Learning from a Legend: Mark Mahaney's Insights and Lessons on Tech Investing and Financial Literacy

Living a life in full is a conversation you always wanted to have with that person who gave an amazing TED Talk, or the author of one of your favorite books, or that inspirational Olympian you always wanted to know more about. It's graduate level conversations with those making a difference in the world and in the lives of others. This show brings you new ideas and approaches so that you can live a life in full. I'm your host, Dr. Chris Stout and I hope you enjoy this episode. This episode is sponsored by our new video course, how to Publish in the New Millennium. From Scientific Journals to Best Sellers, it's an asynchronous course offering so you can watch it when it's convenient for your schedule. It's based on eight video lessons and provides three hours of material with new concepts, stories and examples, and it includes several attempts at humor. You'll learn about the best ways to submit a manuscript to a peer reviewed journal, the mechanics of book contracting, what publishers are looking for, how to evaluate and negotiate a contract, royalties, advances, copyright and ownership, why to never first submit a manuscript to a publisher when you need an agent and when you don't, and the differences between publishers. You'll learn about ebooks, print on demand, Amazon's CreateSpace and KDP programs and other non traditional approaches to publishing, along with how to tell if a platform is of high quality or not. We do a deep dive into marketing, how to create media kits and what goes into them, along with examples how to create a great Amazon author page, how book signings work, and how to be invited to do library talks and the economics of both, along with developing speaking engagements, promotional tours and being a podcast guest, as well as a number of other publicity aspects. We cover blogging and provide additional resources to help you in crafting your work and making it better. This is a rich, fun and fact filled course that covers everything you need to know from a practical and actionable perspective. It's for anyone wanting to get their written work into the world, be it academia, popular media, or both. Join the Masterclass in getting published. To learn more, please visit tinyurl.com gettingpublishedcourse thanks welcome to another episode of Living a Life in Full. I'm your host, Dr. Chris Stout. From Amazon to Netflix, tech has long been the stock market's hottest, most profitable sector. Yet the million dollar question persists. What are the underlying drivers of tech outperformance and how can investors identify future winners in the space? Well, today's guest may have some answers. Mark Mahaney has authored the Most recently published nothing but 10 timeless stock picking Lessons from One of Wall Street's Top Tech Analysts, which we'll be doing a deep dive on in this episode. If you follow the financial markets, Mark's name and reputation will be familiar as he's a regular contributor on cnbc, Bloomberg and Fox Business and has been quoted extensively in the Wall Street Journal, the New York Times and the San Jose Mercury News. He began his career in management consulting at Deloitte and Touche and worked with the US Department of State, the US Senate and the Office of the US Trade Representative. He has worked on both the sell side and the buy side and has been covering Internet stocks on Wall street since 1998 with Morgan Stanley, American Technology Research, Citibank, RBC Capital Markets, and now he's a senior Managing Director and head of Internet research at Evercore. ISI Institutional Investor magazine has ranked him as a top Internet analyst every year for the past 15 years, 13 of those in the top three and five years as number one. Mark has been ranked by Financial Times and Starmine as the number one earnings estimator and stock picker. In addition, Tip Ranks has placed Mark in the top 1% of all Wall street analysts in terms of single year stock picking performance. Mark has condensed the lessons that he's learned from his career into a guide for all investors of all experience levels and we'll learn more about that today. Mark received his BA in Political Science and History from Amherst, his MA from Johns Hopkins School of Advanced International Studies, and his MBA from the Wharton School of the University of Pennsylvania. Welcome to the show, Mark. It's great to have you on.

Thanks, Chris. Great to be here.

Hey, perhaps we could start with how you made the move from being in management consulting with Deloitte and working at State and in the government to becoming a stock analyst. That doesn't seem like the most direct connect the dots kind of situation.

