Zooming IPO

Posted: April 30th, 2019 | Author: | Filed under: Uncategorized | No Comments »

Three years ago I wrote about Atlassian’s IPO and called them the B2B gold standard. Move over Atlassian, there is a new B2B gold standard in town and its name is Zoom.

When I evaluate a public company I consider investing in I look at six main attributes.

  • How much do I love the product?
  • How good is leadership?
  • How expensive is the stock compared to earnings? (Price to Earnings ratio)
  • How much cash does the company have to invest and/or survive a rough spot?
  • How much potential does the company have? What is their Total Addressable Market (TAM)? What other products can they create?
  • How many competitors does the company have? What is the regulatory environment?

Product Love

It was love at first sight with Zoom. I was invited to a meeting on a sales call. I had never heard of Zoom and was annoyed I had to install yet another video conferencing software. But, after a seamless download, I was impressed. Not dealing with a browser extension like WebEx or clunky software like GoToMeeting, Zoom just worked. Right away. The screen sharing also worked flawlessly. And, this is where I became hooked. It wasn’t that Zoom did more, but it did everything without crashes or hassle.

I’ve worked at three startups and all three of them use Zoom. They use Zoom for nearly everything – internal meetings, sales calls, customer calls, large company-wide meetings and more. Although it’s rare to truly love video conferencing software, it became clear to me that people had fewer issues when using Zoom compared to the alternatives.

Zoom started popping up in my life in other places as well. I’ve been invited to webinars on Zoom. I’ve been invited to groups on Zoom. Day traders use Zoom and charge people to watch them work trade during the day. Zoom is starting to grow a life outside the traditional B2B environment.

Furthermore, my product love for Zoom is backed up by more objective measures. G2 Zoom customer ratings are 4.5/5 which is higher than the 4.2 WebEx, GoToMeeting and Skype Business have. Gartner also has data that shows the Zoom product is at the top of the pack.

The “just works” mentality along with the viral nature of Zoom makes the product top notch.


Eric Yuan is the founder and CEO of Zoom. Eric is the archetype of my favorite tech founder – hard working, technical background, unique knowledge with the ability to delay gratification.

Eric is an immigrant from China with degrees in applied mathematics and computer science.

Eric is also a former early employee of video conferencing software WebEx, which was sold to Cisco. Eric’s experience at WebEx gives him an intimate knowledge of video conferencing.

Eric has shown an ability to delay gratification. Most recently, he was criticized about leaving money on the table during the IPO and had this in response to that criticism

“When we started our company, every time we did funding rounds we left money on the table because those are our business partners. When you are trying to win, you also want your partners to win. If you lose, you lose more than your partner. So our business philosophy is always to care about our partners,” Yuan told Yahoo Finance.
“To leave money on the table is always a good thing,” Yuan added.


For a buy-and-hold investor like myself, it’s important to look for leaders that are thinking in the long-term.

Potential and Macro View

Despite being the most loved product in the video conferencing space, Zoom only has 10% of market share, coming in third behind GoToMeeting and WebEx.

With a low market share, Zoom has a lot of space to grow. Furthermore, as distributed teams become more commonplace, so does the need for video conferencing, which means Zoom is in a growing market. Going public will give Zoom more credibility among the Fortune 1000 which will help it steal business from the incumbents. The competition (WebEx, GoToMeeting) is held back by technical debt. The fact that Zoom was built from the ground up with reliability, ease of use and integrations in mind makes it much more resilient to the existing competition.

Cash and Price Earnings Ratio

Zoom has plenty of cash. Going into the IPO, Zoom had $275 million in assets. The IPO raised another $751 million which gives Zoom money for R&D, acquisitions and/or a rainy day.

The bad news is, I’m not the only one who noticed that Zoom is a hell of a company. Many investors saw the great product, strong leader, and the great potential of Zoom and snapped up the shares quickly, making the IPO pop over 70% on the first day. As of this writing, Zoom has a staggering market cap of $18 billion on earnings of $6 million in 2018. That results in a sky high PE of 2800. For comparison, Salesforce has a PE of 115 and other tech companies hover around a PE of 15-30.

