Drew Cohen from Speedwell Research discusses Coupang's pivot from Groupon imitation to Amazon model success. Topics include Coupang's logistics, financial trajectory, dominance in South Korea's e-commerce market, cost structure, operating leverage, and comparisons to Amazon and Naver strategies.

This is Matt Reustle, and today we are breaking down the specialty retailer, Floor & Decor. Now prior to this Breakdown, I cannot say that I thought much about Floor & Decor. It felt like the stereotypical specialty store that sat somewhere between a mom-and-pop shop and a home improvement giant. Little did I know....Floor & Decor had compounded revenue at nearly 30% over the past decade, and it was another business driven by the things you "don't see," like an inventory and logistics strategy that feels proper for a brick-and-mortar business in the 21st century. To break down Floor & Decor, I am joined by Drew Cohen of Speedwell Research. I hope you enjoy the episode.For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. ----- Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt Show Notes[00:02:54] - [First question] - The origin story of Floor & Decor [00:04:41] - Size of the flooring market and the ongoing battle between hard surface and carpet flooring[00:07:26] - A shift in ownership in 2009 and how much that changed the business[00:08:08] - High level overview of the business today writ large[00:09:30] - Independent players and their competitive landscape [00:12:34] - Unique differentiators that give them a competitive advantage [00:15:42] - Their customer split between pros and DIY consumers[00:16:30] - Key drivers that allow them to leverage their position with inventory providers[00:18:46] - Whether or not they’ve considered doing private label or in house products[00:19:45] - Their store model from top to bottom and the economics involved [00:22:03] - What their maturity looks like and what metrics they’re watching [00:22:46] - Existing commercial opportunities for Floor and Decor[00:26:04] - Overview of their earnings profile from a bottom line perspective [00:27:05] - The Home Depot: The Pro Builder’s Choice; Drivers of their 500 basis point differential in terms of their mature margin profile[00:29:17] - Nick Sleep’s 2005 Letter; Considerations about franchising [00:29:48] - How he thinks about growth beyond their existing footprint and potential growth impacts from the economy [00:32:06] - The level of revenue generated from the Decor side of their business[00:33:02] - How ecommerce might impact their growth, if at all [00:35:44] - Overview of their good, better, best pricing strategy [00:37:56] - Variance of store level performance from region to region [00:39:20] - The chemistry of all their strategies that contribute to sustained growth [00:41:37] - The general investment sentiment around their brand  [00:44:37] - Other potential risks to Floor and Decor [00:45:48] - The Secret of our Success[00:47:24] - Key lessons for investors when studying Floor and Decor

This is Matt Reustle and today we are breaking down Restoration Hardware. The average person would call RH a furniture company but RH is a company where the CEO feels as important as the business, and CEO Gary Friedman has aspirations well beyond selling furniture.To break down RH, I'm joined by Drew Cohen of Speedwell Research. You may remember Drew from our breakdown of Floor & Decor. We cover how Gary Friedman took Restoration Hardware from the brink of bankruptcy and has built it into a brand with luxury aspirations. We go deep on the business model, why has RH been leaning into this in person experience despite a massive e-commerce boom, the reality of interior designers, inventory management, and orchestrating a supply chain when you sell monstrous couches. There's a lot to talk about here. It's a fascinating business with a fascinating person sitting at the middle of it. Please enjoy this breakdown of RH. For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. -----This episode is brought to you by Tegus, the modern research platform for leading investors. Stretch your research budget with flexible expert calls you can trust. At a fraction of the cost of traditional expert networks, Tegus customers pay only what an expert charges – with zero markups and no confusing call credits – netting an average 70% savings. Don’t want to conduct a full hour call? Tegus offers the ability to schedule 30-minutes, an offer you won’t find anywhere else. And they don’t stop there. With white-glove custom sourcing for every project and robust compliance measures, including a dedicated 50+ analyst team that vets every call transcript, Tegus ensures your privacy and protection. As the industry innovator for qualitative insights, Tegus helps you find the right experts you need at a quality and speed that can’t be matched. For a limited time, as a listener, you can trial Tegus for free by visiting tegus.co/patrick.-----Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcookeShow Notes(00:02:27) - (First question) - Restoration Hardware’s relevance in the market(00:04:37) - The origin story of Restoration Hardware(00:07:58) - Insight into Gary Friedman’s backstory and his entry into RH(00:09:52) - The current RH business model and how Gary has shaped that over time (00:17:14) - Their unique marketing funnels (00:19:47) - Their move into the luxury brand market(00:21:24) - Explaining how the product collections are made up(00:22:32) - Updated supplier relations model (00:25:25) - Insight into the RH sales model(00:28:04) - Overview of the membership model and how it impacts the business(00:31:42) - Peers within the industry that are using similar business models(00:32:49) - Cyclical macro exposure sales growth over time(00:34:09) - Their operations and logistics model(00:39:03) - The impact of COVID-19(00:40:15) - Expected working capital for RH and other furniture peers(00:42:36) - Peer group average margin growth(00:45:56) - Key decisions and investments that need to go right(00:48:41) - European housing sizes and issues with American furniture(00:49:52) - Capital allocation history within RH(00:51:15) - How RH stays in style as decor tastes change over time(00:54:02) - His overall insight towards Gary’s ideas and risky business experiments(00:55:37) - His capital structure perspective for the future (00:58:09) - How RH is moving into the luxury market as other brands move out (00:59:09) - Lessons learned from studying Restoration Hardware

Speedwell Research's Drew Cohen discusses Constellation Software's unique acquisition strategy, capital allocation decisions, and potential risks like AI. They explore the company's culture, operational synergies, and ownership structures, comparing it to Berkshire Hathaway. The podcast also touches on favorite write-ups and quick thoughts on $RH.

Specialist in specialty retail, Drew Cohen, discusses Floor & Decor Holdings, Inc. (FND), its business model, valuation, and competitive advantage in the home improvement industry. Topics include the investment potential, store expansion plans, management analysis, regional account managers vs. Spartan acquisition, and Berkshire's holding in the company.