Writing for SvD Näringsliv

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I’m happy to announce that starting today I will be a contributing tech analyst to Svenska Dagbladet, a Swedish daily newspaper. Their business section, Näringsliv, is going through a transformation where they focus more on companies that you use, rather than own or work for. This is a change that I wanted to contribute to. Business journalism is ripe for a new take.

I have previously been a contributing analyst to SVT, Swedish National Television, and this feels like a logical progression from there. My board positions and advisory work remain, as before.

First up is a piece (in Swedish) on where technology and politics overlap, with a particular focus on Google and the antitrust lawsuit that just came out.

My new areas of interest

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You get known for what you have done; rarely for what you would like to do. This is a problem because it captures people in an incorrect assumption: that they would like to do – and would be best at – continuing to do exactly what they did before. This is often wrong.

Expertise and capability is in the eye of the beholder, so this is a tricky thing to adjust. But many years ago I listened to a talk from a CTO at a startup that said something like “I try to book a talk about a certain type of tech that I like, and then about six months later I often get contacted about a project involving that very thing“. It makes sense. If no one knows what you are interested in, they are also unlikely to contact you about it. But since no one is going to talks at the moment, I decided to just write these things down instead.

The result is this list of areas and concepts that I’m interested in. It is brief and to the point, and my idea is that I’ll update it when new things come up. I’m also thinking that it can be a place to refer to when people contact me and would like to do something together. Finding common ground in terms of interests is a good start.

What are you interested in? Take a look at my list, and please get in touch if there’s an overlap somewhere.

Designing with asymmetry: Enabling people to share an experience in different ways

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Letting everyone have the same experience sounds good and fair. In reality, this way of designing excludes people that are different, or have different circumstances. Allowing experiences to be asymmetric can be a way of sharing without having to be identical.

When I worked in media research many years ago, a common consumer question was “What kind of TV do you watch?“. The answer was almost always “documentaries“.

You could then place an ethnographer in their house to see what they actually watch. The real answer was almost always “The Bachelor” (or something equivalent). The people you are asking aren’t necessarily lying, but they have a different image of themselves than what reality might show. It probably feels like they watch a lot of documentaries. It’s just that compared to reality-TV, they don’t.

The old, and slightly obvious, lesson here is that there’s a huge difference between what people say they do, and what they actually end up doing.

Why people say one thing and do another
This is familiar in many different areas. For example, rarely have I heard of focus groups with parents where the idea of having a parental dashboard hasn’t come up. Parents want to be able to track and follow their kids’ progress in educational apps. That way they can see how to help or encourage their kids as needed. There’s only one problem with this: parents never actually use these dashboards.

While it is understandable that parents want to know what their kids are doing, it is a little sad that this has to be done through indirect surveillance. Why is it assumed that the only way you could participate in kids’ media choices is from afar?

A part of the explanation falls into the documentary answer above. Good intentions don’t always come through. Parents are often stressed and overworked. There’s just no time to check dashboards with graphs that show math progress. There’s no time to play together.

But there’s more than that. A more interesting explanation, I think. The implied assumption is that kids apps are boring for adults. Another explanation is that the whole point of kids apps is that parents are doing something else while the kids are playing with them. This is fair to some degree, but does it have to be this way? In a word: no. You can design products for this purpose, but it requires some intentional design decisions.

Equal doesn’t always mean fair
When you think of most card games, the basic premise is that all players adhere to the same rules. They play against each other with the same deck. It is an equal starting ground. But all games and experiences are not designed like this.

If you look at golf, they have a handicap system to balance differences in skill level. Good players can play with bad players and still have a somewhat fair match.

If you look at role playing, the Game Master acts as the arbiter and sets the scene of the game. The other participants follow their lead. They are all playing together, but they have very different experiences of the same game. Same thing in something like World of Warcraft. Your role determines your experience, but you are still sharing it with others.

Most kids apps are designed like card games. There’s one way of playing them, and not only would the adults be better at accomplishing the tasks, they would likely find them pretty tedious too. This is unsurprising since kids and adults don’t always like doing the same things. But as the examples above show, you can design experiences that are genuinely fun for both parties. They just need to be different experiences housed in the same context.

How to make experiences work for everyone
Here are a few variables to consider:

  • Time. Kids often have way more time to spend on games than adults do. Sometimes more patience too. For instance, you could weight games so that adults spent 5 minutes for every 60 minutes played by the kid. Both parties are playing, together, but not the same amount of time.
  • Context. You don’t necessarily have to be playing the same game to want to share an experience of something. It could be helping a kid to edit a Minecraft video and then posting it on YouTube. The actual creation of the video itself would be made entirely by the kid, but the adult could participate in the broader context. It creates something to talk about – something to have in common.
  • Skill & Role. What is actually being done on the respective screen can also be largely different. Imagine a mystery game where you need to solve a number of logical clues to work out how to succeed. The adult may need to solve a sudoku in order for the next clue to appear. Which is something that they might be doing anyway, but in a different context.
  • Designed for team work. World of Warcraft is a good example of a game where it is hard to succeed entirely alone. You need the help of others to get to where you want to go. Even a game like Little Big Planet had elements of this – you needed both Sackboys to get through some levels. You are playing together, because it is designed to be played together.
  • Asynchronous. The time element of when you are playing can also be a deterring factor. Adults have less time off, and some of it is often after their kids have gone to bed. All of this makes for difficulties in playing games together in a synchronous manner. The answer is to design something that doesn’t require the activities to happen at the same time. It could be something turn-based (like Scrabble), or managed through roles (as per above) where parents could play their part at night and then it would be ready for the kids when they wake up in the morning. Something to talk about over breakfast!

