Amazon’s not just about e-commerce and cloud storage anymore; they’re delving deep into artificial intelligence. AWS has been rolling out new machine learning offerings at a steady clip, competing head-to-head with Microsoft Azure and Google Cloud in the AI services arena. Their pitch is simple: integrate AI solutions with the same platform you already use for everything else.
A TechCrunch article I found last week highlighted how Amazon is deploying generative AI to improve product recommendations. The idea is to make e-commerce more intuitive, predictive, and personalized—ensuring you see exactly what you need before you even know you need it. That’s a revenue driver if there ever was one.
Meanwhile, Alexa continues to evolve, though it hasn’t become the massive revenue stream some predicted. Still, voice assistants remain a key entry point for AI in the home, and Amazon has a large installed base to leverage. If they can harness generative AI to make Alexa truly indispensable, it might reignite interest in smart home devices.
For investors, the biggest question is how much Amazon will spend to develop these AI capabilities—and how quickly it’ll pay off. Historically, Amazon’s willingness to invest heavily in innovation has paid dividends in the long run. So while AI might cause short-term bumps in operating expenses, it’s hard not to be optimistic about the potential returns. I’m staying long on AMZN, confident that AI will be a big piece of its future narrative.
The wearables market has matured fast, and Apple’s at the forefront with the Apple Watch and AirPods lines. Recent rumors from Mark Gurman at Bloomberg suggest more robust health monitoring features might be on the horizon. From blood glucose tracking to advanced heart health metrics, Apple seems keen to transform the Watch into a must-have health companion.
As an investor, I see huge potential here. Healthcare is a trillion-dollar industry, and consumer tech companies are only beginning to tap it. Apple’s brand trust and established customer base could position them to dominate wearable healthcare. That’s not just hardware sales—it’s an entire ecosystem of apps, subscription services, and partnerships with medical providers.
Skeptics argue about privacy concerns and regulatory hurdles. But Apple has generally been proactive with user data protection. If they manage to keep user trust high, these new features could solidify Apple’s moat. And once you’re using an Apple Watch to monitor chronic conditions, you’re unlikely to leave the Apple ecosystem for a competitor.
Sure, global supply chain issues and inflation may affect short-term results. But Apple’s consistent revenue streams from services and accessories give it resilience. I remain bullish on Apple’s long-term prospects, especially as it blurs the line between consumer tech and digital healthcare.
Amazon has made Prime into something far bigger than a fast-shipping subscription. It’s now a multi-layered ecosystem offering streaming video, music, exclusive deals, and even grocery delivery perks. I recently stumbled on a CNBC report detailing how Amazon keeps adding services to Prime while also raising prices—and people keep paying.
That brand loyalty is one reason I continue to hold AMZN shares. Even with shipping costs rising and some concerns about slowing e-commerce growth post-pandemic, Amazon’s ability to cross-sell within Prime is unmatched. Whether you’re buying an Echo device or streaming “The Lord of the Rings: The Rings of Power,” Amazon ensures it all feeds back into their revenue loop.
AWS also remains a juggernaut. Though the cloud market is more competitive now, AWS’s early lead and wide-ranging offerings keep it ahead. There might be concerns about margin pressures if the economy slows, but Amazon has never been a short-term profit story. It’s a growth machine that keeps reinvesting in new segments (healthcare, entertainment, hardware).
Investors need to keep an eye on how Amazon handles labor relations, regulatory scrutiny, and environmental commitments. The company’s size and influence naturally draw criticism. But if history is any guide, Jeff Bezos’s legacy—and Andy Jassy’s leadership—will continue focusing on long-term growth over short-term concerns. I don’t see that changing anytime soon.
Apple continues to impress. With strong Q3 earnings around the corner, it’s interesting to see how the iPhone maker keeps diversifying its revenue streams. Between Apple Music, Apple TV+, and the wildly successful AirPods, they’re showing us there’s more to this company than just a smartphone supercycle.
I read MacRumors daily for tidbits on upcoming Apple events and product launches. Rumors are swirling about a revamped MacBook lineup powered by their own silicon chips. From an investor standpoint, this vertical integration helps Apple maintain healthy profit margins. And if you look at how quickly consumers adopt new Apple products, it’s clear the brand loyalty remains off the charts.
The real question for me is how Apple will navigate privacy concerns and potential regulatory scrutiny. The new iOS privacy features are a bold move—limiting how much data third-party apps collect. It might ruffle some feathers (especially for ad-driven platforms like Facebook), but it also cements Apple’s image as a privacy-first company. I suspect that’s a long-term advantage, especially as data protection becomes a global priority.
