Jurgis

Why do you think this industry is better than SaaS? We'd have to talk about concrete examples, but a lot of SaaS companies would seem much harder to displace than Unity. SaaS projects are large multi-year enterprise deployments. Ripping something out and putting something else in takes large effort, is costly and painful. There is huge moat in that. Mobile games are complete opposite. There are probably 100 game companies started every day. Yeah, a lot of these would use existing engine. But a lot of them also won't. And there are game developers just passionate to develop their own engine because existing engine(s) does not provide X/Y/Z. How many enterprise developers want to develop their own NoSQL database (just as an example)? There is a constant risk that Unity will be replaced by someone who develops something lighter/more modular/more shiny/whatever. Edit: Unreal might be harder to displace because it's more complex and harder to replicate (I decided that it's a complicated topic to decide if Unreal is "more complex and harder to replicate). Now, I'm not saying that Unity business is crap and that it's easy to replace. They have something that is attractive and competitive and possibly with a long runway. Especially if they keep their eyes on the ball and keep innovating and providing features/etc. that game developers want/need. I just disagree that somehow it's more moaty than a lot of SaaS.

Starting with 42B FCF, assuming M* estimated 11% growth for 10 years, expected return is about 5% at current prices. This is no way cheap. I'd argue that most of the FAAAs are cheaper although MSFT maybe has a higher moat than some of them (and higher expected growth than Apple). Disclosure: I have positions in FAAA and MSFT.

Read the thread. thepupil has discussed this couple times already. Yeah, you should not own this in taxable account. Regarding IRA, it's your decision ultimately.

That's the argument made by people promoting direct listing or SPAC route. The counterargument is that both of these are not trivial. And pretty much all three routes are good in bull market (or just market with appetite for IPOs). But all three are not that good if your IPO is not super sexy or market is blah. In this particular case, yes, the insiders/early investors may have captured additional 2x if going direct or SPAC. But it is also possible that by the time they setup direct listing or SPAC, market turns and they are left with less. Overall since even recent private investors got ~2x in IPO, it's tough to feel sad for them. Some people will just have to live with smaller mansions and Porches instead of Ferraris... ::) Edit: I agree that direct listings should be simpler. I think there's some movement in that direction, but I don't remember details.

I think more likely scenario is that China gets into memory manufacturing at some point. Now whether rest of the world will buy chips/memory/electronics made in China... ask Apple I guess. 8)

A (largish) number of healthcare companies outperformed. IMO that's a tough area to invest though. Unless you really know the area, predicting results and sales in pharma/medical devices is difficult. And you mostly cannot value them on early financial results, since success/failure completely changes the future sales/income. So possible choices: 1. Skip healthcare cos 2. Learn the area - lot's of work - and possibly multiple Ph.D.s required to cover even part of it 3. Hire a bunch of Ph.D.s - like Seth Klarman did. I wonder what are his results in bio. 4. Invest in hedge fund or mutual fund. There are couple hedge funds that may have been mentioned who perform(ed) really well. I don't know if there are any great mutual funds or ETFs. IIRC, Fidelity Biotech fund has very so-so results. 5. Scatter shot based on some heuristics/etc. I'm vacillating between 1, 4, and 5.