As I’ve stated before, there’s so much more to be done in the kids space. I’m not saying that it is easy, or that the market has noticeably changed for the better. It hasn’t. All of those challenges still remain. But this further emphasizes the importance of looking outside of what has already been done and starting to create the next generation of kids apps.

No more parental dashboards. Let’s have real, inclusive, asymmetric experiences that the whole family can share and enjoy – together.

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Next stop: Malmö, Sweden

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In the spring of 2012, I moved to San Francisco to start the US office for Toca Boca. My wife, Miriam, followed shortly thereafter and we sent ten boxes of stuff with UPS. We didn’t know how long we would stay and took one year at a time.

A few weeks ago, I moved back to Sweden. To Malmö, next to Copenhagen, more specifically. A little more than eight years after I left. This time with a freight container full of stuff, and two American daughters. Quite the difference.

I’m going to continue my work as an advisor and independent board member in the same way as before. In fact, due to who I work with regularly, the time zone will be a considerable improvement.

When I had worked in my advisory practice for a year, I summarized what I had actually been doing. It’s been a little over two years in total now, and I think it is time for a brief update.

Here’s a selection of the things I’ve been working with:

  • I advised an educational WeChat app in China with positioning and marketing.
  • I presented about Voice tech for a corporate VC and their portfolio companies in Sweden.
  • I developed an App Store marketing strategy for a London-based EdTech company.
  • I did a long row of expert network consulting gigs with VCs, family offices, and PE companies from across the world.
  • I started working with a family messaging service from Canada.
  • I advised a UK law firm on a specific case.
  • I did product strategy work for an EdTech app based in Taiwan.
  • I wrote a report for a Swedish company about the driving forces behind why people pay for online services, and what happens to their expectations once they start doing it.
  • I helped an Indian EdTech company with overall quality assurance in product development processes.
  • I joined the board of Rovio.
  • I started working with a new kids product from the Middle East.
  • I wrote a few long blog posts, with the most popular one being the strategic overview of the Kids App Market.
  • I made a few minor investments, and started formally advising a few others.

In my new hometown of Malmö I look forward to contributing with my experiences and getting to know the local community. I look forward to freeing up more time for reading and writing. I look forward to having meetings in more convenient parts of the day. I think it is going to be great.

If you have a project in mind or want some help with something – wherever in the world you may be – please feel free to reach out.

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Joining the board of Rovio

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A few weeks ago I was elected to join the board of Rovio, the gaming and entertainment company most known for Angry Birds. I am an independent board member in the company that is listed on the NASDAQ Helsinki stock exchange ($ROVIO).

Rovio is a company I have followed and admired for many years. They were pioneers in building the first global family brand through mobile. In later years, they have gone through a big transformation to the company you can see today. I’m proud and grateful to have the opportunity to help them on this continued journey.

The double edged sword of success: Understanding Naspers and their Tencent investment

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“The investment strategy at the time was to find a replacement revenue source for its traditional print media business – which it forecast would decline in the advent of digital media”

That’s a quote from an article describing Naspers, a South African media company, in the 1980s. Koos Bekker – now the Chairman – had suggested that there was potential for a new type of pay TV in South Africa, similar to HBO.

The narrative is immediately familiar. A media company tries to branch out to digital media in order to make up for the shortfall in print. But this is not that kind of story. Instead of cautiously investing a little on the side, Naspers transformed themselves from a legacy media company to one of the most interesting and prominent internet investors in the world.

What makes the story about Naspers even more interesting is that their transformation wasn’t solely driven by clarity of vision. It was – and is – driven by necessity after having hit the investment equivalent of winning the Powerball – their investment in Tencent in 2001. But having an unbelievably successful investment as a listed company is a double edged sword. Naspers’ journey has been both complicated and has led to some extraordinary secondary effects.

Let me explain what I mean. But first, a little background.

The original logo. Photo: Researchgate.

A brief history of Naspers

Naspers was founded in South Africa 1915 as a newspaper and magazine publisher. They later added book publishing, and in the 1980s also pay-TV through M-Net. Their original name was De Nasionale Pers Beperkt, and as the name implies they were nationalists – Afrikaner nationalists more specifically.

As expected when running a predominantly white media company in South Africa in the mid to late 1900s, Naspers has a questionable political past. They were supporters of apartheid in various ways, and did not formally apologize for their role in this matter until 2015. Too little, too late, of course. More on this dark history here.

