- Deep Dive
- Key Research
- General Search
- Specific Filings
- Personal Interviews
- Building a Framework
- Key Questions
- Market Dynamics
- Key Players
- Key Drivers
- The Output
- @Public Equity
- @Private Equity
- @Venture Capital
- @Micro Private Equity
- @Small Business Ownership
- @Real Estate
- What are people talking about?
Similar to an investment memo, a deep dive is your overall thinking about a specific company or investment opportunity including your notes, models, and evolving hypothesis. The key difference between a memo and a deep dive is typically that a memo is meant to follow a specific structure that drives towards action; you read a memo and have an answer to the question "therefore, what?" A deep dive is a library of knowledge; there may not always be a resulting action but the reader will walk away significantly more informed on the topic.
The reason you create a deep dive is often after you have gone through the process of
Creating a deep dive is an opportunity to gain a deeper understanding of a specific company, and can be a valuable resource to some of these companies as well. The ability to correctly profile a company is a valuable skill for your own analysis and for the companies you work with.
There is a never-ending list of ways you can go about developing a deep dive. There also isn't always a clear outline for what is important until you immerse yourself in the content available. Here are some approaches you might take.
- Google is your best friend. (see )Research
- Try phrases like
- "what does [COMPANY] do?"
- "[COMPANY] alternatives"
- "[COMPANY] product demo"
- "[COMPANY] pricing"
- Review Google Trends to see if any relevant key words about the company have been increasing / decreasing in popularity
- Review Glassdoor looking for hints about company culture, both the good and the bad
- Review G2, Capterra, or vertical-specific review sites; anywhere customers would leave reviews or opinions of the company's products or services
- Review YouTube looking for both product demos and interviews with people discussing the company or market
Secret Research Techniques
Hello! A short, non-healthcare related issue today that I thought might be interesting. Over the years I've found some research "hacks" to be helpful that I thought I would share with you all. I won't share all of them, cause that would put me out of a job :) Two types of google searches are very helpful to me.
- If the company is public you should be able to find different public reports the company has filed, often by searching "[COMPANY] investor relations."
- You may also be able to get access to analyst research on these companies through things like CapIQ
- Two key ways you can get first-hand perspective is to seek out (1) people with relevant knowledge and experience, and (2) other investors that focus on that particular category.
- If I were diving deep into "behavioral health" as an industry I would search that exact phrase in LinkedIn and try and find anyone I know with relevant experience
Building a Framework
- Throughout this entire research process you should be keeping a running list of questions that you have. Some of them may be very specific like "What does SAML mean?" Some may be more general like "Why are there so many players in this market?"
- Over time you'll strike out some of those questions because you'll continue to do research and answer them. Over time you'll be left with what is likely a list of some of the most difficult questions to answer
- Pay attention to the aspects of the market that affect every player. This could include changing consumer preferences (e.g. no one wants to own music anymore), or regulatory impact (e.g. every state has their own regulation around pre-fabricated housing)
- Try to paint a picture of the most important "things to know" about this market that should come to define the way you think about this market and whether those components are good, bad, or neutral
- One of the most critical parts of actually being informed on a given space or company is a familiarity with relevant names and how they relate to each other.
- The flip side is also true. The fastest way to identify whether or not someone is actual knowledgeable on a particular space is to ask them about names you know are relevant and they're not familiar with them at all.
- As you come across relevant names you should try and keep a running list as well as an attempt at categorization in terms of what that player does in particular. It's okay to have one name show up in multiple categories. Often a company will not only do one thing in a market so it's important to understand the overlap.
- You're not only trying to generally understand how these names relate to each other, but if you have a specific target in mind you're paying particular attention to what makes that name unique.
- Alternatively, if you know you want to investigate "e-commerce technology providers" but you don't yet know what is interesting you're paying attention to "what seem like the most interesting parts of this market to play in?" Maybe email marketing is commoditized and uninteresting but customer demand prediction is more interesting.
