Biggie’s mother has reportedly passed away at 72 🙏🏽🕊️ She ran Biggie’s estate since his death, growing it from $10m to $160m.

189.000

Kind of wild that one of the companies with the most revenue from generative AI is a consultancy: Accenture Over $600M booked this quarter, on track for up to $2.4B annualized 🤯

There was a case study in 2019 that examined 11m LLC tax returns. A typical firm owned by the top 0.1% is a regional business with $20m in sales and 100 employees, such as an auto dealer, beverage distributor, or a large law firm.

Who are the best active investors who don’t manage outside money?

Great find, sent to me by a reader on my mailing list: In the 2004 BRK shareholder letter, Buffett admits he regrets holding his “Big Four” stocks and wished he would’ve sold them during the bubble, when he knew they were overvalued. This included Coke, which was down 50%+ from peak at the time. Interesting admission imo, especially considering BRK still owns 2 of 4 of the Big Four today (incl Coke). Patience or just stubbornness? Do you feel the same about some assets your currently holding?

“Multiple compression is a bitch.” -Ben Spero The most important takeaway for me from Adyen’s earnings is the following: Middlemen business models are an eventual race to the bottom. Why? Because they have two default paths: Path1: compete for the big contracts. This forces you to play lowball on price as the big customers (for payments, think customers like Uber, DoorDash etc) bid you off against your competitors mercilessly. Their reasoning is obvious - any savings in fees paid to Adyen or Stripe converts 100% into profit for them and thus valuation for them. So if DoorDash can bid Stripe vs Adyen against each other and save even 10bps, that converts into tens and possibly hundreds of millions of dollars of profits for a company with huge GMV. It’s a no brainer. Path2: you over charge the small guys to make up for the break-even or losses you run to have the big guys as customers in Path1. The problem here is that you need to become a Swiss Army knife for small customers to stay and not churn. Eventually, by doing everything, you bloat your OpEx with too many people that you will eventually have to layoff and your product ends up doing nothing very well - just many things decently ok. Regardless, you lose customers anyways to other best in class solutions. Even worse, by focusing on this segment, you also end up hoping for a customers marginal success - enough so they can keep paying you exorbitant rates but not so much that they migrate to Path1 and take your margin away. That’s a fucked up place to be. So what happens to these tech middlemen businesses? In short, they can grow quickly and have semi-long periods of great profitably but market efficiency will eventually catch up with all of them and they will be forced to compete their profits away to keep growing. It’s a “value trap” but in reverse. Marginal growth rates seem healthy and infinite so you forecast profitability out to infinity but don’t model in competitive dynamics and the competing away of margins. Good luck to all the players.

Freedom is being stripped away one piece at a time until it is gone