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25iQuiz: Should the goal of a subscription provider of digital services be to generate an immediate GAAP profit when it is growing rapidly?

Or should its goal be to maximize the value of expected long-term cash flows, discounted by the cost of capital? bloomberg.com/news/articles/…
Will your local grocer accept payment in "GAAP profit" when you buy food or do they require that you pay cash?

What does "paying for yourself" mean if you are a business? Why isn't it defined by expected long-term cash flows, discounted by the cost of capital?
ARPU: $193 a month

CAC/SAC: $312

Gross margin 29%

Customer lifetime 14 years

On a GAAP basis there's no "profit" in month one from this customer. But is that the right test to determine if shareholder value has been created?

What's the objective of a rational investor?
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Tren Griffin
@trengriffin
1/ Does Goldman’s Marcus service have product/market fit?
Deposits from Marcus were $60B at the end of the quarter, increasing $24B through the full year 2019. Credit card loans were $2B at the most recent quarter-end, up from $1B in the third quarter. pymnts.com/earnings/2020/…
2/ “Goldman consumer bank its fledgling credit card business, contributes less than 3% of its overall revenues.” reuters.com/article/us-gol… "51% increase in credit loss provisions to $336M as retail loans soured." cnbc.com/2020/01/15/gol…
3/ “Only once proven your value hypothesis do you move on to your growth hypothesis. The value hypothesis defines the what, the who and the how. What are you going to build, who is desperate for it, and what is the business model you are going to use to deliver it?” Andy Rachleff
Read 7 tweets
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Tren Griffin
@trengriffin
"By using this free digital tool that costs us very little in variable COGS we obtain data about you which is useful to us in cross-selling other financial services to you. Each time you add a different service to our bundles the risk that you will churn is substantially lower."
My interpretation of what Jim Barksdale famously said during the Netscape IPO was that unbundling can be a cost-effective way for a business to build a customer base that can eventually be used as a fulcrum for re-bundling other higher margin services. google.com/amp/s/25iq.com…
The cycle of rebundling seems to be picking up speed as business focus more on generating cash flow than the customer leads that result from unbundling.

Can you think of some financial services businesses that are picking up the pace on cross selling other products?
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Tren Griffin
@trengriffin
Reminder: You aren't a private equity buyer who earns a fee + carry and must invest your fund or give LPs back their cash. A PE buyer can use a multiple(s) to "price" acquisitions on a relative basis. You by contrast should the "value" the business so you have a margin of safety.
Reminder: You are unlikely to be someone who "selects a portfolio of securities – mostly stocks – that are fundamentally overvalued no matter what markets do with clients who are primarily institutions who use you as a hedge to their core equity portfolio."google.com/amp/s/25iq.com…
I gave a talk once at a business school in connection with the BRK annual meeting. I was on after Aswath Damodaran, who gave a lively and valuable talk on the difference between pricing and valuation. "The value of assets may be very different than price."mmd.cfainstitute.org/pdf/2014/10491…
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Mayur M Thaker, CFA
@freshjiva
TESLA CHARTS: 2013 - Present.

All numbers arranged in TTM annual bars. For example, 2019 refers to 4Q18-3Q19, 2018 = 4Q17-3Q18, etc.

Revenue:
45.2% annualized (least squares) with a 99.2% r-squared on the exponential regression curve.
Gross Profit:
36.8% annualized (least squares) with a 99.2% r-squared on the exponential regression curve.
EBITDA:
72.2% annualized (least squares) with a 93.4% r-squared on the exponential regression curve.
Read 6 tweets
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Sequoia_India
@Sequoia_India
1/: @bharatpeindia is bringing millions of small merchants on to the #digital payments ecosystem for the first time. Their goal: to become the largest enabler of free offline #payments and provide a one-stop platform for all #financial commerce solutions.
2/: Through a unique 30 second on-boarding process, @bharatpeindia has already reached a 1.7 Mn user base. 4 Mn+ #merchants will be using the platform by FY 2020.
3/: There are 50 Mn merchants in India, a vast majority of whom are underserved by #banks and #NBFCs. The credit gap in the market is ~$400b. This is the opportunity the company is going after.
Read 6 tweets
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Per Bylund
@PerBylund
There is nothing automatic about #profit. In fact, 9 of 10 startups fail. Which means they go under and the investor often loses money, time, and effort put into creating and running the business. But it still creates jobs for those employed, even though fortune.com/2014/09/25/why…
those jobs of course only last for as long as the business. There is much confusion about *why* businesses fail, however. Which means there is bad advice for how to avoid failure. As noted in the linked @FortuneMagazine article, the "self-evident" reason startups fail is that
there is no market for what they produce. This is indeed an obvious point, but it is one that is almost entirely avoidable. I would even go as far as saying that most businesses fail for silly reasons, which explains why experienced entrepreneurs often do better: they don't make
Read 13 tweets
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Per Bylund
@PerBylund
Value and market value are different, and it is unfortunate that they are often thought of as the same thing. In fact, it hurts your business and career thinking about the world in terms of only market value. Menger was very clear on value already in 1871: it is the direct
experience of satisfaction of a want, or, to use Mises' term, the relief from a felt uneasiness. It follows that value is purely subjective and must be experienced. This experience is what economists call consumption: it is through the use of goods, services, etc. that we are
able to become better off on our own terms. This may include easily recognizable needs such as food, water, shelter. But this is only a sub set of what we find valuable. And, to be clear, we don't actually have a want for food, but for what food provides us: survival, relief from
Read 14 tweets
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James Barisic 🇪🇺 #FBPE
@jamesmb
The closures that @Rachael_Swindon highlights should also been seen in the context of government policy. She is completely right that this is how the Tories are reducing #socialmobility but it is also how they are reducing access to other vital services for the most vulnerable.
It has long been government policy (in common with other countries) that people should access government services online. Other countries recognise that there is a need to keep other options open to protect the most vulnerable. The UK government took a different approach.
The UK government decided to tell people who had difficulty accessing #digital services that they should go to the #library where staff would help them. They then gave no funding for the training of library staff or for their time or for the equipment needed.

#Librariesmatter
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