49: My Thoughts on You, Pfizer, The Trade Desk Q3, Netflix Going Linear, Lululemon?!, Planting Trees with Drones, Oregon Opens a Drug Frontier, and Good Ol' Feynman
"Am I writing about tea now?"
People ask: 'What's your plan B?' I say 'I don't have a plan A — if I knew what I was doing, I wouldn't be here.’
How do you write for multiple audiences at the same time?
To a newbie, "price is what you pay, value is what you get" may be super profound and life-changing, but to an old curmudgeon, it may sound trite and at best get an eye-roll.
To those who have been reading my stuff here since the first issue (man that’s embarrassing, don’t go back and look, please), all the stupid little inside jokes may make sense and bring a smile-to-the-corner-of-the-mouth-once-in-a-while, but to new readers, it may be confusing and a turn off (‘cause you gotta build up to the craziness, and not let it fly all at once).
Do I really have to pick an audience and write only for them, or can I write for both — for everybody, for nobody — and just assume people are smart and they'll sort it out..?
I’ve decided. I’m assuming you’re smart. You better hold up your end of that, though.
⫸ Speaking of smart, it’s all the rage in Silicon Valley to be micro-dosing on all kinds of stuff. I wonder what kind of effects you actually get from it — what the subjective experience of it is — and how much is placebo. In the meantime, while they’re having breakthroughs on 10ug of lysergic acid diethylamide or whatever, I’ll be sitting here in pyjamas, macro-dosing green tea.
Speaking of, I’ve got a tip to share on that (tea, not LSD).
I use loose-leaf and a big 20oz Contigo travel mug, and I keep re-using the same leaves all day. So the morning tea has the most caffeine, and by the time I’m on my third mug in the evening, it tastes the same, but it’s basically decaffeinated (caffeine is pretty water-soluble, because water can create hydrogen bonds to caffeine molecules in six different spots).
I get better sleep that way. My Oura ring is happy.
If this made you want to order some tea (is this what they call accidental native advertising?), my favorite is Harney & Sons’ Japanese Sencha and Harney’s Dragon Pearl Jasmine. I love the metal tins that it comes in too.
But lately I’ve been drinking lower-end Japanese Sencha from David’s Tea. It’s ok. Just get a decent electric kettle to get the right temps, don’t pour boiling water on your green tea (I use 175F and steep 3 mins).
Am I writing about tea now? Just wait until I get going on scotch whisky… ⫷
★ I mentioned on Twitter that to celebrate reaching 2,000 subscribers I’d be posting a 𝕊𝕡𝕖𝕔𝕚𝕒𝕝 𝔼𝕕𝕚𝕥𝕚𝕠𝕟 with a very special guest. We’re now 2,033 people in the club, so expect something extra in your inbox in the coming days…
Investing & Business
The Trade Desk Q3
All this stuff below you can see in the release, but let me give some highlights:
EBITDA Margin: 36%
Connected TV grew over 100%
Mobile Video spend grew about 70%
Audio spend grew about 70%
Customer retention remained over 95%
Building Unified ID 2.0 (“an upgrade and alternative to third-party cookies”)
Guiding to 33-35% revenue growth in Q4 despite a big impact and extra uncertainty caused by COVID19.
On the EBITDA side, they’re guiding to growth of “at least” 115% ($115m, vs $53.6m during Q4 ‘19). Hard to be disappointed there.
I guess this all helps explain why the stock exploded to new all-time highs after this. By my math, at the time when I’m writing this, the stock is up about 480% since the bottom of March 2020.
Let’s have a look at too many highlights from the call, because there was a lot of interesting stuff:
we are a long way from being completely out of the woods, I do believe that in 2020, so far, we have gained more market share, or said another way, grabbed more land than at any point in our company's history. [...] Our rate of grabbing land in Q3 might be the biggest bullish indicator we produced as a publicly traded company
advertisers are aggressively committing to the open Internet because of the scale and results of Connected TV and premium video. I maintain my prediction that eventually all premium video will eventually make up about half of the global advertising pie.
2020 will go down in media history as a tipping point in TV. [...] consumer shift has created a tipping point. The number of U.S. households with traditional cable TV subscriptions is dropping to below 80 million this year. According to eMarketer, 77.6 million U.S. households will have cable TV packages this year, down about 7.5% year-over-year. That is a rapid acceleration from the 3% decline that they had been predicting at the beginning of the year. In addition, CNBC recently reported that at least 3 large U.S. media companies expect the number of U.S. households that subscribe to linear TV bundles will fall to about 50 million in the next 5 years.
