Funston Brief (Issue No. 2)
This month, our featured stories offer an initial framing of the challenges caused by the ongoing war in Ukraine as well as a number of lessons that CEOs can implement in their companies.
There’s more uncertainty now than ever before in our world. The Russian invasion of Ukraine is causing the greatest humanitarian crisis in Europe since World War II. Thousands of lives have been lost, and millions of livelihoods have been disrupted. With the war now in its second month, the increased inflation in the US, and the skyrocketing commodity prices, the massive economic ramifications continue to unfold at a rapid clip. In spite of “software eating the world”, the war in Ukraine demonstrates once more the enduring power of energy as the world’s most important industry. The disruption in wheat production, nickel, fertilizers, and more are stark reminders of the persistence of the physical environment in our lives. Closer to tech, the shortages of neon gas further disrupted the supply chain of microchips.
From a geopolitical and macroeconomics perspective, the war might prove to be a watershed moment that might create a new model of Europe and redefine the functioning of the global system. A move to a multipolar world might bring with it two fundamental changes: (1) supply chain constraints that favor local players and (2) company valuations that might come down as most companies today (especially the tech ones) are valued for global demand. With the COVID-19 pandemic showing its teeth once more, it’d be interesting to see whether China’s view of the world will change in light of the Ukraine crisis.
ACTIONABLE INSIGHTS.
Social engineering is a powerful tool for hackers: Apple and Meta, the parent company of Facebook, provided customer data to hackers who forged legal requests. Cybersecurity researchers suspect some are minors located in the U.K. and America.
Key Insight: People often represent the weakest link in the security chain and are chronically responsible for the failure of security systems. User security awareness, typically a component of a company's security policy, includes educating and testing employees to help protect your business against cybercrimes, including phishing and other social-engineering attacks. Link
Incorporating Artificial Intelligence into your business is a must: As the world transitions into a more digital era, utilizing AI will help to power and diversify your business. Companies using artificial intelligence and machine learning will have the capabilities to better analyze data, identify and halt fraud, and manage valuable customer relationships.
Key insight: In order to retain or gain a competitive edge, your company must incorporate some sort of AI into the business model. An easy first step to becoming AI-friendly might be to enable a “chat-bot” on your company's website. Link
Sustainability increasingly touches more facets of our lives: In this new generation of cognizant consumption, many users are preferring eco-friendly companies over not-so-sustainable brands. A business's sustainable habits should apply to the environment, community, or even to society as a whole.
Key Insight: Don’t get left behind as a business. Becoming sustainable will help reduce business costs, increase cutting-edge business strategies, and improve your company’s reputation in the eyes of the consumer. Link
EAR TO THE GROUND.
Podcast Episode: Colossus - How Skilled Capital Allocators Compound Capital
Guest: Will Thorndike
Takeaway:
In this episode of the Invest like the best podcast Patrick O’Shaughnessy, CEO of O'Shaughnessy Asset Management, interviews Will Thorndike, author and investor whose book The Outsiders is one of the best examinations of CEOs and capital allocation. The podcast covers how these exceptional CEOs were contrarians in business tactics, lessons for business capital allocation, and Will's experience in private equity.
“[...] as a group, [exceptional CEOs] were not fans of broad long-term rigid strategic planning. They just fundamentally believed in a more opportunistic approach to managing their businesses. They prided themselves on the quality of their analytical work and the related processes internally.”
- Will Thorndike, Partner at Housatonic Partners
$200,000
Apple awarded bonuses of up to $200,000 in stock to select engineers as part of a talent retention effort. Link
PROFILE.
Daniel Ek, CEO of Spotify, discusses his insights on entrepreneurship, leadership style, time management, decision making, Spotify's impact on the world and much, much more. Enjoy!
“I typically tackle one topic a day which takes a lot of my time. That's my big thing for the day. Before we go into a live team discussion on that particular topic, I invest time to prepare beforehand.”
ON MY RADAR.
Moving money internationally is a cumbersome process. In light of the recent restrictions on Russia, a timely article explains how the SWIFT global payments system and other aspects of financial plumbing work in an accessible way. Link
About
Funston Brief is a newsletter by Funston Capital, LLC. We’re an investment company located in San Francisco, CA looking to acquire an already profitable and growing tech-enabled business. If you or anyone you know is interested in selling a business, please reach out to me at alex@funstoncap.com!
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