Business Breakdowns

This is Matt Reustle and today we are breaking down Cadence Design Systems. Cadence operates in the semiconductor ecosystem where they offer electronic design automation software - also known as EDA software - which is used for chip design. Putting that in much simpler terms - our phones now carry an entire 1980s Radio Shack inside them, and Cadence makes that possible with software to design smaller and more powerful chips. 

To break down Cadence, I'm joined by two well-known tech investors and experts in the semiconductor space, Brinton Johns and Jon Bathgate of NZS Capital. We cover the value chain of semiconductors, the evolution of Cadence and the EDA market, and how Cadence reduced it's cyclical exposure over the last decade. I think some of the most interesting lessons come from businesses that face adversity and truly re-invent themselves with a micro-strategic change. Cadence is a prime example. Please enjoy this breakdown of Cadence.

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

Show Notes

[00:03:15] - [First question] - Everyday products that Cadence helps bring to life

[00:07:28] - The rise of Cadence and the origins of the semiconductor industry 

[00:10:26] - Major players in the semiconductor space back in the 80s 

[00:12:13] - Going from plan, to chip, to production

[00:16:58] - The life cycle of a chip and the cost to design one 

[00:19:19] - Differences between software design and embedded software 

[00:21:25] - The history of Cadence and the size and scope of their business today 

[00:28:05] - Existing customer base and how diversified they are

[00:30:55] - What a contract actually looks like between Cadence and a customer

[00:35:05] - Protection, off-the-shelf IP blocks and custom IP 

[00:35:53] - Cadence’s revenue growth, important metrics, and their KPIs

[00:37:03] - How correlated their revenue is to semiconductor cycles

[00:39:30] - Unit economics and the margin profile of the business

[00:42:13] - Contributing factors to growth and thoughts on pricing

[00:45:46] - Benefits of scale and what they like to see as investors from their R&D spend

[00:48:12] - Risks and competitors that may threaten Cadence’s success

[00:50:22] - Potential scenarios where the ecosystem becomes more vertically integrated

[00:52:56] - What would drive a 10x growth for Cadence in next five years

[00:54:58] - Things that would affect their growth in the next five years 

[00:57:38] - Lessons for investors when studying Cadence

[00:59:15] - How they navigated the pandemic and how it impacted their business

This is Jesse Pujji and today we’re breaking down The New York Times. Since its founding in 1851, The New York Times has become known as the national “newspaper of record” through its focus on truth seeking and quality journalism. To underline that status, it has won 132 Pulitzer Prizes, almost double its nearest competitor. However, the business behind the Times hasn’t always been easy and it has faced several existential threats over its history, most recent of which has come from the internet and digital mediums.

To break down The New York Times, I’m joined by Morning Brew co-founder and host of Founder’s Journal and Imposters podcasts, Alex Lieberman. It’s particularly interesting to hear a new media operator dissect the heritage and evolution of one of the most storied brands in his industry. Please enjoy this breakdown of The New York Times.

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

Show Notes

[00:02:55] - [First question] - What The New York Times is as a business

[00:04:35] - Snapshot of the scale of The New York Times and it’s readership

[00:08:06] - The origin story of The New York Times and becoming a national news source

[00:11:40] - How the business is distinctive being family-run for five generations

[00:15:00] - Unpacking the shift from physical to digital and how it impacted their numbers

[00:20:00] - Course correcting after the first few years of their digital strategy not succeeding as anticipated

[00:23:43] - The cost of sales and the margins of the business and growth levers

[00:27:47] - Revenue differences between advertising and subscriptions 

[00:29:37] - What does their non-digital advertising business look like

[00:31:43] - The biggest levers for growing the topline and bottomline of the business

[00:35:18] - Acquiring Wirecutter & historical M&A performance

[00:37:57] - Other categories and businesses that help build a bigger audience

[00:42:00] - Differences between the Netflix and New York Times subscription models

