Herro, Perro! w.32
Dear Friend,
Is it March yet? No. We have another day to go. Happy Leap Year! Ah, this was a fun week, wasn’t it? My highlight was playing quarterback on a 47-page consulting proposal that included collecting input from Indonesia, London, Pakistan, and Brazil. But, maybe, that was welcome relief from the weekly ‘events’. Hmmm. Where to begin? Let’s start easy.
+I found this gem of a newsletter, non-GAAP thoughts, from a former activist analyst at a firm, Relational Investors, that I hadn’t heard of that had the thesis of corporate governance as a moat. They closed shop when their founder, Ralph Whitworth, fell ill and passed. His belief seems important, though, and maybe we’ll see it reemerge before too long:
“Corporate governance is a major factor in our investment decisions for two overarching reasons. First, we are convinced that corporate governance practices and policies, as well as those of executive compensation, materially impact the performance and, therefore, the value of corporations. Second, since each of our investments involve an engagement plan to influence change, we must understand how the particular governance features of our portfolio companies will impact our efforts.” - Ralph Whitworth
+You know I love a good personality quiz. Something about self-awareness being the ultimate superpower something. Here’s a free one on HEXACO personality index. This is the one that is widely used by academic researchers. Way back in the day, I had a Facebook tracking browser extension that collected all the same information as Facebook and reproduced what the algorithms predicted of my personality. RIP Good Ol’ Days.
+Blitzfail: How Not to Go Off the Rails. The latest wisdom from David Sacks at Craft Ventures. Feel like many startup management teams and board members across the ecosystem would benefit from a good read and reflection on this piece.
+The demise of HomePolish! I was sad to read this extensive writeup on the failure of NYC interior-designer marketplace startup. I guess it was a case in point of Blitzfail. I feel a unique tie to the company having been friends, sort-of, with the co-founder Will. He was smart and relatable - you know, grew up geeky from middle America and hustled his way to NYC to earn some money and develop a penchant for beautiful design. Anyway, when you read the story, it all went downhill after Will left, and there is a funny quote about he was the only one that did well financially out of Homepolish. Anyway, it’s sad to see it go Tthe read is a bit gossipy on the other co-Founder, Noa (the interior designer), who ran the company into the ground. But, hey, we can all appreciate his sense of design and style with the like 45 pictures of the Hawaii garden wedding he got written up in Vogue. Love the bridesmaids in power suits. So that’s a win. For him.
+What if you’re a start-up employee?!? There is a calculator to help you understand the value of your options. Put together by two legit Stanford professors. Check it out and play around. Maybe it's solace in a world of market turmoil.
+Do you have everything you’ve ever wanted? Are you wondering what it feels like if when you get there? Best-selling author Ryan Holiday shares with all of us. TL/DR ‘I can tell you: It feels like nothing.’
+Fear is in the Air. And I, for one, am excited. Why? Because you get to observe fear. Observe yourself. What cognitive biases am I exhibiting here? What biases is this person exhibiting? How do people react? Stoicism may be helpful in these cases for those feeling fear. Thus, I shamelessly share with you a PDF of the Daily Stoic. It’s cool, Ryan already has enough.
+Crisis Investing: How to Maximize Returns During Market Panics by Verdad Capital. Basically, Have cash on hand to invest during crises after high yield spreads hit 6.5% for 3 months. Investments made in small cap value equity with usually free cash flow, and CCC bonds that offer attractive extra yield for risk in the environment. Does it work? Is it insightful? I’m not sure, it does have detailed case studies on every crisis since 1970.
+In the category of “I’m also not sure sure” is the a16z 100 top marketplaces analysis. On one hand, interesting. On the other hand, what actually is this data? And does it actually have any validity toward anything useful in terms of consumer trends? They don’t share any of the numbers of practical use. How can you analyze marketplaces without some of the biggest ones? Might it all be highly based on the data sources? I sort of think… probably? Anyone else have strong views? What am I missing?
