AWS Summit 2014, London. Impressed.

Amazon Web Services Logo

Having been to the Google equivalent a few weeks ago, I went to the 2014 AWS Summit in London today. Around 2,000 of us managed to steer around the RMT tube strike and overall, very impressed.

AWS have a “Windows Desktop as a Service” offering arriving real soon now, giving you both a Windows Server 2008 R2 server plus client software (for Windows, Mac, iOS and Android) for circa $30/month/user. That increases to between $50-$70/user/month with Windows and Office in place. I can see major opportunities for them at that pricing, not least as they appear to have solved the issues around high performance graphics being driven remotely, and have also got things like keypads available on the tablet implementations of the client. You can side load apps into the mix either directly or using Active Directory.

So, I will shortly have the ability to run up a PC and do a 30 trial of the current Windows-only Tableau Desktop Professional for around £20 – so I can at last finish off the story telling end piece of my 12 year long weight/nutrition analysis, without having to buy a Windows PC. Just need to be able to through trend lines through a few different filtered scatter plots now (something I couldn’t do with Google Fusion Tables).

There are also several traditional Licensed Software providers offering server implementations of their product as instances you only pay for when active, and with no long term commits. Jaspersoft and Tableau Server being two such examples (there are many more). Amazon are also offering assistance to other software providers to provide more products under this basis, including helping to drive free 30 day trials.

Much else to be very impressed by, and the differences between themselves, Digital Ocean and Google Cloud Services are fairly stand-out – to me at least. I think i’d know what i’d do to fire up Enterprise volumes for either of AWS or Google, but the things i’d do are very different based on what i’ve now learnt.

The most populous stand appears to be that of Splunk, who were one of my 3-4 “bets for the future” when I was at Computacenter. Talking to them, it now looks like IT Security is now their biggest application area, followed by e-commerce infrastructure flows and lastly by their traditional log file (and associated performance) analysis business. The product now appears to have plugins for virtually piece of data centre, storage and network device vendor log file, and relationships in place with all the key large brand vendors – and of course links into AWS infrastructure as well now.

I didn’t win a Kindle HDX, or the iPhone 5S Telecity were raffling, nor either of the two drones. But learnt a lot, and will be applying the learnings over the next few weeks.

The precise art of a low margin business

Amazon Book Warehouse

I found this great article that explains Amazons pricing strategy eloquently. It’s also the first time i’ve heard that Apple rotate their stock faster than Amazon do, which is an amazing feat for a manufacturing company. Meanwhile, it doesn’t mention Microsoft, but if you try to insert the characteristics of their business model into the picture presented, you can see why Amazon, Google and Apple have them in a head lock and are emptying the room of oxygen needed to grow. Enjoy:

http://www.eugenewei.com/blog/2012/11/28/amazon-and-margins

Becoming More Efficient; Moonshot scale ideas available

 

Efficiency Straight Ahead

The statistics below are from an unashamed promotion of a new book, but I thought this was well articulated. The authors cite some statistics to think about:

Examples of Energy Inefficiency

  • The average car spends more than 95 percent of its time …. doing nothing.
  • Less than 40 percent of electrical transmission capacity is in use at any given time.
  • A calorie of beef requires 160 times more energy to produce than one of corn—and as the world grows richer, more people eat beef.
  • The cost of bringing an oil well online has more than tripled over the last decade.
  • A Motorway operating at peak throughput is less than 10 percent covered with cars.
  • Phnom Penh has a lower water leakage rate than London.

There used to be a very small detached house just inside Pamber Forest which I used to pass daily, and often wondered whether I could live quite happily in such a small place. Not quite as extreme as the Capsule Hotels you find in some areas of Japan, but a step in that direction nonetheless. This would probably mean quite a ruthless clean of the miscellaneous stuff we have all over the current house, but i’m sure there would be impressive efficiencies if we knuckled down to it.

