Ben Gilbert: belief

Transcript context

…And ipso facto must be the TAM because you wouldn’t be growing that fast at these large numbers if the market wasn’t that big. If you [...] run out of the market, you wouldn’t be adding customers that fast. This is where we start to get into the, is it a bear case, is it a bull case? We should have the discussion of, is The New York Times a tech company? I was reading a Medium post by their outgoing former CTO, who said things like, I think 150 Timesians went through the reforge growth series. Not a thing that you would expect to hear from within The New York Times organization. They’re taking it very seriously to think like a tech business, act like a tech business, mail distribution on the Internet, understand where they fit in there. From a cost structure perspective, this we owe wholly to Mine Safety Disclosures. They make the point that with newspapers, The New York Times cost was largely variable. They increased in proportion with the number of papers produced and sold. But with digital subscriptions, most of their costs are fixed. They don’t increase as The New York Times adds more subscribers. When you think about this, sure their revenue’s flat, but they’re switching out their cost structure from one that’s delivery trucks, that’s a physical paper, that’s printing presses, to this one that actually looks a lot more like Netflix, where you acquire the content and then the whole base that you have, that you can amortize your content costs across, is all gravy. You have these content cost, fixed cost, variable cost on top, but your revenue’s not actually connected to any of those. Your revenue is actually connected to your audience. The reason to be really excited right now is that The Times is in a place where they’re just about to outrun all those fixed costs and be in this super high-margin territory, where the audience is so large that they really don’t need to grow their cost at the same rate that they’re growing their expenses. We’ll discuss this in power, but it’s just like Netflix. Why can The Times pay $100,000+ starting salaries for journalists and no other organization can afford to? It’s because they have the scale economies of millions of subscribers. Something just like Netflix can pay $100 million for a piece of content, amortize it across there many, many, many times more subscribers than Peacock, same deal, same dynamics here.…

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