That is about a 40% drop from here. At the same time, advertisers will be able to reach more than 80 million U.S. households via CTV on our platform this year. The crossover of household reach on our platform versus linear TV bundles is only going to widen. And that's because on-demand streaming content is more convenient to viewers and because many U.S. households remain under considerable economic pressure and are abandoning their expensive cable TV packages. That live sports remain in the state of flux only adds to the acceleration in cord cutting.
the shift to CTV is helping reinforce advertiser conviction that there is a compelling alternative to walled garden. Like last quarter, I have spent a disproportionate amount of my time over the past few months meeting with agencies and brands. The first question invariably concerns helping them shift [away] from user-generated content to premium TV content. That's because they are increasingly weary of the divisive nature of [user-generated content]…
in that same survey of 200 advertisers, which I referenced earlier, 90% said they plan to shift ad dollars away from user-generated content. Indeed, we have won tens of millions of dollars of spend from UGC platforms in the last quarter alone, and we expect these trends to continue. We are also winning business from linear TV and expect to continue to grab share from that $250 billion worldwide TV market.
In the third quarter, one e-commerce giant saw an 11x return on ad spend for CTV on our platform. As a result of that performance, they shifted 10% of their linear budget to CTV. We're seeing similar shifts across our customer base. But the other side of the CTV coin is the massive surge on the supply side. Broadcasters are all pivoting to CTV.
[outside the US] with their advertising ecosystems much more concentrated than in the United States, these markets have the opportunity to leap ahead quickly in areas such as CTV.
By contrast, broadcast TV is a ticking time bomb where the economics are unsustainable. The ad-to-content ratio creates a terrible viewer experience.
The cost of cable for the consumer is high. So not surprisingly, the move to CTV is accelerating on the supplier side as well as on the consumer side.
Another reason I'm so bullish for our future is product. In 2021, we will launch one of the biggest upgrades to our system in company history.
there is growing demand for such an alternative to walled gardens that can execute at scale across every channel worldwide. The market will not allow Google to be the only company to offer effective ad targeting. There is too much collaboration and understanding of what's at stake for that to happen. As a key element in creating that compelling alternative, we have architected a new identity framework for the entire open Internet called Unified ID 2.0. It raises all boats. Simply put, it creates a better and open competitive Internet, one that also improves privacy controls for consumers. [...]
regardless of what Google ends up doing with cookies, we believe that the industry will have a better upgraded alternative for identity [...] I firmly believe that Unified ID 2.0 will reach critical mass and adoption next year.
I was on the phone with some of our team in China this morning, just talking about how they are leading the world in global growth for us, they're back to the offices and sort of business as usual and having a phenomenal year for us.
Ok, I think this is getting too long, there's probably only 3 of you who read all that. Let’s cut it here.
Also on the topic of TTD, ‘NonGAAP’ Mike notes:
(you should subscribe to his newsletter about corporate governance)
Netflix Testing a Linear Channel (and My Idea to Expand the Concept)
The channel, called Netflix Direct, will be available to Netflix streaming subscribers and will provide content from its existing streaming library in a linear format, much like cable and broadcast TV stations do.
“Maybe you’re not in the mood to decide, or you’re new and finding your way around, or you just want to be surprised by something new and different,” Netflix said in a statement announcing the new service. It chose France for the launch of Netflix Direct because traditional TV is “hugely popular” there, and people “just want a ‘lean back’ experience where they don’t have to choose shows,” the company said. (Source)
I think it’s a great idea to run that experiment. It doesn’t take anything away from the video-on-demand side, and for those who are paralyzed by too many choices or just have no idea what to watch and have formed the habit of just “seeing what’s on” with traditional TV, this is additive to the experience. I really don’t see any downsides.
I actually think there’s a whole different model that would be possible with this: third party channel curators that people could subscribe to (maybe even pay a few bucks — almost like premium channels). A kind of App Store model, but for curated linear channels.
Someone with great taste could become a kind of independent programming manager and schedule content from Netflix’s vast library on their channel. Over social media and with reviews and voting, the very best channels would eventually rise to the top and get millions of subscribers. And once something has millions of people watching at the same time, you re-created some of that buzz that has been lost with season dumps (with everybody saw that crazy Sopranos episode at the same time and talked about it the next day, etc).