But, everything is relative. Many SaaS companies are burning cash and using their revenue growth to justify this strategy. I prefer to buy stocks of companies printing profit and therefore look at $ZM as a high priced stock.

Bottom Line

Zoom is an excellent company with a stellar product. I expect it to be around for a long time and to improve its offerings. I currently find the stock too expensive for my taste. But, I will keep an eye on it to see if the excitement of the IPO wears off and the price of the stock comes back down to earth.

Aggregating Apple

Posted: March 31st, 2019 | Author: | Filed under: Uncategorized | No Comments »

On Monday, Apple announced three new services. Apple News+, TV+ and Apple Arcade. These three services follow the mold of Apple Music. Apple is taking content from many different providers, aggregating it into one service, and selling it to users as a monthly subscription.

Each of these services aggregate content providers into a nice package to entertain users for a low price. Apple is not reinventing the wheel with any of these services as Netflix, Spotify, etc have established a playbook on aggregating content.

Strategic Advantages

When Apple began entering the services industry they started off with iCloud. iCloud made sense for Apple as it extended the capabilities of the iPhone, iPad, and Mac. As Apple continues to evolve into a services company, there are many ways they could go. Apple could create a gmail-like service or a search engine, but neither would take advantage of Apple’s unique position.

Apple News+, TV+, Arcade, and Music are leveraging many of Apple’s core competencies. Apple is leveraging its distribution advantage, its cash advantage, and its brand to create services that will generate high margins.

Apple’s distribution advantage starts with its 1.4 billion active iOS devices. For years, Apple was content with the revenue and high profit of selling the iOS devices itself but, starting with Apple Music, Apple is now taking advantage of this incredible reach. All of these services will most likely exist as default apps on each iOS device, they’ll each have trial periods and you’ll easily be able to sign up for each service through the credit card on the app store or your apple pay card.

Apple, unlike other potential service providers, is not limited to App Store rules or the iOS public SDK. For example, Apple can take advantage of its full access of iOS to create a superior online/offline experience with Apple Arcade.

Although Apple controls a lot of demand, it needs more than that to pull off these services effectively. Apple’s cash hoard allows it to spend liberally to create its own content to augment the TV+ experience. As Netflix has shown, having unique content is key to acquiring and retaining customers to a TV service.

Apple also has one of the best brands in the world. Stars like Oprah and Steven Spielberg, publishers like People and WSJ, music labels and game developers are lining up to be associated with Apple.

Improving the Strategy

As Google and Amazon have learned, making your services available everywhere is key to success. Apple has taken this approach with Apple Music (available on Android) and Apple TV+ (available on many TVs). However, as of now, Apple News+ and Apple Arcade are exclusive to iOS. This isn’t ideal. Apple created Apple News+ from its acquisition of Texture. Texture Android users were not thrilled to hear that Apple was shutting down Texture with no alternative for them. This may be due to not being able to get publishers and game developers on board.

Apple should continue to expand these services to other devices. Apple should increase its reach, aggregate more demand and therefore have more power over the content providers. This will allow them to attract more content and be able to negotiate better terms.

Instant Twitter

Posted: July 27th, 2017 | Author: | Filed under: Uncategorized | No Comments »

I love it when a company has a specific Company Identity. Some of my favorites are losing their focus. Google wanted to make robots for a while. Amazon wants to be a grocer. Instead of being in touch with where they excel these companies believe they can do it all. Instead of focusing on where they are best positioned to win, they go after where they WANT to win.
In March of 2016, Twitter made a change. They followed the pack. Like Facebook before them, Twitter modified their newsfeed from real-time to algorithmic. Twitter enthusiasts thought it was the end of Twitter. The #RIPTwitter hashtag was popular but exaggerated the situation. Twitter’s user base did not revolt and growth has not been what Wall Street hopes for but exists. But, they lost their identity that day. Instead of becoming the go-to spot for what’s happening now, Twitter became yet-another-social-network.

Twitter’s mission

Our mission: To give everyone the power to create and share ideas and information instantly, without barriers.

