Are Good Company Cultures an Economic Moat? With Jessica Ablamsky | 7investing
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Are Good Company Cultures an Economic Moat? With Jessica Ablamsky

January 14, 2021 – By Samantha Bailey

Can a company’s culture be an economic moat, or a sustainable competitive advantage? A recent Gallup poll suggests that a whopping 85% of workers are unhappy at work, leaving only a measly 15% of employees who are engaged with their employer. This directly contributes to high employee churn, leading to high employee search and training costs for most companies. If a company can find a way to keep employees happy, it will not only avoid these costs but have a highly knowledgeable and engaged worker base.

This is why Jessica Ablamsky emphatically believes a good company culture can prove to be a decided competitive advantage. A marketing writer and journalist in the San Francisco Bay Area, Ablamsky now spends her time consulting for some of the world’s most innovative companies, ranging from small startups to global tech giants including companies such as Adobe and Oracle, with an expertise in branding through storytelling.

 In an exclusive interview with 7investing, Ablamsky shares her research on company cultures, why the salary and compensation workers receive is only a part of the equation, and what makes for a good and bad culture in the workplace. Of course, the conversation wouldn’t be complete if we didn’t also discuss what a company’s culture means for investors and different ways to investigate what a company’s real culture might be like.

Ablamsky is also an accomplished investor and doesn’t leave before explaining what her investment philosophy and process looks like and discussing a few of her favorite current ideas.

Companies discussed throughout the episode include In-N-Out Burger, Wirecard, Luckin Coffee, Carvana (NYSE:CVNA), Teladoc Health (NYSE:TDOC), and Zillow Group (NASDAQ:Z)(NASDAQ:ZG). 7investing’s advisors or its guests may have positions in the companies mentioned.

Timestamps

00:00 – Jessica’s Introduction

00:33 – How Companies Can Create Good or Bad Culture

19:54 – Investing in Companies Based on Culture

32:55 – Branding Companies Through Storytelling

36:38 – Jessica’s Stock Picking Prowess and Philosophy

44:27 – Is Jessica Bullish or Bearish on iBuying?

 

Transcript

Matt Cochrane  0:00

Greetings fellow investors.  I’m Matthew Cochrane, a lead advisor at 7investing, where it our mission to empower you to invest in your future.  We do that by providing monthly stock recomendations to our premimum members, and educational content that is freely available to everyone. Listeners, I am very excited to introduce Jessica Ablamsky, a marketing writer and journa in he San Francisco Bay area. A former newspaper writer, she now spends her time consulting for some of the world’s most innovative companies. Ranging from small startups to global tech giants, including companies such as Adobe and Oracle, with an expertise in branding through storytelling. I’ve long followed Jessica on Twitter for investing prowess, but it wasn’t until I discovered she was an expert on business culture that I reached out to her to appear on our podcast. I think this is going to be a very fun and informative show. And one very relevant to investors. So let’s get started. Jessica, welcome to the show.

Jessica Ablamsky  0:32

Thanks for having me.

Matt Cochrane  0:33

I can’t wait to talk to you about this stuff, Jessica. Well, as you know, I want to talk about the workplace cultures different companies create and cultivate for their employees, and how that might be relevant to shareholders. So let’s just start at a very basic level, what is a company’s culture?

Jessica Ablamsky  0:53

That’s a great question. In the most simple terms, your company’s culture is just the way we do things here.

Matt Cochrane  1:05

And what are like some of the things companies do that that can create a good and bad culture, like we hear like buzzwords – oh, it’s an open workplace? Or, you know, it’s, it’s management is good, but what ? How does management establish a good culture?

Jessica Ablamsky  1:24

Well, management is a is a really good place to start, because that is where culture starts. The most important thing I think, if you’re talking about whether you’re interviewing for a job, or investing, the most important thing to remember is that culture starts at the top, it starts with leadership, particularly executives, but especially the CEO, if you’ve got a toxic CEO, the entire culture is probably going to be toxic.