The good thing about looking at stats like this is to start having thoughts of what Larry Page (CEO of Google) terms “Moonshots“. What could be done to improve things 10x, 100x or 1000x better than is considered normal by the rest of us, and what changes will that lead us to.

The authors feel that there’s a lot of waste in the status quo, and thus a great chance to produce and use resources much more effectively. But they don’t think it means that the sky is falling, and that our grandchildren are fated to inherit a poisoned, angry, gloomy, planet. That is also the argument of their new book, Resource Revolution: How to Capture the Biggest Business Opportunity in a Century
by McKinsey’s Stefan Heck and Matt Rogers.

My brain starts to wander at this point, and I still have this nagging feeling that all the books in my bookcase could be summarised down to 1-2pages each of people really tried – or less than 30 if examples are cited. One of the neat things about Kindle Books is that Amazon actually allow you to produce and sell stuff at that length; the The Bitcoin Primer: Risks, Opportunities, And Possibilities book
I purchased was an excellent 27 page read.

In terms of manufacturing (I guess they must be manufacturing consultants by day), they suggest looking at five areas: substitution (replacing costly, clunky, or scarce materials with cheaper, better ones); optimization (using IT to improve the production and use of resources – to order rather than into stock?); virtualization (which must really mean sweating otherwise idle assets?); circularity (finding value in products after their initial use) and waste elimination.

However, then then start citing “having to deal with more complex supply chains”, while integrating “big data” (hmmm – fad alert!) and finding diverse talent with new skills in areas like software- and system-integration (while I thought those were pretty well established!).

They conclude, “any bet that we will succumb to a global economic crisis is a bet against human ingenuity. No such bet has ever paid off.”

Looks an interesting book nonetheless, and i’m sure some good nuggets to pick at. Duly added to my Wish List.

Public Clouds, Google Cloud moves and Pricing

Google Cloud Platform Logo

I went to Google’s Cloud Platform Roadshow in London today, nominally to feed my need to try and rationalise the range of their Cloud offerings.  This was primarily for my potential future use of their infrastructure and to learn to what I could of any nuances present. Every provider has them, and I really want to do a good job to simplify the presentation for my own sales materials use – but not to oversimplify to make the advice unusable.

Technically overall, very, very, very impressive.

That said, i’m still in three minds about the way the public cloud vendors price their capacity. Google have gone to great lengths – they assure us – to simplify their pricing structure against industry norms. They were citing industry prices coming down by 6-8% per year, but the underlying hardware following Moores law much more closely – at 20-30% per annum lower.

With that, Google announced a whole raft of price decreases of between 35-85%, accompanied by simplifications to commit to:

  • No upfront payments
  • No Lock-in or Contracts
  • No Complexity

I think it’s notable that as soon as Google went public with that a few weeks back, they were promptly followed by Amazon Web Services, and more recently by Microsoft with their Azure platform. The outside picture is that they are all in a race, nip and tuck – well, all chasing the volume that is Amazon, but trying to attack from underneath, a usual industry playbook.

One graph came up, showing that when a single virtual instance is fired up, it costs around 7c per hour if used up to 25% of the month – after which the cost straight lines down. If that instance was up all month, then it was suggested that the discount of 30% would apply. That sort of suggests a monthly cost of circa $36.

Meanwhile, the Virtual Instance (aka Droplet) running Ubuntu Linux and my WordPress Network on Digital Ocean, with 30GB flash storage and a 3TB/month network bandwidth, currently comes out (with weekly backups) at a fixed $12 for me. One third the apparent Google price.

I’m not going to suggest they are in any way comparable. The Digital Ocean droplet was pretty naked when I ran it up for the first time. I had to very quickly secure it (setting up custom iptables to close off the common ports, ensure secure shell only worked from my home fixed IP address) and spend quite a time configuring WordPress and associated email infrastructure. But now it’s up, its there and the monthly cost very predictable. I update it regularly and remove comment spam volumes daily (ably assisted by a WordPress add-in). The whole shebang certainly doesn’t have the growth potential that Google’s offerings give me out of the box, but like many developers, it’s good enough for it’s intended purpose.

