BC TECH
Saved by @AnmolNarula11

For decades, Jeff Bezos shunned ads.

But now, Amazon’s ad business is huge: it’s on a $30B+ annual run rate (more than 2x the combined sales of Twitter, Snap and Pinterest).

Here’s how it happened 🧵

 1/ Amazon doesn’t break out its ad business separately in financial filings. However, most analyst believe ads make up the majority of its “Other” revenue segment.

This figure has exploded from $1B in 2015 to a current annual run rate of ~$32B.
2/ In 2009, Bezos said “ads are the price you pay for a crappy product”.

But the business is so lucrative that Amazon’s interface has been swamped with ads:

◻️ First 3-7 search results (left in red)
◻️ Most of the product page (right in blue)
3/ Prior to the rise of ads, Amazon set out to build the ultimate organic customer recommendations engine.

The approach was codified in a famed 2003 research paper: “Amazon Recommendations: Item-to-Item Collaborative Filtering.”
4/ In recent years, Amazon organic recommendations:

◻️"Customers who bought this also bought this"
◻️"Customers who viewed also viewed"

Have been replaced w/ ads:

◻️ "Sponsored products related to"
◻️ "Brands related to this category"
5/ One of the few organic recommendations that still display is the trusty-old "Frequently bought together" feature.

(Of course, increasing the goods in someone's basket is worthwhile for Amazon)
6/ The road to Amazon ads started in 2005.

While Bezos didn’t like ads, he tapped Paul Kotas (who worked w/ him at DE Shaw) to run experiments on AMZN's valuable digital real estate.

The 1st project was banner ads. But it directed users off the platform and the idea was canned.
7/ The real motivation to build an ad business was spurred on by another tech giant: Google.

Amazon was dependent on Google search slots to drive traffic. The company even created a “Google Reliance” metric to track this dependence…which could potentially be existential.
8/ Google, of course, occupies a lucrative part of the buying funnel. It sells ads at the point that someone shows intent for a purchase.

However, Amazon owns the last foot of the transaction funnel: the purchase.

And, today, 60%+ of product searches actually start on Amazon.
9/ Amazon’s transaction data is valuable for 3rd-party merchants, which have grown from 3% of Amazon sales (2000) to ~60% of its $300B+ retail sales (2021).

To stand out, sellers are wiling to pay for sponsored placements (just like brands buying grocery store shelf space)
10/ Amazon sells a number of ad products:

◻️ sponsored products (search)
◻️ sponsored brand
◻️ sponsored display ads
◻️ sponsored posts
◻️ sponsored videos

Ads have grown so much that -- in 2018 -- it passed MSFT to become the 3rd biggest digital advertiser after FB and GOOGL.
11/ While Amazon says that ads are *optional*, getting buried on page 5 of search results is bad for business.

The avg. cost per click (CPC) on Amazon Ads is climbing. And it's not uncommon for merchants (~5m on Amazon) to spend up to 50% of a product on listing fees and ads.
12/ The economics of running a 3rd-party merchant business is trending towards scale.

A number of companies are raising big money to "roll up" Amazon merchants:

◻️ Thrasio ($3.4B raised)
◻️ Perch ($909m)
◻️ Heyday($800m)
◻️ Razor Group ($560m)
◻️Elevate Brands ($373m)
13/ Is Ads already Amazon's most profitable business line?

Using Google's 68% margin for its core business as a comp, Benedict Evans writes:

"Given [Amazon Ads] margin structure and incremental cost base, it's highly likely to be generating similar absolute profits to AWS." 🤯
14/ If you enjoyed that, I write threads breaking down tech and business 1-2x a week.

Def follow @TrungTPhan to catch them in your feed.

Here's a one that might tickle your fancy: https://t.co/B3SWUCF2cd
15/ Also: check out my Saturday email for some laughs, insights and the easiest way to stay on top of my content.
https://t.co/jGZs8brnVR
16/ Sources

BI: https://t.co/jlQcktIFEi

The Information: https://t.co/fKOEJAFEwv

CNBC: https://t.co/HBtXX54cjP

Inc: https://t.co/BzHCfFTvHN

Marketplace Pulse: https://t.co/oDFsn3GVG3
17/ Based on the latest quarterly filings, Amazon's "Other" segment -- mostly ads -- is currently on a $32B annual run rate (+49% YoY).

That's more than 2x the combined sales of Twitter, Snap and Pinterest ($12B).
18/ Here ere is the article from @benedictevans https://t.co/Q9xeimUowL

More from Trung Phan 🇨🇦

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𝚃𝚛𝚞𝚗𝚐 𝙿𝚑𝚊𝚗 🇨🇦...
@TrungTPhan
1/ Amazon is famous for its writing culture:

• "Mock press releases / FAQs" for new product pitches
• "6-page memos" instead of Powerpoint

Two former Amazon execs wrote a book called "Working Backwards" detailing the philosophy.

