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The cloud, explained

IP — Tue, 27 Jul 2010 22:57:30 +0000

Let us begin with an “unrelated” comment: There’s a sentence about Tim O’Reilly that seems applicable to Seth Godin and other people who are masters of networking in the “adding value to the network” sense: “It looks like Tim is just telling disconnected alpha-geek anecdotes, in his customary, avuncular, visionary fashion. What Tim‘s really doing is throwing lit matches into his network. And boy is he the guru when it comes to doing that.” – an underrated skill.

Back to the video itself, embedded inside: thought-provoking presentation on (buzzword alert!) “information shadows”, “the sensor web”, cloud computing, data collection, processing and presentation/ visualization, local marketing + micropayments, P2P credit-card payments, social network risk evaluation… and how all this is coming together to create new products and services that feed on the cloud and/or organize it. It’s still impossible to tell just how practical this is and who will make money from this, but it’s nice food for thought.

Carlos Brito at the WSJ

IP — Tue, 13 Jul 2010 19:49:22 +0000

The WSJ had an interview in late June with Carlos Brito about his plans for Anheuser-Busch Inbev. The video (embedded inside) is focused on the corporate culture aspect, and it’s always refreshing to watch. That said, we wonder if the video registers for foreign investors as much as it registers for investors who have been exposed for so many years to the effects that Brahma’s/ AmBev’s/ InBev’s and now ABI’s culture really has over time.

Here’s the video (it seems a little slower to load than average, though):

Book: The Curse of The Mogul

IP — Fri, 02 Jul 2010 16:54:15 +0000

Strategy & Business published a review for The Curse of The Mogul, which we’ve read recently. It’s a must-read for several reasons: media, capital allocation, competitive strategy and leadership. Not that we agree with Greenwald 100% – especially when he talks about telephone/cable as dumb-pipe winners vs. the lackluster future for content generators and aggregators (there is stuff/players missing there and you could think of some counter-examples). Chapter 2, on competitive strategy, is especially interesting.

That’s because it assesses the competitive strategy framework from a specific industry’s standpoint (always better than ‘generic speeches’) and it was useful for thinking about other industries as well.

The book was generated from the course Strategic Management of Media @ Columbia.

This article shares Mr. Greenwald’s view on media. We don’t necessarily agree with his view on the future of media, but it’s good food for thought and discussion.

The definition of irony

IP — Fri, 11 Jun 2010 23:11:27 +0000

“Irony”: High-level corporate strategy consultants need to review their business models to survive. The Financial Times article may be just a sign of worldwide corporate spending cuts, so don’t read too much into it, but the fact remains that the downturn is driving consolidation in what is already a relatively concentrated market (useful chart in the story).

Reflections on decision making

IP — Thu, 10 Jun 2010 15:49:14 +0000

McKinsey Quarterly recently had a series on strategic decision making called “Seeing Through Biases in Strategic Decisions”, of which we highlight two articles and link to one by Harvard Business Review. Taken together, it’s great food for thought when you try to apply this line of thinking to strategic, investing and even marketing and advertising.

The first one is an interview with three executives with different backgrounds. The 3 points of view are worth reading, but especially the comment of Kleiner Perkin’s partner (smart investor and gives us one more tidbit about Intuit’s culture, which we find more interesting by the day).

This other one on “taking the bias out of meetings” is also helpful (cites the previous one, a bit shallow in comparison with its straightforward/ “do’s and don’ts” style, but still worth 3 minutes as stimulus).

Finally, this one called “My Eureka Moment With Strategy” can be read from both the strategy and the investment decision making standpoints. It reminds us of one of the key tenets of great advertising, which is “protect the big ideas”. People’s experiences/shortcuts and the limited attention span/ information overload sometimes makes them prone to kill an idea by relying on prejudices/prejudgements.

Incentives

IP — Fri, 04 Jun 2010 22:26:40 +0000

It seems obvious but Dan Pink makes it interesting in this 2009 TED talk (also embedded inside): extrinsic incentives work great for certain situations but poorly for others of higher complexity. His other point, that there’s a “mismatch between what science knows and what business does”, is also important… but trying to bridge this gap can lead to information overload and a certain “consultant-driven” frenzy, if managers try to cover all the “buzzwords” for fear of missing out on the latest (supposedly) performance-enhancing method.

Framing the question in another way: know your work/ company/ business well before assuming you need to “Blink”-fy, “Long-Tail”-fy or “whatever-fy” it. The attitude of not “marrying” with any idea – not even your own – and trying to extract and apply the useful part of every bit of knowledge you obsessively seek is a hard one to instill, let alone sustain.