I wonder if Google, AWS, Microsoft and folks like Rackspace buy Netcraft’s excellent monthly hosting provider switching analysis. They all appear to be ignoring Digital Ocean (and certainly not appearing to be watching their churn rates to an extent most subscription based businesses usually watch like a hawk) while that company are outgrowing everyone in the industry at the moment. They are the one place that are absorbing developers, and taking thousands of existing customers away from all the large providers. In doing so, they’ve recently landed a funding round from VC Andreessen Horowitz (aka “A16Z” in the industry) to continue to push that growth. Their key audience, that of Linux developers, being the seeds from which many valuable companies and services of tomorrow will likely emerge.

I suspect there is still plenty time for the larger providers to learn from their simplicity – of both pricing, and the way in which pre-configured containers of common Linux-based software stacks (WordPress, Node.js, LAMP, email stacks, etc) can be deployed quickly and inexpensively. If indeed, they see Digital Ocean as a visible threat yet.

In the meantime, i’m trying to build a simple piece of work that can articulate how all the key Public Cloud vendor services are each structured, from the point of view of the time-pressured, overly busy IT Manager (the same as I did for the DECdirect Software catalogue way back when). I’m scheduled to have a review of AWS at the end of April to this end. The presence of a simple few spreads of comparative collateral appears to be the missing reference piece in the Industry to date.

Pricing: How low can you go?

Limbo Dancer under very low poleWhile I was at Demon Internet, and a good year before Amazon appeared in the UK, we used to promote a small local company called Bookpages, who were selling Books online. At one point, I heard that US-based Amazon had a meeting with the Directors of the company in London, so guessed they’d enter the UK soon – but kept absolutely quiet. In the event, they jumped into the UK market by buying Bookpages, inheriting all their management team – all a complete surprise to me. Just very glad that I had kept shtum throughout.

Around a year later, I called in to see the Business Development Director in Amazon Slough for a chat about advertising to our customers. I was offered a tour after our meeting; I ended up confronted with a football pitch size warehouse that looked exactly like this:

Amazon Book Warehouse
Having been used to walking around warehouses from my time in IT Distribution, I asked the Business Development Director how many days inventory was in the building. He said: 2 days. Like, wow – they’d fill and empty that warehouse 180 times a year; the scale was absolutely intimidating.
 
We finished the tour passing the packing/shipping area, where a flood of books were being served on conveyor belts to four or so teams; all items relentlessly being sealed into cardboard packing to the incessant bass of loud beat music, and sent over the loading bay into one of the waiting 40 ton Royal Mail lorries.
 
Genius
 
I’ve been a customer of Amazon ever since, and these days hold shares in the company. At some point i’ll get the bandwidth to read the The Everything Store: Jeff Bezos and the Age of Amazon, one book waiting for me on my iPad. There are several strokes of genius in their business model, one of which is their focus to live on the bottom rung of the value chain ladder. To suck all the oxygen out from potential competitors trying to attack them from underneath – which is the way most large companies get disrupted.
 
I found this great article that explains Amazon’s pricing strategy very eloquently. It’s also the first time I’ve heard that Apple rotate their stock faster than Amazon do, which is an amazing feat for a manufacturing company.
 
 

Amazon Web Services

The one surprise to me these days is the public perception of Amazon Web Services being the 100 pound industry gorilla selling Cloud Computing Capacity at lowest prices, that keep ratcheting down as their scale advantages allow them to do so. The largely unknown secret is that they are being completely murdered at the low end and with software developers by relative newcomer Digital Ocean, who have recently got VC funding from Andreessen Horowitz (A16Z).

Future Trouble at t’Mill?

The WordPress network from which this site is served is hosted on Digital Ocean in Amsterdam – cost $12/month for a Linux virtual server, 30GB of flash storage and 3TB of Network capacity per month, which includes the cost of backups and snapshots. When I talk to AWS and indeed to Google, it doesn’t take long to be given special offers paying the first $2000 of my hosting cost – which suggests their pricing is way higher than what i’m able to develop on already. Probably more sophisticated than I need right now, but I guess it’ll be some time before I need to scale to a size that will become interesting to them.

