Some things and ideas: November 2021
Some random thoughts on articles that caught my attention in the last month. Note that I try to write notes on articles immediately after reading them, so there can be a little overlap in themes if an article grabs my attention early in the month and is similar to an article that I like later in the month.
My monthly overview (Monthly recurring piece)
I'm going to start putting this piece in at the start of every month. I just want to highlight two things
I do four things publicly: this blog / substack (the free side), the premium side of this blog, my podcast (Spotify, iTunes, or YouTube), and my twitter account. You can see my vision for the podcast here, and my vision for the blog and premium site here. If you like the blog / free site, I'd encourage you to check out the pod, follow me on twitter, and maybe even subscribe to the premium site!
I try to be as helpful as humanly possible to anyone whose research / writing I enjoy. In almost every post I do, you'll notice I link to other subscription services or investors who I like. I don't get referral fees or anything for that; these are almost always organic links and highlights that I do not because I was asked to but because one of my goals with the (very small) platform I have is to shine light on other people who are doing good work and make sure they have a platform big enough to encourage them to keep doing good work!
If you're launching a subscription service, or a new blog, or you're an investor who has done some really good research and wants to get some more eyeballs on it, please drop me a line and let me know. If the quality is there, I would love to link to your blog post or subscription service or research (and if the quality isn't there, I'm happy to provide feedback! I have done so with several services and I think my advice is good / appreciated / helpful!), and I'd love to have you on the podcast to talk about all of it. I can't promise anything, but most podcast guests / people I've linked to have been very happy about the reception / feedback they've gotten (I've even been called the king of the sub bumps / almost as good as Twitter / a big sub bump, and I've generally heard from investors with LPs who come on the podcast that they're delighted by the response). My DMs are always open, so feel free to slide into them if I can be helpful!
Benefits of scale: Peloton edition
It’s been a rough month for Peloton; the company got slaughtered on their earnings and then raised a bunch of capital at unfortunate prices (IMO).
I don’t have a position currently, but I’m still bullish on the company long term. I know fitness is a tough category to crack and sustain a lead in; there’s just so many alternatives (free alternatives like YouTube videos or running outside, in person alternatives like gyms or workout classes, etc.), but I think Peloton’s scale and the quality of the product give them a big edge.
A lot of that “big edge” comes from a bunch of “little edges” adding up. For example, last month Peloton did a dance class series with Usher, and this month Peloton expanded their partnership with Beyonce. It’s easy to dismiss those deals as small or marketing, but I think they effectively show the edge Peloton has. Huge artists like Beyonce and Usher can work with any brand they want to…. but they’re both choosing Peloton. Why? Well, big artists most valuable asset is their time. Peloton is the only scaled digital player out there; working with Peloton is the only way Beyonce / Usher can reach enough fans to justify the cost of their time.
Again, it’s small…. but Peloton has a bunch of those small little edges, and when you put them together I think they add up to a substantial moat (on top of having the best brand in the business, the best instructors, and by far the most monthly recurring subscription dollars).
Buying verbs / when does a company become a verb?
A few months ago, John Huber and I were swapping notes, and we talked about the returns to “buying companies that are verbs”. This is a pretty well known phenomena; you buy a company when their product is so ubiquitous that you replace the product name with their brand name (i.e. how people say “google it” when they mean “search for something” or “pass me a Kleenex” when they want a tissue).
I’ve been mulling on that convo ever sense, and writing the Peloton blurb above reminded me of it. I have one theory and one question on “buying verbs” I thought I’d spitball:
First, the question: when does a company become a verb? Peloton absolutely dominates the at home spin class, and I tell people I’m “Peloton’ing” all the time…. but I don’t think Peloton qualifies. I would say “I google’d that question” even if I had used a search engine other than Google for some reason. I wouldn’t say I took a Peloton class if I went to a soulcycle class or something. Why is google ubiquitious but not Peloton? Similarly, I’d ask for a Kleenex and accept any type of tissue, but if I wanted Nike shoes and you gave me some other type of running shoe, I wouldn’t be thrilled. What is the difference between those?
