#17: Programmatic Portfolio Perspective
Google's open-web 'Network' is 2x more valuable than our entire portfolio of 14 programmatic players; Portfolio returns 6x more than Google since Jan 2018
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In our Quo Vadis: Portfolio 2Q21 Update posted on August 30, we showed a chart comparing the enterprise value (EV) across the 14 programmatic-reliant companies that we track in our equal-dollar portfolio. Altogether, the total EV of this club is $115 billion.
Roku and Tradedesk dominate total EV across the portfolio with 41% and 33% shares, respectively.
Total EV for the 12 long-tail players together is $29 billion (26% share).
S4 Capital is a Google reseller via its media arm (MightHive = 25% of revenue) and the 3rd largest player in our portfolio in terms of EV.
Google’s Data Asset
Sure, $112B might sound like a lot, but if all 14 programmatic players were rolled up into a single company called “Roll-Up Co”, it would be 15x smaller than Google’s $1.8 trillion enterprise value.
Google’s Data Assest (2007) — Brad Burnham (Managing Partner, Union Square Ventures) explained why Google is so valuable in his timeless 2007 post Google’s Data Asset.
TLDR — Google’s productive output is data that comes from other data. Search Data to the power of Gmail Data to the power of Chrome Data to the power of Youtube Data to the power of Open-Web Bid Stream Data… you get the picture. Compared to the programmatic players in our portfolio that only have one, or maybe two, data assets, Google’s exponential data output is basically untouchable.
Of course, comparing a bunch of open web programmatic companies that are 100% reliant on — or significantly exposed to — auctioned-based audience targeting with Google’s entire Googleplex (Search, Gmail, Chrome, YouTube, DSP, SSP, and everything in between) is not exactly apples-to-apples.
But what if we compare Roll-Up Co to Google’s open-web business, aka “Network Revenue” (DSP/SSP/Audience assets)?
After leveling the playing field, Roll-Up Co still looks small standing side-by-side next to Google’s programmatic apparatus. The value of Google’s Network business is 2x more than all 14 adtech companies combined.
Since Google pretty much touches every media plan in one form or another, everyone else gets crumbs worth $112 billion.
Sure, crumbs are better than a stick in the eye, but that alternative might start to look appealing if many of the newly minted IPOs can’t deliver consistent and believable earnings growth.
The Bottom Line
Despite Googleplex’s mighty data power and massive share of open-web programmatic earnings, Roll-Up Co’s stock performance is miles ahead.
Had you bet $100 on Google stock starting in January 2018, you would have only netted a $149 return. The same bet on Roll-Up Co would have generated an $843 net return. That’s 6x more. Go figure.
All in all, it appears investors are betting that non-Google adtech players will attract a growing share ad budget in the future. That’s a bold bet.
What do you think?
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