Tren Griffin Profile picture
I work for Microsoft. Previously I was a partner at Eagle River, a private equity firm established by Craig McCaw. I am on the board of directors of Kymeta.
King Dámì I Profile picture Chris Huser Profile picture Bill OuYang Profile picture Matthew 𝕊t◎tts 🇺🇸☀️ Profile picture Leo Profile picture 102 added to My Authors
16 Apr
This below was about circle of competence. What about margin of safety?

Munger: It is "acquiring more than you are paying for. You must value the business in order to value the stock.”

Li Lu: "If you buy stock with a sufficient margin of safety, the probability is with you.”
Li Lu:

"Investing is inherently about predicting the future. But predictions can never reach 100% accuracy; they can only fall between zero and something approaching 100%. So when we make a judgement, we need a large buffer. This is called margin of safety."
Michael Mauboussin: "Margin of safety can be restated as a discount to expected value. For every stock there is an intrinsic value, and the deeper the discount the stock price is to intrinsic value, the lower the risk."…
Read 4 tweets
12 Apr
1/ What you write for 50,000 fans isn't what you write for millions of readers.

A writer doesn't have a least common denominator limitation and can go deeper on a topic like MoviePass.

A writer can also write about a niche topic like MoviePass "churn."…
2/ That writers have the ability to work for themselves creates a wholesale transfer printing problem for the publication. The better BATNA of writers even benefits writers who stay at the New York Times at salary time. Writers will be paid more. That's a very good thing.
3/ "Substack" is bring used as shorthand by intermediaries who feel threatened by writers selling their work directly to customers. Many types of creators in different types of creative arts are eliminating intermediaries from their value chain. The shift to D2C is unstoppable.
Read 4 tweets
11 Apr
Telesat aims to launch its first batch of 298 satellites built by Thales in early 2023, with partial service in high latitudes later that same year, and full global service in 2023. It is estimated to cost half as much as the $10B SpaceX and Amazon Kuiper."…
"OneWeb plans to have 648 satellites at 1,200 km in orbit to provide a global service. The most recent launch on March 25 took it up to 146 satellites. The fifth launch will be in June, when OneWeb aims to provide broadband to the whole of the UK."…
Craig Moffett: Using Starship for Starlink satellite launches may be important for SpaceX to meet the FCC's 2027 build requirements. The company could increase its rocket launch cadence to 200 Starlink satellites per month, up from the 120 per month."…
Read 6 tweets
11 Apr
1/ "The value of a financial asset is the present value of future cash flows. If you don’t believe that, please put this aside and resume your normal daily activities."…

The two previous sentences written by Michael Mauboussin apply to this Twitter thread.
2/ "Intrinsic value is the number that if you were all knowing about the future and you could predict all the cash a business would give you between now and judgement day, discounted at the proper discount rate." Buffett

The predicting the future part is what makes this hard.
3/ "It is important to understand that intrinsic value is not an exact figure, but a range that is based on your assumptions."

Jean-Marie Eveillard

"Anytime anyone gives you some simplified formula for figuring it out, forget it."

Warren Buffett
Read 6 tweets
10 Apr
When a financial disaster strikes Value-at-Risk (VaR) is inevitably there like a deadly virus.

VaR “cuts off the part of the probability distribution (the extremes) that you most need to worry about.”

VaR is like "asking children to mark their own homework.” James Montier
When I've pointed out the insanity of VaR before some people say: "No one models Gaussian any more." Experience proves that some still do if they want to justify picking up dimes in front of steam rollers. As Munger says: "Show me the incentives and I'll show you the outcome."
"Fat Tony, a Brooklyn street-smart character, builds his success on the paradox that the only prediction one can safely make is that those who base their business on prediction will eventually blow up. So Fat Tony takes the other side."…
Read 4 tweets
7 Apr
What business is this?

Clue: net income = 25% of revenue, so they have that going for them, which is nice.
Read 4 tweets
4 Apr
Microsoft was formed 46 years ago today only in terms of the formality.

The magazine Gates and Allen saw in Harvard Square was the January 1975 edition.

BASIC for the Altair PC was sent to MITS in February of 1975

Altair BASIC was released three days from today in 1975. Image
2/ People get confused about Microsoft history since the unauthorized books on Microsoft are often fictional. Writers make up stories like "BASIC was sold to MITS."