Matt Cochrane  2:00

Why? I obviously like the way leadership establishes that a company like a workplace, and the workplace environment. That’s important to employees. Why is this important though to shareholders?

Jessica Ablamsky  2:13

I think a really good reason it’s important to shareholders is because healthy cultures outperform. Healthy cultures doesn’t necessarily mean every single day is going to feel like sunshine and roses. But healthy cultures beat the S&P 500, they have higher revenue and they have lower turnover. If you’re familiar with business metrics, turnover is incredibly important because one, it reflects on your company culture, and two, it’s expensive to hire new employees. Recruiting costs money and onboarding costs money.

Matt Cochrane  3:01

I think I want to say the first time we started talking about this was I just tweeted out a question like, “can a company culture be be an economic moat?” What would you say for that? Can a company’s culture, the workplace environment they establish for their employees, can that be a competitive advantage for them?

Jessica Ablamsky  3:20

Absolutely. Well, I can give you a couple of statistics, since I’m guessing everybody here likes data. So according to data by Great Place to Work, they are a company that works on company culture. They wrote a really great book. The CEO, Michael Bush, wrote a really great book that I read, but according to their data, trust is critical for business success. High trust companies outperform their rivals on multiple financial metrics. Businesses with high trust culture is yield two to three times greater stock returns than the market average, and have 50% lower turnover rates than the competition. Companies in the top 25% on metrics that include leadership, effectiveness, trust and innovation, produce three times the revenue of growth – revenue growth of companies in the bottom core tile.

Matt Cochrane  4:23

So is that so it’s amazing. It’s just having like employees who have been long standing employees, they don’t need training. They’ve already been trained, and they can help train other employees they bring on how much? How much is that an advantage to just have employees who have been at a company for a long time?

Jessica Ablamsky  4:52

That’s actually complicated. That that kind of institutional knowledge is incredibly important. I don’t want to get too deep in the weeds, but one of the things that is positive for company culture is not putting all your most important decisions on your most tenured employees. It is important to train the next generation of leaders. And that’s one mistake that companies can make. They leave, for obvious reasons, all of their most important programs and decisions to their most tenured employees. And then I hate to talk about politics, but then you get kind of the effect, like in Congress, where the only people in power are the people who’ve always been in power, and what happens when they leave? You lose everything.

Matt Cochrane  5:47

Right? Sure. What are things companies can do that can really establish a good culture for their employees?

Jessica Ablamsky  5:56

Let’s back up for a second. So I think it’s important for people to know that first of all, businesses in the US and around the world have been trying to improve employee engagement for decades. Employee engagement is what we’re talking about here. It’s jargon for whether people care, whether they want to succeed, whether they want to do a good job. And that’s really what employee engagement is to me, businesses are failing miserably. Businesses in the US and around the world have been trying for decades to move the needle on employee engagement, and they’re failing. Not every business but as a whole. So it’s approximately 70% of employees are disengaged. In fact, I think it’s about 16% of employees are so disengaged, that they’re actively trying to sabotage their company.

Matt Cochrane  7:00

Wow. So there’s you said, 16%.

Jessica Ablamsky  7:04

I believe that’s the number. 16%.

Matt Cochrane  7:07

So almost almost 20% employees are so fed up with their company that they’re working for that they get their paycheck from? They’re actively working to sabotage it from within? Wow. That’s incredible. So I know you’re in the Silicon Valley area. Good companies out there. We always hear about like the the headquarters at Google or headquarters at Facebook, or Apple’s new headquarters? Do you Silicon Valley companies do a better job at this than the rest of companies? Is that because the culture is really different? Or easier? Dealing with, like, Walmart has a lot of employees that they just have to deal with on the front lines, and they’re going to almost by their nature, they’re just going to get paid less than obviously a Google engineer. Like a cashier at Walmart is going to get paid less than a Google engineer. So is it because Google only has to do has to deal with so like comparing Alphabet to Walmart? Is it just easier for Alphabet to establish a better culture because they’re dealing with less employees? Or does Silicon Valley really do something different?