Here are some insights 🧵


2/ The "Working Backwards" playbook

Instead of creating a product then finding customers, Amazon asks "What does the customer need?" and works toward the product.

✅Customer need --> Create product
❌Create product --> Find customer

3/ Write a mock press release

To determine if the customer need makes biz sense, employees write a press release:

• What problem is the new product solving
• Why it's better than existing options

To persuade a customer, the document has to be jargon-free and tell a story.


4/ Press release forces big thinking

You don't write a press release for an incremental improvements.

Creating a product worthy of a press release means really solving a customer problem and going after markets with large TAMs.

5/ Include an FAQ in press release

Addressing every potential customer question can help identify hurdles to getting something to market...and also uncover opportunities.
CULTURE
Trung Phan \U0001f1e8\U0001f1e6
Trung Phan 🇨🇦...
@TrungTPhan
At 40, Jim Simons left a famed math career to launch the most successful hedge fund ever: Renaissance Tech.

Even though it only won 51% of trades, the fund made 66%/yr for 30yrs (Simons worth = $25B). It's a story of genius, but also of how hard it is to beat markets.

THREAD🧵


1/ The crown jewel of RenTech is The Medallion Fund (launched in 1988).

◻️ From 1988-2018, it posted a return of 66%/yr (39% after fees)
◻️$1 invested in 1988 is now worth $14m+
◻️ Cumulative profit = $100B+ even with an avg. fund size of only $4.5B


2/ Before creating what Bloomberg calls the “greatest money-making machine ever”, Simons was a legendary mathematician.


3/ While at Stony Brook, Simons started trading commodities (with money staked by former MIT classmates).

The side investing was good enough that Simons -- also going through a divorce -- decided to leave academia and launch his own money management firm in 1978: Monemetrics.

4/ At the time, there were 2 main investment approaches:

◻️ Fundamental (understanding and forecasting an asset based on key drivers)
◻️ Technical analysis (studying price charts)

Simons’ strategy was to place a “fundamental lens” on currencies (eg. supply and demand).
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Trung Phan \U0001f1e8\U0001f1e6
Trung Phan 🇨🇦...
@TrungTPhan
The Wall Street Bets due diligence on Wendy’s is gold.

The catalysts are:
◻️ The release of a new summer salad
◻️ The @Wendys Twitter account, which has mastered “meta pragmatic roasting” (which is effective with younger people)
◻️ The fact it literally sells chicken tendies


OP:

Here’s a more fundamentals-driven analysis of Wendy’s

https://t.co/A2k19S9M7J


😂😂😂


Further Wendy’s analysis from @CliffordAsness !!
PUMP DUMP
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𝚃𝚛𝚞𝚗𝚐 𝙿𝚑𝚊𝚗 🇨🇦...
@TrungTPhan
1/ Marcus Bullock went to prison in the mid-90s at the age of 15.

Today, he's the CEO of Flikshop -- the "Instagram for the Incarcerated", an alternative to the outrageously expensive phone call system.

This is a truly inspirational founder story 👇👇


2/ In 1996, Bullock was living in Maryland. One night, he and a friend carried out an armed carjacking on a man sitting idle in a shopping mall parking lot.

It was the biggest mistake of this life.

3/ Several years prior to hit actions, there was the famed 1989 Central Park "Jogger Case", in which 5 minority youths were (falsely) accused of raping a jogger.

In the aftermath, nearly every state passed new laws that made it easier for courts to try youth as adults.


4/ For the carjacking, Bullock was charged as an adult and served 8 years in prison.

With onerous prison phone charges ($18 / 15 mins), Bullock's mother kept in touch with him by sending a photo or letter every day.

"She saved me," he says of his mom's efforts.


5/ The $1.2B+ prison phone system is dominated by 2 PE-backed firms (Global Tel Link, Securus Tech).

For the right to operate these phones lines, prisons effectively pay kickbacks to state and local government. The highest kickbacks win bids, which drive up costs.
CULTURE
Trung Phan \U0001f1e8\U0001f1e6
Trung Phan 🇨🇦...
@TrungTPhan
The most memorable interview I did this year was w/ Stanley Druckenmiller, who famously made $1B shorting the British Pound.

The trading legend's track record includes a 30-year stretch returning 30%+ a year (without a single down year).

