1/6 Mini-Thread

Roblox may have the most optionality of any business I've looked at.

I realize that's quite a statement.

So why do I think that?
2/ Well, it's a platform for user-generated games. If you think about any UGC platform, once there is a critical mass, content can scale infinitely.

Nearly every day, 8 million developers are creating more and more experiences.
3/ Right now, Roblox looks like silly games of delivering pizza or being a DJ, or taking care of an animal.

But Roblox just provides the tools, and the developers will create things we haven't even dreamed of yet.
4/ What's crazy is that Roblox isn't just individual developers. Serious teams of 20+ people are building stuff just for Roblox.
5/ Management talks about being an educational hub with immersive learning. And now they are partnering with brands to create organic advertising opportunities within an experience.

It will be fun to see where the platform evolves in 10 years.
End/

tl;dr - Never underestimate the power of 8 million people that can make money by creating fun.

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More from @investing_city

10 May
1/15

An interesting metric to track is EBIT conversion.

EBIT conversion = EBIT margins / gross margins

Here's why it's interesting and how you can use it to assess business quality...

[THREAD] ⬇️
2/ It's a rough way to filter through business quality.

Why?

1) Low gross margins don't give much room for high EBIT margins (which are a key driver for ROIC)
2) Low opex hints at some sort of moat
3/ For example, if a company does $10 billion in revenue but has 10% gross margins, that's $1 billion in gross profit.

But say the company brings in $300 million in EBIT.

That's a 3% EBIT margin or 30% EBIT conversion (300 mil/1 bil)
Read 15 tweets
13 Apr
If you back out cost of revenue for Roblox, you get 75% gross margins.

But if you take out infrastructure, trust and safety (depreciated server costs), gross margins are more like 50%.

Then, if you count DevEx fees as part of COGS, "gross margins" are 13%.

Am I off here?
The interesting thing is that the S-1 says:
In the past 2 years, DevEx fees as a percentage of revenue were 22%.

This year, they shot up to 36% and the S-1 suggests that proportion should continue to increase.
Read 4 tweets
12 Apr
What I was reading this morning...

- latest TTD partnership
- 2 blog posts on Bitcoin metrics
- Creator NFTs
- Cloudflare's innovation engine
- Shopify Tegus transcript
- SaaS transitions
- History of entrepreneurship
- Lessons from 2020

Sources below ⬇️
1/

The Trade Desk partnered with Publicis, one of the world’s biggest ad agencies. Epsilon, Publicis’ data platform, will now be interoperable with The Trade Desk’s Unified ID 2.0
thetradedesk.com/us/knowledge-c…
2/ Part 1 and Part 2 of Ark's recent Bitcoin blog posts

The framework for analyzing on-chain metrics is below

h/t @yassineARK Image
Read 11 tweets
12 Mar
Pretty interesting: 40% of Airbnb users are searching with flexible dates
~$10k/year for a casual Airbnb host
95% of normal traffic levels with no marketing spend!
Read 6 tweets
3 Mar
Shopee's monthly site visits vs. competition in their main markets

Quick [THREAD] with charts ⬇️
1/ In Malaysia, Lazada is the main competitor. After surpassing Lazada is Q2 2019, Shopee hasn't looked back. Image
2/ Indonesia is Shopee's biggest market so naturally there is the most competition. Tokopedia is gradually losing share. Lazada went from first to last in the past 4 years. Image
Read 8 tweets
24 Feb
15 quotes from Munger at the Daily Journal Meeting...

Source:
1/

On zero-commission brokerages:

"I think you should try to make your money in this world by selling other people things that are good for them."

"If you specialize in selling gambling services and rake money off the top, I think it's a dirty way to make money"
2/

"You wouldn't want to invest in a parking lot by a courthouse for the future because an awful lot of the court proceedings are going to the internet."
Read 16 tweets

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