Business Breakdowns

This is Zack Fuss, an investor at Irenic Capital. Today, I’m joined by Matt Newberg of HNGRY to help us break down DoorDash, the popular food delivery service. DoorDash was founded in 2013 by 4 Stanford students who saw an opportunity to make it easier for people to get the food they love delivered to them. Today, DoorDash’s three-sided marketplace serves as one of the largest local delivery companies in the world. It serves millions of customers and partners with hundreds of thousands of restaurants across 27 countries, run-rating at over $50 bn of gross merchandise value. We will discuss how DoorDash is working to build the infrastructure for local commerce; expanding its offering beyond restaurants, introducing a vertically owned convenience channel, ghost kitchens, and advertising to build a durable competitive advantage and work towards a sustainably profitable business model. We hope you enjoy this breakdown of DoorDash.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:02:52] - [First question] - The size and scale of DoorDash and the industry today 

[00:04:35] - Early growth and business history

[00:08:33] - Unit economics of a DoorDash order

[00:11:37] - Creative ways DoorDash is maintaining margins and driving growth

[00:13:33] - Optimizing delivery operations to minimize overhead

[00:16:45] - White-labeling versus first-party logistics

[00:20:03] - How restaurants maintain their own margins and customers while using DoorDash

[00:23:04] - Overview of their recruitment and labor model for delivery drivers

[00:24:36] - Implications of new legislation treating delivery drivers as employees

[00:27:51] - Positive and negative impacts of DashMart, ghost kitchens, and automation

[00:30:53] - The importance of ghost kitchens and how they work

[00:36:23] - Automation and its role at DoorDash

[00:39:15] - Virtual brands in the restaurant industry

[00:43:18] - Advertising sales models on DoorDash and similar apps

[00:45:20] - What ads look like on these apps

[00:46:22] - How grocery store profits from slotting fees translate to delivery

[00:47:33] - Main takeaways from studying DoorDash as a business

This is Matt Reustle, and today we are breaking down the specialty retailer, Floor & Decor. Now prior to this Breakdown, I cannot say that I thought much about Floor & Decor. It felt like the stereotypical specialty store that sat somewhere between a mom-and-pop shop and a home improvement giant. Little did I know....Floor & Decor had compounded revenue at nearly 30% over the past decade, and it was another business driven by the things you "don't see," like an inventory and logistics strategy that feels proper for a brick-and-mortar business in the 21st century. To break down Floor & Decor, I am joined by Drew Cohen of Speedwell Research. I hope you enjoy the episode.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:02:54] - [First question] - The origin story of Floor & Decor 

[00:04:41] - Size of the flooring market and the ongoing battle between hard surface and carpet flooring

[00:07:26] - A shift in ownership in 2009 and how much that changed the business

[00:08:08] - High level overview of the business today writ large

[00:09:30] - Independent players and their competitive landscape 

[00:12:34] - Unique differentiators that give them a competitive advantage 

[00:15:42] - Their customer split between pros and DIY consumers

[00:16:30] - Key drivers that allow them to leverage their position with inventory providers

[00:18:46] - Whether or not they’ve considered doing private label or in house products

[00:19:45] - Their store model from top to bottom and the economics involved 

[00:22:03] - What their maturity looks like and what metrics they’re watching 

[00:22:46] - Existing commercial opportunities for Floor and Decor

[00:26:04] - Overview of their earnings profile from a bottom line perspective 

[00:27:05] - The Home Depot: The Pro Builder’s Choice; Drivers of their 500 basis point differential in terms of their mature margin profile

[00:29:17] - Nick Sleep’s 2005 Letter; Considerations about franchising 

[00:29:48] - How he thinks about growth beyond their existing footprint and potential growth impacts from the economy 

[00:32:06] - The level of revenue generated from the Decor side of their business

[00:33:02] - How ecommerce might impact their growth, if at all 

[00:35:44] - Overview of their good, better, best pricing strategy 

[00:37:56] - Variance of store level performance from region to region 

[00:39:20] - The chemistry of all their strategies that contribute to sustained growth 

[00:41:37] - The general investment sentiment around their brand  

[00:44:37] - Other potential risks to Floor and Decor 

[00:45:48] - The Secret of our Success

[00:47:24] - Key lessons for investors when studying Floor and Decor

This is Jesse Pujji and today we're breaking down Netflix, the pioneer in entertainment streaming. Founded in 1997, Netflix has evolved over the years to become the leader in streaming entertainment with over 200m subscribers globally.

