Category: lenS & thoughtS

Youtube’s First Official Financial Result

It has been more than 13 years since Youtube was acquired for $1.65 billion by Google back in October 2006.

Founded in February 2005, with $11.5 million total venture funding and 65 employees at that time, Youtube commanded 46% of visits to U.S. online-video sites in September. That compared with a 21% share for the video activities of News Corp.’s MySpace site and 11% for Google Video. Youtube had close to 20 million monthly visitors in August 2006.

A year and half before Youtube’s acquisition, MySpace’s parent company Intermix Media Inc. was acquired by News Corp. for $580 million.

Back then, Google reported total revenues of $6.14 billion in 2005 and $10.60 billion in 2006, and had a market value of $132 billion. Its net income was $3 billion in 2006 with $3.6 billion cash flow from operations and more than $11 billion cash balance.

On Monday Feb 3, 2020, Alphabet first provided the breakdown for some of its non-Google-search businesses, including Youtube.

Year Ended December 31,
2017
2018
2019
Google Search & other
$
69,811
$
85,296
$
98,115
YouTube ads(1)
8,150
11,155
15,149

(1) YouTube non-advertising revenues are included in Google other revenues.

Youtube ads generated $4,717 million revenue in 2019 Q4 – a ~$19 billion run rate.

Using a multiple of 5.0x, Youtube could be valued at ~$100 billion – a 60 times return for google acquisition or an IRR of 37% for 13 years.

I guess the success formula is: with the right synergies, acquire early & provide support to grow it.

Alphabet 2019 10-K

2019 Q4 Earnings Call Transcript

A Python Generated Graph On Airlines’ Load Factors

Major airlines usually would post their monthly operation results on IR websites. While United Airlines and Southwest Airlines among other stopped reporting in 2019, Alaska and Delta are still doing so.

Load factor is a measure of the use of aircraft capacity that compares Revenue Passenger-Miles as a proportion of Available Seat-Miles.

Below is a three-part project that automatically downloads, summarizes and creates chart for 4 airlines’ load factor.

Download

Given certain years, the program will go through pre-defined links to search for monthly report urls and scrap relevant data based on the page structure. BeautifulSoup is used here.

Summary

The program uses file reading and writing to put four airlines’ data together while adjusting for missing data (aligning based on month)

Charting

The program converts csv to excel and draws the chart based on data. pandas and xlsxwriter are used here.

With some adjustments, the program should be able to scrape and virtualize other web-based standard reports.

 

 

Germline Genetic Testing: BRCA

Genetic testings have different significances and it seems that BRCA is currently the only gene of hard demand (CDx) in cancer treatments among germline testings.

Myriad and AstraZeneca

Back in Dec 2014, AstraZeneca received FDA approval for the first PARP inhibitor LYNPARZA, as monotherapy in patients with deleterious or suspected deleterious germline BRCA-mutated advanced ovarian cancer who have been treated with three or more prior lines of chemotherapy.

Concurrent with the approval of LYNPARZA, FDA has approved the BRACAnalysis CDx (Myriad Genetics) for the qualitative detection and classification of variants in the BRCA1 and BRCA2 genes.

Myriad is a pioneer in genetic testing, especially for BRCA. BRACAnalysis CDx is blood-based, using PCR and Sanger sequencing to gauge single nucleotide variants and small indels, and multiplex PCR to assess large deletions and duplications.

Foundation Medicine and Clovis Oncology

In Dec 2016, Foundation Medicine’s FoundationFocus CDxBRCA was approved by FDA as the first NGS-based companion diagnostic, for Clovis Oncology’s PARP inhibitor Rubraca (rucaparib), for patients with deleterious BRCA mutation (germline and/or somatic)-associated advanced ovarian cancer who have been treated with two or more chemotherapies.

Myriad and Clovis

In April 2017, Myriad and Clovis Oncology announced the CDx collaboration on Rubraca. “The companion diagnostic test approved with Rubraca does not discriminate between germline and somatic mutations. Knowledge of germline status is important to provide patients appropriate counseling.”

Myriad and Pfizer

In Oct 2018, the Myriad’s BRCA test was also approved as CDx for Pfizer’s PARP inhibitor Talzenna, for patients with HER2-negative metastatic breast cancer (mBC) who have a germline BRCA mutation.

