@mims Buffett said in 2001: "the market value of all publicly traded securities as a percentage of GNP... is probably the best single measure of where valuations stand at any given moment." But he's also said the economy has fundamentally changed since then. archive.fortune.com/magazines/fort…
@mims Buffett in 2000 said: "The very best businesses, the really wonderful businesses, require no book value. We want to buy businesses, really, that will deliver more and more cash and not need to retain cash, which is what builds up book value over time." google.com/amp/s/finance.…
@mims As Hal Varian points out in this presentation GDP fails to capture important elements in a modern economy. brookings.edu/wp-content/upl…

Among of the very best investment returns over the past decade has been betting against people who don't understand the rise of intangible assets.

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More from @trengriffin

23 Sep
1/ Casey Newton's interview with Sarah Jeong puts the focus on the economics of the *writers*. Too often people talk and write about whether the publication has a business model. What are the economics for the people who do the writing? How do they thrive? onezero.medium.com/casey-newton-o…
2/ Casey Newton: "What we don’t know is if you’re a writer with a following, can you use that to build a sustainable career in journalism?" That includes working for the NYT but also building a business around a platform like Substack or like rolling your own (Stratechery).
3/ Casey: "If you can find 10,000 people to pay you $100 a year, you’re making $1M a year. I’m not going to get to 10,000 subscribers anytime soon, but if I can I’ll be in a position where I can create media jobs." More and more journalists will adopt Casey's approach over time.
Read 15 tweets
20 Sep
1/ When Bill Gates Sr. achieved his 90 year milestone a book of stories written by his colleagues over the years was created for the birthday party entitled "Thanks for Showing Up In My Life."

I have been re-reading that book this week. It's a wonderful thing to have right now.
2/ Bill Gates (Trey) would not make publicly known that his father had Alzheimer's for another three years, but his close friends knew that Bill Sr. was struggling.

One way I connected with him was to tell memorable stories from the past since long term memory is less impacted.
3/ One story I told happened when the UW Law School Building was dedicated in his name. Bill Sr. said:

"There are many people in this room who deserve to have this building named for them more than me, but I accept this honor as a reflection of a son's love for his father."
Read 5 tweets
20 Sep
1/ Compare: "What stands out most in Nikkei teardown of the Model 3 is Tesla's integrated central control unit, or ‘full self-driving computer.” Tesla developed the chips on its own, along with special software designed to complement the hardware."
asia.nikkei.com/Business/Autom…
2/ "Nikola is relying on Californian manufacturer Romeo Power Technology for batteries for one of its prototype electric trucks. The use of an established industry supplier is the second example of the start-up outsourcing a key technology." news.google.com/articles/CAIiE…
3/ "competitive forces will drive returns down to the cost of capital over time. If a company earns above market required returns, it will attract competitors that will accept lower returns, eventually driving industry returns lower." Michael Mauboussin people.stern.nyu.edu/adamodar/pdfil…
Read 5 tweets
19 Sep
1/ Tracfone was able to prosper in a world where so many US MVNOs failed because: (1) it has unique distribution in a hard to reach part of the market; and (2) it played multiple network suppliers off each other to make a wholesale transfer price workable. google.com/amp/s/www.cnbc…
2/ Verizon is already the network provider for 13 of 21 million Tracfone customers.

Revenues from Tracfone decreased 8.3% year but ARPU rose 2.4% year over year to $24, while the churn rate was 4.6%. Prepaid for value customers is a hard business with low CAC a critical factor.
3/ For reseller like Tracfone with $24 ARPU and 4.6% churn a month, you can solve for what the combination of gross margin and CAC must be to produce an acceptable financial return. Getting sales with a Tracfone on a hook at a drugstore or small grocery is part of low CAC.
Read 5 tweets
19 Sep
Wholesale transfer price fixed!

"NBC content will be added to the free, ad-supported Roku Channel. NBCU is providing some kind of value to Roku: The platform company said it has a deal for “a meaningful partnership around advertising.” variety.com/2020/digital/n…
"Inventory Split model: the channel sets up its own ad server and must send 30% of inventory to Roku. Roku retains 100% of revenue from this inventory (but is under no obligation to fill it). The publisher fully controls the remaining 70%" developer.roku.com/docs/features/…
"Roku Sales Representation Program: Channels participating in this program route 100% of their inventory to Roku to be managed and sold, shifting the financial and managerial cost of building advertising demand and delivering content to Roku." developer.roku.com/docs/features/…
Read 5 tweets
17 Sep
When you just assemble parts and components from suppliers like Bosch you have the same wholesale transfer pricing problems as a PC OEM. The ending to that movie is well known.

But everything changes if the supplier to that OEM delivers a "HTML 5 Super Computer"!
It is true that any other OEM assembling parts into a truck can use this same Bosch "HTML 5 Super Computer."

But no other OEM has tested these components in a vehicle that is rolling downhill because it does not have a working engine or drive train. truckinginfo.com/330475/whats-b…
When you look at the components in a Tesla, Falcon 9 rocket or a Starlink satellite you don't see much outsourcing to a supplier who will have wholesale transfer pricing power as a result. There are still other challenges like TAM and P/MF of course. bloomberg.com/news/articles/…
Read 4 tweets

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