Jessica Ablamsky  8:19

You know, first of all, the campuses- I’ve seen some of these places, and they really are what people say they are.  I’ve been to a number of campuses and you know, they do have the basketball courts and reading nooks. It’s amazing. I’m personally not a fan of  the open work plan. But that’s an aside, they’re still (inaudible) but it is important to keep in mind that you don’t need a racquetball court to make people happy. It may to some extent not be fair to compare a company like Apple to Walmart, however, there are businesses with people who have job responsibilities, like in Walmart, that that do have healthy cultures. I’m in California, so I have to bring up In and Out because that, if you’re not aware, if you’re not on the west coast, In and Out is a fast food chain. It is a family owned fast food chain, and widely considered to be one of the best places to work. When you go into In and Out, first of all, you can see the kitchen from where you’re ordering. They’re not hidden. Second of all, you’ll notice that they’re happy. They’ll probably be laughing, sometimes singing, it’s really incredible. They’re very forced to fast food. They’re fairly well paid. They’ve got benefits. And again, it’s supposed to be one of the best jobs. And that is one of the best places to work. Costco too. Costco I believe is also known as an amazing place.

Matt Cochrane  10:26

Yeah, I’ve always heard Costco. I didn’t know about In and Out. How does the fast food chain do that? How do they establish that culture of laughing and camaraderie while they’re flipping 1000 burgers a day? What’s the secret sauce there?

Jessica Ablamsky  10:47

Well, first of all, if you work a job that is highly repetitive, – how you create meaning in an office is going to look different from a Walmart, but basic things that create a feeling of maybe not happiness, but contentment, satisfaction, are going to be consistent, regardless of the workplace because we are human. And there are a number of very basic things that make humans happy, or make humans content. I don’t like happy. Not like happiness, contentment,

Matt Cochrane  11:27

Contentment, okay,

Jessica Ablamsky  11:28

There are a number of things that create that sense of contentment. You know, one of the first is going to be a sense of meaning and purpose. Another really important factor is going to be a mission and values and related relationships. Those are kind of the big three. Meaning and purpose, mission and values, and your relationships.

Matt Cochrane  11:57

That, that sounds hard, because I get it. I’m a police officer. That’s my day job. And so I get how that’s my purpose, or if you were a teacher,

Jessica Ablamsky  12:11

You have a purpose and meaning driven job, right?

Matt Cochrane  12:14

Or if you’re a teacher, or a minister. It’s gotta be hard, because I imagine if you’re In and Out, you’re getting a bunch of 16 to 22 year olds as their their part time job flipping 1000 burgers a day. Like how how does a company like that say to this 18 year old flipping burgers in the back – the greasy burgers? Delicious, but greasy? How do they instill a purpose in that? How does a company like that do or Costco even stocking shelves all day, I feel like that’s got to be hard for a company to instill that kind of a meaning or to give that job of meaning. And for that employee to feel it, every day they go to work. How does the company do that?

Jessica Ablamsky  13:09

So one of the things I like to see when I’m investing is a strong mission statement. I like mission driven companies, I think a lot of people like mission driven companies, maybe without really understanding why the value is so – a strong mission statement, strong company values is what I want to see is an investor and what will make you happy as an employee is connecting the mission and values to what the company does, each department each day. Each department and each job. That is a very important part of creating a healthy culture. And so you know, maybe the CEO isn’t going to explain how each job contributes to the company mission and values. Both the CEO should be communicating clearly and consistently. The company mission, its purpose, why it exists. And, you know, your manager should be your manager – certainly should be responsible for helping you understand how your job, how your position connects to the mission, and how you contribute to the company achieving key business metrics.

Matt Cochrane  14:53

Oh, I get it. So basically, “hey, this is this is what we’re trying to do, and you’re an important part of this. You’re not some forgotten part of this” Yeah, you’re a part of this almost inclusiveness. Yeah, yeah. Okay. I like that. What about bad cultures? How does the company, I’m sure no CEO, or no founder of a company starts off saying “I want to  found a company with a really bad culture.” So how does a bad culture take place in a company?

