1/ Thread: Thoughts on $FB
Earlier today, I asked on twitter which of the big tech is most likely to have lower market cap in 10 years than it is today.
Perhaps predictably, ~54% people voted for FB.
Is the crowd exhibiting wisdom or too much first-order thinking?
Earlier today, I asked on twitter which of the big tech is most likely to have lower market cap in 10 years than it is today.
Perhaps predictably, ~54% people voted for FB.
Is the crowd exhibiting wisdom or too much first-order thinking?
2/ Let me make a case for both.
$FB's business model probably fails the Lindy test.
In 2012, it had zero revenue from mobile ads. IG was acquired in 2012 which also had zero revenue.
Of ~$80 Bn 2020 revenue of $FB, >90% comes from mobile ads. IG alone contributes ~$15 Bn.
$FB's business model probably fails the Lindy test.
In 2012, it had zero revenue from mobile ads. IG was acquired in 2012 which also had zero revenue.
Of ~$80 Bn 2020 revenue of $FB, >90% comes from mobile ads. IG alone contributes ~$15 Bn.
3/ Think about the velocity of change for a second. The two things that make FB part of today's big tech club made zero revenue just 8 years back.
Here's the problem though. If the velocity of change remains true today, FB might have an issue.
Here's the problem though. If the velocity of change remains true today, FB might have an issue.
4/ Thanks to regulatory scrutiny, today's or tomorrow's "IG" cannot be acquired.
What about the big blue?
$FB bulls get offended when someone says big blue might die soon since the data depicts a very different picture.
Big blue might not die anytime soon, but there's a but.
What about the big blue?
$FB bulls get offended when someone says big blue might die soon since the data depicts a very different picture.
Big blue might not die anytime soon, but there's a but.
5/ Here's a simple question for you.
In 10 years, will the aggregate amount of time on big blue by North American consumers (whose ARPU is >5x than the rest of the world) be higher or lower than today?
There's a very good chance it will be lower.
In 10 years, will the aggregate amount of time on big blue by North American consumers (whose ARPU is >5x than the rest of the world) be higher or lower than today?
There's a very good chance it will be lower.
6/ If big blue fails at some point, the same questions will haunt IG as well. It will be a vicious cycle looming over $FB if they fail to protect big blue.
If you want to get a high terminal multiple, you cannot have big questions looming large in the background.
If you want to get a high terminal multiple, you cannot have big questions looming large in the background.
7/ On top of it, think about the possibility of 8 years of Dems controlled House, Senate, and White House.
Needless to say, Zuck doesn't have too many friends in either side of the aisle, but that's emphatically true for Dems camp.
Needless to say, Zuck doesn't have too many friends in either side of the aisle, but that's emphatically true for Dems camp.
8/ So yes, I can see how the next decade can pose some seriously existential questions to $FB.
I am a $FB shareholder, so obviously I do find the other side of the coin more compelling.
Zuck knows the bear case inside out. He has chips on his shoulders.
I am a $FB shareholder, so obviously I do find the other side of the coin more compelling.
Zuck knows the bear case inside out. He has chips on his shoulders.
9/ There's a reason AR/VR/Hardware has 6k employees at $FB vs 1k at IG.
There's a reason Zuck is pushing to go deep into IG Shopping, payments etc.
For all its success, $FB remains a very much work-in-progress when it comes to extending the S-curve.
There's a reason Zuck is pushing to go deep into IG Shopping, payments etc.
For all its success, $FB remains a very much work-in-progress when it comes to extending the S-curve.
10/ Zuck has to be tremendously focused to uproot the obsolescence risk.
This is why Zuck probably doesn't want to buyback shares even though $FB has >$50 Bn cash lying around.
Nobody's batting average is 100%. If he misses a major transition, he needs it to reinvent the co.
This is why Zuck probably doesn't want to buyback shares even though $FB has >$50 Bn cash lying around.
Nobody's batting average is 100%. If he misses a major transition, he needs it to reinvent the co.
End/ Under no circumstances, Zuck will want to stop building.
If $FB continues to exist and Zuck is at the helm in 2040 or 2050, I won't be surprised if it becomes the largest market cap company in the world.
But before it gets there, Zuck needs to kill the bear.
If $FB continues to exist and Zuck is at the helm in 2040 or 2050, I won't be surprised if it becomes the largest market cap company in the world.
But before it gets there, Zuck needs to kill the bear.
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