Time to Revisit Fastly

After Monday’s recent rise, Saul reminded all to stay flexible and focus on what a company is, now, not what they were. This is always a big underlying theme around here, focus on what IS, not what was or could be.

After seeing several articles that still mention Fastly as a company with great potential and quality products I decided to look under the hood a bit.

There is much to like.

First of all they fired CEO Josh Bixby and he is longer on the BoD.

They replaced him with guy named Todd Nightingale who has a fantastic and long career working in building Internet/Network infrastructure.

Here’s his LinkedIn page
https://www.linkedin.com/in/todd-nightingale/

The man has deep - DEEP - expertise in this space and strikes me as a sincere and likable person. He has a BS and Master’s Degree both in Electrical Engineering and Computer Science from MIT.

He held high level positions at Motorola/AirDefense Solutions and worked his way up at Cisco to the role of Senior Vice President of Cisco Meraki. What is Meraki you ask? I have no real clue beyond they sell important IT infrastructure stuff. Meraki was acquired for $1.2 Billion. While some felt the price was high it seems to have been a successful acquisition.

Now quick tangent - get a load of this - Meraki was founded by a fella named Sanjit Biswas. Yes THAT Sanjit Biswas - the one who created and runs a little outfit called Samsarra. Of note, Samsarra - which I tragically was about to buy but hesitated and missed run-up - is so well run and has such a tough sales division they virtually bankrupted a company someone close to me worked at. I also know another person at Samsarra who raves about the culture, future of company. I realize this is anecdotal but I am putting my long reputation in Fooldom on line here and saying IOT is legit.

Back to Nightingale. Here he is doing an interview at a Cisco Partner Summit in 2019 when he was SVP/GM of Cisco Meraki.

He raves about creating the “fastest launching” Meraki product of all time before getting into deep weeds of the tech. He strikes me as utterly credible, with dominant command of the technology. I really love to see the alignment between the man’s passion for a fast launch and his now running a company that prides itself on speed.

He moved up the ladder at Cisco to become EVP, GM of Enterprise Networking and Cloud.

Read that again. This is a legit technological titan.

I think the stock of Fastly has doubled since his arrival from about 1 to 2 billion in just six months. Yes tech is doing well in 2023 but still that shows the market is taking notice.

If you look at Linked In and find C-Suite folks of Fastly you’ll notice two things - most have been hired in last two years and their resumes are exceptional - long tenures at the likes of Google, Microsoft and educated at Harvard, Kellogg, Wharton, etc.

Unfortunately - Nightingale is no Matthew Prince or Frank Slootman and he struggles to sound cool talking about music (he loves the Lumineers oy vey). Compare this to CrowdStrike’s George Kurtz hyping speed with CRWD’s Falcon platform which sponsors his actual racing car.

That said I give high marks for intelligence, sincerity - BIG things - but his public speaking skills need tremendous work. He looks kind of like a cross between Eric Clapton and Bill Gates and I’m hoping his nerdiness/intelligence is paired with the savage competitive streak in the mould of Gates/Ballmer. It feels like someone has coached him to be more enthusiastic and effusive than his natural persona can convincingly project. Here he is doing a little video “live from the RSA Conference”

That video looks does not radiate “Titan” - again sincere, likable but we need bigboy advertising badly here not baby games. He’s not Spencer Skates just out of grad school with some new tech.

And here’s his keynote at Fastly’s 2022 “Altitude” Conference.

He did this video after only 60 days on the job so we have to cut the man some slack. Again, the commanding knowledge is there but it’s just not authentic when he forces out lines like, “I spent my whole career building the Internet and I feel like I am home. Sixty days into the job and I feel like I am home.” I don’t know. Could be Gospel truth but come on Dogg, you ran major divisions of Cisco for a very long time. Did work you felt literally built the Internet but you were not home there?

He says “the mission of Fastly is to build the experiences that matter, experiences that are fast, engaging and safe.” And that seems to be their tagline. What the heck does “engaging” mean in context of Edge network/computing?

Cloudflare endlessly touts their commitment to being fast, secure, reliable. All crystal clear and backed by epic product development in those categories. And Matthew Prince is on CNBC so often he could have his own show. (Anyone else note that after his co’s recent setbacks he found a comb and has his hair all nice, neat and slicked back? The Huck Finn look is gone.) Prince singlehandedly can just mutter “AI” and the stock adds 10B in market cap. I actually sold in high 60s - having held as favorite stock for years. The “Narrative Premium” - for SNOW and NET - often disappears like vapor after a run.

I can not find any videos of Nightingale on CNBC or major media outlet. This man’s passion is product development, running business NOT hyping it to Wall Street.

Chief Marketing Officer Margaret Arakaway joined Fastly in 2021 - and has her work cut out for her.
https://www.linkedin.com/in/margaret-arakawa-4ab42410/

She spent 20 years rising high at MSFT - hopefully as new CEO with new vision settles in they will fix their marketing which is atrocious with a capital ocious.

This company DESPERATELY needs a full re-brand with a new exciting image. I saw some stuff with race cars and Mercedes - more of that please. Speed is inherently cool even if the name Fastly is borderline painful.

