Bert:FSLY better than NET…

Bert makes the case that due to valuation, underrated tech and management, Fastly will outperform Cloudflare over the next 12 months.

As usual he has lots of well-reasoned, detailed information to back his thesis.

What stands out though is that he rates Bixby higher than most. In the comment section he attempts to refute the claim that Fastly has weak management,

When someone writes poor management I have to wonder precisely what they mean. Is a management poor because it can’t consistently achieve investor expectations? Yes, that is part of the job, and I am sure the CEO and his team are chagrined that they have had forecasting miscues. Is it a management poor if it isn’t charismatic? Joshua Bixby is not charismatic and Matthew Prince is. At the end of the day, Fastly is a company deeply involved with advanced technology and developers-that is a slice of the world where charisma is not so highly valued. Does Fastly have poor management because it suffered an outage that impacted the financials of the company. In my view, as expressed in the article, that isn’t the case.

This is a weak assessment of leadership. Prince is not just more charismatic than Bixby, he’s tougher, smarter, more accomplished and has gravitas that Bixby lacks. He radiates authority and exudes a legit sense of purpose. His company innovates at high speed and he is the visionary who founded the company. Bixby, a VC, latched onto Artur Bergman the real visionary behind Fastly. Prince is a lawyer, lifetime techie and graduated at the top of his class at Harvard’s business school. With regular events like Innovation Week, a dedicated blog and TV Network, the branding and marketing for Cloudflare is exceptional. Prince’s vision - to build a better Internet, one that is safer, faster, more reliable is clear, convincing and relentlessly expressed in their communications and product development. Under Prince’s watch Cloudflare continues to add thousands of customers while Fastly’s customer growth is anemic. During the last few conference calls, as Bixby speaks the stock price plummets. You can practically hear the market booing.

Bert’s rationale for suggesting Bixby’s management is unfairly criticized is weak. He basically says they’ve gotten some big customers to sign up so they must be showing some good judgment. This is where I think Bert’s analysis is just off. Of course all CEOs who reach a billion-dollar+ valuation have done some very good things, landed some big deals. And surely they’re far superior to the masses. But leading a global organization from 5B to 10 to 20 to 25 to 50 and beyond takes mettle that Bixby has yet to prove he has.

While Bert often provides excellent insights into technology his analysis of leadership is questionable. And the best tech with lousy leadership will never crush the market. Bezos, Yuan, Hastings, Green, Lutke are 90% of the reason Amazon, Zoom, Netflix, Trade Desk, Shopify have done so well. And Prince is the main reason Cloudflare will as well.

That said, who knows, with a new CRO, tiny market cap maybe Fastly can beat Cloudflare in the next 12 months. But this is really a value investing play not growth investing. And it gets to the heart of what Saul has expressed countless times - that investing in what is, in companies that are executing - is the key. If Fastly fulfills their potential there will be plenty of time to jump back on board. But to invest in them now is straight up gambling. It’s a bet that execution will improve despite having no evidence it has. All too often tech analysts fall in love with tech and fail to notice the most glaring flaws in the foundation of the company - its people and the stories they tell.



Agree with BD analysis. But the main reason I dumped my fsly shares and kept my net position: fsly relies on 2 main customers for nearly 40% of it’s revenue and right now there’s no discernable trend that provides a compelling reason to try a pure value play
Moreover, mutual funds are adding net shares to there portfolios and discarding fsly.

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