In the 1990s, the company changed its name to Naspers and listed itself on the Johannesburg Stock Exchange. By then, the TV operations contained a spinout from M-Net, now called Multichoice – a subsaharan provider of pay-TV and sports programming. But still, all in all, very much a traditional media company with newspapers, books, magazines and television.

This is where it starts to get interesting. Naspers had started to diversify, which among other things meant some investing in China and other foreign markets. However, the crash in 2001 forced the company to make a lot of write-offs – among the Chinese activities in particular. They lost hundreds of millions of dollars in total, and about $100 million in China alone. But the CEO at the time – Koos Bekker – still managed to leave the market with one, valuable asset.

As they were leaving Beijing, Bekker was approached by two young men who had started an internet operation called Tencent, which was already signing up users at a remarkable pace. Against the decision to withdraw, Bekker took a gamble on 49% (sic*) of their company. 

* The Harbinger, in 2017, lists the stake at 49% but most sources reference 46,5%

This was the turning point – when the South African media company started to become a global internet company.

Tencent President, Martin Lau, chairman & CEO Pony Ma, and CFO John Lo. Photo: Asia Times.

The Tencent investment

Bekker bought 46.5% of Tencent for just $32 million in 2001. 18 years later, in 2019, their stake – after IPO dilution – had grown to $133 billion. An almost unbelievable return, and likely one of the best investments of all time. In 2018 they sold 2% of their Tencent stake, and netted $9.8 billion.

But while the shareholders were happy with the return of their Chinese investment, their trust in what else Naspers was doing seemed to erode. In 2012, 80% of Naspers stock price was based on their stake in Tencent and another 10% on their holding in Mail.ru. That meant that all other activity in the company was valued at only 10% of the total stock price. It also meant that the dependency on Tencent was immense. And with it, a perceived high volatility. Investors were asking themselves: what will happen to Naspers, if Tencent falls?

Being lucky with an individual investment can be a blessing and a curse. In this case, the outlier investment in Tencent forced the management team to start differentiating even further, and much more aggressively. Naspers started to invest a lot into other internet companies – predominantly in emerging markets. Remember – they had already done this once and lost hundreds of millions of dollars about ten years earlier. So this move took some courage. But this time it was a defensive move rather than an offensive one. If the media assets that they owned weren’t going to rebalance the stock volatility – something else had to it. And the bet was that one or several of these new internet companies might do the trick.

The investment era begins

From around 2007 and still to this day, there has been an immense activity in investment and M&A from the South African giant.

Here’s a selection of the e-commerce transactions that they’ve been part of:

These are big deals. There aren’t that many companies in the world that are involved at these levels. And what’s more – note that this was just five of their transactions, in one single category (e-commerce). The complete list is too long to list, but Crunchbase has a longer version for those of you that are especially curious. And below is a little bonus reading about each respective deal mentioned above.

CompanyFurther reading
BuscaPéAcquisition + Divestment
MarkafoniInvestment + Acquisition
FlipkartInvestment + Divestment
SouqInvestment + Divestment
TakealotInvestment + Acquisition

The dawn of Prosus

As you can tell already, Naspers is quite complicated to analyze. Reading this above, one might ask oneself:

– Is this a media company, like Bertelsmann?

– Is this an internet investment company, like IAC?

– Is this a holding vehicle for Tencent shares, like Altaba was to Alibaba?

The answer to all these questions is basically “yes“. But that’s not very helpful in terms of analysis of course. Naspers acknowledged this.

On top of this confusion, Naspers also had – and still has – a structural disadvantage in that they primarily trade on the JSE – the Johannesburg Stock Exchange. This is troublesome for several reasons, but partly because the South African currency, the Rand, is among the most volatile currencies in the world. The currency risk alone is enough to put many investors off. Also, Naspers size compared to the JSE at large was a becoming an issue. And then you have the complexity to analyze and understand the company overall too.

The solution to this was to restructure the business entirely. It was done in 2019, and this is where Prosus first enters the terminology. The process started by spinning out Multichoice, the entire TV- and cable business, to it’s own listing on the JSE. This made the actual media part of this former media company very small. In fact, it represented just 1.7% of revenues in 2019.

Next was to separate Takealot – probably because it is a South African marketplace which makes sense to have listed together with Naspers in their home market.

And then finally – the creation of Prosus, a new company which listed on Euronext Amsterdam in September of 2019. Prosus consists of all of their internet investments, including the 31.1% stake in Tencent. Naspers holds around 73% of Prosus shares, while 27% are floated.

I made a graphic to explain what the relationship looks like, as of February 19, 2020:

As you can see, the Tencent stake represents more than 100% of EBITDA. It’s fair to say that the dependency on this one holding is still very substantial.

