@investing_city's Threads
For the last 6 years, Starbucks has, on average, opened more than 5 stores PER DAY! 😱
No wonder they are on EVERY street corner!
[THREAD]
No wonder they are on EVERY street corner!
[THREAD]
1/ The company has opened 11,258 stores in the past 6 years.
That's a little less than one-third of McDonald's total restaurant count.
That's a little less than one-third of McDonald's total restaurant count.
2/ The company makes a vast majority of its revenue, 80%, from company-owned stores.
This is a different approach than the franchising approach of McDonald's, where company-owned restaurants made up 45% of sales.
This is a different approach than the franchising approach of McDonald's, where company-owned restaurants made up 45% of sales.
McDonald's doesn't sell burgers, it sells franchises.
It's a real estate company, not a fast-food restaurant.
[THREAD]
It's a real estate company, not a fast-food restaurant.
[THREAD]
1/ The company's goal is to have 95% of its restaurants franchised.
It's at 93% now.
It's at 93% now.
2/ There are four ways McDonald's does business.
1) Company-owned and operated (7% of restaurants)
2) Conventional Franchise
3) Developmental License
4) Affiliate
1) Company-owned and operated (7% of restaurants)
2) Conventional Franchise
3) Developmental License
4) Affiliate
Since 2006, Disney has made 44 films.
Guess how much, on average, each film made at the box office?
$850 MILLION!
Guess how much, on average, each film made at the box office?
$850 MILLION!
Here is how it breaks down between studios.
Disney + Pixar
22 films @ $700 million avg.
Marvel
18 films @ $1 billion avg.
Star Wars
4 films @ $1.2 billion avg.
Disney + Pixar
22 films @ $700 million avg.
Marvel
18 films @ $1 billion avg.
Star Wars
4 films @ $1.2 billion avg.
This is the Disney+ interface on connected TV.
You can click into each of the 5 "brand" tiles or just scroll.
You can click into each of the 5 "brand" tiles or just scroll.
Annualized returns of some of the all-time great performing stocks.
3 companies with 30%+ CAGR's:
Amazon
Netflix
Mastercard
3 companies with 30%+ CAGR's:
Amazon
Netflix
Mastercard
Here's a graph with:
size of the bubble = total % return
y-axis = annualized return
x-axis = years since IPO
size of the bubble = total % return
y-axis = annualized return
x-axis = years since IPO
And here's just the companies in order of annualized returns.
Here's a good business lesson to remember:
Competition is bad for margins.
[THREAD] 👇🏽
Competition is bad for margins.
[THREAD] 👇🏽
1/ Transdigm $tdg is a company that sells airplane parts.
You can see the 7 parties it sells to, with Boeing and Airbus making up 20% of total sales.
You can see the 7 parties it sells to, with Boeing and Airbus making up 20% of total sales.
2/ Importantly, the company makes 60% of sales from aftermarket parts.
So if Delta has a 747 out of commission because of an ignition system breakdown, Transdigm will replace that part either directly or usually through an aftermarket distributor like Aviall (Boeing).
So if Delta has a 747 out of commission because of an ignition system breakdown, Transdigm will replace that part either directly or usually through an aftermarket distributor like Aviall (Boeing).
Intuit (creator of TurboTax, Quickbooks, etc.), unsurprisingly, makes all of its profit in a 3-month window.
Guess which three months? 😜
Quick [THREAD]
Guess which three months? 😜
Quick [THREAD]
1/ We'll start with revenue.
You can see that Q2 and Q3 are the biggest revenue quarters, with Q3, being the real driver.
You can see that Q2 and Q3 are the biggest revenue quarters, with Q3, being the real driver.
2/ Here is how much Q3 is responsible for annual sales.
Is this higher or lower than you would have guessed?
I would have guessed even higher.
Is this higher or lower than you would have guessed?
I would have guessed even higher.
Two fun facts to start this one:
1) Netflix is planning to spend $15 billion on content in 2019.
2) The company added 4x the number of international subscribers than in the US.
2018
International additions: 22.94 million
US addition: 5.68 million
1) Netflix is planning to spend $15 billion on content in 2019.
2) The company added 4x the number of international subscribers than in the US.
2018
International additions: 22.94 million
US addition: 5.68 million
1/ We'll start with competition. Obviously, streaming is heating up.
Netflix believes there is still a lot of room for growth but attention is a scarce resource.
This will not be a breakdown of Netflix's stock, but its business.
Netflix does have a BIG content lead though.
Netflix believes there is still a lot of room for growth but attention is a scarce resource.
This will not be a breakdown of Netflix's stock, but its business.
Netflix does have a BIG content lead though.
2/ Netflix has three revenue segments
1. Domestic streaming (US)
2. International streaming
3. Domestic DVD
US streaming makes up about 75% of the contribution profit even though it has 22 million fewer subscribers.
