Podcast Summary
The Importance of Effective Communication Skills: Assessing opportunities for effective communication and investing in skills development can prevent significant losses for businesses.
Effective communication skills are essential in both business and personal life. The Think Fast, Talk Smart podcast, with over 43 million downloads and counting, offers valuable insights from experts on honing these skills. From managing speaking anxiety to taking risks in communication and harnessing nervous energy, the podcast covers various topics to help listeners improve their communication abilities. A crucial business story from 2017 that highlights the importance of strong communication skills is Jason Moser's mistake with TripAdvisor. He assumed the company was making the right move by transitioning from an informational platform to a transactional one, but the InstaBooking platform failed, leading to significant losses. This example illustrates how misjudging the opportunity of effective communication can negatively impact a business. Therefore, investing time and resources in developing communication skills is a worthwhile investment.
Lessons from failed investments: Stay informed about market trends and be willing to cut losses to avoid significant losses.
Market conditions and company performance can change dramatically over time, leading to significant losses for investors if they fail to adapt. Jeff discussed the decline of Instant Booking at Priceline, which was once a focus but is now barely mentioned, leading to a significant drop in the company's stock price. Aaron shared his personal experience of investing in Atwood Oceanix, a company that seemed promising but turned out to be a disaster due to volatile oil prices and an oversupply of rigs. He lamented the time and energy wasted on trying to salvage the investment. Jeff also admitted his mistake of underestimating the potential of Bitcoin and its volatility. The lessons from these experiences emphasize the importance of staying informed about market trends and being willing to cut losses when necessary.
Snap's Resilience Post-IPO Surprises Investors: Snap's stock held up better than expected despite initial doubts, while investments in electronic payment companies and video gaming stocks outperformed the market.
Despite initial doubts and concerns about Snap's performance post-IPO, the stock has held up better than expected. The hosts expressed surprise at Snap's resilience, considering the lack of voting rights for investors and Mark Zuckerberg's potential intentions to compete with Snapchat. On a positive note, they expressed gratitude for their investments in electronic payment companies like Mastercard, Visa, Square, and PayPal. These stocks have outperformed the market since being identified as part of a "war on cash" basket. Additionally, Aaron Bush expressed appreciation for his investments in video gaming stocks, specifically Take-Two Interactive, due to the industry's shift towards digital sales and the potential for high-margin revenue streams through downloadable content, esports, and other media ventures.
Companies have different methods for acquisitions: Companies can use cash, stock, or a combination for acquisitions. The choice depends on factors like company preferences, interest rates, and negotiation terms.
There are various ways companies can be bought, including cash only deals, all stock deals, and a combination of both. The choice between these methods depends on the specific circumstances of the companies involved. For instance, a company may prefer to use its expensive stock as currency to buy another company if the other company agrees. Alternatively, a company may choose to use cash when interest rates are low to make the acquisition at the least cost. When evaluating management and their capital allocation, it's essential to consider their approach to acquisitions. Some companies may have a preferred method, while others may be flexible. Ultimately, the most effective approach depends on the unique circumstances of each deal.
OpenText's acquisition strategy varies based on deal size: OpenText acquires smaller deals with cash, larger ones with stock or debt. Snap and Blue Apron identified as struggling stocks with financial issues.
OpenText Software, a company known for making numerous acquisitions, approaches deals differently based on their size. Smaller acquisitions may only require cash, while larger ones may involve stock or debt. Meanwhile, Snap and Blue Apron were identified as stocks to avoid due to their financial struggles. Snap, specifically, has been burning more money in free cash flow than it's making in revenue, and its shareholder-unfriendly structure raises concerns about profitability. Blue Apron, on the other hand, has terrible unit economics, with high marketing costs and low customer retention leading to significant losses on each dollar of revenue. Both companies face significant challenges in turning their businesses around.
Corporate Challenges: GE's Self-Inflicted Woes and Sexual Harassment: Major corporations faced significant challenges in 2018, including self-inflicted issues at GE and the continued absence of women in critical jobs on Wall Street, highlighting the importance of strong leadership, ethical practices, and a focus on long-term growth.
Several major corporations have faced significant challenges this year, with General Electric being a notable example. Despite having highly regarded leaders like Jack Welch and Jeff Immelt, the company's self-inflicted issues, including questionable acquisitions and accounting practices, led to a 42% stock drop and a $100 billion revenue giant having to cut its dividend. The issue of sexual harassment in corporate America is another major concern, with boards dealing with it poorly or not at all. Michael Lewis' observation of the continued absence of women in critical jobs on Wall Street highlights the need for more diversity and better handling of such issues. These challenges serve as reminders of the importance of strong leadership, ethical practices, and a focus on long-term growth.