Expanded PARP usage

In Jan 2018, AstraZeneca’s LYNPARZA received approval for expanded usage in breast cancer, for patients with germline breast cancer susceptibility gene (BRCA) mutated, HER2-negative metastatic breast cancer, who have been previously treated with chemotherapy. Patients with hormone receptor (HR)-positive breast cancer should have been treated with a prior hormonal (endocrine) therapy or be considered inappropriate for endocrine treatment.

FDA also expanded the approval of the BRACAnalysis CDx, an approved companion diagnostic to Lynparza, to include the detection of BRCA mutations in blood samples from patients with breast cancer.

In Dec 2019, Lynparza was approved in the US as a 1st-line maintenance treatment of germline BRCA-mutated metastatic pancreatic cancer, for patients whose disease has not progressed on at least 16 weeks of a 1st-line platinum-based chemotherapy regimen. Myriad’s CDx usage was also expanded.

While the market expanded, more players are coming to this field. Since 2013, there is a growing number of labs providing BRCA testings – mostly are not for CDx.

Prices are very different for example.

Image result for brca testing price

But overtime, the ASP is definitely coming down.

Image result for brca testing price 2018

Image result for brca testing price 2018

Meanwhile, FDA approved 23andMe’s DTC BRCA genetic testing in March 2018 (again, not for CDx) – testing for 3 BRCA1 or BRCA2 mutations to identify women at increased lifetime risk of breast cancer.

Drugstore Chains In China Adding More Franchised Locations

Two leading national drugstore chains keeps adding more franchised stores than directly operated stores.

Franchised model is more efficient in

    1. leveraging existing distribution network -> improving its utilization
    2. aggregating demand & volume -> better pricing terms from manufacturers
    3. distributing store management (inventory + O2O sales + payment + CRM) software -> higher margin fees

Quanterix: A Growth Story Just Began (1)

Quanterix (Nasdaq: QTRX) is building a razor-blade model just like Illumina. With its ultra sensitive detection, Quanterix is revolutionizing immunoassay especially in neurology, improving the industry’s capabilities to access/evaluate related molecular data, understand diseases better and designing drugs/trials around it.

In recent quarters, Quanterix saw a continued growth in its consumables, which is the bread-and-butter due to its recurring nature and higher margin (than selling instruments.

Of course, the instrument sales are important, as the cumulative count (or installed base) should drive more recurring revenues in consumables.

Currently, the consumables revenue / instrument is ~$70k per year.

Online Higher Education (4) – Online Degrees

Online Degrees Before MOOCs

While the previous posts (2) (3) summarized the birth and development (especially the model of fee-for-certificates) of MOOCs, online degrees, as a more “formal” segment of online higher educations, was actually born before 2011.

The boom can be attributed to the 1. advancement in technology infrastructure (higher internet speed, 4G, streaming, etc.) 2. people’s behavior changes such as the growing adoption of smart personal devices (smartphones, etc.) 3. increasingly burdensome higher education costs in the US and associated student debts 4. the incentives provided by the regulatory environment such as the re-authorized Higher Education (Opportunity) Act in 2008.

Distance education: US Department of Education shall not require an accreditor to have separate standards, procedures or policies for evaluation of distance education. Accreditors must, however, require institutions that offer distance education to establish that a student registered for a distance education course is the same student who completes and receives credit for it.

Then, there emerged a group of companies called Online Program Management (OPM) providers, with 2U being the current leader.

2U

The first of its kind was launched in 2008 – MAT@USC,  Master of Arts in Teaching Program, developed by the USC Rossier School of Education in partnership with 2tor Inc. (the company later its changed name into 2U Inc. in 2012)

The basic idea is to replicate the degree offerings in the online format as much as possible. Private companies like 2tor will invest upfront and share the majority of future tuitions. The programs costs were a little cheaper (but at the similar level) than the traditional on-campus version.

The agreement of MAT@USC program provides a glimpse into the structure. As mentioned in the announcement, “tuition for MAT@USC is the same as the USC on-campus program at approximately $1,300 per credit.”

In 2012, when MOOCs were getting more attentions, 2tor also raised more capital and expanded the partnerships. It raised $26 million Series D in April and had 5 programs in agreement: USC’s Rossier School of Education for the MAT@USC mentioned before, USC’s Masters of Social Work Program (MSW@USC) added in 2010, Georgetown’s nursing program (Nursing@Georgetown) launched in Spring 2011, UNC’s MBA program (MBA@UNC) starting in July 2011, and announced the addition of UNC’s Master of Public Administration (MPA@UNC) right before this financing round. (See appendix for the current tuition of these five programs)

As we shall see in the next post that, as OPMs grew, at the same time, MOOCs were expanding into OPM’s fields, partnering with universities to offer degrees related programs.

