TMT Weekly: GOOGL, META, CDW, and Pushing MongoDB

I asked my friends and colleagues for feedback on last week’s TMT Weekly, and my friend who doesn’t read suggested that I make the design prettier. Understandable feedback, but I’m assuming that my audience reads, probably a lot, so I’m going to ignore design for now.

My literate friends and colleagues suggested that I add the “why.” As in, why do the transcripts with the highest engagement have the highest engagement? The “why” on the giant companies seems obvious – if you call yourself a tech investor, then you should probably maintain a view on MAANGM (META, AMZN, AAPL, NFLX, GOOGL, MSFT). Then again, we publish lots of transcripts about GOOGL, and they get different levels of engagement. Consider these three GOOGL expert call transcripts published on Stream last week:

1. Former Unit Head Thinks AMZN Advertising Is a Big Threat to GOOGL

2. Former Partner Thinks GOOGL Is in the Strongest Technological Position in the Short Term but Faces a Regulatory Threat That Is Difficult to Predict

3. Former Waymo Engineer Believes Commercializing Level 4 Autonomy Is at Least ~5 to ~10 Years Away

Twice as many people read the first one as the second and third ones (which were about tied), and the first transcript had higher per user engagement. Does that make sense just based on the titles? I think it does, especially when you consider the macro environment. Bottom-of-funnel online advertising tends to be the least impacted by downturns, and AMZN and GOOGL are both at the bottom. The expert does talk about this,

“AMZN is a big threat for two main reasons, one… intent. People go to Amazon to make a purchase, that’s very clearly why they’re there… In a recession, when budgets are a threat, people will increasingly reduce brand spending and go to digital spending. Within digital spending, they’ll go for areas with intent. [two] they execute very, very well. They learn very quickly, they are willing to try different things, if they don’t work, they move on very fast, which is hugely, hugely valuable in the AdTech space where the ecosystem changes very quickly.”

-Head of Search, Non Retail, Google (Prior)

But then says this,

“Counter to that, Google has a huge opportunity on Google Shopping, where you as an advertiser upload your inventory into Google and then we display ads directly linked into availability, into size, into whatever product SKU level that you can give us or can give Google, and then drive users straight to your site. It’s a really big advantage for large advertisers who don’t want to depend on Amazon. Again, specifically [part of] the category for the online fashion guide, for example. They’re big in Europe, so ASOS, NET-A-PORTER, FARFETCH, MATCHESFASHION, these big fashion players, they’re online-only players. There is a huge opportunity.

For the big brands, Google Shopping is a huge, huge thing. For small brands who are growing, then Google Shopping is a huge opportunity as well. It’s just for those middle advertisers with less strong brands who are reliant on Amazon and obviously ranking high, then Amazon is a huge opportunity for them.”

There are a couple of potential investable theses in just these few quotes (not investment advice!):

• AMZN is a threat to GOOGL in the short-term due to higher intent, and long-term because they are better executors
• GOOGL is a threat to AMZN in the short-term by getting big brands integrated into Shopping, and long-term by offering a direct buying relationship with customers to startup brands

I don’t know which one of those two is more likely, but I do think they’re relatively straightforward to validate or discard using expert calls. I have about 20,000 expert call transcripts available to me, let’s see if we can find anything:

“You think of Google Shopping, for example, or different marketplaces where often a lot of the actual e-commerce transaction itself can happen within Google Shopping platform, for example, that not until you’ve actually added it to the cart and you’re actually about to make the final two clicks to enter your details and pay that you actually get referred to the e-commerce site. Certainly, at Net-a-Porter, we saw massive growth in those more e-commerce site agnostic channels, which took the pure-play brand out of the equation so it was less relevant to the customers.”

NET-A-PORTER – Head of Customer Retention (Prior)

So NET-A-PORTER checks out, which makes me think that the Google Shopping thesis is worth monitoring. The most-read GOOGL transcript this week, and the most-read transcript overall (see below), also features discussion of GOOGL’s new Performance Max product (hint: bad for agencies). I’m personally interested in how online ad spending shifting to the bottom of the funnel affects corporate bloggers (hint: probably not good). There’s something for everyone here, so give it a read.

