Six Days
w.163 | Superbubble, VC Terms, Housing Market, Emily St. John Mandel
Dear Friends,
Happy Labor Day weekend. Hope you are relaxing and enjoying the beautiful weather (at least here on the East Coast).
Today's Contents:
Good Reads: Sensible Investing
Good Reads: Venture and Startups
Book Review: Sea of Tranquility: A Novel
Weekly Song: Six Days
Good Reads: Sensible Investing
Entering the superbubble’s final act. Here by Jeremy Grantham at GMO. Keep in mind he’s a perma-bear, and this should be read with a grain of salt:
The U.S. stock market remains very expensive and an increase in inflation like the one this year has always hurt multiples, although more slowly than normal this time. But now the fundamentals have also started to deteriorate enormously and surprisingly: between COVID in China, war in Europe, food and energy crises, record fiscal tightening, and more, the outlook is far grimmer than could have been foreseen in January. Longer term, a broad and permanent food and resource shortage is threatening, all made worse by accelerating climate damage.
The current superbubble features an unprecedentedly dangerous mix of cross-asset overvaluation (with bonds, housing, and stocks all critically overpriced and now rapidly losing momentum), commodity shock, and Fed hawkishness. Each cycle is different and unique – but every historical parallel suggests that the worst is yet to come.
Housing is in trouble. Twitter thread here from Jeff Weniger, an analyst at Wisdom Tree.
How Mondragon became the world’s largest co-op: In Spain, an industrial-sized conglomerate owned by its workers suggests an alternative future for capitalism. Here in the New Yorker. It’s on the list for this weekend. Co-Ops, DAOs, and worker-owned companies are all examples of the decentralized ownership megatrend that I’m interested in.
There is no water in Jackson, MS. Not good. And while the cause was different than the one in Flint, MI, this one may be more likely to happen again given generational under-investment in critical infrastructure across the US, highlighted by our bridges, water supply, and the electrical grid. I will watch how we address these situations as emergencies arise - and who pays. If federal emergency funds come to the rescue, then there may be no reason for states and cities to spend from their coffers on prevention - and a national game of chicken will ensue.
Good Reads: Startups and VC
Thread on Common Themes from the Best VCs by Samir Kaji. Here. I agree with basically all of these and, as you would hope for a good list, #1 is the most important:
Serial Entrepreneurs Raise More Capital, but at what Cost? Here from Pitchbook.
TL/DR: Second-time founders raise more money, faster, at higher valuations but own less of their company at the end. The world is full of tradeoffs; what's new? Being a second-time founder is a huge advantage. Based on my experience, being super early at a company on a fast trajectory can sometimes manifest in a similar outcome.
How do venture capitalists make decisions? A research article from 2020 here.
You can see how important each venture deal term is in this chart, which is based on a survey of VCs. Maybe times have changed. Maybe they’ve just reverted to the norm.
Book Review: Sea of Tranquility
Here on Amazon.
By Emily St. John Mandel
I like Emily St. John Mandel. I thought Station Eleven (book, not the TV show) was excellent. I greatly enjoyed The Glass Hotel. Sea of Tranquility was just not as good. Clearly, it was a book written by the author during the pandemic and released quite hastily; it lacked the same depth and lyrical prose as the others. It was also too autobiographical. But, if you haven’t read The Glass Hotel, that would be a good place to start and comes highly recommended.
Weekly Song: Six Days
Music video here.
I’m not in love with the video, which centers around a relationship when obviously the lyrics are about a citizen seeing the progression to a regrettable war.
I thought it was apt this week. A friend sent me this article (Civil War is Coming to U.S. Says Hedge Fund Titan Dalio) on Tuesday. By Thursday, we had a prime-time speech by the current U.S. president about the former. I’m not making a prediction either way, but it did make me think of this eerie song.
"Six Days" by DJ Shadow
You could be sitting taking lunch
The news will hit you like a punch
It's only Tuesday
You never thought we'd go to war
After all the things we saw
It's April Fools' day
Tomorrow never comes until it's too late.
Thanks for reading, friends. Please always be in touch.
As always,
Katelyn