A thread on the underappreciated importance of a user base on a platform that in its early stages isn't necessarily very impressive and/or doesn't necessarily have an obviously profitable direction.
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Let's start with $TWLO, which I am long.
At first, if we just hush up all the fantastical names that non technologists and amateur investors threw around (like CPaaS), it was really just this:
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At first, if we just hush up all the fantastical names that non technologists and amateur investors threw around (like CPaaS), it was really just this:
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1. A very clean and easy API.
2. To send text messages (SMS).
Blah, blah the rah, rah, that's what it was.
It filled a need and it did so very, very easily, but it wasn't a business in and of itself that was obviously profitable.
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2. To send text messages (SMS).
Blah, blah the rah, rah, that's what it was.
It filled a need and it did so very, very easily, but it wasn't a business in and of itself that was obviously profitable.
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But what was obvious, in time, was how many enterprises were using it.
The numbers were growing crazy fast.
And yes, Uber was 10%+ of revenue blah, blah nobody cares.
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The numbers were growing crazy fast.
And yes, Uber was 10%+ of revenue blah, blah nobody cares.
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So, we had this thing. This Twilio, which in and of itself solved a problem very well but it wasn't so terribly clear that the solution was a good long term business.
But WS underappreciated the biggest part of the story.
The users; specifically, the size and frequency.
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But WS underappreciated the biggest part of the story.
The users; specifically, the size and frequency.
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When a company has this thing that caught fire, that's the hard part.
Good CEOs and teams turn it into a business by harnessing the power of a user base.
Great CEOs turn it into a giant.
So, $TWLO did that.
But there are more examples...
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Good CEOs and teams turn it into a business by harnessing the power of a user base.
Great CEOs turn it into a giant.
So, $TWLO did that.
But there are more examples...
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$ROKU originally sold a stick so ppl could stream $NFLX. That was it.
Just like the description above for Twilio, it fit a need but it wasn't obviously a profitable company and wasn't terribly mind blowing.
Wall Street underappreciated the same thing...
User base.
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Just like the description above for Twilio, it fit a need but it wasn't obviously a profitable company and wasn't terribly mind blowing.
Wall Street underappreciated the same thing...
User base.
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So, too, Roku took tens of millions of people and with a fabulous CEO, turned the not obviously profitable business into a monster.
Then we got acronyms like CTV, OTT, AVoD, SVoD, blah, blah.
The moment of truth was not the OS move, it was the userbase.
There are more...
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Then we got acronyms like CTV, OTT, AVoD, SVoD, blah, blah.
The moment of truth was not the OS move, it was the userbase.
There are more...
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$SHOP The idea of a web builder to make an e-commerce store was clever but not at all obviously profitable in and of itself.
But Shopify had the same thing as TWLO and ROKU as it's core underpinning.
Large and exploding user base.
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But Shopify had the same thing as TWLO and ROKU as it's core underpinning.
Large and exploding user base.
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So, Wall Street crowed about the product at the moment and discarded the real asset - users, in this case SMBs, but it's all the same.
Roku had people, Twilio had enterprises, Shopify had SMBs. Whatever. It's users.
So...
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Roku had people, Twilio had enterprises, Shopify had SMBs. Whatever. It's users.
So...
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Shopify turned the not obviously profitable business into a payments, capital, logistics, ecosystem (like Apple) monster.
The first idea was the genius.
Get the users.
This happens again and again; over and over.
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The first idea was the genius.
Get the users.
This happens again and again; over and over.
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An underappreciation of the user base and an over focus on a DCF valuation model for, in reality, an actual business that doesn't exist yet.
We have these today as well that are still underappreciated.
So,...
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We have these today as well that are still underappreciated.
So,...
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Your edge, as a non institution, is that you do not have to conform to a model that predicts stock price.
Your edge is that you have no conformity.
So, on one side there is an information asymmetry - institutions know more.
On the other side ...
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Your edge is that you have no conformity.
So, on one side there is an information asymmetry - institutions know more.
On the other side ...
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On the other side is your shackle free mindset.
If the information asymmetry is too great, you have no edge (you don't).
