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.

 

Screen Shot 2015-11-19 at 2.33.33 PM

 

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.

Screen Shot 2015-11-19 at 2.36.14 PM

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

 


Stocks as Gift Cards – Stockpile

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

As a child, like clockwork, every birthday my grandfather would give me a Savings Bond along with whatever toy or video game was popular at the time. Those Savings Bonds came in handy when paying down college debt. Owning them and using them was all I needed to become hooked on investing and the power of compound interest.

The days of buying a Savings Bond or a Stock Certificate at a bank and signing it over to your grandchildren are long gone. These financial instruments have become electronic and the friction of gifting them has ironically increased since being modernized.

Stockpile is the first promising attempt at cutting down on the friction of gifting financial instruments.

Screen Shot 2015-10-19 at 1.00.50 PM

Stockpile takes a clever and familiar gift card approach to stock gifting. They allow a user to use a credit card to purchase any amount of shares in stock, including partial shares, in gift card form for a gifting fee of $2.99 + 3%.

While using Stockpile I was pleasantly surprised how they handled gift card redemption.Unlike other gift cards that lock you down to narrow uses and attempt to charge fees, Stockpile provides many different options during redemption. You may redeem the gift card for the stock the gifter choose, regift the gift card, redeem for a stock of the redeemer’s choosing or you may purchase another gift card, such as a gift card to use at Macy’s.

Stockpile’s options of investments are impressive — hundreds of companies along with many ETF options. The website and iOS app are carefully designed with a modern look and seamless user experience.

OneShare.com, GiveAShare.com and FrameAStock.com provide a similar but limited stock gifting product. These products allow users to purchase one share (and only one share) at a time for a much higher fee than Stockpile (a share of SIRI trades for $4 and cost $44.00 on GiveAShare). These websites are in much need of a facelift and all three lack a mobile strategy.

Companies like GiveAShare focus on Adults who want to teach investing basics to children. They focus on getting young investors excited about investing by giving users a physical certificate (many times unofficial) and providing add-ons such as child investment books. Stockpile is not pursuing this educational or novelty route and do not provide physical certificates, Stockpile is more focused on providing a practical way of gifting a stock.

Stockpile is a well-designed, easy-to-use, innovative product that has made gifting stock more than a novelty. Stockpile has successfully removed the friction of gifting stock at a reasonable price. Through Stockpile, people can give the gift of wealth beyond the impersonal wad of cash. Proud grandparents, aunts and uncles can buy stocks that will teach the value of investing and set their loved ones up for the future. I like the fact that a small gift I give today could potentially grow much larger and make someone happier now and when they cash it in someday many years from now.


Apple Music and Howard Stern

Posted: June 16th, 2015 | Author: | Filed under: Uncategorized | No Comments »

Howard Stern

With the upcoming 6/30 launch of Apple Music and Howard Stern’s contract with SiriusXM coming to an end, the stars are aligning. Howard Stern and Apple may seem like an unlikely pairing but they would be a powerful couple.

As iTunes music sales continue to lose business to the rise of streaming music and the subscription model, Apple is mixing it up. Apple is entering the streaming music space and needed a way to differentiate themselves from the established players like Pandora and Spotify. Apple Music’s differentiator is a blast from the past – human-driven radio stations (as opposed to playlists or algorithms). At launch, they’ll have one station, Beats 1, which will support 3 different DJs around the world.

For Apple to be successful in the Internet Radio space they should take a peek at SiriusXM. Unlike Spotify and Pandora, which has concentrated on content delivery, SiriusXM has concentrated on having the best audio content in town. SiriusXM has struck deals with the majors sports (NFL, MLB, NBA, etc) and many personalities, the most important being Howard Stern.

SiriusXM had merely 600,000 subscribers prior to Howard joining the company in January 2006. They now have over 28 million subscribers. Howard’s fans are loyal, will follow him and pay to listen to him. Howard joining Apple Music would provide an immediate boost in Apple Music subscribers.