Twitter’s statement gives direction and focus the company can march behind. “Instantly” is the key word. Empowering people to create is a crowded field – Facebook, Snap, Instagram. All these companies allow people to create and share ideas. But Twitter is the place for Breaking News, not Snap or Facebook. Twitter’s use of the hashtag allowed people to consume and share information about a real event. Most recently, Twitter’s Periscope brought live streaming to the masses in a way we haven’t seen before.

Twitter continues to make strides into real-time entertainment but not at the commitment that can make it their identity. For example, last year Twitter streamed Thursday Night Football games. Unfortunately they were outbid by Amazon this year for the deal. This loss indicates that Twitter isn’t as committed to the strategy as they could be.

Twitter can evolve to be the go-to place for real-time entertainment. I like the following strategy –

  • Keep the algorithmic feed but make it easy to access a real-time Timeline. Make ways to discover what is going on now (local, globally, etc) front and center.
  • Continue to build and push Live video streaming with Periscope.
  • Strike new deals to create a real-time only streaming package of high-quality content. A DirectTV Now or Sling type package but limit it to Live Shows. This would include Sports, News, Morning Shows and Award Shows. Never show a replay, only show live content with this package. Curate the best live content the world has to offer.
  • Create a live audio-only streaming service. Reach out to successful podcasters to broadcast their shows live. Reach out to successful “terrestrial” radio personalities and let them broadcast their shows to a global audience.,

By taking these steps, Twitter can have a specific identify for itself and customers. If Breaking News is happening, you want to go to Twitter to see what CNN News, Fox News and everyone on Twitter (the core service) have to say about it. If a live game is going on, Twitter is where you go to see the game, what people are saying about and people’s reactions on Periscope.

What’s doubly sweet about this strategy is how well Live TV lends itself to advertising. Sports advertising in particular has soared in recent years. You can’t fast forward Live TV and the performers (whether a newscaster, radio host or athlete) need breaks. Users are engaged because the length of the commercial break is less predictable than with a taped show.

Mobile Entertainment IPO Wars

Posted: February 6th, 2017 | Author: | Filed under: Uncategorized | 1 Comment »

Snap has filed their S1. Let’s see where Snap is compared to the previous high profile social media IPOs.

The IPO Numbers

IPO Year201220132017
Daily Active Users (DAUs)526 million100 million161 million
Revenue$4 billion$317 million$404.5 million
Revenue Per User$5~$2.30$2.70
Rev Growth Rate yoy88%106%589%
Net income$1 billion($79.4 million)($515 million)
Operating income$1.76 billion($77.1 million)($520.4 million)
Money Raised$18.4 million$2.09 billion$3 billion - $4 billion
Company Valuation$104 billion$14.2 billion$20-$25 billion
Founder ownership Mark - 28.2%Ev - 12%
Jack - 4.7%
Evan - 22.2%
Bobby - 22.2%
Founder Valuation at IPO Mark - $19 billionJack - $439 millionEvan - $3.5 billion
Bobby - $3.5 billion

Snap is younger, growing quicker but losing more money than its predecessors. At IPO, Snap’s metric health is worse than Facebook’s but arguably better than Twitter’s.

Facebook had 5x the users and 10x the revenue of Snap. While Snap is losing money, Facebook’s Net Income was exactly $1 billion, showing that Facebook was not only healthy but in control of their margins.

At their respective IPOs, Snap and Twitter are less proven. They both show engaged users and revenue growth but have a ways to go before profitability. Twitter had slower growth and less users, revenue and revenue per user than Snap. That being said, Twitter lost less than Snap did the year prior to IPO and Twitter raised less at a lower valuation than Snap is seeking.

Two things that stick out in Snap’s metrics are the losses (lost more money than total revenue) and the revenue per user being nearly half of Facebook’s at IPO. Although Facebook has that sweet targeting information my hunch was Snap’s immersive video ads would command more per user.

To Buy or Not to Buy?

Will the competition, like Instagram Stories kill Snap? Social Media companies are more like TV Networks than a Search Engine. Search has been a winner-takes-all market. In the early days of TV Networks we had ABC, CBS and NBC. People were dubious when Fox entered, with their more raunchy entertainment but it turns out there was a large market for Fox to serve for decades to come. In retrospect, that was the beginning and there was room for hundreds of cable networks as well. Perhaps we’ll see something similar with these type of companies.

