Funston Brief (Issue No. 3)
This month, our featured stories dive into Elon Musk’s acquisition of Twitter as well as introduce a number of lessons that CEOs can implement in their companies.
Elon Musk’s takeover of Twitter could possibly be the tech industry’s buyout of the decade. In spite of it being approved by the Board of Directors, the acquisition continues to raise more questions. Most importantly, will founder Jack Dorsey stick around? Apparently not. And how is Musk going to cover the $21 billion equity portion of the transaction that he’s personally guaranteed? The fine print indicates that Musk has pledged $62.5 billion as collateral - five times the $12.5 billion margin loan on his Tesla shares.
Twitter has been a badly run company for a very long time, and that’s reflected in its finances but more importantly in the products and the experience. Although Elon has not, so far, publicly shown a very clear or convincing vision for what exactly he would do better at Twitter, he has already lined up a new chief executive, according to Reuters sources, as well as discussed job cuts as part of his pitch to the banks. Musk also mentioned features to grow business revenue, including new ways to make money out of tweets that contain important information or go viral, and he brought up charging a fee when a third-party website wants to quote or embed a tweet from verified individuals or organizations.
Undoubtedly, Twitter’s network holds massive information value that, with better curation, could yield a better monetization. In a recent essay, Back to the Future of Twitter, Ben Thompson separates Twitter into two entities: Twitter Service, which would manage the data and social graph, and Twitter User Interface (UI). To unlock Twitter’s full potential, third-party developers should be able to build their own user experiences, algorithms, and designs. We’ll see what the future holds for Twitter and Musk.
Is your capital strategy ready? The world will see a once-in-a-lifetime wave of capital spending on physical assets between now and 2027. This surge of investment - amounting to roughly $130 trillion - will flood into projects to decarbonize and renew critical infrastructure. However, few organizations are prepared to deliver on this capital influx with the speed and efficiency it demands.
Key Insight: A surge of investment in hard assets will pressure already strained supply chains and project delivery systems. CEOs who transform their capital strategy fast may win a competitive edge. Link
A new way to grow your DTC store: Amazon now offers a ‘Pay with Prime’ button for e-commerce retailers, leveraging the existing user base and taking on alternatives such as Shopify’s Shop Pay and Apple Pay.
Key insight: Shopify has been trying to build network effects to keep merchants on the platform and its Shop Pay effort is a big part of that. Amazon’s new button leverages its bigger network, while simultaneously extending the reach and value of Prime. Link
EAR TO THE GROUND.
Guest: David Rubenstein
In this episode of Invest like the best podcast Patrick O’Shaughnessy, CEO of O'Shaughnessy Asset Management, interviews David Rubenstein, the co-founder of The Carlyle Group and author of the book How to Lead: Wisdom from the World's Greatest CEOs, Founders, and Game Changers. In this episode, David goes over his approach to building Carlyle, the most valuable lessons he learned from some of the world's greatest leaders, and why he places such importance on history, writing, and giving back.
“Number one, have a vision of what you want to do. Second, you got to persist. Because whatever you say you want to do, there'll be inevitable resistance to it. And then, at some point in your career, as you're persisting, or maybe before you started this new idea, you have to fail. You have to learn what it means to be a failure. Failing earlier is better than failing later. You also have to know how to communicate with people.”
- David Rubenstein, Co-Chairman of The Carlyle Group, speaking on the most basic ingredients in any leadership recipe
Amazon has published its first annual shareholder letter under the new CEO, Andy Jassy. An interesting stat shows that Amazon now has 260,000 drivers. Link
Mike Cannon-Brooks, co-founder and co-CEO of Atlassian, discusses his insights on running a distributed company, entrepreneurship, leadership style, and building one of the most remarkable companies in the world of technology - all far away from Silicon Valley. Enjoy!
“In my mind, Atlassian’s business was built by a couple of twenty-five-year-olds who had no experience. Because I inherently trust young, inexperienced people to do amazing things, I strive to ensure that the organization embraces that by putting them in big jobs.”
ON MY RADAR.
On April 21st, Amazon announced the launch of the Amazon Industrial Innovation Fund, a $1B venture fund to spur supply chain, logistics, and fulfillment innovation. Its first 5 investments have a heavy dose of robotics, as well as a focus on inventory management and wearables to prevent musculoskeletal issues. The supply chain & logistics technology market continues to garner interest due to sustained disruptions from the pandemic, global unrest, and more. Link
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 email@example.com!
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