Baker Street Partners

Optimism is the rational conclusion

[Baker Street Partners @BakerStreetIP]

@newmork @RecurveCapital Because he likely bought a new car while selling his current one (obviously used)

[Baker Street Partners @BakerStreetIP]

@thespencerwalsh I don’t follow Google. Is this trend due to Gemini / “AI summary”?

[Will Ahmed @willahmed]

You have no experience.
You’ve never started a company.
You’ve never had a full time job.
Nike is going to kill you.
You’re a kid.
You don’t have technical skills.
You shouldn’t build hardware.
Apple is going to kill you.
You can’t build hardware.
You can’t measure heart rate non-invasively.
Athletes don’t care about recovery.
Under Armour is going to kill you.
It won’t be accurate.
You don’t listen.
You’re an ineffective leader.
You can’t recruit great talent.
You’re going to have to pay every athlete.
You can’t measure sleep non-invasively.
It’s too expensive to research.
Athletes are a small market.
The product costs too much to make.
The product costs too much to sell.
Your valuation is too high.
Consumers aren’t going to want it.
Hardware is too hard.
You should measure steps.
Fitbit is going to kill you.
You can’t build a marketing engine.
You can’t raise enough money.
You need a real CEO.
Google is going to kill you.
You can’t be a subscription.
You can’t build a brand.
You can’t do consumer in Boston.
Your valuation is too high.
You shouldn’t make accessories.
You shouldn’t make apparel.
Lululemon is going to kill you.
You can’t predict Covid.
Stay in your niche.
You are going to run out of money.
You can’t build a health platform.
Amazon is going to kill you.
You can’t measure blood pressure.
You can’t get medical approvals.
The market is too small.
You don’t understand AI.
The market is too competitive.
It won’t work internationally.
The supply chain is too complicated.
You can’t build an AI.
You can’t raise enough money.
It’s too competitive.
Healthcare isn’t going to want it.
…

Just keep going ✌️

[Baker Street Partners @BakerStreetIP]

@ankurnagpal I’ll take one

[Baker Street Partners @BakerStreetIP]

@CliffordSosin Inequality of any kind will never be about the absolute. It’ll always be about the relative.

(And wrongfully so in my humble opinion)

[Clifford Sosin @CliffordSosin]

Per Yipit (an alt data provider), based on web scraping.
For the week of 10/12:
Carvana sold 12,427 cars
CarMax sold 12,413 cars
Thus, for the first time, Carvana took the title of largest vehicle retailer in the US.
CONGRATULATIONS to the $CVNA Team!
The march continues!

[Baker Street Partners @BakerStreetIP]

@scotti_brooks @grok using only peer reviewed medical white papers, does science agree with the content of this entire tweet thread?

[Baker Street Partners @BakerStreetIP]

@Rainmaker1973 Golf, tennis, ping pong, soccer, lacrosse, squash

[Tren Griffin @trengriffin]

I had breakfast with my close friend Michael Mauboussin yesterday.

He describes the "fade rate" as the speed at which a company's competitive advantage erodes over time. It quantifies how quickly the benefits of a company's moat diminishes due to competition."

Charlie Munger:

[Clifford Asness @CliffordAsness]

The return of economic idiocy is staggering and terrifying. Many things are debatable even if I or others may strongly differ. Tax rates are debatable. Transfer programs are debatable. Regulation is debatable (all within reason). But the return of politically driven idiocy that is not debatable, that history and theory have both proven destructive, is terrifying. Almost all economists of the left and right (not the extreme left and extreme right) would agree (though we haven’t heard the former economist Paul Krugman or any of his backup singers, the Krugtones, courageously speak truth to their own party about rent control of this latest asininity on price controls).

The current top 3.

1) Rent control — has destroyed whatever it has touched, and for clear obvious reasons. The left wants it everywhere and are finally poised to get it.

2) The “blame corporations” utter nonsense on inflation, and the plan to whip inflation now through price controls, is beyond ridicule. From Diocletian to Nixon, from theory to fact, it’s insane. The left is all in on it.

3) Tariffs and trade wars out of the past destroying a ton of prosperity for both us and our trading partners all to claim to have saved some jobs (generally in the industries we don’t really want, they always say “we don’t need cheap crap from overseas in exchange for American jobs” but we don’t want those jobs making “cheap crap” either — also involving “national security” here is almost always just a lie (almost)). This one is mainly from the right but Biden didn’t repeal Trump’s idiocy here and added his own, so the left has no real high ground and is poised to make it worse just not “as much worse” as Trump if they win.