[00:44:37] - Leaning into world events and politics

[00:48:22] - Macro factors and specific things that would lead to reaching their subscriber goal in the future

[00:51:10] - Mistakes and threats that could negatively impact their goals

[00:55:43] - Biggest lessons for builders, entrepreneurs, executives and investors

[00:58:30] - Learn more about the New York Times; Peter Kafka, Rich Greenfield, Lightshed Partners

This is Matt Reustle, and today we’re breaking down Europe’s leading low-cost gym operator, Basic-Fit. Netherlands based Basic-Fit is a story of rapid expansion. Today, they operate over a 1000 clubs across 5 countries, and have 2 million combined members in their system.

To break down the business, I’m joined by Jonathan Abenaim from Arlen House Capital, who is an investor in Basic-Fit. We cover a history of fitness clubs dating back to the late 70’s and early 80’s, how low-cost gym models have emerged as winners and created a large addressable market, and we talk about how Basic-Fit is putting its own spin on a successful playbook from the US. Please enjoy this breakdown of Basic-Fit.

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

Show Notes

[00:02:47] - [First question] - What it’s like to walk into a Basic-Fit gym

[00:03:50] - Their footprint today in terms of geography, members and locations 

[00:04:41] - The history of gyms in the US and differences between them and European ones

[00:08:33] - Why US gym models lack influence and penetration in Europe

[00:10:58] - The key insight that led to founding Basic-Fit 

[00:13:40] - Economics of building and operating a gym in general and for Basic-Fit

[00:16:47] - Typical churn for more established locations and their member demographic

[00:20:33] - When Basic-Fit breaks even on a membership and how they battle churn

[00:23:28] - Their cancellation policy and why they don’t leave for typical reasons

[00:25:10] - Basic-Fit’s fortressing strategy and clustering philosophy

[00:28:51] - Whether or not there’s data to support members using multiple gyms 

[00:33:11] - The competitive landscape and whether other gyms adopt Basic-Fit’s strategy

[00:35:21] - What drives country localizations for a particular gym chain

[00:38:22] - Basic-Fit’s digital offering and at-home disruption from US brands 

[00:42:31] - How they navigated the pandemic and if there’s any lasting changes

[00:44:31] - The biggest threats to Basic-Fit over the next five years

[00:46:23] - Major takeaways from studying Basic-Fit’s story

I'm Zack Fuss and today we are breaking down UPS. With over 100 years of history, it's a business we all know as consumers and one many of us interact with on a daily basis. But in investing circles, UPS carries far less relevance and attention share despite its large market cap. To break down UPS and its rich history, I am joined by former Transport Analyst Matt Reustle. Please enjoy this breakdown of UPS.

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

Show Notes

[00:02:37] - [First question] - The footprint of UPS in the US economy

[00:04:11] - What relevant metrics analysts use to understand UPS’ value

[00:06:57] - How logistics networks work and operating leverage on their fixed assets

[00:10:43] - UPS’ origin story and key differences between it, Amazon, and FedEx

[00:18:24] - Whether or not Amazon is consuming the market or if the market is growing

[00:22:20] - Decreased return on capital and the roadmap to increase returns going forward

[00:25:14] - Making a decision to lean into their network and what it meant for their customers

[00:27:33] - The importance of management and needing outsider management

[00:31:40] - Capital investment programs and what Amazon’s growth means for UPS

[00:34:41] - Secular changes versus historical cyclicality of fulfillment businesses

[00:36:35] - Competitive impacts Amazon and USPS could have on UPS’ future success

[00:42:26] - Why cross-border delivery is such a lucrative aspect of this market

[00:42:51] - Lessons for investors and builders when studying UPS’ story

I’m Zack Fuss, and today we are breaking down Twitter, a business that needs little introduction. Founded by Jack Dorsey in 2006, Twitter has become one of the most visited and influential platforms in the world. Yet, despite its rising social status, investors and users have been left frustrated by the company’s pace of innovation and shareholder returns. To help me break down Twitter’s business, I’m joined by anonymous professional investor, @Compound248. Please enjoy this breakdown of Twitter.

