Netflix has a new co-CEO, Dacia's future will be with the Chinese and AI infrastructure as-a-service
Twitter saga continues Amazon has a monthly subscription for...pills ("buy with Prime")
In the last 7 days multiple companies reported their (stellar) earnings for the latest quarter of 2022. This reminded me of my former sales colleagues from a FMCG company who had the same results in Q4 only to cancel some invoices in Q1 next year. We’ll figure it out pretty soon.
Strategy
Netflix is doing a Masterclass CEO handover
The company presented the results for Q4 2022 and made several announcements. Looking in their financials and on their video interview I identified some points that were not said and I think they are also important:
1/ Subscribers: in 2022 the company spent $2.53 bn on marketing only to acquire 8.9 net subscribers. That’s $284 per subscriber
2/ There are 100m users who are watching Netflix w/o having an account (ie. shared passwords) and sooner or later this problem should be tackled.
3/ We don’t know how many subscribers have the ad-tier
4/ Operating margin has declined vs 2021
5/ Revenue per user decreased for the 5th consecutive quarter in Asia and for the 3rd in EMEA
6/ “Tech development” - $2,7 bn - well, what are they working on? Sending a plane in space? In a comparison Tesla spent $3 bn on R&D in 2022
7/ Share price valued at $338, P/E around 29 and no dividends. Are you kidding?
The “show” has ended with the co-founder Reed Hastings announcing that is leaving the co-CEO position in transition to Chairman, leaving the place to Greg Peters. This practice of having two CEOs is more and more common and the story at Netflix shows exactly how large companies should prepare their leaders' pipeline. LINK
Source: Nielsen (US, Mexico, Poland), Kantar (Brazil), BARB (UK). The UK measures viewing across four screens (TV, smart phone, tablet and laptop), all others are TV only.
Renault is ditching elegantly their ICVs divisions
One of the most disregarded events in 2022 was the announcement of Renault to partner with Geely (the Chinese investors who own Volvo) to create “a new global leader to develop, manufacture and sup”ply best-in-class hybrid powertrains and highly efficient ICE powertrains.”
Where is the impact? Here:
“The new company is planned to operate 17 powertrain plants in 3 continents, employing around 19,000 people in total. It will have a combined capacity of over 5 million internal combustion, hybrid and plug-in hybrid engines and transmissions per year, supplying over 130 countries and regions. The new company's joint product portfolio and regional footprint could offer solutions for 80% of the global ICE market.”
Renault identified correctly two key trends:
1/ EVs have a higher profit margin which partially comes from where they are produced (ie. Made in France); Made in Germany for Tesla is much better than…Made in Hungary
2/ Passing the responsibility of ICEs and everything related to these “dirty” cars to a new company is a marketing trick. At the right point and if the EVs trend continues they will sale these plants, R&Ds and brands to Geely (including Dacia!);
Dacia will be the most affected by this agreement, although their sales in 2022 grew by 6.8% to 573,800 sales, while Renault’s sales decreased by 5.9% to 2,05 million. Partnership; Sales
Twitter saga continues
The Verge has an extensive piece on Elon’s turnaround at Twitter. Things are not going well at all and it is now an open secret that the people remaining are looking for jobs elsewhere. Here are my points this:
1/ I stopped covering Twitter several years ago due to poor management. Nobody outside Twitter knows if the Musk’ experiment will work, but if it does work it will send a signal to all tech companies that they can work with much fewer people. Currently the company has laid off 80% of its employees while reaching an all time high in Daily Active Users
2/ Starting last week the 3rd party clients were banned, bringing more anger against these chaotic decisions. Personally, I think that’s a good thing and should have happened years ago. You can’t control the user experience (including ads) if people are using Twitter elsewhere
3/ Revenue is down almost 80% because media agencies want a “quiet environment”, not discussions and accusations on censorship & all the bad things social media platforms come with.
4/ Looking at the current company’s debt level I believe Elon has two options: (1) change the business model (ie. Twitter as a service) or/and (2) cut costs even more. Of course, the company can be subsidised, but that’s not the point. LINK
Monetizing TikTok
“TikTok makes up about 25% of the social ad budgets” - a quote that you will hear more often. Short videos are always better than 40 min videos from all points of view and where is the best place to be? On TikTok. LINK
The French Ecosystem
I usually don’t cover start-ups due to the lack of public data, but I recently discovered that the French Start-up Ecosystem raised EUR 11.6 bn in 2022 (+6% YoY), but way behind the UK with EUR 27.2 bn. The top is closed by Germany, Spain, Sweden and Netherlands.
Even with the great exodus of companies from Silicon Valley (to Texas and Florida) and from the UK (to Paris and Berlin), most of the funding still happens in the former. LINK
AI Infrastructure as a service
Microsoft has one clear strategy: everything that you do, build or host should be on Azure. So, Satya Nadella is doubling down on their Chat GPT investment:
How to run a National system?
Without competition services will only get worse and the medical act will get poorer. That being said, I support a health tax for those in need and a private alternative for the rest.
Healthcare is a trillion dollar market (only in US)
All Amazon past acquisitions in this domain (including PillPack) led to this: a $5/month Prime subscription for all-you-need generic drugs covering 80 conditions. LINK
Software continues to eat the world
Digitail, an app for vets and their customers, raised a $2.5M seed round. Now think of anything around you that can be transformed with software and AI and you see where the next opportunities lie. LINK
There is no planet B
We must work with what we have and leave the Earth a better place. Forget what Elon is saying, look for science. LINK
Data
On what is working the greatest minds in a company is a key question? Google felt the need to show off with their progress on language, vision and generative Models. LINK
Tesla’s market share in US:
Google laid off 12,000 employees through a blog post where Sundar Pichai mentioned AI three times. LINK
How LEGO plays with data (interview done by McKinsey). LINK
More than 80% of articles in Humanities are never cited, while 50% of these are never read either (except the authors, publisher and reviewers). LINK
Outside interest
Would Chat GPT3 get a Wharton MBA? The answer is YES. LINK
Great article on how Japan still misses some growth opportunities and where 28% of the people are over 65 years old. The country will have 55m people in 2100 (from 125m) if nothing is done now. LINK
KIA’s new logo is confusing the people, who are search “KN car” on Google:
Researchers at Carnegie Mellon University can map human bodies through walls using WiFi signals. This discovery was probably made several years ago in the military. LINK
Japan won the world cup of…pastry, against France. Needless to say, the best Italian restaurants are in the US, the best French restaurants are in Japan and the list can continue. LINK
The US State department switched from Times New Roman to Calibri...to be more accessible. LINK
Boston Dynamics has trained their robot to move heavy chunks and basically to assist you, LINK
Brazil and Argentina are in discussion to create one common currency. I hope they have learned from the euro saga. LINK
Usage of Viagra, Cialis and other PDE5 inhibitors massively lower all-cause death rates and major heart disease events in men: 55% less heart attack risk, and 50% lower all-cause mortality. LINK
How Poon Lim survived 133 days at sea. LINK
