Weekly Update: 12/27/20
Virtual kitchens, IAC spins off Vimeo, themes for the near future, BTC is booming, platform companies, Q3 SaaS earnings, Peloton instructors as celebs, Square's endgame & growing the Internet economy
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🔍 Tickers mentioned: IAC, INFU, BTC, NTDOY, ZM, CRWD, SHOP, DDOG, ASAN, ESTC, SNOW, ZI, PTON, SQ, MSFT, INTC, TSLA, SNAP, FTCH, STNE, ABNB & MWK
Delivery apps + virtual kitchens + celebrities
Last week, @MrBeast launched 300 restaurants via virtual kitchens and the accompanying MrBeast Burger app instantly became #1 in Apple’s App Store:
It’s a genius idea and highlights a trend that’s gaining serious traction. More info in this thread, as well this piece from 2PM: Memo: Enter MrBeast.
⚡️ Quick links
🤔 A Wealth of Common Sense — What If You Only Invested at Market Peaks?
✅ Axios — IAC announces plan to spin off Vimeo. Here’s a great post from Mario at The Generalist breaking down the genius of IAC’s head honcho, Barry Diller
📝 Gavin Baker on Medium — Lessons from George Vanderheiden, one of the greatest investors I’ve ever known. A timely read, given the state of public markets. My favorite quote:
Time in the market is more important than timing the market, but timing does matter for individual stocks as the “price you pay determines the return you get.”
🏥 Seeking Alpha — InfuSystem: Strength In Core Businesses Hedges Against COVID-19 Headwinds. As previously mentioned, INFU is an under-followed small-cap healthcare business that I opened a position in during October. One of my favorite ideas as we head into 2021
🔮 Scott Belsky on Medium — 8 Themes For The Near Future Of Tech. Scott Belsky, Chief Product Officer at Adobe, gives his predictions for the near term. My favorite: “Another round of “the roaring 20’s” is ahead of us, where the pent-up desires from the pandemic will be unleashed in the form of fashion, travel, and culture-bending creative self-expression.”
🏡 Redfin — Luxury Home Sales Surge a Record 61%, Quadrupling Pre-Pandemic Growth as America’s Wealthiest Homebuyers Reap Gains of Uneven Economic Recovery
📊 Charts of the week
Is this the start of another melt up for Bitcoin?
Asset class returns over the last 10 years
20 years of Nintendo console sales
📚 Good reads
Sparkline Capital — The Platform Economy. A well-researched deep dive on platform companies and the rationale behind their significant outperformance in the stock market. This is a must-read
Platforms have handily outperformed the stock market for over a decade. Network effects lead to positive feedback and monopoly, which disrupt traditional investment approaches. Given their increasing importance, investors would be well served to devote resources to deeply understanding the platform business model.
Clouded Judgement — A Look Back at Q3 Public SaaS Earnings. Jamin at Clouded Judgement consistently produces some of the best analysis in the SaaS and cloud space, and his latest post does not disappoint
Q3 Big Winners
If you don’t have time to read the rest of this article, here are the companies who I believe really stood out (from a financial perspective). They represent my “Q3 Big Winners.” The 3 companies in the box are the elite performers.
Vanity Fair — “There’s an Intimacy to What We Do”: How Peloton Became Must-Watch TV in 2020
Net Interest — Hip to Be Square. Excellent breakdown of Square and its endgame
Eventually, Square’s two networks – its merchant seller network and its consumer Cash App – can converge into one, just like Ant Group’s. When that happens the company can lay claim to one of the strongest payment-cum-social networks in the country.
The Technology Letter — Why it’s Suddenly Microsoft and Everyone Against Intel
Quanta Magazine — The Year in Biology
🎧 Press Play
The big theme in two of the three podcast episodes this week is enabling commerce on the Internet. Two interviews from the inside of two of my favorite companies in the e-commerce space: Stripe and Shopify.
Invest Like the Best — John Collison - Growing the Internet Economy
My guest today is John Collison, the Co-Founder of the digital payments company Stripe. Stripe’s mission is to increase the GDP of the internet, a lofty and deeply interesting pursuit. John is clearly a voracious learner across business and investing, which you’ll hear instantly. He started Stripe with his brother Patrick when he was just 19 years old, and has grown it to, at last valuation, a $36B business. In our conversation, we discuss conglomerates, the internet economy, the power of writing, and why board members are like Pokémon characters, each with different powers. It’s a lively and wide-ranging conversation with one of the entrepreneurs I’ve most enjoyed speaking with.
Transcript & show notes here.
Infinite Loops — Alex Danco - Shopify, SPACs & Status
In this episode of Infinite Loops we spoke with Alex Danco of Shopify. In this wide-ranging discussion we cover:
Alex’s first 6 months at Shopify
Social Capital & SPACs
How Twitter has changed status networks
The rise of e-commerce
Can Founders Lie?