But if the cognition traps are too great for institutions, then you have edge (you do) as long as you have the acuity to take it.
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If the information asymmetry is too great, you have no edge (you don't).
But if the cognition traps are too great for institutions, then you have edge (you do) as long as you have the acuity to take it.
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So, OK, why did I tweet this?
Because the decision (it's a decision) to do research that is available to you is just as important as the decision to release the need to do research that is not available to you (like speaking directly with CEOs).
That means...
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Because the decision (it's a decision) to do research that is available to you is just as important as the decision to release the need to do research that is not available to you (like speaking directly with CEOs).
That means...
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... in this world, your edge is acuity and patience.
The 'non shackled' edge is a (1) practice in intellect, which requires the discarding of information that does not help you, and (2) the perspicacity and perspective to let the edge materialize.
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The 'non shackled' edge is a (1) practice in intellect, which requires the discarding of information that does not help you, and (2) the perspicacity and perspective to let the edge materialize.
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The 'non cognoscenti' will call perspective denial.
If you want in on the edge, that is one of (nearly) infinite pieces of 'information' you will need to discard.
Here is an opinion (of mine) that pushes you to edge...
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If you want in on the edge, that is one of (nearly) infinite pieces of 'information' you will need to discard.
Here is an opinion (of mine) that pushes you to edge...
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Long-term investing is far harder than swing trading or day trading.
(I do all of them.)
While some will say that long-term investing is easy, anyone making serious money in the market knows that the long run is....
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(I do all of them.)
While some will say that long-term investing is easy, anyone making serious money in the market knows that the long run is....
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an exercise of ferocious relentlessness in thought.
A long term investment carries with it a never ending discord of garbage and noise.
But... this is why the long-term is more lucrative than many people assume.
...
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A long term investment carries with it a never ending discord of garbage and noise.
But... this is why the long-term is more lucrative than many people assume.
...
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While finding a stock that can rise 20-fold is incredibly difficult, holding a stock that rises 20-fold is even more difficult.
As we noted in the webinar from Friday, while it is possible to find a 20x stock by luck, holding a 20x is very much on purpose.
...
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As we noted in the webinar from Friday, while it is possible to find a 20x stock by luck, holding a 20x is very much on purpose.
...
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It's. Very. Much. On. Purpose.
Twitter is fabulous for some reasons, and one of those is its public nature.
Just four months ago, you can read an endless parade of trolls on most long term investing accounts here.
But...
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Twitter is fabulous for some reasons, and one of those is its public nature.
Just four months ago, you can read an endless parade of trolls on most long term investing accounts here.
But...
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You don't succeed with a weak and angry wage work ethic and intellect.
No matter how much angry tweeting trolls do in their underwear, their takes are weak, their trolling is weak, their intellect is weak, they are weak.
...
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No matter how much angry tweeting trolls do in their underwear, their takes are weak, their trolling is weak, their intellect is weak, they are weak.
...
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They see sharks because when it comes down to it, they're a scared little goldfish.
In just four months, the trolls have dried up, and in that they are announcing with a megaphone, they are not smart enough to see the forest for the trees.
They are not smart enough to...
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In just four months, the trolls have dried up, and in that they are announcing with a megaphone, they are not smart enough to see the forest for the trees.
They are not smart enough to...
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... take the one edge retail has - an unshackled cognition.
Look now at the last four months, or 2020, or Oct-Dec 2018, or 2009...
Who made money?
The ones who saw and then ferociously grabbed their edge.
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Look now at the last four months, or 2020, or Oct-Dec 2018, or 2009...
Who made money?
The ones who saw and then ferociously grabbed their edge.
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It's damn hard being a long term investor.
It's damn better too.
If you need perspective, think of where you do and do *not* have edge.
If you're in the first part, that's your perspective.
It's hard.
It's worth it.
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It's damn better too.
If you need perspective, think of where you do and do *not* have edge.
If you're in the first part, that's your perspective.
It's hard.
It's worth it.
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Be ferociously relentless on pursuit of your edge.
It's not going to be as easy not materialize as fast as you want it to.