But what are these type of companies? Snap says it’s a camera company. In their essence, all three are ways people share, kill time and keep up to date (mainly) on their phones.

The macro trends are in Snap’s favor. Snap’s engagement and user numbers are shocking considering how long stories take to load with typical bandwidth. As bandwidth improves so does the user experience, likely making the ~25 minutes of daily use increase. Bandwidth issues may be to blame for Snap’s current low international growth and that will change with time.

If you’re going to invest in the Snap IPO you’re not doing so because of the metrics. You buy the Snap IPO because you believe in Evan. He’s shown his ability to delay gratification for the long term, turning down overtures that would make him richer than he could ever imagine. Evan has an eye for acquisitions – Looksery (selfie lenses) and Bitstrips, both of which are a big hit. Most importantly to me, as a “Product Guy”, Evan has shown excellent product vision, evolving an ephemeral messaging product into a social network with a photo editor, video editor, stories (with a business model to boot) and is now evolving into a camera company. What’s next?


  1. http://venturebeat.com/2012/02/01/facebook-s-1-zuckerberg-ownership/
  2. http://www.forbes.com/sites/ryanmac/2013/10/04/who-owns-twitter-a-look-at-jack-dorsey-evan-williams-and-the-companys-largest-shareholders/#30009e2d1428
  3. https://qz.com/131932/twitter-average-revenue-per-user/
  4. https://www.statista.com/statistics/234056/facebooks-average-advertising-revenue-per-user/
  5. https://www.cnet.com/news/key-numbers-to-know-before-twitters-ipo/
  6. http://www.wsj.com/articles/SB10001424052702303448404577409923406193162
  7. https://en.wikipedia.org/wiki/History_of_Facebook
  8. https://qz.com/145227/final-tally-twitters-ipo-was-bigger-than-googles-raising-2-1-billion/
  9. https://techcrunch.com/2017/02/02/ceo-evan-spiegels-snap-ownership-is-worth-about-3-5-billion/?ncid=rss
  10. http://www.pewresearch.org/fact-tank/2013/09/13/twitter-ipo-follows-years-of-user-growth/
  11. http://www.investors.com/news/technology/snapchat-parent-snap-files-3-billion-ipo-has-158-million-users/
  12. http://money.cnn.com/2013/11/06/technology/social/twitter-ipo-price/

Peak Apple?

Posted: January 25th, 2017 | Author: | Filed under: Uncategorized | 1 Comment »

It’s that time of the year…peak Apple Predictions! Consumer Reports didn’t recommend the Macbook for the first time ever. Less iPhone units shipped and revenue shrunk in 2016. The sky is falling! Apple is done!

Or is it? The products, leadership, cash on hand, potential and macro trends make me think the peak of Apple is a ways out (I define “peak Apple” as a peak in market cap).


Cook is no Jobs but he’s done a hell of a job. The numbers are impressive. Since Cook took over, revenue is up 99% without sacrificing margins and over $185 billion in cash has been returned to shareholders. With Cook leading the company and Jony leading the products, leadership at Apple continues to be strong.

Peak iPhone?

Apple shipped 211 million iPhones in 2016, a dip from the 231 million iPhones shipped in 2015 but an impressive number. Apple shipped 169 million iPhones in 2014, making it’s jump to 231 million in 2015 a huge 37% increase. 2015’s shipments was helped by the penetration in China and the relatively newness of the larger iPhone screens. Although shipments dipped in 2016 the macro trends are in Apple’s favor.

There are approximately 2.1 billion smartphone users and 7 billion people in the world. The vast majority of people do not own a smartphone. It is estimated that smartphone users will grow to 2.9 billion by 2020. That’s 50% growth in 3 years for the overall market size for Apple to get a piece of.

The majority of new smartphone owners will not be able to afford an iPhone but there is one market where Apple’s chances looks promising – India. iPhone shipments were up 50% in India in 2016 and although the market is accustomed to paying less for a smartphone, as incomes rise so will interest in iPhones.

Unless the buying cycle changes to more than the current 2 year cycle or a competitor starts converting iPhone customers, I expect iPhone growth overtime to continue in line with smartphone user growth (a slower rate than it did in the previous decade).

