fairity

So, if I’m following: Banks are lending to private equity firms to fund purchases of businesses.

Many of these businesses are SaaS which means their valuations are tumbling.

It seems possible that valuations tumble so much that the private equity owner no longer has any incentive to operate the business, bc all future cash flows will belong to the bank. What happens in practice then? Will banks actually step in and take operational control? Will the banks renegotiate terms such that the private equity owners are incentivized to continue as stewards? Or, will they prefer to force a business sale immediately?

The author keeps saying, over and over, that the reason this is a good bet is because "the downside is capped and the upside is asymmetric" as if that's some ground-breaking realization.

Sorry, but obviously the downside is capped. The downside of virtually any marketing investment is capped at the cost of the media buy...And, the upside being "asymmetric" isn't some saving grace. What matters is the likelihood that you actually realize that asymmetric upside. And, nowhere in the article does he talk about Ro's estimated success likelihoods or actual outcomes.

In short, he's basically saying:

- I made a bet

- It costs me something ("capped downside")

- There's a potential payout ("asymmetric upside")

- I have no idea whether this is positive expected value

Why are people saying this seems like a bad deal?

If they really only raised $1.7b, per Crunchbase, then this seems to me like a very good outcome for everyone involved except its late stage investors. And, even for the late stage investors, they're breaking even.

Words are cheap. I really wish there was a way to incentivize authors like this to put their money where their mouth is, before seeking attention for their ideas.

Surprised to see this upvoted because the takeaway is completely incorrect, and based on the anecdotal evidence of one advertiser.

As someone who spends seven figures every month on Google ads, what’s much more likely to be happening here is that the individual advertiser is either getting outcompeted or they’re executing ads poorly.

Google ads revenue in the US continues to grow every quarter. And, since advertisers will generally invest in ads until the last dollar is break even, it’s likely that the total value advertisers unlock through Google ads is growing as well. Whether that’s true or not, the notion that value generated for advertisers is “dead” is absurd.

As this incident unfolds, what’s the best way to estimate how many additional hours it’s likely to last? My intuition is that the expected remaining duration increases the longer the outage persists, but that would ultimately depend on the historical distribution of similar incidents. Is that kind of data available anywhere?

As is the case with most complex problems like this, the correct answer is: it depends.

In this case, it depends on what the crux of your business is. Sometimes the crux is building world-class technology. Sometimes the crux is customer acquisition.

If the crux of your business is customer acquisition, then an exceptional business co-founder will actually be the most important ingredient to long-term success.

This is one of the biggest weaknesses I've noticed in YC's mantra. In most industries, just building something people want doesn't lead to success - you have to excel at customer acquisition also. And, in these industries, as you business matures, you realize that customer acquisition, at scale, is actually the hardest problem to solve.

Years ago, I was lying in the grass, having a conversation with a fellow founder, when he noted how, on most days, he would forget to eat lunch because he was so engrossed with his work. I thought to myself, That's ridiculous. Everyone notices when they're hungry. This was just a thinly veiled brag about his work ethic.

Nowadays, I find myself skipping lunch every other day - out of forgetfulness.

> Why pretend to be smart and play it safe? True understanding is rare and hard-won, so why claim it before you are sure of it? Isn't it more advantageous to embrace your stupidity/ignorance and be underestimated?

I wish this were true, and I do think this mindset would be optimal if everyone adopted it. Unfortunately, real workplaces are filled with people who are confident and wrong. As a leader, if your intuition is more accurate than your peers and you care about objective success, it’s important to assert yourself.

> Hot take but 99% of all profitable businesses have no moat, and there’s absolutely nothing wrong with that. You can still make lots of $$$.

Can you make $157b without a moat? Or, anything close to that? That's the more relevant question at hand.