YouSaid · the spoken record

Mario Cibelli

lines on the record: 46
first: 2020-12-22
most recent: 2020-12-22
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Joked up here that I'll never forget that. That was super nice for them to have done that for me. They passed on. So it's a worthy thing to mention is the nicest thing that someone's ever done for me.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a lot of things that I could say, or anyone could say. One that comes to mind goes back to when I graduated college. A good friend of mine by the name of Rich Jaffe, his parents were Stan and Myra Jaffe. And they lived in Pleasantville, New York. My parents were like up in Canada after I graduated. I went to Binghamton and I had a job. And my first job was Mario Gabelli, still around today, picking stocks. And I had this gap where I was like, I didn't have any money. I had a job. You know, after I graduated, I had to show up for work. I was like, where am I going to live? I have any money. I couldn't afford rent. Now my friend was doing an internship. He wasn't even in town. But he's like, I can live with my parents. So Pleasantville's in Westchester. So Stan and Meyer, a Jaffy, opened their house to me with their son not even there. I moved in and lived in the basement with the parents of my friends. And I don't want to get.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“What it meant much of the time is that a sophisticated short seller had found out that something aggressive was going on in the accounting. It's like, oh, it's a high short interest ratio. I'll look at something else. So the information moved more slowly. All that being said, I don't think the game changed that much. It wasn't a piece of cake to figure things out back then. It was labor intensive to get information. You had to call up the companies and ask them to send the quarterly reports and annual reports and all that kind of stuff. It was a slow and painful process. If you really wanted something fast, you'd go fish it out on microfiche or pay for a service and they'd deliver the papers to you the next day or something like that. I think the participants were also different. You know, there weren't as many hedge funds and certainly what's in Twitter or the internet or anything like that kind of talking about deep things on very specific kind of companies. But the job was the same. It was challenging.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Think it's just as valuable now when I first started the fund in 1997, kind of go back to 90s. Things have changed, things haven't changed. You know, I'd say it's probably tougher and more competitive to get differentiated information today. Access to information has been democratized. Information moved more slowly in the 90s when I first started in the investment business. I remember, this will sound funny. I like telling little stories every now and then. I do that on Twitter to remind people of what the business has changed and how it hasn't. But I remember in the 90s, you could short spinoffs in the when issued market. And then everyone would get their shares and then they would trade down. And you could cover them and even go long if they're a reasonable business. It was like 80% of them you could do. I remember if there was a high short interest ratio in a company, it was a red flag in and of itself. Companies weren't highly shorted.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“For a long time, and maybe the company has been unwilling to say repurchase shares or do something that might make the situation better for shareholders, those are the kinds of situations where a good activist could add a lot of value. And not all activists are good. Some of them do kind of hit and run activism. That's not us. People that are thoughtful take a long-term point of view and are really trying to help the company, they should be welcomed by management teams and boards. Sometimes they are, but oftentimes they're not.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“This role from time to time is labor intensive, it's not necessarily fun, it's a tool in our toolbox. Generally speaking, we try to find a company like Stitchfix, something else where we could help wind up the management team and watch them go for the next decade and not have to do a lot of work. We love working with management teams. I still remember that story go back to Netflix a little bit. I don't know exactly what happened because I wasn't in the room, but people at one point thought that Carl Icon was going to make a run at Netflix. And I think I read some stories, something. Re just invited him in and said, let me tell you about our business. A really talented management team that's working hard for the shareholders. They have nothing to fear from an activist. A lot of times it's the management teams that have a situation that's too attractive. The compensation's been too good. The board's overpaid for underperformance, that kind of thing, or there's a very big delta between a company's intrinsic value, strategic value, and market value and its person.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Very, very generously early on. And I remember I went to the annual meeting and started asking questions, again, super naively, just like this is unfair. Why are we doing this? I kind of learned a lot from some early interactions trying to stand up for shareholders. John Nevine was another one, and I remember got down to, I went there, I flew there, I had a meeting with him in the co-CEOs, the CFO and the investor relations person. They brought me to this boardroom and they're like, how can I help you? I must have been 25 or 26 years old. Man, that room got real hot suddenly. But I said, you know, I think your compensation plan is unfair. I would just kind of say these things to people. I guess that naive assumption that I should be treated fairly by a management team combined with another naive assumption, you know, maybe there's something I can do about this. We've always been active shareholders. We're active. I don't consider us activists necessarily, though we have played the active.