+Also, wash your hands. Particularly at airports. As this study shows: We find that, by increasing travelers' engagement with hand hygiene at all airports, a potential pandemic can be inhibited by 24% to 69%. In addition, we identify 10 airports at the core of a cost‐optimal deployment of the hand‐washing mitigation strategy. Increasing hand‐washing rate at only those 10 influential locations, the risk of a pandemic could potentially drop by up to 37%.
+In best of politics this week: Big Dog Wearing Tie Becomes Mayor of Small Colorado Town. Sounds like a winner. Is he on the ballot for super Tuesday?
+It’s about power, stupid. Harvey Weinstein. Taylor Swift. Softbank Dude. What a week for power. Some thoughts: So Harvey Weinstein, the one untouchable media mogul, was convicted by a jury on charges of third-degree rape and of a criminal sex act. He now sits in jail, sort of. That’s a culmination of a lot of things…
+My finance friend usually recommends amazing business books like “Dear Chairman” and “The Outsiders”. But, lately, he had two recommendations off of the normal track. First, He recommended “She Said" and wrote: it’s by the two NYTimes reporters who broke the Weinstein story and was good at illuminating the way so many systems and people enabled this rampant sexual predation, including charlatan celebrity feminists with bogus claims or celebrity rape advocates who secretly worked for Weinstein for $895.00/hour. The other striking thing was that although other people took on serious risk (leaking documents, resigning in protest) only two women, Ashley Judd and Laura Madden (a blue collar single mother who was in the middle of cancer treatment) were willing to be quoted for attribution in the first article when it was genuinely dangerous. The dynamics between Christine Blasey Ford and people who ultimately shepherded and advised her were also fascinating.
I was like, ‘Nope' on the She Said. I’ve got priorities and conjuring feelings of anger and powerlessness isn’t high on the list. It probably is a good book. And, he recommended it to you, HP community, so I recommend it to you. Maybe I’ll read it too.
+The second recommendation was The Power by Naomi Alderman. This is a fictional story of a world where girls and women begin to wake up to a special electrical current they possess that allows them to physically harm, and potentially kill, others. Men don’t have this power. Long story short: the power dynamics of the world end up being eerily similar to the global society today, just with a different gender. And the story of these is not one of just gender but of the human quest for power and domination over others. The circle around Weinstein included a lot of enablers. And many of those enablers were women.
+Two Netflix recommendations for you:
+Cheer. When this 6-part reality series on competitive cheerleading was recommended to me, I was highly skeptical. Consider this a complete reversal. I was moved. Watching college cheerleading teams. I think it was the personal stories. The grit. The teamwork. The endurance. The leadership and dedication showed by the head coach, Monica. It was one of the most inspiring things that I’ve seen. How is this not fiction? I do worry about the girl with the 6 concussions, though.
+Formula 1 Drive to Survive Season 2 is out today! Which is dangerous. Like, I’ve already had to take a break from writing this newsletter for one episode. I prefer it to watching the actual races. I never thought I’d be interested in F1 and still find that I can rattle off the top tier of drivers a little shocking but, it’s good human drama television! What can I say!
Put both of these on your watch list for the Cov-19 quarantine rolls around to your ‘hood.
Alright, I’ve got some F1 to watch :). Thanks for reading, friend. Please always be in touch.
Katelyn
PS here is some extra on Corp governance:
Dozen Things I Learned From Ralph Whitworth On Investing, Activism, And Business:
Integrity is everything.
The decisions made today have compounding value (or costs) long-term.
Never underestimate the power of a single voice and its ability to drive change.
Markets are very good at evaluating AND valuing a company’s ability to deploy incremental capital.
DuPont model helps frame and prioritize key issues.
Good capital allocation takes a long-term view on ALL (R&D, M&A, buybacks, leverage, capex, etc.) capital deployment decisions.
3 year plans aren’t about predicting the future, but about seeing how management thinks they can execute against uncertainty.
Executive compensation is the company’s rudder. It dictates where the ship goes.
Focus on being helpful and adding value. The best engagements turn adversarial situations into long-term positive relationships.
Embrace letting others take the credit.
Debate in data, not words.
Know when to walk away and when to dig in.