PA: "When our 1975 royalty statement arrived, we were sorely disappointed. Our royalties totaled a mere $16,005."
3/ PA: "By Bill’s calculation, fewer than one in ten Altair buyers were purchasing BASIC. It was hard to fathom, because the machine was next to worthless without it. With the base Altair kit costing ~$400, MITS barely broke even on the machines." Profit was in the peripherals.
Read 4 tweets
3 Apr
1/ Charlie Munger: "I have a simple rule for success in fishing. Fish where the fish are. If the fishing is really lousy where you are you should probably look for another place to fish."

When I see people use modern data science tools, I think about this point made by Charlie.
2/ In business the tools to manage unit economics are vastly better today. Far less guessing is going on.

When I was younger is wasn't hard to catch salmon because they were plentiful. Fewer people had fish good finders. My current Garmin gear is split screen (low/high CHIRP).
3/ New tools make discovering product/market fit easier, but more people are using these same tools. One big difference between SaaS discovery and salmon fishing is you can capture customers more efficiently from legacy providers who don't use these tools or are slow to change.
Read 9 tweets
1 Apr
1/ In 1995 a team of twenty people I was on successfully convinced delegates to create the first 28 GHz spectrum allocation for NGSO (eg LEO) satellite constellations. The scale and nature our lobbying effort at a World Radio Conference was unprecedented.…
2/ The technology has advanced to a point where multiple constellations are fighting each other for various regulatory permissions at the ITU and with national regulators. One estimate: ~10,100 small satellites may be launched into LEO over the next…
3/ ">90 companies or agencies plan constellations, most in LEO. Starlink, Amazon’s Project Kuiper with 3,200 satellites, Britain’s OneWeb with about 700 and Telesat of Canada with 298. The EU, too, is talking about its own constellation while China is planning multiple systems."
Read 5 tweets
26 Mar
What's this just seen in the night sky above Seattle?
Another clue?
Read 4 tweets
26 Mar
"SpaceX had 25 orbital launches in 2020. All but five of these missions utilized flight proven boosters, and 14 payload fairing halves were re-flown. SpaceX aims to almost double that launch cadence in 2021."

How many of the 25 were Starlink launches?…
"More than half of the 2020 missions — 14 of them, to be precise — launched in support of SpaceX's Starlink satellite-internet project."…
"Musk eventually plans to build 1,000 Starship rockets and launch three of them a day to send 1 million people to Mars. The 387-foot-long Starship rocket is meant to be fully and rapidly reusable."…
Read 4 tweets
20 Mar
1/ In early 2000 Paul Allen asked Craig McCaw if he wanted to assume control of Metricom's wireless Ricochet service. Paul wanted to make the service a success and was willing to pay Craig to assume control (the price would be negative). Craig and I met with Paul in his office.
2/ Paul Allen's office was straight up out of a James Bond Movie. For example, a glass exterior wall with shades that dropped down to darken the room when a button on his desk was pushed.

We reviewed the pitch deck, talked about it and were given the financials and other data.
3/ Even with a negative purchase price we concluded the business couldn't be saved. A combination of physics and nonstandard hardware/software created unsolvable problems. The service worked technically in certain locations but it would never scale to create shareholder value.
Read 9 tweets
20 Mar
1/ Broadband Internet provided via a non-geostationary satellite constellation operating at Ka band is an idea enabled by a startup I co-founded of in 1994. Without a team of about 20 people obtaining an ITU allocation in 1995, Starlink, OneWeb and Kuiper wouldn't exist.
2/ My version of the story of Teledesic is told in this link.…
With any wireless communication network there is: 1) can the system provide high quality service technically; and 2) can the service generate enough free cash flow reward investors?
3/ Wait! Is Tren saying that without a team of 20 people Starlink, OneWeb and Kuiper would not exist? Is he saying there would only be geostationary satellite broadband internet services without Teledesic obtaining the "NGSO FSS" allocation at the ITU in 1995? Yes.
Read 5 tweets
20 Mar
This below is not iterative product development. $18 billion of non-recurring engineering (NRE) incurred and zero launches so far. Each launch costs $2 billion.

The book Liftoff explains why: "To adopt iterative development you have to let people see you fail." (page 25)
"In iterative software development, engineers make rapid changes, ask for user feedback and adjust the software for the next increment. Most defense programs use traditional “waterfall” development."…
'Being brave about potential failure in public is how you learn. Making mistakes is how you learn. Being out there.