To break down Netflix, I'm joined by Ben Weiss, the Chief Investment Officer of 8th & Jackson. In this breakdown, we go into detail on Netflix, from their culture and tech advantages to how content drives the business to how they may start generating substantial free cash flow in the future. Please enjoy this Business Breakdown of Netflix.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:02:14] - [First question] - What Netflix is and their size and scale today

[00:03:49] - What portion of their content is original versus pre-existing licensed content

[00:05:01] - Netflix’s founding story and the three stages of their evolution 

[00:07:06] - Their culture and leadership from an investor’s perspective

[00:08:50] - Examples of courageous decisions Reed Hastings made 

[00:10:08] - Overview of the streaming market and how it’s impacted Netflix

[00:11:28] - How to think about the competitive landscape as it exists today  

[00:15:36] - Overview of their P&L starting from revenue and working down to EBITDA

[00:17:51] - Thoughts about unit economics and customer churn 

[00:20:28] - Evaluating how much pricing power they have 

[00:22:47] - How much headroom there is in the US for incremental subscription growth 

[00:25:43] - Other big revenue drivers and potential opportunities to sustain their trajectory 

[00:27:21] - The impact on Netflix’s churn rate when Disney Plus launched 

[00:28:31] - Capital allocation and profits spent producing original content 

[00:31:25] - Content spend compared to their competitors and the economics of licensing existing content 

[00:36:09] - Noteworthy numbers and strategies when it comes to marketing 

[00:38:19] - R&D spend and technology advantages that Netflix has

[00:45:34] - Other unique aspects about Netflix that are worth mentioning  

[00:46:44] - The bull case for Netflix and what would allow for their continued success

[00:49:54] - The biggest risks for Netflix and the bear case for the business 

[00:51:12] - Lessons for builders and investors when studying Netflix’s story

[00:55:10] - Where to go to learn more about Netflix

This is Matt Reustle and today we are breaking down the giant alternative asset manager, Brookfield. Today Brookfield boasts $750bn in assets under management, and it’s a global footprint that includes many noteworthy office buildings and key infrastructure assets. To break down Brookfield, I’m joined by Nima Shayegh from Rumi Capital Partners. We cover Brookfield's powerful history, the evolutionary changes in the operating structure, and what separates Brookfield from other big managers. We started with Blackstone, we covered Vanguard, and now we hope you enjoy this breakdown of Brookfield.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:02:19] - [First question] - The size and scale of Brookfield and what they do

[00:04:52] - How they invest through their balance sheet

[00:06:54] - How Brookfield achieved the scale it has today 

[00:10:36] - What differentiates Brookfield from their competitors in alternative assets

[00:14:31] - Their unique employee compensation strategy  

[00:18:19] - The various segments of their business that helped them achieve their scale

[00:21:05] - Breaking down the economic structure of their revenue streams

[00:25:50] - Percentage of revenue generated by performance and management fees

[00:27:13] - Complex corporate structure and getting comfortable with it as an investor

[00:29:33] - Overview of their ownership structure and its prior scrutiny 

[00:32:32] - Brookfield’s philosophy on debt writ large 

[00:36:04] - Their strategy and approach to capital allocation

[00:40:11] - Important growth metrics they track most closely 

[00:45:57] - Insights and benefits behind merging with other alternative managers

[00:47:23] - How interest rates impact an asset manager like Brookfield

[00:50:12] - Correlation between rising inflation and dividend stock selloffs 

[00:52:38] - Other major risks that might pose a threat to Brookfield’s growth  

[00:53:51] - Major lessons from intimately studying Brookfield 

This is Dom Cooke and today we’re breaking down Harvard Business Publishing. The media arm of Harvard’s world-famous business school was founded in the early 90s, but the seeds were sown a century ago, in 1922, when the first edition of the Harvard Business Review was printed.

