Charlie Munger died today at the age of 99. Most people know him as Warren Buffett’s right-hand man, but he was an accomplished investor before he joined Berkshire Hathaway. As I’ve learned more about public-market companies this year, I’ve also learned about the investors who’ve generated outsize returns in public markets. Munger was one of them. I’ve enjoyed learning about his investing philosophy, mental models, and unique way of viewing the world. He was a gifted person and investor who lived life by his own rules.

RIP Charlie Munger.

Small-parcel shipping is an industry I learned about as a founder. We spent over a million dollars on shipping in some years, which forced me to learn the industry. I saw a duopoly firsthand and navigated its impacts on our operations. I’ve continued to keep tabs on this space. A few years ago, I predicted that Amazon’s shipping service would be bigger than FedEx and UPS. I didn’t know when it would happen, but I was sure it would, given the trajectory at the time and the need for a more innovative player in the space.  

Today, the Wall Street Journal reported that Amazon’s parcel volumes surpassed those of FedEx and UPS for the first time. This year, through Thanksgiving, Amazon has delivered over 4.8 billion packages, a figure that’s projected to reach roughly 5.9 billion by year-end. Through the first nine months of this year, UPS has processed 3.4 billion parcels. FedEx processed right at 3 billion parcels in the fiscal year ending May 31, 2023. Amazon started this service less than a decade ago and is now a formidable competitor (and one of UPS’s largest customers).

I saw this coming years ago when I was a founder, but FedEx and UPS were less worried because they thought it inconceivable that Amazon could create a competing logistics network in less than a few decades. FedEx’s CEO and chairman, in 2016, even called the idea of Amazon competing “fantastical.”

Amazon’s ability to become a leader in a space dominated by a duopoly for decades is a clear example of why companies shouldn’t get complacent. They should keep innovating and take growing competitors seriously, even if they’re small now. 

The small-parcel industry hasn’t kept up with changing consumer needs. I think Amazon becoming a formidable player in this space will ultimately lead to more innovation and a better consumer experience. I can’t wait to see how the industry evolves in the coming years.

In 2022, I realized the power of a foundational habit. Identifying and committing to a daily foundational habit greatly increased the probability of my sticking with other daily habits. When I consistently complete all the things that I decided need to be daily habits, my chances of reaching a desired destination or objective increase drastically. I like focusing on habits and systems over results and goals.

With the new year approaching, I want to start working on my 2024 habits. Before the new year begins, I want to crystallize where I’d like to be by the end of 2024, identify the new habits that align with that destination, and identify the foundational habit that I need to focus on.

I’ve been spending more time researching public-market companies this year—specifically, technology companies that offer solutions I’m familiar with whose founder is still CEO. I’ve noticed that a lot of the public companies that fit these criteria were backed by venture capitalists (VCs) before they went public.

I’ve found a hack for researching these CEOs and companies. The VC firms that backed these companies often have a deeper understanding of them and their CEOs than most because of the duration and closeness of their relationship. (They’ve been close to the companies since well before going public was a possibility.) Companies that go public are often high priority for the VC investors who back them, so some investors will speak and write about them extensively. Much of this content is available online, and I’ve found it often contains golden nuggets about these companies or their CEOs that aren’t in any public filings. In combination with public filings, I’ve found this content helpful in evaluating whether a CEO and company are good or the company might be one of the rare great ones.

This is my one-hundred-ninety-first weekly reflection. Here are my takeaways from this week:

• Thanksgiving – It was great to have time off yesterday to spend time with family and friends and eat amazing food.
• Reading – I’m using my downtime during this holiday to hit my reading goal.
• VC firm origin stories – Company origin stories are always interesting. This week I stumbled upon a podcast on which the origin story of a successful VC firm was shared by one of the firm’s founders. It was great and got me thinking about a few ideas. I’m going to look for more origin stories of unorthodox investment firms.   

Week one hundred ninety-one was another week of learning. Looking forward to next week!

Happy Thanksgiving!