- Always be thinking about what the most important drivers are in this market. If you're diving deep into software for customer service call centers you'll realize that some critical components are:
- # of call center agents
- Avg. revenue per agent
- Hours per month of agent calls (because some vendors charge for usage hours)
- Any market will have unique drivers that often make up the very high level thinking within a given market
Usually after you've immersed yourself in all this information you need to somehow summarize it. This can evolve into two outputs: (1) summary for yourself, and (2) summary for other people.
The best way to do this deep dive and then have it available to you is through a note-taking system (see
For Other People
You could take a few different approaches to creating a summary output to share. You could create a long-form written summary (most of the examples below follow that model.) You could also create a market map presentation; basically a powerpoint outline of the market that explains the players and their relation to each other, the key considerations, and areas that you think are most interesting. What the one-slide market maps are typically focused on is bucketing different players into different categories. They're typically missing a lot of the information you could include in a broader write-up.
Better example of a market map + deep dive context: Creator Economy Market Map
The best outputs are those that become evergreen content, something that provides real value, is high quality, and can be shared over and over again. One great example of this is "The Makings of a Multibagger" by the Alta Fox Capital intern class of 2020:
<<< Even more interesting when you can find a business that is more under the radar than most. You want to add unique perspective in the work that you do and sometimes being the thousandth person to write about Facebook won't be as helpful as finding something less trafficked.
For more detailed deep dives into specific companies, see
Part l: A History of Visa - Mine Safety Disclosures
INTRODUCTION Visa is one of the biggest companies in the world. Cards bearing the Visa logo are used more than 340 million times every day. And the Visa brand is one of the most-recognized on the planet.
Workday, Inc. (WDAY)Market Cap: $42.5 BillionAnnual Revenue: $3.8 billion3 Yr. Avg. Revenue Growth: 31.7%PE Multiple: 78.7Dividend Yield: n/aRecent Price: $180.67Fair Value Estimate: $180 The Business Workday develops cloud-based human capital management (HCM) and financial management applications for large and medium-sized businesses.
Written by Luke Poling (reach out to firstname.lastname@example.org if interested in contacting Luke) Thesis AT&T pays investors to wait for upside. The company provides a safe, yet bountiful 7% yield while also having significant potential upside as the Time Warner acquisition begins a new era of growth. History Alexander Gra
What is Amazon?
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Uber has become a verb. When we search for something on the internet, we google it. When we want to avoid the hassle of parking in NYC, we Uber over to meet our friends. The narrative of "verb" investing is powerful enough to create a compelling and engaging investing thesis.
Spotify: A Case Study in Business Strategy and Value Compounding | MOI Global
"If you focus on near-term growth above all else, you miss the most important question you should be asking: Will this business still be around a decade from now? Numbers alone won't tell you the answer; instead, you must thing critically about the qualitative characteristics of your business."
Agora: Democratizing Real-Time Engagement
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A Short History of MongoDB
Pete DeJoy | July 31st, 2020 In 2007, Eliot Horowitz, Dwight Merriman, and Kevin Ryan had just had their adtech startup acquired by Google and were looking for their next challenge.
Enjoy this free breakdown. If you want more, consider subscribing. Peloton sells premium exercise bikes and more recently, has started selling treadmills. $2,245 for the former and $4,295 for the latter. The company has a certain caché to it. For instance, check out this funny Twitter thread that went viral last year.
Snapchat was founded by Evan Spiegel, Bobby Murphy, and Reggie Brown as a way to bring honesty back into the social media landscape. The founders were tired of "perfect" online photos of their friends that failed to capture the real context of what was happening.
Costco is a fascinating business. You know all those groceries you buy? Yeah, they basically sell those at breakeven and then make all of their profit from the $60 annual membership fees. The key is that the company keeps gross margins as low as possible. This, in turn, gives Costco pricing authority.