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

Show Notes

[00:02:40] - [First question] - The history of Twitter and where we are today

[00:10:44] - The size and scope of Twitter and what drives their business and unit economics

[00:18:54] - Reconciling differences between Twitter and competitive social media platforms

[00:24:36] - Bridging the gap between Twitter and their competitors

[00:29:38] - What about their legacy system had to be rebuilt in order to grow again

[00:34:35] - Unique shareholder dynamics, activists in the boardroom, and leadership change; Compound's open letter to Management

[00:43:35] - Capital allocation and how investment analysts look at and measure their ROI

[00:49:00] - Efforts to innovate around new use cases and Twitter’s opportunity set

[00:55:30] - What builders and investors can learn from studying Twitter’s story 

This is Jesse Pujji and today we are breaking down ViacomCBS. This episode has a different format - you'll hear from both an investor and from company management.

Chris Marangi from Gabelli Asset Management starts us off with a history of ViacomCBS. He goes deep into the dynamics of content creation, curation, and distribution, hitting home the value of IP. Then he helps break down how ViacomCBS is transitioning from a shrinking linear business to a growing streaming business.

Next, I sit down with the CFO of ViacomCBS, Naveen Chopra. He shares his views on the business today, how he thinks about capital allocation, and how streaming will evolve for ViacomCBS. Please enjoy this Business Breakdown.

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

Show Notes - Pt 1 with Chris Marangi

[00:03:31] - [First question] - What is ViacomCBS

[00:04:10] - What a typical media conglomerate looks like

[00:06:45] - The scale and size of ViacomCBS today 

[00:09:03] - Starting as a radio business and becoming a diversified conglomerate

[00:11:25] - What the competitive landscape looked like fifteen years ago 

[00:14:07] - Economics of a typical cable network channel like ESPN or MTV

[00:16:23] - Key differentiators between a good and a bad channel revenue-wise

[00:17:22] - The important roles movies play and how the film industry works writ large

[00:18:12] - Durable competitive advantages in producing strong content 

[00:19:26] - How much of their market cap is their catalog

[00:20:04] - Adopting a streaming model and the impact of this inflection point

[00:24:33] - Thoughts on customer acquisition in movies and streaming services

[00:25:33] - What has to go right for their market cap to double in the next decade

[00:27:55] - What will have gone wrong if they don’t grow over the next decade

[00:28:26] - Lessons for entrepreneurs and investors when studying ViacomCBS’s story

[00:29:33] - Learn more about ViacomCBS and the cable industry; Cable Cowboy

Pt 2 with Naveen Chopra

[00:30:27] - [First question] - Overview of the different businesses within ViacomCBS

[00:34:07] - Size of the broadcast arm of ViacomCBS’s business and the costs of running it

[00:37:23] - How wide the range of content expenses can be 

[00:39:35] - Thoughts on making movies and the business model pre-pandemic

[00:42:47] - Is the box office opening night really that important?

[00:44:40] - How much box office attendance is down post-pandemic

[00:46:19] - Same day releases for streaming and box office can help acquire subscribers

[00:51:45] - Leveraging intellectual property to generate revenue

[00:53:23] - How much Netflix invests in content compared to ViacomCBS and competitors

[00:54:11] - Thoughts on the business model for streaming service revenue

[00:58:01] - Scaling Paramount+ to compete and compensate for pandemic impacts

[01:02:16] - What he’s most excited about for ViacomCBS and Paramount+ looking forward

[01:06:00] - Things in the macro-environment that could be good and bad for ViacomCBS

[01:07:54] - Lessons for entrepreneurs and investors when studying ViacomCBS’s story

This is Jesse Pujji, and today we’re breaking down Peloton. Peloton was founded over ten years ago with the idea of making the best in-person gym classes available at home. By delivering eye-catching hardware and compelling content, it has since become the largest interactive fitness platform in the world with over 6 million members. Peloton’s rise has not been without challenges, however, and the business’s economic model is under debate as we speak.

