What We’re Reading

Here are a few good articles the Collaborative Fund team came across this week.

Employment

What Amazon and friends are doing to traditional retail jobs:

Mr. Mandel has combed through the job statistics on a county-by-county basis and come to this counterintuitive view: From December 2007 to May 2017,by his count, the e-commerce industry has created 397,000 jobs in the United States, and this compares with the loss of 76,000 jobs in the traditional retail industry. And those jobs related to e-commerce, he says, pay about 30 percent more than the brick-and-mortar ones.

Too much of a good thing

A very important piece on overfunding startups:

The irony is Jawbone could have been a suitable acquisition target some years ago, these people say, had it just kept its valuation lower by raising less money from venture capital and sovereign wealth funds.

“They are basically force-feeding capital into these companies,” said Sramana Mitra, a tech entrepreneur and consultant, and founder and CEO of startup accelerator One Million by One Million. “I expect there will be a lot more deaths by overfunding.”

Trends

A good overview of one of our favorite investment themes:

The [ice cream] brand launched in 2012, but it did not explode until 2016. Halo Top has become one of the most Instagram-able products available in the frozen dessert aisle, with 28.8 million pints sold last year, generating $132.4 million in sales, according to data from IRI.

Halo Top’s growth reflects shoppers’ growing desire to shop for healthy, unique products from small brands. That’s good news for brands like Halo Top, but that doesn’t necessarily mean traditional ice cream brands are doomed — although they may need to play catch up.

Allocation

The move toward socially responsible investing picks up:

Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund, said on Monday it has allocated 1 trillion yen ($8.9 billion) of funds to socially responsible investments.

That represents about 3 percent of its Japanese stocks portfolio and, in the medium term, the fund could increase its investment in companies that have good ESG (Environmental, Social, and Governance) practices, the fund said.

Digging in

The purpose of diligence:

Superior due diligence involves an attempt to crack the narrative, not to repeat it for consumption elsewhere. An evaluation process is at its best when it exposes the shortcomings that exist (there always are some) and weighs them appropriately in the body of evidence. It is at its worst when the words and stories of those being evaluated become the words and stories of those who are supposed to be doing the evaluation.

Contrarian

Fred Wilson on risk:

I have found that return and ridicule are highly correlated over the years. We have made more money on things that were highly ridiculed than on any other cohort. When I see people laughing at ideas and companies we have backed, I smile. It means we are going to make a lot of money on that investment.

Parking

Apple’s new headquarters is the future, expect one thing that’s incredibly hard to crack:

The circular structure has not only nearly three million square feet of office space but also about three million square feet devoted to parking spaces. For a company investing no small amount of its significant capital on driverless cars, that’s incongruous. There is much to emulate at Apple — but not that almost 1:1 ratio of office to parking.

Have a good weekend.