Random thoughts without a theme
Ive been gone, here is the dumb thoughts you missed
Who needs a Chinese spy balloon when we have tik tok on every phone in America?
Like what the fuck is the balloon going to tell them?
How nice Kansas is this time of year?
This week:
Instead of the well written, expertly crafted email that you are used too coming out of SeanEcom;
I am going in a different direction.
I have been out the past two weeks at the Semi Annual ridge retreat.
50+ people fly in, we do events, coworking, topgolf, etc.
Takes a ton of planning and my newsletter suffered for it.
So here is every dumb thought I had that you guys missed:
DEBT
Ecom bankruptcies, triggered by a shrinking supply of cheap debt, will ramp up over the next 8 weeks.
Peak in Q2, trail off in Q3
Anything that required 0% interest rates to work will go to zero
We are 4-8 years away from 0% again
The cuts will be too slow to save these companies
Already seeing blow ups in the EU (a secondary debt market)
A business under 20m a year in EBIDTA isnt equipped to handle debt.
I know they need capital, but the complexities of serving 2-6x turns of debt outweighs a bookkeeper and a controller
You need banking relationships to pull it off
Thats why most PE deals are levered to 3 turns max (3x ebitda taken as debt)
We have ecom brands out here with no ebitda and 15m in revolving credit
No financial backbone holding them together
Twitter views debt as this super secret resource of the wealthy
You motherfuckers arent wealthy yet
Get your business to 100m in ebitda and then take all the debt you want
And if you are wealthy and reading this, IDK they got newsletters on yachts
Remote Work
We did the company retreat in Vegas this time instead of palm springs
15 more people, covered everything (hotel, flights, food, entertainment), gave everyone $300 in cash, rented top golf, a work space, etc
Cost less than 150k! And cost less than Palm Springs did
In person work is special, but it isnt special enough to outweigh the benefits of remote work
If you need highly skilled digital first roles, I will beat you 10/10 times if you require them to come to your shitty office
Remote work is harder than in person
You have to actually think about management and communication
“But how do I know my employees are working”
How does a fortune 500 CEO manage? You think Bob Iger walks past 50,000 desks a day making sure people arent watching netflix
You build systems, you hire good people, you incentives them
Your limitation as a manager cant limit your business
MARKETS
Valuations are coming back up
Not this quarter or next quarter
But I am already hearing from PE groups that “teens is on the table”
That means in 18 months, you will see deals start to close above the historic median price
Because interest rates will be below the historic median
9 months ago I was at a hedge fund convention
On 5/2/2022 they called a 20% drop in public market valuations- the SP500 was at $4,155
It bottomed at $3,577 on 10/12/2022, a 15% drop
The SP500 is back to flat against that 5/2 comp
These hedge funds were right…
This proves a rule I have:
The industry knows about something 4 months ahead of the public
We all knew about what facebook could do well before Cambridge Analytica
Its called the “Reporter Delay”
As soon as it is public, it has been over for months
LISTEN TO THE PEOPLE IN AN INDUSTRY TO KNOW WHAT IS REALLY HAPPENING
Climate tech will have one mega sized winner
Its like Search, you only need one
Its another one the conference got right
They told me they had too much cash on hand for climate tech
My advice- Build a green tech co, and pivot if you dont win the market
I made money on that buzzfeed trade I called on 12/30 in THIS VERY NEWSLETTER
Time for bad SPACs to die and strong businesses to recover
CULTURE
The paypal mafia is the corniest shit we allowed to enter culture
This is proof the media is ran by nerds
Yeah there were some VERY talented people who worked at Paypal
But the majority are just connected, right place right time, middle managers who ended up being MID
Elon can still be the GOAT, Peter Thiel can still be a psycho, David Sacks can still be ruthless, without propping up their pencil pushing buddies
“Oh man did you hear about the facebook cartel”- cringe
Brands and Tech are moving further apart, and thats a good thing
Tech eating the earth stopped at fashion
While tech is a hard business, it has a playbook
Brand building doesnt
What worked last year CAN NOT work this year
Youtube is winning
Ignore all the balloon stuff
Youtube shorts just launched monetization
In a more fair, clean way than the "creator fund” system
Tik tok wont pivot, they will continue to limit reach for ad space, creators will get sick of a dead audience and leave
I liked this.