JSArbitrage

Business related professions? All of them.

You actually think us Americans were mistreated? Was not sitting in restaurants and going to large gatherings too much to bear? The entitlement I've seen from my American brethren is shocking. Not willing to give up the smallest inconveniences to prevent mass death. More deaths in 2 months than the entire Vietnam War (and closing in on WWI) but wasn't allowed to sit at an AMC and eat popcorn. My belief in my fellow Americans has been severely damaged in this order. This is not the country that put a man on the moon anymore.

This is the key point, isn't it? A couple of questions: 1) For most moat-y businesses, do they have to pay their customers to choose their business? 2) For the ones which do, in fact, pay their customers (perhaps just initially) - what do those businesses look like? In my opinion, for (1) most moat-y businesses do not need to be acquired. You are offering something so special that competition is limited. Either you have some special process to offer sustainably lower costs (i.e. best commodity producer) or you are so differentiated that you are offering a special product (brands, etc.) Now, yes there are some businesses where you pay to acquire. The question then becomes, which are successful, and why? I would argue therefore the response to (2) is that you are building yourself into long-term customer processes, with high switching costs/specialized service, and a high natural relationship length. It becomes uneconomical to pay for customers if they can just hop to a competitor (low switching costs) in a month (low relationship length). My problem with the VC world (and perhaps I am wrong) is that they over-estimate their competitive advantages. I am sorry, but food delivery is not a competitive advantage. And access to capital is almost never a competitive advantage. Real competitive advantages come from high skilled activities at least in most cases. I think there is potential for significant competitive advantage in creating a network that makes delivery better, if it makes delivery better. Despite what some might argue, I am probably never going back to ordering a taxi because Uber/Lyft are so much more convenient that I would probably pay a premium to a taxi. Uber/Lyft made transportation a better experience IMO. They also made the driver experience better by making it a more flexible job, eliminating expensive medallions, etc. The open question for me perhaps is how are the food delivery services making the experience better than the status quo? Is calling up my favorite restaurant and going to pick it up that much different than having someone deliver it? I see the two-sided network effects very clearly with something like Uber, but food delivery not so much, especially if restaurants are eating the delivery cost. It is at best another form of advertising for them in that world. What makes Uber better than a taxi? Uber is a taxi service with an app. There is nothing more to it. Uber is just the app-ification of a service that's been around forever. The Uber business model wasn't related to network effects (even if they claimed that), it was about just subsidizing rides relentlessly to get to a scale that local laws didn't apply to them anymore. In fact, if you read about Uber, everyone can see the network effects never existed. Even small price increases (or smaller subsidies) causes Uber to lose market share. I would argue Uber just took advantage of another Silicon Valley business model - ignoring regulations. Like how if you throw a Coke can on the ground, you are littering. If you have a scooter company where 10,000 scooters are thrown on the ground, you're a mobile transportation company.

Great answers from everyone. One thing I will also add is that, in my experience with convertible prefs, management teams view this (ever optimistically) as a way to essentially issue equity at above market prices. CAKE might have not issued equity because they believe their current stock price to be too low or secondaries are hard in this market so they looked to a structured deal to issue a lot of equity a bit above their current price.

Energy prefs and debt.

DCP Midstream Series B Preferred look interesting

The issue with the rapid technical advance with electric cars is rapid loss in value and that means high cost of ownership. This hasn’t been considered much, but given the number of customers screwed by Tesla’s price cuts, I think it will be in the mind of potential customers. Leading might be a better option, if the offers are good. That's much more of a problem for ICE cars (or really any mechanically complex machine.) The more "electric" the car is, the more it's essentially a software update issue that doesn't require a new car purchase. I expect electric cars to have a MUCH longer ownership timeline than ICE vehicles historically have had. It’s not just software that changes, it’s the battery, engine, sensor etc that’s evolving faster for electric cars than for ICE‘s, hence I expect a faster loss in value. The buyers of Tesla cars seeing their used car values plummet already. It won’t happen with the Subaru I own. It's literally the opposite. Websites track this. The Model S depreciates far less quickly than sedans in the same class (and as an owner of the Mercedes E350 who is looking to buy a Model S, this is very real.) The Model 3 recently won a "best in class" depreciation award. https://www.autolist.com/news-and-analysis/tesla-model-x-model-s-depreciation Imo depreciations for current owners are becoming quite substantial when owners already start to protest about them: https://electrek.co/2019/03/04/tesla-owners-protest-price-cuts/ About the Model 3: it has been out in volume for less than one year, so definitely too soon to tell. The same seems to apply as for the S, btws: https://twitter.com/i/likes?lang=nl The price strategy of new car sales for Tesla is a COMPLETELY DIFFERENT ARGUMENT than depreciation of electric vs ICE cars (which was the issue raised.) There is little evidence (to date) that electric depreciates faster than ICE but lots of evidence that they depreciate slower than ICE. In fact, one of the primary selling points of electric is just that - a car becomes a software platform largely independent of physical upgrades. Batteries are easily swapped and electric motors have been largely the same for the last 20 years. Fewer moving parts means less wear and tear. The only real innovation that could require significant hardware updates is self-driving (and particularly Tesla's refusal to use LIDAR, which is probably a mistake in the long run.) In short - if the bear thesis on Tesla is that electric will depreciate faster than ICE, then investors haven't done an even surface amount of research. The better bear thesis on Tesla is that it's basically a pump-and-dilute stock run by a madman. But if you are betting against the technology itself, you're going to get smoked IMO.

