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意粉Ethan
2021-07-26
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意粉Ethan
2021-06-28
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意粉Ethan
2021-05-02
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意粉Ethan
2021-05-02
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意粉Ethan
2021-04-18
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@小虎周报:踩上网课风口，Coursera引领在线教育新风尚
意粉Ethan
2021-04-17
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意粉Ethan
2021-04-15
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Thinking About Buying Coinbase? - Here's Your Note
意粉Ethan
2021-03-10
crypto datas 1
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3月31日，在线教育平台 <a target=\"_blank\" href=\"https://laohu8.com/S/COUR\">$Coursera, Inc.(COUR)$</a> 正式在纽交所上市，发行价为美股 33 美元，上市首日股价上涨 36%，截至上周五收盘累计上涨62%，市值达70亿美元。 Coursera意为“课程的时代”，是世界上最大的在线学习平台之一，旨在同世界顶尖大学合作，在线提供免费的网络公开课程。它将学习者，教育者和机构的生态系统与高质量内容，学历，数据、技术联系在一起。 投资要点 三个主要业务线：2C、2B以及学位课程。其中，Coursera在商业上最为成功的仍是价格亲民的普通付费产品，其次是面向企业的产品，最后才是昂贵的在线学位产品。 疫情后获客提升：2017年至2020年四年间，Coursera的注册用户数大涨150%。缘于疫情的推动，2020年，平台注册用户数逼近7700万人，同比增长65%。 一直增长一直亏：公司2020年营收年增长率约为59％，和大部分野蛮生长时期的平台公司一样，Coursera用户数虽然大幅增长，但公司业绩还处在“赔本赚吆喝”的阶段。2020年Coursera净亏损进一步扩大至6681万元，同比增长了43%。公司预计，随着可扩展的课程、用户和市场营销活动以及开展其他增长活动，在一段时间内无法盈利。 国际化带来前景：整体有超过80%的注册学习者来自美国以外。截至2020年12月31日，Coursera注册学习者排名前五的国家分别是；1）美国；)印度；3）墨西哥；4）巴西；5）中国。值得一提的是，为了在中国拓展业务，Coursera开始和中国多所本地大学和企业进行了合作。 飞轮效应：公司借助免费大学课程，吸纳有学习想法的潜在学员，其中部分转化为付费学员，学校机构的收入增加，再反哺到内容生产、课程优化上，强化自身品牌，良","listText":"事件 3月31日，在线教育平台 <a target=\"_blank\" href=\"https://laohu8.com/S/COUR\">$Coursera, Inc.(COUR)$</a> 正式在纽交所上市，发行价为美股 33 美元，上市首日股价上涨 36%，截至上周五收盘累计上涨62%，市值达70亿美元。 Coursera意为“课程的时代”，是世界上最大的在线学习平台之一，旨在同世界顶尖大学合作，在线提供免费的网络公开课程。它将学习者，教育者和机构的生态系统与高质量内容，学历，数据、技术联系在一起。 投资要点 三个主要业务线：2C、2B以及学位课程。其中，Coursera在商业上最为成功的仍是价格亲民的普通付费产品，其次是面向企业的产品，最后才是昂贵的在线学位产品。 疫情后获客提升：2017年至2020年四年间，Coursera的注册用户数大涨150%。缘于疫情的推动，2020年，平台注册用户数逼近7700万人，同比增长65%。 一直增长一直亏：公司2020年营收年增长率约为59％，和大部分野蛮生长时期的平台公司一样，Coursera用户数虽然大幅增长，但公司业绩还处在“赔本赚吆喝”的阶段。2020年Coursera净亏损进一步扩大至6681万元，同比增长了43%。公司预计，随着可扩展的课程、用户和市场营销活动以及开展其他增长活动，在一段时间内无法盈利。 国际化带来前景：整体有超过80%的注册学习者来自美国以外。截至2020年12月31日，Coursera注册学习者排名前五的国家分别是；1）美国；)印度；3）墨西哥；4）巴西；5）中国。值得一提的是，为了在中国拓展业务，Coursera开始和中国多所本地大学和企业进行了合作。 飞轮效应：公司借助免费大学课程，吸纳有学习想法的潜在学员，其中部分转化为付费学员，学校机构的收入增加，再反哺到内容生产、课程优化上，强化自身品牌，良","text":"事件 3月31日，在线教育平台 $Coursera, Inc.(COUR)$ 正式在纽交所上市，发行价为美股 33 美元，上市首日股价上涨 36%，截至上周五收盘累计上涨62%，市值达70亿美元。 Coursera意为“课程的时代”，是世界上最大的在线学习平台之一，旨在同世界顶尖大学合作，在线提供免费的网络公开课程。它将学习者，教育者和机构的生态系统与高质量内容，学历，数据、技术联系在一起。 投资要点 三个主要业务线：2C、2B以及学位课程。其中，Coursera在商业上最为成功的仍是价格亲民的普通付费产品，其次是面向企业的产品，最后才是昂贵的在线学位产品。 疫情后获客提升：2017年至2020年四年间，Coursera的注册用户数大涨150%。缘于疫情的推动，2020年，平台注册用户数逼近7700万人，同比增长65%。 一直增长一直亏：公司2020年营收年增长率约为59％，和大部分野蛮生长时期的平台公司一样，Coursera用户数虽然大幅增长，但公司业绩还处在“赔本赚吆喝”的阶段。2020年Coursera净亏损进一步扩大至6681万元，同比增长了43%。公司预计，随着可扩展的课程、用户和市场营销活动以及开展其他增长活动，在一段时间内无法盈利。 国际化带来前景：整体有超过80%的注册学习者来自美国以外。截至2020年12月31日，Coursera注册学习者排名前五的国家分别是；1）美国；)印度；3）墨西哥；4）巴西；5）中国。值得一提的是，为了在中国拓展业务，Coursera开始和中国多所本地大学和企业进行了合作。 飞轮效应：公司借助免费大学课程，吸纳有学习想法的潜在学员，其中部分转化为付费学员，学校机构的收入增加，再反哺到内容生产、课程优化上，强化自身品牌，良","images":[{"img":"https://static.tigerbbs.com/a59b59c7b95db38b26dab2d6beddd197","width":"775","height":"463"},{"img":"https://static.tigerbbs.com/db5b9d2ba82124e1999d8de7921dc894","width":"774","height":"541"},{"img":"https://static.tigerbbs.com/3c8d86ee464270a2f315026b463d3e80","width":"778","height":"446"}],"top":1,"highlighted":2,"essential":2,"paper":2,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/342866514","isVote":1,"tweetType":1,"viewCount":0,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":6,"langContent":"CN","totalScore":0},"isVote":1,"tweetType":1,"viewCount":1585,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":379985997,"gmtCreate":1618654422719,"gmtModify":1618654422719,"author":{"id":"3573905892850027","authorId":"3573905892850027","name":"意粉Ethan","avatar":"https://static.tigerbbs.com/3d1a89a25620ab26ecc8fb0f21b12c93","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3573905892850027","authorIdStr":"3573905892850027"},"themes":[],"htmlText":"这篇文章不错，转发给大家看看","listText":"这篇文章不错，转发给大家看看","text":"这篇文章不错，转发给大家看看","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/379985997","repostId":"347037137","repostType":1,"isVote":1,"tweetType":1,"viewCount":742,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":344553196,"gmtCreate":1618417507515,"gmtModify":1618417507515,"author":{"id":"3573905892850027","authorId":"3573905892850027","name":"意粉Ethan","avatar":"https://static.tigerbbs.com/3d1a89a25620ab26ecc8fb0f21b12c93","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3573905892850027","authorIdStr":"3573905892850027"},"themes":[],"htmlText":"这篇文章不错，转发给大家看看","listText":"这篇文章不错，转发给大家看看","text":"这篇文章不错，转发给大家看看","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/344553196","repostId":"1145468327","repostType":2,"repost":{"id":"1145468327","kind":"news","pubTimestamp":1618413259,"share":"https://www.laohu8.com/m/news/1145468327?lang=&edition=full","pubTime":"2021-04-14 23:14","market":"us","language":"en","title":"Thinking About Buying Coinbase? - Here's Your Note","url":"https://stock-news.laohu8.com/highlight/detail?id=1145468327","media":"seekingalpha","summary":"Wednesday,Coinbase shares open at $381 on Nasdaq, valuing cryptocurrency exchange at $99.6 billion.S","content":"<p>Wednesday,Coinbase shares open at $381 on Nasdaq, valuing cryptocurrency exchange at $99.6 billion.</p><p><img src=\"https://static.tigerbbs.com/a50d61593da06ef4cdd7abd4eb27fc76\" tg-width=\"840\" tg-height=\"470\" referrerpolicy=\"no-referrer\"></p><p><b>Summary</b></p><ul><li>Coinbase is going public today.</li><li>Instead of reading their +300 page S-1, read our 19 page note.</li><li>We discuss: digital currencies, store of value, medium of exchange.</li><li>Plus, a deep dive into COIN's model, storage, trading, price target.</li></ul><p>Manole Capital Management - Bitcoin & Coinbase (COIN) - April 2021What is FINTECH?</p><p>Manole Capital Management exclusively focuses on the emerging FINTECH sector. For some investors, FINTECH means We define FINTECH as \"anything utilizing technology to improve an established process.\"</p><p><img src=\"https://static.tigerbbs.com/2ef8760c1da50e1776b14e4c10295f65\" tg-width=\"1133\" tg-height=\"692\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a Business Insider slide on the FINTECH Ecosystem</i></p><p>For us, the quintessential FINTECH business is the payment industry. As you can see in this FINTECH ecosystem Business Insider slide, we bolded the<i>Payments and Remittances</i>space, as that is our preferred area to invest. Others can invest in FINTECH's through Alternative Finance companies or digital banks or Insurtechs, but for us, we love the payment sector. We are attracted to the predictable, sustainable and recurring revenues of their businesses, where they essentially earn revenue per swipe economics.</p><p>When most investors discuss FINTECH, they rarely (if ever) discuss the exchanges. Similar to these payment and transaction-based models, many of the exchanges also earn revenue, free cash flow and profits per transaction or trade. When it comes to trading certain assets (interest rates, equities, commodities, foreign currency, etc), there tends to be high barriers to entry or an impregnable moat around certain franchises. While many of these businesses are not recession proof, they have proven to be recession resistant.</p><p><b>Financials:</b></p><p>While Financials only represent 11.3% of the S&P 500 (as of March 2021), roughly 3/4rd's of this sector's weight is comprised of traditional financial institutions, like banks and insurance companies. These businesses are typically credit sensitive, with opaque and complex balance sheets. To simplify the banking model, the underlying asset is the US dollar and they simply look to borrow that capital at a low fee and lend it out to borrowers at a higher rate. This spread business can generate excellent returns, but it comes with a risk. Is the bank following a solid and time-tested risk model? Are borrowers credit worthy?