No, it wasn't. The major pivot for me was the Internet. So I was on a college campus in. I gotta go back now in 1987, okay, that would have just been floppy disks. Really wasn't an Internet to speak of. But then I was again on a college campus, this time for graduate School in 96 when the first browsers started coming out in these little engines like Excite and Yahoo started coming out. And I thought this was fascinating. So I was there kind of at not the birth of the Internet, but the birth of what I call the commercial Internet. And I really wanted to learn more about this industry. I read I was in business school at the time. And I read about this new report that had been published, a Wall street research report was so popular that it was actually published and available in bookstores. So I rode my bicycle of all ironies down to the Barnes and Noble in downtown Philadelphia and purchased Mary Meeker's the Internet Report. Read that cover to cover, and I thought that this looks fascinating. I'd love to be part of this. And. And about a year after that, I started working with Mary at Morgan's Hanley. So it wasn't my interest really wasn't so much in financial markets. That just wasn't my, that wasn't my thing. But my interest was in this new industry for social reasons, for economic reasons, for technology reasons, just because it was super exciting. I've often thought I would have jumped into radio if I was there at the very beginning of the radio industry or TV or airlines. Just the new, new thing was the Internet. And I, I guess I didn't know. I guessed it was going to be, could be a large industry. And you know, I had my, my simple modem and my, my grad school dorm dorm room and watched his photos. Would take forever to load, but it was still a freaking fascinating experience. So that's what really brought me to Wall street, the fascination with this one particular new industry that was emerging called the Internet. I don't think I would have had a career as a Wall street analyst, but I did have a career and have really enjoyed a career as a Wall Street Internet analyst.

That's fascinating. So the trigger really was Mary's report and her research. And then that's. Did it take a little bit of gumption to then kind of go knock on her door and say, hey, I read this and I think you should hire me? Because it almost seems like there's a little bit of a meta aspect, like looking at the stock market and being involved in tech. Most people might instead go knock on the door of a startup founder. But what was that like with getting engaged with Mary and then getting started that way?

Well, the advantage I had was that there were very few Internet analysts on the street because it was such a new category. That meant that they were research associates, junior analysts in the Internet sector before. I'm currently now looking to add another person to our team. We are here and our research team out in San Francisco and you know, we, my LinkedIn, I say like to have somebody who's had experience doing Internet equity research. Well, back then, 25 years ago, there was no such thing. I wasn't disadvantaged that way. And I did have an mba and I did have a real strong passion for working in Internet. And I spent a fair amount of time with trying to understand the very few Internet companies that were out back then. All right, so that was Amazon, Yahoo, Excite, because something called MindSpring, EarthLink, that was about it. There's about five of those companies out there. CompuServe maybe. And. And so I just think. And I'm guessing that's what happened. Mary appreciated the fact that here was somebody who had, you know, a little bit of a financial background at least had an mba, but had. Who had a passion for all things Internet. And. And, you know, I read her. Read her book, and so I just got. I guess in a way, I. I do tell the story in my book, Nothing but Net. How the interview process took a long time to join her team. She had a young associate who was leaving to join this online bookstore company based out in Seattle. And his name was Russ is Russ Grandinetti, and he's been a longtime executive at that company. And I joked with somebody as I came in. I think I really can be Russ plus. And I think about 15 years later or 10 years later, I was watching CNBC and there was Russ from Amazon introducing the Kindle. And I sent him an email and said, you know, I always wanted to be Russ plus, but I think I'm actually Russ Minus. Congratulations on your success. He's one of the top executives at Amazon and been there for 25 years. So I think he's done pretty well for himself. But, but, but that's all right. I'm happy he's happy. And that's what. And challenged. And that's what. That's what matters. I think I went off on a little bit of a tangent to your question.

No, no, no, that's good.

Reminded me of that. That story. So, yes, I came in as, quote, unquote, Russ Plus. And I got. And I was just. It was just a fascinating experience, you know, being there. The first Friday I was on Wall Street, I got a call from this CFO of this tiny little online auction company where you could buy and sell Pez dispensers. The name of the company was ebay. And they were thinking about going public and they were trying to get people from the different banks interested in their offering. I was on the research side. I didn't know anything about ebay. When I sat there for an hour and asked the CEO CFO a bunch of questions and took all the notes I could and passed them along to Mary and So I wasn't there at the very beginning of the Internet, but gosh, I was there pretty close to the beginning of the commercial and certainly the public market. It was a fascinating experience with a huge roller coaster, a series of roller coaster rides up and down. But it's been. I've been lucky.

