Solo Stove (NYSE: DTC) is down almost 50% YTD. Last week, it announced a leadership change and provided a voiceover on 2023 sales and adjusted EBITDA guidance. The stock fell sharply. In this letter, I’m trying to understand if the company’s financials are underperforming or if there’s a disconnect with public markets (or both). Let’s…
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Understanding Implications from Fed’s Meeting Minutes
“We’re on this sugar high and I’m not saying this ends in a depression [but] I think there are more inflationary forces out there.” – Jamie Dimon, CEO of JP Morgan (Nov 28, 2023) The Fed meeting minutes were released earlier this week and it’s a buzz kill for capital market bulls that priced in multiple…
Why Aggregators Fail
“Failure of business schools to study men like Singleton is a crime.” – Warren Buffet The first meaningful conglomerate boom occurred in 1960s. Low interest rates (highlighted below) made leveraged buyouts (LBO) easier; enabling managers of large companies to make a case for category-agnostic acquisitions to bolster their valuations. A conglomerate is typically a large…
WeWork Bankruptcy: Boom to Bust
WeWork filed for Chapter 11 bankruptcy on Nov 6, 2023. Here’s the preface on my LinkedIn post. To understand why WeWork filed for bankruptcy, let’s first take a look at their financials to better understand the situation. Income Statement When analyzing the P&L, I like to start with margin analysis. WeWork earns a GM of…
Business Breakdown: Lunya’s Bankruptcy Filing
DTC can be hard. Founders pour their passion into building a brand that can last. For this post, I went back to reading the bankruptcy filing of Lunya from this summer. The filing is a few months old now, but the lessons can be applied to any DTC brand. I plan to capture highlights from the filing,…
How E-Commerce Brands Can Drive Working Capital Efficiency
Working capital (WC) is the lifeblood of e-commerce brands, and the need to manage WC effectively and efficiently ensures brands can meet their obligations, pay their bills on time, and continue investing in growth. E-comm brands have totally different WC challenges compared to other verticals (e.g. SaaS). You’re paying for products typically weeks in advance,…
Silicon Valley Bank Collapse
The last 72 hours have been stressful for many founders; especially SVB founders. The collapse of SVB is a big deal and will likely cause ripple effects across the startup and venture capital ecosystem. SVB isn’t just any bank. It’s the startup bank. It was the 16th largest bank in the United States at the time of…
Understanding Cash Conversion Cycle
“Anxiety is just your mind trying to experience failure in the future. Be present.” — Seth Godin Cash Conversion Cycle (CCC) or simply, the cash cycle, of any business helps founders and operators manage their liquidity. I wrote about discounted cash flows (DCF) recently, where I captured a teaser to a longer discussion point of CCC. If…
History of Inflation
“There is no better teacher than history in determining the future… There are answers worth billions of dollars in $30 history book.” – Charlie Munger History doesn’t repeat. It rhymes. Dec 2022 CPI report came out last week. We saw headline inflation at 6.5% and core inflation at 5.7% (net of energy and food prices).…
Discounted Cash Flow
“It is an old joke that the stock market has predicted seven of the last two recessions. Markets are often wrong.” – George Soros The market is too optimistic. The Fed is too pessimistic. We’re living in a world where good news is bad news; at least when it comes to capital markets. Growth in…