How does your netflix catalog compare?

Reporting season has been kind for most technology names. Facebook, Amazon and Google all showed accelerating revenue growth as these companies expand their domination overseas. An exception short term has been Netflix. Comparing Netflix catalogs across the world helps us to understand why. In Australia it costs $8.99 a month in America its $9.99 but the difference in the number of titles is staggering. In Australia for example we only have 2,418 titles available just 47% of what US subscribers receive though we are a lot better off than Sudan with only 908 titles. Netflix is a fantastic service it dominates online TV with users viewing 1.8 hours of content a day. The global opportunity is there for Netflix but it will take time as NFLX needs to obtain licenses for each region as some are tied up with other providers. Creating more successful original programming (House of Cards, Orange is the new black) has been a smart way for Netflix to get around this problem. Having exclusive content available globally should help them get back on track. (Picture can be hard to see the link is below).

http://cordcutting.com/how-many-titles-are-available-on-netflix-in-your-country/

Decisive has no position in Netflix. The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

What do you do after making 44% per annum for 18 years?

There are many great venture capital investors out there but I haven't seen anyone who was come close to Masayoshi Son's returns of 44% per annum over 18 years. Masa is the CEO and founder of Softbank in Japan. His biggest win was investing $20m in Alibaba when it was a startup. At the time of Alibaba's IPO this investment was worth $58 billion.

http://www.softbank.jp/corp/d/sbg_press_en/list/pdf/pressconference_01/material_en.pdf

Masa's investment style can be described as getting ahead of trends. He has benefited from the shift to mobile. His next bet is on the internet of things buying Arm Holdings a UK based developer and licencor of semi conductor technology.

http://www.softbank.jp/corp/d/sbg_press_en/list/pdf/pressconference_01/material_en.pdf

On the Arm acquisition conference call he explained how he made his returns.

"So, people ask me how, Masa, did you do that? And people tell me it was lucky incident. But to me, if I can answer only one key factor, one thing in common that I always make investment is that I always make investment at the beginning of the paradigm shift. I never chase from the backward. I always go at the front of the edge of the paradigm shift. So in my last 40 years, okay, the PC started, PC internet started, PC broadband started, mobile internet started, okay. So, to me everything was internet. It was all getting connected and I invest at the every beginning of paradigm shift.

Now going forward what will happen in the next decade? Every 10 years, the big paradigm shift comes then what is the next 10 years, okay, next 20 years and so on. I say biggest paradigm shift that's coming is that internet is going to get connected, not just PC, not just mobile, but everything else. Everything else will be interconnected, so that is Internet of Things in today's terminology. So that paradigm shift is really happening from here on next 10 years, big-time. It's going to explode and in 20 years, 30 years, it's even going to more-and-more accelerate. Today 10 device per population are having Internet Of Things that is smartphone and tablets or PCs. But in 40 years from now, 1,000 devices per population is going to get all connected, that's my view. That's the view I kept on saying the last few years."

Masa believes Arm Holdings chips will be the biggest beneficiary of the internet of things with a track record like his it's a view worth listening to.

Note Decisive has no position in Softbank. The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

Pokemon catch 'em all but not the stock

You can't escape Pokemon Go its everywhere. Since its release on July the 6th (Australia and US were the first) it has already become the most successful mobile game of all time. Nintendo shares are up 93% since then with a market value of $37 billion. To put this in context Activision Blizzard the maker of Warcraft and Call of Duty is worth $31 billion. Pokemon Go is attracting traders to Nintendo according to Bloomberg on Friday $4.5 billion shares traded the biggest daily turnover for any company in Japan's Topix index this century. 

 

Some of the increase is justified as investors extrapolate Pokemon success to other franchisees like Mario and Zelda. The only problem is its hard to live up to these expectations. Nintendo has a historically volatile share price great expectations led to slight disappointments and the realisation they have to bring out a hit product all over again. As a reminder they only own 32% of Pokemon Co and the game was released by Niantic (Nintendo owns a stake) whose augmented reality technology helped the game become a hit. It's good to see a game where users are active similar to Wii Fit which led to a similar rise below but expectations again brought Nintendo back. There is a reason traders are trading the stock long term returns in Nintendo have been average. Surprisingly Pokemon hasn't been released yet in Japan I suspect once Pokemon Go does comes out in Japan trading and the stock will settle down. 

