🍋 MBAs Are The New SPACs

Together With

"I'm the one guy who says don't force the stupid people to be quiet – I want to know who the morons are." — Mark Cuban

Good Morning! Hope y'all had a great weekend. If you spent it at a wedding, get ready for more. Signet Jewelers said they're expecting an almost four-decade high in weddings this year. Chocolate and candy sales also hit a (sugar) high with $36.9 billion in sales in 2021. According to a poll, only 24% of workers think their employers care about their well-being (explains all the chocolate sales). Still, I hope you're doing better than the guy who bought Tom Brady's "last" TD football – man spent over $500k on the ball only to have Brady unretire, and offer him one whole bitcoin as restitution. V generous Tom, but BTC is nowhere near $500k a pop right now. Maybe a Chinese billionaire could buy it off him at cost, considering the country is minting billionaires three times faster than America.

If you are looking to go crypto, there is no better platform than today's sponsor, Gemini, where you can buy, sell, store, and earn Bitcoin, ETH and 70+ other cryptocurrencies. 

1. Story of the Day: MBAs Are The New SPACs

Many of you are considering, currently completing, or have successfully finished your MBAs. Upon graduation, I'm sure y'all will/already accepted some amazing opportunities. Did you ever consider though, that you might be the opportunity?

An increasing amount of B-School grads are offering their knowledge and skillset as an investment. The model is similar to a SPAC, where funds are raised for the newly minted graduate. The MBA uses the money to search for a small private business and lead it as an executive and part-owner.

The so-called search funds have been around for years, but have recently gone awff kween, as the pandemic filled investors' wallets, who then sought new places to put it. According to Stanford GSB, there were 51 new search funds in 2019, which was an all time high at the time. They're now counting at least 70 for 2020, and probably even more for 2021.

While it's a risky strategy, it seems to be paying off. Stanford did a study of almost 400 search funds in 2019. The results showed that 75% of companies acquired by searchers had positive returns for investors. Of the companies in the black, 69% (nice) yielded at least 2x returns for their investors.

Even though we're seeing a rise in the post-grad search fund route, it does not mean it's easy. Finding suitable businesses means a lot of cold calling and rejection. Roughly one third of searches end in no business acquisition. On top of that, students miss out on traditional recruiting for bigger companies and what's probably a safer path. Arielle Lawrence, a student at MIT's Sloan School of Management, said, "The reality is, there's a risk and choice that every entrepreneur makes."

Short Squeez Takeaway: Lawrence's parents, the first in their families to go to college, are unsure about her decision and wonder why she wouldn't want a more tried and true career. Who can blame them? An MBA program is an expensive undertaking, and risking the ROI of that to buy a small company in hopes of pulling the diamond out of the rough is borderline reckless. Then again, these bright individuals have family offices, institutional investors, and friends and family backing them. With a network like that, might as well take a chance. #YOLO

Source: WSJ

2. Markets Rundown

Markets ended the week up 4 days in a row and had their best week since 2020. Only real headline came from James Bullard, who gave investors a heads up on even higher rate hikes this year.

Movers & Shakers

  • (+) StoneCo ($STNE) +42% after Citi upgraded the Buffet-backed Brazilian payment processing company to a buy.

  • (+) Mullen Automotive ($MULN) +19% thanks to a surge in media outlets featuring the Californian EV startup, and news that they've made "progress" on new battery tech.

  • (–) Ambac Financial ($AMBC) -23% on news that a recent court ruling related to their RMBS transactions could "severely impact the organization."

3. Top Reads

  • Next gen rat traps are here thanks to the Internet of Things (Axios)

  • Could Apple get back into the Wi-Fi router game? (BB)

  • State regulators have their eye on Barstool and the Penn National deal (Axios)

  • The new big spenders will actually be old people (WSJ)

  • Europeans may not ask for raises, regardless of inflation (BB)

  • For women, learning how to code may not be enough to excel (Axios)

  • Nielsen swipes left on $9 billion takeover bid from PE consortium (WSJ)

  • Venture debt a rising trend (Protocol)

  • Shanghai Disney closed again due to another surge of COVID cases in China (Fox)

A Message from Gemini: One-stop Shop For All Your Crypto Needs

If you are looking to get into crypto and earn on your investments every day, y’all gotta check out Gemini.

Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy, sell, store, and earn bitcoin, ether, and 70+ other cryptocurrencies. 

4. Book of the Day: DeFi and the Future of Finance

During the Global Financial Crisis in 2008, our financial infrastructure failed.

Governments bailed out the very institutions that let the economy down. This episode spurred a serious rethink of our financial system. Does it make any sense that it takes two days to settle a stock transaction? Why do retailers, operating on razor thin margins, have to pay 3% for every customer credit card swipe? Why does it take two days to transfer money from a bank account to a brokerage—or any other company? Why are savings rates miniscule or negative?

DeFi and the Future of Finance introduces the new world of Decentralized Finance. The book argues that the current financial landscape is ripe for disruption and we are seeing, in real time, the reinvention of finance.

The authors provide the reader with a clear assessment of the problems with the current financial system and how DeFi solves many of these problems. The essence of DeFi is that we interact with peers—there is no brick and mortar and all of the associated costs. Savings and lending are reinvented. Trading takes place with algorithms far removed from traditional brokerages.

The book conducts a deep dive on some of the most innovative protocols such as Uniswap and Compound. Many of the companies featured in the book you might not have heard of—however, you will in the future.

Ideally suited for people working in any part of the finance industry as well as finan­cial policy makers, DeFi and the Future of Finance gives readers a vision of the future. The world of finance will fundamentally be changed over the coming decade. The book enables you to become part of the disruption – not the target of the disruption.

“DeFi boom is a very near equivalent of an apocalyptic event for the traditional financial institutions.”

5. Short Squeez Picks

6. Daily Visual: Post Pandemic Rally

S&P 500 from January 2, 2020 to March 18, 2022

Source: Axios

7. Daily Acumen: Making Mistakes

Openness to making mistakes and recognizing them is beyond many of us. Why is that?

Two reasons. 

The first, our society’s phobia for making mistakes, something that begins at school, where we learn to learn what we are taught rather than to resolve problems.

We are fed with facts, and those who make the fewest mistakes are considered to be the smarter ones. So we learn that it is embarrassing to not know and to make mistakes. We feel bad when we find out we have made a mistake or do not know something.

The second reason we find it hard to recognize mistakes is our focus on outcome rather than process. We prefer the “right” result from the wrong decision to a “wrong” result from the right decision, labeling everything that does not “work out” a mistake.

In doing so, we fail to differentiate between those investors who are unaware of the inconsistency between their thoughts and actions and those who merely come to a wrong decision.

Socrates said that humility is, in fact, one of the greatest assets for any person.

Practicing humility gives you the strength to fail forward. The only mistake you do not want to make is forgetting your mistakes. Ignoring the mistakes can make you lose the golden opportunity to use them as a stepping stone for accumulating real wisdom.

8. Crypto Corner

  • Ethereum scaling startup raises $150 million

  • The metaverse will completely change content creation

  • Elizabeth Warren's crypto bill faces criticism

  • Why gamers hate NFTs: Part 2

  • The biggest bitcoin fund's problem, that only the SEC can solve

  • A guide on how to lose all your Bitcoin investments

9. Memes of the Day

 

 

*This is a sponsored post 

Join the conversation

or to participate.