Naspers strategy in 2020

Naspers today focuses on the following eight areas:

Let’s look at each of them briefly:

  • Classifieds – relatively well consolidated and an established business. Now profitable as a whole too. My prediction that they will acquire Adevinta still stands.
  • E-Commerce – largely a local South African play, and not an area for further expansion given that they have divested Flipkart and Souq.
  • Food Delivery – has similar market dynamics to classifieds in that it is also a marketplace, but a more underdeveloped one. This one will be costly and require more consolidation before it shows a profit.
  • Media – a shrinking business that is going to be difficult to divest due to the lack of buyers. I wouldn’t be surprised if these assets were placed in an independent trust instead of run through the operations.
  • Payments & Fintech – largely a supplemental business to the marketplaces. Having access to massive consumer groups is a great way to launch new payments brands, as well as the additional margin on each purchase.
  • Social & Internet Platforms – this consists of the holdings in Tencent and Mail.ru.
  • Travel – a merger created an ownership stake in a listed Indian travel company called MakeMyTrip. No other activity in the space.
  • Ventures – seems largely opportunistic and a way of identifying new growth areas in the market.

Cursed by success

If the main point of Naspers’ additional investments and acquisition was to diversify from Tencent, how has that worked out? Well, it turns out it is hard to catch up with success. This is how the Tencent stock has performed since it’s IPO:

Tencent’s share price since IPO ($0700.HK)

As of February 17, 2020, Tencent’s market cap is $510.358 billion. The 31.1% ownership that Prosus owns should subsequently be worth ≈ $158.7 billion. However, the total market cap of Prosus is currently at $126.7 billion. The value of the Tencent stake still eclipses the value of the entire company.

This puts Naspers in a familiar position. On the one hand, the performance of Tencent has been incredibly successful – more so then anyone could have imagine. On the other hand, all their other investments and acquisitions still haven’t convinced the stock market that they are worth while. It must be slightly ungrateful to be one of the largest internet investors in the world, and still see your entire portfolio be considered a rounding error in overall valuation of the company. The volatility of the stock remains, and the dependency on Tencent too.

So, why doesn’t the market value Naspers and Prosus higher then? It’s always hard to explain why the market does what it does. In general, investment companies often trade at less than their net asset value, but Naspers discount has been unusually high. Some have raised concerns about the tax liability that selling the Tencent stock could induce, and others have referenced the political instability – including currency risk – that Naspers has in South Africa. These factors could play in, but the market is often not as rational as it is made out to be.

All in all, the fundamental question is: can Naspers do it again? If they have anything in their current portfolio that has close to the development that their one lucky break in China has had, then the tables could quickly turn and the market could start looking at them differently.

Naspers has spent the past 20 years trying to diversify themselves. But no one knows the double edged sword of success like they do. The very success that put them where they are today, is the very thing that is holding them back. The world’s most interesting – and underrated – internet investor in the world, that almost no one has heard of.

Disclaimer: This should not be considered investment advice, and I do not hold any stock positions in Naspers, Prosus, or Tencent.

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A tribute to Joan Ganz Cooney

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As a celebration of Joan Ganz Cooney’s first report on kids and media (re-issued here), I wrote a post for their blog. It is about finding a spark of inspiration in times where things might seem a little bleak. A bit like the kids app market today.

Here’s my attempt to remember the big picture and the great opportunities that are ahead:

At times like this, it is important to remember the big picture. We have a generation of kids across the globe growing up with access to smartphones and devices. The collective knowledge of the world is at their fingertips. Communication between friends, family, classmates is free, simple, and immediate. Entertainment is endless and available anytime, anywhere. Families have the infrastructure in place, the time to spend, and the interest in finding new, great ways to help their kids develop, learn, and have fun.

You can find the full blog post here.

2019 without review

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Years in review

Similarly to last year, I will not be writing a summary of 2019. Sharing less over the year has been surprisingly liberating. For me, it has forced more deliberate attention to a few selected things instead. My writing, for instance.

That being said, I do often get asked what I do all day. I tend to answer “surprisingly little” which is somewhat correct but mostly an unexpected way of answering an expected question.

A more serious answer would be that I’m an independent advisor and analyst. Throughout 2019, I’ve worked with companies in Canada, China, Denmark, England, Germany, Singapore, Sweden, Taiwan, and the United States. I’m very grateful for having the opportunity to have such a varied day to day life.

I have also written a little more often – and longer – than before. Here’s a summary of the articles I wrote this year:

Telecom & Media

Kids Media

Strategy & Business

If you want to make sure that you don’t miss anything, please sign up for my newsletter. It includes some cultural recommendations as a bonus!

Thanks for reading, and for reaching out with your thoughts and comments over the year that passed. See you in 2020.

The Telco Identity Loop: What Disney+ does for Verizon

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May 2015. Tim Armstrong, the CEO of AOL, is on CNBC. He is wearing a navy blazer, no tie, blue shirt. He’s talking fast, and in bursts of excited management speak. He has a lot to be excited about. It has just been announced that Verizon is going to buy AOL for $4.4 billion.

This is of course good news for Mr Armstrong. CNBC anchor, Andrew Ross Sorkin, asks him the key question for the whole telco industry:

– “Why [does] the pipe business need to own content now?”