SiriusXM has done a great job of curating content but the user experience of their web and mobile app is lacking. The iOS mobile app doesn’t allow podcast-esque subscribing. If you are listening on the web there is no handoff to mobile, the iOS app does not know where you left off. Even simple tasks such as fast forwarding and rewinding are clumsy and unreliable.

Howard can bring Apple Music paying customers and Apple can give Howard’s fans a much improved user experience – a win-win situation. As a fan of both Apple and Howard, I’m keeping my fingers crossed. I’m hoping Apple isn’t too prude to team up with Howard.

Bababooey to you all!

 

 


Has Facebook’s Social Network Peaked?

Posted: April 1st, 2015 | Author: | Filed under: facebook, Investing | No Comments »

The big question mark in my mind is if Facebook can monetize the new Facebook Federation fast enough to counter the eventual decline of Facebook, the social network.

To be clear, as the network approaches 1.5 billion active users, it’s not going away any time soon. But I’d bet on a slow decline of the main product starting sooner rather than later. (Who knows if they’ll ever admit this though since Messenger users are technically Facebook users and many people I know have Facebook open on their desktops just to use Messenger.)

The Facebook Federation

MG did a good job avoiding the tiresome claim that Facebook the company would die, but did decide to vaguely predict the peak of Facebook, the social network.

Is Facebook diversifying and splitting up the Social Network a bit? Yes. Has Facebook, the Social Network, peaked? Not based on anything objective that I can think of – total users, daily active users and money per user.

Screen Shot 2015-04-01 at 1.33.45 PM

Facebook Daily Active Users

Screen Shot 2015-04-01 at 1.34.22 PM

Facebook Average Revenue per User

The numbers tell a much different story than MG’s gut feeling. Daily Average Users continues to grow, dollars per user also continues to grow and at an impressive rate. Although there are 1.5 billion people on the network already there are nearly 3 billion people with access to internet. There are also 4.2 billion people without access to the internet, which Internet.org is attempting to address. There are plenty of people that Facebook can go after to grow the network. Law of Large numbers be damned.

Perhaps MG has experienced Facebook fatigue, his usage of the Social Network may have peaked but the numbers do not indicate it’s peaked for the rest of the world.

Based on the post, it appears MG feels Facebook’s diversification is what signals to him the Social Network has peaked. Google and Amazon have also similarly diversified but I believe their cash cows – Google.com and Amazon.com are far from their peak.

The Social Network will evolve but I believe it’s far from it’s peak.

Disclaimer – I own $FB, $GOOG and $AMZN

 

 


Passion or Arrogance

Posted: March 17th, 2015 | Author: | Filed under: Uncategorized | No Comments »

“Steve cared,” Cook continues. “He cared deeply about things. Yes, he was very passionate about things, and he wanted things to be perfect. And that was what was great about him. A lot of people mistook that passion for arrogance. He wasn’t a saint. I’m not saying that. None of us are. But it’s emphatically untrue that he wasn’t a great human being, and that is totally not understood.

It ain’t easy distinguishing a passionate person from an asshole. I’d rather work with a passionate person who is rough at times than someone who doesn’t care.


*


Apple Watch Buying Cycle

Posted: March 10th, 2015 | Author: | Filed under: Uncategorized | No Comments »

I agree with Gruber that the Watch will most likely not have the every-two-year buying cycle that Apple sees with the iPhone. I think the buying cycle will be between the iPhone and the iPad. I still have my iPad 2 and since it generally stays in my apartment, it’s rather unscathed and can do what I use it for easily. A Watch on the other hand will take a daily abuse, perhaps even more since it’s not in someones pocket.

I predict Apply Watch buyers will buy new every 3ish years. iPhone will remain every 2, laptops and iPads will be every 5ish years.


Amazon’s Cash

Posted: February 3rd, 2015 | Author: | Filed under: Uncategorized | Tags: , | No Comments »

Bezos is no idiot. In fact, I believe he’s masterful in his handling of Wall Street. You can play the ever-growing profit game, but unless you’re Apple, you will undoubtedly fall victim to the law of large numbers sooner or later. Then good luck recovering your stock from stagnation.

