One of the more surprising tidbits to emerge from a recent Airbnb filing is that 1 out of every 4 bookings is for a trip lasting longer than 28 days. “”At this point,” Brian Chesky, Airbnb’s founder and CEO said this week at a company event, “24% of our business is really living—we’re not just a travel company anymore.” I think this is right—and frankly indicates some pretty profound possibilities over the next decade. If employers continue to offer employees more flexible remote working options—and I believe they will—we could see an inflection point in where and how and why people choose to spend their time, leading to all sorts of second and third-order effects. Travel, in a sense, can become more democratized and ubiquitous—especially as people opt in for the “cash-neutral” option of listing their own homes/apartments on platforms like Airbnb.
“The trend toward long-term stays is reshaping Airbnb’s business. A far cry from the company’s origin story of couch surfing for a business convention, it’s the cornerstone of the new digital nomad lifestyle: winter months in Miami and Aspen, complemented by summer stints in New York, San Francisco, or the Hamptons in Long Island. While that lifestyle existed before the pandemic, it wasn’t for the masses. “You used to have to be wealthy to live somewhere else for the summer, but people can defer the costs now by renting [their primary home] on Airbnb when they’re gone—it could even become a cash-neutral possibility now,” he says, foreshadowing a world in which Airbnb replaces local marketplaces for seasonal real estate.”
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“Put all your eggs in one basket—and watch the basket carefully”
Conventional wisdom suggests that making concentrated bets introduces risk. In some respects, sure—that’s true. But the exact opposite can be even more accurate—over-diversifying capital into 40 or 50 lower-conviction ideas can be much riskier than allocating capital to 5 or 10 of your highest conviction ideas. Stanley Druckenmiller talked about this concept in a recent interview this week: “When I’ve looked at all the investors (that) have very large reputations — Warren Buffett, Carl Icahn, George Soros — they all only have one thing in common,” Druckenmiller says. “And it’s the exact opposite of what they teach in a business school. It is to make large concentrated bets where they have a lot of conviction.”
“[In 1992] when I went in to tell Soros that I was going to short 100% of the fund in the British pound against the Deutschmark, he looked at me with great disdain. He thought the story was good enough that I should be doing 200%, because it was sort of a once-in-a-generation opportunity. So, [these investors] concentrate their holdings. This is very counterintuitive. In my thinking, [concentrating your bets] decreases your overall risk because where you tend to be in trouble is if you have 35 or 40 names. If you start paying attention to one. If you have a big massive position, it has your attention. My favorite quote of all time is maybe Mark Twain: “Put all your eggs in one basket and watch the basket carefully.’”
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The little engine that could
Activist investing typically involves buying a large chunk of a company’s shares and agitating for some change that, theoretically, will drive the stock price up. Key words there are “big chunk.” Activist Engine No. 1, on the other hand, with a minuscule 0.02% stake in Exxon, snagged two board seats this week in a stunning coup at Exxon’s annual meeting. The investors behind Engine No. 1 have a laudable goal: They are attempting to push Exxon’s management towards implementing more climate-friendly business practices and diversify away from oil. In my opinion, this may be too little too late for Exxon’s ultimate fate—more on Exxon’s stranded asset risk here—but hats off to the activists behind Engine No. 1. This is certainly one of the most historic corporate governance events of the decade.
“The vote was unprecedented in the rarefied world of Big Oil and underscores how vulnerable the industry has suddenly become as governments around the globe demand an acceleration of the shift away from fossil fuels. It’s also a sign that institutional investors are increasingly willing to force corporations to actively participate in that transition… The result is one the biggest activist upsets in recent years and an embarrassment for Exxon. For Woods, who was listed as 56 years old in the company’s March proxy filing, the defeat is just the latest black mark since his elevation to CEO in 2017. Exxon has underperformed peers for years and in 2020 its shares cratered by 41% for the worst performance in 40 years.”
“Long term is harder than most people imagine, which is why it’s more lucrative than many people assume. Everything worthwhile has a price, and the prices aren’t always obvious. The real price of long term – the skills required, the mentality needed – is easy to minimize, often summarized with simple phrases like “be more patient,” as if that explains why so many people can’t.”
“This videos gets into the nuts and bolts of Tesla’s Gigacastings, Micron Precision, and Unique Alloy, which requires no heat treat, coatings, and doesn’t warp/potato chip. This is part seventeen of the Lithium Mine to Battery Line Series to break down and understand what was unveiled at Tesla Battery Day.”
“But markets have changed and I think investors, founders and experienced executives who want to join later-stage startups can all benefit from playing the long game. Think about how much more value was created for all these constituencies (and society) by Snap staying independent vs. Instagram selling to Facebook.”
“Wyden is no shrinking violet when it comes to making big bets. His fund is the single largest shareholder in Houston’s RCI Hospitality, operator of over 40 gentlemen’s clubs and parent company of Rick’s Cabaret. Wyden built his 10% position beginning in late April 2020, when the coronavirus led investors to believe that in a world of masks and social distancing, a company built on drunken bachelor parties and lap dances was toast. But Wyden reckoned that as the pandemic ebbed there would be pent-up demand for RCI’s clubs, many located in Florida and Texas, and that they would reopen fast. Another plus: It’s exceedingly difficult to obtain a strip club license, meaning the company has a deep moat around its business.”
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Welcome to The Nightcrawler, a weekly collection of thought-provoking articles and analysis on technology, innovation, and long-term investing. The Nightcrawler is published every Friday evening by Eric Markowitz, Nightview Capital’s Director of Research. Subscribe below. In this evening’s email… Quote of the week: “Doubt is not a pleasant condition, but certainty is absurd.” Voltaire Embracing uncertainty as a competitive edge In …