Telcos – the owners and operators of the infrastructural pipes that the internet and other communications run on – regularly go through this exercise. They ask themselves:

  • Can we be more than just the backbone for others?
  • Should we own more of the value chain ourselves?
  • Can we bundle our existing offering with new, value-added services (VAS)?

The short answer to all of these questions tends to be yes. This is then followed by big acquisitions in the content and media space.

After a few years, it then changes back to no. The telco writes down a massive dollar value and tries to divest the media assets. And so the perpetual identity crisis of telecom companies continues.

This is the Telco Identity Loop. Let’s break it down.

The Telco Identity Loop

Stage 1: “We have to be more than just pipes”

One would think that being the infrastructure for the internet would be a pretty good business. Everyone loves the internet, right?

Turns out, it is in fact a good business. Telcos often have gross margins of over 80%, and profits at around 20%. Not bad, for being pipes.

But since consumers don’t really care which pipes are being used – as long as their services work well – this puts telcos in a situation where competition can get fierce. And fierce competition is expensive, generally speaking.

So, how does one differentiate these uninteresting pipes? Let’s add something to them! Some services, or rather some VAS – value-added services. A favorite acronym in telco world.

VAS are often content bundles, in some shape or form. They serve the purpose of helping with initial customer acquisition, or retaining existing customers longer.

Verizon’s campaign for Disney+

A current example is Disney+ that launches today. Their tie-up with Verizon was what made me write this blog post in the first place. If you are a certain type of Verizon customer, you get a full year of Disney+ for free. List price: $69.99. T-Mobile has a similar deal with Netflix. If you have two phone lines with them, you get Netflix for free too.

Note that neither of these companies have ownership of each other. They are just partnerships, which is indicative of Stage 1. We don’t really want to commit, but we do need something. It also speaks to their competitors’ tie-ups, that have moved on to Stage 2.

Stage 2: “Let’s buy content!”

When partnering isn’t enough, you go to acquisition instead. Let’s build an integrated offering for the consumer! One big bundle of telecommunications and entertainment services on a single monthly bill.

Entering Stage 2 is expensive, because you need to acquire something substantial enough for it to make a difference. Telcos are large companies, after all.

There are plenty of examples. The most obvious one is AT&T that acquired Time Warner for $85.4 billion in June of 2018. Comcast acquired NBCUniversal in 2011. And as per the introduction, Verizon picked up both AOL and Yahoo in 2015 and 2016 respectively.

But this doesn’t only happen in the US. Looking back a little further, the Spanish telco Telefonica acquired Endemol – a Dutch TV producer – for $5.3 billion back in 2000. In the Nordics, Telia has acquired Bonnier Broadcasting, and NENT and Telenor just formed a joint venture. This is a global trend, and it has been going on for a long time.

HBO MAX announcement. Photo: WarnerMedia.

If we stay with AT&T, last week’s announcement of HBO MAX is the latest example of what this type of consolidation looks like in practice. HBO MAX will consist of both HBO content and a long row of additional content from the WarnerMedia ecosystem. And more importantly in this context – it will be free for viewers who already subscribe to HBO via AT&T. One can imagine some great introductory offers for new AT&T customers, once the service launches too.

This all sounds good, until it doesn’t. This is when it starts becoming obvious that the synergies have failed to appear, and that the corporate cultures of a telco and a media company don’t always jive. That’s when you enter Stage 3.

Stage 3: “Why do we own content again?”

Stage 3 often comes along with a broader management shift. It can be a generational change, or simply sluggish figures for too long. A new CEO is brought in, and they understandably want to pave a new path forward.

Hans Vestberg, CEO of Verizon. Photo: Verizon.

In August of 2018, the Swede Hans Vestberg stepped up from CTO to CEO of Verizon. Vestberg was previously at Ericsson – a large provider of telecom services with 5G as their big main bet. Tim Armstrong, who now was running the content division of Verizon (rebranded as Oath), saw the writing on the wall. He left.

As new CEO, Vestberg set out to find out what was really going on inside the company. The process was described like this:

“Vestberg is currently interviewing hundreds of Verizon’s top managers in an effort to refresh the company’s leadership and unify its offerings.”

From Fierce Wireless, by Mike Dano, October 10, 2018

A classic strategic review. It had started earlier in 2018, and had led to shutting down Go90 already. But more things were about to change. Time for Stage 4.

Stage 4: “Back to Basics”

In November of 2018, the new future for Verizon was starting to show.

Oath was written down by $4.6 billion. For context, that’s about half of what they had acquired the two companies for about 2,5 years earlier (Yahoo was $4.5 and AOL was $4.4 billion). Verizon stated that they “didn’t see the synergies it had expected from the combination of Yahoo and AOL” and that 44,000 of their staff had been offered voluntary buyouts.

Fast forward a few months, and Verizon divested Tumblr to Automattic. While Yahoo originally acquired Tumblr for $1.1 billion dollars, the sale was less than $3 million. A pretty impressive value destruction in about six years time.

If not content, then what? In Verizon’s case, it’s 5G. Core telco services – infrastructure. Pipes, but slightly wider pipes than before.