1. Domestic streaming (US)
2. International streaming
3. Domestic DVD
US streaming makes up about 75% of the contribution profit even though it has 22 million fewer subscribers.
Starting an ongoing meta-[THREAD] to house the business model breakdowns.
Amazon it is.
The company is infamous for "losing money."
But did you know that it has been operating cash flow positive since 2002?
[THREAD]
The company is infamous for "losing money."
But did you know that it has been operating cash flow positive since 2002?
[THREAD]
1/ Amazon typically re-invests all of its profits back into the business for growth purposes.
Here's a pretty crazy fact.
Amazon's free cash flow return on invested capital has basically mirrored its stock price over the past 9 years.
Here's a pretty crazy fact.
Amazon's free cash flow return on invested capital has basically mirrored its stock price over the past 9 years.
2/ So while, yes, Amazon doesn't have crazy GAAP accounting profits, it's very cash generative.
With that out of the way, let's break down how it makes money.
The company has 6 operating segments
1P, 3P, AWS, subscriptions, Whole Foods, and ads
With that out of the way, let's break down how it makes money.
The company has 6 operating segments
1P, 3P, AWS, subscriptions, Whole Foods, and ads
Costco is a fascinating business.
You know all those groceries you buy?
Yeah, they basically sell those at breakeven and then make all of their profit from the $60 annual membership fees.
Quick [THREAD]
You know all those groceries you buy?
Yeah, they basically sell those at breakeven and then make all of their profit from the $60 annual membership fees.
Quick [THREAD]
1/ This is the key. The company keeps gross margins as low as possible.
We'll cover the second part of the highlighted section a little bit later.
We'll cover the second part of the highlighted section a little bit later.
2/ In turn, this gives it pricing authority. In other words, you don't even look at the price because you know it's going to be the best.
Running [THREAD] of business frameworks w/ thoughts
#1-5: industries
#6-12: company strategy
#13-15: competitive advantages
Feel free to add any that I missed!
Thanks 😁
#1-5: industries
#6-12: company strategy
#13-15: competitive advantages
Feel free to add any that I missed!
Thanks 😁
1/ The Classic Porter's 5 Forces
- All about numbers. If you have a lot of customers, you can leverage that against a fragmented supplier base.
- If you have small customer base w/ few suppliers, it's hard to have leverage.
- Same dynamic with # of companies competing w/ you
- All about numbers. If you have a lot of customers, you can leverage that against a fragmented supplier base.
- If you have small customer base w/ few suppliers, it's hard to have leverage.
- Same dynamic with # of companies competing w/ you
2/ Going off of that a little, we have @benthompson's Aggregation Theory.
3 parts to value chains: supplier, distributor, consumer.
If you can monopolize 1 of these or integrate 2, then you can create immense value.
3 parts to value chains: supplier, distributor, consumer.
If you can monopolize 1 of these or integrate 2, then you can create immense value.
Intro
First, industry. Then firm-specific.
3 Parts of Industry Analysis
1) Lay of the land
2) Structure
3) Innovation
3 Parts of Industry Analysis
1) Lay of the land
2) Structure
3) Innovation
Let's go over Alphabet's business model
[THREAD]
[THREAD]
1/ We'll start with its advertising revenue, which is made up of two parts:
A) Properties
- This would include Google Search and ad revenue on YouTube, Gmail, etc.
A) Properties
- This would include Google Search and ad revenue on YouTube, Gmail, etc.
2/
B) Network
- This is ad revenue from "Partners" or other websites/apps that allow Google to insert ads in
B) Network
- This is ad revenue from "Partners" or other websites/apps that allow Google to insert ads in
Went through nearly all of @bgurley's blog posts and picked out the best sections.
Will be adding to this throughout the day.
Enjoy!
[THREAD]
Will be adding to this throughout the day.
Enjoy!
[THREAD]
1/ Backhoes Don't Obey Moore's Law
Lesson: Look for the roots of an issue.
abovethecrowd.com/1996/10/21/bac…
Lesson: Look for the roots of an issue.
abovethecrowd.com/1996/10/21/bac…
2/ How To Succeed In Advertising Pt. 1
Lesson: Incentives always win out.
abovethecrowd.com/1998/04/20/how…
Lesson: Incentives always win out.
abovethecrowd.com/1998/04/20/how…
Looking through the last 5 years of my trading activity to find lessons from the many mistakes I've made.
Disclaimers:
- some of this is "resulting" but I still think it is useful
- no positions in any of the stocks below
[THREAD]
Disclaimers:
- some of this is "resulting" but I still think it is useful
- no positions in any of the stocks below
[THREAD]
1/ In 2015, selling $VEEV at $25/share. Today it is $166.
I thought the market was too small, it was just $CRM for life-sciences.
Lesson #1: Don't under-estimate optionality.
I thought the market was too small, it was just $CRM for life-sciences.
Lesson #1: Don't under-estimate optionality.
2/ Bought $GPRO at $30.
