Continuations

On Monday of this week the Business Roundtable, an organization which “represents chief executive officers (CEOs) of America’s leading companies,” published a new statement on the purpose of a corporation. The new statement, which was signed by 181 executives, explicitly states that “we share a fundamental commitment to all of our stakeholders” (emphasis mine). This is an important departure from the singular focus on shareholders as the focus that has dominated the American corporate landsca...

The magic of markets is that they aggregate information from lots of individual actors into prices. As such they are an amazing coordination mechanism that has done wonders for guiding economies. But prices are also noisy and especially so when it comes to assets and in particular to the share price of companies. This post is a reminder to focus on fundamentals and largely ignore short term swings in share price. The price for pizza is determined by the demand and supply of pizza. Both of tho...

The stock market indices are above their pre financial crisis highs. One interpretation of this is that the financial crisis was just that: a crisis of the financial sector that left the rest of the economy largely untouched. Another interpretation is that we are simply looking at the results of way too much cheap money provided by the Fed. The latter is supported by a chart that I saw yesterday for the first time which shows the Dow divided by the price of gold. That chart is essentially fla...

Later today I will be meeting with the students in Gary Chou’s Entrepreneurial Design SVA class (which Gary and Christina started together last year). We will talk about what’s happening in the labor market broadly and why that puts a premium on being a (micro) entrepreneur. As part of the preparation, I watched and read the materials that Gary had assigned for the class which included Max Levchin’s keynote from DLD. Max is super smart and working on some fascinating ideas around making more ...

With the NASDAQ going above 5,000 for the first time since the year 2000 valuations in tech are once again on everyone’s mind, mine included. It has been a long period writing here on Continuations that I have thought valuations were too high and they have only gone higher since. All the arguments I provided back in 2012 are still true and in particular the line that “rates of return available on many other investments are at historic lows” – this is especially true for interest rates. Very l...

I am sympathetic to Uber’s basic argument that surge pricing is the market at work as (a) nobody is being forced to take an Uber and (b) raising prices puts more Ubers out on the street. On Saturday evening, close to the height of the storm I had to go to the Upper East Side to pick up one of our kids. I quickly decided to take the subway which was running on time and only cost $2.50 each way, even though that meant I had to walk about a dozen blocks in the storm. As an avid skier and lover o...

There has been a renewed interest in the impact that digital technology is having on the boundaries of the firm. In particular there is a sense that networks operating on top of platforms are competing effectively with traditional firms. Examples include AirBnB as competing with hotels without owning any real estate, Uber with transportation companies without owning and cars, LendingClub with banks without having a balance sheet, Upwork (formerly ELance/ODesk) a systems contractor without emp...

The discussion around taxing wealth, and in particular billionaires, has been illuminating. Not in the sense of learning something new but rather seeing who is willing to make or defend bad takes instead of engaging in any level of critical thinking. To make it clear on where I am on this issue, I am in support of a wealth tax, although I think there is a lot of room for discussion on how to best accomplish this. There are a few takes out there though that particularly bother me. The first is...