Some true stars could be created, and Netflix would benefit by owning the platform where this happens. This would increase usage, stickiness, and make subscriptions more valuable to customers.
I’m sure they’d rather do it with algorithms, but for this, human curation may work better (for now?).
Unlike a lot of my ideas, I think this one isn’t entirely stupid. That probably means a lot of people smarter than I am have had it a while ago. Matthew Ball probably thought of it 15 years ago…
P.S. If anyone at Netflix is reading this and liking it, ping me and I’ll give you the account # where you can wire a very small fee for the idea.
…I think your pants look hot, Laurens I like you a lot…
In 2005, Lulu generated $40.7 mn sales. 15 years later, its sales were ~100x of that, implying an astounding ~35% CAGR over this period which was almost entirely organic in nature. [...]
In this deep dive, I will first discuss why Lulu has been such a successful company at a time when we are writing obituaries of so many other retailers. I will then dive deep into the numbers to explain the business in more detail which will be followed by valuation discussion. Finally, I will discuss some optionality which may make my current bearish tone shortsighted if this optionality goes in Lulu’s favor in a major way.
I gotta say, I now know a lot more about yoga pants than I did going in. And I even figured out where the R&D is going:
Interview: Reeves Wiedeman on WeWork (Podcast)
I enjoyed this interview of Reeves Wiedeman, the author of ‘Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork’ by Jason Calacanis.
I haven’t read the book, so I can’t recommend it, but the interview gives a good flavor for this classic rise & fall, crazy story that reminds me a bit of John Carreyrou’s ‘Bad Blood’ on Theranos, which I’ve read and found enjoyable.
Science & Technology
‘Pfizer’s Early Data Shows Vaccine Is More Than 90% Effective’
Pfizer announced on Monday that an early analysis of its coronavirus vaccine trial suggested the vaccine was robustly effective in preventing Covid-19 [...] The company said that the analysis found that the vaccine was more than 90 percent effective in preventing the disease among trial volunteers who had no evidence of prior coronavirus infection. If the results hold up, that level of protection would put it on par with highly effective childhood vaccines for diseases such as measles. No serious safety concerns have been observed, the company said.
Pfizer plans to ask the Food and Drug Administration for emergency authorization of the two-dose vaccine later this month, after it has collected the recommended two months of safety data. By the end of the year it will have manufactured enough doses to immunize 15 to 20 million people
I’ve been telling people around me for a little bit that I think there’s a good chance that things are going to feel much better than you’d expect soon, because humans are forward-looking creatures, and what matters most to how we feel is what we’re seeing on the horizon, not where we are right now.
This is why March felt so bad — lots of uncertainty, and our extrapolation engine had only seen things get worse and worse so far, and we knew we were only at the beginning. Then during the summer I think a lot of people couldn’t help but extrapolate some of that even though we “knew” we’d likely get a second wave in the fall, etc.
So right now the COVID19 situation is as bad as it’s ever been, and very likely to keep getting much worse. But as we see vaccines and Spring and a more competent government response and all that on the horizon, it’ll make it easier to go through the bad times. At least, I hope so…
Dr. Jansen sought to distance the company from Operation Warp Speed and presidential politics, noting that the company — unlike the other vaccine front-runners — did not take any federal money to help pay for research and development.
“We were never part of the Warp Speed,” she said. “We have never taken any money from the U.S. government, or from anyone.” (Source)
Drone Startup Wants to Plant Millions of Trees
This falls in the “cool concept, but let’s see if it actually happens” category:
the Canadian startup behind the project, plans to use its technology to plant 40,000 trees in the area this month. By the end of the year, as it expands to other regions, it will plant hundreds of thousands of trees. By 2028, the startup aims to have planted a full 1 billion trees. [...]
Flash Forest’s tech can currently plant 10,000 to 20,000 seed pods a day; as the technology advances, a pair of pilots will be able to plant 100,000 trees in a day (by hand, someone might typically be able to plant around 1,500 trees in a day, Ahlstrom says.) The company aims to bring the cost down to 50 cents per tree, or around a fourth of the cost of some other tree restoration efforts. [...]
the startup first sends mapping drones to survey the area, using software to identify the best places to plant based on the soil and existing plants. Next, a swarm of drones begins precisely dropping seed pods, packed in a proprietary mix that the company says encourages the seeds to germinate weeks before they otherwise would have. The seed pods are also designed to store moisture, so the seedlings can survive even with months of drought. In some areas, such as hilly terrain or in mangrove forests, the drones use a pneumatic firing device that shoots seed pods deeper into the soil. (Source)
It all sounds very cool, if it works. I’ve heard about lots of things like this over the years and most never went anywhere, and the third paragraph I’m quoting sounds like a lot of marketing hype, but I hope they figure out the tech and business model because this would be good for the world.