</p><p>If an investor has exposure to the Financial sector, one should have a strong opinion on the 10-year yield. The 10-year stands at 1.7% and has significantly risen over the last several months. The Financial sector has a 5-year rolling correlation with the 10-year Treasury of 67% (per Scotiabank and Bloomberg research). We simply choose to not invest in banks and business models that don't have ourideal characteristics (click here).</p><p>As we stated above, we are attracted to businesses that generate steady and recurring and free cash flow. Unfortunately, most Financials are not transaction based business models.</p><p><b>Our Goal:</b></p><p>This note will review digital currencies, Bitcoin and the opportunity in the exchange space. We will use our over two decades of experience following and owning exchanges to draw some parallels for this new asset class. For example, there are \"big picture\" matters concerning storage, access, theft, usage, documentation, identity, rights and dozens of other issues. Blockchain and technology advancements theoretically solve some of these problems, but unfortunately not all.</p><p>Some digital currency or technology experts might find this analysis rudimentary. Others are new to this asset class and want a primer on the industry. That's our primary goal or target, is to provide an initial 30,000 foot view on digital currencies and then dive into the details of the largest (and soon to be public) exchange.</p><p>As always, we strive to present our work in a very readable format. If they had the patience to read our research, we attempt to write our notes so our 80-year father or 14-year old son could easily understand. We will try our best to review the requirements to be considered a currency, volatility, pricing, digital wallets, NFT's (non-fungible tokens), stable coins and some other digital currency issues. After that, we will do a fairly deep dive into Coinbase (ticker COIN). You can read their nearly 300-page S-1 filing with theSEC (click here)or you can let us serve as your \"Cliff Notes\" version. We will discuss their business model, how they generate revenue, their advantages and disadvantages, as well as provide a framework for valuation and a price target. We hope you find this latest research from Manole Capital topical and interesting.</p><p><b>Digital Currencies:</b></p><p>In our 1st quarter 2021 investor newsletter, which we published on Seeking Alpha, we discussed COIN's business and its opportunity. We wrote a couple pages on the subject, but felt it deserved a much larger and dedicated piece of research.</p><p>Before we dive into Coinbase, we wanted to provide our thoughts on Bitcoin and digital currencies. As we stated in the opening paragraph, Manole Capital believes the payments industry is the dominant FINTECH sector. Over the last 5 years, we have done a significant amount of work on digital currencies, trying to understand their best usage, functionality and role in the future of payments. Are digital currencies a threat to the payment networks, processors and merchant acquirers? In order to answer these questions, one has to understand how a typical payment transaction occurs. Who processes, clears and settles a card transaction?</p><p>We have written dozens of articles on this subject, which can easily be viewed here. In our opinion, there are two main requirements for something to be considered a viable currency. One is that it must be a \"store of value\" and the second is that it must be a \"medium of exchange\".</p><p><b>The Requirements To Be A Currency:</b></p><p>In order to be a viable currency, two specific requirements are needed. One is that the currency should be a<b>\"store of value\".</b>This is often defined as any asset that can smoothly maintain its economic value, rather than rapidly depreciating. The other requirement is that the currency should be a<b>\"medium of exchange</b>\" or an instrument used to facilitate the sale, purchase or trade of goods between parties.</p><p>In terms of speed and efficiency, there is no comparison when comparing the centralized payment system to Bitcoin's decentralized platform. Visa processes 1,700 transactions per second and it claims to have 40x the spare capacity, to handle 65,000 transactions per second. PayPal (PYPL) stated that during the 2020 holiday shopping season, it processed over 1,000 transactions per second. Using Bitcoin and its blockchain for global purchases and payments can process roughly 7 transactions per second.</p><p>As technology improves, one could argue Bitcoin processing will improve. However, if Bitcoin were to get used for payments, the conversion of crypto holdings into US dollars will dramatically increase overall network transactions. We are big believers in the concept of...\"if it ain't broke, don't fix it!\"</p><p>There are significant acceptance advantages to the existing payment ecosystem. Visa and Mastercard are accepted in over 200 countries and at over 40 million global merchants. Their payment acceptance brands stand for trust and allows billions of purchase transactions to occur each year. The Visa and Mastercard logos are known around the world, permitting the exchange of goods and services in seconds. While Bitcoin is slowly becoming more recognizable, it simply does not have the same acceptance. We believe the existing payment ecosystem handles the \"medium of exchange\" process well. The overall payment landscape is a well-oiled machine, that involves three to four parties, approving transactions in in roughly 1 to 2 seconds.</p><p>We have discussed the long-term opportunity for a FINTECH company or two to create a \"Super App Holy Grail\". This would be allowing customers to transact with their mobile phone, in whatever currency they wish, at all global merchants. Getting consumers to get rid of their leather wallets is easier said than done. Even though we consider ourselves to be fairly technologically savvy, we still have a wallet that looks a lot like Seinfeld's George Costanza's.</p><p>Several companies have recently announced their intentions to help spur Bitcoin acceptance. On March 30th, 2021, PYPL announced the launch of its \"Checkout with Crypto\" option. Participating merchants (initially ½ of PYPL's 29 million) can offer their customers the ability to pay for purchases using Bitcoin, Litecoin, Ethereum or Bitcoin Cash. How will this work? Once a PYPL customer purchases or stores crypto holdings in their PYPL digital wallet, he/she will be permitted to use those funds at checkout. When a transaction occurs, PYPL users will see the option to apply their balance to complete a purchase. When customers choose this payment option, PYPL will exchange their crypto for US dollars through its clearinghouse partner, Paxos. The transaction will occur based upon a spot market rate, with a 50 basis point spread built in. PYPL will then remit payment (in US dollars) to the merchant, to satisfy the exchange of goods or services.</p><p>While this sounds easy, there are significant hurdles. Certain details are still emerging, but customers using this service must buy their crypto within their PYPL digital wallet. This will satisfy PYPL's adherence to Know Your Customer (KYC) guidelines, but it doesn't solve all potential hiccups. The four cryptocurrencies PYPL said customers can use, are likely to cause problems. The SEC and IRS have not deemed these to be currencies, but instead, consider them capital assets. If they were to be used for payment, the underlying client will potentially have capital gain taxes, if their PYPL digital wallet has paper gains. If you are making a $20 purchase at Walgreen's, we don't believe customers are wanting to consider the tax ramifications of using their Bitcoin balance in their digital wallet. That potential $20 purchase could potentially cost you a tax liability of 100%.