Diamonds and Rust
w.273 | Market Research, Alts, Knowledge Systems Collapse, Omada, DOGE, & Charts
Dear Friends,
I’ve written a bit more than usual below, so I’m going to keep it brief here. Let’s get into the content!
Today's Contents:
Sensible Investing: Trends
Charts Worth Thinking About
DOGE & Learning
Song of the Week: Diamonds and Rust
Sine Die
Sensible Investing: Trends
Coatue Public Market Update (from May). Lots of good charts.
Faster, Smarter, Cheaper: AI Is Reinventing Market Research. Thesis write-up from a16z. This is definitely going to happen, but from the companies on their list that I’ve seen up close, the accuracy when it matters still leaves a lot to be desired.
If history is any guide, the companies that dominate this AI wave won’t just have the best technology, they’ll master distribution and adoption. Qualtrics and Medallia, for example, won early by prioritizing adoption, familiarity, and loyalty, embedding themselves deeply into universities and key industries.
Accuracy obviously matters — particularly as teams measure AI tools against traditional, human-led research. But in this category, there are no established benchmarks or evaluation frameworks, which makes it difficult to objectively assess how “good” a given model is. Companies experimenting with agent simulation technology often have to define their own metrics.
The Future Ain’t What It Used to Be for These Funds. Wall Street wants to sell more ‘alternative’ assets to small investors in an effort to continue to expand its assets under (active) management. The glory days for these assets may already be ending.
Supposedly, this is ‘a must read’, but I feel like I’ve beaten this point into the ground already - as have others. The new information here is that Hamilton Lane, in their new secondaries fund, buys assets at a discount, marks up the NAV immediately, and earns their carry on unrealized gains. Buyer beware out there.
Fisher Investments Launches 'fiduciary.com' to 'Educate' Clients and RIAs, But Site Smacks of 'naked lead-gen,' Says Fiduciary Institute's Head. I love it when the takeaway is the headline. It’s a reminder that you should always think independently and be able to reason for yourself, even if it is exasperating that there seem to be ever fewer sources that one can trust.
Omada Health (like most digital health) is (probably) a terrible business. We had an IPO! Let’s review the details: 14 years old; still not profitable; continues to be a cash incinerator; over $400M raised, resulting in a $1.1B public outcome. They already have 4 of 5 top health plans; so, where is the growth going to come from? ‘Software gross margins’ require non-GAAP accounting gymnastics and belief that none of the high sales & marketing and general & administrative lines should be in COGS. There is no pricing power because the market is competitive, and buyers can be savvy enough to demand discounts, as the company relies on channel partners.
For those scoring at home, the Series E was in Feb ‘22 with a valuation of $1.02B, meaning there was an 8% appreciation to the IPO price over 3.3 years. Suffice to say, US public equities have done better over the same time. At least the equity holders have seen a ~20% pop since trading has started.
The Ten Warning Signs in Ted Goia’s substack. An interesting read that reminds me of my own thesis - now five years old! - about the risks of deskilling for critical thinking and analysis.
Chart Worth Thinking About
Babies and Ballots from The Economist. I suspect we would see a similar gap if we compared the total fertility rates for the states by presidential vote.
SPX Is Now Up to 22x P/E. We are back at ATM highs.
Most of the Equity Market Gains Have Been from Tech Companies. Pretty sure these are from the same Goldman report.
I’m not a huge fan of BLS data but this does show an interesting trendline. Also goes well with this ‘The Enshittification of Tech Jobs’ article. “In other words, the workers in re-shored factories and tech workers need the same thing. They are class allies – and tech bosses are their class enemies. This is class war.”
DOGE: Tech Culture vs Political Culture = No Delivery
Side-stepping the immediate drama of personalities, it seems there was/is a monster of a culture clash between politics in Washington and technology.
I’ve spoken to a few staffers recently who described how the DOGE tech bros ‘had a total unwillingness to engage with policy and law’ and ‘got easily frustrated when there wasn’t a set of binary checklists.’ If we were to give grace, then we could all likely relate to the frustration of a workplace with confounding approaches and inane complexity that stifles efforts to get things done.
Another shared that ‘DOGE was cutting to the bone with zero regard to the merits of what was being cut’, which is harder to sympathize with.
No one is exactly sure what is going to happen next without Elon:
‘Previously, in a fight between agency and DOGE, DOGE would win, but if it were the White House and DOGE, the White House would win. Now, no one knows what will happen with DOGE.’
Here is Sahil Lavingia’s DOGE diaries. No comment.
The most charitable thing that you could say about the work of DOGE to date is that it started with an admirable intent but has ended up a bit more ‘sloppy and slapdash’ than the American people needed. In response, most people smile and agree.
I could say more about Delivery, but I’ll save that for another day. The episode has had me think back to the hard won yards of my work a decade ago and the sheer amount of patience and emotional energy required to do government reform right.
AI & the Future of Learning and Education
One unlock for me has been separating EdTech investing from more broadly developing an independent perspective on the future of learning, which is an eternal human endeavor. Taking the investment opportunity lens off is helpful because the investment opportunity from a risk-reward perspective in EdTech is minimal at the same time that massive advances are happening at mainstream consumer technology companies that will change both the learning process and disrupt the systems at large through indirect pressure.
In this video, I discuss the implications of AI on education and learning with Akshay (Partner at Tola Capital, VC focused on Enterprise AI) and Sinan (startup CTO and teaching people how to use LLMs). We chat about:
Ed-tech vs. "learning tech." Why the biggest breakthroughs often skip the classroom and go straight to the consumer.
Motivation over personalization. The real bottleneck isn’t better content—it’s sparking curiosity and keeping learners engaged.
AI’s dual role as both “teacher’s aide” and “homework cheater” - and why that might not be a bad thing.
How VR math simulations, language-learning avatars, and AI-powered sales floors demonstrate the next wave of learning-by-doing.
What jobs and university majors might look like in an era where "the largest school in the world is YouTube."
Song of the Week: Diamonds and Rust
Here on YouTube.
I watched A Complete Unknown recently, about Bob Dylan’s early years, which tells the story of him meeting Joan Baez in New York City and her helping launch his career.
Diamonds and Rust is one of her most popular songs, and it’s about a phone call that she received from Dylan about ten years after they parted ways.
The metaphor of diamonds and rust speaks to both the sparkle and emotional scars from the old entanglement.
“Diamonds and Rust” by Joan Baez
Ten years ago I bought you some cufflinks
You brought me something
We both know what memories can bring
They bring diamonds and rustSelfie of the Week
Sine Die is a Latin term meaning "without a designated future date" and is often used to describe the adjournment of a meeting or session indefinitely, without setting a time to reconvene.
This week was the end of the 89th Legislative Session for the state of Texas.
To mark the milestone, one of my portfolio companies, USLege, an AI-powered legislative tracking platform, hosted a celebration to honor their customers, partners, and Capitol allies. See the picture below with USLege Co-Founder and Chief Business Officer, Laura Carr.
What did Texas accomplish?
Sadly, Resolution 46 to rename the New York Strip was not pushed forward, but it spiritually remains :)
WHEREAS, The renaming of the New York strip steak to the Texas strip steak would be a fitting tribute to the legacy of Texas as the nation's beef leader, and it would reflect the importance of steak to the state's identity; now, therefore, be it…
Good news? It was a huge session for education system reform and spending across the state. Texas is an ambitious state. Passed massive education bills, including a historic $8.5 Billion in public education funding mostly for teachers and the framework for the largest day-one school choice program. More on this next week.
Thanks for reading, friends. Please always be in touch.
As always,
Katelyn