At the same time, they are also trying to provide non-university based higher education, usually for/with companies in industries.

Born with different origins and offerings, MOOCs and OPMs are now coming to fight similar battles and creating full-service online higher education platforms:

    1. fee-for-certificates
    2. degrees-based programs
    3. career-oriented continuing education

To be continued

Other more recent highly watched events for 2U included:

May 2017 2U to acquire GetSmarter for approximately $103 million, which provides online short courses in partnership with universities – just like what MOOCs did.

August 2017 HBS, SEAS and FAS partner with 2U, Inc., to offer the Harvard Business Analytics Program. The first cohort of students is expected start classes in March 2018. The total cost of the program—not including travel and lodging expenses—to be $51,500 based on current program fee rates.

January 2018 2U and WeWork announced a broad partnership: e.g. WeWork spaces are available to 2U students enrolled in graduate degree programs; WeWork members and employees can access $5 million in scholarships to enroll in 2U programs, etc.

April 2019 2U to Trilogy for $750 million in cash and shares, a large boot camp provider that partners with continuing education divisions at dozens of universities.

Appendix

  • MAT@USC current rate of tuition for the 2019–2020 academic year is $1,928 per credit.
  • MSW@USC 2019-2020 Unit Charges: $1,928 is the per-unit rate for students enrolled in 1-14 units. $28,628 is the flat rate for students enrolled in 15-18 units.
  • Nursing@Georgetown’s tuition is $2,139.00 per credit hour as of Academic Year 2019-2020.
  • MBA@UNC in 2011 said “tuition will be $89,000 for the two-year program and will include books, texts, student fees and lodging and food costs for four weekend immersions.” For students beginning in the July 2019 term, the tuition for the 2019-2020 academic year (July – June) is $125,589.06.
  • For MPA@UNC students enrolled in the program in academic year 2019–2020, tuition will be $1,209 per credit hour. Students who start the online MPA program in academic year 2019–2020 can expect to pay at least $54,405 for the entire program.

End of Decade Thoughts (1): An Increasingly Divided United States

This is a series about what we have seen in the past decade.

An Increasingly Divided United States

Three aspects:

1. The 2008 financial crisis provided a great opportunity for those who had equity while made many others in debt work years to recover. And the tax reform exacerbated the process.

– When we entered the past decade, prices were cheap for a lot of equities, but only for those who can buy.

– Differences were then created when the economy recovered – those who held equities enjoyed it.

– On the other hand, those who can’t buy didn’t share the growth (in any bull markets like stock, housing, etc.)

– Thus, more wealth inequalities were created. Supporting evidences could be found for a graph

2. The Republican and Democratic parties are more divided than ever – in fundamental values and action plans.

– The voters were divided before and in the 2016 election.

– It’s a result from dissatisfaction caused by the inequalities mentioned above and also from clashes over values [which is fueled by a multi-year accumulation of “opinions” mentioned below in 3].

– “Like the American public, Congress is also deeply divided. Lack of trust in the other party as well as a lack of bonds between representatives have fueled greater partisanship.” [Harvard Politics Review]

Democrats and Republicans More Ideologically Divided than in the Past
Source: PEW Research

– They are also unable to agree on what issues they should prioritize for policymaking.”

Republicans and Democrats differ over key priorities for the president and Congress in 2019
Source: PEW Research

3. Social medias fueled bias

– “Fake news” is a popular phrase. And misinformation is wide-spread. Meanwhile, social medias have become the primary sources of news.

– Machine-learning enabled “feeds” fulfills the confirmation bias among others.

– Personalization feeds “the most engaging and relevant” content for each individual user, which could easily compromise objectivity and expose human’s weakness.

– When people connect directly with their peers, the social biases that guide their selection of friends come to influence the information they see. [phys.org]

– Social medias made the discovery of “similar” peers, influencers and public accounts much easier, which again made the sources of information biased.

Summary: The econ pressure and social medias “cultivated” the public, leading further disconnections between parties, who made policies that most won’t see as “uniting” forces.

The dividing problems affect the policies again other nations, which are usually used when there is chaos inside.