100 years on, this secretive business has been through significant change. But the roots of influencing managers through academic research remain firmly intact. And despite its not-for-profit status, Harvard Business Publishing generates an impressive and growing income stream for its parent institution. To explore the business, I’m joined by our Colossus CEO, Matt Reustle. Please enjoy this breakdown of Harvard Business Publishing.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:02:19] - [First question] - A one hundred year old business that no one will talk about on the record, and their size and scale today 

[00:04:54] - The history of the business from the 1920s leading up to today 

[00:07:49] - What happened in the 90s and how that changed the trajectory of HBP

[00:09:24] - Changes over the past twenty years given the decline of print media 

[00:14:08] - Detailed overview of HBP’s business model and offering case study access to the public

[00:21:19] - What else is published by them and how they monetize those offerings

[00:25:05] - How they interact with their parent groups, who owns them, and their relationship with them  

[00:28:24] - Who reads the content they publish and who their customer base is

[00:30:05] - Which brand is more influential to which business and thoughts on their brand overall

[00:35:59] - When they first put up a paywall for their content and how successful it was 

[00:39:24] - Anything they’ve done from a tech perspective that’s unique and noteworthy 

[00:41:27] - Factors that will contribute to their continual future growth  

[00:42:54] - Potential risks to Harvard Business Publishing in the years ahead 

[00:47:48] - What Matt’s learned from studying HBP so closely for this episode

This is Zack Fuss, an investor at Irenic Capital, and today we’re breaking down Vanguard. Vanguard and its founder, Jack Bogle, have ushered in an era of low-cost investment, which has left its mark on the entire industry. Today, the business commands $7.5 trillion of assets under management and owns approximately 8.5% of any given public company in the US. To break down Vanguard, I’m joined by Eric Balchunas, a senior ETF analyst at Bloomberg and author of The Bogle Effect. We explore the firm’s unique ownership structure, which in large part enabled its success, look at the potential for regulation to slow Vanguard down, and assess the unique figure that founded the business, Jack Bogle. Please enjoy this breakdown of Vanguard.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:02:24] - [First question] - The size and scale of Vanguard as it exists today 

[00:05:45] - Some of the secular forces that has allowed Vanguard to capture so much of the market

[00:09:04] - How Vanguard generates revenue and thoughts on its ownership structure

[00:12:36] - What the fee structure would look like as an investor buying an ETF versus a fund

[00:15:10] - The key differences of investing in a Vanguard ETF compared to a mutual fund 

[00:18:20] - Market share of the key players and the industry landscape

[00:21:24] - How big of a player ARK is in relation to how much media coverage they get

[00:22:33] - Jack Bogle’s history, his thesis on mutual funds, and starting Vanguard 

[00:28:07] - What it was like transitioning to new leadership given Jack’s fans and supporters 

[00:32:10] - The thing that allows Vanguard to attract more funds despite their competitors 

[00:35:58] - Complimentary services their competitors are offering that Vanguard is considering to capture more market share

[00:42:59] - Potential regulatory risk that could pose a threat to Vanguard’s growth 

[00:47:27] - How Vanguard has managed to avoid headlines unlike Blackrock

[00:48:56] - The lessons for investors and builders when studying Vanguard’s story  

This is Matt Reustle and today we are breaking down the home improvement giant, The Home Depot. In the US, The Home Depot is a key ingredient to a nice little Saturday but beyond the power tools and building supplies is an excellent story of business execution. Why has Home Depot been such a strong performer following a housing crash in the e-commerce revolution? I’m joined by Sean Stannard-Stockton of Ensemble Capital to break that down. We cover how Home Depot transitioned their approach to business, from customer focus to capital allocation, and while Home Depot has reported strong earnings growth over the past decade, and beyond that, this isn't a simple story about a growing footprint. Please enjoy this breakdown of The Home Depot.

