The Next Billion Dollar Retailer
By now we’ve all heard of Amazon’s near-billion dollar acquisition of Zappos which provided a tremendous return to Zappos’ original investors – Sequoia Capital and Venture Frogs. In fact, they only invested $60 million in the company over seven rounds. And, now, they’re sitting on a billion dollar return. How’s that for IRR?
Obviously, this is the magic of venture capital and outside of investing in a publicly traded venture BDC like Harris and Harris (Ticker: TINY), there’s not much we at home investors can do to get in on the ground floor. But, with up and coming retailers, …
You don’t need a 13D to write a letter
Almost all of us investors have felt the way Bob Chapman or Dan Loeb at one point in our lives. I can’t count the number of times that I’ve wanted to grab a member of management and give him what for. Well, there are times when just sitting back and searching for 13D letters just isn’t enough.
Truth is, you don’t need to be a 5% shareholder or even a shareholder at all, to write a letter to a company you deal with. Just look around for the “comments and suggestions” addresses on the packaging of the products you use. Or, simply go online and look for some customer service e-mail addresses. In my experience, these little customer service entreats are often a great way to test how well a company responds to the demands of their customers and whether or not they’re nimble and persuasive or stubborn and uncooperative. I don’t think I have to say, investing in nimble businesses which can convince customers of their value proposition is usually a winning bet.
Let’s start with a company I recently wrote about – McDonald’s. Last summer, I tried out McDonald’s new beverages – Sweet Tea and Caramel Iced Coffee. In my opinions, they were cloyingy sweet and just completey off the mark and unenjoyable. I couldn’t help but write an e-mail to express my displeasure.
Dear McDonald’s,
I am writing as a result of a few recent visits to McDonald’s that have left me less than enthused with your new product offerings – particularly the new sweet tea and caramel iced coffee drinks. I’m not sure what product trials the Company went through or how it decided on its formulations but I’ve found both drinks to be sickly sweet, nearly undrinkable. I don’t believe that this is a result of my personal preference or a misstep at an individual McDonald’s as I’ve given the drinks a try at multiple locations.
While a good southern sweet tea is traditionally rather sweet, one would expect a hint of tea flavor to remain. The caramel iced coffee is even worse, tasting like sugar syrup and milk without even a trace of coffee. I thought that these new drink offerings were a terrific way to highlight McDonald’s hot tea and coffee offerings which are truly underrated, but it’s clear that these two new cold beverages were not designed to capitalize on the quality of your base tea and coffees.
These poor drinks are particularly disappointing to me given McDonald’s success rolling out some terrific new products like the southern style chicken, mcskillet burrito, and multiple incarnations of the snack wrap. I would hope that the Company is able to continue its terrific innovation and not slip back into the cycle of misfires like the failed sandwich releases in the 1990s that left me disenchanted with the overall McDonald’s franchise.
Sincerely,
[The Curious Investor]
Lo and behold! McDonald’s wrote back. Later in the year, so maybe they aren’t the most responsive, but they were impressive. See their reply after the jump…
MCD – Almost as much value as a dollar menu
Above is a 5-year weekly chart for McDonald’s (MCD). As described by David Gordon of The Deipnosophist, MCD seems to have entered a hesitation after a strong, multi-year bull run. Over the last year, however, a symmetrical triangle seems to have formed which is a type of intermediate term base which is expected to end in a breakout or breakdown, though usually symmetrical triangles signal a brief pause before the continuation of the primary trend. But, I’ll leave the discussion of …
Weekend Recap – September 13, 2009
Though it’s been happening for the last six months, the dollar’s weakening seems to have hit a head over last six months. Moreover, it seems that gold has directly offset the weakening dollar. Could this mean that, contrary to popular belief, investors are actually fleeing to the quality of gold as opposed to increasing their appetite for risk? Ken Phillips warned us in Bad Money that U.S. dollar supremacy could weaken if we don’t move …
Book Review: Bad Money
The title, Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism, pretty much sums up the book’s thesis. This is actually Kevin Phillips’
Weekend Recap – Post-Labor Day Catchup
Just catching up on the Weekend Recap after taking a weekend off for Labor day. Hope everyone had an enjoyable and restful weekend. Just to get the week kick started, here’s a rundown of some interesting posts that I came across in the past week.
Market Commentary
Bill Gross, bond-king at PIMCO, released his most recent commentary, “On the ‘course’ to a new normal.”
Bespoke Investment Group publishes its analysis of US stock returns vs. foreign market indexes in local currency. It’s not pretty.
The Economic Policy Institute believes unemployment is soaring to historical …