Sexual harassment allegations against executives: A severe risk issue for individuals and companies: Boards must take sexual harassment allegations seriously, respond appropriately, and understand it's a systemic problem requiring ongoing attention and improvement in corporate governance.
Sexual harassment allegations against executives, including CEOs, are a severe risk issue that can lead to embarrassment and job loss for both the individual and the company. Boards must take these allegations seriously and respond appropriately by convening a committee of independent directors and hiring unbiased counsel. The failure to do so can result in negative publicity and long-term damage to the organization. Furthermore, sexual harassment is not an isolated issue but a systemic problem that requires careful examination by every organization. The ongoing revelations of such incidents in various industries, including Wall Street and politics, underscore the need for continued attention and improvement in corporate governance. The most significant progress in this area has been the increased engagement and activity of board members, who now understand their role in preventing emergencies rather than just reacting to them.
Focusing on strategy, risk management, climate expertise, cybersecurity expertise, and diversity: Boards should prioritize strategy, risk management, climate expertise, cybersecurity expertise, and diversity over regulatory compliance to effectively lead companies. An optimal board size of 8 to 12 members ensures effective communication and strong relationships.
While regulatory compliance is important, there is a need for boards to focus more on strategy, risk management, climate expertise, cybersecurity expertise, and diversity. The optimal size for a board is 8 to 12 members, allowing for effective communication and strong relationships between members. New CEOs should be given latitude in running the business, but the board's nominating and evaluation process should ensure independence and effectiveness. I would also like to recognize the small group of CEOs who have spoken out against withdrawing from the Paris Accords, demonstrating their understanding of business risks, strategies, and sustainability.
Documentaries 'Abacus' and 'Betting on 0' stand out: 'Abacus: Small Enough to Jail' and 'Betting on 0' offer unique perspectives and compelling stories, providing valuable insights despite not being front-runners for Oscars.
This year's documentaries, specifically "Abacus: Small Enough to Jail" and "Betting on 0," deserve recognition for their compelling stories and unique perspectives. Steve James' "Abacus" is a must-see for its exploration of a family's resilience and the critique of Cyrus Vance Jr. "Betting on 0," directed by Ted Braun, offers a surprising take on billionaire activist investor Bill Ackman. Although they may not be front-runners for the Oscars, these documentaries provide valuable insights and captivating narratives. Looking beyond documentaries, the holiday season brings several highly anticipated films. Timely and star-studded, "The Post" is a must-watch. Gary Oldman's performance in "The Darkest Hour" as Winston Churchill is expected to earn him an Oscar nomination. Lastly, "The Shape of Water" and "Last Flag Flying," with their intriguing storylines and talented casts, are worth keeping an eye on. These films offer a nice balance between the blockbuster releases and smaller, more mature productions.
Three Vietnam war veterans reunite in 'Last Flag Flying', Patty Jenkins' direction brings hope for women in Hollywood: Three veterans reunite in a poignant film, Patty Jenkins empowers women in Hollywood, Teladoc is a long-term investment opportunity
The film "Last Flag Flying," featuring three exceptional actors, tells a touching story of three Vietnam war veterans reuniting to bring home the body of one's son killed in Afghanistan. The discussion also highlighted the significance of Patty Jenkins, the director of "Wonder Woman," as a beacon of hope for more women to helm larger budget movies in Hollywood, given the recent wave of sexual harassment allegations. Additionally, Nell Minow recommended the movie "What's Cooking?" as a must-watch for the Thanksgiving holiday. On the investment front, Jason Moser highlighted Teladoc (TDOC), an Internet health care provider, as a long-term investment opportunity due to its impressive growth rates. The Weinstein Company's potential pledge to hire only women writers and directors was also suggested as a positive step forward.
Telemedicine and Subscription Retail Disrupt Traditional Industries: Teladoc makes healthcare accessible and cost-effective with virtual consultations, Stitch Fix personalizes clothing selections using data, and Coherent benefits from the importance of lasers in manufacturing.
Technology continues to disrupt traditional industries, with companies like Teladoc in healthcare and Stitch Fix in retail leading the charge. Teladoc, a telemedicine company, is making healthcare more accessible and cost-effective by providing virtual consultations to businesses and individuals across state lines. However, they still need to ensure their doctors are insured, which is likely to be addressed by insurance companies. Stitch Fix, on the other hand, is revolutionizing retail with its subscription-based clothing service, using data to personalize selections for customers and increase retention. The company is already profitable and sees potential for continued growth. Lastly, Coherent, a manufacturer of laser machines, is benefiting from the increasing importance of lasers in manufacturing, particularly in the production of electronics and medical devices. With a large addressable market and essential technology offerings, Coherent is well-positioned for growth in the coming years.