That's great. Well, speaking of Mary's book, then let's segue on into yours. Let me start with some of the praise that others have said about it. Scott Galloway, who we were talking about prior to our hitting record today, author of the Four and author of what I'm currently in the midst of the Algebra of Happiness. Also a professor of marketing at NYU Stern School of Business and has his own podcast, the Pivot. He said of your book timeless insights into Stocks, Management and what makes a Company worth Investing. Required reading for the next generation of investors. Emily Chang said about it. She's host and executive producer, Bloomberg Technology that Mark has been one of the sharpest, smartest and most reliable analysts on my show for the last 10 years. He takes it to the next level in Nothing but Net, a remarkably personal witty, engaging, yet informative read. You'll laugh and learn not just about picking tech stocks, but also about the meteoric rise of the world's most dynamic and valuable companies and where they're going next. And then also I thought this was particularly cool. I have great respect for Emily and for Scott, but also Jim Cramer, who I'm sure everyone's familiar with, host of Mad Money and co founder of TheStreet.com he said, People always ask me what investment books can help them understand how to value technology. Technology stocks. I gave up suggesting them a long time ago. Nobody knew enough or had enough history with the most important sector in the market. And then along comes Mark Mahaney with Nothing but Net. The problem's solved. I have the answer. Read this book. It's the most comprehensive, self deprecating and insightful book that I've come across that explains how tech stocks really work. Which ones go up, which ones go down. From the only person who has opined for the entire era, I thought I knew these stocks cold. I learned a ton. You will too. So wow, Mark, congratulations. That's high praise from people that know what it is that they're talking about. And I just want to say maybe just my own experience of it. It seems like the audience for your book could be traders or investors of all experience levels. And certainly if people are interested in investing in the tech sector, it's I think, top shelf one of the essential reads. But I also geek out with authors about the formats and the mechanics of their books and I also want to do that with yours as well too. I liked your writing style. We talked a little bit about this, you know, before we started recording with your. Your tongue in cheek. I love your puns. And then the layout of it, the mechanics of it and design really kind of I felt helped. I've read a lot of financial books over the years, but it really helped me understand what could be very dense material and hard to understand, very understandable, and how you've got it broken up into your 10 lessons and then your 10 lesson cheat sheet. So I have to say, as naive as I am to the top, I really learned a great deal and very much appreciated your personal and transparent aspects that you brought to the work as well. But let's maybe start with after all these bouquets, if I can dig through them. What spurred you to write it? You're a busy guy, you do a lot of things, but doing a book is no light lift. What caused you to get it out there?

Well, I think three things, Chris, and thanks for the kind words about the book. One is that I had been working for almost 25 years covering Internet stocks and I wanted, partly just for my own purpose, I wanted to go back and reflect on the last 25 years. There's a little bit of memoir in the book and there's a little bit of step back. And what did I really learn? The process of writing a book helps you kind of step back out of the day to day of the financial markets and all of the distractions, necessary distractions that come with that. And I just thought, look, I've lived through the meteoric, absolutely meteoric rise of Amazon of 166,000% since its IPO and the rise of Netflix up 45,000% since its IPO. And then some massive misses or shoulda couldas from Yahoo and ebay and real disasters like Blue Apron. And there must be some lessons from that. So that was part of it. I wanted a chance to introspect and really think through what are the lessons for me and what could be lessons for investors. That was one of the primary reasons for writing the book. The second one was we've had a flood of new investors in the market in the last two years because unfortunately of the COVID crisis. But something like 15 million Robinhood accounts have been opened up and it shows up in some of this meme trading, stocks going to the moon, the gamestop frenzy. And there's A little of me that was a little worried that we've had all these new people coming into the market and my sons, I've got two sons, two, three sons that are getting into investment age. I didn't think that there was a good book out there for them in the way that there was 40 years ago. Peter Lynch's one up on Wall street was just a wonderful book, Main street financial advice book for how to invest in the market and with some wonderful examples from that era. I didn't think there was a good one up on Wall street book for this era that could draw lessons from what our household names today, Amazon, Uber, Netflix, Google, Facebook. So I wanted to write a book that would be helpful and give people a little bit of caution and responsible advice on how to invest. And then the third thing was, and I've always been kind of a tech bull, you know, if you're in equities, it sort of pays to be a little bit of an optimist. And you know, so I've always, I've lived through a lot of the cynicism and the skepticism about tech stocks and the Internet bust, you know, back in 2000 and 2001, 2002 and you know, the Amazon dot bomb magazine covers bomb is the negative bomb, not positive bomb. And I wanted to give people a reason, a little bit of hope to invest and confidence, not hope, confidence to invest in high quality tech companies. Because I think you can have phenomenal returns, you can, or you can have very good returns and sometimes phenomenal if you invest in the right high quality growth assets. And so yeah, I wanted to leave people with the confidence to invest in that part of the market. Maybe it's where eagles dare. You can have some high multiples in the group, you can have profitless companies, but if you focus on a few things and you're patient, I think you can have enormous returns. So I wanted to leave people with a sense of confidence that yeah, I can invest in the market and I can invest in high quality, high growth tech stocks and I can generate a decent return. I wanted people to approach one of the, what is perceived to be a highly risky part of the market and there's definitely some risk here, but I wanted them to be able to do that with a sense of confidence. So those are kind of the three reasons for the book.

