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Quick thread with thoughts going into Q1 social media earnings season:

- Pinterest reports its user metrics as of the last day in the quarter
- FB reports users as an average over the last month of the quarter
- Snap and Twitter report an average over the entire quarter
- FB's largest Cost of Revenue line item is historical spending on data centers depreciated over 2-30 years (IE not actual usage)
- Snap and Pinterest's are cash owed to AWS/GCloud
- Twitter's are both cash payments to third-party cloud providers and depreciation of its own CapEX
Relatively what should we expect from Q1 social earnings?

Pinterest: Highest user growth (12/31 vs 3/31), hosting costs reflect actual usage

FB: High growth (Dec vs March), not real usage costs

Twitter: Lowest growth (Q4 vs Q1), mixed costs

Snap: Lowest growth, actual costs
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Turner Novak
@TurnerNovak
These #’s highlight YouTube’s ad load problem compared to TikTok:

15 second videos with a built-in ad break between each one (TikTok) > 15+ minute vids with long pre-rolls + some awkward mid-rolls (YouTube)

Don’t be surprised when TikTok is eventually valued higher than YouTube
Just by the nature of how advertising works, YouTube also leaves a ton of value on the table to be captured by advertisers.

CPM’s have to rise + these video platforms will strategically move further into their own advertisers’ turfs (commerce, gaming, etc) to increase margins.
This is one of the reason we see ByteDance and Google getting into mobile gaming (+ Facebook and Snap to an extent).

That said, I’m skeptical these massive corporations with ad-driven business models have the DNA to move fast into other categories. There’s lots of opportunities!
Read 4 tweets
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Turner Novak
@TurnerNovak
Here's a thread with some charts based on Facebook's 2019 Q4 earnings that were released yesterday.

These first two charts highlights that the core $FB app hasn't grown much in North America over the past five years. This is important because...
Facebook (the company) generates over 73% of its revenue in the US and Europe. Meanwhile, these countries only represent 29% of its the core Facebook app's user base. FB keeps the data close to its chest, but it's likely its other apps have a similar user / revenue breakdown.
Facebook's user / revenue dynamics lead to interesting charts like this: Facebook generates nearly all of its revenue in North America and Europe.

This is especially important considering that APAC and RoW include countries similar to the US/EU like Japan, Korea, Australia, etc.
Read 12 tweets
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Turner Novak
@TurnerNovak
I just finished putting together my second fantasy VC portfolio. Here’s a quick thread with an overview of my process and a link to read the full PDF that includes a one-page write-up on each investment.

docs.google.com/document/d/1FN…
My portfolio includes plays on restaurants, elevators, last mile delivery, computer vision, groceries, direct mail, weddings, school lunches, flowers, circular consumption, bees, taxes, employee perks, data management, stories for enterprise, micromobility, and digital avatars.
I tried to stay as early as I could (less than $10M raised) as that’s what I’m most interested in.

I prioritized positive long-term societal impact, and think investing in such a way can actually generate outsized returns in the right capacity.
Read 8 tweets

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