Here are 8 investing lessons🧵

1/ Make concentrated bets in high conviction plays


2/ Concentrated bets can sometimes *reduce* risk


3/ Use a multi-disciplinary approach to investing


4/ Know when to sell (he never uses a stop loss)
FINANCE

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TESLA. TREATS. ITS. CUSTOMERS. LIKE. TRASH.

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🕵️‍♂️ How Google's PageRank algorithm works

The PageRank algorithm gives each page a rating of its
importance, which is a recursively defined measure of importance, based on if important pages link to it.
It's recursive because the importance of a page refers back to the importance of other pages that link to it

Here's how it works in practice:
1⃣ We start with some pages and crawl them for links


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~8yrs ago (Dec’12) I got a job @Google. Those were still early days of cloud. I joined GCP @<150M ARR & left @~4B (excld GSuite). Learned from some of the smartest ppl in tech. But we also got a LOT wrong that took yrs to fix. Much of it now public, but here’s my ring-side view👇

By 2008, Google had everything going for it w.r.t. Cloud and we should’ve been the market leaders, but we were either too early to market or too late. What did we do wrong? (1) bad timing (2) worse productization & (3) worst GTM.

We were 1st to “containers” (lxc) & container management (Borg) - since '03/04. But Docker took LXC, added cluster management, & launched 1st. Mesosphere launched DCOS. A lot of chairs were thrown around re: google losing this early battle, though K8 won the war, eventually 👏

We were 1st to “serverless” (AppEngine). GAE was our beachhead -- it was the biggest revenue source early on but the world wasn’t ready for serverless primitives. We also didn’t build auxiliary products fast enough. Clients that outgrew GAE wanted “building block” IaaS offerings.

1st to hadoop (map-reduce ‘04) but our hosted Hadoop launched in ‘15. AWS EMR was ~200M ARR by then. 1st to cloud storage (GFS ’03), but didn’t offer a filestore till ‘18! Customers were asking for it since 2014. Didn’t launch archival storage or direct interconnect till v. late.
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Gbenga Samuel-Wemimo
Gbenga Samuel-Wemimo
@GbengaWemimo
An apostle was addressing his own members
If not for technology, you wouldn't be privy to his discussion with his members
He was sharing with them within the context of their understanding of his message, nature, and personality how he thrived in the middle of a season of casting

down
He mentioned what he achieved and even though it might sound like a boast, he was not boasting to you
He was boasting to his church members and as such, you cannot call it a boast
A father does not need to boast to his children and a shepherd surely does not need to boast to

his sheep
Newspapers needed a scandal and felt the message of the apostle was the right fit in their quest to get eyeballs
You read it and you began to insult the apostle
You, the son of a dog from Abatan refuse dump decided to drag an apostle on Twitter
Do you understand what it

means to be an apostle?
The angels working with an apostle are innumerable, they do not only work at his command, but they also work at his behest!
They are entrusted with the duty of ensuring that the Lordship of his office is respected by both spiritual and mundane entities

In the days of Jesus, many of the Pharisees and religious leaders treated his words and actions the same way many of the gutter bred stone casters with 100 Naira data and stolen or London used phone treated the words of the apostle
Jesus warned them at the time that they were
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How to make a "Briefcase" icon in @figmadesign.

🧵 thread 👇


In a 24 x 24 pixel artboard, use the rectangle tool (R) to draw a 18 x 10 pixel rectangle positioned horizontally centered and 6 pixels from the top of the artboard.


Using the ellipse tool (O), draw a 96 x 96 pixel circle and align the top to the center/top of the rectangle. Select both shapes and use the boolean tool to intersect the group.


Using the ellipse tool (O), draw a 48 x 48 pixel circle and align the bottom to the center/bottom of the rectangle. Select both shapes and use the boolean tool to intersect the group.


Flatten the shape (command + E) and double click it to make it editable. Select the top left and right points and give them a 2 pixel corner radius. Select the bottom left and right points and give them a 1 pixel corner radius.
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Andy McCabe has some explaining to do.


Andrew McCabe was reported to the FBI’s Office of Public Affairs for making an unauthorized leak of classified info to the media about @GenFlynn in early February 2017.

If you’ve wondered exactly who it was who leaked the classified info from that intelligence report on @GenFlynn’s phone calls with then-Russian ambassador Kislyak to the media, you are right now seeing a huge honking clue who it was.

To those responding to this info by sneering "Nothing's gonna happen":

Up.

Your.

Game.

You just might be too stupid to be following me.

The then-Deputy Director of the FBI get's caught targeting @GenFlynn with an illegal leak so he can 'investigated' by Peter Strzok?

Now that we know it was McCabe who set up Flynn for a fake 'perjury' investigation by his pet attack dog, Peter Strzok, the next name that's going to surface is...Joseph Pientka.
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