#4/2020

“Don’t worry about the level of individual prominence you have achieved; worry about the individuals you have helped become better people. Think about the metric by which your life will be judged, and make a resolution to live every day so that in the end, your life will be judged a success.”
• Clayton Christensen, RIP

Deals

99Math and 19-year-old co-founder raise $500,000 for edtech app based on e-sport gaming (tech.eu)
  • Tallinn, Estonia-based startup that created eSports style competitions for math students. Students face off in real-time math battles, complete with live viewers.
  • Co-founded by a 19-year-old Estonian recent high school grad and gaming lover, Timo Timmi, 99math has already had 30,000 elementary students from around the world participate in its eSports style math league.
  • I’ve met with Timo and we have decided not to invest due to not having clear monetization model, which is too risky for us, but I am a big fan of him.

OpenPhone grabs $2 million for its business phone number app (techcrunch.com)
  • The company is working on an app that lets you seamlessly get a business phone number without a second phone or a second SIM card.
  • It currently costs $10 per month per user. For that price, you get a local number, a toll-free number or you can port an existing phone number. You can then use that number for unlimited calls and texts in the U.S. and Canada.
  • Compared to out portfolio company Cloudtalk and other enterprise solutions, OpenPhone targets small and medium companies that want a mobile-first, easy-to-use solution to take advantage of a second phone number.

News

Casper Sleep IPO slipping over fact it doesn’t make its own mattresses (nypost.com)
  • The six-year-old D2C mattress startup slashed its expected valuation to less than $750 million well short of the $1.1 billion valuation it got in the last private funding round. Casper lost $67 million during the first nine months of last year on $312 million in revenue.
  • Their manufacturer got sold and now makes mattresses for direct competitors and industry incumbents.
  • Opinion: Casper is not performing very well financially and is now facing more competition (currently 175 online mattress companies) in an industry that does not have brand loyalty. It also has weak value proposition and I would expect the IPO to either be lowered or significantly under-perform.

Reading

Different Kinds of Easy (collaborativefund.com)
  • The cost of exercising is immediate. Exercise hurts while you’re doing it, and the harder the exercise the more the hurt. Investing is different. It has a cost, just like exercising. But its costs can be delayed by years.
  • Star analysts who switched employers on Wall Street paid a high price comparable to stars who stayed put: overall, their job performance plunged sharply and continued to suffer for at least five years. Several things could explain this. The big one is that success didn’t belong to the analyst to begin with.
  • The potential for temporary success by pure luck beguiles people into thinking that trading or investing is a lot easier than it is. If you have never trained as a surgeon, the probability of you performing successful brain surgery is zero.

Why Superstar Investors are a Dying Breed (evidenceinvestor.com)
  • Explanations why it is for active managers hard to generate alpha: The supply of victims that can be exploited has been persistently shrinking; The skill level of the competition is persistently increasing; and The supply of dollars chasing the shrinking supply of alpha has persistently increased.
  • In 1984 in a speech entitled “The Superinvestors of Graham-and-Doddsville” Warren Buffett identified funds Sequoia and Tweedy Browne Value as superstar funds.
  • In the most recent 15 years Sequoia has returned 7.9 percent per year, Tweedy Browne Value has returned 5.8 percent per year. Those are both less than 9.1 percent generated by a passive investing fund (Vanguard's Total Stock Market Fund).


   

In case you are interested in helping us with evaluating some companies and industries or you just want to discus any of these articles, feel free to reach out to Roman from Presto Ventures at roman@prestoventures.com or Linkedin.

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