The fight with the tech industry is also inevitable as political power is diminishing in driving/organizing the society. But tech is needed for overall growth and jobs – making them look more like monopolies is a good way to tackle/regulate.

Online Higher Education (3) – MOOCs

Udacity

As mentioned in the previous blog, Udacity started in 2012, with roots from free computer science classes offered by Stanford in 2011. Its co-founder and CEO Thrun, known as one of the inventors of self-driving cars, has previously founded Google X and Google’s self-driving car team.

In June 2012, Udacity pioneered the on-site finals for MOOCs for a $89 fee, partnering with Pearson.

In Jan 2013, Udacity announced a partnership with San Jose State University (SJSU) to pilot three new courses, available for college credit at SJSU for the Spring 2013 semester and offered entirely online. The courses, if taken for college credits, have a price of $150 per course.

However, six months after it launched, San Jose State was suspending the Udacity partnership as more than half the students in the first batch of online courses failed their final exams.

Udacity has focused more on the vocational courses and create materials from non-universities sources, especially in tech.

In June 2014, Udacity and AT&T announced the “Nanodegree” program, designed to teach programming skills needed to qualify for an entry-level IT position at AT&T. The coursework is said to take less than a year to complete, and cost about US$200/month.

In Nov 2015, Udacity raised a $105 million Series D valued at $1 billion, led by Bertelsmann, with Scotland’s Baillie Gifford, Emerson Collective and Google Ventures joining as new investors. Existing investors Andreessen Horowitz, Charles River Ventures, and Drive Capital also participated in the round. The announcement came as the company celebrated the one-year anniversary of its nanodegree program. Udacity reported 11,000 students are currently enrolled in nanodegree programs in 168 countries.

Coursera

In Apr 2012, Coursera raised $16 million in venture funding from KPCB and NEA. At the beginning, the company has partnered with Stanford, Princeton, University of California at Berkeley, University of Michigan, and University of Pennsylvania to bring professor-created classes online.

Aside from offering free courses to the masses, Coursera’s learning management service (LMS) platform can be used internally by universities to revamp their online course programs.

In Sep 2012, Coursera announced that it is working with the American Council on Education (ACE) to initiate a credit-equivalence evaluation of a subset of the MOOCs.

In Jan 2013, Coursera announced that students would be offered the opportunity to earn Verified Certificates – called Signature Track, priced from $30 to $100 on a course-by-course basis. Students will create a Signature Profile by first taking two photographs with their webcam: one of themselves and another of an acceptable photo ID document. Next, students will create a biometric profile of their unique typing patterns by typing a short phrase. When a student submits work in the course, they authenticate their identity by typing the same short phrase, which is then matched to their recorded samples. Upon successful completion of their course, students will receive a Verified Certificate issued by both the participating university and Coursera.

According to InsideHighEd, revenue from the fee-based path will be split with partner universities. A Coursera spokeswoman said universities would keep 6-15 percent of revenue from courses taught by their professors, as well as 20 percent of profits.

Some other statistics shared by Coursera in May 2013: almost 70% of the students who joined the Signature Track went on to successfully complete their course; 9,000+ students from all around the world have joined the Signature Track for their course; over 2,000 students are taking Gamification from University of Pennsylvania with Signature Track.

Coursera brought in $220,000 in the first quarter of 2013.

More recently, in Apr 2019, Coursera raised $103 million Series E, led by a strategic investor, the Australian online recruitment and course directory provider SEEK Group, with participation from Future Fund and NEA.

A summary so far for MOOCs and fee-for-certificates

As of 2019, we could see fee-for-certificates has become a mainstream business model to monetize on a subset of MOOCs users. Certificates are issued for single-courses or programs (grouped courses).

Certificates could be issued/recognized by the platform (e.g. Udacity, Coursera, edX) and/or by the organizations (companies or universities). Letting users put those certificates on social medias such as LinkedIn do provide an incentive to purchase.

At the same time, part of the materials/courses can still be accessed for free if users don’t need the certificates.

To be continued

Some Wisdom From LEAD Class

  • Team Culture is better thought of as an outcome than as an input.
  • Find proper balance of advocacy and inquiry
  • Organizational design can be a source of innovation and competitive advantage
  • Distinguish between performance gap and opportunity gap

Some common bias/problems

  • Attribution Error
  • Failure to discuss and integrate uniquely held information
  • Intention vs impact from ourselves and others
  • Growing without transition from informal to formal organization