Buy A Basket Of Opportunities

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In their recent episode of the VALUE: After Hours Podcast, Taylor, Mitchell, and Carlisle discussed Buying A Basket Of Opportunities. Here’s an excerpt from the episode:

Tobias: Because Facebook, of course, wasn’t the first social network. It was MySpace before that, and that was SixDegrees, and there were a whole lot of those, merely having a network effect didn’t deliver to you all this money, if there are other people able to build their own networks and consumers prefer those.

Michael: That was always a reason I never got involved, and that was a mistake. I think now in hindsight, we realized the answer was, MySpace went public, but $10 in the space [crosstalk] understand it. Yeah, it’s very Peter Lynchian, and Peter would say, I don’t know who’s going to win between A and B, but I know, somebody who does win is going to make a whole lot of money. In this case, I think that was the– I think history now tells us that was the right answer. It was really easy for me to say exactly what you’re saying now, which is– It was GeoCities, and then Myspace, and then it’s going to be Facebook. By the way, it was Facebook, and now, it’s being something else. But Mark figured out, why don’t I just buy the other thing?

Jake: Well, it sounds [crosstalk] they say.

Michael: Well, let’s just buy Insta.

Jake: You had to know that the regulatory antitrust was going to be like a chihuahua, and not a Doberman.

Michael: Yeah.

Tobias: Do you think they made mistake with that? It’s so small at the time. It was a $1 billion, which that seemed like a preposterous amount of money to pay for it at that time. A billion dollars for something was basically an app with not very many users, but they could see that it might get there, and so you get there early enough, but then they give it a big boost by giving it access to Facebook social graph as well.

Michael: Correct. Yeah. Their engagement algorithms, and everything that they put on it, I’m sure they made it more valuable. But I’m also sure, if you’re Facebook and you’re making so much money, I think you’re more at risk for not buying that stuff, even if it doesn’t work, because on the off chance it does work and takes your business away from you, and you’re left with nothing. I think the answer is, you just buy it, and buy them all, and then you hope that you can protect the mothership, and then grow these little ancillary assets.

Tobias: How much of a risk is TikTok?

Michael: I don’t use the TikTok.

Tobias: Yeah, neither do I, but that might be a generational thing.

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