Following up on my prior post, here are more interesting startups: GroupMe, Uber, GetJar and Top Prospect. GroupMe, a text-based listserv, is a service that I have been longing for. I can now replicate “reply all” e-mail communication via text — much better for real-time mass messaging of friends.
When one of the younger partners in the firm started, Don took him aside and drew a four square quadrant. Along one axis, he put “easy to get along with” on one end and “hard to get along with” on the other end. One the other axis, he put “normal” on one end and “brilliant” on the other end.
He then said, “sometimes we make money with brilliant people who are easy to get along with, most often we make money with brilliant people who are hard to get along with, but we rarely make money with normal people who are easy to get along with.”
The entire blog post from Fred is here.
Update 10/24/11: Oracle has announced its acquisition of RightNow.
The interview process at most equity focused buyside shops (e.g. mutual funds or hedge funds) require a “stock pitch”. In my case, the need for a stock pitch was heightened by my application to the USC Student Investment Fund (the “SIF”), which is an academic program that gives portfolio management and stock picking responsibilities to current MBA students. Student managers oversee approximately $4 million of the USC endowment. Whether for the SIF or a buyside interview, the line of questioning goes the same way, interviewers will say, “Tell me about a stock you have been following and why it’s a buy?”.
Answering this question is as much a sales job as it is an analysis of a company’s market and financial performance. Below is my pitch. And here is the Word document and Excel file. If you would like, feel free to use these as a template for your own interview prep with a few caveats: 1) the revenue build is pretty weak in this model; you may want to do a better job a building a revenue sheet that shows average selling price * volume, 2) the working capital and depreciation figures could be more precise; this is more of a banker “swag” than equity analyst build using A/R and A/P turns, 3) beware of the deferred revenue adjustment in the working capital calculation; it’s a complex issue and this model only captures part of the issue correctly (hey, give me a break, I was in a rush when I built this!!); and 4) the write-up is nearly 2 pages; I think it’s best if you can fit all of the topics onto one page. (more…)
Today was another interesting day in my entrepreneurial finance class with Duke Bristow. I love the format of this class. We begin every session with a ~20 minute discussion of the Wall Street Journal before diving into lecture material. The professor enjoys provoking feedback, opinions and insight on currents event from students, and then he provides his own commentary on the topic (which usually has a small government and economist spin).
Today we discussed an article in the WSJ titled No Rush to Hire Even as Profits Soar. The Wall Street Journal offers a graph (see right) of quarterly U.S. employment and profits in support of its point that while profits have rebounded sharply since Q4 ’08, job creation has been meager. Logically, one might think, “Hey, profits are back, so why the hell aren’t these greedy corporations hiring anyone?!!” The professor encouraged a little logic test to tease out why job creation may be slow. I know, logic to news is a terrible habit; you might not believe everything you read, a disaster :). (more…)
I’m sitting in my Financial Analysis and Valuation class taught by Julia Plotts. I’ll admit, I took the class because I needed a “gimme” to lighten my workload as a I seek both a school-year and summer internship. A lot of the accounting and valuation topics are review, however, today I really appreciated the Professor’s points as we analyzed Blockbuster’s financial statements. When analyzing a statement of cash flows, she suggests the following:
- Scan the Big Picture
- Pinpoint Good and Bad News
- Analyze the Major Sources and Uses of Cash
- Determine whether CFO covers CapEx (i.e. do they have to raise debt or equity to grow the business)? In other words, do a “sources” and “uses” of cash analysis.
- What does the Statement of Cash Flow tell us about the company’s positioning?
(Sidenote: For anyone considering taking this class, I highly recommend both the subject matter and the Professor!)
Similar to the assured income provided by dividends on stocks, rental income provides real estate investors with a defined cash flow for return on investment, as opposed to capital appreciation (i.e. praying that real estate values increase). Stock investors prefer higher yields to lower ones, so as a real estate investor, wouldn’t you also like a higher yield? Yes. And the yield can be measured by the Price-to-Rent Ratio. Trulia, a real estate search engine, has created an interesting map of the U.S. which displays its Rent vs. Buy Index for 50 of the largest cities by population. Here is a snapshot.
Trulia’s Rent vs. Buy map relies on its calculation of the Price-to-Rent Ratio, which Trulia more fully explains as follows: (more…)
I had some fun playing around with LinkedIn Labs’ new network visualization tool. Here is a picture of my network.
The red USC cloud (fitting) and the green Duff & Phelps cloud aren’t surprising, however, I find the blue San Francisco cloud interesting. Nearly everyone that I met during undergrad sits in the San Francisco cloud along with my broader San Francisco network accumulated since high school. I’m guessing this means one of two things. Either, I am well connected in San Francisco so LinkedIn grouped all UCSB contacts into this cloud, or I never really branched out during college. I’m hoping it’s the former! Now go have some fun with LinkedIn’s new toy.
I’m sitting in my entrepreneurial finance class taught by Duke Bristow. We have been discussing the “gold bug” that everyone has caught over the past few years. When asked whether inflation is better hedged with houses or gold, my professor, a Financial Economics PhD, argues the case of homes on the following points:
- With inflation, house prices go up;
- By owning a home, one can either rent it for cash flow, or live in it for avoided rent;
- There is a tax benefit to owning a home; and
- By financing the home loan with a fixed-rate loan, you (as the borrower) can put the inflation risk on the lender (i.e. the bank).
I’ve never been sold on the case for gold, particularly because it doesn’t throw off any cash. These four points are the nail in the coffin for me (for the time being).
Below is an interactive chart put together by The Economist, a chart chalk full of… more charts (its most popular of 2010). Have fun, and Happy New Year.
I’m back from New York after meeting with executives at a lot of top Wall Street firms, both sellside and buyside. During my meeting with Tim Coleman, Head of Blackstone’s Restructuring & Reorganization Group (and also a fellow Gaucho!), he cited the strength of Blackstone’s culture as a key asset, an asset cultivated, in part, by an annual 360 review among Blackstone employees. According to Tim, the 360 review process prevents coworkers from unfairly “dumping” work on others. Wouldn’t you think twice before unreasonably working someone until 4AM if you knew that person would have the chance to air the dirty laundry at the end of the year? In Tim’s world (i.e. Wall Street), a 360 review seems like a great check for what sometimes can be a brutal culture.
This morning I ran across 360 reviews again while reading a great article about the rise of BlackRock. 360 reviews are an aside at the end of the article, but the mention of their use at another great firm began to make me think further about their use. Should companies include a 360 review in their annual review process? (more…)