Current Product Lineup

Apple’s revenue breakdown is 60% iPhone, 10% iPad, 10% Macs, 15% Services and 5% other products (like the Watch). I don’t expect much growth with the iPad but I believe it will be a healthy product line for years to come. The majority of startups use Macbooks and every college kid has one. As the overall PC industry declines Mac sales have stayed resilient. Will Mac sales ever make up the majority of PC shipments? It’s a long way to go, but that’s the bet I’m making.

The Watch and new AirPods are products an anti-peak Apple person can be excited about. At $269 a pop, the Watch isn’t cheap and yet Apple was able to sell $6 billion dollars worth its first year and shipped 25M units in less than two years. Once Watch becomes a standalone device and Apple gets the entry-level price point down to $150, we’ll see a huge boom in sales. For those questioning if Apple still has its je ne sais quoi, the AirPods by all accounts show that Apple can introduce best-in-class products.

Potential New Products

The biggest difference between Apple’s stock price compared to Google’s, Amazon’s or Facebook’s is that little of it is based on potential. Since Apple keeps their product roadmap close to their chest, Wall Street can’t justify lofty valuations based on a product coming any day now.

Apple makes computer widgets. Big computers, handheld computers, wrist-sized computers, etc. Apple designs processors and software. They do this better than any other company in the world and they have over $230 billion dollars in cash. Whether it’s a TV, a Car or a VR device, Apple has the means and know-how to crush any of these markets.

Bottom Line

We’re not at Peak Apple. iPhone shipments in 2017 will grow compared to 2016 due to growth in China and India. iPad and Macbook biz will remain steady. Watch will get cheaper and better. Apple will ship more Watch units for more revenue. Services will continue to grow as they enter the original content game. In the long term, Apple will use their $230 billion dollar war chest for a new product that will grow the business significantly. Tim Cook and Jony Ive will ensure Apple plays the long game and doesn’t optimize for short-term stock growth.

In other words, Apple’s death has been greatly exaggerated.


Sharing with Collaboration Products

Posted: September 21st, 2016 | Author: | Filed under: Uncategorized | No Comments »

Sharing is caring

Sharing is caring

Sharing is caring. As a Product Manager of a collaboration app you must consider friction, security, virality and the overall user experience. I’ve analyzed the top dogs when it comes to collaboration apps these days – Google Drive, Dropbox, Box, Asana and Trello to see how each handles the following workflows.


Sharing with Existing Users

  • Send Email to existing user email
  • If logged in, the user goes directly into the item (document, event, etc)
  • If not logged in, prompt the user to log in
  • If clicked on the link while logged into a different account, inform the user that account doesn’t have access and allow them to sign in from the account with access

Access Denied

Sharing with Existing Users is for the most part standard among all collaboration apps. One difference in the approaches analyzed is the notion of “Accepting” the invitation. The majority of the collaboration apps automatically give access to the user and the user will see the new item when they log in while others required the user to accept the item before they could access it.

Sharing with Non Users

  • Share with an email address that is not associated with this account
    • Prompt the user that this user does not have an account. Warn the user of any security concerns this may arise Google Share New Account Warning
      • Send Email to new user     Asana New User Email
  • If the user has another account and is signed into that account, you have a couple of options
    1. Allow the user to merge accounts Trello Account Merge
    2. Inform the user the account doesn’t have access and allow them to sign in from another account Access Denied
    3. Prompt the user to log in to the account it was shared with or accept the item to the account being used. Dropbox Accept
  • If the user would like to sign up, put them through registration 
    1. Quick Registration (Just email and password, no confirmation or profile gathering) Easy Registration
    2. Full Registration asana-profile
  • After Registration there are two main options
    1. Put the user directly into the item
    2. Put the user through a tutorial

Sharing with non-users has more trades offs to consider and therefore more variation among those analyzed.

Trello uses usernames instead of email addresses as their log in. This allows them to associate multiple email addresses to one account which allows them to give the user the option to add an email to an existing account. This approach maintains security and a good user experience.

Accepting the invitation to a different account than was shared was only observed with Dropbox. Dropbox allows you to do this when the item is shared with an email address that doesn’t have an account but forces you to log in to the account it was shared with if the email does have an account. This is an example of balancing security and user experience.

