Misc

Miscellaneous is often where the gems are.

Misc

Online Display Eating TV

  • Online display advertising is rapidly displacing TV in the UK.
  • “However, despite the increase in online, TV advertising remains the medium of choice for big brands wanting to reach an audience quickly and at scale, with advertisers citing TV’s ability to drive both short-term sales and longer-term brand equity as a major advantage.” 
  • Source: Ofcom.
Misc

Investing Aptitude

  • “Aptitude is the rate at which you level up, by changing the nature of the problem you’re solving (and therefore how you measure “improvement”). The interesting thing is, this is not purely a function of raw prowess or innate talent, but of imagination and taste.“
  • This is a nice way to think about learning in investing – as returns to a particular area diminish, it is key to open a new front.
Misc

Crossover Taking Over

  • “Crossover investors have become more active in Europe (e.g. Tiger Global, BlackRock, RA Capital, Coatue).
  • While in 2019 only 2 made the top 15 investor league table, now, as at the half year, 4 of these (all from the US) are part of the top 15, with the number 1 overall being Tiger Global.”
  • Source: Lazard.
Misc

US is bad at Payments

  • The US, despite being the key player in the global financial system, is woefully behind when it comes to its own payments system.
  • Frictions abound.
  • For example, It costs $10-$35 to wire money same-day between major banks, something that in the UK is free, 24/7 and takes seconds.
  • A staggering 34% of companies rely on paper checks for the majority of their payments (costing $4-$20 per transaction).
  • This is a great paper covering all these frictions and more. A sobering read.
  • NB paper written by individuals associated with Diem (formerly Libra).
Misc

Online Platforms are Bad for News

  • Craigslist, the world’s largest classified ads platform, was rolled out in a staggered fashion from 1995 to 2009.
  • This created the perfect testing ground for its impact on 1,500 US daily newspapers.
  • Researchers found that:
  • As one would expect local newspapers reduced staff by 6% (14% for those that relied more heavily on classified ads).
  • There was also a sharp decline in circulation which isn’t made up by other sources of news consumption.
  • Most fascinating though, there was a significant decline in political content of newspapers (see chart) while things like sport, entertainment and crime didn’t change.
  • This has very stark implications discussed in the link.
Misc

Right to Repair

  • FTC has voted unanimously to enforce laws around Right to repair.
  • There is a big movement towards this – supported by Biden’s broad executive order – to put the power to repair everything from electronics to tractors to cars back in the hands of consumers.
  • This could be a big issue across the board for companies like Deere, Apple etc. who all make high margins on after market servicing and repairs of their original products.
  • The full FTC report on the matter is worth a flick.
Misc

Unicorns

  • “We analyzed over 2,600 seed-stage startup investments made on AngelList dating back to 2013 to determine the likelihood of any startup achieving unicorn status today.“
  • The answer – 1 in 40 shot or 2.5%.
  • A 2018 study put that number at slightly more than 1%.
  • One reason for the increase is the pictured chart –  “The first quarter of 2021 was the “best quarter ever” for early-stage startups in terms of rates of markups and positive exits. Just over 85% of the events reported by startups on AngelList during that period were positive ones—an increase of 5% from just one quarter before.“
  • Source.
Misc

China Tech Regulation

  • “China’s anti-monopoly laws were first passed in 2007, almost a century after the US Sherman Act of 1890, the Clayton Act of 1914 and the Federal Trade Commission Act of 1914. It’s also worth noting that Alibaba was founded in 1999, Tencent in 1998 and Baidu in 2000 — all ahead of anti-monopoly laws. Laws themselves also aren’t enough, and the State Administration of Market Regulation (SAMR) was established in April 2018 with holistic coverage to enforce the legislation.”
  • Great article on what to make of the regulatory crackdown drama going on in Chinese tech – from education firms being forced to go non-profit to the botched listing of cab-hailing firm Didi.
Misc

US Venture Returns

  • VC managers have seen falling MOIC (multiple of invested capital) returns while IRRs, just like those in private equity buyout, have been rising.
  • This can be explained by use of subscription lines and faster distributions.
  • Notice the difference between median and average – VC tends to have some very high return/size funds.
  • Source.
Misc

US Buyout Returns

  • Private Equity buyout returns measured by multiples on invested capital (MOIC) – a simple cash-in vs. cash-out metric, have been falling since 2009.
  • Interestingly internal rate of return (IRR), a time-weighted measure of return, has been rising.
  • The reason is the increased use of subscription lines – managers financing investment with bank loans delaying capital calls to LPs until later.
  • Mercer data suggests their use has grown 6x since 2010.
  • Note also average and median returns don’t differ much.
  • The note compares returns to public markets showing 1-5% pa excess returns, which have also fallen.
  • Source.
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