</p><p>Even if we ignore the large tax issues, there are additional worries. So, if the cryptocurrency in your digital wallet is going to be used to fund purchases, who is going to pay for it? Merchants will have to pay for the cost of converting cryptocurrencies into US dollars, whatever that cost might be. There will be the traditional merchant discount rates applied, but this will ultimately be another cost for merchants to bear. Besides a company like Tesla, that has a dynamic CEO, do you envision merchant's dying to accept additional costs to help their customers transact? Especially when cards are so ubiquitous?</p><p>So,Teslahas decided it will accept Bitcoin as a form of payment. What does this really mean? If a consumer has a sizeable gain in Bitcoin and wishes to use it to purchase a \"free\" Tesla, there are serious tax consequences. Just like selling an appreciated stock, where a consumer has to pay capital gains taxes, Bitcoin would be under the same burden. Until the IRS classifies Bitcoin as a currency, and not property, this tax problem will remain.</p><p>The second problem comes if the Tesla buyer decides to return his/her new vehicle. Tesla reserves the right to pay the consumer back in cash, worth the original purchase price, not in Bitcoin. If Bitcoin jumps in value since the original transaction date, the consumer would be negatively impacted. If Bitcoin falls in price, Tesla could return a depreciated Bitcoin to the car buyer. Are there hundreds of thousands of consumers yearning to purchase a Tesla with Bitcoin? We doubt there's too many, especially if they are aware of the tax issues.</p><p>Last week, Visa announced it would use various FINTECH API's (application programming interface) offered by cryptocurrency custodian and privately-held Anchorage. Visa plans to settle transactions using US dollar stablecoin, powered by the Ethereum blockchain. Once again, this is exciting news, but will likely encounter problems and take a while to come to fruition.</p><p>Before one uses Bitcoin to transact at the POS (point of sale), be actually believe it can become an excellent opportunity for money transfer. Western Union is about to turn 170 years old and can be considered the original FINTECH company. However, moving paper currency around the world is not terribly technologically advanced. Visa has launched an expanded version of its<i>Direct</i>platform, which will allow for cross border disbursements. Visa's platform supports real-time domestic and cross-border person-to-person, business-to-small business and business-to-consumer use cases, so the options are endless. Bill Sheley is the global head of Visa Direct, and he stated, \"Visa is innovating to give financial institutions, governments, individuals and businesses new ways to pay and get paid beyond the card.\"</p><p>On the \"store of value\" front, the total addressable market for assets is enormous. For example, art and collectibles are a $20 trillion market, gold is $10 trillion, real estate is $200 trillion, bonds are $100 trillion and equities are another $30 trillion.</p><p>50% of gold is used in jewelry and another 1/3 is used in electronics. While gold used to back fiat currencies, Britain dropped the gold standard in 1931. The US followed suit in 1933 and totally abandoned the gold standard in 1973. There are additional issues to consider like fixed or variable supply, as well as volatility concerns.</p><p>We agree that digital currencies are becoming a feasible \"store of value\". In our opinion, digital currencies have significant challenges to becoming a \"medium of exchange\". With that caveat, the opportunity for the crypto-economy and digital currencies to thrive is still open ended and vast.</p><p><b>Inflation:</b></p><p>The world is always looking for additional asset classes and stores of value, especially as governments keep the currency printing presses running 24 hours a day, 7 days a week.</p><p>Last year, the Federal Reserve printed an unprecedented amount of dollars, roughly 1/5 th of all US dollars ever printed. On a daily basis, the Bureau of Engraving and Printing produces over $500 million over 38 million notes.</p><p>If you are the United States and the dollar is considered the dominant global currency, your perception of Bitcoin (or any digital assets) should be of concern. The ability of countries to simply print money should inherently be inflationary, yet Federal Reserve Chairman Jerome Powell continues to seek to get the US at and above 2% annually.</p><p>A couple of weeks ago, the Biden administration announced an infrastructure bill, called the American Jobs Plan, with a $2 trillion spending target. In March of 2021, US government passed a $1.9 trillion stimulus package. This followed a December of 2020 stimulus package of $900 billion, as well as a CARES Act in March 2020 bill of $2.2 trillion. We are not making a statement about the merits of any of these packages and stimulus programs. We simply are trying to point out the massive amount of money that is getting printed.</p><p>Many cryptocurrency bulls will cite inflationary worries with fiat currencies for why their digital cryptocurrencies assets are undervalued. We understand this argument, but always come back to an initial framework. If you are the US or the European Union or Chinese government, would you be able to control your society if there wasn't a viable currency in place? Would economies function without government control of its fiat currency? If cryptocurrencies become widely accepted and are considered a better version of payment, would governments be able to function? If the US couldn't issue additional debt to fund its spending initiatives, would it even exist? We just don't believe government regulators will allow certain cryptocurrencies to thrive, especially if it threatens their sovereign currencies.</p><p>We tend to look at this as a simple supply and demand equation. While Bitcoin has currently issued 18.7 million tokens, there is only a maximum of 21 million that can be created. That fixed supply is counter to some governments. For example, there are countries that have taken the printing of fiat currency too far. Zimbabwe is but one example of runaway inflation. Here's a picture of one of their 100 trillion bills. Yes, that's a 100 trillion. Do you want to be a trillionaire? Simply buy one on eBay for $8.99,by clicking here.</p><p><img src=\"https://static.tigerbbs.com/375ab15b324158141f0eceee4633e5ca\" tg-width=\"900\" tg-height=\"900\" referrerpolicy=\"no-referrer\"></p><p><i>Source: This is a picture of Zimbabere's currency, that I took on myiPhone</i></p><p>As this Piper Sandler chart shows, Bitcoin now has a market capitalization of roughly $1 trillion. If we look at the top 10 digital assets by market capitalization, the vast majority of market share falls to just 2 currencies.</p><p><img src=\"https://static.tigerbbs.com/4f0caa7a9dbd54216c5e67fb83199d42\" tg-width=\"859\" tg-height=\"576\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a Piper Sandler slide/chart</i></p><p>It is estimated that Bitcoin is over 55% of all cryptocurrency market capitalization and Ethereum is roughly 11%. Cryptocurrencies like Tether, Binance Coin, Stellar, Cardano, Litecoin have a modest following and just 1% to 2% market share (all under $50 million in market cap).</p><p>Digital currencies should be considered assets, as they can be represented digitally, dynamically transmitted, and stored safely in the cloud. However, digital assets and cryptocurrencies have a long way to go to become used in our globally interconnected economies.</p><p><b>Rules & Regulations:</b></p><p>In a perfect world, we think all assets should trade 365 days a year and 24 hours a day. In this hypothetical environment, assets should immediately process and settle and fees to transact should be modest. Why does the NYSE only officially operate from 9:30 am to 4:00 pm EST Monday through Friday (and not on holidays)? There are trades that occur pre-market and post-market hours, but liquidity and volumes are sparse. The simple answer is that this is the way it has always occurred and why should we change something that isn't broken.