1/ Seeing this chart of NASDAQ 100 from 2000-02 made me think about a time in my life when we were in triage mode trying to keep businesses from dying. Some people were trading then, but our focus was on actual businesses running short of runway (eg cash).ritholtz.com/2022/01/living… Image
2/ The funding environment from 2000 to 2002 was in a state where assets of a business would sometimes not produce the ability to generate enough cash to get though a valley of death. Just one example was Nextel as this chart illustrates. I hope you never see a time like this. Image
3/ Control of XO Communications was up for grabs (if you had cash, which was rare at that time, you could gain control of companies in Chapter 11). We had to decide whether to try to gain control of XO or double down on Nextel. We correctly chose Nextel and avoided that battle.
4/ Confidence was required to double down on Nextel when it was trading for "2 and change" at the bottom in 2001. If you did that successfully the current repricing of some stocks looks like a wobble. You sleep better now than when telecoms crash produced a nearly full graveyard. Image
5/ Some people sold near the bottom between 2000 and 2001 and were nearly wiped out. Others sold at the bottom again in 2008. One doctor I know who was hammered 2X in this way has never owned anything but a CD since 2009. He says he can't take another near wipe out a third time.

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More from @trengriffin

16 Jan
1/ Understanding why SpaceX's Starlink constellation currently has ~1,800 active and soon to be active satellites and the OneWeb constellation currently has fewer requires that you examine the inherent trade offs given the physics of wireless and how that impacts unit economics.
2/ OneWeb's higher orbit means fewer satellites and gateways are required to cover the Earth and this reduces system costs, but higher orbit translates to a worse link budget which means the signal isn't as strong as in lower orbit. To learn more: itu.int/en/ITU-R/space… Image
3/ "I don't care" you say. "When do I get the Starlink terminal I ordered?" The issue usually for people in the northern US now is capacity not coverage. There's only so much capacity in a cell and it is shared. Will capacity increase over time? Yes, but it is not unlimited. Image
Read 6 tweets
15 Jan
1/ In the new Infinite Loops podcast I explain why Gates and Allen saw more in the microprocessor than Intel. They wanted to solve a personal problem. Paying for computer access via a timeshare was $40 an hour in 1970s dollars. They wanted to own a computer at a low fixed price. Image
2/ Bill Gates told a Financial Times writer in 1988: "Intel themselves did not understand the importance of the advance they had made in building the microprocessor. Paul Allen and I wrote to Intel to tell them what an unbelievable device they had created.  That was in 1974." Image
3/ "The last time Jim Manzi and I really talked at length was at the PS/2 introduction in April 1987.  Jim was saying to me, 'Bill your company is fully valued.  And I said to him, 'Jim, you’re right.' You know it is fully valued!” Forbes, December 7, 1992

Prediction is hard.
Read 9 tweets
14 Jan
1/ Me: "My worst nightmare is somebody I love is in trouble and I can’t help them. That’s the point of having money. That’s the point of having strength. That’s the point of preparing yourself. I’m always ready to do that, because I couldn’t live with him myself if I couldn't."
2/ "Start a company, you've got to be brave. Write a book, you've got to be brave. Paint that painting behind you, you've got to be brave. You must be willing to say: 'This is my painting.'"

There is a transcript of this podcast that is out today at: infiniteloopspodcast.com/tren-griffin-w…
3/ "If you give children opportunities to make mistakes and do things, they will be independent. When they go to college and through life, they're going to make great decisions. If you truly love them, do that. The downside is they're not going to call you often. Do it anyway."
Read 4 tweets
11 Jan
1/ Most fun for me is an operating business. In a business you don't have the luxury of no cash flow planning or not understanding return on capital in addition to growth of NTM sales. Pretend proxies for that can only be ignored until they can't. Only unforgivable sin = no cash. Image
2/ Charlie Munger: “We have the same problem as everyone else: It’s very hard to predict the future."

Seth Klarman: "An unresolvable contradiction exists: to perform present value analysis, you must predict the future, yet the future is not reliably predictable."
3/ When I hear: "We can't do a DCF because the results can vary," I know that the person: 1) has not run a real business; 2) doesn't know how to run a business; or 3) knows but is pretending it doesn't matter.

If running a real business was easy, everyone would be wealthy.
Read 4 tweets
4 Jan
1/ Is Sweetgreen selling a subscription or is it instead a membership program?

Is there a difference? Does Costco sell a subscription ?
amp.cnn.com/cnn/2022/01/03…
2/ One of my 25iQ blog posts is about a meal service provided by Rovco which enables its customers to have fresh bass delivered to them twice a week. A Bass-o-Matic subscription service creates an obligation to purchase delicious bass, not just a discount. 25iq.com/2018/01/20/sup…
3/ A subscription is at its core an arrangement with a customer that creates a periodic contractual commitment. 25iq.com/2018/08/11/how…

If a consumer uses a loyalty card or a mobile app to pay is that a subscription?

Is paying for time limited discount card a subscription?
Read 6 tweets
30 Dec 21
1/ In 1994 I said to Bill Gates that while network effects can be beneficial, the phenomenon can easily disappear because the factors that sustain them are brittle. We were talking about AT&T losing network effects.

Bill responded to me by saying "That's why I worry so much."
2/ At the time (1994) our friend Craig was selling McCaw Cellular to AT&T, which was buying mobile assets since it believed it could save the long distance business. AT&T (the long distance co. now gone) not understanding network effects was ironic given who first described them.
3/ Each question is different

a. Do you have a moat? (The test is based on math)
b. What created the moat (eg, supply or demand side scale economies)?
c. What value does the moat protect? (Google a lot vs Twitter not so much)
D. How long will the moat last (CAP)?
Read 7 tweets

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