Jamin Ball: “M&A has followed an interesting arc over the last ~20 years. A while back companies companies built platforms through M&A. They build organically, but also acquired their way into new products and markets. [Salesforce] is a great example. They built out their core CRM capabilities, but expanded into analytics when they acquired Tableau, expanded into integration when they acquired Mulesoft, and expanded into communication when they acquired Slack. With more recent cloud software companies, there was a lot of organic expansion – ie expanding into new markets and capabilities through internal product development. Datadog is a great example of this. They started with infrastructure monitoring, and then organically built out application performance monitoring (APM), logging, cloud security solutions, ITSM offerings, etc. I do wonder if the pendulum will start to swing back to inorganic expansion as the cloud platform companies who were founded 10-15 years ago start to see growth slow and look at inorganic opportunities to continue their expansion. OR – if earlier stage companies (not startups, but companies in the $5-$20b valuation range) look to inorganic expansion earlier than they would have otherwise in a more M&A friendly environment. There are also a lot of “zombie” point solutions stuck in the ~$100-$300m ARR range who probably don’t have much of an independent future, but would be quite valuable as part of a broader platform. For private companies in this bucket – this may be your window. Better to be on the front end of it, otherwise you risk missing the wave. ”
Jeff Bezos: “What are the inputs to a higher stock price? Okay, well, free cash flow and return on invested capital are inputs to a higher stock price. Let’s keep working backwards. What are the inputs to free cash flow? And you keep working backwards until you get to something that’s controllable.” [via Shane Parrish]
Siddharth Chowdhury: “Every man has in his memory a few songs which facilitate time travel.”
Arnold Kling: “Human society is dynamic. We are always trying out new ideas for products, services, processes, and rules. We can think of innovation as taking place according to three e’s: experimentation, evaluation, and evolution. Experimentation means trying out the new idea. Evaluation means assessing how well the new idea works. Evolution means keeping good ideas and discarding ideas that no longer work or never worked in the first place. People trying to innovate from within the government have to persuade a sluggish bureaucracy to attempt something that might seem risky. In the market, all it takes is willpower and the ability to mobilize resources. This makes experimentation easier in the market, unless we are talking about a project that requires a massive undertaking, such as the Manhattan Project or the first manned moon landing. The market has a natural mechanism for evaluating new ideas and for undertaking evolution. That is the profit and loss system. Ideas that yield more benefits than costs will generate profits and survive. Those that fail to do so will generate losses and be unsustainable.”
Astasia Myers: “We think web AI agents are the next frontier that really helps with the end-to-end automation of human tasks. [W]eb AI agents are this dynamic bridge between static pre-trained models that are mostly text-focused in the ever-changing digital landscape.”