</p><p>The traditional exchanges have always had a set period of time where they are \"open for business\", but this is changing. For example, the technology backbone of the CME Group (ticker CME) is called Globex. It essentially permits 24/7 trading to occur on its electronic platform for equities, interest rates, commodities, foreign exchange and other assets. After years of investing in international growth, roughly 1/5 th of all volumes come from outside of the US.</p><p>In order to have access to Globex, there are rules one needs to adhere to, as exchanges are heavily regulated entities. Just like banks need to conduct AML (anti-money laundering) and KYC (know your customer) due diligence on its customer base, the exchanges need to follow strict guidelines enforced by their regulators.</p><p>As of today, we believe there are over 50 distinct blockchain protocols which support more than 7,500 various digital assets. Unfortunately, the financial systems are not known as entities that are quick to adopt change and technology. The world has embraced the internet, as a revolutionary and transformational platform. However, financial systems are not comfortable seamlessly exchanging data, information and assets. There are numerous activities like cross border payments or peer-to-peer payments that are ideally suited for technological advancements, but rules and regulations exist to stymie growth.</p><p>The goal of an open and transparent financial system is honorable, but not terribly realistic. In terms of managing one's assets, especially money, the process can be cumbersome.</p><p><b>Volatility:</b></p><p>If we accept cryptocurrency as a digital asset, we then want to better understand how value is determined, where it can be stored and how best to process and handle its exchange. With decentralized assets, the network allows participants to transact without intermediaries. Who sets the value and determines price?</p><p>The most notable cryptocurrency is Bitcoin and it has a CAGR of over 150%, from 2013 to 2020. In 2017, it rose 1,318%, but then fell by (72.6%) in 2018. In 2020, it rose over 302% and it currently is up well over 50% this year. Since January of 2017, there have been 5 corrections of 50% of more in Bitcoin, so it can be wildly volatile.</p><p>We are slowly getting comfortable with digital assets and cryptocurrencies as a \"store of value\" and believe they will become a viable asset in one's diversified portfolio. Each individual or entity needs to determine their own risk and reward framework, so cryptocurrency might be 10 basis points or 10% of one's portfolio.</p><p>Opinions on Bitcoin are changing every day. Back in 2018, the CEO of Blackrock (Larry Fink) called Bitcoin a currency \"for money launderers.\" A year earlier, JP Morgan CEO, Jaime Dimon called Bitcoin a \"fraud\" and threated to fire any bank employee who dealt with the currency. Fast forward to today: Blackrock (in January 2021) enabled two of its mutual funds to purchase Bitcoin, and a JP Morgan analyst recently published that he thinks Bitcoin could rise to $146,000.</p><p>Recently, large institutional interest has boosted the price of certain digital assets. High profile investors like John Tudor Jones (May 2020) and Stanley Druckenmiller have made sizeable purchases of various digital currencies. Other companies like Microstrategy (August 2020) and Tesla (Feb 2021) have made sizeable transactions for their firm's balance sheet.</p><p><b>Stable Coins:</b></p><p>A stable coin is simply a digital asset that is attempts to lower volatility by pegging itself to an actual fiat currency or physical asset (ex: gold). For example, Tether has a market capitalization of over $40 billion, is backed by US dollars and it's the largest cryptocurrency stable coin. One of the risks associated with stable coins is ensuring that the proper amount of fiat currency is held in reserve to match the amount of stable coins in circulation.</p><p>In prior official commentary, the Governor of the Central Bank of Russia - Elvira Nabiullina - stated that Russa was against any form of private currency, as it threatened financial sovereignty. Russia's Ministry of Internal Affairs also was considering seizing all digital currencies and claiming cryptocurrencies criminal activity. Now, in January 2021, the Bank of Russia began to test a ruble-based stable coin. While starting cautiously, the Russian Central Bank is exploring the possibility of issuing its own digital currency. There are numerous countries that are investigating the process of issuing CBDC's or Central Bank Digital Currencies. China has studied the process of issuing a digital yuan, the European Central Bank is looking into a digital Euro.</p><p>Other governments and regulators have highlighted the risks of digital currencies. The UK's Financial Conduct Authority called crypto assets \"high risk, speculative investments\" where investors \"should be prepared to lose all their money.\" US Treasury Secretary (and former Federal Reserve Chairwoman) Janet Yellen has warned on investing in digital currencies too. Just a week ago, India's Reserve Bank took a fairly bearish tone on digital currencies. Rumors are that India is looking to pass a law outlawing cryptocurrencies and making anyone trading or holding them punishable with sizeable fines. India's Finance minister is Nirmala Sitharaman and she said India's Cabinet will shortly issue a final ruling on the matter and that the governments ruling is \"under preparation and nearing completion\".</p><p>Will additional countries look to make cryptocurrencies illegal? These type of comments act as a governor to adoption and change. Politicians and governments are worried about losing control of their economies. Statements like this are further evidence that governments will remain a headwind. We aren't going to put this in the realm of a new \"space race\", but the country that embraces this technology first might have an early advantage versus those that are afraid of change.</p><p><b>Digital Currency Conclusion:</b></p><p>This quick digital currency discussion was created to set the framework for an analysis of Coinbase (ticker COIN). Will digital currencies replace traditional payment systems? We do not believe it will, but continued adoption and traction in digital currencies is noticeable.</p><p>Is Bitcoin poised to climb higher, or will it crash? We simply don't know. What we do know is that we prefer to own the medium where these \"assets\" trade. We would compare this to the Gold Rush of the mid-1800's. Back in 1849, owning Levi Strauss made a fortune selling picks, pans and shovels to '49ers looking for gold. Back then, some would say, \"There's gold in those mountains.\"</p><p>Nowadays, there's a huge opportunity in the collection of data and information. We truly have no idea what the price of Bitcoin will do, except we know that it will be very volatile. As we know, volatility leads to trading, which should equate to profits for the exchanges. Speaking of exchanges, let's now discuss another exchange and upcoming FINTECH direct listing - COIN.</p><p><b>Introduction to Coinbase (ticker COIN):</b></p><p>The stated goal of COIN is \"to create an open financial system for the world.\" While this is altruistic, it seems to be fairly broad based goal. It is noble to strive to create a financial system that is transparent for all mankind. It might be more prudent to strive to provide an end-to-end infrastructure and technology platform for all types of cryptocurrencies.</p><p>From our perspective, it might be judicious for COIN to focus its attention on providing value adding services for all types of digital currencies. If COIN becomes the dominant exchange where anyone can easily and securely send and receive Bitcoin, it will thrive. If COIN can create an efficient and accessible marketplace for the emerging digital assets community, it can be a massive success. There are hundreds of platforms that want to democratize access to the crypto-economy, but COIN (as the oldest and most recognizable brand) seems to have an early lead in this race.