recently how debilitating more money is for fund managers. Quite counter-intuitive and somewhat different to the VC game (where the money is used to double-down on the winners in later rounds). How to combat this? NetInterest describes a couple of models. Link
Warren Buffet puts it - “If I was running $1 million today, or $10 million for that matter, I’d be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”
Buy-now-pay-later breakdown: If you have been following the BNPL sector in Australia, you would be across most of this - if not - good intro. The US market is a 2 years or so behind Australia in the BNPL wave. Lot’s of growth to be had. Link
🦖 Entertaining & Interesting things
Netflix removes the Chappelle show on request from Chappelle: You don’t hear many instances of content owners/distributors doing what is morally right typically (I don’t even know if it is morally right but it feels right to some degree). Link
People think I made a lot of money from ‘Chappelle’s Show.’ When I left that show, I never got paid. They didn’t have to pay me because I signed the contract. But is that right? I found out that these people were streaming my work and they never had to ask me or they never have to tell me. Perfectly legal because I signed the contract. But is that right? I didn’t think so either.
So you know what I did? I called them and I told them that this makes me feel bad. And you want to know what they did? They agreed that they would take it off their platform just so I could feel better. That’s why I fuck with Netflix. Because they paid me my money, they do what they say they’re going to do, and they went above and beyond what you could expect from a businessman. They did something just because they thought that I might think that they were wrong.
Airbus’s legendary John Leahy on A380’s failure: There has been much written on the demise of the A380. Here we hear it from someone on the inside, right at the top and in retirement - John Leahy. Link
Where I believe we got into serious trouble was when we were blindsided by the engine manufacturers. They were assuring us that the specific fuel consumption was that of new generation engines, and it would be ten years before there was the next leap to a substantial improvement. We launched in 2000, but three years later we got the 787 being launched with GENx engines and Rolls Royce matching that, having a ten to 12 percent better specific fuel consumption than the A380’s engines. Can you imagine the success of the A380 if it had 12 percent better fuel burn than it actually had?
Princeton grads gaming and winning the lottery system: Seems they have gained some kind of information advantage. Link
Loreal shows off digital makeup: Could this be the future of our zoom calls. Link
🎧 Podcasts
The best podcast episodes last week according to Bosco Tan:
Who is Janet Yellen (The Daily) - 29 mins: Biden this week nominated former Chair of the Fed Janet Yellen for the post as Treasury Secretary in his incoming administration. She will become the first female to hold the position, but also the first person that’s done both of these roles. This episode goes into her background, why she might be the right pick given her economic crisis experience and what her ideology may indicate for policy. Link
Vale Tony Hsieh (How I Built This…) - 30 mins: This is a repeat episode. The great entrepreneurial hero Tony Hsieh of Zappos died this week at 46 years of age under some mysterious circumstances. He was one of the first to trumpet culture as the secret ingredient to building a great business. Here he lays it out in detail. Despite not big into shoes himself, he led the growth of the biggest shoe company the would has ever seen, all the while implementing his learnings from his first company. Link
WTF is the Hyperloop? (WSJ Tech News Briefing) - 19 mins: One of the most ambitious projects currently being worked on is the Virgin Hyperloop: a transportation pipe which will contain trains which work off magnetic and vacuum forces. Something out of science fiction and will cut down on-land travel times dramatically. The size of the financing to date indicates the ambition - over $400 million to develop the technology (not including any actual infrastructure building). The company’s CEO Jay Walder tells us more here: Link
Chillies and Chinese food (Sinica Podcast) - 41 mins: In the cultural interest slot, a history of how chillies worked its way into some of the most iconic Chinese cousins. The guys talk about when it was imported, how it spread across China and became part of the culture, as well as some medicinal applications. Link
📹 TikToks
VC pitching with theraNO’s. Link
Skipping vibes. Link
Grill cleaning. Link
Vinyl record making. Link
The sound of modems. Anyone born after 2000 probably haven’t heard this sound. Link