FOLLOW THE MONEY

Author

Fae Fazeli
February 14, 2024

Good morning. Happy Valentine's Day to all Lovers and Players. On this special day, we will follow the money to balance the equation of love. let’s dive in:

BUSINESS
VC’s Sitting On Cash

Venture capitalists, after raising $435 billion from 2020 to 2022, are holding back on new investments, holding onto their funds, according to a January 2024 Financial Times report.

VCs favor investing in mature companies or boosting stakes in existing portfolio ventures over random seed funding. This cautious approach led to 3,200 startup shutdowns in 2023, accounting for $27 billion in VC funds, according to The New York Times.

The 'Better Safe Than Sorry' strategy might eventually come to an end as investors will start asking, 'What are my fees for?'

START UP
Luxury Cookies for $160

Last Crumb is a Luxury Cookie Company offering Michelin-star quality cookies handmade in Los Angeles, packaged as luxury fashion items, and sold online via limited-edition drops.

Since launching, every drop of Last Crumb’s $160 cookie boxes has sold out in minutes, collecting a waitlist of 225,000 people and 8 figures in sales.

Last Crumb has successfully applied principles from the luxury market: High pricing, limited stock, and high-end packaging. Like luxury brands, Last Crumb collaborates with high-end brands, luxury hotels, and celebrities to enhance their perceived value.

SUSTAINABILITY
A $13 Billion Withdrawal from ESG Funds

The past year saw a $13 billion withdrawal from ESG funds due to green-washing fears, political boycotts, and corporate disputes.

The E.S.G. market is still worth trillions, attracting a wide swath of investors looking for solid returns and motivated by a cause they believe in. The median return for the larger E.S.G. funds was a decent 24.4% last year, which outpaced the S&P 500.

MARKETING
Only 2 Rolex Models Rise in Value

The Rolex GMT Master II in stainless steel with a ceramic blue and red bezel, nicknamed the “Pepsi” by collectors, rose about 5% to trade at roughly $20,000 in the secondary market according to Bloomberg’s Subdial Watch Index. The only other watch in the index to increase in price was the reference 69173 Lady-Datejust in steel and gold.

MONEY
High Returns

CITY
‘HERR OBER’: A City Guide

DEEP DIVE
Tesla: A Tech or a Car Company?

A former senior product manager at Tesla shares insights into how Tesla maintains a competitive edge through vertical integration and advanced battery technology. This approach allows the company to control every aspect of its technology stack, from batteries to software, unlike competitors who rely on external suppliers such as NVIDIA and Intel. Significant investment in battery development influences the cost, quality, and production time of EVs. Tesla also prioritizes recycling batteries for energy storage and uses in-house battery modules to optimize design and circumvent tariffs. Despite their open-source technology, competitors find it difficult to match Tesla's manufacturing scale. Tesla's future plans hinge on software for self-driving capabilities and robust hardware for further enhancements.

Tesla’s Potential New Revenue Streams
Traditionally a car company, Tesla's recent investment in software, including self-driving features, battery systems, and OTA updates, highlights its aim to sell not just vehicles but also software and regular updates.

Tesla’s Full Self-Driving (FSD) software, is already worth $1 billion to $3 billion in terms of annual revenue. Tesla charges an upfront fee of $12,000 for its FSD software, or $199 a month on a subscription basis and around 19% of Tesla buyers choose the FSD package. Key innovations like Autopilot, FSD, and OTA updates suggest potential for software licensing. Tesla could monetize network services and license its software to other automakers, creating new revenue streams.

China Entered The Chat
2023 was tough for non-Tesla EV startups. Tesla's stock dropped 25% due to competition from China's BYD, which delivered 42,000 more units and plans to expand globally. Despite this, Tesla's market cap of $582.54 billion on Jan. 26 remained higher than BYD's $67.3 billion.

Could Elon Musk's goal of lowering Tesla car prices and targeting emerging markets for high volume sales be influenced by a future software-centric business model, while Chinese competitors focus solely on car manufacturing?

LUXURY
Hermès: ‘Let’s Just Be Friends’

Upon receiving my first Kelly bag, many were surprised it took less than the usual 2 years waitlist. I initially thought it was luck, but Hermès has a strategy for selecting potential customers. A former employee at Hermès has provided insights into the selection process and shared tips on how to improve your chances.

Investment Piece: Each bag is handcrafted by a single artisan, taking up to 19 hours to complete. A Kelly is not merely a bag; it's an investment that can yield higher returns than certain stock options. A mini Kelly is priced approximately at 8050 euros in the store, and its resale value ranges from 22K to 32K. Let that sink in.

Selective Sell: Hermès sales staff choose clients based on their alignment with the brand's image, not just their past purchases. Salespeople focus on loyal, local customers, which shifts the power dynamics.

Good News: It's not all hopeless if you take a strategic approach. You can increase your chances of acquiring a Kelly or Birkin by building a purchase history with easier-to-obtain bags like the Picotin, Lindy, and Herbag models. Additionally, follow the steps below:

  • Buy always at the same store.

  • Interact with the same salesperson.

  • Avoid asking for a Birkin or Kelly initially.

  • Begin a purchase history.

  • Buy an alternative bag, such as Picotin.

  • Ultimately, request the Kelly or Birkin.

Bonne Chance.

NEWS
Headlines

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