</p><p>Coinbase:</p><p>COIN was started in 2012 and it has built a trusted platform for accessing various crypto currencies. Using blockchain technology, COIN has simplified the user experience and reduced the complexity of purchasing, selling and holding digital currencies. In its early days, COIN was primarily just used for sending and receiving cryptocurrencies. Then, it became a trusted platform for those seeking to invest in various currencies. We liken this period as COIN's realization that it needed to become an \"exchange\" or intermediary between buyers and sellers. It has since launched cryptocurrency payments, distribution capabilities, storage, borrowing and lending services.</p><p>As this chart from COIN shows, there are over 45 different cryptocurrencies investors can purchase and another 90 that can be stored at COIN.</p><p><img src=\"https://static.tigerbbs.com/f91cd70c100e3a8159938dd730935867\" tg-width=\"767\" tg-height=\"319\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from COIN's S-1</i></p><p>However, two primary digital currencies dominate COIN's total trading volumes. In 2020, Bitcoin represented 41% of COIN's trading volumes and 15% came from Ethereum. While this 56% is a decline from 2019 levels (72% of the total mix), we envision both will remain the primary digital currencies traded on COIN.</p><p><b>Revenue:</b></p><p>Over the last several years, COIN has materially grown its revenue. In 2019, revenue $533 million and it impressively grew to $1.3 billion last year. As we show in our pie chart, in 2020, COIN's $1.28 billion of revenue grew 130% year-over-year and was a mix of 86% Transactional, 3% Subscription & Services and 11% \"Other\".</p><p>On April 6th, COIN reported 1st quarter 2021 results and the metrics were eye popping. Last quarter, COIN generated $1.8 billion in revenue, which exceeded the prior two years combined.</p><p>In 2020, 86% of COIN's total revenue was<i><b>Transactional</b></i>in nature. This means revenue was derived from sending, receiving, investing and spending cryptocurrencies. When it comes to Transactional revenue, we like to look at the fee as a percentage of total volume traded.</p><p>COIN provided this diagram and it shows exactly what products are inside of each of its revenue classifications. The remaining 15% of total revenue came from<i><b>Subscription & Services,</b></i>which COIN classifies as paying, distributing, storage, and from borrowing and lending cryptocurrencies.</p><p><img src=\"https://static.tigerbbs.com/b0466f39ad66c6fefeaeee25b50847fb\" tg-width=\"922\" tg-height=\"716\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from COIN's S-1</i></p><p>Storing earns custodial fee revenue, which we will dissect in a couple of pages. Staking revenue comes from validation on a proof-of-stake blockchain transaction. License revenue is generated from users of its Analytics services. Lastly, COIN can earn campaign revenue or distribution fees when its constructs educational materials for issuers. For cryptocurrency issuers, COIN earns revenue for helping the platform engage with its users, in the form of educational videos or tasks, when cryptocurrencies are attempting to widen their distribution, marketing and acceptance. While these ancillary services are nice, the real opportunity is trading.</p><p><b>Customer Type:</b></p><p>In its S-1 regulatory filing, COIN showed its product portfolio, separated from retail users, institutions and other ecosystem partners. One has to understand that different clients are paying different rates. Over the last 8 quarters, this revenue rate has averaged 0.61%, with a high of 0.80% in the 1st quarter of 2019 and a low of 0.50% in the 4th quarter of 2020.</p><p>Looking at the last 8 quarters, we can clearly see that both retail and institutional trading volumes have exploded higher. It is interesting to see that Retail was bigger at $45 billion in the 1 st quarter of 2018 than it was at the end of last year at $32 billion. Also, one can see that Institutional trading volumes have gone from $11 billion in the 1 st quarter of 2018 and now are over $57 billion.</p><p><img src=\"https://static.tigerbbs.com/6b80fa39db4f3163a635e88da58642ed\" tg-width=\"846\" tg-height=\"524\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from COIN's S-1</i></p><p>COIN has different fees depending on whether or not the client is retail or institutional, as well as whether or not the client uses Coinbase or Coinbase Pro, which we will discuss this later on, in our pricing section.</p><p><b>Trading volumes:</b></p><p>In terms of exchanges, it all comes down to volumes. Crypto exchange volumes have soared, because of strong interest from both retail and institutional clients. This type of growth will not continue, but volatility tends to drive overall volumes.</p><p>Looking at this Compass table, one can clearly see that volumes noticeably increased in 2018, following the rise of Bitcoin in December of 2017. What happened in late 2017 that helped drive future trading volumes? Well, CBOE and CME both launched Bitcoin future contracts that month.</p><p><img src=\"https://static.tigerbbs.com/7170f3967e17422584307fc937c403b5\" tg-width=\"689\" tg-height=\"691\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from Compass</i></p><p>So far in 2021, COIN has experienced 298% growth in ADV (average daily volumes). What did Bitcoin increase last year? Just over 300%. There's clearly a very high correlation between Bitcoin's recent price and COIN's future ADV.</p><p>One of our favorites aspects of investing in the exchanges is the ability to simply model the businesses in Excel. The large, publicly-traded exchanges provide wonderful transparency for investors, by posting daily volumes. We liken this to Goldman Sachs or Morgan Stanley providing real-time insights into their prop desk trading results. You shouldn't hold your breath for that level of transparency, right?</p><p><b>Bitcoin, Bitcoin and Bitcoin:</b></p><p>In the real estate business, the common phrase is that the 3 most important items are \"location, location and location.\" For digital currency exchanges, we believe the 3 most important products are \"Bitcoin, Bitcoin and more Bitcoin.\"</p><p>On COIN's platform, the volumes tend to be concentrated in a few different currencies. In 2019, BTC or Bitcoin was 58% of COIN's trading volumes, but that fell to 41% in 2020. ETH or Ethereum was 14% in 2019 and that grew slightly last year to 15% of COIN's total. The biggest category jump came from \"other\", which was 18% in 2019 and grew to 44% last year.</p><p>Having multiple products to transact in is obviously key, but COIN is cryptocurrency dependent. Yes, tokens like Dogecoin might come in and out of favor, but COIN is dependent upon higher Bitcoin and Ethereum prices.</p><p>A great aspect to owning CME is their transparency. Not only does CME provide daily ADV, but they provide details on open interest. We like to follow open interest, as it is a leading indicator of future volumes. Also, CME provides details on large open interest holders (called LOIH's) or those owners of a minimum of $7.5 million of Bitcoin futures. Over the last couple of months, CME has hit all-time highs in volumes in Bitcoin futures trading. This year, Bitcoin futures contracts on the CME have averaged 13,800 contracts per day, up 42% year-over-year.</p><p>Like CME, COIN has invested heavily in its technology to give its customers access to a deep pool of cryptocurrency liquidity. Like we just described, this liquidity can act as a virtuous cycle. Volumes beget more volumes and leading more customers onto the platform.</p><p><b>Pricing:</b></p><p>We focus on the trading volume of an exchange, but also try to model how revenues are generated from this volume. Each trade does not generate the same level of revenue, as different traders tend to pay different prices.