That's great. Perhaps maybe we could spend this next section talking about. I kind of want to do a little bit of a highlight reel of your 10 timeless stock picking lessons. And we don't have all the time in the world, which I wish we did, to be able to go through all 10. So these are some of the ones that I felt maybe weren't necessarily specifically clear to, you know, people off the top, like, oh, yeah, I get that, you know, don't play the quarters, etc. But if you don't mind, there's like two or three of them I'd like to maybe do a little bit of a deeper dive into. One of the things you talk about is that revenue matters more than anything and to look for a 20% revenue growth rule. Can you kind of unpack that for us? What. Give us some examples or what, what your thoughts are around that?

Yeah. And so I always start off by saying, I hope that, you know, my Wharton MBA doesn't get revoked by the statement that revenue matters more than anything. Of course earnings matter. Of course cash flow matters. I do run dcfs. This kind of cash flows on all the stocks I, I cover. And so I do think that's really, really important. I, I'll make one, I'll make two broad points here. One is that one of my learnings is that fundamentals really do move stocks. It sounds simplistic, but I think it's true. Even though it's simplistic. The bigger the revenue base, the larger the profit pools, the higher the stock price. I've learned that from dealing with the most, one of the, maybe the single most volatile, certainly one of the most volatile elements, segments of Wall street, which is consumer tech, consumer Internet. So fundamentals really do move stocks. And kind of, you're always looking for kind of leading indicators. Well, the most important leading indicator is revenue. Or as I like to say, the three things you really got to focus on when it comes to growth stocks, high tech growth stocks are revenue, revenue, and revenue. And yes, of course, earnings matter and free cash flow matters. But revenue is, you know, I, I know plenty of companies that generate revenue that don't generate earnings, positive earnings or positive free cash flow. I don't, however, know any companies that generate positive free cash flow and positive earnings that don't generate revenue. Hope I said that right. So revenues, clearly the leading indicator. There's this wonderful example of Netflix, which I think kind of proves this. Netflix was the single best performing S&P 500 stock for the decade that began in 2010. For that decade, single best performing S&P 500 company was Netflix. And was it because of earnings and free cash flow? Absolutely not. If you look at the free cash flow that Netflix generated over that decade they actually went negative. Their free cash flow losses increased each and every year from 20 million free cash flow loss back in 2011 to as high as 3.2 billion free cash flow loss or burn in by 2019.

Wow.

