My Favorite Company Deep Dives of 2020
Posts on Fiverr/Upwork, Carta, Tyler Corp, CostCo and more
Hello everyone and happy new year! To kick it off, I gathered a few of my favorite business deep dives that I read over the last year.
From Around the Internet
[FVRR, UPWK] Freelance marketplaces (Paywall) | Scuttleblurb
If you don’t subscribe to Scuttleblurb, you should change that. I can’t recommend his writing enough. This post, on freelance marketplaces, discusses the two main marketplaces (Fiverr and Upwork), how they compare to incumbents and what to think of their lofty valuations. A sample: “Whereas Fiverr can spin up network effects atop a fixed base of technology, incumbent temp agencies run what is essentially a cost-plus model on commoditized labor inputs managed by staffing specialists, resulting in few scale economies. Consultants have a somewhat similar business model but a respected brand like McKinsey can at least charge a premium for specialized expertise and CYA validation.”
$1 trillion in equity: How Carta is set to unlock the private markets | Tribe Capital
An excellent deep dive into Carta, a company that provides cap table management software and other services related to a companies capital structure. One of their new products is CartaX, a marketplace providing private market secondary transactions. This article goes over how the company grew, how they built network effects, and their plans for CartaX.
Tyler Corporation History | Funding Universe
I linked this for two reasons. First is it provides a look into the very early days of Tyler Corporation ($TYL) and how they transformed their company through M&A. If you aren’t familiar, Tyler is the largest provider of software and services to the public sector (government organizations like police departments and school districts). But I also linked this because the site, Funding Universe, is a super interesting directory of company histories. Worth checking out!
Datadog (DDOG) Stock Analysis | Software Stack Investing
This was the first piece I read that sparked my interest and understanding of Datadog (which lead to a post of my own). This was written by an engineer turned investor, so the technology he talks about often comes from first hand experience.
Financing the American Home | Net Interest (Marc Rubinstein)
I’ve published another piece by Marc on Napkin Math, but this post on mortgages was really interesting. The 30-year fixed-rate mortgage has only been around since 1948. Before the Great Depression, land was cheap and ownership became a core part of what it meant to be a citizen. It was financed by a very different kind of loan: a 50% down payment with a three to eight year term at a rate of around 5.5%. The article is quite thorough.
The Mike Speiser Incubation Playbook | Kwokchain (Kevin Kwok)
Snowflake was one of the most successful businesses that IPO’d this year, and Mike Speiser of Sutter Hill was who incubated the company. In this piece, Kevin goes over the playbook that Speiser has used to launch several companies, specifically how he thinks about building a team and finding a CEO. “The core of his model is to find 2-3 co-founders and be the founding investor. Often he takes on the interim CEO role himself for the first year or two. This has many advantages. The biggest is that it reshapes the ideal founding team profile. He can focus on getting the right top technical co-founders that will have strong views on what to build and the ability to build it—even if they are people who don’t generally view themselves as having a natural inclination to be founders. This is a significant talent arbitrage.” Lots of other good reads on Kwokchain if you haven’t poked around yet.
How Costco Convinces Brands to Cannibalize Themselves
CostCo is a favorite for many consumers: the low prices can’t be beat, and they still maintain high quality. Particularly with their Kirkland Signature line. In this post, I dove into the history of CostCo, how Kirkland manages to be 1% better than the best, how the economics of their suppliers works and why private label represents such a strong advantage for CostCo.
Why MasterClass Isn’t Really About Mastery
Masterclass is one of the few EdTech businesses valued at nearly a billion dollars. In this piece, I wrote about how their business ticks, why they don’t really sell education, how they are creating one of the largest repositories of evergreen content on the internet, and how they leverage their beautifully-made advertisements.
How Domino’s Stock Returned 4,595%
Domino’s has returned over 4,000% in the past 10 years and has outperformed Amazon, Apple, Facebook, Google and many others. They accomplished it through a combination of strategic technology investments, a capital-efficient franchise business model, and by using dividend recaps to return capital to investors along the way. I wrote this while I was still writing for Divinations earlier this year.
What are you favorites from last year? Would love to hear in the comments!
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