📱 You need a sounding board
GM, this is Podup #10. You’ll notice this is a special arena edition of Podup. Acquired hosted their Arena Show on May 4th in Seattle, followed by the inaugural All-In Summit from May 15-17 in Miami. Catch all of the best bits below 👇
Congrats, you saved yourself 2 hours & 39 mins listening time
What you need to know
📱 You need a sounding board
🔮 What’s not going to change
🏆 The winning stock pick
🏎 Elon Musk’s Master Plans
Get ahead with WhatsApp groups
Acquired: Arena Show Part I: Idea Dinner + YC Continuity on Apple Podcasts
Show Acquired, Ep Arena Show Part I: Idea Dinner + YC Continuity - 12 May 2022
2 min read vs 1 hour 13 mins listening
It can be lonely at the top. Founders and execs are burdened with keeping the lights on but often have no one to lean on for support. By joining a likeminded peer group, you can access one of life’s cheat sheets.
What they say
David sets the scene
For act one tonight, we start back in February 2021 when we were all bored at home, Clubhouse was a thing, GameStop was going to the moon, and we decided to call up our best internet friends, Packy McCormick and Mario Gabriele, and pick some stocks!
Tonight, we’re going to recreate that magic, live here, in person.
David Rosenthal
Ben adds some flavour to what’s coming next
We’re all coming with our best investment idea starting today. The idea is to espouse something that you think would be a profitable investment (not investment advice).
Ben Gilbert
What I say
Why it matters: David, Ben, Packy and Mario created their own version of TIGER 21. Rather than paying $30K membership dues for the pleasure of presenting their investment portfolio to peers IRL and having this picked apart (yes, that's really how TIGER 21 makes money), they did this for free over the internet.
Mockery aside, what’s important is having a safe space to present, critique, and discuss ideas. If you already have a group, you know the outsized benefits this brings. If you have a few friends you do this with individually, introduce them and create a WhatsApp group. It works best when people ask direct and provocative questions. This helps you to reprioritise what’s important and tackle problems in a different way.
Between the lines: Funnily enough, I listened to this episode on the same day that I read Shaan Puri’s 5 Tweet Tuesday newsletter. In it, he shared these words of wisdom that summarise this segment perfectly:
“Life hack. Set up a group chat of 6 people who have the same goals/ambitions as you.
Mentors. Overrated.
Peer Groups. Underrated.”
My favourite Jeffism
Acquired: Arena Show Part I: Idea Dinner + YC Continuity on Apple Podcasts
Show Acquired, Ep Arena Show Part I: Idea Dinner + YC Continuity - 12 May 2022
4 min read vs 1 hour 13 mins listening (same pod)
What's not going to change in the next 10 years? This is how Jeff Bezos famously responded when asked what he thinks will change in the next 10 years. He reframed the question because he argues that a company foundation should be built upon things that do not change.
Following on from the last segment, let’s dive into why Amazon is David’s favourite stock pick and the importance of asking the right questions.
What they say
My pick is Amazon. They’re trading a $1.25T market cap.
Looking at the fundamentals, Amazon did $470B in revenue in the last 12 months. That is the second highest amount of revenue that any company has ever done, ever.
That means Amazon is trading at 2.5X revenue. About $400B of that is retail revenue but about $75B is AWS revenue.
AWS is growing at 37% annually on a $75B base. Google and Microsoft are growing at 45% but their market share combined is still significantly less than Amazon.
But none of that matters. The market that we’re talking about here is the internet. This is the picks and shovels of the internet. Amazon is the clear market leader. I cannot imagine any other asset I would rather own, period.
To borrow a Bezos framework, you’ve got to think about what’s not going to change in investing.
I think 1) What’s not going to change is that the internet is going to keep growing, so I want to own AWS.
And 2) I and others are going to keep buying more stuff online, so I want to own Amazon retail. And I think that on the retail side they’ll keep adding credit cards, advertising, Buy with Prime, and all of those are high margin products.
David Rosenthal
What I say
Why it matters: The allure of breakthrough technology and new consumer trends is hard to resist. The most prominent rags to riches stories feature founders who change the world with a disruptive product, business model or route to market. But the most durable businesses (like Amazon) are built on foundations that do not change.
One thing we don’t do enough of is ask the right questions to build sustainable and profitable businesses. Questions like ‘What are my antigoals?’ and ‘What's not going to change in the next 10 years?’
It’s important to know what you want to avoid when starting a business (think divorce, estranged children, financial ruin) before deciding what kind of business you want to build. ‘Boring businesses’ are being talked about more and more. Why? Because they can provide better work life balance and they serve needs that will not change over the next 10 years. Here are a few examples, along with their biggest proponents:
Demand for camp grounds and car washes will never die (Codie Sanchez)
The ability to write well can impact every part of your life (Sam Parr)
Storage facilities will always be needed (Nick Huber)
Niche websites that rank top of Google print money (Niche Site Lady)
Between the lines: Here's a random but kind of on topic way to end. Recreate this Jeffisms website but for Buffetisms and Muskisms. Best case scenario, your site ranks #1 on Google and you get amazing opportunities you wouldn’t have otherwise been exposed to.