Could Apple’s stock be overvalued? Maybe in the short term, but their track record with consistent growth, innovative products, and an installed base of loyal customers says otherwise. I’m comfortable holding (and occasionally adding) Apple shares. With each earnings report, they continue to defy gravity, and I don’t see that changing anytime soon.
With Joe Rogan signing an exclusive deal with Spotify, both Ben Thompson and Jon Gruber mentioned Howard Stern in their analysis.
Gruber, assuming Joe Rogan was making between $64mm-$240mm per year from his podcast wrote –
However much Howard Stern was getting underpaid by Sirius six months ago, it’s even more so now.
Since Joe Rogan’s multi-year deal with Spotify is being estimated in the ~$100mm range, the $64mm-$240mm estimate is most likely inflated.
Howard Stern’s deal with Sirius has long been estimated to be $100mm per year. Howard will get more in his next contract but to call him underpaid is an exaggeration. He is the highest-paid radio/podcast broadcaster in the world, by a large margin.
Ben Thompson wrote –
Lots of folks have drawn a comparison between Spotify’s deal with Rogan and the one Sirius made with Howard Stern back in the 2000s. The latter, though, required Stern fans to actually buy hardware and pay for a subscription service; it’s a testament to Stern’s popularity that this actually worked, and also a great sign for Spotify. After all, the company isn’t asking Rogan fans to buy a new phone, or even pay any money at all: the fact Spotify’s goal is first and foremost advertising means the cost imposed on users is simply switching to an app they have probably already downloaded.
It is Luminary that is a better analogy to Sirius: no, you didn’t need new hardware, but you did need to download a new app and pay money; without a singular star like Stern, the idea was doomed from the beginning (in fact, even with, say, Rogan, Luminary would have still had no chance: Rogan, unlike Stern in 2004, could already go direct to consumers, which would have given him leverage to take all of Luminary’s profits, were they ever to exist). I’m honestly baffled the company managed to raise more money no matter the terms.
Ben highlights that Howard has been a success with Sirius despite the incredible uphill battle of friction his listeners endured. This is why Howard is, and will continue to be, the highest paid broadcaster in the world.
The question is, where does Howard go at the end of the year when his contract is up?
Howard’s options are –
Retire
Go independent
Go to Apple
Go to Spotify
Stay at Sirius
Does he retire? No. Howard’s price will be as high as ever, he’s in good health, and he’s good at what he does.
Will he create an independent podcast? Although he’s in good health, he’s 66yo. He’s scaled back his show to 100 a year. It’s unlikely Howard wants to take on the overhead of hiring staff, building studios, and selling ads.
Will he go to Apple? Apple is slowly but surely losing market share of podcast control to Spotify. An exclusive deal with Apple, which is a paid-only service, makes sense for both parties and get Howard a tremendous payday. Howard does not live a lavish lifestyle but he is competitive and views being paid the highest as validation that he is the best broadcaster alive.
Will he to go Spotify? Although Howard increased his pay, he lost total listeners when he went from radio to Sirius, which has a paid-only model. What’s appealing about this option to Howard is that he can get the payday he deserves while expanding his reach through Spotify’s free tier, increasing his relevance.
Howard would not want to go exactly the Joe Rogan route. Howard would want to be a Spotify employee and have Spotify build and maintain his studios, pay his staff, and sell his ads. Spotify has an advantage over Apple, having a major office in NYC, Howard’s home.
Finally, Howard may choose to stay at Sirius. Sirius has proven they are valuable partners to Howard and can continue to make him the highest-paid broadcaster in the world. They won’t be able to match an offer from Apple or Spotify but will they offer him enough that moving to another employer isn’t worth it? Howard has been with them for 15 years, he has his studio, his staff, and his show is running like a fine-tuned machine.
At 66yo, I expect him to stick with the familiar and stay at Sirius. But I hope he goes to Apple or Spotify.
After a nine-month hiatus, I’m itching to start writing again.
Instead of monthly long-form 500ish word take on biz&tech, I’m switching it up.
Going forward, posts will be takes on takes. Shorter, more frequent posts on takes by people like Ben Thompson, John Gruber, MG Siegler, and publications like TechCrunch and The Verge.
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.
Leadership
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.
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.
I love it when a company has a specific CompanyIdentity. 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.
Snap has filed their S1. Let’s see where Snap is compared to the previous high profile social media IPOs.
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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?