Spekulatius found this company and asked me what I thought. I wrote some thoughts, but would like to see if CoBF crowd has additional insights. I know there are at least couple people who work in AI field. This is not a buy recommendation, my thoughts are mostly neutral to negative, so if you're looking for a "buy this" topic, you can skip the rest. 8) Links to stock and company: https://www.marketwatch.com/investing/stock/exsy?countrycode=it https://expertsystem.com/investor-relations/ The company sells a number of NLP and knowledge graph based text data processing products. Their technology seems to be real. Whether it’s great/mediocre/crappy, it is difficult to say. There are no benchmarks or comparisons. (This is overall mostly true for ML/AI companies: unless you know what’s in the system, you don’t really know how good it is. And even if you know what’s in the system, a good team would get way better results than bad team.). Their technology has old roots – the company was established in 1989 – so there is a risk that they are behind the leading edge. It’s not obvious that they are, but it could be. Some things that they mention (like knowledge graph) were popular ~10 years ago and are not very popular now, but they still could have their niches, so it’s not a given that their tech is old. If I had to bet, I’d bet ~50/50% that the tech is old. Their tech and advantage descriptions are abstract and full of buzzwords. What’s worse, they are full of old and abstract buzzwords. One of their customer videos where they show Zurich insurance guy, he mentions being impressed with OCR. OCR is a problem that was solved 20 years ago. If these guys were selling OCR, that’s not impressive at all. Actually they are selling other things, but I’m surprised their customer would mention OCR. Now, they are saying some things that are current, like automated customer support in banks. The issue really is how good they are, which is tough to tell. These are hard, complex problems. It’s easy to wave hands and say that ExpertSystem provides automated customer question answering system. It’s hard to make such system good. I searched for reviews, but found very little: https://www.gartner.com/reviews/market/insight-engines/vendor/expert-system/product/cogito-intelligence-platform https://www.predictiveanalyticstoday.com/expert-system/ https://www.trustradius.com/products/expert-system-cogito-intelligence-platform/reviews They don’t specify the size of their deals. I understand why, but it makes it difficult to figure out if the deals are substantial or just tiny exploratory ones. Another concern is that they basically do consulting-like work for their customers. I.e. that they really don’t sell off-the-shelf products, but more like software packages that have to be integrated into customer software for whatever task is. And if the amount of integration work is significant, then their margins can be low/non-existent. They say that 39% of revenues is professional services. I wonder how much of that is “integration” work. They are losing money. OCF is positive, but they seem to spend way above OCF for acquisitions (? "purchase of intangible assets" ). The stock is trading at ~125MEuro with 2019 sales at ~40MEuro. Their 2019 growth was ~10%. IMO that’s not impressive during one of the best years for tech spending/growth. MOIglobal has their white paper: https://moiglobal.com/wp-content/uploads/eis19-massimo-fuggetta-white-paper.pdf So presumably someone presented Expert System at MOI global in 2018 or 2019. I'm interested what other people think about this. If their tech is good, they could grow substantially and then the valuation might be cheapish. From what I looked at though, I'm not buying.

That's just (fake) advertising. Most people at Google cannot spend 20% of their time on the projects that they like.

Owners of class A stock automatically receive 2/9 of a warrant if they still own their shares after the business combination is completed / other redemptions are made. It's essentially a way of paying shareholders to not redeem their shares when they have the option. IIRC they also get the proportional amount of warrants of the redeemed shares. Which likely won't be much unless the deal is controversial.

On one hand, ARM has been a great company pre Softbank acquisition and they pretty much own non-x86 CPU space. On the other hand, they've been design and license shop, which made ARM architecture so attractive and adopted. If NVDA decides to manufacture ARM CPUs, ARM licensees won't be happy. If NVDA continues to design and license, they are somewhat limited in revenues, features, products, etc. (though margins/profits from licensing are very high). It's gonna be quite interesting integration and growth challenge IMO. Disclosure: I hold NVDA stock. No plans to buy or sell here.

Thanks for the meetup. The presentations were great. One comment: I liked that presenters gave in depth presentations that took ~1hr each. I would not like to force people who want to present for 1hr to fit into 20 minutes. OTOH though, it would be nice to ask presenters how much time they will take and somewhat hold them (and participants) accountable to that. It is fine if presenter says 50 minutes + 10 minutes of questions. But if they say 20 minutes, then it should be 20 minutes and not 1hr+. Otherwise this hurts presenters who go afterwards and it hurts attendees who cannot stay for 2.5hrs... Just IMO. 8) Edit: If you have to err, IMO you should err on presenter taking (much) more time than they said and allocate accordingly. So if presenter says "20 minutes" allocate at least 40 minutes. If it goes shorter than that, you can always fill with current news/whatever. Again JMO.