</p><p>In derivative exchange land, we often look at commission prices as RPC or rate per contract. For example, CME charges $0.478 a contract to trade interest rates, $0.545 to trade equities, $0.764 to trade foreign currency, $1.397 to trade metals, $1.336 to trade agricultural commodities and $1.124 to trade energy. Within each product, prices can vary. For example, WTI crude is a different trading price versus natural gas contracts. While CME is trying to get more retail customers into trading futures and options, the vast majority of its volumes are from institutions.</p><p>At COIN, there are different fees for different clients. COIN has two main fee structures, one called Coinbase Pro and the other called Coinbase Prime. Here's a quick look at the pricing tiers, as discussed in the S-1 filing, based upon whether or not a client is taking or providing liquidity (called taker fee and maker fee).</p><p><img src=\"https://static.tigerbbs.com/cba2058d6aac36d1f5fa59d2261be3c1\" tg-width=\"527\" tg-height=\"649\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from Compass</i></p><p>Transaction revenue, as a percentage of total volumes traded, has averaged 0.61% over the last 8 quarters. Over these 2 years, retail client transactional revenue has increased from 1.27% up to 1.47%. For institutional clients, revenues as a percentage of volumes traded has fallen from 0.07% down to 0.05%. Clearly, retail customers pay significantly more than institutional clients to trade.</p><p>Also, unlike transacting in a stock, COIN calls its transaction based revenue \"staking\" revenue. This is earned from transaction validation on a proof-of-stake blockchain, when COIN's nodes successfully creates or validates a certain block. This revenue is recognized when the rewards are available for transfer and at the point when the block creator or validation is complete. The metrics that determine the staking revenue are driven by quantity, price and rewards rate.</p><p><b>Customers:</b></p><p>The strengths of COIN's platform seem to be its vast and extensive network of contacts. COIN is leveraging its trusted brand to attract those that want access to transact or store cryptocurrencies.</p><p>COIN's growth strategy is based upon driving more customers onto its platform and becoming the de-facto platform for cryptocurrency. Just like the online brokers did in the 1990's, the key to growth was adding new accounts and clients to the platform.</p><p>In this COIN chart, one can see the exceptional growth in verified users or those that have \"demonstrated an interest\" in COIN's platform. In addition to these users, there are another 7,000 institutional customers, across roughly 100 countries.</p><p><img src=\"https://static.tigerbbs.com/0b0ae20183f76b5f50213a6fba41d49f\" tg-width=\"671\" tg-height=\"663\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from COIN's S-1</i></p><p>These verified users have registered for an account and confirmed either their email address or a phone number. In our model, we are not terribly interested in tracking verified users as a key metric. While it is nice to know who interested in cryptocurrencies, it is much more important to understand who is willing to transact.</p><p>As you can see in this Compass Point chart, COIN has 2.8 million MTU or monthly transacting users. In order to be considered a customer needs to have logged in and transacted one time, over a 28-day rolling period.</p><p><img src=\"https://static.tigerbbs.com/37e82feeeec96702e21745ad5bdc1c48\" tg-width=\"706\" tg-height=\"416\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from Compass</i></p><p>It is interesting to see that there were 2.7 million MTU's in the 1 st quarter of 2018 and 2.8 million MTU's at the end of last year. Over those 2 years, MTU's dramatically declined and then lifted. As of today, COIN has roughly 3 million MTUs, which was up +180% year-over-year, but we like to think of it as only 7% of its verified total accounts.</p><p>This reminds us of the online brokerage business, back in the 1990's and 2000's. For years, the primary goal of marketing executives at the online brokers was to generate more and more accounts. The theory was that with new accounts, clients would eventually look to consolidate their relationships with one or possibly two firms. Once an account was opened, the goal was to increase wallet share from that satisfied customer.</p><p>For online brokerages, driving customers typically comes from TV advertising. One cannot watch CNBC or Bloomberg or Fox Business without seeing advertisements for Schwab, TD Ameritrade, E*Trade, Fidelity or Interactive Brokers. Robinhood was very successful in opening up investment accounts for the emerging Gen-Z demographic, but its well-publicized issues in late January (regarding prohibiting \"meme stocks\" purchases) might impact its torrid account growth.</p><p>How does COIN plan on increasing its exposure and customer base? Our guess is that it will look to increase its marketing spend. The ROI or return on investment of TV marketing is somewhat opaque. We anticipate COIN learning from its foray into marketing and advertising, with some successes, as well as some failures.</p><p>The best avenue to increase accounts and customers is to offer a product that cannot be easily replicated. COIN can continue its account growth by launching new and innovative products, as well as offering access to new cryptocurrencies.</p><p>While BTC or Bitcoin is the dominant cryptocurrency today, maybe there will be a new and exciting cryptocurrency in vogue tomorrow. Over the last few months, Dogecoin has garnered significant attention and media coverage. While we shake our head and do not understand the fascination with this cryptocurrency, the goal for COIN is to attract and become the go to platform for those that wish to transact. COIN needs to expand its support of all digitally native cryptocurrencies and help to tokenize new assets.</p><p><b>Storage:</b></p><p>While the vast majority of COIN's revenue is trading based, COIN does earns subscription and service revenue when customers choose to safely store their cryptocurrencies on its platform.</p><p>COIN is one of the most trusted exchanges in the crypto space and operate as a \"qualified custodian\". This means that they have a separate company, called Coinbase Custody, which operates as a standalone, independently-capitalized business. Under New York State Banking Law, Coinbase Custody is considered a fiduciary. All digital assets are segregated and held in a trust. COIN has never suffered a hack that led to loss of funds and cannot afford to ever have that breached.</p><p>As you can see in this COIN asset chart shows, there has been excellent growth on the platform. At the end of 2020, COIN had $90.3 billion in assets on its platform, which was up +432% year-over-year.</p><p><img src=\"https://static.tigerbbs.com/fa49892f328f6968397671bfc6bfbab1\" tg-width=\"887\" tg-height=\"689\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from COIN's S-1</i></p><p>Of these assets, 70% was from Bitcoin and another 13% were Ethereum. Clearly, those two currencies represent the bulk of COIN's platform assets.</p><p><b>Wallets:</b></p><p>The leather wallet in your pocket holds a combination of cash and credit/debit cards. However, cryptocurrencies and tokens need to be kept in a crypto wallet. \"Hot wallets\" are connected to the internet and are considered much less secure, while \"cold wallets\" are kept offline. Most cryptocurrency custodians employ \"cold\" storage to safely hold a client's digital assets.</p><p>Acting as a cold cryptocurrency custodian (say that 3x fast), COIN derives fee revenue based on a percentage of the daily value of customer accounts. The assets under custody are a function of quantity, price and type of cryptocurrency asset.</p><p><b>Custody:</b></p><p>In addition to hot versus cold wallets, there are two primary ways to store your Bitcoin. The first is called self-custody. This is when an individual or entity has complete control of their Bitcoin. This entails maintaining and controlling your own private key. When it comes to Bitcoin storage, there is a popular self-custody mantra that says, \"not your keys, not your coins\". This implies that if you do not control the private key for your Bitcoin, it is not truly your Bitcoin.