Stratechery is a great site I have been reading. Here, he breaks down Spotify's business issues https://stratechery.com/2018/lessons-from-spotify/ He shows that the traditional tech company scales this way Except that in the case of Spotify the marginal costs line is not flat, it tracks along with Revenue as the Record Labels want a piece of the action Its a very good piece that is worth a read
"Spotify could grow its revenue without increasing its operational costs. How, though, will it grow revenue if it cannot increase its spending on R&D and Sales & Marketing? The typical pattern for non-social network companies is for Sales & Marketing to grow less efficient over time, which means it would need to increase as a percentage of revenue, not decrease (and remember, Spotify can’t afford to miss its growth numbers or its royalty rates go up)" Spotify seems to be a very binary company. Its either going to be a huge sucess (from a profit perspective) or its going to be worth very little and it will be effectively owned by the Record Labels
If you look at what they did (negotiated a 'good deal' with the Record Labels and improved margins) it makes me think that there is an element of pump and dump into this. Its a very short-term deal (it will have to be renegotiated soon) and it happened before the IPO. Looks like they wanted to have good numbers to show to IPO investors (or they got there by luck) and now they want to cash out because they know their overlords wont be generous forever
Zuckerberg did his largest insider selling in a long-time before the whole scandal exploded. His defense was that it was under a 10b5-1 plan, but he is full of shit. These plans are so scammy is a joke https://www.wsj.com/articles/SB10000872396390444100404577641463717344178?mod=WSJ_hps_LEFTTopStories He sold because he knew it was a good time to sell
"Put another way, there is little in the system to prevent an executive who foresees good news about the company from canceling a scheduled share sale, or an executive who foresees bad news from canceling a scheduled share purchase."
China is such a dirty player, I never realized the extent and tactics that went behind its 'great firewall' https://en.wikipedia.org/wiki/Websites_blocked_in_mainland_China A lot of internet/software companies have a lot of benefit from network effects/being first/having weak competitors etc. What China does is to give a head start to pretty much all of their tech startups by blocking competitors and not enforcing copyright laws, etc. The net result is massive domestic corporate value creation (Tencent, Alibaba, Baidu etc) due those advantages.
"In his excellent book "The Signal and the Noise," there's a section where Nate Silver covers Bayesian reasoning - essentially, a formula for estimating the probability of [X] based on some new piece of information, given the likelihood of [X] *prior* to receiving that new information. I know, I know; your eyes are glazing over at the mere thought of mathematics, but bear with me for a second. Silver outlines a storybook scenario wherein a woman comes home to find, in her boyfriend's bedroom, some unmentionables of unknown origin. What, then, is the likelihood that said boyfriend is being unfaithful? The answer is much lower than you would intuitively think, and that is a problem if you are an investor, because you're likely putting far too much weight on incremental data points and far too little weight on "priors" - i.e. the underlying "base rates" of how likely things are. A less lascivious but perhaps more useful example: if you believe (based on good evidence!) that it's extremely unlikely that someone will be able to shout a word and make it start raining, and then someone does exactly that 10 times in a row, you still shouldn't believe that they're actually a rain god - they're just really, really lucky. As it relates to investing, historical data largely suggests that investors overreact to data points... which is where the opportunity for value investing arises: if you can develop a strong knowledge of the fundamental nature of things and deeply understand base rates, you'll have the ability to swing hard when you see a compelling opportunity."
https://www.marketwatch.com/story/t...it-could-last-2018-03-27?mod=mw_share_twitter "To be sure, you might worry that we are due for a larger-than-average decline, given the length and gains of the bull market that began in March 2009. But history does not support such a concern: There is no statistically significant correlation between a bull market’s length or gain and the subsequent bear market’s length or loss. So while a bigger- or longer-than-average bear market is certainly possible, it will be for reasons other the mere strength of the preceding bull market."