23: Venture Capital Going Through Puberty, ACS on Ultrajaya, The Matrix Is Good, Weekly Curiosities, Takako Mamiya, Spirituality & Kobe Beef
Back to Berlin Edition
Coming back after a hiatus of ~1 month as I was busy with work and other fun things over the weekends!
Investing & Business
The Changing Venture Landscape
Reading time: ~10 minutes
Venture Capital has not been spared by the huge changes that we saw across the financial markets, especially with the profusion of hungry capital waiting to be deployed at record pace. Money is burning every manager’s pocket right now.
Mark Suster of Upfront Ventures gives a great overview of what he considers are the main changes happening right now:
#1: Valuations are nuts (not original, heh!)
Nearly every corner of our market is over-valued. By definition — I’m over-paying for every check I write into the VC ecosystem and valuations are being pushed up to absurd levels and many of these valuations and companies won’t hold in the long term
#2: The funding pace has increased tenfold
Today you have funders focused exclusively on “Day 0” startups or ones that aren’t even created yet. They might be ideas they hatch internally (via a Foundry) or a founder who just left SpaceX and raises money to search for an idea. The legends of Silicon Valley — two founders in a garage — (HP Style) are dead. The most connected and high-potential founders start with wads of cash. And they need it because nobody senior at Stripe, Discord, Coinbase or for that matter Facebook, Google or Snap is leaving without a ton of incentives to do so.
[…]
There is so much money around being thrown at so many entrepreneurs that many firms don’t even care about board seats, governance rights or heaven forbid doing work with the company because that would eat into the VCs time needed to chase 5 more deals
#3: Next structural changes are already at play
Of course I have no crystal ball but if I look at the biggest energy in new company builders these days it seems to me some of the biggest trends are:
The growth of sustainability and climate investing
Investments in “Web 3.0” that broadly covers decentralized applications and possibly even decentralized autonomous organizations (which could imply that in the future VCs need to be more focused on token value and monetization than equity ownership models — we’ll see!)
Investments in the intersection of data, technology and biology. One only needs to look at the rapid response of mRNA technologies by Moderna and Pfizer to understand the potential of this market segment
Investments in defense technologies including cyber security, drones, surveillance, counter-surveillance and the like. We live in a hostile world and it’s now a tech-enabled hostile world. It’s hard to imagine this doesn’t drive a lot of innovations and investments
The continued reinvention of global financial services industries through technology-enabled disruptions that are eliminating bloat, lethargy and high margins.
Asian Century Stocks on Ultrajaya Milk
Reading time: ~10 minutes
Hmm.. Too much time has passed since my last oligopolistic stock highlight 👀
1-liner:
Ultrajaya Milk (ULTJ IJ) is the leading dairy company in Indonesia. Its most popular product “Ultra Milk” has a market share of roughly 40% and dominates the mass market.
The macro view:
Indonesia’s per capita consumption of milk is only 15 litres per year. That number can be compared with neighbouring Malaysia’s 60 litres. While most people in Asia consume dairy on a regular basis, that is not yet the case in Indonesia. I believe that the gap in milk consumption between Indonesia and its neighbouring countries will narrow over time.
On governance:
If you want to fault them for anything, it would be for being too conservative. Ultrajaya issued medium-term notes at 7.5-8.5% interest rates at the height of the pandemic, despite plenty of cash on the balance sheet. They justified the action by saying that the uncertainty brought about by the pandemic necessitated additional caution.
On the plus side, Ultrajaya also repurchased 10% of its shares during the crisis. Founder Sabana Prawirawidjaja has also been buying shares for his personal account over the past few months.
Current trading:
Shy of 14x P/E, forward dividend yield at 5.61% pre-fx
Assuming half of guidance for base case (5% CAGR) and stable multiple, that can be a nice compounder!
Thought-provoking stuff…
Is The Matrix Good?
Reading time: ~10 minutes
First, let’s settle this very fast:
YES.
Recently, as I re-watched the first movie with my girlfriend, the answer appeared not as self-evident to her… But now thankfully I have arguments from Reactions!
It has a very simple, straightforward story at its center, blending the fears of the machine age with more ancient human anxieties. Basically it’s Gnostic Christianity in a Terminator world: The universe is a fake, a prison created by a malignant demiurge, except in this case the demiurge is the Strong A.I. of Silicon Valley’s worst imaginings, the fake world is a computer program and the messiah come to overthrow the archons must do so with the help of hackers and kung fu.
That’s it, that’s all you need to appreciate the story. You don’t need a definite view on free will versus determinism or whether the Oracle is telling Neo the truth […]
And about that Matrix <> Gospel connection you’ve always been waiting for:
Adam Gopnik once memorably described how a Gnostic gospel’s Jesus, “who never laughs in the canonic Gospels, is constantly laughing in this one, and it’s obviously one of those sardonic, significant, how-little-you-know laughs, like the laugh of the ruler of a dubious planet on Star Trek.” That’s not precisely how The Matrix’s heroes relate to the human beings still trapped in the toils of unreality, but they definitely regard them as expendable, for the reasons Morpheus lays out in the clip below: These people are still a part of that system and that makes them our enemy
The clip in question:
Go read the full piece, one of my preferred Reactions 🙌
Arts & History
Your Weekly Curiosities
Reading time: ~10 minutes
Once again, mk2 Curiosity offers a handful of movies to watch for free on their website!
Tracklist 📺:
Un été inoubliablede Lucian Pintilie
La crimede Philippe Labro
Vincere de Marco Bellocchio
Il segreto di Mussolini de Fabrizio Laurenti et Gianfranco Norelli
B comme Béjart de Marcel Schüpbach
Treat for the Ears
Highlight from comments:
>be her
>no one knows anything about me
>drops one of the best citypop albums
>refuses to elaborate further and disappears
Absolute God-Chad
Other Interesting Links
Loved this one documentary about different tastes of spirituality. Felt like watching it as I’ve been going through St Augustine’s Confessions lately. Definitely recommend watching it!
Found this incredibly entertaining to see and measure the amount of preparation that is going on behind the scenes! If I ever visit NYC again It’ll definitely be on my bucket list. 📝👀
Until next week!
Antoine