Here’s the link to the working paper by Dan Ariely et. al. that Dan Pink mentions in the video.

Video:

Brazilian capitalism in the US

IP — Tue, 11 May 2010 15:24:11 +0000

Brazilian business magazine Exame has translated the story they ran a few months ago on AB-Inbev, about the culture “massacre” imposed by the newcomers. It reminded us that many years ago, when the brazilians were set to take over key management positions at Interbrew, we had an edge over foreign investors (and took advantage of it) because we knew how relentless these guys could be in terms of operational efficiency – especially when well aligned. They did an incredible job at InBev, which makes it surprising to us that Anheuser-Busch investors and employees (and suppliers, much to their loss) were, well, so surprised with the changes they’ve made and are making.

Foreign investors are starting to catch on. At the latest Value Investing Congress – West, one presenter had AB-Inbev as his long case and said: “Amazing how unfamiliar the market is with the management story behind AB-InBev; like Rose Blumkin at Nebraska Furniture Mart.”

This is another example of looking at companies “globally”. From just this angle, that of the “local” investor: How could an US investor really understand Anheuser-Busch’s competitive environment if he ignored that such a revolution was going on in Europe? It was “common sense” in the US that Anheuser-Busch was “very efficient”, yet a closer look at what the InBev people understood as “efficient” would have made them reconsider. And the inverse is also true: how can a brazilian investor really understand a local company’s challenges if he ignores what’s going on in the world, best practices, trends and so on?

The payoff has always been clear to us, even before the authorization for local funds to invest abroad up to a certain percentage of the portfolio.

OTHER LINKS:

Luiz Fernando Edmond goes public, sort of – St. Louis Journal – April 28th, 2010

St. Louis Journal profiles Edmond and other key managers – April 24th, 2009

Same old Nielsen, brand new price tag

IP — Tue, 27 Apr 2010 15:06:31 +0000

In another episode of an ages-old game, Nielsen (of TV ratings fame), formerly VNU, is set to make a triumphant return to the equity markets merely 4 years after being taken private. VNU was one of our international holdings that were LBO’d in the final stages of the booming markets in 2006 and early 2007, along with Laureate Education (International higher-education player that owns, for instance, Anhanguera in Brazil) and others. These cycles make for interesting opportunities to reacquaint ourselves with companies we admire in businesses we like, and hopefully our efforts to understand these companies in the past will again pay off.

Back to Nielsen/ VNU: the controlling group is surveying the markets for an IPO valuing the company’s EV in the $17 to $21 billion range, compared to the $10 bi LBO in 2006. That said, the company is set to earn a respectful $1.6Bi in Ebitda in 2010 (in this case not that many fixed assets, but we’d still prefer to see the free cash flow figures). The debt is $8.6Bi and the annual interest is approx. $500 million, but at least some of the proceeds would likely go towards reducing this debt.

Strategy vs. Execution

IP — Tue, 20 Apr 2010 21:48:13 +0000

The question in this article is, simplifying things, “who said that Strategy and Execution must be dealt with separately”? They don’t. It reminded us of the old Value vs. Growth debate, to which Buffett always replied that growth is a component of value.

In fact, we probably wouldn’t point readers to this article if it wasn’t for the link to a free*, 143-page e-book with a selection of the best Harvard Business Review articles on Strategy and Execution. Enjoy!

* the e-book will only be made available for free until June 15th.

Buffett CEOs (and Axl Rose)

IP — Fri, 19 Mar 2010 16:11:02 +0000

OK, funny things first: Buffett playing Axl Rose is awesome. Less impressive is him playing a hip-hop artist, but it’s alright (both videos embedded inside). Viral videos can be a smart marketing tool, and these work.

Back to seriousness: Business Week had a cover article by Alice “Snowball” Schroeder interviewing CEOs who have had Buffett in their boards, as advisor, friend, whatever. Interesting read. There was an entire book on the subject a few years ago, but it focused on Berkshire subsidiaries and frankly wasn’t all that great, although nowadays it does help to evaluate some potential successors.

By the way, the Business Week section included this article by Peter Buffett, Warren’s musician son, about how his father handled money with him. Nothing new, but always interesting.

The videos, as promised:

1) The Business Week video on Warren Buffett:

2) Buffett as Axl Rose (the ballad of customer service)

3) Buffett the hip-hop artist (from GEICO’s sales reps annual meeting, Buffett is on around 4:00)