This gets us to August of 2019. Hans Vestberg is now on CNBC – also talking to Andrew Ross Sorkin – and predicting that 50% of Americans will use 5G phones by 2024. That’s where Verizon should be too. Back to basics.

Stuck in the loop

Most telcos are somewhere in this loop. The Disney+ deal is a clear example of how Verizon are leaving Stage 4 and are halfway in Stage 1 again (if you want to learn more about Disney+ and what they are getting out of this, then Matthew Ball is the authority). They still have Verizon Media Group (the new name for Oath) but in Q1 2019, their revenue was only $1.8 billion out of a total of $32.1 billion. These 5.6% of revenues aren’t going to hold back a change of strategy.

Vestberg himself said the following in a recent interview with Barrons (my emphasis):

“We think that we are best equipped to leverage the best network and continue to partner with [media companies] rather than us managing it”

From Barrons, by Nicholas Jasinski, September 19, 2019.

The CEO and Chairman of AT&T, Randall Stephenson, is clearly deep into Stage 2. They have had to defend that position from activist funds like Elliott Management too. And if margins don’t improve the coming quarters, these concerns will surely come right back again. And then it’s on to Stage 3 again.

Running an undifferentiated business is very difficult, and it’s hard to fault wanting to expand further into the value chain. But these content acquisitions, more often than not, don’t seem to really change the mothership. They’re just bolting on another side business. The culture, what’s considered core business, the way of thinking – it’s all the same as before. And as such, content becomes a secondary priority. Or perhaps a loss leader and marketing expenditure in order to keep the core business going.

The fact that this loop is so recurring also poses the question where a new, innovative vision is going to come from in the telco space. Softbank – that has their core business as a Japanese telco – has certainly tried on a group level. Although you could definitely argue that this vision – including the now infamous Vision Fund – may not be one to emulate for others.


With this loop in mind, where will these telcos go next?

Making predictions is a fools errand really, but it’s fun to both read and write. They also have an asymmetrical upside (you’ll probably only remember if I got it right). So here goes nothing:

Current position: Stage 2 (Content Acquisition).
Comment: They overspent and fought to push the deal through. Now they have make to make it work, but performance will likely suffer. It is a huge behemoth full of cultural differences and conflicting interests. The likes of Elliot Management will come knocking again, and this will force change.

Prediction: Write-downs and lay-offs starting in 2020. I think at least 25% of the $85 billion acquisition price.

Current position: Coming out of Stage 4 (Write-offs & Divestments), heading into Stage 1 (Content Partnerships).
Comment: 5G is their big bet, but it is still quite far away. I think we can expect several partnerships to the marketing going in the meantime. And once 5G is here, they’ll realize that they need to acquire content companies that can make use of this new technology.

Prediction: Major content M&A starting in 2021 (they’ve already bought VR assets from Disney). Could be a company like Magic Leap (if they’ve survived until then).

Current position: Stage 1 (Content Partnerships).
Comment: Merger. The FCC just approved the deal and while there are individual states that are still protesting, this is effectively a done deal. The merger has likely taken – and will continue to take – all management attention for the foreseeable future. I can’t see them moving out of Stage 1 any time soon, even if they would have wanted to.

Prediction: Complete strategic standstill for 12+ months. No major M&A.

Current position: Stage 2 (Content Acquisition)
Comment: Telia have been trying to acquire Bonnier Broadcasting since the summer of 2018. Things are finally looking up, and the deal is likely to go through just went through. But there have been a lot of stir-ups while they waited. They now have both a new CEO and a new Chairman of Telia. That being said, it would be strange if they immediately divested the very asset they’ve been trying to get hold of – even if it was a different management team doing it.

Prediction: The deal officially passes before Christmas, and the integration begins (Update: The deal went through today!). Once the deal goes through, I predict that they immediately acquire SF Studios from Bonnier too.

Current position: Stage 2 (Content Acquisition).
Comment: This Nordic telco have gone in and out of both content and markets the last few years. But it’s hard to look at Telenor without understanding Telia above. Telenor’s entry to Finland is directly aimed at them. Most recently, Telenor merged their cable-tv Canal Digital with NENT Group (formerly half of MTG).

I think they’d like to keep expanding in content, but there isn’t that much to buy in the Nordics. Egmont got TV2 Norway and probably won’t sell. TV2 Denmark has been rumored to sell forever, but never does. TV4 Sweden and MTV Media in Finland just went to Telia. Maybe Discovery would consider selling their Nordic markets?

Prediction: If I had to make a bet, I think Telenor will make a big offer for 51% of TV2 Norway and Egmont will, somewhat reluctantly, accept it. Staying in Stage 2 for a while, in other words.

And finally a long shot, from the other direction:

Current position: N/A
Comment: Now this is an outsider since Amazon isn’t a telco. But they are one of few players that could come at this from the opposite direction. Prime Video is a strong video offering and they have plenty of other content offerings too (Audible, Kindle, etc).

