Tren Griffin @trengriffin I work for Microsoft. Previously I was a partner at Eagle River, a private equity firm established by Craig McCaw. I am on the board of directors of Kymeta. Nov. 10, 2019 1 min read

This is a great 25iQuiz: How would you apply the principles of strategy from my tweetstorm yesterday in assessing the Competitive Advantage Period (CAP) of Netflix? How does your expectation differ from the one implied by current price?

Ps, Go Sounders!

 https://threader.app/thread/1193194176201904131 

What 25iQ posts might you read before answering the quiz on the Netflix CAP:

Reed Hastings:
 https://25iq.com/2018/02/03/business-lessons-from-reed-hastings-netflix-part-1/ 

 https://25iq.com/2018/02/10/business-lessons-from-reed-hastings-netflix-part-2/ 

Subscriptions:
 https://25iq.com/2018/08/11/how-subscription-business-models-are-changing-business-and-investing-the-microeconomics-of-subscriptions/ 

The "movie" business:

 https://25iq.com/2017/12/30/moviepass-premature-scaling/ 

Michael Porter:

 https://25iq.com/2013/08/26/a-dozen-things-ive-learned-about-strategy-business-and-investing-from-michael-porter-2/ 

Have you dug deep into NFLX and OTT video unit economics? Have you run different assumptions through your model to determine sensitivities?

Some people will bury the assumptions by using P/E to assess value, which is like putting ketchup on a hot dog.

 https://25iq.com/2016/12/31/a-half-dozen-ways-to-look-at-the-unit-economics-of-a-business/ 

Do you recall the 1996 BRK meeting when Buffett said:

"Charlie was a lawyer for 20th Century in the old days and he saw how Hollywood operated. It kept us out of buying any motion picture stocks for about 30 years."  https://buffett.cnbc.com/video/1996/05/06/afternoon-session---1996-berkshire-hathaway-annual-meeting.html 

What was Charlie concerned about?

In the same 1996 BRK meeting:

"The big money is animated films and everything that revolves around that because you go from films to parks to character merchandising and back. It's a circular sort of thing, which feeds on itself."

Cross-selling lowers CAC. Reuse lowers COGS.


You can follow @trengriffin.



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