Linkedin at JP Morgan Conference Notes

Mike Gamson – Head of Global Sales

Recruiter gave companies the ability to do direct sourcing in house

“And so we went to market with really just the one-two punch of Recruiter, an opportunity to do direct sourcing, something that had been only possible through external executive search before, now made more possible and more scalable and accessible really to any company for the first time. And that was all about educating the market on taking a process that they had historically done out of house and bring that in house.”

New version should expand the potential footprint

“So if you think about, say ABC Co. has maybe 100 full time Recruiters, maybe 300 or 400 general talent professionals who do other things and then maybe 1,000 hiring managers, traditionally our footprint for Recruiter, the original product, was only to those full time sourcing Recruiters who are real experts. Today with this new version it should open up for us people who are much less expert and who are not full time Recruiters. And so, it expands the potential footprint pretty significantly and has the opportunity to really drift into a hiring manager.”

Not seeing anything to suggest that the sky is falling from a macro standpoint other than in Brazil

“I went back and I looked at the transcripts too from the last couple quarters, and my personal perspective is that we’ve been pretty consistent in trying to talk about the macro, and for whatever reason the narrative got some momentum on its own that the sky was falling. We were concerned about the macro. We read the same headlines that you guys read and there is a lot of stuff going on in the world that we kept thinking was going to have the possibility of impacting the businesses, so we wanted to comment on it. But I travel around the world a lot with our customers and I have seen nothing personally or heard of on my team that makes me think the sky is falling again anywhere but Brazil. And even in Brazil, to be honest with our business, its actually moving along pretty well given the crazy backdrop.”

Brazil is a good test case of how the worst environment affects us

” if we look at Brazil as a test case for that, which I mean it literally can’t be pretty much going worse than what’s going on there right now. How does that impact us? And what we’re seeing is the strong companies double down, they go bigger, they are trying to get share.”

Moving to lower skilled workers is part of our vision but not this year

“The vision is our bigger goal and that’s about the 3 billion workers, trying to create economic opportunity for the 3 billion workers in the world. Our mission is about connecting the world’s professionals to make them more productive and successful of whom there are only about 780 million. So, I share that to say going after the next middle skill and lower skilled workers for us is going from mission to vision, something that we do see on the horizon, but its not going to happen this year and we’re not going to probably focus on it. In two years I could start seeing some of that perhaps.”

We are focused on GAAP profits and reducing stock based compensation

“Yes, listen, we’re very focused on GAAP profits, and I think all companies in our space who use both stock and cash are focused on it. And I think we’ve got a very clear commitment with our compensation committee about the goals that we’re moving towards and I think so far so good on tracking towards them.”

Miscellaneous Earnings Call Notes 3.10.16

Uber CEO Travis Kalanick Fireside Chat

Uber CEO Travis Kalanick said he is being forced to raise money in order to compete with an irrational competitor

“We’re profitable in the USA, but we’re losing over $1 billion a year in China. We have a fierce competitor that’s unprofitable in every city they exist in, but they’re buying up market share. I wish the world wasn’t that way. I prefer building rather than fundraising. But if I don’t participate in the fundraising bonanza, I’ll get squeezed out by others buying market share.”

Linkedin CEO Jeff Weiner Bloomberg Interview

Linkedin (LNKD) CEO Jeff Weiner said turnarounds are hard

“Turnarounds are arguably the most difficult thing you can do in business.”

Sprint’s (S) Management Presents at Deutsche Bank Media, Internet & Telecom Conference

Sprint (S) CFO Tarek Robbiati said they are increasing focus on how their marketing dollars are spent

“I can find a lot of things at Sprint that were superfluous. One example is I never liked sponsoring race cars in telephone industry. That makes absolutely no sense. There is no car relations between the branding for the race car and our customers, so there’s no more sponsorships that don’t bring us any sort of result. We are also more targeted in the way we advertise.”

Sprint (S) CFO Tarek Robbiati said the 4G network is already past its prime and they are now focusing on building out the 5G network

“We are not building a network that is 4G, 4G is almost a thing of the past. We are building a 5G network for the future, and 5G networks are funded fundamentally different to 4G networks. They’re all around high capacity, and the more spectrum you have the more capacity you have. The more spectrum you deploy, the more you can connect customers and the more speed you can give customers across your network. And there is a simple engineering law that governs this, the higher frequency spectrum is more efficient to handle very large capacity of traffic and that’s the world we’re moving towards with 5G.”

