Business Breakdowns

Today, we will be covering the endlessly fascinating market of Space. While we typically focus on an individual company for Business Breakdowns, we thought an industry primer was the best approach for this expanding market. With Elon Musk and Jeff Bezos directing so much energy to the promise of space, it is impossible not to dream about what lies ahead. To cover this endless topic, I’ll be joined by a previous guest, Tren Griffin. While Tren’s full-time job is a director at Microsoft, his experience with satellites and endless curiosity make him ideal for this conversation. We cover how our ground economy is enabled by space today, what excites him most about the space to space opportunities in the future, and how space compares to other network foundations. I hope you enjoy this great space primer with Tren Griffin.

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, Inc. 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

[00:02:19] - [First question] - The current size and scope of the space economy

[00:04:42] - Important historic milestones that helped us get to where we are today

[00:12:33] - The varying levels of orbit and what they unlock for technology

[00:19:22] - How expensive launches were and what they are now with SpaceX and Starship

[00:22:08] - Overview of the Starlink project and using it to recoup infrastructural setup costs

[00:27:32] - Whether or not launch will ever become more than just a commodity

[00:31:01] - Different types of satellites and earth-orbiting technology

[00:34:23] - Thoughts on in-space manufacturing as an emerging industry

[00:35:33] - Future colonization of the moon, Mars, and humanity leaving the Earth

[00:38:19] - The importance of dreaming big to inspire those around you

[00:42:36] - Potential reasons why space may not become a new frontier

[00:44:41] - Politics and the militarization side of open space

[00:47:19] - Legalities and the need for a space treaty

[00:49:41] - Whether or not humans will be living on the moon by 2035

[00:51:03] - What the benefits will be of a colony on Mars if we can establish one on the moon

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

Today, we will be diving into Facebook. A business that requires little introduction, Facebook was launched in 2004 from Marc Zuckerberg’s Harvard dorm room. Zuckerberg has since grown Facebook into the largest social network in the world and continues to operate the business today. To break down Facebook, I am first joined by Robert Cantwell, founder and CIO of Upholdings. Rob’s unique background makes him an ideal person to speak on Facebook. Rob shared a dorm with Zuckerberg, went on to work at Elevation Partners, a large private investor in Facebook, and eventually became CFO of Everlane, where expansion was closely tied to the growth of Instagram and its advertising tools. We touch on how Facebook successfully navigated the transition from desktop to mobile, what drives the value of the network, and where Facebook may drive value in the future.

I am then joined by Jesse Pujji, a familiar voice as a host of Business Breakdowns. Jesse’s time as co-founder and CEO at Ampush make him ideal to break down the advertising business of Facebook. During our conversation, Jesse outlines the basic dynamics of the Facebook ad ecosystem, the economic proposition to an advertiser, and how to assess risks to Facebook's control of the digital ad market.

Facebook is such an interesting business, and we could likely speak for hours on the potential opportunities for growth. We decided to focus on the core advertising business today, given it represents 98% of revenue. In the future, we want to dedicate individual Breakdowns to WhatsApp, Oculus, and potentially other Facebook initiatives that are worthy of their own deep dives alone. I hope you enjoy this conversation on Facebook.

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, Inc. 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

Part 1

[00:03:20] - [First question] The size and scale of Facebook and how we interact with it

[00:04:59] - The best way to describe what their true core business is

[00:07:21] - Observing Facebook’s growth as an operator and how it impacts his view of it

[00:10:46] - The ad model that they offered that wasn’t historically available before

[00:12:49] - Competitive advantages they have today that makes theory moat impenetrable

[00:15:44] - Potential impacts of the decentralization of the internet

[00:19:20] - One of the biggest risks to Facebook over the coming years

[00:23:33] - Future asset optionality that investors should be excited about

[00:28:16] - Thoughts on whether or not Facebook abuses its power given its size

[00:31:19] - Whether or not plans to establish themselves as a super app holds true

[00:34:14] - What Facebook is today and where they’re going

Part 2

[00:36:25] - Why Facebook has such an effective ad system for digital marketing

[00:41:28] - Overview of how an advertiser uses their ad platform

[00:45:39] - Key dynamics that impact bidding on certain keywords and customers

[00:49:22] - The types of companies that are being built on top of Facebook’s ad railway

[00:52:13] - What data they have and common misconceptions about it

[00:56:15] - Things Facebook could learn about cross-app system tracking

[00:59:07] - The competitive landscape of digital advertising today

[01:01:52] - What would have to play out in order for them to stop growing

[01:04:05] - The ways in which commerce plays into Facebook’s story today

[01:07:39] - How having access to a user's payment information is a value unlock

[01:08:55] - The most important thing to Facebook and lessons to be learned from their story

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

I’m Zack Fuss and today we’re breaking down NextEra Energy. NextEra is America’s most valuable energy firm and consists primarily of two businesses; a high-quality regulated utility and a renewables business that is the world’s largest generator of wind and solar energy.

To help break down the business, I’m joined by Mark Tomasovic, an investor at Energize VC. In our conversation, we discuss the structure of the energy market, what’s changed in the renewables space over the past twenty years, and how NextEra takes advantage of its cost of capital advantage. Please enjoy this breakdown of NextEra 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

Show Notes

[00:03:16] - [First question] - Mark’s background and how he thinks about the energy markets

[00:03:46] - A broad overview of the electricity market and how it’s structured

[00:05:22] - The value chain and production line of energy from facility to customer

[00:06:59] - What informs how much an energy company is allowed to earn

[00:09:16] - Unregulated versus regulated markets and the risks and benefits of both

[00:11:29] - How the retail electric market looks today and alternative production methods

[00:12:40] - NextEra’s business fundamentals and their current scope and scale

[00:14:45] - The two business arms of NextEra

[00:16:00] - Inputs and costs of the low cost regulated utility side of NextEra

[00:18:33] - NEER being the world’s largest generator of wind and solar

[00:19:43] - How they’re able to get contracts and how they work

[00:20:03] - Comparison of revenue generated between their different branches

[00:21:26] - How the regulated and unregulated arms work together for NextEra vs its competitors

[00:22:30] - What their most important benchmark is and thoughts on gross margin and profits

[00:24:33] - Natural cost of capital advantage given the growing focus on ESG

[00:25:33] - How COVID impacted the energy space, specifically in electricity

[00:28:20] - Conventional energy production becoming more expensive in the near future

[00:30:10] - How reliant NextEra is on government subsidies

[00:31:20] - Where they spend all their revenue, the price of projects, and ROI

[00:33:01] - How they evaluate projects

[00:34:19] - Structural differences in renewable energy business models today

[00:36:18] - What could happen that could negatively impact NextEra’s growth

[00:38:22] - Considering risks when underwriting turbines

[00:39:15] - Is nuclear power a potential tail risk?

[00:40:05] - Being forward-leaning when adopting digital technology and innovation

[00:41:23] - Lessons that can be learned from NextEra for builders and investors