Amazon are far from alone. While folks like Rackspace are a leading proponent of OpenStack to commoditise Hosting Centre Infrastructure, Digital Ocean are walsing way with thousands of their previous customers; it is almost like they are paying no attention to Netcraft Hosting Provider Switching Stats – and at the same time, issuing profit warnings of their own.

I wonder if Amazon similarly start feeling the same heat in the months ahead – and if they are likely to address it before Digital Ocean go flying past.

Mobile Phone JFDI – and the forgotten art of Removing Buttons

Keep Calm and Just Do It PosterIn my relative youth, I was always bemused about how the Computing Industry had a habit of making things over complicated. I’d be listening close by as a phone call came in to one of my colleagues, where a salesman wanted to know how much a specific piece of software would cost his customer to buy. Out came a wide range of licensing and update options that made my brain hurt, and i’m sure sent the salesman into a state of gloom and despondency. Came in with one question and left with at least three.

There was an article in one of the early editions of “Practical Computing” magazine that really hit home, so much so that it’s one of a select seminal few bits of paper I still have copies of from my early programming career . A two page article – stored alongside a completely unrelated one page flow chart of how to draw a circle on a bit mapped screen using only increment and decrement instructions, with no trigonomic functions in sight. The two page article was entitled “Removing the Buttons” by Nick Laurie. It’s premise stands correct to this day, an observing it has resulted in some multi million pound profit spectaculars my teams have pulled off down by career.

The 0-$100m at 89% Gross Margin – in 18 months – example

One was being given a Software business to run that featured 48,000 different part numbers. Some of my American colleagues built this into a kind of telephone directory that was 2″ (50mm) thick, and duly sent this to all the sales folks in the USA in the belief that it was doing them all a favour. I took a different tack, listened in to quite a few customer phone calls, and managed to boil things down to 6 double page spreads, each spread dedicated to a specific type of product. The chief stated objective was to ensure that a salesperson could lookup the part number and price for any software product we sold within their normal attention span (which we thought was around 10 seconds!).

So, the split was Operating Systems and System Software, Development Tools, Networking/Comms, Database Management, Industrial Applications and Office software (aka “End User Computing). Product names down the left with most of the part number present, different computers in order of price/power across the top (with the code to insert into the part number for that tier), and the associated price at the intersection of product and machine. The media cost on tape cartridge or magtape on the right of each product.

Visit from Royalty

We had a Corporate senior management entourage over from the USA who were told about the DECdirect Software Business and it’s impressive growth. I found myself called out of the blue into a conference room, carrying one of the price books, to find at least 2 company Vice Presidents and a lot of their senior staff present talking to my bosses boss. One of them got the USA Software price book out, and asked what I thought of it.

I related the challenge it gave salespeople, and on request, passed a copy of our 12 page work to one of the entourage. His VP said to him, well, say I wanted to buy VAX ELN to run on my VAX-11/785 – what’s the part number and price? His direct report, who’d been in possession of the guide for 2 minutes and had flicked through it once, from cold, said “oh, here it is” and rolled off the correct part number and the local price. I think they understood pretty quickly why that software operation was growing like topsy, and why even customers would throw orders into us, correct part numbers and pricing on board, for over 90% of our order volume. Simplicity Sells.