Prediction: Amazon takes Prime and becomes a US MVNO within 24 months. I don’t see them building any 5G towers any time soon, but they could easily operate in someone else’s network. They could have bought Boost Mobile in front of Dish, but they might be persuasive enough to find another way out there. That would at least stir things up in an otherwise predictable telco market.

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In defense of screen time

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The Daily

As a part of Techfestival 2019 in Copenhagen, Denmark, I was asked to present my thoughts on kids, screens, and technology. In order to get the nuances right, I wrote a speech. You can read it below.

Let me tell you a familiar story.

Imagine young people longing for an alternate reality. One where regular rules of life do not apply, and one where your imagination prevails. Their parents worry, because this alternate reality is so compelling that these young people sometimes don’t want to leave it. They don’t want to go outside – they have all they need from their new world. Some of them never want to go back to the realities of everyday life.

Margaret Cohen, a professor at Stanford, described these young people as “considered to be in danger of not being able to differentiate between fiction and life”.

Does this sound familiar?

I am of course talking about women reading fictional books, in the late 1800s. In particular, reading the novel “Madame Bovary” by Gustave Flaubert.

To continue quoting from Margaret Cohen – who is a professor at Stanford, but in French literature:

I think Flaubert is channeling a century of worries about young women as particularly susceptible to the fantasies they find in novels and the seductions of reading”.

I say this not to disparage the current concerns about screens and children – quite the opposite. Concerns about our young are in fact very common, and have been so for hundreds of years. These concerns also tend to accelerate as new types of media have been introduced. 

But as this is a familiar situation – historically speaking – we can also benefit from learning what the actual outcomes of many of these changes have been. What turned out to be true, false – and what was completely unexpected? Delightful, even? And how should we think about new technologies when it comes to our children? This is what I’m going to talk about today.

How can we talk about screen time without knowing what is taking place on the screen?

I intentionally chose the example of books as it represents a media format that is not only accepted, but almost universally seen as preferable. Books are great. Books for kids are great. Kids that read books are great.

While I don’t disagree with these statements, I do think it is an overly simplistic way of describing reality. So let’s go more granular. Is it good that kids read books? Generally speaking, yes, right? Is it good that kids read any type of book? Not necessarily. You wouldn’t choose “50 Shades of Grey” as a bedtime story for a preschooler, for instance.

Hence, saying that “books are good” is less useful than saying “some books are good” (or even “most books are good”, if you are more of a positive person than I am). From this we can conclude that books themselves are neither good nor bad. They can be both. It depends on the context, the reader, the intent – and of course it depends on the book itself.

This sounds obvious. Yet, if we were to apply the same line of reasoning to kids and screens, things immediately get more messy.  I’m sure you’ve heard phrases like “No screen time before 2”. “No screen time in the weekdays”. “One hour of screen time a day”.

But just like we can’t talk about books without knowing more about the specific book – how can we talk about screen time without knowing what is taking place on the screen?


The answer is that we can’t, and we shouldn’t. But what we can do is understand why some people do worry about screen time, and empathize with their concerns. There is a lot of conflicting information available on this topic. You read about a study on Facebook, a parent at the playground guilt trips you about letting your kids use an iPad, or you read somewhere that Steve Jobs didn’t let his kids use technology. I’m a parent of two daughters myself. I get it.

A lot of concern is that screens, and for slightly older kids social media, is making kids feel bad or not develop appropriately. Parents are concerned it could be harmful in some way. I found the latest work from Amy Orben and Andrew Przybylski, both from Oxford University, to have a good take on this.

The reason why I like their work, is that they have almost ten years of data and over 10,000 British preteens and teens in their study. This is significant, and in this space – very rare. It goes far beyond the anecdotal, which is precisely what we need. Let me read a shortened quote from an article they wrote in The Guardian, summarizing their latest work from May of 2019. Their question, simply put, was if social media makes you happy or sad.

“What did we find? Well, mostly nothing! In more than half of the thousands of statistical models we tested, we found nothing more than random statistical noise. 


Our results indicated that 99.6% of the variability in adolescent girls’ satisfaction with life had nothing to do with how much they used social media.

It is undoubtedly tough being an adolescent. But this was true long before there were any screens.

On the flip side, there are some things that seem legitimately concerning. Myopia – being nearsighted – has almost doubled from 1971 and 2008 which in turn can increase risks of vision related diseases. To me it doesn’t seem unreasonable that screens may have contributed to this, but a causal link is yet to be established. We know that nearsightedness has increased, but we do not know why. Not yet.

In fact, that is where most of the studies on this topic are right now. They are inconclusive. They are often done with a very limited data set. We simply don’t have that much data to imply one way or another. That’s not to say that it is completely safe, but that certainly does not mean that it is harmful. 

Most parents are not scientists. Therefore evaluating scientific reports is hard. There are also more pressing priorities for parents than to crack open the latest version of the “Adolescent Brain Cognitive Development Study” on a Friday night. It is easier to listen to an alarmist TV psychologist that – very conveniently – is trying to sell you a book on the topic of screen time.