Jessica Ablamsky  15:28

Sure. I think one of the important things to remember is most people hate their jobs because most managers have little training. And this is I think something people are aware of that most people are hired for management positions because they were really good at doing the job. And they’re really good. You’re really good at making cogs. So you’re hired to manage people who may cogs that’s actually a remarkably bad way. To choose your managers, you want to look for quality, you want to look for those soft skills that people talk about, emotional IQ things, you want to be looking for those soft skills, and then provide training.

Matt Cochrane  16:22

What kind of training should companies be? How are companies failing to train managers? Where are there good ways to train managers and bad ways? Is it just basically taking someone who’s making cogs and saying, alright, you know how to make cogs, so manage this line of people making cogs? Is it just a lack of training classes to even have? Are they having this training, and they’re not doing it? What’s the disconnect that happens in most of these companies? Because like, as you said so many people hate their jobs, and are just unsatisfied with their jobs. What’s the big disconnect there?

Jessica Ablamsky  17:09

Now you get into the area of job coaching and learning programs. And that is a huge conversation. But offhand, I would say, one, whatever kind of coaching and learning a company has, it should be built. It shouldn’t be an afterthought. It is important, and it should be treated like it’s important. For example, I can’t remember who but one of the  SC bulls  based overseas went to their shareholder meeting and was asking if anybody had any questions, and one of the things I really wanted to know, was, well, I’ve heard that hiring has been a headwind. How is that going? Is their internal training program meeting their needs? H thought it was a great question, which I’m glad about because I genuinely wanted the answer. He came back with what I thought was really great feedback from management about their training program, and its effectiveness.  I would ideally like to see a company that doesn’t treat learning as an afterthought. Because also another important part of being happy at work is feeling like you have opportunities for development. Can you develop if there are if there are few opportunities?

Matt Cochrane  19:04

Yeah, definitely one of one of the worst things I think is, or one of the most demoralizing things is if you believe you’re in a dead end job. I’m making cogs in, there’s no way out. This is the end of the line. There’s no way I can move up from here. Like, I totally get why that would be probably one of the most demoralizing things.

Jessica Ablamsky  19:27

Hope is enough. As I bet a lot of people have figured out over this past year is a good thing. It’s fundamental to your sense of hope/optimism. It’s fundamental to contentment should at war, it’s no different at work. You need a sense of optimism.

Matt Cochrane  19:54

Sure. Sure. Absolutely. So that awesome. Let’s put on our investor hats. So as an investor, what are some red flags like you look for in companies before you invest in them like that maybe this company’s culture isn’t up to par?

Jessica Ablamsky  20:13

It’s definitely gonna depend on whether we’re talking about a scrappy high growth small cap, or mid cap versus a mega cap. I mean, if you check Glassdoor and the reviews on a on a company that’s nearly a mega cap are just terrible, I would probably be worried. I give a little more leeway to these companies that are practically startups, because it is hard to grow a company, and a lot and that these companies, we forget just how small they are sometimes. If I remember correctly, a GoodRx, which I’m a fan of, I’ve been a fan of it since before the IPO. If I remember correctly, they have 200 employees. So high growth, small cap companies are going to be places where you where you’re struggling to keep up with growth, you know, it’s hard to hire enough, especially in highly specialized industries. They wear a lot of hats. Work life balance isn’t going to be great. There are going to be bumps and I give more leeway to that. What I will not excuse is any kind of ethical concerns in a company of any size among executives. Your reputation and the people you’ve surrounded yourself in the past with in the past should be Sterling. For example, a company I was concerned about bills itself as a tech company. And I frankly have very serious doubts, and I was looking at another company in the same sector. And three of their executives had jumped ship to this other company. And I haven’t really made up my mind how I feel about that. I can’t  can’t fault the person for deciding you know what, this isn’t what I signed up for. But it gives me pause.

Matt Cochrane  22:37

Sure. Absolutely. What about so what about Carvana? I believe the founders -like family is involved in the business, and I don’t believe it’s been while they were at Carvana. But in the past, they’ve had  blotches on their record.