Top Transcripts – Unique Users

1. GOOGL (Alphabet Inc) – Former Unit Head Thinks AMZN Advertising Is a Big Threat to GOOGL

2. META (Meta Platforms Inc) – Former Head of Retail Believes That Despite Privacy Changes  META Will Find Brilliant Ways to Be Ahead of Its Competition in Targeting

3. META (Meta Platforms Inc) – Customer Is Bullish on the Long-Term Outlook for META

META reported its first ever YoY revenue decline in Q2 of 2022, so the bullishness of these META transcript titles seems odd. A quick scan of the transcripts with our sentiment analysis enabled shows a lot more red than green.

“It’s not that it’s been shrinking. This year is the last quarterly announcement, Facebook is, I think, -1% year on year on a given quarter.

Somehow the company grew in a like-to-like in constant dollars but because the dollar situation was very positive, the dollar was very strong, then Facebook actually ran into issues in exchange as well. They have growth issues. It’s a matter of fact because they didn’t grow. They were mostly stable in a lot of geographies, but then couple that with the currency exchange situation and that’s the reason why they didn’t grow.”

-Head of Retail & eCommerce Marketing – EMEA, META (Prior)

Wait… all those “first META decline” headlines were misleading me? They were! META Q2’22 revenue actually grew 3% y/y ex-FX. This is why you should get your financial news from expert call transcripts. In all seriousness though, this is what I love about the information in expert call transcripts. There’s no sensationalism or weird agendas – just two smart people trying to better perceive reality.

Top Transcripts – Engagement per User

1. CDW (CDW Corp) – Former VP Believes Culture Is CDW’s Top Competitive Advantage but Culture Is Shifting
2. PAYX (Paychex Inc) – Former Oasis HR Generalist Thinks PAYX Keeps Getting Bigger and Better
3. MDB (MongoDB Inc) – Competitor Thinks MDB Has a Unique Niche

The CDW transcript has bonkers engagement per user. It’s 15 pages long, which is another good sign of quality. CDW just reported their highest ever gross margin… of 19%. Reselling is a tough business! 

“When people would ask me in the past, ‘who are you competing with?’ It’s really everyone because you’re competing directly with a Dell or direct with an HP. You’re going against other national resellers, you’re going after Best Buy, you’re going after the small moms-and-pops, so you’re competing everywhere. I think CDW is a greater force with going up against the Accenture’s or other global integrators, whether it’s in commercial or public. We definitely have more firepower to bring an opportunity compared to just fulfilling on the hardware.”

-Vice President – CyberSecurity, Networking, & Digital Workspace Practices, CDW (Prior)

Yeah tough business, competing with literally everyone. They’re going after Accenture? Ok, CDW. You were already a good bellwether for the SMB economy, and you now have my full attention.

There’s a pattern to the PAYX stock chart that makes me want to do technical analysis, but then I remember how the suits of technical analysts are always a little frayed at the sleeves, and I refrain. It appears we have another scrappy little midcap going after a behemoth.

“Again, what Paychex is doing as opposed to ADP, honestly, is not that different. It really just comes down to market knowledge of the sales team at Paychex, of what ADP is doing, and then directly competing with that pricing from a value proposition perspective and also what Paychex is willing to tolerate as a business as far as financial risk.”

-HR Generalist & Business Partner, Oasis (Prior)

Pushing mongo is a skateboarding term used to describe pedaling a skateboard the wrong way. It looks wrong, it feels wrong, but it has its uses (eg, to assert dominance). You might say it’s a niche skating style.

“MongoDB has a unique niche just because there aren’t many competitors at this point. Couchbase would be one other top competitor, but MongoDB is far ahead of them. Couchbase doesn’t really offer anything that I’ve seen that’s unique on comparison. I think the closest competitors would probably be Azure Cosmos, which is more of a multi-model database that has document database capabilities. Postgres, even though it’s a relational database, you can store data on Postgres as JSON. Companies will often just keep using Postgres and store their JSON in Postgres.”

-VP, Corporate Marketing, Immuta (Current)

I knew there was an analyst doing a deep-dive on CI! 

I can already hear Edward telling me we get no engagement on Friday afternoons, so we’re going to have to call it here. Let me know if this hit closer to the mark. You can straight-up email me (my first name at streamrg dot com).

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