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Some things and ideas: March 2022
Some random thoughts on articles that caught my attention in the last month. Note that I try to write notes on articles immediately after reading them, so there can be a little overlap in themes if an article grabs my attention early in the month and is similar to an article that I like later in the month.
My monthly overview (Monthly recurring piece)
I consider YAVB my “empire” with four core pieces: this blog / substack (the free side), the premium side of this blog, my podcast (also on Spotify, iTunes, or YouTube), and my twitter account. You can see my 2022 vision and goals for the empire here. If you like the blog / free site, I'd encourage you to check out the pod, follow me on twitter, and maybe even subscribe to the premium site!
I try to be as helpful as humanly possible to anyone whose research / writing I enjoy. In almost every post I do, you'll notice I link to other subscription services or investors who I like. I don't get referral fees or anything for that; these are almost always organic links and highlights that I do not because I was asked to but because one of my goals with the (very small) platform I have is to shine light on other people who are doing good work and make sure they have a platform big enough to encourage them to keep doing good work!
If you're launching a subscription service, or a new blog, or you're an investor who has done some really good research and wants to get some more eyeballs on it, please drop me a line and let me know. If the quality is there, I would love to link to your blog post or subscription service or research (and if the quality isn't there, I'm happy to provide feedback! I have done so with several services and I think my advice is good / appreciated / helpful!), and I'd love to have you on the podcast to talk about all of it. I can't promise anything, but most podcast guests / people I've linked to have been very happy about the reception / feedback they've gotten (I've even been called the king of the sub bumps / almost as good as Twitter / a big sub bump, and I've generally heard from investors with LPs who come on the podcast that they're delighted by the response). My DMs are always open, so feel free to slide into them if I can be helpful!
We don’t talk about Bruno and Streaming Moats
This is a few months old, but this WSJ article on how “We don’t Talk About Bruno” stormed the world has been percolating in the back of my brain for two reasons.
First, it started peaking on the Billboard charts in January, months after it was released in theaters (November). Encanto did ~$230m at the box office (compare that to something like Frozen, which did almost $1.3B). Yes, there’s the pandemic to consider… but I just think it’s interesting that Bruno would surpass Let it Go (from Frozen) w/ a box office less than a quarter the size.
Second, look at all the complexity to launching Encanto and Bruno world wide. I know there are still lots of Netflix bears, but the tools to really effectively release global hits take time to build, and there are only going to be a handful of global companies that have them. I think the few of them that do (Netflix, Disney, likely the new DISCA/WB) are going to have a sustainable competitive advantage when it comes to identifying, producing, and rolling out global hits.
Peloton and destroying the brand
Long time readers of this blog will know I’m a big fan of Peloton. I don’t currently own the stock, but I’ve come close several times and I’ve written about them more than almost any company outside of the cable industry.
The stock and company have been an absolute disaster recently, so I wanted to share my recent experience with Peloton. I’ve got the full experience in the bullets below, but feel free to skip to the TL;DR if you don’t want all the details.
For the past few months, my bike has made a super annoying clicking noise when I peddle at anything more than a recovery pace. I contact Peloton customer support about it, and they said “No worries, the bike is under warranty. We’ll send a technician out to you on Friday!”
Great customer service, right? Well, the Friday time slot came and went, and I didn’t hear from the technician. I contacted Peloton…. and, it turns out, they had cancelled the technician without letting me know.
Long story short, they apologized, and set up a new technician. The prior appointment was supposed to be done with an in-house technician; this was a third-party rep so Peloton needed to mail me the parts. That meant I had to wait two weeks for the tech so the parts could get to me and everything.
Two weeks go by, the parts arrive, and the tech comes to my apartment. Nice guy, very pleasant, gave Penny some love while he was working. Anyway, he repaired the bike and then told me “Hey, is there anything else to do? Peloton sent parts for two bikes.” Nope, Peloton just over sent the parts. After he was done, he had me hope on the bike to see if the bike had been repaired. Nope, turns out that Pelton had misdiagnosed the problem and sent him the wrong parts to repair the bike. I asked him if there was anything he could do, and he told me “Nope, it’s the Peloton frame that’s the issue. That’s Peloton. Quality!” (he deadpanned that last part).