THE BOTTOM LINE - NARRATIVE LOOKS REAL GOOD
What we have here isa tech titan at the helm, legit technology, a new group of executives with exceptional track records, educated at the finest Universities selling products/services that are likely to explode in growth in the coming years, especially when the economy recovers, rate hike-apolooza stops and if God willing the politics of Planet Nutcase ever calm down.

I hope some tech folks can jump in and add flavor to this gumbo but at a $2B pittance - it seems a little marketing muscle and narrative enhancement this could be a big winner. A jaunt back to a piddly 10B is a four-bagger. They might even have fun being sort of Coke to Prince’s Pepsi - proud of being old school, humble, focused on the steak not the sizzle.

I once was real early pointing out that Cloudflare was the better choice when we were all giddy about Fastly. Now that NET has had some stumbles and the auto-50% growth sheen is off, Fastly is is the one who deserves a deeper look.

Any company that trades Bixby for Nightingale deserves respect. It calls to mind Nolan Ryan for Jim Fregosi; Mika Zibanejad for Derek Brassard and that awful, awful time my brother tricked me into trading Dodger slugger 3rd baseman Ron Cey for 7 awful Chicago Cubs in Strat-o-Matic baseball because hey I was getting seven guys!

Anyway…

Fool On,

Broadway Dan

PS - For anyone who might care, I only have about 8% of my port in individual stocks, which at the moment consists only of ENPH, TTD hopefully soon IOT. I do not own Fastly but could easily see doing flyer on it. And if NET drops back to high 30’s/low 40’s could add back.

I think what I love most in a stock is one that if were a High School Senior would be voted “Least Likely to Catastrophically **** Up”. Strong leadership, proven tech, blue sky with tail winds, these kinds of things.

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Ah Fastly.
The short summary for me is: Like VHS winning over Beta, Fastly’s better tech (and that’s even arguable) wasn’t near enough for it to win out. What Fastly did with CDNs and then Edge Compute was great technically, but Cloudflare’s free CDN tier was impossible to compete against and the Edge Compute took too long to get to market.

As for an investment today, I think the world has moved on. CDNs are a commodity business, and the potential for Edge Compute has moved all the way to the actual edge devices (like phones and IOT devices) following cost efficiencies. No need to have close servers to handle compute. Heck, even cheap Wyze home cameras have compute in them.

And any security stuff is usually considered in a broader context than Fastly can provide. I don’t see a strong future for Fastly unless the new management gets it into new businesses, and there’s no way yet to know that’s coming.

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Thank you Smorg!

More i look at resumes of CEO and CFO more this looks like a tidy it up and sell it job. Both have serious acquisitions in past.

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New CEO Nightingale has preached simplicity throughout his career. This sure looks like a very smart move.

To simplify pricing, Fastly is adding flat-rate pricing options for customers who don’t want to manage usage-based consumption. The new, predictable pricing removes the risk of surprise bills associated with events like traffic spikes, global malicious attacks, or misconfigurations, which can result in overage charges on pay-per-use plans. Pricing is straightforward, transparent and competitive, with no fine print or hidden charges. Customers have the flexibility to mix and match packages to meet their unique needs. The packages (Starter, Advantage and Ultimate) are designed to cover the needs of companies of all sizes

Smorg you say, “I don’t see a strong future for Fastly unless the new management gets it into new businesses, and there’s no way yet to know that’s coming.”

I disagree with this. There’s some way to know. You have a CEO with a fantastic track record in tech, who left an elite cushy job at Cisco to take over this company. We can safely assume he understands the tech, the landscape and didn’t jump from the BoD into the Captain’s seat to play tiddlywinks.

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OK, but that doesn’t mean he’s going to be successful.

The CDN business is well established, so gaining there means taking market share away from the competition, which seems hard since I expect most are happy with their current CDN, and even if they want to switch, Fastly needs something really compelling to gain that business over someone like Cloudflare or even Akamai, which are solid choices.

I liked your earlier idea of setting the company up to be bought, perhaps for its technology and network, better. But, to me this is all speculation and not an investment thesis.

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Yeah, let’s kill this thread. This almost certainly not a Saul stock. The CFO they hired in 2021 has a long history of working for companies that get acquired - Fitbit by Google, Nanometrics merged with Rudolph Technologies to become Onto Innovation which is run by the Rudolph team so it was basically an acquisition and he was CFO of PGP which was acquired by Symantec. Of note he’s been at Fastly 2 years and seems to take his companies about three years from time he becomes CFO to acquisition. Hard to fathom they hired this particular CFO if plan is not acquisition.

We know Nightingale was at Meraki acquired by Cisco but get a load of this: before that he was Director of Enginering for Air Defense Solutions, acquired by Motorola. What’s notable about Air Defense is that company was founded by Jay Chaudry, founder of ZScaler. And just one last word on the interconnectedness of companies around here. David Hornik who recently became Chairman of Fastly’s Board also serves on Bill’s board since 2016. Like attracts like.

Okay that’s it for this thread. I will email you privately with question about tech. Thx Smorg!

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