Last week, I talked about how first principles thinking fails. This week, I go deep into one specific example: commoncog.com/blog/cash-flow
(Yes, the title is not a mistake ;-)
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The piece is long because I had to bootstrap an intuitive understanding of cash flows. If you have a finance background, you'll find this rather boring (and terribly basic!)
But I wanted to demonstrate that not understanding a SINGLE axiom might lead to a mistaken conclusion.
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One thing I realised while reading this — there's so much more to John Malone than I thought. I'm currently working my way through Cable Cowboy (goodreads.com/book/show/6794) and the best description I have for the book is 'a business thriller for those who enjoy corp finance'.
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Read it this morning from the link your newsletter. Yet again, another excellent article. Thanks. Also, Cable Cowboy sounds like a great read! Added it to my list.
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Ok finally read this, I like it. There's a common phrase , and I forget who said it, that most business problems come down to a mistiming of cashflows. Obviously lots of nuance into why, for example no revenue could be for many reasons, such as not creating value.
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Two other thoughts to add:
1. I find delightful irony in SV founders poopoo'ing MBAs/business knowledge yet business fundamentals leads to many a bankruptcy among those companies.
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