I think most of the readers of this newsletter are in the position of being able to think at least a couple of years into the future. As far as I know, if someone can subscribe to a newsletter which offers zero get-rich-quick schemes then I can assume the readers are not living paycheck-to-paycheck.
Viewing things relative to time is interesting. After reading this newsletter by @LibertyRPF (well worth a subscription), I realized how I am benefitting from my past actions – the investments, relationships, books, yoga etc.
It’s interesting if I look 1-2 years into the future. It seems already planned out to a large extent. There are things that I have in the calendar – meetings, events, holidays, work weeks, exercise etc.
What’s interesting for me this week is to think 5-10 years ahead and see what versions of future me I would be most happy with, and then try to increase the odds of getting to those various nirvanas. Of course, nothing is for certain, and fate can be cruel to anyone at any time. But I would still say that the benefit of doing something like daily exercise or coffee meetings with people I find interesting far outweighs potential costs. Additionally, things like travel are not only fun, but also eye-opening and educational. I’m glad that I get to do a bit of it this summer.
I think future me might be happy if I increase his optionality and choice of how to spend time. I also think he’d be happy if I minimize his future regrets. The next 1 year is probably administration and execution towards those various nirvanas that make future me happy, while also having some fun today and living a little. Tough job – but I can’t complain about my starting position.
Let’s see how future me ultimately grades present me. I hope he can be kind!
Wise Write-up
I really enjoyed this Net Interest post about Wise. The company (started as TransferWise) started with the mission of lowering international payment fees. The industry used to be an oligopoly of banks essentially ripping consumers off for billions in fees. The article talks about the history of Wise, the mission, as well as scaling opportunities – however, what I want to talk about is product.
Apparently Wise has a problem engaging users behind its product – even though it delivers huge savings to the consumer.
I checked the transfer fees for Wise versus Revolut before writing this note – and they are immense. On a transfer of $1000 to euros, I save around €12 – which is a major amount. The value passed onto me, the consumer, is clear. However, the product doesn’t really link to anything else. Therefore, I have no incentive to use it beyond one-off large FX transfers.
Competitors such as Revolut have already bolted on wealth management services, crypto, as well as sending me a credit card within 3 days of ordering it. Since I’m still a bit of an old-school consumer, the Revolut card has taken “front-of-wallet” position, meaning that other competing cards won’t be used as much. So even if I order a card today on Wise, it has almost zero utility to me unless they start offering rewards or cash-back to encourage usage.
Though Wise has huge value delivered to me versus other FX transfer options, it may not have much more to offer me that justifies a daily touchpoint with the app. It hasn’t become my go-to checking account - and probably won’t. Perhaps more aggressive product launches will be necessary for Wise to engage its users more actively.
Airbnb Host Churn
Last week I spent some time in Croatia with an Airbnb Superhost. I started thinking about what it would take to get Airbnb to retain its best hosts.
Some properties in Croatia have partial ownership schemes (like time shares) where guests book out a month in the year for 10-15 years – and pay upfront for the right in year 1. Following this model, hosts might use Airbnb as a customer acquisition platform and then sell past guests time shares on properties. As time shares on the property get sold for the next 10-15 years, reliance upon Airbnb as a platform decreases, especially if the host doesn’t reinvest into new properties. But given the time, effort, and trust needed to execute such a model, only the savviest hosts would bother with it.
Property insurance from Airbnb still incentivizes hosts to list on the platform – but what if over the long-term Airbnb’s fees (up to 14% - charged to guests, but still…) exceed the price of insurance? The more sophisticated hosts with good guest relationships might partially opt out of the platform, sourcing guests elsewhere, decreasing reliance upon Airbnb. Here’s a note about supply from the CFO:
Overall, Airbnb still has all the guests heading to its platform, and even though there might be some churn from sophisticated hosts, Airbnb still provides enormous value to property owners in the form of revenues and occupancy.
But the question remains. If the best hosts are able to market their property off-platform, and opt out of Airbnb piece-by-piece, does the platform become less valuable to guests – who (if like me) use Superhost as a filter when selecting a place to stay? After all, there is probably a very profitable, stable, cohort of guests who are willing to pay a higher price in exchange for a certain level of guaranteed comfort.
Time Horizon and 1000X Returns
This is a nice chart from Twitter (thanks @bkaellner) which illustrates the power of finding the right business and sticking with it. Sure, there is some survivorship bias in this. And if we were hitched to the wrong train, rather than these ones, there is every possibility that we could lose our shirts instead of cashing out big.
What’s interesting to me is that there are a few on the list which have gone up 5-10 times on me in the last decade. Great businesses can surprise to the upside with results – and the runway can stay attractive and long for decades.
Which businesses today do you think will populate this chart 40 years from now? I really hope I’m currently sitting on one or two of them…
Hey, thanks for reading and for the link! Cheers 💚 🥃