</p><p>The second way to store your Bitcoin is to outsource it to a trusted custodian, like Kraken, Coinbase, Anchorage or others. In this case, the custodian stores your Bitcoin for you and they have control over its private key. Kraken is security focused and has an time-tested private key management practice. In its 10-years of existence, it has never been hacked.</p><p>Whether one decides to self-custody or use an outsourced custody provider for storing your Bitcoin, two critical issues must be discussed. The first is trust. Do you trust the custodial firm that holds your Bitcoin? If one self-custodies, they bear the risk of lost private keys, break-ins or natural disasters. On the other hand, self-custody ensures you control your own Bitcoin. The obvious downside of self-custody is that one can lose all of your Bitcoin, if it is not stored properly.</p><p>Do you trust the bank that holds your checking account or brokerage firm that holds your stocks? US financial institutions are some of the most highly regulated companies in the world and most have proven themselves to be good custodians of our assets. Maybe we can exclude Lehman Brothers and AIG from that statement, but it is fair statement for the other 10,000+ financial institutions in the US.</p><p>Does trusting a firm called Kraken, with millions of dollars' worth of Bitcoin, sound like a sound idea? Some might prefer to custody with a firm like Bank of New York, which announced in March of 2021, that it intends to enter the Bitcoin custody business. However, does Bank of New York have the technological expertise and security protocols of newer entrants like Kraken? With a random name like Manole Capital, we clearly don't place too much emphasis on one's name. We do however appreciate 3 rd party, independent industry rankings. Kraken has been voted the #1 most secure cryptocurrency exchange by ICO Ratings.</p><p>The second key issue to consider is protection and safety. Cryptocurrency custodians and exchanges are a prime target for hackers. There are hundreds and potentially thousands of thieves looking to steal your Bitcoin private key. PayPal and Robinhood recently sent warnings instructing their clients to install two factor authentication onto their digital wallets / account. Also, governments can force companies to freeze funds, if they perceive illegal activity or fraudulent behavior.</p><p>Trusting someone else to store and manage your Bitcoin is a challenging decision. There have been a few custody firms to have disastrous results (i.e. Mt. Gox), but there are also extremely competent businesses that can trusted to hold your cryptocurrencies. For us, we prefer an expert store our assets, as opposed to keeping it under the proverbial mattress.</p><p><b>Characteristics:</b></p><p>As we mentioned earlier, there are certainideal characteristicswe look for in our investments. COIN has a strong brand name and dominates its cryptocurrency niche. Its platform is scalable and by leveraging certain blockchain advancements, COIN can provide a safe and secure environment for its customers.</p><p>We often look for our companies to have dominant market shares, high barriers to entry and what Warren Buffett calls a \"moat around the franchise\". Regardless of industry, we always focus on an investment's market share. In terms of COIN's cryptocurrency market share, it has risen from 4.5% in 2018 to 8.3% in 2019 up to 11.0% in 2020.</p><p>For exchanges, there is typically 1 or 2 firms that dominate the trading of a specific asset. These exchanges have the best liquidity and the tightest bid/ask spreads. For example, the CME dominates US interest rate trading, as well as WTI crude trading. Intercontinental Exchange dominates the Brent crude marketplace. Once an exchange begins to control trading for a certain asset, it is very difficult for a competitor to steal market share. Some try to lower trading pricing and commissions, but this usually is only temporary. Investors are always seeking best execution and will usually return to the marketplace with the most liquidity and tightest bid/ask spreads. From an exchange standpoint, this is definition of dominant market share, competitive advantage or possessing a moat around your franchise.</p><p>Ideally, COIN is looking to become the one-stop shop for those wishing to buy, sell and/or store cryptocurrency. COIN has many of the desirable characteristics we look for in an investment, but it does have risks.</p><p><b>Risk #1: Bitcoin</b></p><p>For a business like COIN, there are literally dozens of risks. For starters, cryptocurrencies are volatile and we anticipate COIN's stock will be highly correlated to the price of BTC, Bitcoin and other important cryptocurrencies.</p><p>As we have mentioned, the underlying price of these cryptocurrencies helps to determine COIN's revenue and profits. Possibly the biggest risk for owning COIN stock will be its reliance and dependency on rising Bitcoin and Ethereum prices.</p><p><b>Risk #2: Competition</b></p><p>On the retail front, COIN has numerous competitors. For example, both Square's Cash App (36 million users) and PayPal (375 million accounts) are offering mobile-based wallets, primarily to retail clients. Customers can purchase various cryptocurrencies on both Square and PayPal and store them for free.</p><p>Over time, we expect both of these firms to begin to allow wallet holders to transact in whatever currency he/she wishes. For example, a customer can use their Square Cash App wallet to transact at over 3 million Square merchant acquiring locations. This mobile wallet will permit credit or debit transactions, but might also permit the user to utilize their Bitcoin balance. There are numerous issues that still need to be resolved on this front, but this is what we have been calling \"closing-the-loop\".</p><p><b>Risk #3: Regulations</b></p><p>Exchanges are highly regulated entities and they must learn to engage with their regulators for the benefit of all market participants. COIN is subject to a regulated environment, but the rules and landscape are dynamic. Unlike US financials, with a known regulator, the laws and rules cryptocurrencies are subject to are constantly changing. As COIN moves more of its business to international markets, it will have additional governmental issues to deal with.</p><p>The new SEC Chairman is Gary Gensler. Gensler was the head of the CFTC from May 2009 to January 2014 and was the primary regulator for the derivative exchanges. In his tenure at the CFTC, Gensler attempted to write rules and regulations for the swap markets, as suggested in the Dodd Frank Act of 2010 (following the Financial Crisis). Now that Gensler is at the SEC, one of his first challenges is what to do about regulating and providing oversight on Bitcoin and other digital currencies. He is not new to digital currencies, as he was a professor at MIT's Sloan School of Management after his stint at the CFTC. He primarily taught about blockchain technology and cryptocurrencies.</p><p>As of today, there are only a few crypto funds available to investors. Grayscale has over $38 billion in assets and is the sponsor of the Grayscale Bitcoin Trust (OTC:GBTC), which is provides Bitcoin exposure for qualified investors. GBT investors have a $25,000 minimum investment and currently pay a 2.5% management fee.</p><p>Many firms (Skybridge Capital, Valkyrie Digital, Fidelity Investments, VanEck, WisdomTree, etc) have announced their intention to offer Bitcoin ETF's. attempted to get the SEC to approve Bitcoin ETF's. As of now, the SEC has not approved any of these filings, but it will ultimately have to make a decision on the subject. Earlier SEC rejections were based upon problems with volatility, transparency, market surveillance and market and price manipulation. We expect a positive Bitcoin ETF to be approved by the SEC in 2021.