Speedwell Weekly Recap
Edition #7: Announcing the new Speedwell Research Podcast, Selling Buildings, Conversion's the Wrong Metric, Balancing Experimentation and Focus, and One Bad Loan
This is a series where we compile some of the best content we put out each week. You can expect to get a mix of interesting and insightful takeaways on various businesses and investing! Follow us at @speedwell_llc and @kevg1412 on Twitter, or @speedwell_research and @kevg1412 on Threads for more timely updates!
New Podcast
The Synopsis
We would like to announce the launch of Speedwell’s very own podcast, The Synopsis!
We know there is a lot of business content out there, especially podcasts, but we feel that most of these existing podcasts lack the next level of depth and analysis that most investors crave. Each episode will be a “synopsis” of the multi-hundred hour research process we conduct for each of our research reports.
We will be recording an episode for each of our reports, which go over everything from early business history to industry dynamics to investment merits.
Our first episode, on Meta, spans ~2 hours and is available to listen to now on Apple Podcasts and Spotify.
Long Form
Walker & Dunlop
Last week, we released our full 20,000+ word research report on Walker & Dunlop. From a third generation heir taking over a 60+ year old business with ~50 employees worth just ~$25mn to a business with ~$250mn in operating earnings worth valued at $5bn in 2022, you can learn about the story of Walker & Dunlop and purchase the full report here.
RH
We just released the first 10 pages of our RH research report for free. It covers the founding history and the beginning of the RH turnaround story once Gary Friedman took over.
Short Form
Etsy (Upcoming Report)
Next up after Walker & Dunlop, we’ll be releasing a research report on Etsy in August. If you follow us on Twitter, you’ll have seen us tweet some interesting nuggets from their management on various earnings calls and conferences.
Even optimizing for what sounds like desirable outcomes can have unintended consequences. Here Etsy’s CEO talks about how focusing on conversions actually drove them to reduce gross merchandise sales.
Below, Etsy’s CEO notes how they cut staff, which not only saved costs, but improved efficiency. You can be forgiven for thinking this is from this year, but it’s actually from 2017. A good managers only need to learn a lesson once.
Walker & Dunlop
You can learn more about Walker & Dunlop and see our table of contents here.
This is why business history matters. “When I joined, if one loan went bad, we could have gone bankrupt”. 20 years later, that attitude still permeates Walker & Dunlop’s lending operation.
Only in banking can poor decisions look smart in the present. That is why Walker & Dunlop judges credit decisions only a decade after the fact.
Owner-run businesses have more ability to not follow the crowd, which is critical when the crowd is doing something foolish.
Copart
You can learn more about Copart and see our table of contents here.
It is hard to balance experimentation and focus, but all great companies do. Here Copart’s Jay Adair talks about their decision to exit a consumer used car auction business to focus on Copart’s core salvage vehicle auctions.
What is a long-term time horizon? For Copart, that answer is a 5 to 20 year time horizon.
Copart’s global buyer base meant they could enter international markets easier than the competition (IAA). Yet another aspect of their many moats.
General History
Letters
Compilations
Sam Altman
SamA: Breaking (the) Loop(t); Building OpenAI
1000+ pages of Sam’s essays, interviews, lectures, and speeches covering:
Loopt
YC
OpenAI
How to Start a Startup
Startup Playbook
United Slate
AI
Machine Learning
SF
Hard Tech
and more!
Yes – Sam recently said that he was embarrassed by the advice he gave while he was at YC and that he was thinking about deleting his blog. However, if you listen closely, he doesn’t say the advice was necessarily wrong or didn’t work – just that OpenAI proved it wasn’t the only approach that worked.
And if you look at YC’s performance under his tenure, ~5% of all startups that went through it became unicorns. Yes – ~5% of all startups that went through YC reached unicorn status. Very few, if any, investors or investment firms have a hit rate that’s even close. Certainly none who have invested in as many startups.
Paul Graham and Jessica Livingston may have invented the accelerator, but it was Sam who scaled it. His thoughts, and their evolution over time, are worth paying attention to.
Thanks for reading this week’s roundup! If you have any questions or suggestions on what you’d like to see more of, please reach out!