TTD is very interesting indeed. It has the upside potential of a consumer company, while being a B2B company. It appears, at least in some jurisdictions, that it is the leader in programmatic TV advertising, which is the biggest of the biggest of all future programmatic ad markets. And it does appear that they are moving and leading their market.
But I cannot say this with any reference to anyone else they compete against, because for the most part, it is difficult to get information about their competitors. Forrester has TTD still as a middle of the pack leader with smaller market presence. So we can perhaps infer TTD is a market disruptor. And the evidence we have for this is TTD growing at 2x the pace of the market in general, and the language coming out of TTD. So you need some faith here.
This all said, TTD taking a 20% chunk is a big commission, and yet they maintain 95% client retention quarter after quarter. I have no insight as to the nuances of what this means. It could be misleading, as for example, you still retain a client even if the client decides to cur its spending with you by 90% and move that spending elsewhere. So this 95% retention rate is not necessarily a valuable metric, unless we know how TTD is deriving it.
The advertising business itself, as with Saul, is not something I like either. True, Mongo’s founders were the original internet ad guys with Doubleclick (that they eventually sold out to Google), but TTD is already quite profitable, and doing far better in that regard, while still rapidly growing revenues, that practically any company of its ilk in any SaaS market. TTD is clearly doing something very right.
The market remains edge about TTD. Perhaps TTD is suffering from some of the issues Nvidia is suffering from as if Nvidia had much in common with AMD at all. I do not know what it is with TTD. Perhaps the market considers TTD to be very cyclical with the advertising cycle. But since programmatic is disruptive and taking marketshare (like Arista did from Cisco, but at a faster rate it seems) cyclicality may not be an issue.
Jeff Green, the CEO is clearly one of the better CEOs in our universe, and visionary in his field. My sense is that TTD is the disruptive leader, and the more data and intelligence and product refinement TTD makes, the greater its moat grows to any upstarts, or any legacy companies. How do you catch up to something moving that fast? You do not. Then the worry becomes what if Google goes programmatic big time, and Amazon does the same? I think that is a constant worry. I would imagine TTD would remain just fine, particularly as it is so focused on Asia where Amazon and Google have a much smaller presence.
What I hold now I want to continue to hold and have no interest in selling some off to buy TTD or anyone else at the moment. But I may simply be wrong not to do so for TTD. But it is advertising…and as Saul indicated earlier today, you do not need to own every company.
I have not run my Tinker Ratio in my head in much depth about TTD, but my impression is (and was a year ago as well) that TTD is doing something of the like that only a David Gardner catches early, and that the rest of us become to biased against or skeptical (advertising - yuck ). It is not that Dave has not been wrong before on companies like this. Most of these ad enhancer companies have disappointed and under performed, and David has been in quite a few. We all have our biases. TTD may be the exception that puts all that behind for advertising and marketing intelligence companies.
It is hard to say that TTD is not in a “Tornado” if that applies to their field fo business. There small businesses (that some day will be their largest businesses) are growing at a fantastic rate comparable to Mongo’s Atlas (as an example).
I have no great insight however, and thus that metaphysical wall turns me off. It is just one of those things where you have to have faith and understand as a passive investor you sometimes just have to go with it when a company starts to grow and dominate as TTD appears to be doing. I feel that this is one that I may miss out on, but regardless, I don’t care at the moment.