And much more
Follow Alex (https://twitter.com/Alex_Danco) on Twitter, and read his blog here http://alexdanco.com/ .
Alex shared an edited and condensed transcript on his Substack.
Panic with Friends — A Special 2020 Year in Review with Stocktwits’ Riley Rosenberger and Thomas Tranfo (EP.128)
A year ago on my blog, I asked: “Could 2020 be as good as 2019?” From where I’m standing now, that’s going to be a different answer depending on who you ask. So, I called on two pretty cool kids over at Stocktwits to put something together and help us all make some sense as to what exactly happened this infamous year. That’s right, this isn’t just any episode of Panic – it’s a Stocktwits and Panic with Friends pandemic special! In this episode, Stocktwits’ Riley Roseberger and Tommy Tranfo break down what was going on in the markets from the pre-COVID days in January to the dark days of March to where we stand as of December. We talk about the industries, trends and stocks that dominated conversations on Stocktwits and beyond in 2020, including Tesla, oil, SPACs, EV companies, solar, gambling, social platforms like TikTok and Snapchat, crypto, weed and more. I want to thank Stocktwits again for putting this all together and continuing to put up with me as I make this podcast. I hope you’ve had as much fun listening as I’ve had making Panic with Friends this year!
Great listen to end one of the craziest years we will ever see in the public markets. Will the SPAC, EV, crypto and SaaS bull market extend into 2021?
📺 Videos of the week
Happy Hour With Traders: JC Parets & Howard Lindzon | What’s NOT a Tech Stock at this point?
This week Howard and I discuss what "Technology" actually means. With companies like Google, Amazon and Facebook representing ZERO PERCENT of the Technology Index, people continue to group them into Tech regardless. Is that right?
Should we ignore Dow Jones and their weightings? Or is it important to acknowledge which stocks are in these indexes and which ones aren't?
When asked about underperformance from Europe and Emerging Markets, Howard says "I filter the world to only see what's working. I'm all about investing for profit and joy, not misery and pain."
Always a fun conversation when JC & Howard link. Farfetch, StoneCo, Shopify and Airbnb were some of the companies discussed.
Garry Tan — Silicon Valley is still for future billionaires (with Elad Gil, legendary investor)
Re-posting a panel talk we did with Elad Gil, legendary investor in Stripe, Instacart and 14 other multi-billion-dollar startups, and Bloomberg Reporter Katie Roof at Web Summit last week. If you're keeping score I've only funded 10!
The water is fine. Silicon Valley is doing great. What's going on with all these crazy rounds? We talk through all of those things.
Good quick disucssion with a couple of SV’s top tech investors.
Avory & Co. — Due Diligence w/ CEO Yaniv Sarig: How Mohawk [MWK] is Disrupting CPG (CEO Interview)
In this interview, we go deep into the business model of the Mohawk Group.
The company is a leading tech-enabled consumer products platform built on marketplaces such as Amazon and Walmart. Using home grown technology, they are able to discover and automate research planning for product creation. The company is looking to solidify digital real estate or digital shelf space on marketplace platforms. When we say digital real estate, we are referring to product placement on marketplace search results. The company sells products on Amazon and Walmart using data to drive product development, automate marketing, and manage product life cycles. Each successful product launch drives valuable insights to the company, providing cash flow, which drives additional product launches, which produces an annuity-like model.
Full disclosure, I recently opened a small position in MWK as I think they can rapidly grow revenues (organic growth + early days for international expansion + M&A) in a manner that’s both scalable and margin accretive:
Also, their optionality related to licensing the proprietary AIMEE® (Artificial Intelligence Mohawk eCommerce Engine) software is intriguing—could Mr. Market decide to re-rate the stock with a higher multiple? As of 12/24 market close, MWK trades at a 0.7x price-to-sales multiple (NTM). Given the company’s execution so far, this is too low in my opinion. The multiple expansion and revenue growth I’ve observed with PAR over the past ~18 months as they placed an increased focus on growing their Brink cloud POS business is a somewhat similar situation.
Adding a handful of links on the Amazon 3P marketplace and MWK:
The Amazon Third Party Seller Ecosystem Might be the Most Important Thing Since the iOS App Store
Seeking Alpha — Mohawk Group: Small Cap With Potential
Interview with MWK CEO Yaniv Sarig. Dated 10/6/20
Spotlight Growth — What Thras.io’s $1B Valuation Means for Mohawk Group Holdings, Inc.
Industry Week — Seeking Digital Manufacturer Status? Don't Discount Power of AI
Well-articulated thread on the risks associated with MWK: here
Disclosure: None of this is investment advice. I own BTC and IAC, INFU, CRWD, SHOP, ESTC, PTON, SQ, MSFT, FTCH, STNE & MWK shares.
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