1/5 Thread: Income inequality gimmick

ProPublica's "leak" on wealthy individuals' taxes reminded me of some of the studies related income inequality I read a few years ago.

A short thread.
2/5 University of Michigan did a study from 1975 to 1991 following a group of individuals who initially started in the bottom 20%.

95% of these people were found not to be in the bottom 20% in 1991. 29% actually reached the top 20%.

Link: (page 8) scribd.com/document/88651…
3/5 IRS later did a similar study from 1996 to 2005, and found people who started in the bottom 20% in 1996 saw their income increase by 91% over the decade and people who started at the top 1% actually saw their income fall by 26%.
4/5 Even more interestingly, 56% of the Americans spent sometime in their life in the top decile income bracket.

Link: treasury.gov/resource-cente…
5/5 Income inequality is real but the level of survivorship bias in any one point of time and how that bias is completely ignored in this discussion is always a surprise for me.

Well, probably not a surprise since most of these "analysis" have a certain goal in mind.

• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with Mostly Borrowed Ideas

Mostly Borrowed Ideas Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @borrowed_ideas

2 Jun
1/ Thread on @depop acquisition by $ETSY

Etsy just announced to acquire Depop, a gen Z focused online apparel resale marketplace for $1.625 Bn (all cash). Optically expensive i.e. ~2.5x GMS or ~23x revenue based on 2020 numbers.

Here are my thoughts.
2/ Etsy coined an interesting term today “house of brands”.

After Reverb acquisition in '19 and now Depop, the strategy seems clear: keep penetrating vintage, handmade core marketplace AND acquire other niche marketplaces that you will have hard time building a connection with.
3/ Why is this important?

E-commerce is primarily behavioral in nature. Once you buy something from a marketplace, they have enough of your data to encourage you to buy again.
Once a marketplace grabs critical attention in a niche, it can be difficult to unseat the incumbent
Read 16 tweets
28 May
1/ Thread: $ADSK FY 1Q’22 Update

ADSK had a pretty decent 1Q, comfortably beating high end of the revenue guidance. 98% of revenue are now recurring, and net revenue retention was in the range of 100-110%.

Topline guidance was raised by ~$40 mn. Here are my notes from the call
2/ Q1 is expected to be trough from growth standpoint and the rest of the year is likely to have some acceleration post-pandemic. ~75% of FCF of this year will be generated in the 2H.
3/ Billings from converting noncompliant users doubled YoY in Q1. In fact, a noncompliant customer converted into one of the largest premium customers.

But don’t expect hockey stick growth from conversion of noncompliant users. ADSK wants to gradually and naturally convert.
Read 11 tweets
26 May
1/9 Thread: Retention rate illusions

With the rise of SaaS businesses, retention rate is often discussed and followed by investors.

Here are some of the notes I took from an academic paper discussing illusions/misconceptions when it comes to retention rates.
2/9 Issue #1: Reported retention rate may not be indicative of realized renewal rate. Let me give an example.

Let’s say a business reports retention rate is 95% which is, of course, awesome. What is less discussed, however, is the duration of the customer contracts.
3/9 To illustrate why it is important, imagine Company A, B, and C all report 95% retention rates, but customers only renew the contracts in every 1, 3, and 5 year respectively.

Here’s how the reported and underlying retention rate differs for these companies.
Read 9 tweets
24 May
1/8 Thread: Changing your mind

It's easy to read Keynes' quote, "When the facts change, I change my mind - what do you do, sir?" and nod your head; but it doesn't make it any less difficult for anyone to change their opinions.

Why is that?
2/8 Murakami had a great quote that I try to remind myself every time I disagree with someone:

“Always remember that to argue, and win, is to break down the reality of the person you are arguing against. It is painful to lose your reality, so be kind, even if you are right.”
3/8 Unfortunately, one of the downsides of arguments/debates on twitter or any social media is it's mostly performative in nature.

You not only lose arguments that shatter your "reality", you go through the experience publicly which makes it even harder to accept and change.
Read 8 tweets
22 May
1/ Thread: Customer-based Corporate Valuation

@mjmauboussin and Callahan recently published a piece highlighting Customer-based Corporate Valuation (CBCV) which works particularly well for subscription businesses.

Here are my notes.
2/ Subscription based businesses’ topline grew 17.8% in 2012-2020 period whereas S&P 500 grew sales ~2% during the same time.

Digital subscription has also expanded TAM significantly for some businesses.

$NYT print subscription in 1996: 1.1 mn vs digital subs in 2021: 5.3 mn
3/ The CBCV framework appears simple: customer value comes from existing and future customers. Of course, the devil is the details.

Let’s get to it.
Read 22 tweets
16 May
1/ Thread: Why I am an active investor

One of the questions most investors ask themselves at least at some point is whether they are indeed good investors, or all their past success are just random luck which by definition may not persist.
2/ My basic assumption is I am probably not a great investor. Even to be average, it will require a lot of work for me.

A common retort is why bother investing then? If I am so unsure of myself as an investor, shouldn’t I just index?
3/ This feels like equivalent of telling kids there’s no point in playing basketball because they’re never gonna make it to NBA.

I doubt most NBA players knew before touching the basketball that they are probably very good at it and it might be possible to make it a profession.
Read 15 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!