Note I intentionally chose Peloton / Google and Kleenex / Nike. Peloton and Google are services, while Kleenex / Nike are tangible products, so I used those two different examples to show that this “verb branding” can apply to both products and intangible services.
Second, the theory: this is nothing spectacularly new, but I’d guess the returns to “buying verbs” has historically been very good, and given we are in a world with increasing network effects and returns to scale, I’d venture that the returns to identifying and buying verbs early will continue to increase / accelerate going forward.
One bonus question: does Netflix qualify as a verb? I think the answer is yes; obviously we all know about “Netflix and chill”, but I (and most of my friends) generally use “I watched Netflix last night” to refer to watching any streaming service.
Starting a newsletter
I’m very bullish on finance newsletters longer term; if you have a passion for finance and are looking to break into the industry, I don’t think there’s a better way than launching one. That doesn’t mean you need to do a paid newsletter right off the back; in fact, the best way to break through and build a following is to just launch a free letter and grow your following from there.
All that said, you can definitely make a career running a paid newsletter if you’d like to. Rich Howe over at spinoff investing did a nice thread on how he’s built his business that I’d encourage you to check out.
PS- I’m a subscriber to spinoff investing and really enjoy it; it’s the best service I know of for quickly getting up to speed on spin-offs.
Podcasts (Monthly recurring piece)
I launched the Yet Another Value Podcast in August 2020 and provided a longer piece on my vision for the podcast at the start of 2021. They've been a blast so far.
A big update: I have created yetanothervaluepodcast.substack.com; I’ll be posting each podcast there as well as a transcript of the podcast. Would very much appreciate feedback on the site if you have any; I’m still trying to figure it out!
This month's pods:
Nerd Corner (Monthly recurring piece)
There’s no hiding it; I’m a massive nerd. I read 3-4 fantasy books a month, my favorite past time is playing board games with my wife and friends, and I religiously watch every new entry in the Marvel Cinematic Universe (MCU) and listen to fantasy show recaps on Binge Mode (so much so that I even did a Twitter Space talking about the MCU!). I figured a few of you are nerds like me, so I’m starting this segment to give recs of what I’m nerding out over currently, with the hope that you’ll either try it and enjoy it or recommend me similarly nerdy things that I’ll enjoy.
Dragon’s Banker- apologies to whoever recommended this; I would h/t you but I can’t remember. But whoever did knew me well; Dragon’s Banker is a silly story and a quick read but if you’re into finance (which you almost certainly are if you’re reading this blog), I can near guarantee you’ll be entertained by it!
Cradle series: I tweeted this out, but I’ve been obsessed with this series. I read the first six books in about two weeks (I love falling in love with series, and the downtime / travel for Thanksgiving certainly helped!). The series isn’t going to be for everyone, but if you like fantasy that starts small with a weak main character and balloons into a huge world that is well thought out, I think you’ll like this!
Unhewn Throne Series: I had mentioned this a few months ago, but just wanted to circle back to it as our book club finished it and universally enjoyed it!
Other things I liked (Monthly recurring piece)
Always the best interview of the year
T-Swift’s rerecording of Red is reshaping the music industry
IWG vs WeWork (FT article)
AEW vs WWE (WaPo article)
NBC renews with EPL for media rights in U.S.
Some very aggressive bidding… rights are worth 3x what they went for in 2016
John Malone says Discovery (DISCA / DISCK) will easily exceed Warner merger synergies
Wonder how Charter’s going to treat all those extra subs (SNL cable skit)
These charts show the spread of Mariah Carey’s classic Christmas song
Extrapolate it out, and in a decade or two All I Want for Christmas is You will dominate the radio year round
The world’s largest record company is creating an NFT super group
Red rising series is pretty legit.
Hi Andrew,
You've been bullish on Peloton and an avid user of Peloton. But what prevents you from being a shareholder of Peloton? What's most concerning you?