Strange & Beautiful (I'll Put A Spell On You)
w.268 | VC, Time Value of Money, Klarman on Cash, Macro Changes, India <> Pak, & Consumer Sentiment
Dear Friends,
I’ve went to Nashville this week for the first time. Along with a pig roast, I ventured to Broadway, the equivalent of Sixth Street here. Flying between Austin and Nashville is when you learn that a carry-on guitar consumes a whole overhead bin space, putting even more of a premium on an earlier boarding number on Southwest. There were at least three on my flight.
P.S. Apologies for the broken link in last week’s edition. Resolved: The Rise and Fall of the Stock Market’s Music King (PDF from Bloomberg).
Today's Contents:
Sensible Investing
Song of the Week: Strange & Beautiful
Sensible Investing
Venture Capital, An Ailing Asset Class. An extremely long article posted on X by Dan Gray. Dan is the head of insights (euphemism for content marketer) for Equidam, a company that sells startup valuation estimations. Caveat being that, to the extent the company creates a sense that “you are all being ripped off, and you have no idea what this is worth without a sophisticated product (like ours),” it will be good for business.
The central thesis: The asset class appears to be grappling with a deep-seated "sickness," characterized by stubbornly poor liquidity, questionable aggregate returns despite soaring paper valuations, and a potential decoupling from its foundational purpose: the financing of genuine, boundary-pushing innovation.
Duration is a real problem, as Josh Koppleman points out. Anyone who has ever done a DCF or even taken an economics course knows that the time value of money matters.
Seed Investing WTF? Update for Q2 2025. From Slow Ventures. Worth a browse.
The Painful Decision to Hold Cash. An excerpt from Seth Klarman at Baupost from 2005. It’s a two-pager and worth the reminder.
Largest Economies in the World Broken Down by US State. Good reminder of how big and powerful several US states are on their own.
Bridgewater Warns of Macroeconomic Changes. Pages from Connecting the Dots from Bridgewater’s (three!) CIOs. More protectionism and a risk of stagflation mean equities won’t perform well. Nothing terribly new here, but it’s a succinct summary.
Trend Watch: Tensions Between India and Pakistan. Here is the situation after a recent terrorist event in Kashmir. Balaji had an interesting take on India’s path forward: INDIA'S VENGEANCE IS BEST SERVED COLD. I might be biased, but Pakistan is the most interesting tinder box on the planet; it often seems to be anarchy being held together by the thinnest of threads. No one is really in charge, even if the military has a technical stronghold.
Consumer Sentiment Indicators Show Concern:
Hardship withdrawals from 401(k) plans are running about 15% to 20% above the historical average, Empower CEO Ed Murphy said Monday during a Bloomberg TV interview. These withdrawals allow Americans to pull money from their retirement savings to cover urgent and significant expenses, such as medical bills or housing debts. However, such withdrawals are subject to taxes and, for individuals under 59½, can trigger a 10% penalty.
“There’s a corollary between what you’re seeing in the U.S. economy with deferred payments on auto loans and mortgages,” said Murphy, whose company manages 88,000 retirement plans for 19 million people. “That’s something we monitor carefully.”
Southwest CEO Says US Airline Industry Is Already in a Recession
Noting demand for domestic leisure travel has dropped more than he’s ever seen outside of the pandemic, Bob Jordan said that an economic contraction is in full swing, at least in the US airline industry.
The CEO said his company expects second-quarter revenue to decline by six percentage points, following a three-point drop in the first quarter.
Song of the Week: Strange and Beautiful
Here on YouTube.
This is a captivating song, particularly if you can substitute the romantic storyline for a similar experience. For instance, source a special situation or a truly exceptional investment opportunity where all the stars align. It’s strange (to most, at least right now) and beautiful (to you), and you have to do whatever it takes to secure it!
My favorite YouTube comment: “The thin line between a love story and a restriction order. Love this song. LOL”
“Strange & Beautiful (I’ll Put A Spell On You)“ by Agualung
Sometimes the last thing you want comes in first
Sometimes the first thing you want never comes
But I know that waiting is all you can doSelfie of the Week
I was in Nashville this week for Lightning, an un-conference for VCs and high-potential founders across the Southeast. I met some awesome folks, from potential co-investors to founders who had billion-dollar exits, to plenty of tech founders building the next big thing. H/T to the fantastic Daley for the hookup.
The conference founder is Haley ‘Zap’ Zapolski (pictured below). She is on a mission to build the Nashville startup ecosystem. She has her branding down and plays to win (and she did!).
Thanks for reading, friends. Please always be in touch.
As always,
Katelyn