Siding on caution is not a bad principle in life per se. It is, however, rather blunt and impractical. From a strict harm reduction perspective, it would be best to make kids wear helmets and protective gear at all times. But it is not practical. And it is not preferable, at least not from the kids perspective. Imagine all the things that the kids now could not do! Screens are not dissimilar. By withholding screens from your kids you may be reducing a hypothetical risk, but you are also withholding them from opportunity and potential. 

Who should we listen to?

When making this call, who should we listen to? Well, there are some railings to hold on to. The AAP – American Academy of Pediatrics – updated their previously misunderstood screen time guidelines in 2016. In their new recommendations, they specifically call out “high-quality programming/apps” which moves the conversation from looking at the screen itself, towards looking at the activity which is taking place. 

Further, they address the context of screen usage and say the following:

“Co-view or co-play with your children, and find other activities to do together that are healthy for the body and mind (e.g., reading, teaching, talking, and playing together)”.

How your kids – and you – are watching, playing, and learning matters too. This is not strictly a numbers game. So say I, and so say the American Academy of Pediatrics too.

Before I conclude, allow me to speculate a little about what the outcomes of screen usage could be. In order to do that, it’s useful to think about what has been said about other media in the past. What did they overlook?

In 1938, St Petersburg Times wrote an article that said:

Withdraw all encouragement relating to the reading of books. Reduce the number available. Act so as to make reading inconvenient except for the set time”. 

Now this is easy to laugh about now, but let’s try to empathize with the writer instead. Their concern is the amount of reading, not the reading itself. It is becoming too much, and taking over other activities. Seen in that light, this is a more reasonable approach. It isn’t healthy to only read novels all day. Just as it isn’t healthy to only play football, or to only play Roblox. There is a lesson to be learned here.

Further – where has reading taken us? Especially with the access of the internet, it is the gateway to a world of experiences, literature, perspectives, and knowledge. Most of the world’s written history is available with a few clicks of a button. In all languages, for all people, globally. It only requires a device that costs less than €50. Or in some cases, a free library card.

And while I’m not oblivious to the complexities of conspiracy theorists, disinformation campaigns, and things of that nature – I think it is still fair to say that discouraging reading in 1938 may not have been a great piece of advice. They didn’t know what reading could do for them and their kids – not there and then, and not in the future either. Today this is self-evident.

Where will this thing people call “screen time” take our kids in the future?

With this in mind, where will this thing people call “screen time” take our kids in the future? In some sense we are already there, but just like the reading skeptics in 1938, it is not clear enough for everyone yet.

Fortnite looks like a game where people shoot each other and do weird dances to celebrate it. But Fortnite is also an online social club where leadership and teamwork develop. It’s deep and multi-layered. When was the last time you collaborated with a global group of people, in real-time, towards a common goal?

Minecraft is similar. It looks like a game with strange block-like graphics and people walking around with axes. Or you could say that Minecraft is a creative tool that opened the doors to architecture and construction for millions. Spatial thinking, creative expression, community. 


For me, I think the future of screen time is togetherness. I see a world where global collaboration is seamless and enriching. People working together, building on each others knowledge, and learning from each others cultures. The initial building blocks are already in place. Why would we want to hold our children back from these types of experiences?

Four suggestions

So, where do we begin? We need to start on the ground floor, with the simplest of questions. Addressing the immediate needs of guilt-ridden families trying to work out what is best for their kids. With this in mind, here are my four suggestions for how to think about kids and technology:

1. What matters is what is on the screen, not the screen itself.

Help your kids find the right thing for them. There’s so much great stuff out there. Don’t assume that your kids have necessarily found it themselves. And if they have found something – help them to use it the right way. What matters is what is on the screen, not the screen itself.

2. Consider the context

How are your kids playing? Are they doing it together with others – siblings, friends, online friends? Is the screen the main part of the activity, or actually a facilitator of something else? If you think Fortnite is about shooting each other, you haven’t been paying attention.

Is there an opportunity for you to participate in the activity? You can probably add layers to any activity that is going on, creating both a learning opportunity as well as a shared space between you and your kids. Consider the context.

3. Encourage variety

I think there’s much to be gained from Fortnite, but I wouldn’t suggest playing and streaming it for 8 hours straight everyday. But come to think of it – there are very few activities I would recommend for 8 hours straight everyday. Go beyond the screen and ensure that your kids have varied activities in all places – including with screens. Encourage variety.

4. Treat the screen like you would anything else

When I was the CEO of Toca Boca and tried to explain my job to people, almost everyone said “ah, you mean educational apps”. It was precluded that if you make apps for children, their primary purpose must be education. There’s no other area in kids lives that you would hold to that standard.

What if all food you served your kids had to have a specific nutritional formula? That’s interesting in theory, but anyone saying that has never been in a car with a hungry toddler. Different circumstances call for different solutions.

Childhood is more than just education. But if you want apps to be educational, you can find plenty that are really great. You can also find ones that encourage kids to become artists or musicians! Or sometimes – just things that let them chill out and relax a little. The screen is just like life in general – don’t treat it any differently.

Thank you.

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