Gamesofluck
w.267 | Astra, Education Investing, Asian Equities, Yale Selling, Recruiting Tech, & Bitcoin vs Gold
Dear Friends,
Happy Easter weekend. Enjoy the festivities, whether it's a religious celebration or as simple as a hunt for painted eggs.
Based on videos of my nieces’ exploits, every holiday now seems to have devolved into an exercise in dispensing candy to kids. Or maybe that’s my life stage.
Today's Contents:
Education Investing Roundup
Sensible Investing
Song of the Week: GamesofLuck
Education Investing Roundup
Anthropic Education Report: How University Students Use Claude. The Best Consumer Internet Technology is All Learning Technology. YouTube, OpenAI, Anthropic, Zoom. So, when someone says ‘I’m going to build a TikTok for education,’ it probably won’t work unless it has another learning delivery method built into it and is highly specific to a high-need use case.
The AI Rapture Ain’t Nigh - A 15-minute talk from Dan Meyer (who has a PhD in Math Education from Stanford and is the Chief Academic Officer at Desmos/Amplify, a math curriculum company) as he announces a close to his newsletter. The talk is skeptical of AI tutors or AI in the learning process with the reasoning that the core of teaching is not content delivery but human connection. AI excels at generating content but often undermines the teacher-student bond, which is critical to learning. Emotional moments, like a teacher encouraging a student, cannot be replicated by chatbots.
However, most EdTech is vertical enterprise software, and the biggest technology companies are competing to be the full-stack solution of AI in education. This will be a challenge for the many AI-generalist EdTech companies that have just raised large growth rounds.
Speaking of the full-stack solution:
The OpenAI, Datavant, and Education Vets Rescuing K-12 from Itself. A squad of tech and education bros are building a network of schools that don't suck — and an AI stack to support it.
It’s funny that the article called Arvind a bro. However, fitting in (e.g., matching the pattern) is a valuable skill! AI in industry may also belong to vertically integrated firms that deliver the frontline product and have their own homegrown tools, fully embedded natively into their operations. This is true in education, as it may be in healthcare and other industries.
Arvind and Astra are executing more of a PE-style roll-up strategy than a venture-funded greenfield venture. These have become popular among venture firms with significant capital to invest.
From Not Boring on Vertical Integrators:
Vertical Integrators are companies that:
Integrate multiple cutting-edge-but-proven technologies.
Develop significant in-house capabilities across their stack.
Modularize commoditized components while controlling overall system integration.
Compete directly with incumbents.
Offer products that are better, faster, or cheaper (often all three).
For Vertical Integrators, the integration is the innovation.
Sensible Investing
Why VCs Hate Recruiting Startups. Similar to staffing companies. You could replace “VCs” with all investors. The non-recurring revenue, lack of moat, and commoditized aspects of the business model are all reasons why they trade at a 1x revenue multiple.
Uluwatu Q1 Investor Letter. Uluwatu is an Asian long-only fund founded by my friend Rob Sheridan. Their investor updates are always interesting reading, but more relevant now that the world is seeking more international exposure and there is potentially more potential for outperformance from equity selection.
The Rise and Fall of the Stock Market’s Music King (PDF from Bloomberg). Merck Mercuriadis convinced everyone from pop stars to Blackstone that music was the next hot asset class. It worked out for everyone—but him.
I always enjoy stories of rise and falls, particularly of niche asset classes. This is a good read.
A New Framework for AI Agent Pricing. Every ex-consultant likes 2x2s. This is the new SaaS:
Tweets. A friend emailed me last week and asked if I hesitated to include a tweet from a handle titled ‘teeznutz11’, and you know what? I didn’t even think about it. If it’s insightful and funny, let’s go.
On that note, here's one from ‘HodlMagoo’.
A different friend remarked, “At least it’s now clear that this crypto thing is over and Bitcoin is dead,” and I said, “Well, not so fast.”
Sure, Bitcoin is now 20% from all-time highs in January, but it’s still up 31% over the last 12 months, and the sell-off could be much worse.
The composition of Bitcoin and gold holders is so different that their buying and selling behaviors are not particularly coordinated. Bitcoin is still seen as a relatively risky asset, while gold is viewed as a haven, particularly among investors who have more buying power during market declines.
The ratio in the charts below divides the price of Bitcoin by the price of Gold and represents the number of ounces of gold it takes to buy a single Bitcoin. When the ratio rises, Bitcoin is outperforming gold, and when it falls, gold is outperforming Bitcoin.
Here’s a 10-year chart, which looks pretty steady / decent performance for Bitcoin.
The 1-year chart shows the outperformance of gold after Trump’s inauguration.
Private investments: Who is selling? In recent weeks, we’ve seen rumors that large institutional investors are beginning to sell their private portfolios and that private equity investors are finding creative ways to generate liquidity (secondaries, extension funds, dividend recap). Notably, Yale is planning to sell ~$ 6B of private investments. Other large endowments may follow Yale's to avoid the much-discussed endowment tax.
Song of the Week: Gamesofluck
Here on YouTube.
I like the '80s synth throwback of this song that discusses elements of luck in a romantic context. But it’s a fun reminder for investing to know when you're playing a game of luck (gambling) and a game of skill, although being lucky always helps.
“Gamesofluck“ by Parcels
'Cause you make it dangerous
When you're playing games of luckSelfie of the Week
Eating Ethiopian in the District of Columbia this week with my college friend Fredo Vasquez and his wife Melissa.
Thanks for reading, friends. Please always be in touch.
As always,
Katelyn