How much friction you put a user through when accessing a shared item is a tough decision with tradeoffs. The user may be in a situation where they need to access the shared item quickly and experiencing friction during sign up may leave a bad taste in their mouth. On the other hand, there are compelling reasons to add some friction to the process. Collecting contact information can allow a sales team to follow up with the new user. Putting the user through a tutorial may allow the user to understand the application better and have an overall better experience. Prompting a user to invite others into the app may allow that user to get more value from the app while also serving as a viral hook.


There are lot of options with sharing and no straightforward formula to figure out what option is best. Is security most important? Is allowing users to quickly access the item more important? Is capturing lead information critical? These are questions you can ask yourself when deciding on your options. As always, tracking your user behavior and A/B testing is your friend. Monitor your users and conduct tests to answer the following questions – Are users bailing during sign up? Are users using the app once to access the item shared but never come back? Is marketing/sales having trouble reaching out to the new user to convert them into a paying customer?

Happy Sharing!

Why I Invest in Facebook

Posted: July 19th, 2016 | Author: | Filed under: Uncategorized | No Comments »

I’ve posted a lot on this blog about Facebook and when it comes to their business, I’m fanboy. Other than Apple, Facebook is the second highest (tied with Google) on my investing rubric.

Investment Rubric

Stock My Love Leadership PE Cash Potential Macro view Total
FB 8 10 4 8 8 9 31.3
AAPL 10 9 10 10 7 8 36.1
AMZN 7 9 1 3 8 10 26.4
TWTR 7 9 1 5 9 9 27.2
GOOG 8 8 8 8 7 8 31.3
BRK.B 5 10 8 8 5 7 28
CMG 10 8 5 3 7 7 29.2
UA 8 9 4 2 7 7 27
SIRI 7 6 6 2 5 5 22.6
TEAM 8 9 1 8 8 9 28.4


Annual Cash

Facebook has nearly $5 billion in cash along with $21 billion of overall assets, a growing position year over year. Facebook has enough cash in the bank to weather a bad year or two and enough cash, along with an attractive stock to own, to make acquisitions such as Instagram and WhatsApp.


As of this writing, Facebook’s PE is 74.33. I give FB a low score of 4 for this high PE. That being said, considering FB’s growth last year (23% earnings growth, 43% revenue growth) they’re growing into that valuation reasonably quickly (although the price has appreciated nearly a quickly as the growth).


Facebook’s user base and the information about their users puts it into a fascinatingly strong position. There are many categories Facebook could dominate if they chose to, such as events.

The upside within the Big Blue App is enormous but the potential with their other products is an attractive icing to the cake. Instagram, WhatsApp and Oculus are growing and still a ways away from achieving their true potential. We may think of Facebook not as a Social Network, but as a Virtual Reality company someday.

Macro View

More internet users are coming on board every day. 46% of the current population is on the internet, plenty of room to grow. Internet users grow 7.5% yearly.

Online advertising, where Facebook makes its money, continues to grow as well. Online advertising accounted for 28% of all advertising and is growing 13% per year.


Mark Zuckerberg has the ability to see a clear vision of the future and execute to get there. It appears Mark still owns voting control. Mark has shown the ability over and over again to delay gratification and think in the long term. As a buy and hold investor, this gives me great confidence that our interests are aligned.

My Love

I use Facebook every day. It’s typically the first app I open when I wake up in the morning. I use WhatsApp to communicate with my cousins around the world and I use Instagram nearly daily. I’m a fan of their products.

My Concerns

Time spent on Facebook per day (~40 minutes / day) is high. Will people fatigue? Will Snapchat, Twitter and yet-to-be-named startups chip away at this time spent? Will another Social Network overtake Facebook someday?

They’re betting a lot of money on messaging – Messenger and WhatsApp. Can they win this war? Can they monetize communication like AT&T and others have in the past?

When I’ll Sell

I’d sell if Zuckerberg left but I thought I’d sell Apple when Steve Jobs died but I haven’t. Zuckerberg leaving would make me think long and hard about their prospects.

I’d sell if they started to stretch themselves too thin. Although I invest in companies who do a lot (Google, Apple, Amazon) I love Facebook’s relatively focused product line.