The stock was the single best performing stock. How could that possibly be? Could the market really have been irrational for a decade? And I think absolutely, markets can be irrational and they reflect herd mentalities, mass psychology, but, you know, not if it's for a decade. That's something else going on. There was something else going on. Netflix was generating at that time 30 to 35% revenue growth for streaming business year in and year out for almost a decade. And it was showing accelerating number of new customers coming in. So there really there were two leading indicators. There was the revenue and the revenue growth. And then there was also the number of new customers coming in. And so to me, the lesson is you focus on revenue and you focus on the lead customer metrics if it's consumer facing or a customer facing company. And you do that because eventually I have found that most companies can scale their way to profits. And I've lived through this directly. I had one of the smartest, wisest, most experienced money managers stop me in the elevator in the year 2000, put his finger in my chest and say, you know, Amazon will never be profitable. And I mean, he must have been right. And he was so experienced and smart, except he wasn't. And Amazon sort of proved that if you get enough scale, you can generate profits. And by the way, there's a recent, very recent example of that. This is company Uber, which despite, but despite going public with the greatest losses of any public company. I think this is a true statement. Or it's one of the, it's one of the, it's at the top of the list. It went public with more losses than any other company had ever gone public with. And yet they just turned their first positive free cash flow quarter. So scale really can generate profitability. And so that's why revenue really matters. I mean, unless you're selling dollars for 95 cents, okay, that's not a good business. But most other businesses, because some costs are fixed. And so I do focus on revenue, especially for high growth tech stocks. And I'll just make one last quick point. It's the 20% revenue growth rule, because you mentioned this, Chris, which is that premium growth, and I call it 20%, there's no magic behind that number. But something like roughly 20%, that's rare and it's highly valuable. So if you can Find companies that can sustain consistently sustained premium revenue growth, 20% plus. They oftentimes reflect something and either reflects a large market opportunity. A company that's just executing really well, it's got great products, very compelling value propositions. You know, it reflects a couple of things, but it is rare. I mean GDP growth worldwide is what, 2, 3, 4%? So you're talking about a company that can grow 20% is growing 4 or 5, 6, 7 times faster than the global economy. That's, that's unusual. And what I found in detail this in the book is that if you go back through history that it's about 2%, 1 to 2% of the S&P 500. Those are the big scale companies that can really generate consistent 20% revenue growth. But those are those stocks almost always materially outperform the market. So the market treats that 20% revenue growth for what it is. It's rare. And something that's rare means that it's worth a lot. And investors do a bit it up. Yes, they do overbid it from time to time. But you know there's that, that, that revenue is an indicator that premium revenue growth is an indicator that there's something special about this company's market opportunity or its management team or its execution. And you want to be part of that fundamental story as an investor most times.

And that's a nice kind of Venn diagram overlap with your point about total addressable markets and TAMs. The bigger the better. And I think, what did you call it? Pulling a Google or something I think in the book. So yeah, that makes very good sense. So talk to us about hunting for DHQs dislocated high quality stocks. Unpack that for us.