Today it is at $5.4
"Hey, look it is down 60% from its high, must be cheap."
Lesson #2: Don't anchor to a 52-week high to determine if something is cheap or not. Especially when the market is trending up.
Today it is at $5.4
"Hey, look it is down 60% from its high, must be cheap."
Lesson #2: Don't anchor to a 52-week high to determine if something is cheap or not. Especially when the market is trending up.
1/ Mary Meeker's 2019 Internet Trends is now out
You can find it here: file:///Users/ryanreeves/Downloads/44c7bad_Internet_Trends_2019%20(11).pdf
I'll be going through it and adding to this thread...
You can find it here: file:///Users/ryanreeves/Downloads/44c7bad_Internet_Trends_2019%20(11).pdf
I'll be going through it and adding to this thread...
2/ First year of declining new smartphone shipments
2017 = 0% growth
2018 = -4% growth
2017 = 0% growth
2018 = -4% growth
3/ Asia-Pac has the most potential with 53% of global internet users but only 48% penetration.
EMEA looks interesting with only 32% penetration.
EMEA looks interesting with only 32% penetration.
1/ A man is either a librarian or a salesman. He's retiring. What are the odds that he is a librarian?
A lot of people say, "The odds that he’s a librarian must be at least 90 percent.” That's the story, librarians don't work super hard.
fs.blog/2012/11/mental…
A lot of people say, "The odds that he’s a librarian must be at least 90 percent.” That's the story, librarians don't work super hard.
fs.blog/2012/11/mental…
2/ The trouble with this logic is in the US, salesmen outnumber male librarians 100 to 1. Before you even considered the fact the man is “retiring,” you should have assigned only a 1 percent chance he was a librarian.
Ignoring the base rate can lead you wildly astray.
Ignoring the base rate can lead you wildly astray.
3/ Base rate thread 👇🏽
Base rates can be thought of as a frame of reference. For example, if you wanted to start a construction company, what are your odds of success?
Apparently, it's 47%. The idea is that base rates, a group of prior data points, give you starting point.
Base rates can be thought of as a frame of reference. For example, if you wanted to start a construction company, what are your odds of success?
Apparently, it's 47%. The idea is that base rates, a group of prior data points, give you starting point.
Thread 👇🏽
Recently finished Influence by Robert Cialdini.
Many people say it is one of the most important books they've read. When Charlie Munger first read it, he sent Cialdini an A share of Berkshire b/c he was so grateful. That is worth 300k today.
Here's my synopsis...
Recently finished Influence by Robert Cialdini.
Many people say it is one of the most important books they've read. When Charlie Munger first read it, he sent Cialdini an A share of Berkshire b/c he was so grateful. That is worth 300k today.
Here's my synopsis...
Main Thesis:
We all have automatic responses programmed into us that can be taken advantage of. It is through these psychological vulnerabilities that the marketer, or anyone really, can prey.
The books goes over the 7 main vulnerabilities and how you can deal with them.
We all have automatic responses programmed into us that can be taken advantage of. It is through these psychological vulnerabilities that the marketer, or anyone really, can prey.
The books goes over the 7 main vulnerabilities and how you can deal with them.
The 7 tools are as follows:
1. Contrast (not explicitly a tool, but it qualifies)
2. Reciprocation
3. Commitment and Consistency (lumped together b/c similar)
4. Social Proof
5. Liking
6. Authority
7. Scarcity
1. Contrast (not explicitly a tool, but it qualifies)
2. Reciprocation
3. Commitment and Consistency (lumped together b/c similar)
4. Social Proof
5. Liking
6. Authority
7. Scarcity
Thread 👇🏽
Loved @JamesClear's Atomic Habits. When I read it, I thought, "this is going to change my life" but here we are a couple weeks later and honestly, not much has changed. So I wanted to really reflect on this...
Loved @JamesClear's Atomic Habits. When I read it, I thought, "this is going to change my life" but here we are a couple weeks later and honestly, not much has changed. So I wanted to really reflect on this...
Sums up the book. But how do we get 1% better everyday?
Before getting started, here's a great quote to think about, "you should be far more concerned with your current trajectory than your current results."
When we can't see results, it is easy to give up.
The San Antonio Spurs have this quote in their locker room by Jacob Riis...
When we can't see results, it is easy to give up.
The San Antonio Spurs have this quote in their locker room by Jacob Riis...
Confession: I'm a nerd. Spent the whole morning learning about how a credit card works. Surprisingly, it's incredibly complicated. Here's what I've learned.
1/ There are five main parties involved.
- Consumer
- Issuing bank
- Card network (Visa/Mastercard)
- Acquiring Bank aka merchant banks
- Merchants
- Consumer
- Issuing bank
- Card network (Visa/Mastercard)
- Acquiring Bank aka merchant banks
- Merchants
2/ Consumers
- People who buy stuff
- People who buy stuff