We have a democratic candidate who is economically illiterate and just a far left hack, and a republican candidate who thinks lying about his crowd size is more important than articulating anything cogent.

It is very very bad.

Good morning.

[Ernest Wong @ErnestWongBWM]

Bruce Flatt on electricity demand over the next 20 years $BN

[Aaron Chan @RecurveCapital]

$CVNA’s Rocklin IRC tour was another great display of process improvements, particularly driven by proprietary software. The teams keep adding more apps and modules which progressively makes life easier for associates and unlocks important insights and operating efficiencies for the company. Some of my observations are below:

1. The level of digitization and automation in the inspection and parts ordering process has improved meaningfully. CVNA is leveraging its data and analytics to automate most decisions and effectively highlight exceptional cases for associates to work on. They are where you would imagine a tech-oriented, best-in-class operator would be if you didn’t know the industry.

2. Growth is a choice and is currently dictated by staffing decisions made across the company given their low asset utilization. They do not feel constrained by anything else in the market, nor do they feel constrained by their ability to hire when they want to grow. Rocklin was running at less than 40% capacity and it was obvious - there were unused inspection lanes, lifts, and equipment ready to be used by additional workers.

3. CVNA is being disciplined and methodical about its labor growth. It started adding staff last year (and continues to do so) and hopes to internally promoted those to higher levels when the company enters growth mode. They will help manage new and train new associates, rinse and repeat.

4. There are 17 Carvana IRCs and 2 ADESA sites that have been converted ro Carvana reconditioning centers (Buffalo and Portland). Those conversions include adding CARLI software and processes, and some light capex. CVNA can grow by sourcing new labor where it is optimal in the network across its 19 production sites and >100 market operations locations.

5. The recent improvements in software and automation help with real-time data analysis and reporting, and also helps centralize coordination and decision making across the company. I think this will manifest in lower variance in unit economics in the future and tighter control over inventory levels and days to sale.

6. I was interested to learn any insights about the ADESA conversions. They migrate those locations to digital-only auctions and convert the auction lanes into inspection lanes with lifts, resembling a Carvana IRC inspection lane. Auction customers can still check out the cars on the lot ahead of the auctions, but all bidding is digital once the conversion is complete (takes a few weeks). They wouldn’t comment on future plans, but I expect them to do more conversions soon-ish because the benefits are obvious, especially in markets that are farther away from a Carvana IRC. Localizing production can reduce delivery times (helps conversion) and transportation and logistics costs, among other benefits (helps EBITDA per unit). Looking at the maps, there are some clear gaps that can be filled easily with these conversions.

The process improvements and institutional discipline that have been implemented—especially over the last two years—have been impressive. The financial results clearly shine through already, but it’s also apparent that there are additional gains to be had in GPU and especially EBITDA/unit, though I doubt they can match their gains over the last year. That said, there will be significant operating leverage whenever they start increasing capacity utilization.

Overall, it was a great update and it increased my conviction in the stickiness of the financial and operational gains made in the last 12-18 months.

[Jon Erlichman @JonErlichman]

2024 valuations:

Nvidia: $2.2 trillion
Intel: $132 billion

2009 valuations:

Intel: $90 billion
Nvidia: $5 billion

[Jerry Capital @JerryCap]

"Many investors simply can't handle any kind of markdown, so as a result they never achieve life changing winners"

[Baker Street Partners @BakerStreetIP]

@dalibali2 https://t.co/e4og6g9RAu

[Andrew Walker @AndrewRangeley]

Not sure I've ever seen anything like what's happening at $PLCE.

Company reports awful Q4 and liquidity issues, stock cracks.... and a new shareholder steps in and buys >50% of the company in three days, creating a Change of Control / default under credit agreements.

Wild

[Baker Street Partners @BakerStreetIP]

@AllbrightNFL I would agree

[Baker Street Partners @BakerStreetIP]

@borrowed_ideas Would it require technological tailwinds akin to what he had (internet + mobile)? Or do you think it’s possible without those?

[Ethan Mollick @emollick]

It appears that just applying techniques inspired by Kahneman and Sloman actually results in better LLM outputs. From psychology to AI, interesting.

[Josh Wolfe @wolfejosh]

Wow. Wow. Wow.

Incredible powerful message (incredible speech writing)—to those who stumbled on the wrong path and may ruin their future for not knowing the past.

The weight of history

[Liberty 💚🥃 @LibertyRPF]

@VivekGRamaswamy 99.9999% of the 5000 miles border between Canada and the U.S. has been a hiking trail for centuries. Congrats on just finding out.