Grow in times of platforms or how acquisitions push GAF

“Alphabet anunció sus resultados trimestrales y anuales del año fiscal 19”

Today Alphabet announced its quarterly and annual FY19 results and although they stayed $ 800 million from the expected number, the highlight was that it was officially announced that YouTube is a $ 15bn / y business and growing almost 25% from year to year … and this is interesting because it shows that in an era of platforms it is very difficult for someone to dethrone them.

Facebook faces ethical and trust dilemmas and generational changes but its acquisitions save it at the level of growth and market value: Instagram is going to scratch the $ 14 billion of revenue in 2019, WhatsApp continues to be the most downloaded app worldwide and nothing seems to stop the network effect these 3 generate.

Google wants to stop being “a search engine” and even changed its name; but when you look at their growth engines they are acquisitions; Android is the dominant mobile platform, YouTube is the video leader, over $ 160,000,000,000 of revenue $ 135,000,000,000 is from advertising and AdSense + DoubleClick gave it the business model for this.

Amazon bought from Woot to Zappos and always let them work quite freely, but already in WholeFoods he pushed the accelerator and if you go into a store today it seems like a Prime pop-up … and the purchase came out for free because his shares rose more than the value of purchase to understand the attack on WalMart

All these numbers and examples make me think how do you compete with the giants? Are we getting to the peak-valley? Who can stop companies that have more than 50bn average in cash for acquisitions? How to compete in a platform economy?

And beyond this, culturally the acquired ones end up being amalgamated (few founders stay) but the growth potential multiplies and the numbers show it. Could any of these acquired companies achieve the growth they achieved thanks to GAF? I doubt it … and that’s why I value guys like Evan Spiegel who decided to compete with Snapchat despite understanding where he was going:

If you are trying to convince someone who wants to join your team, helping them understand the pain they would have to go through [as an independent company] to compete is a valid tactic.

Mark Zuckerberg explaining trading strategies

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