Speedwell Research's Weekly Recap
Relaunching our Weekly Recap Newsletter, Coverage Updates, Weekly Highlights, and Links
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.
We decided to relaunch our weekly recap! We will highlight key updates from the week, as well as share news from our coverage and links we like!
Table of Contents:
Speedwell Releases & Upcoming
Spotlight
Coverage Updates
Sharing Links
1. Speedwell Releases & Upcoming.
Research.
We released five 4Q Business Updates already: Airbnb, CoStar Group, Evolution, Floor & Decor, and Perimeter Solutions
The Synopsis Podcast.
This week on our podcast we interviewed Evolution’s CPO Todd Haushalter!
Features.
Speedwell Research collaborated with Quartr Magazine to produce a short piece on Axon!
Drew Cohen was featured in Compounding Quality’s Newsletter (over 400k subscribers)
(This interview is a shortened version of the full written interview, which we will be publishing on Speedwell Memos next week!)
Upcoming.
More earnings updates will be released next week!
We have Copart which just reported and Constellation Software, Axon, Coupang, and Dream Finders homes reporting!
After earnings, we will be releasing our latest research report on APi Global!
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 that we want to emphasize.
Some Top Quotes from our Todd Haushalter Interview:
Culture: “What we call a product review, other companies would call a mugging, but it’s loving–it really is loving.”
Building great games: “That is the entire dance. Is the trade offs. I’ve got to give you something that say it feels like more than you’re taking away. Because you’re always taking something away. First order thinking is, Why don’t we give players this? That’s great. Now let’s focus on what you’re taking away.”
Consumer Surplus: “I want the sessions to last as long as possible. I design games–I talk about holding players hands and bringing them on a long journey that lets them have fun until they have a chance to make big money and maybe they will today and maybe they won’t, but give them maximal entertainment value. And if you want to make great games, just ask yourself what’s the most fun possible game you can make.”
Why it’s so hard to compete against Evolution: “And even with unlimited money, finally at the finish line, you’ve got a product you offer to operators and they're like, Well, we have Evolution. Our players know it and like it… And you can’t do anything for my players that Evolution’s not doing.”
Focus on players so operators need Evolution: “If you’re the operator, even though you have a cheaper solution that you might offer in that moment in time, you’re like, Well, I got to make sure that this player is super happy, even though I might have to pay a little bit more. I must make sure that they have a great experience.”
Secular shift to online gaming: “I can get better RTPs, I can get better games, I can have games that many people will find more engaging, like game shows, which are not in land based casinos. And so I think, over time, you’ll see land based feed online, plus greater adoption rates.”
Airbnb 4Q24 Update:
Call Option: “The big call option is on the Experience business relaunch and all of the other new business lines they will launch. Brian Chesky is positioning Airbnb to be more than just a travel company and it started with the tech re-platforming that would allow them to more rapidly launch new products.”
Long-term vs short-term greedy: “Like the best operators, Chesky doesn’t talk much about take-rates or margins, but rather how to make the customer experience better. That is what tends to build the most consumer surplus overtime and allows for the most long-term value creation for investors”
Brian Chesky on building a Superapp (our words not his): “We’re going to have one app, one brand, the Airbnb app. And we want the Airbnb app kind of similar to Amazon to be one place to go for all of your traveling and living needs.”
The Invisible Competitor: When Creating Value is Better than Fighting for It:
Competition Tunnel Vision: "Great companies focus on optimizing for their consumer preferences as much as possible. Being stuck in the mindset of responding to competition almost definitely means that you weren’t doing that before. The reason for this is simple: if you are already doing everything you can possibly do to serve your customers, then there is nothing more to do when a competitor comes along."
Creating More Value: "You win business by fulfilling consumer preferences. And the harder the preferences are for others businesses to fulfill, the more value you are creating and thus the more you can monetize."
Two Competitive Sets: "Companies have two general sets of competition: 1) The competition that they get from peer competitors iterating on the same value prop (a value prop is a group of preferences), or 2) the "competition" they get from consumers preferencing different items"
Drew Cohen on Compounding Quality’s Newsletter:
Confidence: “Deep research builds confidence. If you know your investment inside out, price swings won’t shake you.”
Decisions: “I don’t force decisions when investing. With enough research, the right choice becomes obvious”
Comfort: “Comfort in an investment comes from confidence in the business model, not just the valuation.”
3. Coverage Updates.
4Q Earnings.
Airbnb, CoStar Group, Evolution, Floor & Decor, and Perimeter Solutions all recently reported earnings.
We decide to call these “business updates” and not “earnings updates”, because we focus on the long-term perspective and not just how a bunch of P&L items moved around relatively to last quarter. There are many analysts that do a great job of summarizing the quarter in terms of numbers, and rather than give you another update like that, we want to lean more on analysis and our own thoughts.
The hard part with this though is that the story seldom changes on a quarter to quarter basis, and in fact if it does, that would be very worrisome. However, when we didn’t write up quarterly earnings and just told members and readers that we will write if anything material changes, people kept asking us if something material had changed each quarter. We realized that there is value in more or less restated certain aspects of the thesis each quarter, while incorporating new items to see if it matches or doesn’t match our preexisting fact pattern.
This does mean though that there will be a fair amount of repitition quarter to quarter in our updates. It seems this is preferred to saying nothing at all. We think Floor & Decor and Perimeter Solutions are particularly good examples of how incrmental facts taint or support the investment narrative.
Copart
Copart reported earnings and revenues grew +14% y/y and gross profits +13% y/y. Insurance volumes also grew +8% y/y, adding to the narrative (half joke) that no matter what happens Copart seems to put out strong performance.
We will have an update out later!
CoStar Group
Announces acquisition of AG-Analytics. This acquisition will tuck into Land.com, which is one of their “other marketplace” businesses.
CoStar made a bid for $1.7bn for Australia’s #2 real estate classifieds firm.
Etsy
Etsy reported 4Q earnings and the results were rough. Their core GMS was -9% and active buyers decreased -3% y/y too. This is worse than last quarters GMS contraction of -6% y/y.
We will likely not write an update on them at this time because we feel we have covered the dynamics that are driving this deterioration already in our 3Q update, on this podcast (Meta, Etsy, and Snowballing Risks: Apple, Spotify), and more philosophically in this memo.
Meta
Reality Labs is developing a humanoid robot. So much for those Reality Labs losses shrinking. In all seriousness, there success with their AR Ray Bans glasses has hinged on their developments in AI and so it is likely they now view hardware and AI development as being symbiotic. Building a humanoid robot could help advance their AI research efforts, which could have other non-robotic applications.
4. Sharing Links.
Berkshire Hathaway released their 2024 Annual Letter. (Link)
Lone Pine Co-CIO Kelly Granat on the Ebb and Flow of Public Markets (Link)
Time BioVentures Founder D.A. Wallach proposes a new framework for healthcare (Link)
Altos Ventures Director of Research Nick Chow on business and basketball (Link)
Frederik Gieschen’s essay on surrendering to experiments (Link)
And a special thank you to Matthew Harbaugh for helping us 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.
(Many members have gotten their memberships expensed. If you need us to talk with your compliance department to become an approved vendor, please reach out at info@speedwellresearch.com).