Meanwhile, back to today

Sometimes termed “Opinionated” interfaces, the central theme is that rather than adding extra buttons to any hardware, or one-plussing the number of software User Interface options you confront a user with, or giving people a thick book containing every imaginable option available, that the antithesis is usually much better design. To boil things down to the core tasks the user wants to implement, and to do that one thing really well, without unnecessary distractions. And despite knowing this for a long time now, the Mobile Phone Software Industry is very much stuck in the “let’s give them the kitchen sink” mind set, or to let functionality of their app get one-plussed to death in a mission creep into adjacent “wouldn’t it be nice if” task types. Two recent personal real life scenarios:

Scenario 1

First is that i’m in a Coffee Shop while my wife is shopping. I get a text from her saying she’s in the last one, and will be ready to leave soon. Message comes up on my iPad, so I pull my Nexus 5 phone out of my pocket to tell her i’m on my way. Sequence goes something like this:

Google Hangouts Initial Screen

Google Hangouts Second Screen

Google Hangouts Tell Jane i'm on my way

Having selected the Google Hangout app (the default way of sending SMS’s in stock Android), I flick it’s startup screen to the left, select her picture (there as I talk to her regularly), tap in “on way” and hit the button to send it. Done.

I get to the last shop and she says “Did you get my text?”. I said yes, and that i’d replied to tell her that I was on her way. She said she’d not received it. So, I replay the sequence, look how I sent it, click on her name and see this:

Google Hangouts - Who did I send the message to?

WTF! The Hangout app decided that my default action was to have a face to face video call with her, and it appears to have sent a notification to the Hangout app on her iPhone inviting her to this meeting. One which she didn’t get a notification for. Note to self – remember to select her name, choose the SMS number, before sending a text next time.

Scenario 2

We’ve had a day out with my sons kids, whose school has had an inset (teacher training) day, walking (according to my Fitbit) around 5 miles around Legoland Windsor. Get in the car at the end of the day, get to the road outside, and think – hmmm – I think we turned left somewhere further up this road to aim home, but not sure where. Let’s play safe. Pick up my Nexus phone, and say “Ok Google”. Up pops the speech input on the launcher. “Navigate me home”. Beep – up comes a display showing that it plans to send me from my current location, and lists the ultimate destination as my home postcode. Then sits there like a lemon with a display that looks like this (i’ve just done this one from my home, asking it to navigate me to a local supermarket, but the screen layout is identical in structure):

Google Maps Navigation Screen

 

Given the phone is sitting there like a lemon and the car is moving in traffic, I hand the Nexus 5 to Jane, and ask if she can see what I need to press to make it start giving directions. The first thing she says is “it appears to be having difficulty loading from the Internet” – given in a browser, there is a blue line that gradually moves left to right as the page loads. The Maps UI appears to be stuck at around 25%. It’s only later I realise that Google have just underlined the mode of transport (by car) with a blue bar, and this isn’t a progress bar at all.

Next, she can select route options. Then we are given some alternative ways of getting to the destination, just like the two listed above (shortest and fastest route). Though I can swear that the words “Start Navigation” were not visible at all when we were in motion and the map around Windsor was displayed. So, Jane says she can’t see where to press, the phone is sitting there like a lemon and roads passing me by with the car in motion. So I make a guess. And get it wrong, and have no idea which way we’re headed. A couple of miles on, a plane outbound from Heathrow flies over us, and I suddenly have a clue that if that is going East to West, I need to turn right to approximately head north back to the M4. This I do, travel another mile and then we get signage to M4 junction 6. And the phone is still sitting there like a lemon.

When I tried it today at home, it did an automatic hop, skip and jump into telling me how to start my journey – something I wished it did yesterday when I needed it to. But didn’t.

I’m far from alone

I’ve heard similar rants from one friend about how Apple iTunes has now turned into an ungodly and complex mess. Also quite a nice rant by Marco Arment about unnecessary bundling of unwanted components to his Amazon Prime Membership supporting a price increase (to support their online video business, that he has no interest in subscribing to). Marco then goes further with the one-plussing of Facebook and Twitter apps to start treading into each others core business, and losing their value to him along the way by doing so. See his blog post entitled “Wrong“.

So, quite a widely used and unfortunate trend. I guess the good news is that where vendors start doing this, it opens up an opportunity for other vendors to more closely align to the basic brass tacks most customers value. If the network effects are strong enough to enact this sort of revolution, we’ll all be the better for it, so – out with the coding pencil!

