Trung Phan Profile picture
Jul 13, 2021 23 tweets 9 min read Read on X
In less than 2 years, Disney+ notched 104m subscribers and is prob worth $100B+ as a standalone entity.

How did Disney build a Netflix competitor so fast? By acquiring a tech firm spun out from MLB (yes, Major League Baseball) for $2.6B.

Here's the story 🧵 Image
1/ It starts in 2000: the height of Dotcom.

MLB Commissioner Bud Selig wants to consolidate digital rights and create websites for the league's 30 teams.

To make sure the project is "fair" to every team, he creates an independent arm: MLB Baseball Advanced Media (BAM). Image
2/ To fund BAM, Selig asks for a $4m commitment ($1m per year for 4 years) across all 30 teams = $120m.

The first big project -- MLB .com -- is outsourced to a consulting firm. It's a complete disaster.

Lesson learnt: BAM will now create everything in-house. Image
3/ In 2001, Japanese sensation Ichiro Suzuki (the OG Ohtani) joins the Seattle Mariners.

BAM creates an audio streaming product so that Japanese fans can listen to games lives.

They spend millions on the product but it totally flops...getting less than 1k subscribers. Image
4/ With these failures, BAM looks doomed.

Running low on cash, the unit catches a break: MLB gives BAM ticketing rights.

BAM then tells TicketMaster "pay up or no baseball". The ticket giant ends up giving BAM $10m, which it uses on its next bet: streaming video. Image
5/ On August 26th, 2002, the MLB streams its first ever game: New York Yankees vs. Texas Rangers.

This is 3 years before YouTube is launched.

30k people watch at a pathetic speed of 280 kilobits per second (one BAM exec calls is like "watching a flip book"). Image
6/ Even so, fans LOVE it.

For the 2003 season -- 4 years before Netflix streams -- MLB TV debuts and 100k fans pay $80 for access to live stream games.

BAM is now stable and only takes $77m (of the $120m commitment) from team owners before paying a dividend. Image
7/ With a cash cow in place, BAM starts innovating.

It figures out how to handle live audiences at scale, video quality and key issues that every streaming service will eventually face: Image
8/ By mid-2010s, BAM is the fastest and most cost-effective streaming provider.

BAM builds for the WWE ('14), NHL ('15), PGA ('15), Playstation ('15) and HBO Now ('15).

HBO thought it would cost $900m over 3yrs (BAM did it for $50m in 3.5 months). Image
9/ To reach its full potential, MLB spins out BAM as "BAM Tech" in 2015 (sales = $900m, employees = 800+).

Enter Disney: the media conglomerate knows streaming is the future and needs expertise.

In August 2016, it buys 1/3rd of BAM for $1B with the option to buy more. Image
10/ In August 2017, Disney drops another $1.6B ($2.6B total) to own 75% of BAM Tech.

It then announces it will launch streaming for: 1) ESPN (sports network); and 2) its outrageous IP catalogue (Marvel, Star Wars, Pixar, Classics).

BAM Tech becomes Disney Streaming Services. Image
11/ At first, many are critical of the Disney deal.

Former CBS head Les Moonves says "We didn’t buy BAM Tech for a zillion dollars. We [built streaming] internally."

As it turns out, timing is everything: Disney+ launches in November 2019, months before a global pandemic. Image
12/ With the stay-at-home orders in place, Disney+ is among the big COVID media winners.

By March 2021 (1.5 years from launch), Disney's streaming service reaches 100m subs.

A *much* faster pace than Netflix or AMZN Prime, all powered by the artist formerly known as BAM Tech. Image
13/ Today, Disney+ has ~104m subs.

Of course, you can't actually *separate* Disney+ from its parent. But using the same "market cap-per-sub" ratio as Netflix gives Disney+ a standalone value of $119B.

While that is ~35% of Disney's total value... Image
14/ ...it's not an outrageous value guessimate.

Consider this: $DIS is up 55% of the past year, from $212B to $330B. That's a $118B market cap gain even as its parks, cruise and theatre businesses have been mostly shuttered. Image
15/ And lets not forget that -- last fall -- Disney frickin' reorganized the entire company around its direct-to-consumer streaming business. Image
16/ The latest data point.

Disney released the Marvel film "Black Widow" over the weekend. It had the largest COVID-era box office domestic opening in the US: $80m.

