Amid ‘back to school’ and tech volatility sits a huge opportunity, among other things.
My introduction to the public markets is one which is short of notice but incredibly condescending when doing it myself. When going through your iPhone 's Settings →Screen time →See all activity →Weekly, you know which public companies to invest in as a first order, millennial, 101 investing principle. The big four: Amazon, Apple, Google and Facebook are on the verge of becoming products which are indispensable in any Western country and room for competition becomes obsolete. Nevertheless, the fifth horseman exists and is called Netflix. The company is in the spotlight this week since its founder and CEO Reed Hastings has published his latest book ‘New Rules Rules’. It’s an anthology on the slidedeck Hastings has published in 2001 where the company’s zero rules culture is explained: within the ‘interest’ of Netflix, the choice is with the employees how many vacation days they want and how much of their expenses is put on the company’s tab. Dream on.
5 reasons why
These liberal causes of corporate governance would lead on first sight to boredom and addiction as some of the 193 million bingewatchers worldwide sometimes feel. The opportunity on skipping hypermasculine management practices are moribund since Netflix’s IPO. Proof? The business metrics per employee of the last 12 months are staggering:
1. $26.5 million in shareholder-value (3x more than Google)
2. $2.6 million generated in revenue last year (9x more than Disney employees do)
3. 26.5 million in market capitalization (more than Apple, Microsoft, Alphabet and Google)
4. $311.8 thousand net profit (more than Comcast, AT&T, Comcast and Disney combined)
5. Access to information such as a running tally of subscribers, which Wall Street would crave for
One take in the book in keeping such a superior culture alive is the so-called “keeper test” which questions whether managers are fighting to stop their underlying employees from leaving. If the answer is ‘no’, the individual is immediately sent with severance. These handshakes which range from four months salary in the U.S. to more than six months in the Netherlands are golden or “too generous to reject”, writes Mr. Hastings. Some inspiration for sure.
Vaccination grey pool
The Hastings doctrine shuts down when handling a pandemic combined with the current ‘back to school’ period worldwide. The tech sector, with blown-up stocks (Tesla’s stock split is more an effort without result to join the S&P500), is still putting the finishing touches on the ‘i’ and seems to be missing an opportune timing to disrupt again. While more than 1 billion students are out of school due to nationwide school closures, their return is steady. 105 out of 134 countries that have closed schools have decided to reopen. The gaping healthcare industry with unknown vaccine solutions is screaming for logic sense among smart companies and the results can easily be divided between winners and losers:
- Winner: Tencent, the third biggest internet company, allows students to track positive cases in dense places + allows to see whether you sat near someone positive via WeChat and Wallet (see figure)
- Loser: Amazon is sitting on a large dataset where its creation of marketplaces seems to either sort non-prescribed drug businesses via competition while keeping a hand over any good health business. Too static
See you next week.
Laurent
