Facebook is a great example of a company that has lost its way as founder CEO Mark Zuckerberg increasingly exercises control over product decisions.
Tightening control. It is difficult to fault Zuckerberg for tightening his grip on Facebook’s strategic reins in the aftermath of the Cambridge Analytica scandal. Whether or not you agree with Zuckerberg’s strategic decision to evolve Facebook into a secure messaging platform is beside the point. Where we have a bone to pick with Mr. Zuckerberg is his decision to insert himself into Product Management decisions that typically are the purview of Product Managers. Zuckerberg wouldn’t be the first founder to believe that because he got it right once he can do no wrong. Zuckerberg’s power grab and product meddling has resulted in a number of Facebook senior executives leaving the ranks in recent months.
Zuck lacks “Trust”. Zuckerberg does not sufficiently trust his people – those who spend all day every day living and breathing Facebook’s various products, features and functionality. This lack of trust is in line with Zuckerberg’s “trust” score based upon the CEORater Big 5 Personality Analysis that we ran. Zuckerberg’s “trust” score sits at the 62nd percentile relative to the broader population. For comparison, Tim Cook’s trust score is at the 78th percentile, Elon Musk at the 80th percentile and GM’s CEO Mary Barra at the 90th percentile. The below image is from Zuckerberg’s Big 5 Personality Analysis which you may access by clicking the link in the image caption.
Instagram – Killing the Golden Goose. One could argue that were it not for Instagram’s success, Facebook’s reported usage metrics and valuation would be substantially less than where those figures stand today. Zuckerberg’s meddling in Instagram’s user experience (UI/UX) is ultimately what caused Instagram co-founder Kevin Systrom to leave last year. We touched on this topic last year in a TEK2day Podcast episode when Systrom announced his Facebook resignation. To borrow a football analogy, rather than continue to run the plays that have worked, Zuckerberg chose to throw out the playbook and change the offensive coordinator.
A mashup of 3D printing, computer vision, machine learning and other advanced technologies.
It’s an exciting time at the intersection of robotics, computer vision, AI, machine learning, deep learning/neural networks and 3D printing. We roamed MIT’s campus earlier this week as we were on site for a 3D printing class. While unsuccessful in our quest to 3D-print a robot of our own, we did spot a few delivery bots on campus. Below are snippets of content we found interesting about one of MIT’s more famous spin-outs, Boston Dynamics. We are working to get founder Marc Raibert on the TEK2day Podcast. The Boston Dynamics robots operate much like an autonomous vehicle, leveraging LiDAR technology to power “vision” and spatial awareness.
It’s all about the cloud. Given that Amazon’s AWS business unit and Microsoft’s Azure business unit are the two finalists for the Pentagon’s $10 billion “JEDI” contract, we thought it timely to publish AWS, Azure and GCP revenues for the 12-month period ending 12/31/18. As per usual, see the video and image content “below the fold.”
Amazon (AWS): $25.7 billion. Amazon reports AWS figures in its SEC filings. The $25.7 billion figure represents 47% year-over-year growth.
Microsoft (Azure): $6.5 billion. This figure is our estimate based upon certain public disclosures made by Microsoft. We estimate that Azure revenues grew 82% year-over-year.
Google (GCP): $4.5 billion. This figure is our estimate based upon certain public disclosures made by Google. We estimate that GCP revenues grew 32% year-over-year.
There are a number of new streaming content providers on the block such as YouTube TV, ESPN+ and the forthcoming Disney+. In addition, legacy content providers such as the New York Times and CBS have caught subscription fever. (free article)
Subscription fatigue? Time will tell. We provide subscriber metrics including number of paid subscribers and subscription revenue for the following companies: Amazon, Apple, AT&T, CBS, Disney, Factset, Google, Hulu, Netflix, New York Times and Spotify.
Disney May Be the New King of the Content Jungle. Disney+ Coming to A Screen Near You in November.
We’ve previously written in these pages that “Content Is King“. Similarly, back in 2017 we posited that “Netflix Loses in A Disney Fox Deal“. Disney – owner of the world’s best content library – was in full force at yesterday’s investor day. The highlight of course was Disney+, the forthcoming streaming service to be launched in the U.S. on November 12th 2019 for $6.99/month or $69.99/year.
We have culled through 200+ pages of Investor Day slides to bring you the below highlights including the financial outlook for Disney+, ESPN+ and Hulu.
Subscribers will have access to Disney’s library of film and television entertainment.
Disney+ will be the exclusive home for films released by Disney Studios in 2019 and beyond.
Disney stated that it is likely that Disney+ will eventually be offered as part of a larger bundle with ESPN+ ($4.99/month or $49.99/year) and Hulu – the latter which Disney is the majority owner of.
Disney/Fox/Marvel/Lucasfilm content now available on Netflix will be removed from Netflix once content license contracts expire.
We favor subscription revenue models for a variety of reasons:
Providing a better service: Subscription models (aka – “usage-based models” or “consumption-based models”) align value provided to the customer with customer payments. The Cloud is tailor-made for usage-based services. Consider Netflix. The company’s content recommendation engine suggests content that you are likely to enjoy based upon your viewing history and preferences. Consider any one of a number of services that make wine recommendations based on your wine consumption history and preferences. The cloud enables companies to: 1) observe customer usage 2) to refine service elements that users value most. The output is growing a better service, which leads to greater customer loyalty, predictable revenue and a stronger competitive moat.
Greater strategic flexibility: Subscription revenue models provide companies with superior revenue visibility and operational predictability – enabling them to take a longer-term strategic approach to capital allocation.
Premium valuations: Investors award valuation premiums to subscription revenue companies vs. upfront license revenue models which lack predictability and can be volatile.
Usage-based models are becoming the norm: In many cases customers prefer to engage with companies via consumption-based models vs. paying for everything upfront. Auto OEMs, content providers (video games, feature film, episodic television, live sports, newspapers), ride share, short-term office rental – you name it – subscriptions are where it’s at.
Apple will have a new CEO within 5 years. You may thank Apple CEO Tim Cook and former Microsoft CEO Steve Ballmer.
Microsoft shares flat-lined from 2001 to 2013 during a series of flubs including being late to the Internet, late to mobile, late to the cloud, late to AI, slow to capitalize on the Surface technology it had pioneered in the early 2000s and refusing to partner with others. Former Microsoft CEO Steve Ballmer and co-founder Bill Gates had a semi-public boardroom breakup, but not before Ballmer rushed through the ill-fated Nokia acquisition. This 12-year period where MSFT shares were as flat as the Bonneville Salt Flats served as a very public teachable moment (or decade). No CEO in the Bay Area wants to have their own Microsoft moment. Apple is at risk of suffering a similar fate under caretaker CEO Tim Cook. Mr. Cook operates at a pace that puts AAPL at a disadvantage, not to mention some of the strategic blunders (we address below) which may not be reversible. While 5G may boost iPhone sales, we are well beyond the point where the iPhone may save the day over the long-term. We provide our 3 key strategic recommendations for kickstarting Apple’s long-term growth.
We took a snapshot from our CEORater database of Fintech companies led by Founder CEOs. The “Fintech Founder 5” consists of those companies that have generated the highest total stock return Year-to-Date.
The Fintech Founder 5: GreenSky (tkr: GSKY), MSCI Inc. (tkr: MSCI), Pegasystems (tkr: PEGA), Square (tkr: SQ) and SS&C Technologies (tkr: SSNC). Click Here for company snapshots including: company specific returns, our CRScores and the Autonomous Investment Ops platform.