Anyway, now I’ve had to schedule a new technician, have all new parts sent out, etc. I’ve been on the wait list for this new tech to come out for over 3 weeks, and I still haven’t had any luck getting an appointment scheduled; in fact, as I write this, I’m chatting with Peloton technical support trying to get them to reach out to the third party service and schedule the tech. It’s been almost 30 minutes, and still no luck.
TL;DR: Peloton’s really messed this up. The cost to them is pretty high: multiple times shipping unneeded parts, multiple service calls, lots of customer support hand holdings, etc. And, to make up for it, they’ve comped me multiple months of service. Just unnecessary cost and headache all around.
But the bigger issue for Peloton is they’re supposed to be a premium brand. The bike is thousands of dollars, and the monthly membership costs more than most gyms. Yet here I am, a Peloton super fan, and I’ve been going through a two month ordeal trying to get my bike fixed. Peloton’s a premium brand that’s supposed to have an insane NPS; things like this are just a disaster for them. I promise you I’m not signing PTON’s praises to all my friends anymore.
I get this whole segment could come off as whiny. But I put it here (and not on a Twitter thread with Peloton tagged) because I’m not looking to get bumped on customer service or anything. I was more looking to put an investor lens on and think about Peloton. On my numbers, PTON right now is trading for <10x run rate subscription contribution margin. That looks pretty cheap if you think Peloton is a scaled business with insane customer loyalty and a great brand…. but it doesn’t look anywhere near as cheap if you look at Peloton as a business in turnaround mode with huge operational issues. I used to think Peloton was facing temporary challenges driven pandemic related supply/demand ramp up (and ramp down), but for months the stock has been melting down as the market has been saying that I was wrong and Peloton was simply a broken business in turnaround. My experience is suggesting the market is right.
PS- while I’m here, I know people scoff at loyalty from having the best instructors. But I'm a regular at a boutique cross fit gym, and over the past six months all of my favorite instructors left the gym. Suddenly I found myself not having as much fun at the gym, and I was doing other workouts instead, so I downgraded my membership from monthly to class by class to adjust for going less frequently. If you use Peloton, you form a relationship with the instructor. As long as Peloton can keep the instructor (and I don’t believe they’ve had churn issues with instructors), that’s a mammoth advantage for them.
Podcasts (Monthly recurring piece)
I launched the Yet Another Value Podcast in August 2020; the goal of the podcast is to do a deep dive into a high conviction idea from a sharp investor. No talking about the investor’s philosophy or history; just one well research idea broken down (I provided a longer piece on my vision for the podcast at the start of 2021). They've been a blast so far.
A big update: I moved the podcast to a dedicated section of this blog. If you already subscribe to the podcast, no need to do anything. If you don’t….. well, you should!
This month’s podcasts:
Louis Camhi on the opportunities in the SPAC market (Podcast #97)
Chris Colvin thinks Veritas is stealing $HMHC (podcast #98)
Tim Weber updates $AMPY and talks the double dogs (Podcast #99)
Also, not my podcast, but I went on the hard money podcast. It was a blast; we mainly focused on cheap retailers aggressively buying back shares.
Nerd Corner (Monthly recurring piece)
There’s no hiding it; I’m a massive nerd. I read 3-4 fantasy books a month, my favorite past time is playing board games with my wife and friends, and I religiously watch every new entry in the Marvel Cinematic Universe (MCU) and listen to fantasy show recaps on Binge Mode (so much so that I even did a Twitter Space talking about the MCU!). Plus, I was an eager supporter of the Brandon Sanderson Kickstarter (yes, I splurged and went for the hardcover books).
Anyway, I figured a few of you are nerds like me, so I’m starting this segment to give recs of what I’m nerding out over currently, with the hope that you’ll either try it and enjoy it or recommend me similarly nerdy things that I’ll enjoy. This month’s recs:
Nothing else jumped out at me this month. A few of you hit me with recs recently, which I’m diving into as we speak. Hopefully I’ll have more to rec next month (and I also have high hopes for Moon Knight!).
Other things I liked (Monthly recurring piece)
Sanderson is the best fantasy author working. Glad we get to continue exploring his worlds!