We would like to take this opportunity to briefly explain Jet Token’s broad economic principles of operation. The world’s most successful capital allocator, Warren Buffet, has shared his principles
, and because we agree with him, we have edited and repurposed his Owner-Related Business Principles
for Jet Token.
OWNER-RELATED BUSINESS PRINCIPLES
Below we set down 5 owner-related business principles that we think may help new shareholders understand our managerial approach.
- Although our form is corporate, our attitude is partnership. We think of our shareholders as owner-partners, and of ourselves as managing partners. We do not view the company itself as the ultimate owner of our business assets but instead view the company as a conduit through which our shareholders own the assets.
We hope that you do not think of yourself as merely owning a piece of paper which is a candidate for sale when some economic or political event makes you nervous. We hope you instead visualize yourself as a part owner of a business that you expect to stay with indefinitely, much as you might if you owned a farm or apartment house in partnership with members of your family. For our part, we do not view shareholders as faceless members of an ever-shifting crowd, but rather as co-venturers who have entrusted their funds to us for what may well turn out to be the remainder of their lives. If we have good long-term expectations, short-term price changes (though psychologically vivid) are meaningless for us except to the extent they offer us an opportunity to increase our ownership at an attractive price.
- Our long-term economic goal is to maximize Jet Token’s average annual rate of gain in intrinsic business value on a per-share basis. We do not measure the economic significance or performance of Jet Token by its size; we measure by per-share progress.
Over time, we expect our business to exceed our expectations. But sometimes we have disappointments, and we will try to be as candid in informing you about those as we are in describing the happier experiences. When we use unconventional aviation measures to chart our progress, we will try to explain these concepts and why we regard them as important. In other words, we believe in telling you how we think so that you can evaluate not only the business but also assess our approach to management and capital allocation.
- We use debt responsibly. We will reject interesting opportunities rather than over-leverage our balance sheet. This conservatism may penalize our results but it is the only behavior that leaves us comfortable, considering the economic sensitivity of air travel, and many equity holders who have committed portions of their net worth to our care. (As one of the Indianapolis “500” winners said: “To finish first, you must first finish.”)
The financial calculus that we employ would never permit our trading a good night’s sleep for a shot at a few extra percentage points of return. We’ve never believed in risking what we have and need in order to pursue what we don’t have and don’t need.
In our present configuration, we expect outright borrowings to be at the aircraft level, loans that are non-recourse to the parent, Jet Token Inc.
- We feel noble intentions should be checked periodically against results. We test the wisdom of retaining earnings by assessing whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained.
- We will be communicating with you through our filings with the SEC, the investor section of our website and social media. Although we would like to communicate on a one-on-one basis, that isn’t feasible given Jet Token’s many thousands of owners. We will, however, be candid in our reporting to you. Our guideline is to tell you the business facts that we would want to know if our positions were reversed. We owe you no less. We also believe candor benefits us as managers: The manager who misleads others in public may eventually mislead himself in private.
In all of our communications, we try to make sure that no single shareholder gets an edge: Our goal is to have all of our owners updated at the same time. At Jet Token you will find no “big bath” accounting maneuvers or restructurings nor any “smoothing” of quarterly or annual results. We will always tell you how many strokes we have taken on each hole and never play around with the scorecard. When the numbers are a very rough “guesstimate,” as they necessarily must be in some cases, we will try to be both consistent and conservative in our approach.
Thank you again for allowing us to act as stewards of your capital. We look forward to reporting progress in the days ahead and appreciate your support.