Essay: Investors, Focus & horizons
JC’s Newsletter #187
A new format for the newsletter
During the holiday season, I have decided to change the format of the newsletter and push myself to write a bit more, instead of sharing only what I read. I don’t know where it will take us but I’m really happy to have your feedback.
I’m going to try to be provocative in those essays to trigger a discussion with the community. Please answer, comment, and ping me.
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I wanted to share my thoughts on how to think about building a company, especially in the context of what “the market” advises you to do in the current context.
How (most of) the market think
The market judges what is happening right now in a very specific context, is far from being perfect, and overreacts to short-term trends. It is often short-sighted.
The last year has shown the market was reacting very strongly to a trend, by pushing into the same direction until there are signals it does not work.
As a result, most (not all!) investors/stakeholders forget very fast what they were telling you very strongly only a few months ago, being sure they see the truth in the world at every period.
Honestly, it is normal, those investors have a benchmark of public companies on which they see the price today, and pressure from their Limited Partners to tell a story.
(Note: I feel very lucky at Alan to have a lot of investors who are not like that!)
What builders should do
The question for builders is what to do with such advice.
If you need financing in the short term for your company, you should mostly listen to the market (even if sometimes it is bad advice for the long-term business), because not managing to finance your company means death.
If you don’t, it is where you should be contrarian.
Avoid pattern matching
As Frank Slootman is saying in Amp it Up:
One of the more irritating habits VCs have is “pattern matching,” making recommendations and suggestions based on what other supposedly successful companies were doing.
No two companies are alike, and just because another company is doing it, doesn't make it right.
The bottom line is you should avoid pattern matching.
Rather than trying to do the same thing as every company, my conviction is that we should think about the future state we want to reach and then work backward to the present.
The Matrix
In the case of Alan, taking the assumption that we have enough buffer of cash for both plans, we don’t need to raise money, and we have a 3-year perspective on what we want to achieve.
Do we prefer:
💊 🔵
We are profitable sooner
We have a lot more cash on the balance sheet
But we are a lot smaller in 2026
We didn’t create the foundations for future expansion and our growth will slow.
💊 🔴
We are only profitable at the end of 2025/beginning of 2026 as a company (before in our core market)
We still have a solid buffer of cash to manage against adversity
We are bigger in terms of members/revenue allowing us to leverage our scale & network effects
We have built the foundation that sustains our growth for the future
Welcome to Wonderland
If I can afford it, I will always take the red pill, not only because it is more exciting, but also because if I take the investor’s perspective, the company will be a lot more valuable in 2026.
At Alan, we always aim to act aggressively while others aren't, which has historically defined our company in past crises (like COVID).
For example, everyone was advising us not to launch international expansion so early, but we did it to avoid the pitfalls that trapped many French companies into remaining domestic players.
We wanted to avoid becoming too France-centric and then struggling to expand internationally.
We believed in creating a global DNA from the outset.
We are doing the same right now, with the one-stop health partner strategy I described in our Q2 letter to shareholders.
We are planting seeds now that will reap incredible benefits in 3-5 years while being profitable when we need it.
The example of Amazon
It reminds me of the situation of Amazon in 2000-2001. Amazon was hit hard by the internet bubble collapse. Its stock was at $106 a share in December 1999, a month later it was down 40 percent. Within two years it had fallen to as low as $6 a share.
We should not dumbly pattern match what Amazon did, but we should try to understand why they did this, why it was smart, and why it paid off for them, and see what could apply to us.
What did Bezos? Despite the pressure of Wall Street to increase its margin, Bezos decided to cut prices again.
Like Walmart and Costco, Bezos said, Amazon should have "everyday low prices". The company should look at other large retailers and match their lowest prices, all the time. If Amazon could stay competitive on price, it could win the day on unlimited selection.
Amazon announced it was cutting prices of books, music, and videos by 20 to 30%. Bezos said: "There are two kinds of retailers: there are those folks who work to figure out how to charge more, and there are companies that work to figure how to charge less, and we are going to be the second, full stop.
Just after, Amazon’s core retail business was still pummelled following the dot-com crash, and they were still pulling out of the tailspin in 2004 when Jeff started the Kindle team and AWS.
Everyone told him it was a distraction, but he ignored them.
Conclusion
Howard Marks, the founder of Oaktree, defines skepticism as calling for pessimism when optimism is excessive, but also calling for optimism when pessimism is excessive.
As he also says, in the course of trying to be different and better, people have to bear the risk of being different and worse. This is really the bottom line: not whether you dare to be different or to be wrong, but whether you dare to look wrong.
So, let’s not care about looking wrong short-term, as long as we win longer-term. At Alan, we are not followers, we are contrarians, and we want to redefine how we do things.
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