American Express Investor Day

American Express (AXP) CEO Ken Chenault is confident they have the right business model going forward

“Is the American Express business model fundamentally broken? I can tell you with complete confidence, the answer is no.”

AT&T’s (T) Management Presents at Deutsche Bank 2016 Media, Internet & Telecom Conference

Saw a slowdown in the handset upgrade cycle

“I think you saw in the fourth quarter, it was a slowdown in the handset upgrade cycle or the total sales. I wouldn’t be surprised to see that continue”

The DirecTV assets were as advertised if not better

“The DIRECTV assets were as advertised if not better. Good quality products, good people, a good organization. Two, from a more mundane perspective, we are focused on systems integration, we are focused on everything from general ledger reporting and payrolls and vendor management and so forth. We are going through all of that heavy lifting.”

Enterprise Products Partners’ (EPD) CEO Jim Teague on 2016 Investor Day

Oil and gas markets are being forced to adjust to the staying power of US shale

“Because of U.S. shale and slowing economies much different than President Carter said, now we’ve got too much oil and global markets have another problem. They are being forced to adjust to the magnitude and staying power of U.S. shale. Over the last few years, the largest consumer of hydrocarbon now has enough to production to be a provider to international markets and different from sovereign producing countries, the U.S. producer is a pure capitalist.””

In a crisis you’re trying to survive

“Is this a crisis or is it a cycle? Well they are different. In a crisis you’re trying to survive”

Low prices are the cure for low prices

“So we see this as a challenging year but we see a sunrise with all of the demand growth that’s coming. And I think, Tony, you’re going to speak to that. Really the cure for low prices are low prices, just like price creates supply, guess what? Price creates demand. ”

Bancolombia S.A. (CIB) Q4 2015 Results

Risks to the economy are biased to the downside, but we don’t expect a sharp deceleration

“Risks to economic activity are biased to the downside. And in that sense with today’s information, I think that the likelihood of having the 1.8% growth scenario for this year is becoming more likely. But I would also say that basically what we think is that — I mean if you compare the situation to previous ones, what we think is that, I mean we are not in — I mean it’s not very likely to see a sharper deceleration but instead to have a long period of low growth, basically because first, the external shock that the economy has received has proved to be more prolonged than we expected before; and secondly, because we don’t see that there is a scope for countercyclical policies and/or monetary or fiscal side.”

Vail Resorts’ (MTN) CEO Robert Katz on Q2 2016 Results

People are skiing

“Our Colorado resorts continue to deliver very strong results, with solid growth above our record prior year. Our U.S. destination visitation has remained strong throughout the year at all of our mountain resorts, as we saw the benefited from the appeal of our resorts to high-end leisure travellers; we are reaching through our more sophisticated marketing efforts and the strong U.S. economy.”

International visits have declined, but drop has moderated

“While we have continued to see a decline in international visitation, it has moderated since the Christmas holiday, in large part due to the strength of Australian visitation which is up considerably over last year due to the success we’ve had in driving visitation to the U.S. among our Epic Australia Pass holders. Visits from Mexico have been stable relative to prior year which we view as a strong success given the currency headwinds and as expected we are seeing declines from our U.K. Canadian and Brazilian markets.”

