This year we’re going to start publishing a weekly roundup covering all things public markets, and venture related with a focus on FinTech and the business of sports. It will include a mixture of originally generated content and views, coupled with key articles, videos, podcasts, and tweets that we come across that we think are worth sharing broadly.
This week was filled with a number of 2019 year in review and 2020 year ahead reflections and projections. Given that it was also the end of the decade, there was some extra reflection & projections (with seemingly everyone feeling more embolden with decade ahead projections as no one will remember them 10 years from now to check the scoreboard of who was right and who was wrong). We won’t rehash too much as there has been a lot written about the topic but the 2010’s were the first decade on record without a recession. This resulted in only one down year in the S&P (and notably 0 down years in the NASDAQ) and as Josh Brown points out every $10,000 invested in the S&P in the beginning of the decade turned into $30,000. Charlie Bilello had an interesting tweet comparing the S&P % change in operating EPS to multiple expansion / contraction dating back to ’89. During this past decade we saw a ~192.8% increase in S&P 500 EPS vs. the nearly ~300% increase in price (incl. dividends).
Despite that public market performance the average 401(K) balance at Fidelity (which holds >16.0mn of them) was $103,000 as of March 2019, with the median balance of $24,500. This is clearly a problem that needs to be solved from both an educational and automation standpoint; and as we noted in our own FinTech: The 2020’s projections, we’re looking for startups geared towards financial services for the silent generation + boomers to deal with this shortfall.
The WSJ had a good compilation of the Decade in Review discussing the biggest stories, how economists got the decade wrong, how big stories evolved, the evolution of the smartphone, the streaming revolution, affordable care act, US market outperformance, Unicorns, Outsourcing, explosion of PFM solutions geared towards frugality, energy, China, food, immigration, and even music / theater.
Matt Ridley wrote a good piece for The Spectator entitled We’ve just had the best decade in human history. Seriously. The article notes that extreme poverty has fallen below 10% of the world’s population for the first time, global inequality is falling as Africa & Asia experience faster economic growth than North America & Europe, child mortality is at record lows, famine has nearly been eradicated, malaria, polio, and heart disease are all in decline. This won’t make the news because good news doesn’t sell like the polarizing content but it’s helpful content backed by data.
The Ridley article felt like a nice complement to a recent Stanley Druckenmiller interview on his 2020 outlook. At the 42 minute mark Druckenmiller talks about the benefits of capitalism notably the fact that it has lifted 1.0bn people out of extreme poverty since the 1990s. For all the negative rhetoric around billionaires, Druckenmiller notes that over that time period there have been 2,500 billionaires created which equates to 1 billionaire for every 400,000 people lifted out of poverty. If you were to redistribute the $8.7 trillion held by billionaires equally to everyone else on the planet that’d be $1,130/person; hardly enough to solve the world’s problems as some would lead us to believe.
Year-end is one of the rare quiet times in the venture market as very few term sheets get signed in what felt like a prolonged year-end this year given a Wednesday Christmas and New Years Eve. Alex Wilhelm started the year highlighting 4 new names to the $100mn ARR club including Sisense, SiteMinder, Monday.com, and Lemonade.
There were countless Medium posts by VC’s reflecting on what occurred during the last 10 years and their thoughts for the years ahead. Fred Wilson expanded upon his year end post and wrote What Happened In The 2010s where he highlights the emergence of the big 4 web/mobile monopolies (AAPL, AMZN, FB, GOOGL), the SoftBank idea of “capital as a moat,” Machine Learning coming of age, subscription businesses gaining scale, Silicon Valley’s weakening position as the mecca for startups, emergence of cryptography, the interjection of technology into society itself, income inequality, and China as a tech superpower.
Former NBA Commissioner David Stern passed away at the age of 77. Stern should be remembered not only as arguably the top commissioner of all time, but as one of the most successful business leaders of the past 35+ years. When he took over as commissioner in 1984 the NBA league wide revenues were $18mn with the aggregate value of all 23 teams standing at $400mn. When he stepped down NBA revenue was $4.6bn (on a glide path to the $8.0bn where it stands today given the last TV rights renewal) with aggregate team valuations of $19.0bn. Stern was responsible for the globalization of the game. When he took over the NBA Finals were shown on tape-delay in the US, when he left regular seasons NBA games were shown live in 200+ countries globally. He focused on China prior to most business leaders and the NBA marketed its players like no other league. In retirement he was a great ambassador for the game, while also serving as an active angel investors across sports, data and analytics, gambling, and health tech. He had a great podcast with Whoop CEO Will Ahmed which is worth a listen.
Endeavor announced it had acquired a majority equity stake in On Location Experiences, the high-end hospitality company for ~$650-$700mn. On Location has been privately held since 2015 by RedBird Capital, Bruin Sports, the Carlyle Group, and the NFL’s investment arm 32 Equity. The NFL will continue to be a minority shareholder, while retaining a board seat. Endeavor had to pull its IPO when it tried to get out in September, partially to allow this deal to close, but also for “general market conditions” (aka WeWork). If we look at the success of UFC under Endeavors ownership OLE is another interesting asset and makes the conglomerate an interesting equity play at the right place if and when it finally joins the public ranks.
While Google Trend search volume and the press would seemingly suggest the end of Bitcoin, it finished 2019 +85.4%, and saw $770bn of transaction volume during the year or ~$2.1bn/day. In May of this year Bitcoin will undergo the third “halving” where the block reward (the amount of new BTC mined every 10 minutes) will be cut in half once again from 12.5 to 6.25 BTC. This should help the supply / demand imbalance because as Rptr45 points out there was ~$5.0bn of inflation this year in the form of BTC block rewards.
Coin Metrics published a “State of the Network 2019 Year in Review” which looks back at major cryptoassets over 2019. We found their work on market value to realized value (MVRV) most compelling showing the theoretical cost basis of all holders versus existing market prices.
Top Articles / Videos / Podcasts
Below is a compilation of links for articles / videos / podcasts we referenced above or found interesting during the week that we thought was worth sharing:
· Decade in Review- WSJ
· No Asterisks- Josh Brown
· The Rise of the Family / Private Investment Office- David Bain
· We just had the best decade in human history. Seriously- Matt Ridley
· Kicking Off 2020 With 4 New members of the $100mn ARR Club- Alex Wilhelm
· Bitcoin 2019 Annual Review- Jameson Lopp
· State of the Network 2019 Year in Review- CoinMetrics