Jessica Ablamsky  23:03

I’m very aware of the issue with Carvana.

Matt Cochrane  23:06

So how does that play into it? Is there a point where as an investor, you can say, well, this was in the past, and I can look past it now, and maybe they’re changed? Or is this something that is a stain that that stays with them forever?

Jessica Ablamsky  23:23

I mean, I think the stock market seems skeptical on Carvana for a number of reasons. Clearly is giving the company a chance. For me personally, Carvana is exactly the kind of thesis I like. It should slide right into my portfolio, you know what I mean? But it was a difficult decision. For me personally, I decided there are too many great companies and I would have to pass. I did actually own it for a little while, but there’s just too many great companies. I don’t care what anybody else invests in, but there’s so much uncertainty. Do I really need to also worry on top of it if you’re honest and ethical?

Matt Cochrane  24:18

Right now, I agree with that, actually. Last year for a little bit of time, I was invested in Wirecard. If you’re familiar with that, because their numbers looked great and it was decently valued.  I lost money on it but it was like 10%, nothing big, but like thank God I got out of it before it completely blew up. That was one where I was reading all the articles and then I was reading the CEOs responses, and for listeners that If you don’t know, Wirecard was a merchant processor based out of Europe, and they were growing in Asia, and all the numbers looked great. But articles kept hanging out, I want to say, with the Financial Times, or Forbes and there was a reporter who was just like dogging them with these stories like, no, something’s not right, their accounting is not right, things don’t add up. And the SEC would investigate them. That happened from time to time. I got in it for a little bit. I was just like, “wow, it’s so undervalued.” And I really liked the story. And thank God, eventually the articles added up and the evidence added up in the CEO. He was just dodgy when he was responding to the questions, you know. All the accounting was and the end, they had like $2 billion they said that was in the bank that didn’t even exist. All the growth, or a lot of the growth was made up in and everything like that, but it completely blew up. And after that, it’s like one of those reminders you need, like I already said, would would have told you at that time, or before that like if there’s questions about management, just move on, like you said about Carvana. There’s plenty of great companies out there. I can invest in that I don’t have to worry about management’s integrity. And, and that was just like another very vivid reminder for me like.

Jessica Ablamsky  26:27

I almost bought Luckin! I’m always pretty skeptical of companies that are growing. Well, it’s really stock price stock price moving too quickly, it always makes me a little bit nervous. And I am very, very cautious. Unless I’ve really done my homework, but I’m not gonna lie I very seriously thought about Luckin and finally decided to pass.

Matt Cochrane  27:05

Yeah, yeah, yeah. In both those cases, that was obviously a good decision. Wirecard at the time I bought it, I want to say it was like 40 bucks, and it went down to 35 when I sold it, and now it’s at like, 35 cents. So it definitely blew up. I was glad I got out of it by then. Um, yeah. So I was reviewing our DM’s just before we talked, and one of the things you told me when we first started talking about workplace cultures was it was to ignore best workplace awards. Why is that?

Jessica Ablamsky  27:38

I think best workplace awards are great. It’s a nice place to start. If you’ve already designed it compan it is a good investment. You know, it’s nice to note, but I would kind of take them with a grain of salt, the data is too easy to game. What you’re probably never going to know is what percentage of employees actually filled out the survey. So now picture 30% of your employees are so get disengaged, they didn’t even bother filling out the survey. I’m not gonna name any names, but the best workplace awards are nice to see, but I wouldn’t place too much weight on it.

Matt Cochrane  28:53

And you mentioned already Glassdoor, which I guess is my go to tool like when I like I’ll say I care about workplace culture. And I guess that’s what I do. I’ll go to Glassdoor and I look at how many stars the company gets? And how many people like would recommend the company to a friend? When you use Glassdoor, what specifically are you looking at?