Or you can plow your profits back into initiatives that continue growth. And if you have the right type of business, which Amazon does, you can live off the cash flow. As a result, you don’t really need profits to operate, but few people realize this. So, again, they demand to see them from time to time.

And, again, Bezos is happy to show them from time to time. But it’s more for show than anything else. Yes, Amazon can turn a profit if it chooses to. And don’t you forget it! (At least for a few more quarters until you do once again.)

ParisLemon: Punxsutawney Jeff 

Profits aren’t necessary to operate but they’re ultimately why you’re in business. Is Bezo’s being a genius or arrogant? Do you let the cash flow determine how much money you invest into new initiatives or does the merit of the initiative drive what you invest in? 

The question you have to ask yourself when evaluating Amazon is are they investing in initiatives that continue their growth or could they have spent the money better else where?

Amazon has plenty of examples of flops

Amazon believes it can do it all. As much ink that has been spilled on Apple and their arrogance, Apple stays relatively focused and does not appear to think they could or should do it all. Apple sells phones, tablets and computers. They do a lot of other stuff but all of the other efforts are around making sure they sell a bunch of phones, tablets and computers. 

Apple invests in what they think will return a large bang for their buck. If they don’t see anything obvious to invest in that utilizes what they specialize in, they hoard the cash. Eventually they give it back to the shareholders or buy back their own shares

Amazon attempts to invest all the money they have back into initiatives that aren’t necessarily towards moving their main focus forward, which is “Sell a bunch of shit online”. They make hardware, they sell hosting services, they make original TV programming, they make games, yet none of these appear to have a measurable impact on the amount of goods they sell through the store, their cash cow.

I like that Amazon is investing in the future and thinking about the long-term versus appeasing Wall Street with short-term profits. I question how they are investing that money and the general lack of focus and specialization. 

Disclaimer – I own a couple of shares of $AMZN and do not currently plan to sell.


Playing with Stilly

Posted: May 31st, 2013 | Author: | Filed under: Uncategorized | Tags: , , , , | No Comments »

Playing with Stilly. #carbombs


Yahoo and Tumblr

Posted: May 23rd, 2013 | Author: | Filed under: Uncategorized | No Comments »

Here’s my wild speculation – Tumblr will not be a new cash cow for Yahoo within the next five years and David Karp will not enjoy working under his new overlords My original thoughts have changed, after writing this post out and researching the gaps, I’m now bullish on this acquisition and starting to drink the Marissa Kool-aid.

Tumblr is popular as fuck, no doubt about that. They have over 20 billion page views a month and have continued to grow.

Will this growth continue and can it be monetized effectively?

Growth is anyones guess but the numbers are promising.

Eyeballs are eyeballs and despite what some want to believe you can always make money if you have enough eyeballs. Rumor has it that Tumblr made $13 million in 2012 which seems small considering it’s $1.1 billion exit. In the world of the web, revenue isn’t everything and Tumblr is an example of a product-first company that has delayed gratification ($$$) for the sake of the product quality – not because of a lack of opportunity to do so.

What would Tumblr need to do in order to make this acquisition a success? To justify the $1.1 billion price Tumblr will need make a lot of money someday, better sooner than later.

Synergy

Yahoo makes the majority of it’s money in advertising – search, display, video and mobile. Yahoo has experience monetizing eyeballs and relationships with advertisers to quickly and effectively monetize Tumblr. How valuable are the views on Tumblr? This is yet to be seen. The intent of a user, unlike Google and Yahoo searches, are low and the information about a user, like you have on Facebook, is minimal. A pageview on Tumblr can make money but is most likely not as valuable as one on Google or Facebook but similar in value to the pageviews that many other Yahoo properties receive. With the experience that Marissa has making money off of eyeballs and the eyeballs that Tumblr has this may just work. I doubt in any jaw dropping way, but it may be worth the $1.1 billion price tag.


Hooked on FB

Posted: February 5th, 2013 | Author: | Filed under: Uncategorized | No Comments »

parislemon:

om:

What’s worse Facebook or cigarettes? How about Facebook branded smokes. No seriously #sanfrancisco

Smoke ‘em if you got ‘em.