European Cloud (update)

  • Two years ago we posted about Europe’s attempt to challenge US tech dominance in cloud computing.
  • Predictably it has struggled.
  • In conversations with POLITICO, more than a dozen industry and government officials involved with the work of Gaia-X said the project was struggling to get off the ground amid infighting between corporate members, disagreement over its overall aims and a bloated bureaucratic structure that is delaying decisions. One industry official closely involved in the work of Gaia-X called it a “mess.”

Peter Thiel

  • Intriguing review of latest book on the Silicon Valley legend.
  • The book “does an excellent job of unpicking the disparate elements of the Thiel mythology”
  • From trying to get out of his early Facebook investment as fast as he could, including trying to convince Zuckerberg to sell to Yahoo for $1bn.
  • To his failed anti-college scholarships.
  • Absolutely worth a read.

Creator Economy

  • The creator economy is booming.
  • New platforms are largely to thank – they have transformed the economics of creating.
  • This is seen in the table from The Independent Creator Manifesto.
  • In aggregating monetization across these 50 platforms, we’ve found that creators will soon pass more than $10 billion in aggregate earnings. While 2020 saw a jump in new creators, it wasn’t a one-time spike. A year later, creators are still coming online at a record clip: the number of creators is up a whopping 48% year-over-year. In total, these platforms have onboarded 668,000 creators.
  • Substack just announced they have hit 1 million paid subscribers.

Reservations

  • Wonderful article about how reservations are taking over our lives.
  • The end result of this movement is that our access to real world experiences is experiencing a kind of digital enclosure.
  • The master of this new world are Disney Theme parks, which the author covers in all their planning glory.
  • The latest pinnacle here is the Disney Genie app – though consumers aren’t fans (the launch video has 13k dislikes vs. less than a 1,000 likes).
  • The big issue is likely the attached chart – Disney ticket prices have outpaced wage growth for years (Source).

Big Tech Acquisitions

  • Provocative chart from latest Bain technology report.
  • When the facts are reviewed, most big tech M&A spending actually benefits consumers and doesn’t hamper competition. That’s according to Bain’s analysis of all $300 million-plus acquisitions, totaling more than $150 billion, from 2005 to 2020 by the five US hyperscalers: Alphabet, Amazon, Apple, Facebook, and Microsoft
  • Overall they find that, excluding Linkedin, 72% of M&A spending created value for consumers, rising to 89% if we exclude Nokia/Motorola.
  • For those interested the methodology is in the appendix of the report.

Online Display Eating TV

  • Online display advertising is rapidly displacing TV in the UK.
  • However, despite the increase in online, TV advertising remains the medium of choice for big brands wanting to reach an audience quickly and at scale, with advertisers citing TV’s ability to drive both short-term sales and longer-term brand equity as a major advantage.” 
  • Source: Ofcom.

Technology Transformation

  • Company IT systems are vital but understudied by investors (e.g. here).
  • This is a great post on how Fox went about setting up its technology capabilities after the deal between 21st Century Fox and Disney.
  • To whet your appetite – “we left almost all of our systems and infrastructure behind and embarked on a two-year journey and radical transformation
  • What follows is a set of principles that is fascinating to read for investors and corporate insiders alike.

Pixar

  • George Lucas was forced to sell Pixar to fund his divorce.
  • Venture capitalists, 35 of them, refused to back the firm as did eight strategic partners, but Steve Jobs agreed.
  • If we’d had any other investor than Steve, we would have been dead in the water.
  • He forced the firm to succeed “He’d berate those of us in management, then write another check”
  • Pixar was eventually sold for $7bn to Disney “This is astounding considering they could have had us for free in the 1970s when we approached them on bended knee.” 
  • The real story of Pixar – a fascinating read.

Dell

  • Splitting a good black jack hand” is a great way to describe how Michael Dell pulled off perhaps the most daring deal of the last decade.
  • Before the LBO, he owned 15.6% of his company, shares worth less than $4 billion. Thanks to the miracles of his financial engineering, he will own 52% of Dell and a 42% stake in VMware. The total value of his Dell holdings is $40 billion.
  • A really great article from Forbes.

Music Streaming Market

  • There are 487m music streaming subscribers globally at Q1 2021.
  • Emerging markets are now central to this market accounting for 60% of all 2020 subscriber growth.
  • Spotify is still the leader with 32% but has lost two points of market share since Q1 2020.
  • Google’s Youtube Music has been the standout story – “The early signs are that YouTube Music is becoming to Gen Z what Spotify was to Millennials half a decade ago.
  • Source.
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