JS Earnings Call Notes 2.9.2016 – Oaktree, Yelp, and Linkedin

Oaktree (OAK) Co-Chairman Howard Marks expects increasing defaults in high yield energy bonds
We expect a meaningful uptick in the U.S. high-yield bond default rates over the next 12 months with distressed energy sector contributing most significantly. As I believe you know, over the last five years, the average default rate has been just about the lowest in history for such a period.”
With more bond downgrades to come
Additionally, billions of dollars in investment grade energy and metals and mining debt could be downgraded to high yield status if commodity prices remain depressed. With the record amount of dry powder and our ability to add value in distressed assets across multiple strategies, including control investing, real estate, strategic credit and of course most prominently the Opps Funds, we are more optimistic about the ability to find attractive investments than we have been for several years.”
Oaktree (OAK) Co-Chairman Howard Marks thinks fear is creeping back into the market
Risk aversion is back after a five-year hiatus and a burgeoning supply of distressed opportunities is on the horizon. What started as a largely oil and gas focused dislocation has generalized into weakness across nearly every commodity sub-segment. And weakness is starting to bleed into other segments of the bond market, including media and retail.”
Oaktree (OAK) Co-Chairman Howard Marks doesn’t see a recession this year
“First of all, Michael, we fired our economist. So – actually that’s not true, we never had one. My general feeling is, I just don’t think that we’re in for a recession this year. And my feeling is that we’ve been limping along for several years now with an anemic recovery, and it even seems to be losing energy from that low level. But having said that, the consumption side is pretty good. I think that the gas savings are allowing people to improve their financial pictures, and the services businesses are resilient. Eventually, we’re going to have a recession, we always do, but I just don’t think it’s imminent and I don’t think it’s going to be a strong one in large part because we didn’t have a strong boom. We didn’t have an overexpansion of facilities or payrolls.”  
Relative to the rest of the world, they are reasonably optimistic on the Eurozone region 
One area we are selectively adding to at the present, however, is Europe. The reasons for our optimism about Europe include Europe’s evolving economy and the ECB’s quantitative easing, which is supporting credit fundamentals. It’s also worth reemphasizing Europe’s lower exposure to known troubled sectors such as commodities and its structurally lower sensitivity to interest rate movements.”
And they are putting their dry powder to work
We currently have a very robust pipeline of potential acquisition opportunities and our deal funnel is about as strong as it has been in some time. The bottom line is that this is a good time to have capital to spend.”
Oaktree (OAK) CEO Jay Wintrob said sovereign wealth funds represent 8% of the company’s assets under management
So sovereign wealth funds are an important part of our client base, but not really a vital part I guess you’d say. They represent about 8% of our AUM and that number has been consistent for several years. In terms of growth just in the last year, I think sovereign wealth funds represented about 18% of the growth, so a faster growth rate in our AUM from sovereigns than from our clients in the aggregate. We’ve been fortunate. We’ve added sovereign wealth clients in the last 18 months and, in fact, one of our largest sovereign wealth fund clients helped seed one of our step-out strategies.”

Yelp (YELP) CEO Jeremy Stoppelman said the company is seeing increased engagement from their mobile app 

Consumers are increasingly moving their online activity to mobile devices and we have evolved to a mobile-centric company. We will continue our focus in the mobile app since app users are more than 10x as engaged as web users based on the number of pages viewed and our shift towards the app will enable us to establish a direct relationship with consumers.”
And he believes there remains a large opportunity to capture a significant portion of online marking dollar ad spend
The vast majority of local business owners continue to advertise in traditional offline channels. Even though according to a 2015 BrightLocal study, more than 90% of consumers read online reviews when looking for a great local business. Migrating these offline marketing budgets online continues to represent a huge market opportunity for us.”
They’re spending more marketing dollars to increase brand awareness
We also see a significant opportunity to increase awareness in usage of Yelp. ComScore indicates that Yelp has only about 30% reach on U.S. smartphones. So in 2015, we expanded our marketing efforts to include our first TV advertising campaign to increase awareness. Based on a survey we conducted with Nielsen in the fourth quarter, unaided brand awareness increased from 26% to 41% over the last year among U.S. adults online.  We plan to invest approximately $50 million in marketing in 2016, which represents an incremental $20 million compared to 2015.”
Yelp (YELP) CFO Rob Krolik thinks they can steal market share from Yellow Pages offline directories
We think there is a huge opportunity in the market if you look at the fact that there is $7 billion in 2016 that’s being spent on Yellow Pages alone. I mean, most of that money is going to move online and we think we are the perfect place to grab that, given our high ROI.”
Yelp (YELP) COO Geoff Donaker addressed how they compete with tech heavyweights Google & Facebook for online marketing dollars
I think what I hear from our sales team is that Google and Facebook do come up, but in general, when they hear Google and Facebook from a local advertiser, that’s a really good sign. That means that the local advertisers who has already started to shift online and it’s a great opportunity for us to talk with them about Yelp advertising as well and we are very confident with the ROI that we offer the typical advertiser. More often frankly, we are dealing with prospects who don’t advertise online at all yet and that’s a more difficult conversation, because you are trying to get somebody effectively out of print and online, which is happening over time, but is a more gradual process.”

Linkedin (LNKD) CEO Jeff Weiner said their professional social network surpassed 400 million members

“In the quarter, cumulative members grew 19% to 414 million, unique visiting members grew 7% to an average of 100 million per month, and member page views grew 26%.”

