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Tren Griffin
@trengriffin
, 3 tweets, 1 min read Read on Twitter
1/ "In a business with a large spread between return on invested capital and cost of capital, rapid growth adds lots of value. For large negative spreads, growth subtracts a lot of value. Whether growth is good or bad is contingent on incremental return." d2wsh2n0xua73e.cloudfront.net/wp-content/upl…
2/ Miller:Modigliani: "The essence of ‘growth' is not expansion, but the existence of opportunities to invest significant quantities of funds at > the cost of capital."

Buffett: "Growth creates value only when a business can invest at incremental returns > its cost of capital.
3/ Mauboussin: "Growth is an amplifier, and it’s impact grows as the ROIC - cost of capital spread widens (above or below zero). At zero spread, growth has no impact.
It’s not margin that matters but ROIC (these are related, of course)."
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Tren Griffin
@trengriffin
"Peloton has two businesses: hardware (selling bikes and, recently, treadmills), and subscription content (a monthly $39 fee). If you had to guess which of the two will sport a higher gross margin, which would you pick?" news.crunchbase.com/news/as-peloto…
"Anki said it was left “without significant funding to support a hardware and software business" recode.net/2019/4/29/1852…. Without recurring revenue from software that benefits from telemetry, the life of a business is hard. High gross margins make life better. Hardware is hard.
"Android OEM death watch: Sony, HTC, and LG edition" google.com/amp/s/www.thev… "in the modern smartphone world, it’s not enough to just design and build new gadgets to a high spec; you have to power them with your own tailored software"
Read 4 tweets
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Tren Griffin
@trengriffin
"If you think about airlines, there’s a lot of barriers to entry and there are capital intensive barriers, but ultimately airlines are not massively profitable,” the investor said." reuters.com/article/us-ube… Perhaps in some alternative universe airlines have a lot of barriers.
"The airline industry has very, very, very low incremental cost per seat with enormous fixed costs. The temptation to sell that last seat at a very low price is very high and sometimes it’s very hard to distinguish between that seat and the last seat" CM google.com/amp/s/25iq.com…
He bought anyway: "I now have an 800 number I call every time I think about buying a stock in an airline. I say, 'I am Warren Buffett and I am an air-aholic.' They try to talk me down, 'Keep talking don’t do anything rash.'"
Read 3 tweets
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Tren Griffin
@trengriffin
"Jardiniere’s closure is emblematic of the plight of high-end, a la carte restaurants in San Francisco — operating costs are too grand and profit margins too slim." google.com/amp/s/www.sfch…
"What are the unit economics of a full service restaurant? 25iq.com/2016/11/18/why…

San Francisco:

Cost of food – 24%

Cost of alcohol sold – 5%

Wages and salaries – 32%

Employee benefit – 7%

Lease – 10%

Other – 15%

Pretax profit – 2.5%
"Razor-thin does not even begin to describe just how slender margins are in the restaurant business, and that’s if you’re one of the fortunate few that don’t go under in the 1st year. If you’re lucky, small single digits. Like, the smallest single digits." 25iq.com/2018/04/14/bus…
Read 3 tweets

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wiiw
@wiiw_news
#Panel discussion on "What is the new normal for #CESEE?"
@wiiw_news #wiiwSpringSeminar
Vizek: "Very strong public sector, lot of informal economy. Croatia experienced slow growth before, so new normal not really new. But political willingness to reform very low."
Zubovic: positive trends in #Serbia: - rapid #growth in #IT sector over last 3/4 years w/ 3% to 6% share of GDP - Huge Chinese #investments, but with #externalities - Macroeconomic #stability, no fiscal #deficit anymore - foreign #debt declining - Substantial growth of #GDP
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Mr. Skilling (Parody)
@mr_skilling
The first games will tip off in the (Low Return On Invested) Capital Blessings Region.
First match-up is classic blue blood vs new blood. #6 TC PipeLines $TCP has been on the block since 2009 while BP Midstream Partners $BPMP went public in late 2017.

TCP is most known for getting #FERC'd and cutting the distribution immediately before knowing the impacts.
Additionally, $TCP has basically been abandoned by its parent $TRP, which used it as a dropdown vehicle, but has started to rally back as of late.

$BPMP is mostly known for coming public WITH IDRs during a time when everyone hated them. Quite the "fuck you" to investors.
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Elizabeth Yin
@dunkhippo33
1) Some thoughts on metrics. The best founders I've ever backed have all been incredibly metrics driven (there are other important qualities of great founders too, but you cannot be a great founder without being metrics driven IMO).
2) What does this mean? Simply put, it means really understanding what levers drive your business. Business, at its core, is simple. You want to acquire customers for $x. And earn $y such than $y > $x. Execution is the hard part but understanding Y > X is the key.
3) Being metrics drive is about understanding the funnel of a customer. How much does it cost for a person to learn about you? How much does it cost to cultivate that person into a paying customer? How much can you make on that customer the first time? And then thereafter?
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Neil Tamplin
@NeilTamplin
I’m at #cx2019 today - a conference about ‘customer experience’. These slides are the crux of it for me. It’s about doing WITH, not FOR or TO.
Also, really pleased that I’ve heard one of the speakers point out that ‘customer’ implies choice. 👌
‘Don’t ever hide from the data’ - share the data about services with residents. Transparency about performance data and what your working on is really important. #cx2019
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Alec Stapp 🌎🚀
@alecstapp
Meta 🚨: Things I Learned Reading "Things I Learned in 2018" Posts

HT @kenthendricks @TomWhitwell @WillRinehart @david_perell, full links at end.

1/ "Less time separates us from Tyrannosaurus rex than separated T. rex from Stegosaurus." @Laelaps smithsonianmag.com/science-nature…
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EduBridge Academy
@edubridge_ng
Cost evaluations is an important part strategic management and often times consultants find themselves managing pool of high revenue but low profit firms.

This is a #thread on cutting costs strategically & staying competitive.

#Consulting #ManagementConsulting
The business environment today has become extremely competitive. Companies are not only facing competition from their local competitors but also from global ones. Different economic and geopolitical factors make global supply chains necessary.
The problem with having global supply chains is that operations become broad and complex. It is much easier to manage operations located in the same geography rather than those located in multiple countries.
Read 27 tweets

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