1) “Google will not use data from Google Pay for targeting ads.”

Likely true. And irrelevant.

“Amateurs talk strategy. Professionals talk logistics.”

Targeting = strategy. Attribution = logistics.

The data will be used for attribution.

2) The combination of targeting AND attribution drives advertising spend.

They don’t need the data for targeting.

Google - like everyone - is *much* better at targeting than they are at multi-touch attribution.

Last click attribution was the best possible world for Google.
3) The problem is that Facebook has successfully moved the world to multi-touch attribution. The Facebook pixel is everywhere.

I will never forget Sridhar saying at a conference circa 2015/2016 that Google had to accept that the world had moved to multi-touch.
4) Facebook is about to have their own closed loop system with “Shops.”

Google Pay creates a potentially even more powerful closed loop system.

Facebook can obviously do the same.
5) Google has been saying for years that the real value of payments to them was for attribution.

Success with this effort - and a likely future effort from Facebook - would further reinforce their dominance.
6) The large internet platforms were already immensely advantaged by their ability to do deterministic cross-device user ID via their billions of logged in users when everyone else had to do probabilistic.

GDPR reinforced this.

Having dominant digital wallets would cement it.
7) Also kinda funny that offers - which will be included in Google Pay - are a form of advertising. 😀
8) Interesting to imagine a world where Google had gotten really serious about payments, cloud computing, G suite and messaging in 2012.

They probably already would have been broken up.
9) Instead, they got serious about cloud computing in 2018 (Kurian), G suite in 2019 (Soltero) and payments in 2020 (Google Pay).

They still aren’t really serious about messaging, although was recently unified under Soltero so *maybe* they are finally getting focused.
10 Would not want to be a neobank in this world.

Google will acquire users at much lower cost, has an advantage with the automated gmail scanning option and *never* needs to make money on Google Pay.

Better ROAS for their advertisers will drive revenue.
11) The incumbent banks - like Citi - will perform the customer service functions here that the OTAs provide for Google in travel.

Citi in an an arguably position than the OTAs here with respect to Google.

All this will only work if Google *really* focuses. Time will tell.
12) And yes, I realize targeting is more akin to tactics than strategy but I wanted to be true to Omar Bradley’s original quote. And then I learned the quote may actually come from Robert Hilliard Barrow.

Learn something new every day.

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More from @GavinSBaker

15 Nov
1) Last week was obviously a huge rotation towards reopening & travel names on the Pfizer news.

Reopening and travel baskets were up +12%ish vs. Megacap Tech, Software and Stay at Home baskets down -2 to -6%. Insane moves in the Momentum factor.

Moderna news likely next week.
2) Curious to see how the market trades on the Moderna readout and likely Regeneron approval given Covid third wave, increasing lockdowns and credit card data rolling over hard.

Setup and positioning are quite different now vs. going into the Pfizer news.
3) Tech and WFH names were strong the day of the election and were especially strong the Wednesday immediately after Biden won.
Read 12 tweets
22 Aug
1) Ken Grant was the head of risk at Tudor and SAC.

The analogy he made in his book “Trading Risk” between Julius Caesar and Augustus always stuck with me.

Here are his “10 Commandments”

2) “No matter what your market orientation, you are likely constrained, in gravity-like fashion, by one unshakeable reality: there is a finite amount of money that you are able to lose and still remain in the game.”
3) Permanent loss of capital is the most significant risk, but there are many forms of risk and uncertainty when it comes to investing.

Volatility is a legitimate way to think about risk because LPs don’t always control when they have to withdraw capital.
Read 8 tweets
2 Jun
1) Instinct is that risk/reward on the market is deteriorating rapidly, but thought I would highlight parts of the bull case that had struck me recently.

Sentiment and positioning are overwhelmingly bearish. Chart via the superb GS macro/hedge fund specialist team.
2) Valuation for the broader market remains attractive, especially when comparing dividend yield to interest rates and suspect we have seen most of the dividend cuts. Chart via ERP. Goldstein is the 🐐 when it comes to strategists.
3) Liquidity is an overwhelming tailwind. Would ordinarily dismiss “price to liquidity” as prima facie absurd but Darda was one of the few who was bearish going into 2008-2009 and then got bullish towards the bottom. And liquidity always paramount - see Druckenmiller comments.
Read 6 tweets
30 Apr
1) "You want to cheat the laws of physics, you don't want to confront them." - Jensen Huang

Great interview for anyone interested in semiconductors and datacenter architecture.

2) Vastly more venture $ have gone into AI accelerators vs. SmartNICs which will help "cheat the laws of physics" by putting more processing and intelligence in the network.

Suspect SmartNICs will end up being a much better investment.
3) History of semiconductors suggests it is really hard to dethrone a dominant incumbent.

CPUs: ARM couldn't displace x86 in PC/Server, x86 couldn't displace ARM in handsets, AMD has never displaced Intel in x86.

Similar story in GPUs & basebands - same #1, same architecture.
Read 9 tweets
28 Apr
1) So far in the battle of the irresistible force of the largest stimulus ever vs. the immovable object of the sharpest economic slowdown in history, the irresistible force is *overwhelmingly* winning.
2) Market has been rallying on new cases declining, massive stimulus, cleaner positioning and the fact that large parts of the economy will begin reopening - rightly or wrongly - by Memorial Day along with the reality that many of the largest index components benefit from Covid.
3) The market is always anticipatory - and it ripped into the economy reopening vs. around the economy reopening

Even after 20 years, I am surprised by just how anticipatory the market is. I thought I was weeks early writing this vs. only days early.

Read 18 tweets
20 Apr
1) "It will not last. Because they are the knights of summer, and winter is coming." - Catelyn Stark

Lots of "Summer CEOs" in Silicon Valley.

We are beginning to see who can become a "Winter CEO."

2) Many of these "Summer CEOs" have sold a lot of secondary, are posteconomic to varying degrees and seem to care about their reputations above all else.

As a result, it is hard for some of them to become "Winter CEOs" and make the difficult decisions necessary for survival.
3) Being decisive and making the difficult decision to cut expenses early means that the cuts don't need to be as deep.

This puts the company in a much stronger position for the eventual recovery vs. those companies who wait to cut and as a result have to cut much deeper.
Read 4 tweets

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