The film also came streamed on Disney+...where it pulled in nearly as much money: $60m.

Thank you BAM Tech. Image
17/ If you enjoyed that, follow @TrungTPhan for other business breakdowns and some really dumb memes:
19/ Other thoughts:

◻️ Between 2009-19, Disney spent $80B on content (Marvel, LucasFilms/StarWars, Fox). BAM Tech at a fraction of spend ($2.6B) was the streaming unlock.
◻️ Can BAM Tech be in the same ballpark as FB/Instagram ($1B) and Google/YouTube ($1.6B) for value creation? Image
20/ If you prefer Disney parks to streaming, check this LOL.
21/ Worth adding here the subscriber boost from Disney's acquisition of Fox (which includes Hotstar, an major Indian streaming asset).

Having said that: Disney+ was in the works 2 years before the Fox deal.

22/ Lastly, I deserve to get roasted for underselling Disney's existing IP that BAM Tech took to streaming:

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More from @TrungTPhan

Sep 19
PayPal’s bland logo redesign was inevitable
Image
If you are the person that did the un-aligned letters for the previous eBay logo, please contact the research app team. We are huge fans of how un-aligned the “e” is with the “y”.Bearly.AI
This article offers up reasons for popularity of simple font logos (mostly Sans Serif):

— Easier to standardize ads across mediums
— Improves readability (especially on mobile)
— The “brand” matters more than the logo velvetshark.com/why-do-brands-…
Read 4 tweets
Sep 1
Berkshire Hathaway board member Chris Davis once asked Charlie Munger why Costco didn’t drop the membership card.

Let anyone shop and raise prices by 2% (still great value), thus making up for lost membership fees (and more).

Munger said the card is important filter:

▫️“Think about who you’re keeping out [with a membership card]. Think about the cohort that won’t give you their license and their ID and get their picture taken.

Or they aren’t organized enough to do it, or they can’t do the math to realize [the value]…that cohort will have a 100% of your shoplifters and a 100% of your thieves. Now, it’ll also have most of your small tickets.

And that cohort relative to the US population will probably be shrinking as a % of GDP relative to the people that can do the math [on Costco’s value].”▫️

I have a membership but have been guffing on the math for a few years tbh. They keep telling me to upgrade from Gold to Business but I’m too lazy (even if the 2-3% Cash Back on Business pays back after a few trips).

This is a long way of saying Costco’s membership price hike effective today — its first in 7 years — is annoying but when I decide to do the math in a few months, it’ll be worth it.

***

Chris Davis’ remarks from this episode of The Knowledge Project: open.spotify.com/episode/6fJYHF…Image
Anyway, here is something I wrote about Costco’s $9B+ clothing business my affinity for Kirkland-branded socks and Puma gym shirts. readtrung.com/p/costcos-9b-c…
Two notes:

▫️Meant “Executive” (not “Business”) membership
▫️Chris Davis was doing a pure thought experiment. Costco membership obvi high margin (on~$5B a year) and accounts for majority of Costco profits. Retail margin is tiny on ~$230B of annual sales (Costco would need like another $150B+ from letting anyone shop to make up membership profits)Image
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Read 5 tweets
Aug 15
One of the Team USA rowers who won a Gold Medal is an investment banker and actually did the “B2B SaaS Sales” joke on Linkedin. Legend. Image
Here’s the rest of the post (perfectly formatted to show up in the feed as a shitpost): linkedin.com/feed/update/ur…
Image
Justin if you’re reading this and are available for consulting, the research app team would love to engage your B2B SaaS knowledge for our Q4 sales roadmapBearly.AI
Read 4 tweets
Aug 7
Explainer video on science of why the 400m sprint is considered the most painful track & field event.

And why “no person on the planet can run the 400m all out from start to finish".

The race pushes the way the body creates energy to the limit:

▫️0-50 meters: ATP-CP (energy system for very short and explosive movements; used up after 5-10 seconds)

▫️50-200 meters: Anaerobic glycolysis (burns glucose without oxygen, leading to lactic acid buildup and muscle fatigue)

▫️200-300 meters: Aerobic energy (uses oxygen to break down glucose, but cannot keep up with the demand)

▫️300-400 meters: Anaerobic energy reserves tapped while aerobic energy is too slow to fill the gaps (lactic acid buildup is going HAM)

Track athletes can pace for longer distances and shorter ones are just over quicker (obvs).

