Netflix hit the industry with some bombshell moves this month. First, it announced that it plans to spend $8 billion on original content next year (including on 80 new movies). This is far more than any other online player. Obviously, this is great news for its 100 million-odd customers worldwide.
What isn’t so great for customers is the other news. Netflix will raise the price of its standard plan by a dollar a month and its premium plan by two dollars a month. With these increases it is slowly edging toward the $15-a-month plan offered by its competitor HBO.
This means Netflix isn’t just your Blockbuster replacement anymore. Makers of original content — including the likes of Disney — are moving away from Netflix. Instead, Netflix looks like an old-school TV network; if one had to predict what the industry will look like in five years, one might say
It sometimes appears that the traditional rules of business are being upended by today’s mega-trends of multisided platforms, big data, machine learning and AI, crowdsourcing, the internet of things (IoT), and more. These trends have transformed the world of business immeasurably. But they have certainly not repealed the timeless rules of strategy.
Yet for too many entrepreneurs, especially those steeped in tech and devoted to product, strategy often seems to be an afterthought. Experiment and create a great product, the thinking goes, then scale, and then figure out the business model once you’ve succeeded. It’s true that nothing beats having a compelling product that customers badly want. However, while good products and good “shopkeeping” are surely good business, they are no substitute for clear-minded strategy.
This is a long post (1,900 words). For those of you who are time poor here’s the tltr:
Forward Partners operates a focused investment strategy because it helps us make better investment decisions and provide better support to our companies
A good focus area for us is one that can generate 50+ deals and where we can build some generalised expertise that helps with our decision making and value add
Until now we have focused on marketplaces and next generation ecommerce
Recently we evaluated lots of options and did a deep dive on Applied AI before selecting it as our next area of focus
For the three and a half years that we’ve been going, Forward Partners has operated a focused investment strategy. We observed that small transactions of all types are increasingly moving online and backed the companies that were helping to accelerate that trend. That meant lots of
Digital technology has been roiling markets and disrupting companies for more than two decades, but despite that lengthy history, incumbents are still struggling to enact and deliver on digital transformations.
The first challenge is disruption; digitization is enabling new, disruptive models that aggressively compete with legacy models, putting material pressure on incumbents’ revenue and profit growth. As incumbents fight back with their own digital strategies, our research shows that they often trigger a second wave of competition, closer to the notion of Schumpeterian imitation where incumbents start themselves to innovate, sometimes aggressively, against the threat of entrants slashing yet more revenue and profit growth. We estimate that on average, both waves of digital competition has taken out half of the annual revenue growth and one third of the growth in earnings from incumbents that have failed to respond to digital.
The second challenge is that, even when companies do launch
Tim Cook recently confirmed that Apple is working on ‘autonomous systems.’ As usual with Apple, details are sparse, but it’s likely that autonomous cars are part of this.
Apple is so great at connectivity, aesthetics, and entertainment that any vehicle they develop will incorporate these as table stakes. With that in mind, I can see three potential scenarios for how Apple might play in the autonomous car market.
The first scenario is to enter cars as a Trojan horse to sell more iPhones. It’s the most conservative play–and a nod to the fact that Apple’s revenues are 60% driven by iPhones. Elon Musk has already said he thinks of Tesla as a ‘sophisticated computer on wheels.’ One could imagine an Apple car that is a Tesla-like product—one with comparable speed, self-driving technology, aesthetics, and features–but is so seamlessly integrated with the Apple ecosystem and requires a new
NAFTA is headed for a renegotiation. Changes could range from adjustments to the rules of origin for product content, and more-stringent labor standards, to the extreme of withdrawal and a return to World Trade Organization most-favored-nation tariffs. These shifts will have important implications for the supply chain and profitability of U.S.-based companies. However, there is a high level of uncertainty about the ultimate outcome and consequences for companies, in part because the effect could be offset or aggravated by how currency rates adjust.
Notably, the proposed “border adjustment” that is part of a tax reform package Congress is debating could cause the U.S. dollar to appreciate relative to other currencies. Under the plan, companies would not be able to deduct the cost of imports from their revenue, a move that today enables them to lower their overall tax burden. At the same time, exports and other foreign