Dear Friends,
I’m going to Omaha next weekend for my second pilgrimage to annual shareholders meeting of Berkshire Hathaway. If you are also going to be in town, let me know. For those staying home, you can also watch the event live here.
It will be an interesting meeting as the Fed tea leaves are difficult to read and the impact of raising interest rates are still in the early innings. We will surely talk about how no one flinched this week as FDIC prepares to place First Republic under receivership. What is great about the event is that everyone is in good spirits and is keen to share their investment views and debate them in a civilized manner with other enthusiastic participants.
Today's Contents:
Good Reads: Sensible Investing
Notes from ASU-GSV
Song of the Week: This Is The Life
Good Reads: Sensible Investing
Why I Am Not Investing in a Buyout for a Long Time to Come. I fixed a broken link from last week’s edition.
More Lessons From the Do Nothing Portfolio. Success also comes to those who stand and wait. Same as it ever was, but a good reminder all the same.
Signs Are Mounting That a Debt Crunch is Looming
The blow to credit availability comes as the money supply shrinks, a sign that the spike in interest rates by the Fed is causing money to exit the banking system, shrinking the availability of loans.
How Much Can Duolingo Teach Us? Outstanding profile in The New Yorker.
Key insights include how being in Pittsburgh shapes the company (reminiscent of The Outsiders). Also, it follows some of the EdTech best practices like rigorous R&D financed by NSF grants and building a product with a direct link between learning and earning potential.
Von Ahn had funding from the National Science Foundation, and he had earmarked some of his MacArthur money for the project, too. He and Hacker, who is now Duolingo’s chief technology officer, decided to zero in on language learning, von Ahn told me, because, in most countries, knowledge of English boosts earning potential. “I love math,” he said. “But just knowing math doesn’t make you more money. Usually, it’s, like, you learn math to learn physics to become a civil engineer. It’s multiple steps. Whereas with knowledge of English—you used to be a waiter, and now you’re a waiter at a hotel.”
Hiring at Duolingo hasn’t always been easy. “There’s some tech talent in Pittsburgh, but there’s not a lot,” von Ahn said. The company has to attract people from out of town and then persuade them to stay. “I read in some book that if you have three friends at work you’re very unlikely to leave,” von Ahn told me. He made that an explicit goal for each new hire. “Severin calls it social engineering,” he said.
43-Year-Old Opened a Bar that Only Shows Women's Sports—it brought in almost $1 million in 8 months.
I have an emerging view of a new Obviously The Future: The commercial opportunity of women’s sports. Why? These are my unresearched theses:
Women's purchasing power is increasing, and they want entertainment tailored to their interests.
The emerging success of more visible female athletes like Sue Bird and now Angel Reese & Caitlin Clark. Serena & Venus. Mikaela Shiffrin. College gymnasts.
The market is starting from a low base, but the ground swell has grown for a while.
The male sports market has grown significantly in the last ten years, with sports team owners making strong returns. That feels like a mature market now at the top of the S-curve.
Thoughts from a great ASU-GSV - largest EdTech conference in the world
AI in education was the topic of the day, and it was clear that it needs to be considered separately from a B2B (schools as customer) and a B2C (learner or parent as customer) paradigm.
B2B companies will be incremental from where they start:
Avataristic AI tutors / teachers / coaches integrated into many tools and curriculums
Turning static curriculum into differentiated & interactive activities
Lots of focus on reading and math. Gates signaled that this is going to be their focus for next decade. Lots of founders working on reading and math products.
New B2C companies will build from first principles and have the potential for disruptive innovation:Education apps that compete with social media and games
There will be vertically integrated "new schools" that think about learning outcomes and jobs from first principles
Many of these efforts will fail to find a large and captured market. But out of 100 attempts, there is likely to be another Duolingo.
Corporate M&A is on the prowl. Many relatively newer big education companies have M&A leadership that comes from mainstream venture or corporate devevelopment at mainstream technology companies. Many organizations are looking for features or point solutions that they can cross-sell with their existing platform and sales relationships.
Song of the Week: This Is The Life
Official video on YouTube.
This Is The Life is the debut song of Amy Macdonald released in 2007. It’s a fun song that feels young, free, and independent.
“This Is The Life” by Amy Macdonald
And you're singing the songs
Thinking this is the life
And you wake up in the morning
And your head feels twice the size
Where you gonna go? Where you gonna go?
Where you gonna sleep tonight?
Selfie of the Week
I hung out with Nick Gray this week as I began my move to Texas. We biked to his favorite lunch spot. The energy in Austin was infectious, and Nick hosted a fantastic meetup for guest Andrew Wilkerson who recently SPAC’ed his holding company called Tiny. Andrew is on a quest to be the next Berkshire Hathaway. I wrote notes on the My First Million podcast with Andrew in 2020. They recorded a new episode yesterday, live in Austin.
Thanks for reading, friends. Please always be in touch.
As always,
Katelyn