Don’t miss our first written Breakdown. David Kim from scuttleblurb joined us to break down the best in class trucking business, Old Dominion Freight Line. You can read the interview here.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:03:10] - [First question] - What the customer strategy is for Home Depot and how it differs from Lowe’s

[00:05:28] - How the sales process works for a pro versus a DIY builder 

[00:07:38] - The size of the addressable market and how much of it Home Depot controls

[00:08:47] - Home Depot’s history and its role in developing and growing their industry 

[00:11:39] - When Home Depot was founded and their original go-to-market strategy 

[00:13:38] - What drove their decision to stop expanding stores and honing their offering

[00:14:56] - Their revenue model and growth over time and the correlation between revenue and the housing market 

[00:18:10] - How much revenue growth can be traced to in-store traffic and what’s driving it

[00:21:55] - Overview of their economic model as a whole

[00:23:42] - Their earnings profile and overall leverage compared to Lowe’s 

[00:24:54] - How they position themselves for more of their business to be done online and thoughts on their CAPEX budget

[00:27:56] - Who Home Depot purchases from and how they navigated the pandemic

[00:37:09] - Thoughts about Home Depot’s growth over the next three to five years

[00:41:40] - How much historically there has been a growth lag after bubbles and crashes 

[00:44:12] - Whether or not new home purchases and refinancing during the pandemic might impact Home Depot’s trajectory

[00:47:27] - Thoughts on Amazon potentially becoming a competitive threat

[00:49:37] - Other risks that are top of mind when thinking about Home Depot’s future

[00:53:51] - Lessons for investors and builders when studying Home Depot’s story

This is Jesse Pujji and today we’re breaking down Cameo, a video-sharing marketplace where you can buy personalized videos from your favorite celebrities. Cameo was founded in 2016 and reached unicorn status last year after producing millions of messages since its founding.

To breakdown Cameo, I'm joined by the company’s CEO and Founder, Steven Galanis. In this breakdown, we discuss the unusual origin story of the business, how they manage the two-sided marketplace, and discovering a scalable pricing model. Please enjoy this business breakdown of Cameo.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:02:51] - [First question] - What Cameo is and their size and scale today

[00:03:51] - An overview of Cameo’s value proposition for creators and customers

[00:05:28] - The most common events tied to someone wanting a Cameo  

[00:07:15] - Case study of a creator making Cameo a meaningful income source

[00:09:10] - The early inspiration for the idea that eventually became Cameo  

[00:11:46] - Biggest differences between Cameo today and its original form  

[00:13:26] - What the competitive landscape looks like today in this space

[00:14:51] - How they compete and what makes them defensible 

[00:16:44] - The potential market size for this type of business and the supply side

[00:19:01] - Describing their business model from a high viewpoint  

[00:21:55] - Managing the supply side and the metrics used to do so 

[00:24:15] - Important data points to consider for customer acquisition

[00:27:09] - Interesting supply and demand dynamics that drive each other

[00:29:01] - Thoughts about customer retention and expanding Cameo’s use cases

[00:30:35] - Important sub drivers of pricing and how it affects the business and demand

[00:34:43] - How the B2B side of the business has evolved and its overall potential

[00:37:41] - Growth levers inside the core marketplace and new initiatives 

[00:39:08] - Overview of overhead, costs, and their revenue model 

[00:40:29] - The Represent acquisition and philosophy of M&A

[00:43:28] - A tendency to have legends who’ve retired joining the platform

[00:44:56] - What would contribute to an explosive future for Cameo’s trajectory in ten years

[00:47:18] - The biggest potential risks to Cameo as a business

[00:48:40] - Thoughts about brand in terms of building Cameo’s industry presence   

[00:50:04] - Competing with OnlyFans and how brand plays a role in that 

[00:51:46] - Lessons for builders and investors when studying Cameo’s story  

[00:54:42] - Where to go to learn more about Cameo and talent marketplaces 

This is Zack Fuss, an investor at Irenic Capital, and today we’re breaking down Archaea Energy. Archaea is one of the largest and fastest growing providers of renewable natural gas in the US. The company uses methane produced by landfills as its feedstock to create renewable electricity and natural gas.