Jessica Ablamsky  29:17

I do like to look at Glassdoor. I do like to check the charts to see how the ratings have changed. The ratings have changed over time. You do have to keep in mind sometimes, especially for companies that recently went public. Those ratings can seem to follow the stock charts. So keep that in mind. Keep that in mind too. But I think my favorite way to use Glassdoor is actually to look for red flags in a company. And that can be in a number of categories. Keep in mind that everybody loves to complain. So the reviews are often going to skew negative, but if you’re seeing the same kind of complaints over and over – work life balance is pretty common. I’m not paid enough is pretty common. I don’t mind those things. But if there’s something specific and you’re seeing a pattern -that’s worth noting the same on the positive side, if you’re seeing if you’re seeing a pattern in the positive reviews, then that’s something to note. The other thing I always look out for is companies that are gaining the reviews. And some companies are better on it than others. But there are companies that have been accused of literally ordering every employee to make a positive review.

Matt Cochrane  30:47

I’ve seen those I see those. Exactly.

Jessica Ablamsky  30:50

Right, exactly. So what I would look out for there is a disproportionate amount of, you know, four or five star reviews, with just enough characters for them to publish. Often you’ll see, you know, the no negatives that I can think of, and you’ll see that over and over and over, no negatives at this time.

Matt Cochrane  31:19

Gotcha. Gotcha.

Jessica Ablamsky  31:20

Oh, if you see a lot of positive reviews, with absolutely no negative feedback, you either found the world’s best company, or maybe there’s a problem. Right?

Matt Cochrane  31:31

Right. I apologize for jumping around. But I always do this too. I wish I was more organized in my interviews, but like, how much of this is money related? Like how much of it is just like compensation and salary? Because we talked about management making the cog makers feel part of the team and part of the family? How much of that comes down to? Or not like letting them feel like they’re out of debt? And that there’s opportunity for them? But how much of it at the end of the day, is it just like, well In and Out pays their employees on average 10% more than McDonald’s employees, or for larger companies like their 401k is a better plan? How much of that plays into it?

Jessica Ablamsky  32:21

Studies show less than you’d think. I think that being able to afford to live is kind of a bare minimum.  I think once you pass a certain threshold, I’m paying benefits matters less than you think. It’s hard to pay somebody enough to make it worth making them miserable.

Matt Cochrane  32:55

That’s a great way to put it. I love that. I love that. When I was talking to you, you said your specialty is branding companies through storytelling. What does that mean, storytelling? Why is storytelling important?

Jessica Ablamsky  33:11

Stories are one of the things that we look for. For example, in investing, when somebody asks, well, what’s your thesis? They’re really asking what’s the story? Stories are a way to get people to pay attention. A way for managers and executives to connect people, to their message to their mission, you know, to their message to the company’s mission, to the company’s values. Stories are a very powerful tool.

Matt Cochrane  34:02

How so? How does a company story affect its culture? Could you give us an example of like a company using its story where it really like, affected its culture? Maybe?

Jessica Ablamsky  34:21

If we want to just talk about the power of stories, I think Livongo is a perfect example. Anybody who participated in Livongo was a big fan of Livongo. But what a very important part of that story was – I don’t know if you remember the video on the the video on the website of the CEO and founder who talked about having a child with diabetes and wanting to improve his child’s life.

Matt Cochrane  34:58

I don’t remember that video, but it sounds pretty powerful though. Like it when he’s saying this is why we’re doing what we’re doing.

Jessica Ablamsky  35:08

Right, exactly. So he story of Livongo was I’m a healthcare executive, my child asked me, am I going to be okay? And he said yes. And then wanted to make it true. And the video talked about how many people who worked for the company had or were impacted by diabetes? We’re gonna make money, you know, we’re gonna make money selling this product is not a powerful story. We are empowering people to take control of their health. That’s a story that not just employees, but clients, consumers.

Matt Cochrane  36:02

Absolutely, absolutely. And just going back and just for the workplace culture, this is what we’re doing. We’re not just making cogs, we’re not just earning a paycheck. We’re trying to make our families, our friends that we know like this. People who are suffering make their lives meaningfully better.  That is powerful. Absolutely. Good example,

Jessica Ablamsky  36:25

Empowering people through technology is a is a very powerful story that underlies a lot of the branding in technology.