My Investing Rubric

Posted: May 19th, 2016 | Author: | Filed under: Uncategorized | No Comments »


WARNING – Shitty investment advice ahead. Proceed at your own risk!

It’s 2016 and all of the practical advice on investing is to sit back and invest in index funds, ETFs like $SPY. Maybe you’re even more savvy/lazy and use a service like Betterment. Yet here I am, still unable to resist the allure of picking a stock.

Maybe it’s the ego, maybe it’s the rush you get when a stock you pick doubles, maybe it’s more extrinsic — the exercise of evaluating these companies will (hopefully) make me a better Product Manager and a better entrepreneur someday. Either way, it’s a hobby of mine and it’s something I enjoy whether I make money or not (but def trying to make that $$$$). Don’t do what I do, stick to the ETFs. But…here is how I go about evaluating a stock.

As Product Managers tend to do I’ve developed a rubric. The criteria of the rubric are heavily influenced by the greats – Warren Buffett, Charlie Munger, Ben Graham and Peter Lynch.


I invest on 10 year time frames. I’m not concerned about how well the stock will do tomorrow, or next year, but where will it be 10 years from now. Keeping that in mind, I break down each stock from six different perspectives.

How much Cash does the company have in the bank? If they hit a rough patch do they have the cash to get through it? Do they have cash for R&D, for acquisitions?

What’s the Macro View of the company? What trends in the world will affect this company both positively and negatively?

What’s the company’s Potential? They’re making money doing X but what other opportunities do they have to make money in other ways?

What’s the current Price/Earnings ratio? Is the stock, based on its price, already expected to grow like a weed? Is the price cheap compared to earnings and therefore the growth expectations modest?

How’s Leadership? Particularly the CEO. Have they shown the ability to delay gratification? Are they committed to building a long lasting company? Visionary?

My Love. The most important criteria of them all with my investing. How much do I love the product? And not just any product by the company, but the product that is making the lion share of their revenue and profit. This is where I hope to leverage any information asymmetry I may have. Picking individual stocks that will beat the S&P 500 is tough and a big reason for that is because Wall Street is very good at understanding many of the other criteria I listed above. My taste has to be the differentiator.

The Equation

My Love + (Leadership .8) +( PE.7) + (Cash .3) + (Potential *.7) + (Macro View .5)

My love for the product is the most important to me and therefore I give it the most weight within the rubric.

The Individual Stocks I Own and Their Rubric Score

Stock My Love Leadership PE Cash Potential Macro view Total
FB 8 10 4 8 8 9 31.3
AAPL 10 9 10 10 7 8 36.1
AMZN 7 9 1 3 8 10 26.4
TWTR 7 9 1 5 9 9 27.2
GOOG 8 8 8 8 7 8 31.3
BRK.B 5 10 8 8 5 7 28
CMG 10 8 5 3 7 7 29.2
UA 8 9 4 2 7 7 27
SIRI 7 6 6 2 5 5 22.6
TEAM 8 9 1 8 8 9 28.4

Each criteria is on a 1-10 scale. A perfect score, after the weights, would be a 40. A score of 25 and above is what I consider to invest in.

With $SIRI, the outlier, I only invested $500 and I did it because it was unbelievably cheap at the time and I’m a big Howard Stern fan. It’s my biggest percentage gain investment to date but I consider it to be a lucky investment.

In the next couple of weeks I’m going write a breakdown of how I came to the numbers in the rubric for $FB, $AAPL, $TWTR and $TEAM.

Young Users

Posted: March 31st, 2016 | Author: | Filed under: facebook, Product, snapchat, Uncategorized | Tags: , , | No Comments »

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Old habits die hard. As you get older your mental models of the world become more rigid. You know what you know but ya start becoming closed off to trying new things.

People making products, especially products with a shitload of users, run into this all the time. As processors and cellular networks improve, new features are possible but people are stubborn, they like the way they do X and they’re not trying to change it.

Facebook, with over a billion users, has a tough task on hand. They don’t cater to the lowest common denominator but they don’t cater to their advanced, or power users either. This means Facebook doesn’t release the most advanced product they can, Facebook makes concessions so they can release a product that will be widely used.