Note Decisive has no position in Nintendo (7974). The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

Best social media marketing

Social media is great for marketers. If successful news goes viral. Cards against humanity have run some very successful Black Friday events. The card game is a popular "party game for horrible people" its very inappropriate and offensive on purpose. Its the most popular selling game on Amazon. Their marketing lives up to their hype offering inappropriate Black Friday experiences. Instead of receiving a discount on Black Friday they charged you $5 for nothing. Amazingly they made $71,145 and split it among employees! One person gave $100 and if you click this link you can find out what employees did with the money (some of it went to charity). Previously they sold $6 boxes of dog poo (called bullsh*t) and the year before that they raised prices from $25-$30. The price rise was great marketing for the company and widely shared on social media. The promotion was successful they kept their position as the best selling toy/game on Amazon. As a bonus the day after Black Friday they saw a lift in sales as people waited for the price to go back down to $25!

Pizza is a very shareable item so it's no surprise that pizza does well on social media. Domino's has been very savvy with technology. With just one pizza icon tweet you can order your favourite pizza. It's probably too easy. Domino's also made news with an autonomous delivery vehicle named DRU. Though it can only reach speeds of 20km an hour limiting it to neighborhood deliveries. Thoughtfully each unit will have cameras so any theft will be recorded.

I'm looking forward to the promotions cards against humanity (slightly cringing) and Domino's come up with next.

Note Decisive has a long position in Domino's (DPZ). The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

Founder led companies outperforming the rest

We believe that investing with founders gives you an edge in the stockmarket. Behind every stock there is a company and behind every company are people. Why not invest with the best like Jeff Bezos and Mark Zuckerberg? Amazon and Facebook have outperformed for years they seem to be able to take risks and make investments most companies wouldn't be able to. We believe a main reason is the founders long term vision. Thankfully Bain & Company have quantified the out performance of founder led firms, you can see below that they beat the index by 3.1x.

https://hbr.org/2016/03/founder-led-companies-outperform-the-rest-heres-why

The founder mentality=owner mindset
Bain's study found that when the founder was still CEO the company generated 31% more patents, were more likely to make investments and had a willingness to take risks to better position the company for the future. These companies had a strong sense of purpose for servicing customers this purpose helped employees feel more engaged at work. The founders treated everything like their own money because it was with large stakes in the business and hated bureaucracy. It's hard to have a successful business but it's even harder to keep growing into the future. The long term view of founder led companies meant that overtime they were positioned for change compared to management with shorter time horizons (average S&P500 CEO 9.9 years in 2014) and little equity in the business.

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

Best CEO ratings

Glassdoor recently announced the top CEO's as rated by their employees. In what should be a tough crowd to please the top 5 CEO's had an employee approval rating of 97%. Two of the top five were private companies represented by consulting firms Bain and McKinsey. The reason for Bob Bechek's success? He made time to support employees and help them with their professional development. The other top performers were internet companies like Facebook, Linkedin and Ultimate Software (see below).

https://www.glassdoor.com/Award/Highest-Rated-CEOs-LST_KQ0,18.htm

The top ten has changed considerably from last year. Only three of the top ten made it again Tim Cook from Apple, Mark Zuckerberg Facebook and Scott Scherr Ultimate Software. Out of the top 50 four were women. In the S&P500 there are only 20 female CEOs so they are outperforming percentage wise at 8% versus the index of 4%.

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

Internet Trends 2016 report

Mary Meeker just released her 2016 internet trend report. There are 213 slides we have included our favourites below. US internet advertising actually accelerated last year growing 20% vs 16% driven by mobile up 66% y/y. Google and Facebook were 76% of internet advertising growth. If you're in the print business you probably wouldn't like to see the slide below.

This chart helps explain some of Apple's (iOS) problems their average selling price has increased while Android prices have halved.

As we all know owning a car is expensive costing $8,558 year in the US, depreciation is 44% of the annual cost. Commuters spend 4.3 hours a week traveling to work time that Google or Facebook could use entertaining you! The rise of Uber has a big impact not just on cars but carparks freeing up extra space should help reduce property costs. Most users like Uber for its convenience but 84% surveyed use it after a few drinks.

China has spent more building roads in the past six years than than previous 30 but now its slowing.

Retail in China is online first. The top 2 Chinese retailers are e-commerce players. Alibaba is around 6.5% of retail sales compared to Amazon's 3% of sales in the US.

Source: http://www.kpcb.com/internet-trends

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.