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“That's kind of funny. Look, I came into the business pretty naively. I'm like, well, I expect to be treated fairly. If someone didn't treat me fairly, I got pretty upset. And then a couple times I said, well, I'm actually going to do something about it. I learned, we got into a spat with Ron Perlman many, many years ago in a company called M&F Worldwide. And I learn an awful lot about how to fight and an awful lot about boards and dynamics and all that kind of stuff, how to justify transactions that are not justifiable. That was a very, very interesting experience and I want to go over the whole story, but if you Googled my name and a company called M&F Worldwide, some stories would pop up. We help reverse a decision blatant kind of play to create wealth for Ron Perlman at the expense of shareholders. And I learned a lot doing that. I was kind of a corporate gadfly complainer with a company in Chicago called John Nuvine that was paying its executives.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“When the rock retires and gets out of wrestling and he still wrestles, by the way, it has an effect on engagement and ratings, but they've time and time again been able to find the next one. That's the brilliance of the company in Vince McMahon. I mean, I consider him a visionary. I have nothing but respect for what he's built and for the family. It's wildly impressive, actually.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Part of a portfolio of properties, then they could do alone. Would Disney potentially be interested in the WWE network to help drive more subscribers to ESPN? This is what they did a deal like this with the UFC. That's very interesting with other big tech companies be interested in the audience and the engagement that WWE has? Absolutely. One of the NOx is I told you people are worried about how the US media rights renew for the pay TV, the traditional pay TV ecosystem linear TV. Again, I don't think the market for that is going to be down. It's not going to be a down round for WWE. But even if it is, that means their streaming rights are more valuable. There's another transition going on. The main thing is that they just get highly, highly engaged fans and they've done it forever. And yes, there's ebbs and flows and how the performers relate to the fans, but they always find another way.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“To the share price is that the company announced that it's looking at alternatives, quote unquote, alternatives for the network. And what that really means is that they are now looking at their direct path pipe to their fans. It's just another licensing opportunity. The product is the product. It's the performers. It's the on-stage athletics. It's the story that they create. It's years and years of IP. And I think they're going to be looking at their network as just another potential thing to license out. Now who steps up for that? This is where it gets really interesting. And it all makes sense too, by the way. The streaming wars are in full swing. My opinion is that the bundle is in the process of”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“That and that's the WWE network. Now, to do that, they had to put at risk their pay-per-view model where they were getting 10 or 12 pay-per-views a year. They had to risk pissing off their partners in distribution. And so they went from a money-making business to a money-losing business, cut the dividend to make that transition. And Wall Street absolutely hated that because it created a high level of uncertainty and it wasn't certain that they would emerge victorious from that. That goes back to some of the sectors that we like. Essentially, WWE, when it launched its network, was investing to create its network, became a completely different company. That tends to make Wall Street very uncomfortable. And they were, and that also created an absolutely amazing six and seven dollar price to people that kind of had the vision or shared vision that the network would actually be valuable. Interestingly enough, and this is a great opportunity right now.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Unique thing that happened to him on the last renewal rights, the media rights, which I think are fast approaching a billion dollars in revenue, now dominate the P&L. So the trinkets they sell online and the t-shirts they sell when the events come back, those are smaller items. So those are all kind of optimizing, but it's really going to be about the US meteor rights and the rest of the world meteorites going forward. So that dominates the P&L now. So it kind of makes everything else not matter. The last time that we bought shares of WWE and bought them in size was when the company went through a very interesting transition. It was profitable business that was paying a nice dividend. Vince McMahon had a vision that he wanted to have a direct path to his fans. And that was a WWE network. And the internet and the explosion of infrastructure designed to create all the services that we now love and enjoy like Netflix, whatnot, allowed him to do that.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Were added and additional things thrown in, so you might not say 60 is the new market, and each of these properties has unique renewal negotiation, which I don't think the market is down on U.S. media rights for an important property that does a very specific thing well, and the specific thing that WWE does well is it delivers a highly engaged, relatively large audience on Monday night and Friday night, and it's been doing it for 25 years.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the loss of the audience here has been way more difficult than kind of any other event. They will come back from that. But I do think that has created a perception that the next renewal for the US media rights will not go well. I don't think that's going to be the case. I think that they have plenty of time to re-engage the audience. I'm assuming sometime between now and 2024, we're doing live events again, and that will re-engage the audience and help the storyline and get them back on their feet. In the meantime, we're Wall Street investors. We're not just talking about the business in the vacuum. You got to like, well, what's priced in? My belief is that with reasonable assumptions that the market is pricing in, a down round on their meteor rights. And I think that's wrong. You just saw Major League Baseball kind of re-upped their rights. I think it was a 60% premium to the last round, and there was some additional games.