Most people are like, 'What if people criticize me?' Going to happen. Be brave, be audacious."…
Read 4 tweets
19 Mar
I plan to read "Liftoff: Elon Musk and the Desperate Early Days That Launched SpaceX" this weekend. I may tweet a few comments as my journey through the book unfolds. People *love* rockets with a passion that is uncommon, especially billionaires.…
2/ Quiz: Why was cost not dropping?

"Companies in the US and Russia still used the same decades-old technology to launch rockets into space, and the price kept going up. It seemed like things were going in the wrong direction, so Musk founded SpaceX."…
3/ That question is the business equivalent of the type of question Elon Musk asks potential engineering employees:

"You’re standing on the surface of the Earth. You walk one mile south, one mile west and one mile north. You end up exactly where you started. Where are you?”
Read 21 tweets
13 Mar
1/ "In a networked world, mayhem in one market spreads instantaneously to all others..."

Mandelbrot wrote this previous sentence in 2004.

The world is vastly more "networked" today and will continue to get more networked.
2/ With each ratchet up in the networking of the world, this phenomenon is magnified:

"people almost never make decisions independently."…

The world is more complex than ever.

Some people are bewildered when something like a five sigma event happens.
3/ Every increase in the ability of signals from one source to reach others who can resignal creates more feedback loops that are ever more powerful.

The bumper sticker that said “Shit happens” should now say:

“Shit happens faster and at far greater often nonlinear scale."
Read 9 tweets
11 Mar
A mask is off my profile picture, but not off me when in public (double mask). ~45,000 vaccines given per day in Washington State. 2 million vaccine doses have been administered statewide, which is 700,000 more than two weeks ago. My friend the checked shirt is smiling somewhere.
Let's goooooo! It's time to knock this virus down!

"The Seattle area once had more coronavirus deaths than anywhere else in the United States. A year later, the region’s deaths per capita are lower than any other large metropolitan area."…
"The vaccines are coming!"

You can feel it in the stories people are telling. Appointments are easier to get. Systems are working.

"In came artisan, and we both rode away
He whispered in my upturned ear, “it’s time to get an’ go”
'til this job’s done."
Read 4 tweets
9 Mar
To obtain extra credit, please explain the process the buyers used to purchase these Twitter 0% convertible senior notes due 2026 (the "notes").

"Initial conversion price of approximately $130.03 per share."

You must show your work to get full credit.…
"The low interest rate environment, coupled with high equity valuations and high volatility in markets amounts to a 'triumvirate' that leads to very attractive convertible pricing”, he said."

Answering "triumvirate" isn't an acceptable answer. Sorry.…
Is this statement correct? Use example based math to support your answer.

"market volatility also provided hedge funds with an opportunity to profit. They buy the convertible bonds of companies whose stock has soared and hedge their position by shorting."…
Read 7 tweets
7 Mar
1/ Helping Bill Gates write his first two books was great fun for me. The process was an opportunity to ask him questions (eg, his experiences with DEC). He's usually reluctant to talk about the past but the book writing process was an exception. Here's a picture of a DEC PDP-10:
2/ “Under Ken Olsen, Digital pioneered the minicomputer and later scalable hardware architecture (VAX). When PCs became popular, Ken followed his engineering inclinations and built a better one — only better, in this case meant incompatible with the Intel standard." Bill Gates
3/ “Olsen accomplished an amazing amount. He persevered through ups and downs, driving things forward and had a commitment. DEC faced the challenges of a changing industry, but when you look back on what he did, it was very impressive. I actually grew up on a DEC computer.” BG
Read 8 tweets
6 Mar
1/ I helped my late friend Dan Kohn write this essay in 2001:

"Items are 'nonrival" when we can all make use of them without anyone having to give them up. If I copy your CD, you’re none the worse for it (nonrival), but if I steal your car, you will probably be upset (rival)."
2/ "Goods are "nonexcludable" when it becomes impractical to stop everyone from making use of the item, once one person can...

....the cost of providing the item to one consumer [can be for some goods] the same as providing it to any number of consumers."…
3/ Mauboussin: "intangible assets have characteristics that are different from physical capital or
labor. ...intangible-based companies can defy the conventional economic concept of diminishing marginal returns and in fact realize increasing returns."…
Read 5 tweets
6 Mar
What business is this?
What business is this? Both this business and the last business just filed a S-1.
Which business is Applovin…

Read 4 tweets