Speedwell Research's News Update and Weekly Recap
Enablers vs Disruptors, Inverted Champagne Tower, Why Most Fail to Build a "SuperApp"
Welcome to Speedwell Research’s Newsletter. We write about business and investing. Our paid research product can be found at SpeedwellResearch.com. You can learn more about us here.
This is a weekly recap, where we summarize recent content you may have missed.
Table of Contents:
Speedwell Releases & Upcoming
Spotlight
Coverage Updates
Sharing Links
1. Speedwell Releases & Upcoming.
Research.
In case you missed it, we released a memo on Airbnb’s business history.
This is the story of how 3 guys in San Francisco went from air mattresses to a $100B empire.
This is a free excerpt of our research report on Airbnb.
The Synopsis Podcast.
We released an interview episode with tech investor William deGale! William is an investor who manages over $2bn in his global technology fund called Bluebox Global Technology, which has returned 17% since inception. We talked about growth expectations with tech investing, enablers vs disruptors, and position sizing and valuation.
Upcoming.
Podcast
New Dialogue this week covering some business updates!
Research
Our next research report on AppFolio will be released this week! This is a very exciting time to learn more about them as 2024 was the first year of meaningful cash flow and their stock is down 22% YTD!
Coverage
Earnings season is kicking into high gear! 8 of our coverage companies report next week. Companies reporting are: CoStar Group, Evolution, Etsy, Meta, APi Group, Airbnb, Floor & Decor, and Dream Finders Home.
Become a Speedwell Member today to get access to all of our research updates and our in-depth research reports!
2. Spotlight.
Below are select quotes from our various writings and podcast.
Interview: Multi-Billion Dollar Global Tech Fund Manager William de Gale on Nvidia, Growth Investing, and Tech Enablers
Direct Connection: “All these computers before 2005 essentially had relied on human beings as input and output devices for the system. From 2005, that began to change, the human has basically been taken out of the loop. We're supervising the system, but we're no longer the input and output device, and if you take the human being out of the loop, then processes run millions of times faster because we were by far the slowest bit of the system.
Untap Demand, But Supply Constrained: “If you look at the growth of profits or the growth of stock prices for tech over those 15 years. The slope is due to direct connection, but the consistency has nothing to do with demand; it has to do with supply. The industry is constrained. It's constrained by semiconductors, capital equipment, raw materials, energy, staffing, permitting, and subsidies.”
Focus on Enablers Over Disruptors: “The enablers are the companies that are selling the technology to the disruptors and also to the incumbents, because even more of the money that's being spent on technology is coming from the big existing businesses that are defending themselves against disruption.”
On Circle of Competence: “I'm interested in cause and effect and people and how things change over time and the implications of what happens now on what happened in a few years and trying to look to why something is happening now. And looking through the present into the future. None of that is about the product and the technical stuff behind it. If you get too tied up in the technical detail in the products and the technology, you can end up making mistakes.”
The Inverted Champagne Pyramid: “Imagine a champagne glass and it's standing on top of four champagne glasses then 9, 16, 25. It's a pyramid. It's a champagne tower with a single glass at the top. You take an enormous bottle of champagne and you pour it into the glass on top, and it overflows and overflows all the way down until every glass in the tower is full to the brim with champagne. So that is nothing like the tech industry. The tech industry is exactly the opposite. It is an inverted pyramid.”
Go For Certainty: “So we sit at the bottom of the pyramid and we just wait for the champagne to come to us. The nearer you are to the bottom, the less competitive issue you have in general and the nearer to the top you have, the more chaotic it is and unpredictable. I go for certainty. Everybody else seems to enjoy the chaos, but it's very hard to make money up there.”
Great Companies Surprise to the Upside: “Know your long term view is that on average, the surprises from here to there are going to be positive. The next surprise that comes along is more likely to be positive than negative. And those surprises, when it's done really well, are often the biggest ones you want to be in a position where you benefit from each of those positive surprises.”
WeChat, Meituan, and Grab: What is a SuperApp and Why You Will Fail Building One
Barriers Drop, Customer Acquisition & Retention in Focus: “In a zero-distribution cost, internet-enabled world competitive dynamics shift as physical barriers that previously contained competition are removed. This results in an increased focus on customer acquisition and retention since distribution is no longer a differentiator.”
More Offerings = High Monetization: “There is also the ancillary benefit that the more offerings you carry, the greater your ability to monetize… The more offerings an individual consumer utilizes, the less likely they are to go elsewhere and the more valuable they become.”
Customer Acquisition Tool: “A proper SuperApp effectively acts as a low-cost funnel of future customer acquisition for different offerings by keeping customers captive to a slew of everyday services. The high frequency nature of these “everyday services” keeps consumer churn de minimus.”
Win Using Consumer Hierarchy of Preferences: “It wasn’t the business prerogatives that allowed them to win, but rather serving customers with unmet preferences.”
When you’re not a SuperApp? “If a SuperApp needs to pay to acquire consumers to their new service, with no CAC (customer acquisition cost) benefit from housing multiple services together, then there is hardly anything “Super” about their app.”
Read What is a SuperApp and Why You Will Fail Building One memo here
3. Coverage Updates.
Axon
Announced 2 new ALPR cameras and partnership with Ring
“Axon Outpost and Axon Lightpost—two new fixed, intelligent ALPR cameras join Axon Fleet 3 to form a complete suite of fixed and mobile vehicle recognition solutions.”
“Axon Assistant, an AI voice companion, launches via Axon Body 4, giving officers hands-free access to real-time translation, policy guidance, and general information, useful facts, and answers from the internet.”
“Axon announces plans to integrate with Ring, a leading smart security company; empowering Ring customers to share—on their terms—relevant video with law enforcement to help solve crimes faster and safeguard neighborhoods.”
"Technology alone doesn't build safer communities—people do." -Axon Founder & CEO Rick Smith
Appfolio
Appfolio 1Q25 Earnings
Revenue growth decelerated 300bps to 16% y/y
They have now generated free cash flow of ~$120mn (without SBC)
Authorized a new $300mn stock repurchase program
DFH
DFH closes of its acquisition of Alliant National Title Insurance Company
“This acquisition represents a significant expansion of Dream Finders’ financial services capabilities, as Alliant National underwrites title insurance policies with more than 700 independent agents in 32 states and the District of Columbia.”
“This partnership creates significant value for both Alliant National and Dream Finders as a result of further vertical integration and additional service offerings to our stakeholders.” - DFH CEO Patrick Zalupski
4. Sharing Links.
A Letter a Day: Outstanding Investor Digest Compilation (link)
Michael Mauboussin: Market-Expected Return on Investment-Bridging Accounting and Valuation (2021) (link)
Aswath Damodaran on The Appeal and Dangers in Contrarian Investing (link)
And a special thank you to Matthew Harbaugh for helping put this weekly recap together!
The Synopsis Podcast.
Follow our Podcast below. We have four episode formats: “company” episodes that breakdown in-depth each business we write a report on, “dialogue” episodes that cover various business and investing topics, “article” episodes where we read our weekly memos, and “interviews”.
Speedwell Research Reports.
Become a Speedwell Research Member to receive all of our in-depth research reports, shorter exploratory reports, updates, and Members Plus also receive Excels.
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