To break down Archaea, I’m joined by Chadd Garcia. Chadd is lead portfolio manager of the Ave Maria Focused Fund and co-portfolio manager of the Ave Maria Growth Fund.

You may have seen Archaea in the news this week. On Monday morning, BP announced a deal to buy Archaea for $4.1 billion US. We recorded on Friday before this news broke. The bulk of our discussion, therefore, does not touch on BP. It serves as an explanation for what BP has bought and why they found it to be an attractive asset. At the end of our conversation, we asked Chadd for his quick reaction to the news. Please enjoy this business breakdown of Archaea Energy.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:02:59] - [First question] - Defining landfill gas and its historic and current state

[00:05:50] - What Archaea is, their business scale, and economic profile

[00:07:44] - The waste hauling value chain and how money is made in the ecosystem 

[00:11:33] - How Archaea takes something that’s perceived to be worthless and profits from it

[00:15:47] - The way the company is organized to capture and capitalize on this opportunity set

[00:17:56] - How much visibility they have into their future earnings

[00:19:04] - The renewable fuel standard and how revenue is derived from it 

[00:20:10] - Explaining how you produce renewable natural gas from a landfill

[00:24:52] - The unit economics of a single Archaea landfill to gas site 

[00:25:40] - How much capital can be deployed into one of their projects

[00:26:45] - What differentiates and makes Archaea defensible from private equity companies 

[00:27:51] - The history of the company, how it was founded, and its major players

[00:29:57] - Thoughts about the size of the untapped opportunity in this sector

[00:31:57] - Where is Europe in doing something comparable to this 

[00:32:59] - Free cash flow conversion and financing requirements

[00:34:18] - The current state of the competitive landscape   

[00:37:37] - The key risks for a business like Archaea

[00:40:30] - Lessons learned from studying Archaea from an investor’s and operator’s perspective

[00:43:02] - His reaction to the news of Archaea being purchased 

Today’s Breakdown is a little different. For one, I’m Ali Hamed, an investor at Crossbeam and CoVenture, and I’ll be your host. Secondly, in this conversation, we are studying a private company that you’re unlikely to have heard of. That business is Spotter, and they play a fascinating role in the flourishing creator economy. Specifically, they provide capital and knowledge to a number of the world’s most influential creators, including Mr Beast. So in the process of discussing Spotter, we will also dive into the inner workings of YouTube and their creator platform.

To break down Spotter, I’m joined by their CEO, Aaron DeBevoise. Aaron has spent his career at the intersection of entrepreneurship, investing, and digital content. I’ve worked with Aaron for a number of years and learned a ton about this ecosystem from him. Please enjoy this Business Breakdown of Spotter. 

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt

Show Notes

[00:02:52] - [First question] - How the YouTube ecosystem became what it is today

[00:05:52] - The transition from mobile to professional television quality content

[00:08:58] - How advertising on YouTube works and generates revenue for its creators 

[00:11:47] - The moment YouTube had to differentiate themselves from Google’s ad auction

[00:13:20] - How the pandemic has accelerated the pace of their ad revenue 

[00:16:19] - Why YouTube nailed monetization in a way that other platforms haven’t 

[00:18:53] - His background and how he came to learn so much about YouTube

[00:22:57] - Capital deployed and projects financed so far in the YouTube ecosystem

[00:25:13] - Overview of the main ways to fund a YouTube creator 

[00:27:30] - Thoughts on pricing and his risk reward perspective

[00:30:49] - The breadth of uses for proceeds when creators invest in their brands

[00:36:42] - What ad optimization and asset management means in this asset class

[00:38:48] - The order of magnitude people are willing to pay for premium content

[00:40:06] - Where the barriers to entry are that make Spotter so defensible

[00:45:06] - The future of YouTube in the next five to ten years

[00:47:03] - Something he used to believe about YouTube that has changed