It is going to get bumpy and the stock volatility to follow is the only part of this whole thing that is natural.
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It's not going to be as easy not materialize as fast as you want it to.
It is going to get bumpy and the stock volatility to follow is the only part of this whole thing that is natural.
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When the best investors in the world face consternation about a stock price ‘on that day that time’, they don’t hear it.
It’s not a reluctance to it, it simply means nothing.
A day cannot encapsulate the changes that have already been laid.
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It’s not a reluctance to it, it simply means nothing.
A day cannot encapsulate the changes that have already been laid.
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This understanding that whatever the market does today has no impact on the view of the future has a name.
It’s called perspective.
The rare (rare) few have it.
It is these rare few that we call the best investors in the world.
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It’s called perspective.
The rare (rare) few have it.
It is these rare few that we call the best investors in the world.
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It is this group of people that you can join, by making a decision.
You are the best investor in the world with perspective.
Your edge is here and likely nowhere else.
So take it.
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You are the best investor in the world with perspective.
Your edge is here and likely nowhere else.
So take it.
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I do this with CML Pro, but since we are institutional, we also get the CEO and CFO interviews.
The proof, as they say, is in the pudding.
This pudding is a five-year auditor verified track record.
Be powerful.
CML Pro
bit.ly/CMLPro
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The proof, as they say, is in the pudding.
This pudding is a five-year auditor verified track record.
Be powerful.
CML Pro
bit.ly/CMLPro
30/30
Thread 👆 discusses power and underappreciation of early platforms w moat in userbase but not necessarily obvious path to profits.
IMHO most compelling today is $JMIA
6.9M users
50M downloads
500M raised last 9 mos
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IMHO most compelling today is $JMIA
6.9M users
50M downloads
500M raised last 9 mos
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It's not necessarily obvious how it's various parts will turn a profit, or really, which part will be the money maker.
But it is obvious the moat in that platform.
The bearish argument is that it's too expensive to build scale platform in Africa and $JMIA will go broke.
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But it is obvious the moat in that platform.
The bearish argument is that it's too expensive to build scale platform in Africa and $JMIA will go broke.
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But now that bearish thesis is the bullish thesis.
Jumia did it (and is doing it).
With $500M raised in the last year, the bankruptcy risk is gone.
The money was raised due to these charts.
1. Platform
2. Gross margin %
3. Gross margin dollars (Euros)
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Jumia did it (and is doing it).
With $500M raised in the last year, the bankruptcy risk is gone.
The money was raised due to these charts.
1. Platform
2. Gross margin %
3. Gross margin dollars (Euros)
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Now what is next?
$JMIA ad business, rarely discussed, grew 26% in 2020 and 30% in Q1.
Small business for now, but it's an example of a revenue source no one predicted yet here it is due to...
... userbase + platform.
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$JMIA ad business, rarely discussed, grew 26% in 2020 and 30% in Q1.
Small business for now, but it's an example of a revenue source no one predicted yet here it is due to...
... userbase + platform.
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Next is possibly (likely) a centralized $SHOP version of the world. Actually, let's call it $ETSY version of the world (that's more accurate).
Maybe it's food delivery which has suddenly caught fire, very quickly.
Again, with the userbase and platform...
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Maybe it's food delivery which has suddenly caught fire, very quickly.
Again, with the userbase and platform...
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... with userbase and platform, ideas are quickly implemented.
Maybe, for uber bulls, it's simply the existing core teifecta of (1) e-commerce market place, (2) Pay, (3) logistics.
My guess is it's somewhere in the ad business, sellers services 'Etsy' business, and big 3.
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Maybe, for uber bulls, it's simply the existing core teifecta of (1) e-commerce market place, (2) Pay, (3) logistics.
My guess is it's somewhere in the ad business, sellers services 'Etsy' business, and big 3.
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But either way, with money in the bank, vastly improving margins, and a hard fought / money burning / multi year platform build, it's now possible.
It was never possible before in Sub-Saharan Africa.
Now there's a platform, with users.
Let's see what can be done.
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It was never possible before in Sub-Saharan Africa.
Now there's a platform, with users.
Let's see what can be done.
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