First, some housekeeping. Check out my podcast on YouTube; my subscribers jumped from 100 to 3.5k in 3 weeks.
Now, to the weekly programming.
- Should you invest in a Softbank’s ARM IPO? The data says No.
Softbank took ARM private in 2016 for $32B. And it’s now coming to public markets at an estimated valuation of around $50B. But as a retail investor interested in tech, should you consider investing in ARM?
The data says no.
Out of 25 companies backed by Softbank that went public, only four companies are above their IPO price. And the average loss in the 21 companies that are below IPO price is a whopping 45%. Knowing these numbers, I wouldn’t touch ARM IPO and instead wait to see the price settle down.
If the recent subscription interest claims are true--that it’s six times oversubscribed--it’s clear that large companies are going to take a stake in ARM because of its strategic importance. Google, Apple, TSMC, and Intel all have an interest in ARM to stay a neutral player in the chips game.
This will be the main reason why ARM’s IPO will succeed. But as a retail investor, don’t be influenced by the IPO FOMO.
- The reason why 14 Toyota manufacturing plants shut down last week
As someone who works in developing storage products at Azure, this story is fascinating. Last week, 14 manufacturing plants of Toyota shut down. The reason was a botched IT maintenance issue, which became an issue with full disk memory across a bunch of servers, and the backup mechanism to switch disks was not working, which ultimately took down the IT systems and the manufacturing plants. Almost all IT departments have a backup mechanism designed to handle different failure scenarios from disk failure, VM failure, network failure, region failure & data center failures. Something as common as a disk full error taking 14 manufacturing plants down is fascinating.
3. You are what you consume
The one conversation you should listen to this week if you are interested in what is happening in India’s venture capital scene and how India’s top VCs are thinking is the conversation Nitin Kamath hosted on his YouTube channel. My takeaway in this conversation was both the Kamath brothers felt that investing in VC funds in India was not the best way to use their money & it seemed like they were hinting at the hypocrisy of valuations at which startup equity is being dumped to Indian retail investors. One point that the VCs bought briefly but didn’t delve deep into it was that it’s not all the fault of VCs that this was happening it’s the founders who are making most of those decisions. I particularly enjoyed Blume Ventures co-founder Karthik’s view it seemed like they had original thoughts, while the other two VCs were boringly non-original.
Also published here.