Matt Cochrane  36:38

That’s great. I first started following you on Twitter because of your stock picking prowess, not because I knew you were this hidden expert on our workplace culture. If you have time, why don’t you tell us about your investment process in philosophy?

Jessica Ablamsky  36:59

Sure. My philosophy is make money.

Matt Cochrane  37:06

A good place to start.

Jessica Ablamsky  37:08

That’s kind of my starting point. I think as a as an investor, my ideal is buy and hold. I’m not gonna lie. I’m not against a good trade. But a lot of the companies I’m attracted to are disruptors in some way. For example, my thesis on buying is that residential real estate has never been disrupted. A lot of investors think it never will be. But if they’re wrong, the upside is massive. So I got I got long, I got long iBuying. Actually kind of at the right time. I finally got to convince to go all in last March. To be fair, I was actively trying to decide what to buy on my shopping trip. But I got very long iBuying. That’s why it pains me to pass on Carvana. You may be able to understand now why it’s something I would like. TDOC, I’ve liked Livongo and TDOC for the exact same reason that healthcare is broken. And I genuinely believe this is going to be an amazing. Finally, I don’t know if technology is going to fix health care, but I do believe it’s going to be an amazing decade for improvements in that space. So I picked up a TDOC and Livongo practically the moment I heard about it. I fell in love with it. That’s why pains me to pass on Carvana disrupting the car industry. I mean, that is right up my alley.

Matt Cochrane  38:53

Absolutely. Yeah. Sounds like it. So like are you a fan? Were you a fan of both companies? Livongo and Teladoc. Before the merger and are you a fan of the merger?

Jessica Ablamsky  39:03

Yes, um, I actually passed on TDOC. So well before the I’ve done a lot of work in health care and hospitals. Before the pandemic happened, I knew that telehealth was the future. When I discovered TDOC, you know, this is the only pure telehealth company on the market. I had to pass because there were enough – ethics is not quite the right word. There were some there were concerns that have since been cleared up not ethical per se, licensing issues. They were working out issues with regulations and I had to pass in hindsight, obviously, I wish I hadn’t, but you have to follow your rules.

Matt Cochrane  39:53

Right, right. Right.

Jessica Ablamsky  39:54

And I followed my rules there. There are things if there’s a question about the basic process product, I can’t go all in. But I did. I did go long TDOC. Right as soon after going long Livongo, and I just loved Livongo. I mean, and you know it just immediately and when I heard about the merger, I was honestly shocked to find out that Twitter despised it, because my brother actually texted me and I almost lost my mind. This was the most amazing thing I’d ever heard. And I got online and I felt like I got on Twitter and it felt like Groundhog’s Day. Practically every single influencer in the business, except From Growth to Value. I believe 7investing was kind of say let’s wait and see. But a lot of the influencers were unabashedly negative they were selling. It was, at one point, basically just me and From Growth to Value who were like, guys, this is the most amazing thing that’s ever happened.

Matt Cochrane  41:19

Tell me if I’m wrong. I didn’t follow those companies too closely at the time. It seems like if you were a Teladoc shareholder, people were very excited about or more excited about it. But if they were Livango shareholders, I feel like the Livango shareholders felt like they they were getting like, not not the best – not the price they thought they deserved for their shares. And I think that was a lot of the questions.

Jessica Ablamsky  41:45

I think, I think, actually some of the teladoc shareholders were like, why are you buying this overpriced company? I don’t even know this company. Why would you buy this overpriced company and the Livongo shareholders were like, but I wanted to see Livongo grow on its own. I bought this high growth company. Why are you saddling us with this? Wait, when we were going to the moon, and I guess there wasn’t as much, at least on on Twitter, there wasn’t as much crossover between the two companies, as you would have expected, although the customer base didn’t have much crossover either. So it was me, and From Growth to Value, we’re just sitting here like, guys, amazing. I mean, it’s a little sad about Livongo. But this is amazing.