I hope everyone had a safe and healthy holiday!

A few months ago, I shared my thoughts about venture capital funds distributing returns to limited partners (LPs) via cash or in-kind distributions (i.e., stock in publicly traded companies). I wondered how many venture capital firms use in-kind distributions so their LPs will have the option to own shares in great companies for decades.

It’s hard to know how a venture capital firm makes distributions unless you work for it or are an LP in one of its funds. But I recently came across a public filing indicating that a venture capital firm distributes shares in a public company to its LPs. These shares are worth hundreds of millions of dollars. I found this interesting because this firm made an early-stage investment when the company was very young, around fifteen years ago. The company has been public for several years. The firm could have easily sold the shares and returned cash to LPs, but it opted to do the work of returning shares in the company to LPs. The filing also indicates that the venture capital firm general partners took their carry from the deal (i.e., profit sharing) in shares and haven’t sold those shares.

I don’t have insider information on this public company or the firm, but I assume that the venture capital firm’s partners are bullish on the long-term prospects of this company and want their LPs to have the opportunity to participate in its future upside.

I like to keep my finger on the pulse of new technologies and emerging trends, but it’s easier said than done. One of the ways I do it is by catching up with early-stage founders who are building in that space. The founders in the early days of launching a company are typically as close to ground level as you can get. They’re usually hands on keyboard and in the weeds of everything. Hearing how they’re applying new technologies and what positives and negatives they’ve experienced helps me understand things from a practical perspective. I also try to make sure these conversations are bidirectional by providing feedback on anything that’s on the top of their mind (that I can help with).

I’ve found that this is a great approach to staying abreast of new things and maintaining relationships with and giving back to early founders.

I recently had a conversation with an aspiring entrepreneur. He wanted my thoughts on a company he was considering starting in a space I’m familiar with. During our chat, I learned that he’d been an early employee at a tech start-up and stayed for several years. That company recently sold for a few billion dollars. His equity as one of the first few employees gave him a financial windfall. Because he was on board so early, he worked closely with the CEO for several years, and they still talk regularly. The CEO encouraged him to start a new company and offered to back him once he settles on an idea.

I love to hear stories like this. An early employee is part of a company that turns out to be a massive win. He gets a significant financial reward. Seeing his former CEO’s journey firsthand makes him want to take the same journey. And he already has the backing of his former CEO, who knows his drive and worth ethic.

These are the kind of stories that, when repeated, lead to a city having a thriving start-up ecosystem. We need more stories like this!

Last year I shared a post about Atlanta having the highest inflation rate among U.S. cities in 2021. My post was inspired by a Wall Street Journal (WSJ) article that talked about how Atlanta saw an influx of people during the pandemic, because of the city’s attractiveness, that caused Atlanta to have a higher inflation rate than other cities (mainly driven by above-average increases in housing costs).

I wanted to see where Atlanta stands today, so I did a little digging. The U.S. Bureau Of Labor Statistics (BLS) produces a city-specific Consumer Price Index (CPI) for various metropolitan cities, including Atlanta. The latest report, released this past week on November 14, includes Atlanta’s October CPI.

When the WSJ came out in February 2022, the 12-month Consumer Price Index for All Urban Consumers (CPI-U) for metro Atlanta was 10.6%; it peaked at 11.7% a few months later in August. Since August 2022, the rate has been declining, and it stood at 3.2% as of last month. For context, before the pandemic in December 2019, Atlanta's CPI-U was 3.3%.

I did a quick check against New York and Miami and found that Atlanta ranked below both cities in October. New York’s 12-month CPI-U was 3.5%, and Miami’s was 7.4%.

I’m no CPI expert, but the data appears to be showing that the rate of cost increases in Atlanta is moderating. The BLS’s next metro Atlanta CPI will be released on January 11. I’m curious to see whether this trend continues.

If you’re interested in reading the city-level October 2023 CPIs for Atlanta, Miami, and New York, they’re here, here, and here.