Yeah, and I'll just, first I'll just touch on this. You know, I. Well let me go backwards in your questions. Dhq. So there's one thing to remember from the book. I hope you'll still buy it. But if not. One thing to remember from the book is dhq, not dq, that's Dairy Queen. DHQ is dislocated high quality companies. So I'm just going to simplify all of this. When we're investing, we're trying to do two things. We're trying to mitigate or minimize fundamentals risk or mitigate and minimize valuation risk. Fundamentals risk. What's that? Well, that's when a company blows up its revenue growth dramatically, slows down it, its margins get crushed, they materially miss street estimates, they have a new product line that implodes fundamentals Risk like something that means that it's revenue growth and its profit growth get dramatically blocked, stopped, reverse. So that's fundamentals risk. And when you the way to try to mitigate that, you can never eliminate it, eliminate it. But the way to mitigate it, to try to minimize it, is to hunt for high quality companies. So companies with great management teams that are addressing very large TAMs, total addressable markets, that have got great track records of product innovation and have got compelling value propositions like the deal they offer to customers is really compelling and customers really love it. So those are the kind of the four factors that go into a high quality company. So you know, focus on the high quality companies because it helps you mitigate one of those two things we're trying to do in a market which is fundamentals risk and on the other side is valuation risk. So you know what, what's the right multiple for Nvidia or Tesla or Amazon or Google or Microsoft? I mean those multiples can move up or down the valuation. What everybody thinks is clearly cheap at $100 six months later can look clearly expensive at $100. The market's view on valuation can change a lot. And so that's what I call valuation risk. But you can mitigate that, minimize it somewhat by waiting for corrections. What I call dislocations when stocks trade off 20 to 30%. And what I found looking at even what I considered the best assets, these phenomenal stocks over a decade's time frame, over a five year time frame, over a two year time frame, almost all of them will correct. No, I'm sorry, every single one of them has corrected at least 20% at one point or another, either because there was expectations miss or there was a fundamental problem at the company that was temporary or because there was simply a market rollover. We all lived through that with the COVID crunch or crisis that we experienced in March, April, when every single company, regardless of how high quality, how bulletproof, their balance sheet was, corrected at least 20%. So you'll get your chance. And so the single punchline from the book is hunt for those DHQs, look for the high quality companies and just be patient, they're all going to dislocate. And you can use that dislocation to either start a position in and buy the company or to add to a stock. And then just to get back to your first point about pulling a Google, the importance of tams or large total adjustable markets is that they allow companies to do what I call pull a Google and what I Mean by that is Google did something that only two other companies in history have ever done from a 25 billion revenue run rate. And that's like the top 5% of the S&P 500 companies generate that kind of revenue. They, after reaching that level, they grew their top line 20% for a decade. There's only two other companies in history that have ever done that. One is Amazon, one is Apple. Those three companies were able to generate for a full decade 20% growth year in and year out from a 25 billion revenue run rate. I call that pulling a Google. I guess I could have called it pulling an Amazon or pulling an Apple, but Google is what I decided to do. And you're not going to be able to, you're not going to be able to do that. You know, you do that once a decade or something like that. But I, so I don't necessarily mean, you know, finding a company with 25 billion in sales and figuring out which one can sustain premium growth for the next decade. But I just, if the company is doing it from a reasonable position of scale, not, not, not a couple of million in revenue, but I'm talking about a couple of hundred or even a couple of billion in revenue and, and growing 20% and you believe can consistently grow 20%. Like that's, those are the kind of companies you want to, you want to, you want to, you want to invest in. And, and what allows that to happen? What, what certainly helps that is if they face large tams. Google was able to do that because they faced a T tam, a trillion dollar tam which was global advertising and they had a single digit percentage share of said TAM for the first 15 years that they were a public company. So you want to find companies that face large total adjustable markets and have a small single digit percentage share. And I wrap up the book talking about some stocks today that could fall into that category for the next decade. One of those to me is Uber because it faces these massive tams which is global ride sharing. Maybe not during the COVID pandemic, but you know, if you think about the next five to 10 years, it's a massive industry and it's also faces this massive trillion dollar plus delivery market of restaurant, food, groceries, convenience store items, et cetera. And it's got a very, very low single digit percentage market share. So at least there's the potential set up for Uber to pull a Google. And anyway that's one of the, one of the things I really look for in companies.

That's great. I know we're a little tight for time. I want to be very respectful so you can get going. But I have maybe what I'll do is rapid fire set of questions and just you can kind of weigh in on them as deep or as light as you'd care to. Does that sound good?

Sounds great. Chris.

So I know you have a bias towards founder led companies. Can you maybe just briefly tell us why and do you have any thoughts about Jack Dempsey as of late?