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“To own SmackDown. So, two main shows are Raw on SmackDown. Raw is broadcast Monday night. SmackDown is broadcast Friday night. Comcast previously had those rights. Fox decided that it wanted to play in those rights. And so now those rights are split between Fox and Comcast and the value of the US meteor rights went up by a factor of I think almost four times on the last go around. So that really transformed the company into a different beast and different animal where the touring side of the business absolutely shrunk relative to the overall profit pool. I think the debate on Wall Street is, well, what happens to those meteorites in 2024 when they come up for renewal and when you're in a COVID crisis, you don't have an audience and their audience participation is way more important than football and baseball and everything like that. The performers feed off the audience.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“I've been following WWE. Gets a bad rap. It's misunderstood. They hold events in New York City, but I wouldn't say New York City is their core market. It used to be that National Tennessee would get the highest rating share, I think, for wrestling, if I recall. Or you might say it's kind of a NASCAR crew. But I do think that they're exceptionally good at what they do. They've been around forever. To me, I said there's no chance that the fans disengage with the company over time. a lot of really interesting upsides that are built into the model. Now, I haven't talked about the model so, so much you can think about it like a circus. They traveled around and they put their show on. They charge for events. They'd sell you stuff at the events. They would televise it and be on TV and people would pay for those rights. But a couple years ago, the company went through a massive transformation and all that really happened was Fox woke up one day and said, we want.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say they happen in a variety of ways. How do you find these interesting companies you pay attention? You read a lot of S1s, try new things, try new apps, you're just trying to suck up information everywhere that you can. I'd say sometimes I would say that, well, gee, like with Uber, I had an instant reaction. This is maybe 10 plus years ago when I heard about it. I think Rich Barton mentioned it to me on the beach once and I was like, well, that just sounds like an awesome idea. I had an instant reaction to that, you know, and how many years later we had the opportunity to buy it all this summer and during the coronavirus pandemic at prices that we thought were pretty attractive. And so I guess on that one we had the observation first, this is pretty good. Can it come down to the price where it's attractive? On other ones, I would say that we dig in. We keep thinking, we ask questions, we ask detailed questions. We do a lot of work. And then the nuggets of gold may reveal themselves after.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“The world if tequila starts catching on internationally look out it could be an absolutely epic run for Beclay. It has the potential to be the fastest organically growing spirits company outside of China globally over the next 10 years. Absolutely may happen for them.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Pretty crappy to absolutely amazing. That range would exceed, say, something for a vodka. I do think vodka and a couple other spirits will be sharegivers to tequila for an extended period of time. Look, there's no parties right now, but the party five years ago, there was one tequila drinker, party three years ago, there were four next year when we get past the coronavirus, there'll be eight. It's kind of playing out like that. It's absolutely growing share domestically. And of course, we border Mexico, so a lot of people travel to Mexico. And, you know, that heritage translates into the US and Canada more easily. Absolute home run will be is that it catches on internationally. The market share for tequila is something 9-10% range in the US, but internationally, it's much lower than that, maybe on the order of three or four percent, which would include, of course, a big contribution from the U.S., which is the biggest spirits market.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's hard sometimes in the spirits and beverage businesses to create a trend. But once that trend starts, it's also hard to turn it off. I think there is a wonderful trend going on in tequila right now in the US and Canada that we can't see how it turns off, at least for an extended period of time. And that trend is, I presented the idea to a group of people not too long ago, brought a bottle with me. And a lot of people that I didn't want to try it because they're like, oh, I had shots when I was in college and got sick, whatever. They had a negative experience for it. And I said, try it anyway. Try it anyway. And I brought a nice expensive bottle. They ended up loving it. I think a lot of people have figured out that it's a great drink. Latin heritage in the internationalization of our country, I think, is kind of played a role into that. And essentially, there's a lot of different variations of it. So it can range from”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Those per kilo, it almost doesn't matter if agave prices don't correct because they're producing more and more in-house and at their scale, at their size, not everyone will be able to produce internally like they do.