To break down Peloton, I’m joined by my brother Vinny Pujji, partner at Left Lane Capital, a growth-stage investment firm focused on consumer businesses. We discuss Peloton’s success in creating a new fitness category, the impact of the pandemic on its financials, and why it may make sense for Peloton to build its own music label. Please enjoy this breakdown of Peloton.

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

Show Notes

[00:03:37] - [First question] - What Peloton is and what they do

[00:04:59] - How most consumers experience their brand

[00:05:40] - Their customer base and the size of their business today

[00:06:22] - The founding story and what lead to Peloton 

[00:10:10] - What business they started with and how they’ve expanded their offerings

[00:12:03] - Complexities of direct to consumer hardware distribution

[00:13:01] - Scope of the global fitness and wellness market writ large

[00:14:42] - Unit economics of Peloton’s business

[00:19:03] - Contributing factors that draw on their cash and working capital 

[00:22:46] - What would solve their current liquidity problem

[00:25:11] - Their latest treadmill product and their subscription product

[00:26:22] - Thoughts on why management has struggled with their forecasts

[00:29:44] - The competitive landscape as it exists today and how they compete

[00:33:16] - Whether or not Peloton will experience a boom and bust cycle

[00:35:18] - What Peloton does very well that separates them from their competitors

[00:36:52] - Gamifying fitness and incorporating a live feature

[00:38:59] - How music plays into their business and its role in their future 

[00:41:45] - Whether they are a subscription or hardware business

[00:43:59] - What has to go right in order to scale their market cap in the next decade

[00:45:08] - Their approach to marketing and what drives their engine

[00:47:17] - What will have gone wrong if Peloton doesn’t survive the coming decade

[00:50:28] - What can we learn from Peloton

This is Jesse Pujji and today we are breaking down the emerging industry of cannabis. After spending decades as an illegal drug, US states have begun to make regulatory changes and build legalized marijuana marketplaces. To help me break down this market, I am joined by Jeff Hoffman of Marathon Partners Equity Management. Jeff is co-portfolio manager of a fund, which invests in US public cannabis companies. We discuss exactly what those regulatory changes look like, the difference between federal and state laws, and companies across the value chain that are showing up in public markets. I hope you enjoy this breakdown.

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

Show Notes

[00:03:40] - [First question] - What is cannabis and the current size of the industry today

[00:05:44] - Differentiating between THC and CBD 

[00:06:46] - Whether or not the whole market is growing writ large

[00:08:08] - The history of cannabis, the changing legal landscape, and key players today

[00:10:51] - What the argument was for making cannabis a schedule 1 narcotic

[00:11:48] - Is cannabis addictive, objectively speaking?

[00:13:27] - The differing levels of when cannabis is or isn’t legal 

[00:14:05] - Overview of the value chain involved in getting cannabis to a dispensary

[00:15:18] - What an MSO is, how their operations work, and the marketplace today

[00:20:31] - Regulatory catalysts that would allow this market to thrive

[00:23:19] - The income statement of an MSO, their expenses, and how they differ from traditional businesses

[00:26:44] - Different business models for MSOs depending on their geography 

[00:29:31] - How the economics of MSOs compare to mom and pop shops 

[00:31:30] - Normalizing margins and incentives to compete on price or participate in discount wars

[00:33:48] - D2C, mobile-first, and delivery trends influencing distribution

[00:35:53] - Whether or not cannabis is considered perishable 

[00:36:43] - How the finance industry is evolving around cannabis 

[00:38:44] - The role COVID played in helping the cannabis industry grow

[00:41:03] - Will cannabis see a pullback in public interest as the world returns to normal

[00:42:25] - Form factors to consider as the industry shifts from medical to mature markets

[00:44:20] - What will have to happen for the cannabis market to excel in the coming decade

[00:47:07] - How M&A might play out as the market continues to evolve

[00:49:06] - Lessons for builders when it comes to the cannabis industry

[00:51:54] - Learn more about the cannabis industry; marijuanamoment.net

Today’s episode is part business breakdown and part biology breakdown as we explore Finch Therapeutics and their novel work on the microbiome, which plays a crucial role in regulating our immune system.

