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Circle of Competence Issue #86


"A business obtains the best financial results possible by managing both sides of its balance sheet well. This means obtaining the highest-possible return on assets and the lowest-possible cost on liabilities. It would be convenient if opportunities for intelligent action on both fronts coincided. However, reason tells us that just the opposite is likely to be the case: tight money conditions, which translate into high costs for liabilities, will create the best opportunities for acquisitions, and cheap money will cause assets to be bid to the sky. Our conclusion: action on the liability side should sometimes be taken independent of any action on the asset side." - Warren Buffett, 1987 shareholder letter


Deep tech Trends (SOSV)

I have nothing to add to this slide deck. I merely wanted to call attention to how much information is in it and earmarked multiple areas of tech worthy of study. VC companies/sub-industries become tomorrow's investable opportunities, so it's never too early to start learning about what's just around the corner.

The new dot com bubble is here and it's called online advertising (The Correspondent)

The Google squeeze (Ben Thompson)

These two pieces make a great pair. On the one hand, the Correspondent makes the case that online advertising is an absolute waste of dollars for most (if not all) brands. On the other hand, Ben Thompson points out how Google continues to absolutely dominate all forms of digital advertising (highlighting travel ads in this case) and continues to grow at a fast pace given its size.

While I agree with the Correspondent's sentiment that advertising for Ebay (a well-known household brand) with Google ad words is probably a waste of time, I'm not sure I agree that online advertising as a whole is indeed a bubble. For the small and medium sized businesses that are not household names, it makes total sense to craft a marketing strategy that ranks your site highly through a combination of SEO efforts and paid advertising to help your business get found by the right people at the right time. Is this an excuse to waste dollars without demanding a return on ad spend? Of course not, and the author makes the important distinction that running experiments with marketing spend and strategies is paramount to understanding whether there is a real, tangible benefit to a company's digital ad strategy.

If you own and operate a small business, I'd love to hear from you on 1) what your views are on digital ad spend 2) if you run any types of data analysis to tease out the benefit of the ad spend and 3) what your conclusions have been.



Sam Zell is buying distressed oil properties (Bloomberg)

The inner workings of opportunity zones (Thomas Judy Tucker)

Bruce Greenwald: channeling Graham and Dodd (Barron's)

Common plots of economic history (Morgan Housel)

What it takes: Steve Schwarzman with Shane Parrish (The Knowledge Project)

Steve Schwarzman on the David Rubenstein show (Bloomberg)


Starlink is a very big deal (Casey Handmer)

A new era of 'designer children' (The Economist)

The smarter city (Urban Land Institute)

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