Matt Cochrane  42:42

It was definitely a grander vision for a company. I’m not as knowledgeable. I’m not an expert on either of those companies, like I said, but it was definitely – I get people asking questions about it. But I also get they’re really trying to do something very, very big and grand and special over there. You gotta admire that that vision that they’re that they’re going for.

Jessica Ablamsky  43:09

I’m pretty biased. I am almost dangerous bullish on TDOC. I have a hard cap on initial investment. But because I had filled my cap, I mean, we all know what the market did last year. It went up like crazy. So normally, I would go somewhat slowly as I’m building a position, but I went very, very, very quickly, unusually quickly, with TDOC and Livongo. So I had full positions in both when they announced the merger and decided as a matter of philosophy that I would not trim. And so now not only do I have an outsized position, it is my It is my highest conviction stock that is I actually would argue it’s investment grade at this point, but I still could be wrong. So it is my highest conviction position outside like Apple is going to be around tomorrow, and Amazon’s not going anywhere. So I actually think I believe in TDOC as much as I believe in Amazon. That’s where I’m at.

Matt Cochrane  44:27

Okay, all right. Well, let’s talk about if you don’t mind let’s talk about iBuying real quick too because that’s a space I’m very interested in.  love real estate. And 7investing might have some recommendations in that space. What are your favorite ways to play that space? Like have you created a basket of thethe Zillow, Redfin, Open Doors, or is there other companies you’re looking at?

Jessica Ablamsky  44:55

My preference in it is Zillow. That’s the first company I went long. Just because they are larger. They’re larger positions. Although I am building out I actually was pretty aggressive with Open too. But I’m building out Redfin, that’s one of my plans for 2021 is to build up Redfin because I got into it later. But so my thinking with iBuying is that I am very long. I don’t know how the space is going to play out over the next decade. But I think it’s too early to just pick one company and go all in. If that’s what you’ve done, I don’t blame you. Go for it. Baskets – it’s actually not generally the way I operate. I usually just pick a horse. But I really think in iBuying it’s just too early. I prefer Zillow. That’s the one I’m betting on. But I want to stay long on all three because I think it’s too early to tell how the space is going to evolve. Full disclosure, I got burned by GRUB fairly hard. So that might have impacted my, my position on iBuying you just never know how these things are gonna shape up. And it’s a shame to be right about the opportunity, but wrong about the winner.

Matt Cochrane  46:25

Right? Absolutely. And I you know, I’m kind of the same way actually. I am not usually a basket investor. If there’s an industry I like I might definitely might have more than one company from the industry. But I’ve tackled it in a similar way. I have a fairly sizable position in Redfin. And actually, my newest position is Open Door. I actually don’t have a position in Zillow, though there are other investors on our team who are very bullish on that company as well.

Jessica Ablamsky  46:57

I’m a big fan of Zillow. Like I said, that’s a that’s my favorite horse. But I’m not gonna bet the farm on it yet. I, again, it’s ashamed to be right about the opportunity, and wrong about the winner. For the record, I don’t think this is necessarily a winner takes all space. I personally suspect that all of the ibuying companies are going to tweak their model and mimic each other until somebody gets it right. And then everybody just does that. But again, I got burned, I got burned pretty hard by grubs. So I don’t want to take any chances with iBuying. I am very bullish. I do genuinely believe it’s the future. And I want to say every time someone goes public to scoop it up.

Matt Cochrane  47:49

Right, right. No. And I mean, obviously, the the US real estate market is one of the biggest markets in the world. And I mean, we just moved not too long ago. And when you move you see that this industry could be more efficient. There’s ways to improve this industry, both on price and on process. And I think these companies are definitely working on a solution for that. Jessica, thank you so much for joining us. If people are interested in following you, where can they find you?

Jessica Ablamsky  48:2

6  You can find me on Twitter. It’s just first letter last name @jablamsky

Matt Cochrane  48:33

On twitter @jablamsky. And if you are if you’re on Twitter, as far as I’m concerned, she is a must follow. Well, Jessica, thank you very much for joining us today. Again, I’m Matthew Cochran. We’re 7 investing and we’re here to empower you to invest in your future. Thank you.

 

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