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“For Beckley to trade a discount to the group based on the earnings that we think that they'll have. Agave pricing does not have to collapse for us to make a positive return on Becle. But if it does, we're really going to have a charged return. And we think it's very likely that it will. But that's the downside protection. That's the interesting part. It doesn't have to happen for us to get pretty positive returns for our investors. Oh, by the way, what's also interesting is that Beklay has been insourcing more and more of its production of agave. And that takes time to build up irgave fields because they take multiple years to mature more and more of their production will come from in-house. We think the agave price decline will be the catalyst that people would identify and see to ultimately bid up shares of equate to probably where they more appropriate valuation over time. But because they're insourcing more and more of their production, where their costs are probably five to seven pace.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“A zero interest rate world, you have an opportunity for real earnings growth. That's infinitely valuable. I think what we've done is we found kind of an interesting way to buy into a spirits company that hasn't been fully recognized that it belongs with its peer set yet valuation-wise. What we believe, we're at the beginning stages of a very likely collapse in agave pricing. Agaveber Agave farmers in Mexico have been planting multiples of the harvest for the past three years. And we think there's a windfall event, margin event in the future of backlog. We kind of believe backlay is trading at 12 to 13 times EBITDA on 2022 numbers versus peers today like Brown Foreman and Diageo that are trading kind of in the high teens multiples of 2022 numbers. And we think when we get to that period of time, there'd be no reason.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Lower than peer multiple with cyclically depressed margins growing faster than peers because their tequila exposure is way higher than peers with very little debt. And I was like, this just doesn't make sense outside of malfeasance or something, or the numbers weren't real, that there was no way that we really could lose money. And that was the initial appeal. Now, as we've gotten to know the company better and become more familiar with the story of tequila, it's gotten really interesting. And I do think it's one of these kinds of things 10 years from now. It's just going to be a bigger and more valuable company. I guess I think what we've really done is we've figured out a backdoor cheap way to buy into the spirits business. Spirits business is a hard justify for value type investors because they're always well bid for. Why are they always well bid for? Because they survive inflation, deflation, fees, famine war. They're always around. They don't go away. Not going to get disrupted.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Brands that was driving most of its profitability as a U.S. company but decided to list equity on the Mexican force and sold a relatively small sliver to the public, 15%. There's questions why they do that. What was the motivation behind that? The company was practically debt-free. It didn't really need to raise any capital. To us, that was a perfect recipe for potentially mispriced security. Essentially, what we saw. I actually called this one the second best risk-reward trade I've ever seen in my career ever. I don't think I could lose money here. And I got really good upside. I got free calls all over the place. That's a super interesting equity. Beckley was trading at a discount to peers in the spirits business, but its margins had been compressed in fairly dramatic fashion because the price of Loubergave had spiked. So here they were trading at a cyclically.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“A couple years ago traded hands for five pesos a kilo. The current price is in the high 20s for kilo. That is the main input into tequila. Tequila producers have had to absorb a massive price spike in their main input. That caused the Beckley shares to trade down to levels that we thought were absolutely absurd for about coming up on two years now. We've been buying shares of Becklay from its absolute lows until the current price. And we think that that company is a very unique opportunity. One of the certain sectors that we can talk about that later that we tend to find a lot of our investments in, but I consider as generalists, but going back to my old days of selling research to hedge funds, we're always turned on by inefficiency. And backlight was a super interesting company. You essentially had a really old company with absolutely tremendous”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“I'll tell you, it's been a lot of fun to do research on this one. I wasn't a fan of tequila. I'm not even a big drinker, but I now have an appreciation for tequila, and I have a small little tequila collection, but it was on the basis of an investment opportunity. The biggest tequila producer in the world, no surprise, is headquartered in Mexico, the name of the company is Beckle, and a couple years ago went through an IPO. The story of Beclay is really the story of Tequila. The story of Tequila is really about a plant that grows primarily in central Mexico called Blue Weber Agave. Blue Weber Agave takes anywhere from five to nine years to mature, different than a lot of other spirit companies. The input is not an annual crop. There have been in the past, we found three of them more recently. We're in one of the price spikes now. There have been three epic price spikes of Blue Weber Gave. Blue Web Berge.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Valuable. And we were right. PayPal recognized that. They had a multi year head start. So I guess that's a yes to your question. That was a small example, another example of a company that just put so much distance between it and its competition.