Fastly isn’t a cdn, they are not competing in that segment. From the last Conference Call.
Joshua Bixby
I think what you’re also seeing, which is something we’ve talked about in the past, which is there is obviously a commodity market here in the high volume. If you think about where we really focus, it’s in the high quality, and I think now more than ever, those who care deeply about their quality, that’s paying off, and so when you look at the platforms that are really excelling, I think you’ll see a correlation between how fast they are, how consistent they are, and that is a unique value proposition for us. We’ve also seen in a lot of those instances, and I think this is important, is because we are so good at what we do, we’re able to offload the central cloud from a lot of traffic and so as your central cloud costs go down, when you bring in a modern intelligent Edge cloud, you also see a really significant payback there, so I think you’re seeing a combination of the ROI showing up, you’re seeing a combination of the unique value proposition that we provide. You’re also seeing the adoption of multiple products and I think across all of those vectors, if you add them all up, that’s really where you’re seeing really impressive results there.
So that really is what it comes down to. People either understand quality or they don’t. They understand that something that costs more just might be worth it. I think we understand this with the amount of Revenue that Fastly is making and the amount of Revenue that net is making. Yes Net is getting more customers but those are the Walmart customers, people that are looking for the cheapest price not necessarily the most quality company. Fastly is Costco.
Now for those that think it doesn’t matter? Well I think we all will find out in the future. These things take time to work themselves out. Read this on Twitter.
Costco (Fastly) and Walmart (Cloudflare) is a great analogy. They can all be winners.
Zoom: It just works!
Fastly: It’s just faster!
In reviews, Fastly stands out for being “instant,” “real-time,” “built for mobile first,” and “best for streaming media.” Fastly is known for being “open-source,” “catering to developers on their terms to optimize the web and app experience,” and in founder Artur Bergman’s words “developed for developers, by developers.”
Tim Beyers explains it well: “Being that I’m a business-focused investor and analyst by trade, I decided to test Bergman’s claim with the developers who run our SiteOps here at Fool.com. Is Fastly really that much of a developer-friendly platform? All three I talked to said yes.” https://www.fool.com/investing/2019/06/14/fastly-proof-that-…
Aren’t these disruptive trends behind other winners we like here? The Trade Desk, Roku, MongoDB and Elastic.
The bear case about Fastly is more about Tik-Tok than about Fastly.
"I see yet another CDN (yes, maybe they do things better. I don’t know. But switching costs were not much if TikTok is an example) that is planning to do the same on the edge (like so many others are). "
but no mention about the rest of Fastly’s clients who are not leaving “Moreover, net retention rate was of 138%, up from 130% reported in the previous quarter” even with Tik-Tok, a 10% customer, leaving! Maybe for Tik-Tok the old CDN architecture is all they need. Tik-Tok is a valid example only if all other Fastly customers are like Tik-Tok. Are they?
Why the longer leash? Because their Edge product is just now coming out of beta. A more realistic/prudent investing argument would be to not have bought Fastly at all until their Edge product proved out.
Speaking of Tim Beyers, did anyone see he was just on Chit Chat Money? Beyers is a legend at The Motley Fool who has written around 8,000 articles and covered tech (and cloud) for about two decades. He’s too busy internally to write much anymore, so when he does, it’s worth paying attention to. In the recent show, he talks about our companies and explains them in plain-speaking language anyone can understand. Chit Chat Money is the show that just interviewed Beth Kindig (KayakerRW posted it), and it is hosted by a couple of Fools. Beyers says, “I prefer companies whose opportunity is dramatically misunderstood,” and he picks a favorite.
I am just going to say one more thing about Fastly and then let it go.
Have any of you been on a freeway during rush hour traffic? I am thinking Los Angeles, four o’clock, going from fourth and Olive to La Canada. Not just imagine, how much would you pay to have a toll road that you could hop on? Get off of the public roads and jump onto a toll road that takes you right down to La Canada. Stay on the public roads with your rag top up and the air conditioner on, bumper to bumper, 2 mile an hour or get on the toll road, the rag top down, the wind whipping through your hair (or running across your dry scalp), 90 miles an hour, Highway to hell blaring.
That is the difference between Cloudflare and Fastly. Cloudflare is giving away cdn for free, getting more people on their network, but their revenue growth isn’t that exciting. They do have a lot better gross margins than Fastly but do you really think that will hold? Either Cloudflare’s Gross Margins will come down or Fastly’s will go up. I am thinking Fastly’s will go up.
So like the Freeway analogy I gave you this is exactly what Cloudflare and Fastly are giving you. Bandwidth that will be slower (Cloudflare) or faster (Fastly), public free way(Cloudflare), Toll road(Fastly). Which one would you rather be on.
It is one thing to make the choice of where to drive as an individual and quite another thing to make the choice to invest in building the toll road, i.e., investing in Fastly.
From reading all of this, it’s interesting that you came to that conclusion. I actually came to the opposite conclusion and hopefully will be re-initiating/legging into a position sometime in the next few weeks. They’re plagued by geopolitical tensions and are realizing what Wall Street wants to hear slowly. But once that’s worked out, they’re reaching for the stars. This company is amazing and goes after different customers than Cloudflare IMO. I have no predictions for the short and medium-term, but if you’re a long-term investor, buying in over the next few weeks/months/1 year should serve you really well 5 years from now.
It is one thing to make the choice of where to drive as an individual and quite another thing to make the choice to invest in building the toll road, i.e., investing in Fastly.
I think you completely miss the point.
Everything you do is an investment, whether it be time, money, or relationships. You just have to decide what is the better use of your investment. Some people would say I would rather give up my time than my money, others say I would rather give up my money than my time. When you have money time is more precious, when you have time, money is more precious. Companies with Money will vote on Fastly, companies that do not need speed ie have more time, will vote Cloudflare. Both can do well because they are serving different customers. I just would rather be in Fastly.