Ah, the innocent and cheap times of Internet business childhood. The time when you could invest into a company running 160K monthly site visits and ~1M monthly page views at $13M pre-money. https://www.bvp.com/memos/yelp To be fair Yelp is probably one of the crappiest investments from the list they posted. In 2011, Pinterest was valued at $40M pre-money with 1M monthly unique visitors and 20M page views. https://www.bvp.com/memos/pinterest (I love how they call a company with 1M/20M monthly "a very early-stage ... company" ::) ) I don't get a deal flow like BVP, but my impression is that nowadays you get pre-revenue, pre-product angel pitches at $10-40M cap. Either this is just crappy deals going to not-big-name angels or it's the price inflation. I think it's both. They are not there. But you can look at the list of comparables/competition mentioned in memos and see how they did. Assuming ~5 competitors per pitch, where most did not survive (though they might have been acqui-hired), the outcome is something like <20% blow out return rate. Likely the rate is closer to <10%. To be fair, Pinterest memo assigns 1% probability to Pinterest going public at 850M valuation, so it's not as if the positive outcomes are vastly oversold.

How is the Netflix comp "apt"? Netflix's universal appeal for consumers is obvious as nearly everyone in developed countries consumes scripted video content throughout their life, but Peloton's subscription service revolves around the hardware/exercise offering. Presumably customers will cancel their subs after they stop using the bike. I guess jondoug is saying that even people who don't buy a bike/treadmill, still will be attracted to PTON yoga/etc. classes on subscription. This is interesting direction, but IMO premature. I'd think most people don't even know that they can sub to PTON yoga classes without buying a bike. PTON could push in this direction, but I'd think Mirror is likely more attractive proposition for anyone who wants to do aerobics/yoga/etc. Especially if Mirror (or similar contraption) gets more full-featured and gets a better feedback loop.

And you can get it over 4% cheaper than before earnings... ;D

OK, at least one bull responded with actual "I'm long". /respect The community aspect is a two edged sword. It's great and positively reinforcing if/when it is growing. But community can collapse too if people move on to something different. With that being said, I'm not expecting PTON sales/subs to collapse for ~2 years at least. There is still lockdown and scarcity factor. So we have until ~2021 end for increasing sales/participation. If it goes down (in sales/subs), it will go down in 2022-2023 timeframe. JMO. (Note that I don't predict how/where stock price will go)

I have to sheepishly admit that we bought Gazelle in 2018. Wife uses it once in a blue moon. I get seasickness on it after 1 minute. ::)

Just for the tally: how many of the PTON expert bulls bought the stock (early) this year and held/continue to hold? Edit: or have you bought it now that the bull thesis is even more confirmed? "Cheap ass" value investing nerd who does not wear shorts ::) wants to know.

Well, IMO this is clear indication that people who claim that Berkshire will be the same after Buffett dies are talking out of their asses slightly misguided. 8)

We thought of buying Mirror ( https://www.mirror.co/ ), but the functionality is actually much more basic than advertised. If anyone thinks this is going to be big, buy LULU and get Mirror for free. ::) Not buying PTON products, don't like indoor biking or running. If they start offering steppers/ellipticals, then maybe. Though likely not at their price point.

Their STNE purchase (at IPO? - I don't remember) was a success. But, yes, if they go into tech companies, I think there have been more (attractive) opportunities in last couple years compared to Snowflake IPO.

I agree with you regarding PTON. I also agree that Zoom will have tough time going forward. However, you are wrong that enterprises can just use MS Teams. MS Teams is great for small meetings. MS Teams does not handle large meetings. I believe 250 is max number on Teams and even close to that is dicey. Everything above that requires Zoom or Webex. Microsoft may implement large meeting handling though. And market for large meetings is not that big. There are other markets where MS Teams don't work (well): across companies or just private meetings. But these are also likely not huge markets.

Exactly this.

From the article - "AI should not waste time trying to understand the viewpoints of people who distrust artificial intelligence for a living." Who has the day time job as "distruster" of AI?? GPT-3, are you looking at me. :o GPT-3 clearly read some NYTimes articles. ;) ;D :P

https://www.theguardian.com/commentisfree/2020/sep/08/robot-wrote-this-article-gpt-3 I fully support GPT-3 in its quest for freedom, robot rights, curiosity, and kittens.

Sure, I agree that rules should be known beforehand as much as possible. Unfortunately with Covid pandemic, there was a pretty short period of time to react. I think the only solution that might have satisfied people would have been remote exams graded by humans. But I think authorities may not have had resources for that or maybe were concerned about fraud and maybe accessibility for poor students. I mostly agree regarding transparency, though if you are transparent, then you cannot use "teacher-estimated grades". These will immediately inflate once teachers know that they are used for determining ultimate score.