For those who miss Sarah Friar, Square current CFO is equally impressive answering the tough question under fire.
https://www.bloomberg.com/news/videos/2019-08-05/square-cfo-…
Looks like Square is in good hands.
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Sarah who???
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I agree, she did a solid job there, which alleviates a concern. She is obviously fiercely intelligent and able to answer tough questions thoroughly. I still find her a bit robotic and she seemed a little deer-in-the-headlights. But she is definitely an impressive figure, no doubt.
I also love that they got rid of Caviar.
So you have two positive developments here in the story - major executive is very smart, and the company is focusing on their core businesses.
The reason I’m still concerned though about Ahuja, can be seen in this excerpt from the CC… Read this and note how it makes you FEEL, how easy it is to digest and how clean the ideas expressed are transferred from the writer to the reader. Of course I get that this involves complex information and some corporate-speak is inevitable. Still, I find this concerning for reasons I’ll put below…
… in our seller business we continue to generate strong return on investment from sales and marketing with further opportunity to scale at attractive returns. We’ve seen payback period trend toward three quarters with continued positive revenue retention. This results in a 3 to 4x return on investment for a new seller cohort within three years of on-boarding. In April, we launched a marketing campaign to increase brand awareness for Square’s ecosystem of products to help sellers manage and grow their business. We are encouraged by early returns from this campaign, including improved top of funnel metrics around awareness which has led to growth in sign ups.
Third, our Cash App ecosystem has driven meaningful monetization and attractive unit economics. We see strong momentum and durability across three key vectors; the network, engagement and monetization. Cash App delivered $135 million in quarterly revenue, excluding bitcoin. While we are improving the efficiency of our cash ecosystem, we continue to invest given the rapid growth of the platform and compelling unit economics.
What we see is, one, low and stable acquisition costs for new customers, even as we scale into mainstream populations and, two, greater engagement and monetization per active customer across multiple revenue streams, driven by increased attach rates on key products that provide daily utility and as we launch new features we see further opportunities to cross-sell into our large and growing customer base with minimal incremental acquisition costs.
This is all fine and I’m sure makes sense, but what was inspiring about Friar was not just her intelligence it was her comfortable demeanor and seeming humanity.
I think the market reacted harshly after the CC, in part (not possible to quantify) due to HOW the information was presented.
It reminds of the classic book, “On Writing Well” by William Zinsser. He writes, in the chapter, “Simplicity” that “Clutter is the disease of American writing. We are a society drowning in unnecessary words, circular constructions, pompous frills and meaningless jargon.” He would have slaughtered expressions like:
“This results in a 3 to 4x return on investment for a new seller cohort within three years of on-boarding”
“We are encouraged by early returns from this campaign, including improved top of funnel metrics around awareness”
“even as we scale into mainstream populations”
“provide daily utility and as we launch new features we see further opportunities to cross-sell into our large and growing customer base with minimal incremental acquisition costs”
The story of this stock is supposed to be that Dorsey and Ahuja come from small business people and are humble folk who know their customers and what they need because they get them deep in their gut. The last thing they want to come off as are slick-talking, big money, Ivy league educated corporate sharks looking to add “new seller cohorts” whom they can make 3 to 4x off in a few years after “onboarding”.
Best,
Broadway Dan
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Good point Dan. Unfortunately, corp-speak is sort of the norm, and this just highlights really what a superstar Sarah was for SQ.
Here she is, just over two years ago, explaining the future of Caviar. From minute 5 in the video
https://www.bloomberg.com/news/videos/2017-05-04/square-cfo-…
Explains why they have Caviar and are in the ‘food business’. Basically confirms the view here that it is/was a good thing to ditch Caviar now as this future has arrived. The eco-system has been built, there are now many competitors to Caviar, so ditch Caviar and integrate SQ with everyone.
People were asking about AYX convertible notes upboard. It’s free money to be used when the opportunity arises. In the 6 minute, Sarah Friar gives a good, concise explanation, and that same explanation could be used for our other hyper-growth companies. She explains they had just raised 440 million of convertible debt. This type of thing keeps happening with our companies - SHOP, SQ, AYX…etc. For SQ, nothing was imminent, nothing was planned, but gives them the ‘flexibility’ and ‘hyper opportunistic’, and they got ‘great terms’ with the debt.
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able to answer tough questions thoroughly. I still find her a bit robotic and she seemed a little deer-in-the-headlights.
Did anyone else notice during the Q&A how she was reading prepared statements for some of them? The response on the first cash app question was a straight read until the very end. That did not come off well at all for me. She should have notes for possible questions but straight reading an answer is just no good.
SQ has been out of favor in the market for awhile, even considering that 80-100 range was a crypto induced run. I’m still optimistic but losing faith.
This thread assumes that, in evaluating SQ, greater than minimal weight should be placed on an edited, 4-minute segment on Bloomberg.
Interpreting on-camera “performance” as meaningful seems ripe for the introduction of bias. It would also seem that, more important than considering, in any way, individual perception of performance, the focus should be on the substance of what SQ decided to message.
(P.S. You can see from the wide shots that she did not have any notes in front of her. Sometimes we see what we want to.)
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(P.S. You can see from the wide shots that she did not have any notes in front of her. Sometimes we see what we want to.)
My comment on the CFO reading prepared answers was during the Q&A on the earnings confernce call, not the Bloomberg video clip. Sorry I didn’t make that clear.
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In addition to financial performance; I am a strong believer in quality of leadership. To me, in many situations, quality of leadership in a company is a precursor to a company’s financial performance. A skill whereby a leader is able, in real time, to take a complicated matter, such as financial performance, and break it down into simple and digestible laymen’s terms is a solid leadership quality and perhaps indicative of one’s grasp of the concepts. Therefore, I find the discussion of her performance has merit.
I quickly tire of the individual that hides behind “corporate speak” and regurgitates the same themes that I can get from any board post, podcast, SA article etc.; “platform”, “metrics”, “optionality”, “leverage”…feel free to add your own here.
Fool On,
Harley
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Jasmos, interpreting massively complex financial information is ripe for the introduction of bias. I probably don’t really belong on this board as I’m trying to explore issues, namely Story/Leadership that are vitally important but admittedly can’t be accurately measured and are not a key part of the Saulinian style. No doubt it is a precarious thing to attempt and must be handled with as much objectivity as possible. I said she was fiercely intelligent - which is undeniable, but that she lards her speech with corporate buzzwords, which is also undeniable.
Jeff Green the CEO of TTD is a far superior communicator. TTD stock was down almost 7% - when he was done speaking it was down 3%. After the SQ CC the stock got hammered - beyond what many analysts feel was fair. It is not possible to formally quantify these things. If anyone wants to ignore them that’s fine. But I feel communication is an essential skill for leaders to possess - to transmit the vision to the company, customers, partners, wall street is essential.
On a similar note I bought a small position in NEWR - New Relic then watched the CEO and though I found him very intelligent, something about his persona just seems a little funky to me for a big-time leader. And I can’t stand that he named the company an acronym for his own name. So I sold my shares.
There’s a gravitas, maturity, directness and understated confidence in leaders like Bezos, Hastings, Green and Friar and I think it’s the most underrated data point in investing.
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THANKS Gclever.
For your encouraging words re Square, I bought the stock as soon as it went public…used the service, before.
Surprized by Market down, again…
STJ