So yeah, Jack Dorsey, the CEO of Square now called Block and Twitter, just announced he was stepping down from Twitter. And as he did that in his letter of resignation on Twitter he said, you know, there's kind of an overemphasis on founder led companies. You know I think founder led companies another way you could describe them as companies with a single point of failure. I thought that was an interesting point. I take the opposite side. I think that you definitely want to bias towards founder led companies and it doesn't mean that. I'll tell you one thing I did and I show this in the book. If you look at the largest tech companies in the world in terms of market cap, there's a commonality here. They've all been founder led for a dramatic period of time. So I'm going to go with Amazon, Apple, Facebook, Google, Microsoft, Netflix, Shopify, Tencent, Tesla, Alibaba, all of those. Their founders aren't necessarily still with them. Obviously that's not the case in terms of Apple Bezos step down. But those are companies, those are the biggest market cap companies in the world. Factually that's true. They all had founders who worked with them for an average of about 20 years. That's factually true. That doesn't necessarily, you know, I don't want to that this may be coincidence, not cause and effect but I think there's, I've looked at these companies. Founders can do things sometimes that professional managers can't and that is they can buck external pressure in pursuit of what other people don't quite see as great new growth opportunities. And so yeah, that's why I, you know I've got some examples of companies that weren't founder led. That's Uber by the way and was Priceline to one of the great stocks the last 15 years now called booking that. But those two examples are not founder led companies. But generally I have a preference for founder led companies because you get the right founder in there. They have, you know, especially if they got great vision like I think like a Reed Net, Reed Hastings and Netflix has had then you, you know, you want to, you want to stick with them. And when they step down, it's always a little bit of a question mark. So anyway, hopefully that answered that question.

That's good. Very good. So you'd already mentioned Uber. Are you still a fan of Spotify and Airbnb?

Well, those are both founder led companies. Let's see. You know, if I apply this, I don't want to be mechanical about it, but if I apply this screen to it, do they face large tams? I think Spotify does. You have to be creative though, and I don't mean that in such a negative way. You have to be thoughtful about what the TAM is. But if the 3 billion smartphones in the world, you know, almost every one of them is going to have an app, a music app on their front screen. In fact, my guess is that if you randomly pulled 1,000 smartphones around the world and saw what was on their front screen, that 99.9% of them would have a music app on there. So there's a potential for a really large installed base. Spotify currently has about 200 million subscribers. I think the number of subscribers just given the total number of smartphones in the world, a total number of subscribers that could quintuple from here they could actually get to a billion users. So it's a large tam, a founder led company, a person who's been extremely good at envisioning where music, how music could be consumed and distributed. So practically invented music streaming. So give him credit for that. A very compelling consumer value prop. And by the way, one of the best ways to tell that is if companies, if the value proposition is so compelling to consumers, raise prices and see what happens. And Netflix proved that they could raise prices and more consumers would sign up for the service service. So that's the case with Spotify. And they also have a track record of very good product innovation. The Spotify user interfaces improved materially over the last three to three to five years. So yes, I like Spotify and Airbnb. I won't go through all the details, but that also is a company that's founder led, great product innovation, trillion dollar plus end markets and I think just a wonderful value proposition to most consumers and the most hosts. So yeah, those are two companies that I like going forward.

Great. Facebook and the Metaverse.

I think there's a there there when it comes to the Metaverse, but it's going to take a long time. And Zuckerberg is, of the big tech companies, he's the only one that's the current Founder that's still running it. And the guys, the dude's young, I forget what his age is, but meaningfully younger than me. More power to him. And, and this idea of investing in a virtual reality world. He made a great acquisition of Oculus and then these Oculus Quest 2 devices, there's 10 million of these that have been sold. Now it's getting interesting. You sell 10 million items, then that's something. Now you're starting to prove a market. And the question then is, well, could there be 100 million of these sold? You put on an Oculus Quest 2 headset, it will blow your mind. You will be taken to places. You will feel like you're standing on the top of the Golden Gate Bridge and you'll feel dizziness. You will take on the zombies in some of their role playing games and your heartbeat will race. You'll enjoy watching a concert, a virtual concert with Chance the Rapper. You'll enjoy walking through the halls of the White House being led by former President Obama and you know, like it is, you'll feel like you're sitting in the Oval Office with him right across the sofa from you, telling you about the history of the place. So anyway, I just think that use cases are building. I think there's a there there. And Facebook, to its credit, is way at the front, at the forefront of this. I don't know whether they'll be the long term winner or not, but I think that the company is more valuable precisely or for one reason, is because they got this option value in the metaverse.

