One Step Up Issue #9

This week, we cover Oatly's creative genius, Amazon's ruthlessness, network effects, Reliance Industries stories history, long-term thinking, SaaS business attractiveness, entropy theory, plus more

1. Diversification, explained

   10-K Diver @10kdiver

   2/ Imagine that you're a journalist. You just scored an interview with the world's greatest investor. You're really excited.

2. A week ago, Oatly - a Swedish manufacturer of plant-based dairy alternatives, raised $200 mn at a $2 bn valuation from marquee investors and celebrities. A thread on how it made inroads in the market by being creative.

   Kevin Lee @kevinleeme

   4/ Oatly Chief Creative Officer, John Schoolcraft, claims that they only keep one strategic document internally. Seems unlikely, but it's a good story that embodies Oatly's rebellious spirit.

   

3. Amazon Met With Startups About Investing, Then Launched Competing Products

   Live feed of startups sharing data on customers, product with Amazon:

   

4. On Network Effects:

   • The Power of Network Effects: Why they make such Valuable Companies, and how to Harness them

   • The Dynamics of Network Effects

5. Two part write-up on Reliance Industries and its History

   • Part 1 - Reliance: Origins

   • Part 2 - From Oil to Jio

     

6. Six Ways to Think Long-term

   Forget the corporate vision of ‘long-term’, which rarely extends beyond a decade. Instead, consider a hundred years as a minimum threshold for long-term thinking. This is the current length of a long human lifespan, taking us beyond the ego boundary of our own mortality, so we begin to imagine futures that we can influence but not participate in ourselves. 

7. Why We Like SaaS Businesses by Lead Edge Capital

   Highly recommended for anyone wanting to understand why SaaS businesses are so sought after as investments and how should an investor evaluate the business.

8. Entropy Theory

   Entropy Theory explains industry evolution as a story of ever-increasing chaos and suggests that the most successful businesses are those that use the latest technology to wrangle that chaos, until entropic forces unleash the next set of opportunities.

9. The “Permanent Home” Advantage

   A highly acquisitive business (and even more successful), this article highlights how Constellation Software has the “permanent home” advantage over private equity buyers.

   Constellation’s pitch to owners of software businesses is simple and mutually beneficial. In exchange for being the ideal “permanent home” of an owner’s business, Constellation will buy the business at a lower-than-average price. The owner, although they won’t receive as much for their business, knows Constellation will take a hands-off approach to the business they spent decades building. No massive employee lay-offs and little meddling. In contrast, other buyers of businesses (like private equity groups) will offer a much higher price and then engage in severe cost-cutting measures after the transaction to fund the purchase.

10. The Weird Portfolio

    The portfolio utilizes six low-fee ETF’s to create a portfolio that is designed to deliver a satisfactory rate of return in multiple economic environments.

    Each ETF represents an asset class. On their own, all of the asset classes are highly volatile. When lumped together in a portfolio, volatility is reduced and the portfolio still earns high returns.

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Till next time.

Visualize Value @visualizevalue

Nature always wins. visualizevalue.substack.com/p/unforce

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