Footnote: The Seminal “Removing the Buttons” is here: Page 1 and Page 2.

 

 

Shareholder Positions and Profits YTD

Pie Chart of Ian Waring Stock Profits YTD

At the start of last year, I started to run my pension funds personally. In line with normal advice, I put circa 70% of the available funds in Vantage LifeStrategy 100% Equity Accumulating Index Trackers, and the balance i’ve used to bet on a few companies I believe have a rosy long term future – while being fully aware of likely swings of the US Dollar vs GB pounds. I’ve lived long enough to see that cycle between $1.40 and $2.20 to the pound – currently nicely in the middle and with holdings I can leave in situ waiting for the right position to enact an exit – albeit that’s not for many years into the future.

At the moment, my total fund is up 9.05% in the year i’ve been running it. The shares portion of this has come in +17.68% year to date (touch wood – profit of £21,871.99). The sources that contributed to the increase in the fund are as above.

In the early days, I did bet on a few others but kept the shareholding small until I had visibility of what they were doing. When they weren’t giving meaningful return, or where I felt I didn’t understand the company direction (strategically) well enough – or learnt their susceptibility to unfounded competitor rumours – I unloaded them. That applied (for various reasons) to ARM, Baidu, Red Hat, Salesforce.com, Splunk and Netflix.

At this stage, i’ve retained positions in Google, Amazon, Tableau Software, Apple and… Facebook. I did buy some Facebook shares in the early days after it’s IPO, but unloaded them at a slight loss while they were in the $20’s. I’ve now bought back in at $69 – largely because Mark Zuckerberg’s purchase of WhatsApp, and the fact he’s put the WhatsApp CEO – who is vehemently against advertising – onto the Facebook Board. I thought this was brilliant, as advertising is the major current source of Facebook’s income, and there was a willingness to put someone up there that will push an alternative, subscription based model. A good sign that Facebook are willing to be radical with their business models, and not follow the normal high technology malaise of clinging to a failing business model into oblivion.

I always think that the Advertising Industry is naive to think their next frontier is the screen of people’s mobile phones; it’s a bit like having a kiddie jumping up and down in front of the TV when you’re trying to watch something. WhatsApp currently charge $1/year for the instant messaging service, and at that level, there is even scope for friends (or vendors) to offer to pay the subscriptions of large numbers of users.

Liquid Metal and GT Advanced Technologies were a small punt based on hearing about various Apple licensing agreements two years ago, and then seeing Apple employees start filing patents on the associated materials just ahead of contract renewal due dates. Liquid Metal is likely to be used for the carcass of new iPhones (without the need to mill aluminium as at present) and GT Advanced Technology supply very resilient Sapphire screens large enough for the display surface of same. Those shares turned out to be quite volatile, so I did an exit stage left on profits of 30.9% and 24.2% respectively – within 3 weeks of their original purchase.

Google shares will split in April, improving their liquidity. Amazon have had a recent fall, but i’m confident that they’ll recover 20-25% in the next 2-3 months. Tableau Software are just about to dilute things a bit with a new share offering, but my returns are still very good (not too far away from 100% returns for the 218 shares I still have). Apple are a blog post all by themselves, cursed by Analyst expectations of slowing growth (despite ratcheting up their market share relentlessly, plus earning 70% of the mobile industry profits) and discounting the likelihood of laying another category of Golden Egg, as they’ve done for iPod, iPhone and iPad already. Quite funny when Amazon trade at huge multiples on the suspicion that their conveyor belt will magic Golden Egg league profits as soon as Jeff Bezos decides that’s what he wants. And Facebook is a wait and see.

There are three potential IPOs i’m looking out for, but that apart, the strategy is “Long Term Buy and Hold”. Working well so far, touch wood.

Google Shares: Stick or Twist?

Danger - Will Robinson

A fairly quiet Sunday. Trip down to the gym for the last of my three weekly visits, finding that they were finishing their 24 hour Charity Spinathon, £20 duly donated. En route, listening to the last of a two hour John Gruber Podcast talking at length about Crypto currencies, which was fascinating. Then back home for a walk to the local shops with Jane to pick up some milk, then back to catching up on my various high technology news feeds.