The issue with the rapid technical advance with electric cars is rapid loss in value and that means high cost of ownership. This hasn’t been considered much, but given the number of customers screwed by Tesla’s price cuts, I think it will be in the mind of potential customers. Leading might be a better option, if the offers are good. That's much more of a problem for ICE cars (or really any mechanically complex machine.) The more "electric" the car is, the more it's essentially a software update issue that doesn't require a new car purchase. I expect electric cars to have a MUCH longer ownership timeline than ICE vehicles historically have had. It’s not just software that changes, it’s the battery, engine, sensor etc that’s evolving faster for electric cars than for ICE‘s, hence I expect a faster loss in value. The buyers of Tesla cars seeing their used car values plummet already. It won’t happen with the Subaru I own. It's literally the opposite. Websites track this. The Model S depreciates far less quickly than sedans in the same class (and as an owner of the Mercedes E350 who is looking to buy a Model S, this is very real.) The Model 3 recently won a "best in class" depreciation award. https://www.autolist.com/news-and-analysis/tesla-model-x-model-s-depreciation

Says who? Most of their locations were leased in major malls and other areas. They could get back into those locations in less than 6 months if they wanted to. Their entire Telsa "store" was just a few cars for test drive and t-shirts on a wall.

The issue with the rapid technical advance with electric cars is rapid loss in value and that means high cost of ownership. This hasn’t been considered much, but given the number of customers screwed by Tesla’s price cuts, I think it will be in the mind of potential customers. Leading might be a better option, if the offers are good. That's much more of a problem for ICE cars (or really any mechanically complex machine.) The more "electric" the car is, the more it's essentially a software update issue that doesn't require a new car purchase. I expect electric cars to have a MUCH longer ownership timeline than ICE vehicles historically have had.

Just to be devil's advocate - who has better share of mind? Amazon literally wins awards for having the best consumer satisfaction on the planet. If I need to buy anything non-grocery related, I always go to Amazon. I don't even price compare; I trust Amazon gives me a reasonable price. I also use Prime Now if I need something quickly. If I opened Amazon's website tomorrow and there was a grocery section where I could get delivery, HEB (my primary go-to here in Texas) would be toast and I actually really like HEB. That's how much I use Amazon.

I think crafting unearned wealth inequality as inheritance is a bit misleading. For example, one could say that Bill Gates is self-made; he received no significant inheritance and went into an industry completely different than that of his father (attorney.) But one could also argue that his parents have a huge impact on his trajectory. His parents even paid for a prestigious, expensive private school that had a computer in the 70's (which was insane at the time.) Bill's father even wrote a book on parenting. As for myself, I sometimes think about how much of "me" was baked in many generations ago. I had parents that were upper middle-class, purposely moved across town to get me into the best public school system in my city, always came to my sports games, spelling bees, etc. Their parents were educated immigrants from Germany who could claim to have come to the US with nothing in their pockets (true) but were also quite educated for their day in Germany (also true.) When I think of wealthy inequality, I don't think of the Rockefellers. I think about all the children today that have a really strong headwind while I had a strong tailwind.

I think AMZN will follow the same strategy they've always used: Bring on AMZN itself as a customer, build out world-class modular logistics/infrastructure, then bring on third-parties to scale out the logistics investment. For example, online retail was first customer of AMZN logistics. Then once AMZN hit scale, they brought on thousands of third-parties (Fulfilled by AMZN). Second, AWS was the first customer of AMZN cloud infrastructure. Then they brought on thousands of third-parties (AWS by AMZN.) I think the WFM investment is going to go the same route. Bezos will leave WFM mostly to their own devices but immediately start modularizing and upgrading WFM's logistics/infrastructure behind the scenes. Then once AMZN has built world-class modular grocery logistics/infrastructure, open it up to third-parties. WFM will just be another customer for AMZN.

No, this one is on Eddie. I remember like 10 years ago, SHLD put in a low-ball offer for Restoration Hardware before the MBO. Like $270M for the entire company. It ended up being sold for only a little bit higher. An investor at the annual meeting asked Eddie why he didn't bid more to get such a well-known, growing luxury brand and Eddie sarcastically quipped to the investor, "Well what should I have paid?!?" ... RH is now a $1.2B company. Not to mention that in any turnaround, you have to know liquidity is very important. Plowing $6B in cash into buybacks when the stock was rocketing up was greedy. He should have kept that cash around for the long-haul. That's not even hindsight - there were people on this board screaming for him to stop in real time. And that doesn't even take into account what opportunities would have been available during the financial crisis with that kind of cash on the balance sheet.

While I would never touch AMZN with a 50 foot pole from an investing perspective, this is why the stock is so highly valued. Bezos has made a very interesting pivot with AMZN: the model is no longer the retailer. Instead, he offers the technology they build out for the retailer to other companies. AWS was created because Bezos realized AMZN was actually one of the the world's most sophisticated development and implementation platforms. So he made a requirement that all AMZN internal development tools had to be made so outsiders could use them. They were already building them for the AMZN retailer: charging others for it's use was revenue straight to the bottom-line (give or take.) Remember - AMZN is, by far, the most advanced logistics and robotics company in the world right now. Their warehouse automation and shipping process is best-in-class. It's unreal. How long until AMZN starts offering Logistics-As-A-Service? I wouldn't be surprised to see a headline tomorrow that AMZN has signed an agreement with Target or Sears to manage all of their online retailer logistics in AMZN warehouses. AMZN already makes these investments for AMZN's online retailer so the marginal cost to manage Sear's logistics is almost zero. And they'd be able to charge a TON for it. AMZN is definitely in the too hard (gambling) pile from an investment perspective but it's hard not to admire what Bezos is doing. I think he's the business genius of my generation (more than Musk or Page/Brin.)