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1/ Costco derives roughly 75% of its operating profits from membership fees. Because Costco’s membership revenue is booked in advance, cash flow volatility is below average. Membership renewal rates stand at about 90% in the U.S. and Canada. google.com/amp/s/25iq.com…
2/ 25iQuiz: Who invented the membership/subscription based business model? How far back does it go? Was the membership/subscription model really "pioneered by publishers of books and periodicals in the 17th century?" Was it used earlier? en.m.wikipedia.org/wiki/Subscript…
3/ Was Sol Price first to adopt a membership model? google.com/amp/s/amp.busi… Sol Price was clearly first on other things though. mastersinvest.com/newblog/2019/6… google.com/amp/s/www.sand… anbhf.org/pdf/Sol_Price_…
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Tren Griffin
@trengriffin
1/ "The investors bankrolling these companies are discovering one thing in common — that most of their money is going to expensive and ever-rising customer acquisition costs (CAC) via Google, Facebook, and Instagram....'CAC is the new rent.'" marker.medium.com/why-all-the-wa…
2/ CAC that is high can be a stone cold killer- or not. The impact of any one variable in the unit economics of a business must be considered in relation to the other variables. abovethecrowd.com/2012/09/04/the… "the variables of the LTV formula are interdependent not independent"
3/ "You can create infinite revenue if you sell dollars for 85 cents. Webvan had the highest NPS scores of any company I’ve ever known. It wasn’t that the consumer proposition didn’t work, it was that the economics didn’t work." google.com/amp/s/25iq.com…
Read 3 tweets
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Tren Griffin
@trengriffin
1/ Elon Musk: "Tesla is like a laptop on wheels" today at Satellite 2020 responding to a question about the growing importance of software.

He said Starlink's broadband will have an order of magnitude larger total addressable market per year than a $3B market for launch.
2/ Musk said "zero" focused on a spinoff of Starlink since he had to make it work first since all previous LEO systems went bankrupt. He mentioned bankruptcy of Iridium and Globalstar. He's wrong about Teledesic, which didn't file bankruptcy (cash was sent back to shareholders).
3/ I didn't hear that Elon Musk said there was "zero chance" of a Starlink spin-off from SpaceX as some people have said. What I heard was that he was giving a spin-off "zero thought" right now since focus on making the system technically and financially successful was essential.
Read 3 tweets
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Tren Griffin
@trengriffin
1/ Service via satellite to a handset originally designed for terrestrial use isn't a new idea, but it has always been held back by the cost of capabilities like creating an acceptable link budget. Mobile operators allocating spectrum to this isn't simple. spacenews.com/megaconstellat…
2/ "Link” refers to the transmission of the signal from a transmitter and its reception by a receiver. An accounting of the satellite signal strength and noise is known as a “Link Budget”.

Fun with physics! For example, ijltet.org/wp-content/upl…
3/ Even at frequencies < 1 GHz, will the link to the phone be able to:

A) operate indoors or in a car; or

B) be effective without line of sight to the satellite (do structures and trees block service?)

Asynchronous messaging is easier than synchronous voice communication.
Read 3 tweets

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Raffy Jacobs
@JacobsRaffy
Assumptions: The following DCF model is predicated on a few assumptions regarding the margins of these businesses and the resulting free cash flow they should produce.

$AAPL
1) Gross Margins for the segment (iPhone, Mac, and iPad) as a whole rest at 32% throughout the 10 year period of the following DCF model, and operating expenses rest at 13% throughout the same period of time.
$AAPL
2) Free cash flow to shareholders is assumed to be about 80% of the above operating margin when we account for deductions resulting from an effective tax rate around 20% and interest expense.
$AAPL
Read 25 tweets
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Phil Hill
@PhilOnEdTech
1/ Instructure ($INST)'s preliminary proxy statement is out, which is doc describing upcoming shareholder vote on whether to accept the Thoma Bravo acquisition. sec.gov/Archives/edgar… #LMS #Canvas #edtech
2/ Doc has a lot of new details, including total price of deal (adding in stock options, etc): $1.959 billion
3/ Fees that Instructure would owe Thoma Bravo if deal does not go through: $29.3 million if superior bid comes in before Jan 8 (go-shop period) from party who had not already given bid, or $63.5 million otherwise. Instructure would get $136.9m if Bravo walks.
Read 12 tweets
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Volatility Professor
@VolProfessor
1/Today's Saturday post will be on #volatility mean reversion (from a simplistic point of view) in relation to $VIX and $SPX.

This can be a fairly complicated topic but I want to narrow it down to its most basic form.
2/
First an aside..I have been in Sydney for almost a week ( which explains my posting at odd times) and really enjoy this #bigbash cricket. Really fun to have it on in the background

Ok, back to the post.
3/
 Some facts first.

1.)Unlike price, we know that #volatility has to revert, but the speed at which it reverts is unknown.

2.) We also know it has a log-normal distribution, and we can estimate the confidence intervals quite easily
Read 13 tweets
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vilage_idoit
@vilage_idoit
1/n For those who missed out on #Mello2018 - have decided to compile some thoughts from the talks and the cos. Some very successful investors in attendance; investing is about stacking the odds in your favour (like poker) and repeatedly playing to leverage your edge.
2/n If you don’t have an edge then you’re liquidity for someone else who has one. Investing and trading require patience and to wait for the opportunity. Losses reduce both physical and mental capital. You need to play to win but if you lose all your capital you can’t play.
3/n Gervais Williams - lack of wage growth changing political and investing landscape. Tailwinds will become headwinds as rates potentially rise and productivity stagnates. Risk comes from real world. Imo we are drunk on cheap credit; previous tax shields will become burdens.
Read 24 tweets
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Brendan Bernstein
@BMBernstein
1/ Investors continue to extol blockchains for "decentralization". But we already have many technologies to do so: IPFS, datproject, Bittorent, etc

What they’re actually promoting blockchains for is the ability to create MLM schemes on-demand with a large supply of greater fools
2/ See below from @cdixon as an example.
3/ The problem with these biz's is not that the equity mechanism is flawed. It’s that the moat of the biz *grows too large* and they can extract a rent instead of adding value. What we need is more competition, not a new incentivization mechanism. Fee != rent if it’s value add
Read 12 tweets

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