Tuesday Mar.23, 2021

🎥 Zoom-as-a-Service

_On the (rail)road again..._
_On the (rail)road again..._

Hey Snackers,

After Elon Musk changed his title to "Technoking" of Tesla, we asked for your creative CEO titles — and you delivered. Some highlights:

  • Apple CEO Tim Cook: "Core of the Apple" (Steve Fischer)
  • Bumble CEO Whitney Wolfe Herd: "Queen Bee of Courtship" (Tara Purswani)
  • Costco CEO Craig Jelinek: "The Incredible Bulk" (Tony DeRosa)

In the markets: tech shares rebounded yesterday as Treasury bond yields fell.

ZaaS

Zoom's having a (pre) post-pandemic crisis, so it's launching Zoom-as-a-Service

Call her ZaaSy... Zoom has become a verb, a meme, and a lifestyle. Despite that powerful brand clout, Zoom's latest service involves un-branding itself. Zoom will license its video conferencing tech to other apps. We're calling it Zoom-as-a-service.

  • ZaaS: Companies will be able to weave an unbranded version of Zoom into their products. Think: dating apps, telehealth providers, and social media.
  • AaaS: Amazon is sneakily offering something similar with its own video conferencing tools. Those Slack video calls? They happen through Amazon (Bezos is everywhere).

A (pre) post-pandemic crisis... This past year, Zoom has been a coronaconomy star. In 2020, its sales quadrupled to a record $2.7B. In October, it notched a stunning $170B valuation as its stock soared. Since then, three vaccines have started rolling out — and Zoom shares have fallen ~40%. Now, Zoom's looking at other ways to grow.

  • One product, many applications: Instead of launching new products, Zoom is expanding use cases for its existing product (basically, just video).
  • Last year, Zoom announced OnZoom, which lets people charge for events they host (think: pilates class). With Zaas, Zoom is becoming more than just a standalone app — it'll be invisibly integrated into apps you use each day.

Don't let brand drive ego... Sometimes, brands can do more for themselves by unbranding. Just look at Stripe: its brand is "invisible," but it just became America's most valuable startup. Brand recognition is key to consumer-facing businesses like Zoom. But companies can't let their ego get in the way of good opportunities. If Amazon forced Slack to stick "powered by Amazon" on its video calls, Slack might've passed. By setting aside its ego with Zaas, Zoom is giving itself a new post-pandemic growth opportunity.

Rail

The biggest merger of the year so far: we're talking railroads, Biden, and the USMCA

Forget SpaceX shuttles... The hottest transportation story on Wall Street yesterday was a railroad merger. Canadian Pacific Railway has agreed to buy Kansas City Southern in a $25B cash-and-stock deal. It's the biggest merger announcement of the year so far. If approved, it would create the first railroad network connecting the US, Mexico, and Canada.

  • ~20K miles: The distance the new company would operate, generating ~$8.7B in sales per year. Start planning your Toronto-Vegas-Cabo trip (if you're a car part or grain product).
  • Kansas City Southern shares jumped 11% to a record high yesterday, and have more than doubled in value over the past year.

It's fun to stay at the USMCA... USMCA = US-Mexico-Canada Agreement. Trump signed the major trade treaty into law last year to replace NAFTA. This railroad deal is an effort to capitalize on an anticipated post-pandemic increase in North American trade.

  • "Build Back Better": President Biden has pledged to spend trillions on infrastructure (think: roads and bridges). That could benefit railway companies like Kansas City that are transporting gravel, metal, machinery, and other building materials cross-country.
  • "Clean energy future:" Another focus of Biden's BBB plan. Rail is 4X more fuel efficient than trucking. One train can keep 300+ trucks off public roads and produce 75% less greenhouse gas emissions.

It's possible to invest in public policy... Cannabis stocks can be an investment in the possibility of federal marijuana legalization. Electric vehicle stocks can be an investment in environmental regulation and government-sponsored EV subsidies. By buying Kansas City, Canadian Pacific is investing in North American trade policies and a potential spending boost from Biden's infrastructure proposal.

What else we’re Snackin’

  • Vax: AstraZeneca's Covid vaccine was shown to be safe and 79% effective in late-stage US trials. The company plans to request FDA authorization by mid-April.
  • Regulate: President Biden nominated tech critic Lina Khan to the Federal Trade Commission. If confirmed, she'll vote on important Big Tech antitrust cases.
  • Level: Fortnite-maker Epic Games is reportedly closing in on a large funding round, which will value it at $28B.
  • BBB: Biden admin officials are reportedly crafting a huge infrastructure and economic package that could cost up to $3T.
  • Um: Apple's HomePod Mini has a secret temperature and humidity sensor just waiting to be switched on.

Tuesday

  • Earnings expected from Adobe and GameStop
  • Treasury Secretary Yellen and Fed Chair Powell testify to the House Financial Services Committee on their pandemic response

Authors of this Snacks own shares of: Amazon and Apple

ID: 1574546

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