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“The Challenger company side, disruptive business model side, absolutely we'd be looking for that. We had a great investment, a company we really loved called Zoom that I think right now would be valued in the billions and billions. It happened to be taken over by PayPal a couple years. And they were looking to disrupt traditional international remittances, so the Western unions of the world. We did a tremendous amount of work at that company. an online stitch fix and unlike some other ones, you know, there weren't a lot of profits necessarily. in the near term to kind of justify the interest say from an outside investor. The way they did remittances was so difficult to get right and was fraught with risk and fraud and know your KYC rules and all these rules that required for financial intermediaries. It was so terribly difficult to get right. We came to the conclusion that if this company's growth rate kind of falls off a cliff, the platform is extremely”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“I think they will. The level of success, how far they take it, I don't know. But I'm not saying this is easy. I'm actually saying it's really, really hard. That's the whole point. That's going to allow them to potentially escape Earth's gravitational pull in a big way. I think there's a chance that they could really be big and successful. And 10 years from now, I'll be talking about that DC visit in Dallas that I did, just like I am about the Netflix visit we did in the early 2000s.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“But what we saw in that distribution center to me is that is not traditional e-commerce by any stretch. It was hard to do. They have years of mistakes and bottlenecks kind of being solved. And the Copycat companies, they'll come. They're going to have to make all those mistakes. And stitch fix will continue to innovate and keep that delta between them and the would-be competitors. And that could be mine for years and years and years. So look, if they're doing a good job, they're going to continue to innovate. very rapidly, put more and more distance between them and would-be competitors, they kind of want to make it look hopeless for those that are coming in after them. And I think a store operator like J Crew or Urban Outfitters, I think, is attempting a service like this that operates stores. Good luck. It's going to be tough. It's going to be tough to do subscription apparel. It's not going to be easy. My interest, by the way, I would say it's not entirely clear that Stitchfix is going to...”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Expensive, labor intensive thing to do for a very small win. So that labor bottleneck is, I think, very different than traditional e-commerce. Another thing that's just absolutely fascinating is that if you go into onto their site now and you want to get a fix sent to you, they show here's the first available date. That first available date could be seven days in the future, 14 days in the future when they're busy. There's some range of things. So just think about from an operator's point of view what it means to know that shipments, what they're going to be like in two weeks. It's very different to traditional e-commerce. There's no seasonality in the business, really. It has grown over time, but they have a very, very predictable production schedule. So if they're sending out a thousand...”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Apart, they're picked, they're folded, they're stacked, they're wrapped, they're put in a box, and they're sent out, and the quality controls go on at this point. That was a tremendous part of the human labor that was present in the DC was in that area. When the box is opened, you could try everything on inside a six or seven minutes because it's already to be tried on. That's an interesting way to present units versus another e-commerce operation that will send you some shirts. The collar stays are in, there's pins in them, they're folded nicely, there's plastic on top of them. If you had four or five things sent to you from a traditional e-commerce company you want to try them all on, it might take you seven or eight minutes just to get everything set so you actually could try them on, they put great effort into ensuring that when the box is open, that it's very presentable.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Way I would think of traditional e commerce and potentially even Amazon is that they're sending out finished goods and generally speaking they're hoping that they don't come back, that the customers satisfied. I think there's been a tremendous amount of volume of that type of e-commerce. For stars, Pitchfix has built a tremendous expectation of returns that most e-commerce operations don't kind of have to think of. And returns are margin killers for that model. There were some really interesting labor bottlenecks present at Stitchfix that I don't think other companies in traditional e-commerce think about. You might say labor bottleneck is negative. And I would say, yeah, it potentially is. It's a level of complication there and difficulty that makes it harder to get right. So the way Stitchfix presents its units generally speaking, all the collar stays are out. The plastic's gone. Everything is taken.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“But if they get it right, and I think they've gotten a lot right so far, it could really be something special. There's a number of different things that we saw there that I think vary dramatically versus traditional e-commerce.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“The stitch fix DC visit that we did recently. I'll say this was like a kid in a candy shop down in Dallas. That was the most interesting DC that I've seen since my early days on Netflix. It was super, super interesting some of the different dynamics that were going on there. So we got two hours there, which was super nice of them to allocate that much time. We spent time with their head of U.S. operations, absolutely brilliant, dynamic guy. that explained the flow of product throughout the facility there. And I walked out so many questions. I mean, I could have just spent 12 hours there. Really could have. I walked out saying, this is not an e-commerce business that we just saw. This is a whole different kind of service. And I don't think anyone, anyone in the world potentially is trying to do what they do at scale. And it's going to be a very complicated thing to get right.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“A lot less since COVID happened. I've done one since then. I did one trip. I got in the airplane two months ago to visit a distribution center in Dallas for stitch fix. Across my career, I mean, ah, eight to 12 times 23 and a half years.