Look At What The Light Did Now
w.223 | 2U, Data-Driven VC, Active vs Passive Mangement (redux), Nvidia
Dear Friends,
It’s President’s Day weekend here in the United States. Until convinced otherwise, I do not celebrate this holiday, so Monday will proceed as usual.
There were enough good songs, articles, and such that I thought I’d send a late weekend edition.
Today's Contents:
Good Reads: Sensible Investing
Song of the Week: Look At What The Light Did Now
Good Reads: Sensible Investing
Here’s How EdTech Company 2U Spiraled from $5 Billion to ‘Going Concern.’ It is a cautionary tale of ill-conceived M&A, negative profit margins, and a bad business model.
The Importance (and Shortcomings) of a Data-Driven Approach in Venture Capital. I like the level of detail this essay gets into on their model. Here are a few of their KPIs:
The entry point of the investment by the GP in question.
The most recent fundraising round conducted by the portfolio company.
Time between financing rounds.
The entry point of any “Tier 1” investors on the cap table of the portfolio company.
Vanguard and Fidelity Active Stock Funds: Both Generally Beat their Same-Style Vanguard Index Funds. Last week, I advocated for indexing against actively managed funds (Ark and Pershing), and Prof Ed Tower (my thesis advisor and professor emeritus at Duke) responded with this draft book chapter showing the merits of active fund management with the note ‘lest you be a victim of index fetishism.’ I never fancy myself a victim, so I’m also passing this on to you :)
It is important to note that these active stock funds are likely to have lower fees than Ark and Pershing, which were highlighted last week.
Nvidia Is Nuts, When’s the Crash? In the Financial Times. I hear more and more rumblings about how the “Magnificent 7” are over-valued and being sold off by insiders (like Jeff Bezos). Of course, it’s impossible to time the market and no one knows anything - but the math on Nvidia is hard to pencil.
This week Nvidia’s market cap passed the $1.8tn mark, leapfrogging Alphabet — whose 2023 net income was greater than Nvidia’s 2023 revenues — to become the third most valuable US company after Microsoft and Apple.
Toby Clothier has pulled a dusty discounted cash flow model from a drawer and plugged in Nvidia’s numbers. To get to a $740 share price simply requires that the company maintain a monopolist-like operating profit margin of 55 per cent for the next decade, while also growing sales tenfold, from $60bn a year to more than $600bn. For context, the entire industry sold $527bn worth of chips last year, according to the the Semiconductor Industry Association.
The Hedgies Who Sniffed Out Wirecard Have a New Target: the AI Bubble. Fun read in a similar vein.
AI is like Water from NFX Ventures. The Problem: Tech Differentiation is Heading to Zero.
Song of the Week: Look At What The Light Did Now
Video of Flo Morrissey and Matthew White singing the song that Fiest originally wrote and performed (but for whatever reason is no longer online).
Feist has mentioned that this song was inspired by her experiences with the transformative power of creative connections. The song is about embracing change, seeking personal growth, and finding strength in vulnerability. It urges listeners to live life to the fullest, as nothing can be taken for granted.
Enjoy :)
“Look At What The Light Did Now” by Fiest.
In my will I went 'till it's wasted
Look at what the light did now
Taste the taste I taste 'till it's tasted
Look at what the light did now
Bought it like a boast that burly beaming
Look at what the light did now
Got it like a ghost that girly gleaming
Look at what the light did now
Selfie of the Week
My friend and I have been playing with lights and photos. This one turned out well. Look at what the light did now.
Thanks for reading, friends. Please always be in touch.
As always,
Katelyn