Peace Somehow
w.278 | Heat & A/C, ReIndustrialize, Fiscal Tightrope, Peak Software, & EdTech Churn
Dear Friends,
Thanks for the messages about the floods in Texas. While I was unaffected, the stories coming out of Hill Country, particularly the girls ’ summer camp, are awful.
Floods are frequent. And flash floods can come (and go) so so quickly. The adage that you should always “assume the worst, but hope for the best,” comes to mind, though it is hard to live up to with every warning, every day. The New Yorker had a well-written account of the events: Recovering the Dead in Texas’s Flash-Flood Alley. I thought that Avi Kaplan’s Peace Somehow was a also good anthem for what is out of our control.
Today's Contents:
Sensible Investing: Trends
Song of the Week: Peace Somehow
Sensible Investing: Trends
Britain and Europe Need to Get Serious About Air Conditioning. In a rapidly warming world, a former extravagance is becoming a necessity. As we all learn more about the importance of high-quality sleep, the graphics are all the more striking. In the FT, but the charts tell the story.
List of Companies Attending ReIndustrialize Conference Next Week. Always nice to check off lists of new companies, but the ones I’m most interested in aren’t on the list; they’re probably too busy to attend conferences!
Signal Over Noise #10: The Fiscal Tightrope. UBS Report. Basically, the US is fiscally undisciplined, and we will need a massive AI-led productivity increase to resolve the deficit. We’ve discussed that before. This chart is new to me, though, and an interesting comparison of how much the US spends as a portion of revenue on interest expense. I found this through MBI Deep Dives.
AI is Creating Peak Software, Media is the Best Analogy. This article claims that SaaS, as a business model or industry, is now in decline. I think this was the early consensus that’s been building since AI-mania took over.
My Predictions and Lessons From the Frontline of EdTech. David Park, CEO of Jenni AI, posted this on X this week. Jenni AI is an AI-powered research paper writing tool. I spoke to David about investing in Jenni two years ago when he was first starting, and I ultimately passed - on this business and many like it! - for precisely the concern he expounds upon in the chart below.
I wouldn’t count them out, but it’s going to be hard. David is smart and thoughtful, and he has shown to have a great influencer and content game. He’s built a large audience on X, sharing his growth stats and the ups and (critically!) the downs of building the company.
The first lesson: The churn is inevitable and unpreventable for every D2C education and parenthood product. Students and young people are cash-strapped and are always graduating out of their immediate user needs. The minute they don’t need a product anymore, they churn. It happens every summer like clockwork.
The second lesson/my prediction: Incumbant and well-founded AI generalists will own the majority of the market. This trend is still evident in the early days, but I imagine the challenge with this churn for Jenni is that there will be alternatives given for free to students. Decent AI tools will be built into all the enterprise products - Google Classroom, Microsoft Co-Pilot, and CanvasLMS plus the OpenAI Education and Anthropic Campus are moving aggressively into education. These companies have existing distribution and brand, and each will layer all the AI functionality into their current product suite. Enterprise buyers tend to pay based on cost and bulk, not incremental quality.
The third lesson: almost every B2C EdTech company eventually becomes a B2B company to combat churn and capture where the majority of the profit pool is. Hunter (below) is a Thiel Fellow who runs a healthy school lunch company called Ordo, which is doing amazing work and solving a tough problem. But he’s right. I see it all the time.
Song of the Week: Peace Somehow
Here on YouTube.
This song is incredible. Avi is the former vocal bass of the a cappella group Pentatonix from 2011 to 2017 and is known as one of the best and deepest bass voices in the industry. His solo work is a mesmerizing show of his tremendous talent.
As someone commented: If your lowest note is D2, then you probably can't sing this song and also hit B1's. Not even if you just wake up. My lowest chest note is D2 and I can't sing along with this guy.
My favorite remark: “If the earth could talk.... It'll probably sound like Avi Kaplan”
“Peace Somehow” by Avi Kaplan
Sunlight peeking through the rain
Take the toil and the pain
Breathe in
Breathe out
Find the peace somehow Picture of the Week
This was supposed to be the picture of the week last week, but it missed the publication cut-off. We attended a family wedding in the Midwest; congratulations to the newlyweds!
Thanks for reading, friends. Please always be in touch.
As always,
Katelyn