To help break down these topics, I’m joined by Mark Smith, co-founder and CEO of Finch Therapeutics. Mark is a leader in the microbiome field and the perfect person to cross the bridge between business and science.

As Mark outlines, we’ve made a lot of progress in living longer, but we are yet to make significant steps to living better. In our discussion, we explore what the microbiome is, why it’s so important, and the role that Finch plays in helping patients transform their lives. We then turn to the business side of developing therapeutics drugs and what Mark has learned there.

Please enjoy this breakdown of Finch Therapeutics.

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

Show Notes

[00:02:55] - [First question] - What is the microbiome?

[00:04:56] - Where the microbiome is inside the body

[00:06:42] - Overview of what bacteria is in general terms and what they do for us

[00:10:44] - What would happen to a human that didn’t have any bacteria

[00:13:29] - Inflammatory auto-immune diseases and widespread antibiotics

[00:14:32] - How seasonal allergies and gut bacteria are related

[00:16:32] - Key contributors that have led to our current understanding of the microbiome

[00:18:48] - Whether an absence or dominance of bacteria is more concerning

[00:20:47] - The state of stool sample diagnostics today

[00:22:52] - Tools available today for widespread microbial treatment and repair

[00:24:48] - The science behind probiotics and whether or not they’re worth it

[00:27:00] - Fecal transplants and supporting empirical evidence of their efficacy

[00:31:39] - Addressable conditions that Finch Therapeutics seeks to solve

[00:35:27] - What the end game looks like and the timeline to achieve it

[00:40:05] - Is there a future where we use these therapeutics preventatively?

[00:41:22] - Key risks that could threaten the growth of Finch in the coming decade

[00:43:10] - What it’s been like running a company that is so different than its competitors

[00:45:51] - Whether or not the regulatory and iterative pace of therapeutics will increase

[00:48:19] - How much his lifestyle has changed given what he knows now in this field

[00:50:50] - Other innovations taking place in the microbiome and related therapeutics

[00:52:28] - What most has his attention outside of his field in health science today

[00:53:24] - Learn more about the microbiome; I Contain Multitudes (book)

[00:53:42] - The kindest thing anyone has ever done for him

Today, we’ll be breaking down the London Stock Exchange, now referred to as LSEG. LSEG is a nearly £40 billion market cap business that plays an integral role in the infrastructure of the world’s financial markets. Since 2000, there have been at least 11 attempts at mergers and takeovers of the business by other exchanges and banks. The company itself made a notable acquisition when it closed on its M&A of Refinitiv from Blackstone in January of this year. The company offers a wide range of services, financial markets, and data exchanges, which make it an essential player in the world’s markets.

To break down the business, Zack Fuss is joined by Nick Shenton of Artemis, a UK-based fund manager.

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

Show Notes

[00:02:47] - [First question] - The industry LSEG operates in and its role within it

[00:05:37] - How to think about LSEG as a business and what drives their growth

[00:07:33] - The model that allows for such high profit and how its pieces work together

[00:14:21] - Overview of the data analytics side of their business 

[00:18:29] - Trading & banking as a key component of their data analytics revenue

[00:22:09] - Its 300-year history and what has led them to become such a dominant player

[00:29:25] - Thoughts on the Refinitive asset they’ve acquired and its role in future success

[00:33:04] - Key factors that allow LSEG to sell in adjacent markets and their competitive advantage

[00:38:57] - Drivers behind the growth of the digital financial market industry

[00:41:26] - Structural risks that could impede LSEG’s growth over the coming years

[00:45:29] - Simplifying their story to help investors better understand their underlying growth

[00:47:35] - Lessons for builders and investors when studying LSEG’s story