All right. And maybe our last one, SPACs,

I don't have a strong opinion about them. One way or another, I'll just make. There are companies that are going public through SPACs, through traditional IPOs, through direct listings. I think for a Main street investor, for an investor, I don't think it really matters which way they go public. You just want as much disclosure as possible. Yeah, I think that's what you so equally any of those ways. There are different rationales for each of those three approaches for companies, but for investors, I don't think it really matters. My only one point I do make to the all the private companies I meet with all the time is I just remind them that public markets are kind of the big leagues and public markets can be very patient if, if you prove, you know, you got to earn that, but if you prove that, that you can be successful in terms of product innovation, breaking in the new markets, that you really have a compelling value proposition, the market will place a high multiple on you or will be willing, be patient and be willing to buy you even though you're not generating profits because they'll discount out five years. That's what they did with Netflix, that's what they did with Amazon, and that's what they did with Uber too. And so yeah, I actually think there's a little bit since I'm out here in the Bay Area and I interact with a lot with venture capitalists who always kind of derive public market investors as being short term oriented. I think I've got a couple of great examples of it where that's absolutely not the case for public investors based on trust and confidence in a management team that's got a good track record are certainly willing to go and look out multiple years and give that management team the benefit of the doubt.

Excellent. Great. Well, gosh, again, I want to be respectful of your time today, Mark, so thank you for this. It's been great fun. What are some of the best ways for people to get a hold of your book, to connect to follow you, et cetera, besides your media outlets and being on CNBC and Bloomberg, et cetera?

Well, I did, you know, the purpose of the book was really kind of be more thoughtful about, about how to invest and so, you know, nothing but Net is available. Hopefully wherever fine literature is sold is, you know, it is on Amazon, Barnes and Noble.com et cetera. So it's, it's out there. I very much appreciate the chance to talk about it. It was, it was a labor of, labor of love, something I've been trying to do on and off for multiple years. My, my sons were starting to, starting to kid me about it. Come on, dad, when's the book coming out? And I really got a chance. I really got it. Really happy I had a chance to do it. It was, it was a wonderful opportunity. It was on my bucket list. And hopefully the ideas that we've talked about today, Chris, are interesting enough to listeners to have them kind of dig into this a little bit more. And again, I want to, you know that I want people to kind of find something this can be for seasoned investors. But, but wow, this is really geared towards the newbie investors, your nieces, your nephews that are in college or in high school and thinking about investing. I do think it's important that all of us do save and invest and manage our own financial futures and create financial independence for ourselves. And I think investing is a great way to do that. And I try to create a book that will help give people the tools and the confidence to invest in really high quality assets and generate good returns and, and gain greater financial independence. And so if I've been successful with that, and if I've written a book that makes people think, makes some money and makes them laugh, those three things, then my lucky streak will have continued.

That's good. Well, I think it has continued. I agree. I think your book in particular, like I said, it sort of in some sense it demystifies. It also explains and then the practicality of it. And you gave us just a quick little workshop, kind of vetting your 10 lessons in the quick, taking a look at Airbnb and Spotify. But also to your point, it really does need to be on the shelf around the issues of financial literacy. And it's something that certainly young folks I think would get a great deal out of it. But again, any kind of investor really trying to understand at a greater depth but also an actionable way, I think your book is really, you know, one of the top ones on that. So. And again, it's predicated on your ability, your history of kind of getting into how you make decisions and how you select companies and kind of, you know, what you've tested and, you know, been very well acclaimed for throughout your career. So thank you for doing the book and thank you again so much for being on. It was great fun for me today.

Mark thank you, Chris. I very much enjoyed it.

Take Care of. Living a Life in Full is a production of Stout Media, a subsidiary of Gordian Knot, LLC. Assistant Producer Gracie Wong Music Dan O' Brien Executive Producer and Host, Dr. Chris Stout. To learn more, stop by our website A lifeinfull for show Notes and please recommend us to your friends and subscribe on your favorite platform. And as for the obligatory disclaimer, this podcast is for general information uses only and does not constitute the practice of psychology, medicine, nutrition or other professional health care services, including the giving of medical or psychological advice. No doctor patient relationship is formed. Lastly, and perhaps most importantly, I take conflicts of interest seriously. For all of my disclosures as well as show notes, please see livingalifeinfull.org podcast and my LinkedIn profile. Thanks and until next time,