Snapchat, on the other hand, is doing an excellent job of capitalizing on bandwidth and smartphone improvements. “Stories” – a mixture of photos and videos that users create using the editing tools Snapchat provide are a perfect example of this. When Facebook came out, sharing videos was a pain in the ass, it was slow and cameras weren’t readily available. People form a mental model around what Facebook is as they use it and when things change it becomes difficult for companies to break out of the box their user base sees them in.

Facebook has done a great job pushing against that tide and have made huge inroads with videos, some say they’re even surpassing youtube, but taking a video of yourself and uploading it to Facebook is not the ubiquitous behavior you see in Snapchat.

Snapchat has a much younger and more open minded user base and this allows them to be more aggressive with their product. When Snapchat Chat 2.0 was released on 3/29 I was curious if they were going to push the envelope in the chat game. Sure enough, they delivered.

The chat game is crowded, as I pontified on before. It’s hard to make inroads but one of the ways to get started is to piggyback on your social network’s user base. Unlike Facebook and Instagram that have public ways of giving props, Snapchat lacks this which encourages users to send a chat if they like a Story or have something to say. It’s funny because, like the name implies, Snapchat started off as an ephemeral chatting app, evolved into a Social Network and is now getting back to its roots and beefing up its chatting abilities.

It’s one thing to release cool features it’s another to have them be used. At 33, most of my friends will be reluctant to embracing the new features. The majority in my age group insist on using feature-poor iMessage or SMS. Luckily I’m on the older side of Snapchat’s user base. Snapchat Chat 2.0 will be immediately embraced by their users. For whatever reason I find the stickers lame (too old?) but I look forward to seeing my (younger) friends live stream, create small gif-like videos, annotate em with Snapchat’s editing tools, audio notes and more.


Sky is the Limit

Posted: November 19th, 2015 | Author: | Filed under: Uncategorized | No Comments »

Growth Ahead

Despite predictions that we’ve hit the peak of Facebook’s Social Network it has continued to defy critics and grow in every objective measure you could think of.

To determine the health of the Social Network itself I keep an eye on Daily Users and time spent on the site. In terms of the business, Revenue Per User is another metric to keep an eye on. Facebook’s Q3 showed growth in all three.


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Compared to a year ago, Daily Average Users has grown a total of 4%. 5.2% in the Asia-Pacific, 2.2% in Europe, 1.8% in US and Canada and 5.5% in the rest of the world. I’m most impressed by the smallest number, 1.8% in the US and Canada. If users were feeling Facebook Fatigue in large numbers the saturated market of US and Canada would start trending down, we’re not seeing that (yet).

The 5.5% growth in the rest of the world, although the largest, is the least impressive. Internet usage is growing around 7% this year with the expected growth much larger in the “rest of the world” as defined by Facebook. Facebook’s strategy, including Internet.org is solid and Facebook is most likely capturing a large chunk of new Internet entrants but have some room to improve.

Facebook continues to increase Average Revenue Per User worldwide and in every region.

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Ad revenue in the US & Canada grew 41% from a year ago. Facebook is moving in the right direction and there is still tremendous upside here. It’d be interesting to compare ad revenue per minute spent watching TV versus the ad revenue per minute spent on Facebook. It’s a bit of an apples to oranges comparison — TV advertisements consist primarily of long, informative, high-quality commercials whereas Facebook ads come in a variety of types including photos, videos, and links. While TV ads are often richer and more informative, Facebook ads allow for precise audience targeting and provide useful engagement metrics to advertisers.

My hunch is that the broader market’s ad spend is not being allocated effectively and many advertisers are clinging to older, less measurable, less effective ways of advertising (newspapers, magazines, billboards, TV). Slowly but surely these ad dollars are moving to Facebook and expect the ARPU number to double in the next 2-3 years.

Some believe the Law of Large Numbers will soon be Facebook’s biggest problem but Facebook has plenty of potential users to gobble up —  over a billion people that have internet access already and more than 4 billion people who are not on the internet yet. Expect user growth and revenue growth per user to continue for over a decade.

We’re not at peak Facebook. The Sky is the Limit

Disclaimer – I own $FB