Longer-term: I’m pretty sure that drones will do reforestation work, even if it’s not this specific company. It just makes sense as a way to reach remote areas with payloads that aren’t that heavy.
Trees Don’t Come from the Ground
Speaking of trees, here’s my tree fact for you today:
“The stuff of the tree is carbon, where does that come from? It comes from the air. People look at trees and think it comes from the ground. But where does the substance come from? It comes from the air… there’s a little bit from the ground, some minerals and such.”
A $70 PC that Fits Inside a Keyboard
We take for granted miniaturization, but it’s good once in a while to take a moment to remember how amazing humans have gotten at putting what are really powerful computers into tiny places, and making them very cheaply.
The Raspberry Pi 400 is a clever example:
Raspberry Pi 4, which we launched in June last year, is roughly forty times as powerful as the original Raspberry Pi, and offers an experience that is indistinguishable from a legacy PC for the majority of users.
You Wouldn’t Eat Garbage, But What Are You Breathing?
Indoor air pollution (IAP) is "the world's largest single environmental health risk" according to the WHO.
In poor countries it leads to the death of 4.3 million in a year.
Many countries made good progress in recent years: they got richer and reduced the IAP death rate.
Indoor air pollution is the consequence of lack of access to modern sources of energy.
It is caused by burning solid fuel sources – such as firewood, crop waste, and dung – for cooking and heating.
In wealthier countries, indoor air pollution isn’t quite the same scourge, but it doesn’t mean that air pollution isn’t a big deal. There’s probably a lot of health issues that can’t be directly tied to it but are made worse by it (asthma), or caused by it, but we just can’t say for sure 30 years later that your lung cancer came from breathing in a bunch of PM(2.5).
I’m especially looking forward to the day when diesel trucks are replaced by electric trucks. They are a huge source of both air and noise pollution in urban areas.
Note that in 2012, the WHO recognized that diesel exhaust was a cause of lung cancer and cardiovascular disease. This is the stuff that most of us breathe in in varying quantities on most days…
‘Oregon Votes to Decriminalize All Drugs, Allow Psilocybin for Mental-Health Treatment’
I wrote in edition #48 about early studies on the potential beneficial effects of psychedelics like Psilocybin in the treatment of conditions like PTSD and depression.
Looks like there’s more good news for the study of these compounds coming form Oregon:
Oregon became the first state in the nation to decriminalize the possession of all illegal drugs and also legalize the use of psilocybin—the active ingredient in hallucinogenic mushrooms—for mental-health treatment, after voters passed a pair of ballot measures this week. [...]
Oregon’s Measure 110 makes possession of any controlled substance, including heroin, cocaine or methamphetamines, a violation punishable by a maximum fine of $100 or a completed health assessment. It also establishes a new statewide drug-treatment system funded in part by tax revenue from marijuana sales and state prison savings. [...]
Measure 109, meanwhile, gives the state public health department two years to develop regulations and create a program responsible for manufacturing and dispensing psilocybin to adults aged 21 or older seeking therapy with a trained facilitator for everything from post-traumatic stress disorder to nicotine dependence. (Source)
Now there's a look in your eyes, like black holes in the sky.
Shine on you crazy diamond.
You reached for the secret too soon, you cried for the moon.
Shine on you crazy diamond.
Threatened by shadows at night, and exposed in the light.
Shine on you crazy diamond.
Had never really paid attention to their nails...
Wow, that's ‘uncanny valley’ close…
The Arts & History
Just a Tree I Like
Three photos I took of the same tree at interval (if you click on it you should be able to see a bigger version). It’s on a trail not far from my house where I’ve been walking a lot in the past year, and every time I see it, I’m impressed.
In fact, a lot of my favorite photos are of trees. No doubt similarly to how we’ve evolved to recognize and appreciate nice faces, we have probably evolved to appreciate nice trees.
End of an Era
An era ends as it began: seemingly directed by the Coen Brothers.