The Olympic record is a blazing 43:03, set by South African runner Wayde van Niekerk in 2016 (and 2024 Final race is tomorrow).

***

Full video from Outperform:
Usain Bolt ran the 400m early in career but then said training was “too hard”.

The 400m Hurdles is a world of pain too for similar reasons — Vox has a good vid on it:

Here is a great breakdown of Wayde van Niekerk’s record run:

Image
The 400m is also tough because you don’t get the benefit of an absolute baller like Bottle Klaus keeping hydrated
Read 5 tweets
Jul 20
The amount of work Hayao Miyazaki and Studio Ghibli team put into a film is mind-boggling.

Each typically has 60k-70k frames, all hand-drawn and painted with water color.

This 4-second clip (“The Wind Rises”) took one animator 15 months to do. Insane.
The docu “10 Years with Hayao Miyazaki” shows him talking to the animator (Eiji Yamamori) after its done.

It’s so good:

Miyazaki: “Good job.”
Yamamori: “It’s so short, though”
Miyazaki: “But it was worth it.”

The animator gets a second of joy (he’s pumped) but on to the next.
Miyazaki doesn’t use digital FX or computer graphics. He believes “that the tool of an animator is the pencil.”

On a related note, here’s something I wrote about another Japanese legend dedicated to the craft (Ichiro Suzuki) and the art of mastery: readtrung.com/p/jerry-seinfe…
Read 4 tweets
Jul 9
New York City paid Mckinsey $4m to conduct a feasibility study on whether trash bins are better than leaving garbage on the street.

The deck is 95-slides long and titled “The Future of Trash”.

Some highlights:

▫️The official term is “containerization”, which is the “storage of waste in sealed, rodent-proof receptacles rather than in plastic bags placed directly on the curb.”

▫️Two main types of containerization: 1) individual bins for low density locales; 2) shared containers for high-density.

▫️NYC needs to clean up 24,000,000lbs of garbage a day

▫️Containerization has only become the norm worldwide in major cities in the past 15 years.

▫️New York City first considered containerization in the 1970s but never conducted a feasibility study until now (Mckinsey’s sales team has been dropping the ball)

▫️Key considerations for container viability:

• POPULATION DENSITY: NYC has 30k residents per square mile (more dense than comparable big cities)

• BUILT ENVIRONMENT: Few places to “hide” containers due to history of infrastructure development.

• WEATHER: Snow creates challenges for “mechanized collection” in the winter.

• CURB SPACE: Mostly taken up by bus stops, bike lanes, outdoor dining and fire hydrants.

• COLLECTION FREQUENCY: NYC needs to double frequency of pick-up for estimated speed of trash that bins would accumulate.

• FLEET: A new garbage truck will needs to be designed to collect rolling bins at scale.

▫️ The proposed solution (literally garbage bins and shared containers) covers 89% of NYC streets and 77% of residential tonnage.

▫️The three case studies — because you gotta have solid case studies — are Amsterdam, Paris and Barcelona.

▫️There is a slide called “Why containerization matters” and three reasons are “rats”, “pedestrian obstruction” and “dirty streets” (the 21-year intern that did this slide billed at prob $10k an hour is my hero).

The study is actually pretty interesting.

I have no idea if $4m is a rip-off to learn that “yeah, we should put garbage in bins so rats don’t eat it” but I would have happily done it for 10-20% of that budget (and come to a similar conclusion).Image
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It is actually an interesting deck. Just the thought of a 20-year old newly grad getting billed at an obscene rate to say”rats get to garbage” is kinda funny

Four more solid slides:
— By the numbers (daily garbage = 140 Statue of Liberty a day!!)
— City comparison
— Container comparison (looks like they did select the “scalable” trash bin)
— Curb side analysis

Full deck here: dsny.cityofnewyork.us/wp-content/upl…Image
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Think Mckinsey telling NY to “put garbage in bins so rats don’t eat it and people can walk” will work out better than when it told AT&T in 1981 that cellphones would be “niche.”

That cost AT&T $13B and one worst business predictions ever as I wrote here: readtrung.com/p/the-worst-te…
Read 6 tweets

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