And that mobile continues to gain traction 

“Mobile in particular grew three times faster than overall member activity, and now represents 57% of all traffic to LinkedIn.”

Linkedin (LNKD) CEO Jeff Weiner wants the company to become the de facto job listing site 

Another key member investment throughout 2015 has been to help members advance their careers. As of January, we’ve more than doubled the number of jobs on LinkedIn versus last year, to more than 6 million open listings.  Through improved discovery in our flagship and Job Seeker apps, as well as better relevance, we’ve seen a material increase in jobs engagement on LinkedIn, from approximately 30% year-over-year growth last January to over 80% growth today. In addition, our jobs app has seen traffic increase approximately six times from a year ago. And most importantly, we’re driving a greater volume of hiring by our customers.”

Sponsored content is their fastest growing product

“Sponsored Updates continues to be our fastest growing product at scale as well as our most profitable ad product.  Sponsored Updates continues to exceed our expectations given how quickly it has scaled. With the launch of the new flagship Feed, we are increasingly focused on driving even greater alignment between engagement and Sponsored Content growth.  Sponsored Updates grew approximately 85%.  And growth has been driven largely by a combination of engagement and customer adoption.”

Linkedin (LNKD) CEO Jeff Weiner called it a competitive hiring environment in Silicon Valley for top talent

We remain very competitive, especially with regard to technical hires, which has been a challenging hiring environment, I think, for a couple of years, especially here in the valley. And I think our team has done excellent work in terms of continuing to add to the world-class folks that we already have here.”

Linkedin (LNKD) CEO Jeff Weiner said trust is at the core of their business

With regard to plans to leverage data off of, that comes back to Members First. And we’ve talked about this in the past, but trust is the foundation, it’s the bedrock upon which our entire ecosystem exists. And we talked about Members First as a value, it’s a first principle. And so to the extent we can be leveraging data to create more value for members and more value for customers in a way that’s consistent with that first principle, then we’ll explore those opportunities.”

China is their fastest growing market for new members

With regard to China, China continues to be our fastest-growing market in terms of new users. And growth was very much a part of the strategy there, it was priority number one. At this point, given the initial success we’ve had in terms of penetrating the marketplace – not dissimilar from where we are elsewhere in the world – we want to begin to invest increasingly in engaging those members.”

Linkedin at Morgan Stanley Conference Notes

Each week I read dozens of transcripts from earnings calls and presentations as part of my investment process. Below are some of the most important quotes about the economy and industry trends from the transcripts that I read this week. Full notes can be found here.

Our vision…

“our vision is to create economic opportunity for every member of the global workforce and is there’s over 3 billion people in the global workforce and contrast that with the mission, connect the world’s professionals make the productive and successful, where there an addressable about 780 million professionals, knowledge workers and students.”

Mobile has surpassed 50% of engagements

“I should add by the way that today mobile now accounts for over half of total engagement. We just surpassed the 50% mark, what we called our Mobile Moments in December of last year and so this notion of prioritizing the mobilization of LinkedIn was an anticipation of that moment and that will continue to grow overtime.”

Monetization not a priority in China

“The monetization is not the priority right now. The priority is getting the team right, building the right team very fortunate to have some very strong leadership in China. I think that’s a big part of the challenge, when you’re trying to localize in that market, highly competitive market. So we’re very fortunate along those lines and then getting the member experience, right and again coming back to member value.”

Social selling

“social selling provides sales people an opportunity to leverage a platform like LinkedIn to do at least one of four things. First to establishing their identity.

So historically, when a sales person came calling. You had no mechanism of understanding who they were, it was just a question how they introduced themselves, what they were telling you, what they were saying, a cold e-mail information. Today, you actually have a mechanism by virtue of LinkedIn better understand who that person is.

So the sales person gets a chance to establish their identity and this isn’t just about a resume or the profile and the experience of their skills or their ambition, it’s their post, it’s the content that they’re sharing, it’s the product that they’re selling”

Culture is the collective personality of our organization

“For us, culture is the collective personality of our organization. It’s not only who we are today, but who we aspire to be, values are the operating principles upon which we make day-to-day decision and we want to walk the walk with regard to our culturing values and the ability to continue to scale our culturing values of the company, continues to grow. There were 338 people when I joined in December 2008, we’re now north of 6,000 people”