I reflect on Robots getting more and more impressive. Saw a video of a guy in Germany debugging a table tennis playing robot, which is already showing promise (3 minute video here). Then saw that on Tuesday, there is a match planned between Timo Boll, the #1 German Professional Table Tennis Player (currently #8 in the world), playing against a KUKA industrial robot (preview here). Robots are one feature that keeps hitting news headlines concerning Google, who are making many related investments recently.

On a related thought, one thing that has started to bug me a bit is the so far excellent performance of my Self Invested Pension, which over the last 10 months has grown 10.68%. Given 64% of it is in an index tracker, the performance of various stocks i’ve traded (normally on a long term buy and hold basis) has been over 24% to date. The nagging feeling is always asking if i’m carrying too much of too few companies, albeit I tend to focus on ones that I feel have high market shares and future growth potential.

I’ve made good returns trading in then later out on Netflix, Splunk and Salesforce.com. I got slight losses from the early days in Red Hat, ARM, Baidu and Facebook, so reversed out with minimal damage. I made a returns of over 20% on GT Advanced Technologies (GTAT) and 49% on Liquid Metal (LQMT) in 3 weeks by joining the dots on some future Apple investments from patent filings. Those apart, I wound up investments in Google, Amazon, Apple and (having IPO’d) Tableau. I have more recently taken a position in Facebook (it was in the $20’s when I left it, and bought back in recently at $69).

One personal irritation about the Advertising Industry is its relentless pursuit to derive advertising revenue on mobile phones. This is a practice I hold akin to having a kiddie jumping up and down in front of the telly when you’re trying to watch something; something to be actively discouraged. The one concern I have is that Google are my biggest shareholding (at the time of writing, they represent just under 50% of my (non Index Tracker) stock investments), and derive almost all its revenue today from monetising purchase intentions – read: targeted advertising. Likewise Facebook.

Something that impressed me greatly with Facebook was CEO Mark Zuckerberg buying SMS app “WhatsApp”, which has over 400 million users (70% using the service daily) for a jaw dropping $19 billion. The ethos of WhatsApp is to never let advertising interfere with the user experience, instead relying on a nominal $1/year subscription to use their service. Despite that being the antithesis of Facebook’s current business model, they put the WhatsApp CEO straight onto the Facebook Board. While it may sound a very basic simplification, their willingness to do this sort of “eat our children” move gives me confidence that they are aiming for the long term – and not clamouring to keep hold of a business model that may go stale.

With that, I turn to Google. I put £40,834 in them and have so far seen that go up to £54,508 – an approx return of 35%. Around 98% of their current income is tied to advertising revenues. I have quite a wide view of the various initiatives they are undertaking, which while mind-blowing, don’t translate into a likely future revenue/profit stream for the next two years or so. Maybe Chrome Tablets will arrive. Maybe they’ll cotton on that it may be a good idea to sell their excellent ChromeCast outside the USA. One thing I don’t yet understand well is their fixation – and many investments – in both Deep Thinking technologies and in Robotics.

The fact they may pull a rabbit out of their hat on one of a wide range of initiatives means i’ll leave my shareholding in them where it is. Likewise the shareholdings held by my three grandchildren (Ellie age 12, Charlie age 9 and Ruby age 2 all have shares in Google, Amazon and Tableau alongside their index trackers). Google shares will split in April, so I think a likely increase as their Google shares get more liquid. After that, we’ll see if the value of those shares continue their relentless march northward.

I’m also confident Amazon will bounce back – I reckon up another 20% in the next quarter to recover from their recent downturn. Apple and Facebook will soldier on. Tableau Software will continue to impress (they are my highest returns to date – over 67% at the time of writing). Those apart, i’m keeping my eye out for signs of three potential IPOs that I think will become very valuable – when they’re ready. But that’s a story for another day.