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Trying to fix it. I think that's ultimately what we figured out there that it's not going to be easy to replicate. And that's a continuing theme. The market gets validated. Competitors are coming. Some of them are going to be bigger and more well capitalized. Is that business defensible? And I do believe that you can get insights into that in a distribution center, of course, talking to management team and whatnot. But it's great to get out in the field and see what really makes an operation tick, not all investments obviously lend themselves to that. There's no factory to visit for Facebook or PayPal, but on a lot of other services, there are.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Very hard to replicate that had years and years of finding and bumping into bottlenecks and eliminating them and getting more and more and more efficient. That would range from how labor was used, the lack of storage of DVDs. They actually didn't store them anywhere. They always remained on the desk. Manager explained to us how the DVDs were always looking for a home. They weren't trying to find the DVD that the home wanted. They had the DVD in hand and say, hey, which home would this want this to a bunch of machines that they bought that sorted the material that didn't work, that destroyed a number of DVDs and that they had to customize just a tremendous amount of things and you get the sense that this is not going to be easy to do. Blockbuster can't go from running stores to running a DVD by the mail subscription service without a tremendous amount of work, without a lot of brilliant people running around.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“This is a part of the business I've always loved. Lots of people analyze companies without visiting them. Some people have a bias. Management teams are marketing to you. Of course, they're going to tell you what you want to hear. I've always had the belief that I can potentially learn more and get an edge by visiting companies and I may see something. I may spot a detail or something that either changes my mind or reaffirms kind of what my existing belief is. I'd say if I zoomed out a little bit on Netflix, we visited 3DCs. We visited Long Island DC, which was the first one. We visited DC in San Jose, which a lot of people visited. Then we also visited one in Atlantis. So we started mixing and matching and seeing certain patterns repeat with the DCs. But the one in New York was the most epic one. They sent us there without any representatives from the company. So it was just us and the manra of the office. I think what we saw essentially was an operation that was very”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Had a couple calls with them. I think they initially didn't even believe us that we And then we showed It over Reason I was in the book Netflix was because. The ones that kind of cracked the code on envelope Very helpful to Netflix It wasn't also clear that they were going to emerge. In touch with”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Tracking it, but it was pretty labor intensive. Maybe you might argue with somewhat limited benefit. It told us what we wanted to know Blockbuster service was The US was unsustainable and didn't perform nearly as well as the Netflix”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Notice that on the envelope, the blockbuster envelope, there were certain sets of numbers that kind of Repeat in other sets that wouldn't. We started looking into this more closely, and what we discovered was that on the Blockbuster envelope. Received your DVD and Blockbuster was telling you Many customers How many DVDs they were sending out? We started tracking that. The quarterly conference call, Blockbuster would say, This is how many subscribers that we have. Then you could kind of triangulate Was the beginning of subscribers? What was the ending subscribers? And then how many subscribers Kind of Throughout the quarter Essentially, we could see that their churn was. Astronomically Absurdly high, maybe three. 5x Churn that Netflix We saw that, we spotted that”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“Subscribe to every service, and we said, let's start putting them through their paces. One of the things we looked at is what percentage of the time did you get what was at the top of your queue? How many days did it take to turn around? So you selected them, when did they come? When you send them back, when did the next one come? When did they receive it? All that stuff, unsurprisingly, Netflix outperformed everyone. That was interesting. One of the ways that we kept track of everything, we had all these envelopes. We keep envelopes and write data on them when it was shipped, when it came back, and we eventually entered into a spreadsheet. We had DVD envelopes all over the place. The office from all three services. If you stare at something for long enough, sometimes certain patterns reveal themselves, and a guy in our office,”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source
“While I kind of considered it proprietary, this is a good time for a great reveal. We had an investment in Netflix. We've been fortunate enough to have a number of really good companies in the portfolio over the years, and Netflix is one of them. We got in there at a time where the company wasn't particularly in favor on Wall Street. So we got a fair amount of access. I tweeted at one point about a visit to a distribution center on Long Island. It was one of the most interesting DC visits I've ever had in my career. We do a lot of thinking, a lot of deep work, details, concentrated portfolio like we run are very, very important. So one of the things I came up with, let's track how these services run in comparison. Netflix had its service subscription DVD by the mail, red envelope. Everyone knows that stuff. Blockbuster had something called total access that they were competing with against Netflix. And even Walmart jumped into the fray at one point.”
2020-12-22 · Invest Like the Best · Mario Cibelli - Cornerstone Investing Insights - [Invest Like the Best, EP.205] · IDENTIFIED FROM THE TRANSCRIPT · source