Worst case scenario, you improve your writing, you reinforce your learning, and you enjoy compiling frameworks by one of the best innovators of our time. Or as Paul Graham puts it:
"If you’re thinking without writing, you only think you’re thinking."
— Leslie Lamport
Think like an investor
Acquired: Arena Show Part I: Idea Dinner + YC Continuity on Apple Podcasts
Show Acquired, Ep Arena Show Part I: Idea Dinner + YC Continuity - 12 May 2022
2 min read vs 1 hour and 13 mins listening (same pod)
So who won? Shu Nyatta, Managing Partner at SoftBank, was the judge of who picked the best stock. David picked Amazon, Ben picked Coinbase, Mario picked Snowflake, and Packy picked Opendoor. Here’s some of his comments and criteria before the winner is revealed.
What they say
The first is you all said you’re not very good stock pickers. I’m going to posit that the future of investing is people who understand and create narratives, and that’s what you all do. You’re all very good stock pickers, period, because you all understand the power of stories and narratives.
Overall comment number two is you all think like venture investors, nobody talked about downside [audience laughs]. I was waiting for the bear case and what could go wrong and it didn’t come up. For example, Coinbase over earns from a consumer pricing point of view compared to any other platform you look at, it’s a total outlier.
The third thing is you were all focused on companies that were cheap. Expensive companies can be great investments. It’s probably because we’re in this part of the market cycle and everyone’s focussed on dirt cheap with these prices.
I had five criteria, one was upside, the other was downside, the other was timing, why now? The other was novelty, which you all failed on by the way. And the final one was flair.
Shu Nyatta
What I say
Why it matters: Drumroll please … Shu let the audience choose the winner, and they chose Coinbase. Remember, this is not investment advice. But if you want to listen to Ben’s pitch on why Coinbase is his top stock pick, skip to 23:10.
If there’s ever a ‘must listen’ episode that’s worth your time, this is it. It’s a mix of pure entertainment and nuggets of wisdom that will make you question your own personal investment thesis and your reasonings behind every stock you hold.
Between the lines: It’s important to put yourself in the shoes of a great investor. Before you launch a new product or service or start your own business, ask yourself what’s the upside, what’s the downside, why do it now, and why are you positioned to do this better than anyone else?
The one story you must get right
All-In with Chamath, Jason, Sacks & Friedberg: E69: Elon Musk on Twitter's bot problem, Spac...
3 min read vs 1 hr 26 min listening
What's a Master Plan? It sounds like a plot by Darth Vader or Thanos. Alas, a Master Plan is the blueprint for your company. It’s a 5-step plan that everyone can follow, remember, prioritise from, and plan from. Who better than Elon Musk to show us the importance of a Master plan? Read on for his story of the SpaceX Master Plan.
What they say
Is the idea that you build the ability to do orbital cargo, take all of those profits, launch Starlink, take all of those profits, and move it all into building something that can get to Mars?
Chamath Palihapitiya
Pretty much, a three slide PowerPoint would be pretty much as you described which is develop rockets that are capable of taking satellites to orbit and crew to the Space Station, service government and commercial space launch needs, and then build a global communications system in space that does a lot of good for Earth by providing internet connectivity to the least served, where they’ve got either no connection or a very expensive or poor connection.
The revenue generated from Starlink is what can enable the development of a crude base on the moon, which will be the next stop from Apollo. Let’s not go there for a few hours and head back. Let’s have a permanently occupied science station on the moon.
In order for us to become multi planetary in a way that’s meaningful, the key threshold is at which point does the city become self sustaining such that if the ships from Earth stop for any reason, does the city still survive?
Elon Musk
What I say
Why it matters: The SpaceX Master Plan is storytelling at its finest. He’s used it to secure over $7B in funding, hire the worlds best engineering talent, and inspire millions to dream of a day when humans live on Mars. The plan anchors almost all of Elon’s tweets and company comms and sets a clear direction for everyone to work toward.
So, how do you make a Master Plan of your own? We’re doing exactly that at Medicspot. Thanks to Elon, we’ve distilled four core principles that make for an inspiring plan:
There’s a clear linear progression
Each step is unique and challenging
You know when a step is complete
The end shows the future vision
Between the lines: Unfortunately, I can’t reveal Medicspot’s plan just yet. We’re working on it as we speak. What I can do is share the full 5-step plan for SpaceX to give you an idea of how to structure yours:
Space delivery. Create a space company to reduce the cost of orbital delivery.
Connection. Deploy an orbital ISP and get billions of customers.
Movement. Use meta-material antennas everywhere (including Mars).
Colony. Get the first colony on Mars.
Interplanetary species. Terraform Mars.