🎬 Amazon’s MGM acquisition, explained


May 28, 2021

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Disney’s “Cruella” comes out this weekend in theaters and on Disney+. It’s a reimagining of Cruella de Vil — the villain from Disney’s “101 Dalmations” — as an underdog in the fashion industry.

We’ve officially run out of ideas.

Editor’s Note: In honor of Memorial Day, we aren’t sending an email Monday. But don’t miss our Sunday story about 30-year-old retirees.

The big idea
Amazon’s $8.5B acquisition of MGM

Amazon’s $8.5B acquisition of MGM, explained

Back in 2017, Jeff Bezos pushed the Amazon Studios team to find him a “Game of Thrones”-like franchise to boost the Prime Video streaming service.

On Wednesday, Amazon delivered a media coup, but Bezos didn’t get dragons. Instead, he got the “James Bond” franchise as part of an $8.45B deal for MGM Studios.

This is Amazon’s biggest deal…

… since acquiring Whole Foods for $13.7B in 2017, per CNBC.

In addition to 007, Amazon scores 4k films and 17k TV shows including “Fargo,” “The Handmaid’s Tale,” “Shark Tank,” and “Survivor.”

MGM Studios is the latest in Amazon’s media cash drop:

  • ~$19B on content spend in the past 2 years
  • $1B a year for the NFL’s Thursday Night Football (an 11-year agreement starting in 2022)
  • $465m in production cost for the forthcoming 1st season of the “Lord of The Rings” series

What’s the play?

Bezos has previously said, “When we win a Golden Globe, it helps us sell more shoes.”

Amazon’s Prime membership now has 200m subscribers worldwide. Keeping these people from churning is critical, and an attention-grabbing streaming service helps to lock them in.

This is particularly important with streaming competitors, from Netflix and Disney+ to the forthcoming WarnerMedia-Discovery merger, spending 10s of billions of dollars on content.

Helping another business line

The MGM acquisition will also provide content for Amazon’s free, ad-supported IMDb TV streaming service, per Protocol.

If you’re thinking, “what do ads have to do with Amazon?”…

In 2020, ad revenue pulled in 2.4x the combined ad rev ($9.3B) for Twitter, Snap, Roku, and Pinterest.

While Bezos didn’t get “Game of Thrones,” MGM will turbocharge many parts of his business… and give him tons of content to binge when he officially leaves the Amazon CEO role on July 5.

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SNIPPETS

The New York Times explores the pitfalls of Apple and Google’s virus-tracking apps. #big-tech

Instagram learned that hiding likes doesn’t make it feel like less of a competition. So, all users can now choose to display their hearts — or not. #big-tech

Cast in Space: The International Space Station will host a reality competition, a Russian drama, and maybe a Tom Cruise flick. #emerging-tech

Instacart — now valued at $39B — announced a global expansion beyond the U.S. and Canada, though it hasn’t delivered the where or when yet. #ecommerce-retail

An app that teaches people how to take care of their houseplants has scored $5.4m in seeding funding. The app’s name is… Greg. #ecommerce-retail

The Hustle’s Trung Phan shares 10 investing lessons from Stanley Druckenmiller, who once made $1B shorting the British pound. #hustle-picks

Facebook will no longer ban posts that suggest COVID-19 was man-made amid President Biden’s inquiry into the virus’s origin. #privacy

The Trump admin made it harder for states and tribes to use the Clean Water Act to block fossil fuel projects. Now, the EPA will reverse course. #clean-energy

Bird is calling its new, more durable scooter a “micro-EV.” It comes with an automatic emergency brake and a battery designed to outlive the scooter itself. #clean-energy

A study found that Black business owners were 2x+ more likely to use online lenders for PPP loans than white, Hispanic, or Asian entrepreneurs. #fintech-cryptocurrency

Overcompensating?
Coinbase is switching up employee compensation

Ford Motor stock certificate issued to Henry Ford himself (Source: Bettman / Getty Images)

Forget currencies, Coinbase is switching up employee compensation

In tech, you frequently see folks in handcuffs.

Specifically, golden handcuffs, which signify the idea that employees must stay at companies for years in order to take home hefty stock payouts. These payouts are a primary topic of conversation in tech salary negotiations.

Now, Coinbase is flipping all of that on its head

In a blog post, Coinbase’s chief people officer L.J. Brock lays out the company’s new approach, including:

  • Increasing its compensation targets from the 50th to the 75th percentile in tech
  • Eliminating negotiations from its recruiting process
  • Adopting annual grants instead of typical 4-year stock schedules

As with anything, this comes with pros and cons

In his post, Brock says negotiations disproportionately impact women and underrepresented minorities.

Coinbase, he explains, is trying to reward employees based on actual performance at Coinbase — not in a negotiation.

Critics have pointed out the shift to annual grants can benefit companies more than it does employees. Why? The valuation of grants resets every year, thus reducing the potential upside.

The move is getting mixed reviews

Both Stripe and Lyft switched over to 1-year grants prior to Coinbase, so Coinbase has some solid backup. But an anonymous post calling to boycott Stripe, Lyft, and Coinbase racked up ~800 likes, and clearly saw some heated debate.

Some, like Brock, believe the move will give both Coinbase and its employees the chance to show honest, mutual commitment toward each other.

Coinbase board member Fred Wilson thinks the move will unshackle employees from their golden handcuffs. “I’ve never loved that concept,” Wilson writes on his blog. “It feels like staying in a bad marriage for the kids.”

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Tech Beef
Turntable.fm is back from the dead

Party time (Found Image Holdings / Getty Images)

Social music site Turntable.fm is back from the dead… and has an interesting rival

On Tuesday, Turntable.fm CEO Billy Chasen announced that the once shuttered startup is coming back — thanks to $7.5m in funding led by Andreessen Horowitz.

The funding breathes life into the once uber-popular social media platform, and sets the stage for some juicy startup drama (get this: there are now 2 Turntables).

The story starts in 2011

Founded by Chasen and Seth Goldstein, Turntable.fm was launched as a social music platform. Users created virtual avatars and bounced around different rooms where DJs would stream music.

In its 1st month the site added 140k+ users and later counted stars like Aston Kutcher and Lady Gaga as financial backers.

Even so, it was shut down abruptly in 2014 as people were cheap asses not ready to pay for streaming audio.

Queue the Pandemic

Another Turntable sprung up in April of this year — Turntable.org, AKA tt.fm. The copycat was founded by Joseph Perla, a member (and hotly debated cofounder) of the original Turntable.fm team.

Turntable.org is functionally identical to the original but is trying something new on the monetization front: subscriptions.

What happens next?

There’s still no detail on what Chasen plans to do with the OG Turntable.fm. Access to the site is password-protected, but witnessing a dead app rise from the grave is rare in Silicon Valley circles.

As for the feud between Perla and Chasen, in Chasen’s own words, “This is now up to the courts to decide…”

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Podcast

The secretive billionaire who acquired Burger King

He also owns Budweiser, Popeyes, Tim Hortons, and Kraft Heinz among others. How did a middle-class, self-described “beach bum” from Brazil pull it off? On episode 185 of My First Million Sam and Andrew Wilkinson break down the amazing rise of Jorge Paulo Lemann.

🎧 Listen here →
Tweet of the Day
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Source: Twitter / @JonErlichman

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  2. “Watermelons are the summer version of pumpkins.”
  3. “Divorce filings are declarations of independence.”
  4. “Communication is an art, language is a technical skill.”
  5. “Technically you receive a participation trophy when you get your birth certificate.”
  6. “One day you’ll hear the funniest joke of your life and all following jokes won’t be quite as good.”
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