September Monthly wrap - 500 subs, the story of Spotify and the makings of a multi-bagger stock return
Monthly Wrap
Every month I share an update on this newsletter and a summary of what I’ve read, seen, or heard that I’ve found interesting. Expect the format to evolve over time, as well as what’s included. If you have any feedback, please hit me up! If you missed the August Monthly Wrap, you can find that here.
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The Long Game Update - Thank You!
Firstly apologies for the lateness of this post. The combination of a very full plate at work, a lot of travel and life in general has meant I haven’t been able to prioritise my writing.
In September, I spent a bit of time in South East Asia talking to entrepreneurs and VC’s and came away very impressed with the ecosystem. I have always been a bit of sceptic on investment opportunities in SEA, given the challenges of scaling a company across ~9 different countries dealing with languages, cultures, currencies and regulations. I think the key take away for me was that the ecosystem has matured rapidly, which has been driven by expats coming home, and the halo of Grab / Gojek and other notable unicorns spawning a virtuous circle of new entrepreneurs. All of this has been fueled by an abundance of capital from local and US based players (who surprisingly have been particularly active in the region). On the scaling point, I think a regional play vs a country specific opportunity really just comes down the business model and the regulatory requirements of the business’s operations. Low reg, asset-light businesses (i.e. consumer, SaaS) tends to scale pretty easily while companies that have high regulatory barriers (i.e. Fintech) tend to focus on serving just one country. No different to anywhere else in the world I guess.
In another update, this newsletter has surpassed 500 subscribers! That’s blown my most optimistic expectations (I had forecasted about 30 new subs a month when I started seriously in April). September had over 100 net new subscriber adds. Thank you to everyone who has provided advice and shared my work, appreciate it a lot.
Finally, on a separate note, I am considering a name change for this Substack which better reflects my investment style. Still a work in progress and may not eventuate but stay tuned!
Adding culture to my diligence process
The more time I spend looking at great companies, there are two common traits that every great company has - high quality management and a great culture. Both are qualitative in nature, but critical ingredients to long term success. Unfortunately, there are limitations on assessing both on an outside in basis, but I think it’s important to use primary and secondary sources of data to make an assessment and have a view. As a result, I’ve explicitly included a section on both in my investment notes going forward. To date, I’ve assessed culture 2 ways: 1) Glassdoor reviews, 2) expert calls, and 3) where possible talking to individuals who work at the company. Peter Drucker once said that culture eats strategy for breakfast, and the more time I spend looking at historical compounders, the topic of high quality management and aligned culture continues to be a common thread.
What I have been reading, watching and listening to
A couple of denser reading this month:
The Spotify Play (Book) - I’ve written about SPOT 0.00%↑ twice now (Investment Notes and Follow up) and expect to add it to my portfolio at some point. Cowritten by two very experienced reporters, the book delves into Spotify's history and provides insight into some of the company's defining moments since its inception. The authors almost exclusively rely on secondary sources, but its clear the book is very well researched. A really solid read.
Making of a multibagger- this presentation was done by the summer intern class of Altafox Capital. The authors (with great detail) “analyzed the highest performing stocks over the last five years and identified their common characteristics, trends, and catalysts”. Its a dense read but compulsory for any serious investor.
Arsenal’s Mikel Arteta emotional dressing room talk- I love learning how leaders motivate high performance teams. The rise of digital media getting behind the scenes access to the internal workings of these teams is seriously cool. Highly recommend watching this clip of Mikel Arteta inspiring his team after a terrible start to the season.
Tweet of the Month
Every month I will share a Tweet I came across that I found interesting. For September, it was this interesting thread from Jon Erlichman which highlighted 10 companies which faced the threat of bankruptcy. Just another reminder that the path to being a great company isn’t easy and not linear.
Keen to read a bit more, you might enjoy:
Enjoyed the perspectives on SEA. Still so much capital floating around here even in this environment. Founder/seller expectations still at 2021 levels in a lot of cases. Next six months or so will be interesting.
Congrats on 500! Enjoy the reads