Welcome to Talk Money Weekly - where I cut through the noise and curate the best money-related topics from the web.
I'm sorry for the delay. I had some personal stuff come up this weekend and couldn't get the newsletter out last night. Let's see how it performs with a Monday late morning release!
Episode #2 of the Talk Money Weekly podcast is out. In this episode, I cover how investor Bill Hwang lost $8B of personal capital and blew up his fund. I break down how leverage works and why getting margin called can be a nightmare scenario.
Season 3 returns in a few weeks! Narrative episodes do take a long time to produce, and we are a small team. It will be worth the wait!
📈 Markets & Business
This is a GREAT thread. Love or hate Disney, you have to respect their ability to stay relevant and dominant over the years. It's amazing that a diagram from 60 years ago is still relevant today. Create great content and repurpose it in multiple forms- parks, merchandise, more film/tv projects etc.
If you haven't read Bob Iger's book The Ride of Lifetime, I highly recommend it. Staying relevant is about moving with the times and seeing when others are emerging, and recognizing that. There's a reason why incumbents eventually die. Disney will forever stay dominant. They bought Pixar, Marvel, Star Wars, Fox and made them all even MORE relevant and profitable today.
And they still haven't moved away from their parks business, which is powered by the new content they produce. It really is incredible how well they've done. The only thing I don't like is the dumb real-life remakes of the classics. THEY'RE NOT GOOD...but they still make money.
Have you ever seen South Park's depiction of Mikey Mouse, where's he's an evil psychopath that will use violence against you if you against his wishes? It's hilarious!
Chris Sacca may go down as one of the best early-stage technology investors in history. The reason why we invest in venture capital funds is the potential to have our money in the next Coinbase or Uber. The reality is, most venture capital funds don't return any capital. And a good return would be 3X net of fees (after management fees and incentive fees). That's over the course of 10 years. So you don't even know you're doing well until year 7 or 8.
Chris Sacca's first fund was $8M, which sounds about right for a first-time fund. In that fund he invested early in Twitter (now $50B+), Uber ($107B), Docker ($1B), Instagram ($1B). I said a "good" return is 3X in venture capital, and he returned 250X. Let's be honest, we invest because we want the outlier. 3X is OK for the risk you're taking. The chances of you making ZERO is high, and the chances of performing over 3X are slim to none.
Personally, we've invested in over 8 small funds hoping for that outlier. I don't see it happening, but I think we'll do ok. There is a GIFT in being able to invest in companies early before you have any data. Now there are so many investors chasing companies, it's VERY competitive. And just because there are more investors and more companies, it doesn't mean there will be that many more outliers.
This seems obvious. The weather is better, there are more people vaccinated, we've done a better job cutting down the death rate and we've been trapped inside for so long. BUT it is different state by state and city by city. It's not surprising that Texans are dining out more than ever before. It's probably a balance of being stuck at home, but also in support of the businesses who've suffered. It's AMERICAN to go out and dine and support the economy.
New York is understandably not as much as Texas. For one, it's just a different vibe up here. Everyone still wears masks outside, even if there's no one around. Restaurants are finally doing better, because they can be open 50% inside, and they have the outside as well with nicer weather. BUT, I've heard from folks who are still scared to dine out. New York was hit hard in the beginning and people are still nervous to eat out. A friend told me that it's hard to find staff who will work service for two reasons. 1) Some of them saw many die from COVID in their neighborhoods, 2) they're collecting unemployment checks that are significant compared to what they were making before.
Will be interesting to see how things progress. I imagine that summer in NYC will be a big swing up as more and more people come back. Residents and tourists.
Remember Turtle from the HBO show Entourage? He's a real person who now produces shitty action movies starring some of Hollywood's biggest names. Have you noticed these movies pop up on Netflix, Hulu, etc., and wonder why the hell Bruce Willis is doing another movie that looks so stupid and is rated 12% on Rotten Tomatoes? It's money. It's always about the money.
Randall Emmett used to be Mark Whalberg's personal assistant. He's since built a network and produced several of straight to VOD movies. Here's the formula. Foreign financiers + big name action star with big payday + large foreign market + low-cost production that is possibly illegal + low-cost shooting locations with tax incentives= a shitty movie that makes a lot of money.
Bruce Willis can do several of these movies that don't require a ton of time and get paid so well. What does he care? He's not going for the oscar anytime soon. Sometimes it's not about prestige and glory, it's about doing good business and making money that you can retire on.
That's all the news from this past week! If I was to make this newsletter into a Youtube show, would you watch it?
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