McDonald's doesn't sell burgers, it sells franchises. It's a real estate company, not a fast-food restaurant. The company's goal is to have 95% of its restaurants franchised. It's at 93% now. There are four ways McDonald's does business. Company-owned and operated (7% of restaurants) Conventional Franchise Developmental License Affiliate The company has 37,855 restaurants, 35,085 of which are franchised.
1) Netflix is planning to spend $15 billion on content in 2019. 2) In 2018, the company added 4x the number of international subscribers than in the US. We'll start with competition. Obviously, streaming is heating up. Netflix believes there is still a lot of room for growth but attention is a scarce resource.
As we've stated, the free emails are pretty sporadic so don't get used to it 😋 If you haven't already, read this [Netflix 2018] post first for more context. Here are the updated numbers for Netflix. US: 60.62 million Int'l: 106.05 million Just look at the international subscriber growth!
Intuit (creator of TurboTax, Quickbooks, etc.), unsurprisingly, makes all of its profit in a 3-month window. Guess which three months? We'll start with revenue. You can see that Q2 and Q3 are the biggest revenue quarters, with Q3, being the real driver. Here is how much Q3 is responsible for annual sales.
Transdigm is a company that sells airplane parts. You can see the 7 parties it sells to, with Boeing and Airbus making up 20% of total sales. Importantly, the company makes 60% of sales from aftermarket parts.
This will be the last free example. If you're on the free email list, please consider subscribing because we will only be sending out marketing emails from here on out. If you're a paid subscriber, expect new emails on the 7th and 21st of every month.
If you didn't read the original post, we'll briefly recap for some context. Alphabet makes money in two main ways: Starting with advertising, there are two distribution methods: AdWords (aka Properties) - these are the ads you see when you do a Google search or watch YouTube videos.
Spotify is a company you've probably heard of. It's a music streaming business. But before getting into it, let's jump in our time machine and understand the history of this industry. Prior to the invention of the phonograph (yes, we're going ALL the way back), the music industry consisted of sheets of paper.
Date 9/29/2020 Speculator Leon Gaban (DumbMoney.tv) Assets | Trade Trade Management & Updates NIO Call options (Jan 15th $25) 10/14 Calls are now ITM 10/23 position is now 25% of my total investing/trading portfolios 11/13 Rolled out the 1/15 $25 into the 2/19 $40s Thesis & Na...
🚨 130% NET EXPANSION RATE 🚨Sales grew by 44% YoY 📈 It got 630 customers with ACV over $ 100K 💸This company provides the SEARCH ENGINE 🔍 company needs 💻Here is an EASY thread on a HARD TO UNDERSTAND business 👇 pic.twitter.com/R04acE093Z
Hilton / Blackstone Deal
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Stripe Teardown: How The $35B Payments Company Plans To Supercharge Online Retail | CB Insights
As businesses and consumers become more comfortable using credit cards online, the proportion of US commerce that takes place online has steadily increased over the last 20 years. This growth has created major opportunities in the payments space, and companies like Stripe - the payments unicorn valued at a masive $35B - are hungry to capitalize on them.
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Companies are a sequencing of loops. While it's possible to stumble into an initial core loop that works, the companies that are successful in the long term are the ones that can repeatedly find the next loop. However, this evolution is poorly understood relative to its existential impact on a company's trajectory.
Andrew Wilkinson & Tiny Operating Manual - Colin Keeley
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The Investment Opportunity in School Bus Operators
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What are people talking about?
353 Startup Failure Post-Mortems
It's hard to say goodbye. A compilation of startup failure post-mortems by founders and investors. Of his many failed experiments, Thomas Edison once said: " I have learned fifty thousand ways it cannot be done and therefore I am fifty thousand times nearer the final successful experiment."
MBI Deep Dives
Here are some sample deep dives you can explore before subscribing to my research: Uber, Etsy, Lululemon. You may also consider reading MBI's research process and approach to valuation. To know more about MBI, click here. You can contact MBI at [email protected] Follow MBI on twitter or LinkedIn.