</p><p>In addition to SEC regulation, we anticipate the Federal Reserve to explore the subject too. Chairman Jay Powell, in official Congressional testimony, has officially stated that the Fed is looking into the idea of a \"fully digital dollar\". This type of \"Fed coin\" would likely need Congressional and White House approval and it is very much in the early innings of its examination. Chairman Powell is still dealing with the ramifications of a global pandemic and a soft US economy, so a CBDC might not be his first or even second priority right now.</p><p><b>Risk #4: Security</b></p><p>As with any exchange, security and safety is paramount. We anticipate that COIN will be subject to thousands of cybersecurity attacks. Hackers, criminals and even foreign countries might find it worthwhile to breach COIN's platform. COIN's valuation is dependent upon it keeping its first-mover advantage and its reputation as a dominant cryptocurrency custodian. Security, for customers and partners, cannot be underestimated and COIN will have a very large target on its back.</p><p>Scale & EBITDA Margins:</p><p>For us, we always like to model in operating or EBITDA margins, as well as free cash flow for our exchanges. In 2020, EBITDA margins for the largest exchanges were impressive. Here is a table of the dominant four exchanges and their EBITDA margins last year, as compared to COIN. Looking at the 2020 EBITDA margins of its publicly-traded exchange peers, provides interesting insights. Last year, CBOE posted 68% EBITDA margins and CME and ICE each posted margins in the 62% to 63% range. Despite trailing their competitors, Nasdaq had impressive EBITDA margins of 55%, that would be the envy of most companies. One key takeaway is that all of the exchanges are generating impressive margins with excellent leverage and scale opportunities.</p><p><b>Exchanges: CBOE CME ICE NDAQ vs COIN</b></p><p>2020 EBITDA Margins 68% 62% 63% 55% 41%</p><p>These exchanges have spent billions of dollars building out a scalable platform, that has enormous operating leverage. Each and every transaction that occurs is extremely high incremental margins. Most do not provide guidance on future or forward revenue, but they do have decent insight into expenses. The CME typically will provide forward expense guidance in the 2% to 5% range each year. Expenses don't dramatically increase each and every year, but do modestly rise.</p><p>How does COIN compare? Well, COIN is still constructing its exchange and heavily investing in its infrastructure. Last year, technology and development expenses were $271.7 million or 21% of COIN's total revenue. In 2019, this expense line item was 35% of revenue.</p><p>In 2020, COIN's expenses grew 50% year-over-year to $868.5 million. At this early stage of its lifecycle, we are pleasantly surprised to see that COIN is generating positive operating leverage (expense growth less than revenue growth).</p><p>As you can see in this Compass Point chart, over the last 8 quarters, COIN's Adjusted EBITDA margins have steadily improved. Are they peaking or at an all-time high? No, but the best part about COIN's current margin trajectory is where we see it going.</p><p><img src=\"https://static.tigerbbs.com/44d11356cbdbc81549a9f5422e6e0e4f\" tg-width=\"567\" tg-height=\"426\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from Compass</i></p><p>In its S-1, Brian Armstrong (COIN's CEO) stated a focus on operating profits, as it tries to manage its expense growth. He said, \"We may earn a profit when revenues are high, and we may lose money when revenues are low.\" He then went on to state that \"our goal is to roughly operate the company at break even, smoothed out over time.\"</p><p>This has proven to be true, when one considers that COIN generated $533 million in revenue in 2019, but lost $30m of profit that year. Then, in 2020, COIN produced $527 million of EBITDA on $1.2 billion of revenue. Clearly, the exchanges can generate very impressive profit margins, at scale.</p><p>The real benefit for the exchanges comes when volatility spikes and volumes soar. As this happens, assuming the exchanges properly manages this rising volatility, profitability climbs. As more and more volumes transact on a platform, free cash flow (and margins) is very attractive. Operating margins at its other publicly-traded exchanges have been high for years and do not fluctuate significantly from year-to-year. As revenues surprise to the upside, because volatility spikes, these exchanges typically reward their shareholders with buybacks and special dividends. As much more mature businesses, these exchanges tend to allow this leverage upside to fall to the bottom line. We anticipate that COIN will choose to re-invest any revenue upside towards marketing, growing its customer base, improving its platform, and building up its infrastructure.</p><p><b>Valuation:</b></p><p>In their 1st quarter 2021 release, management provided a low-to-mid-to-high range for a number of key metrics. In terms of MTU's, COIN management provided low guidance of 4.0 million and high guidance of 7.0 million. In 2019, the net revenue per MTU was $37 and it increased to $49 last year. Over the last 8 quarters, the net revenue per MTU range has grown from $26 in the 1 st quarter of 2019 up to $59 in the last quarter of 2020.</p><p>In our modeling and analysis, we will stick with management guidance, which ranges from $35 million to $45 million in net revenue per MTU. This implies revenue for the final three quarters of the year could be in the $3.48 billion on the low side and up to $4.64 billion on the high side. If we simply average these low and high ranges, 2021 revenue would be $4.1 billion. Considering COIN did $1.8 billion in revenue in the 1 st quarter alone, it is probably safe to assume that 2021 revenue will approach $4 billion this year. Our model is fairly detailed, but for this exercise, we will use a nice round $4.0 billion in 2021 revenue. Then, for 2022, we will assume 15% growth, to $4.6 billion. This does not seem like we are being aggressive. In fact, we wouldn't be surprised if COIN generates this level of revenue a full year earlier.</p><p>Without making an assumption on future volume growth, we need to estimate profit margins for COIN. Over the next decade, we would expect COIN to post EBITDA margins into the mid-50's%. Over the next one to two years, we would like COIN to annually increase margins by 200 basis points. This should be do-able, even with COIN making significant investments in their operational technology and platform.</p><p><b>Stock Trading vs Fundamentals:</b></p><p>It can be challenging to sometimes separate the volatility of a stock from its underlying fundamentals. For example, the primary exchange to trade interest rates is the CME. When it comes to trading Brent crude, most traders prefer ICE (although WTI is primarily traded on CME). While both of these exchanges trade hundreds of other products and assets, those two products (interest rates and Brent crude) tend to materially impact the exchange stock price.</p><p>When it comes to COIN, we anticipate the stock will trade very closely to the price of Bitcoin and Ethereum. If both digital currencies continue to rise, COIN's stock will be a solid success. If Bitcoin falls by (80%), like it did in 2019, COIN's stock will dramatically fall. In a world with massive Bitcoin volatility, COIN's underlying fundamentals should be good. In theory, COIN's stock should correlate and reflect the volatility of Bitcoin and Ethereum, not just their upward trajectory. However, we fully anticipate COIN's stock to trade in-line with the success or failure of Bitcoin.</p><p>Today's reality is that certain market participants are not long-term investors. Many unfortunately consider stocks as pieces of paper, as short-term trading instruments. If Bitcoin were to struggle and decline in value, that volatility and environment would be excellent for COIN. In fact, that might be a great time to \"dip one's toe\" into a position. However, the Reddit and Wall Street Bets community is more likely to consider short-term trading momentum than bottoms up, underlying fundamentals.</p><p>As we discussed earlier, COIN generated an impressive 2020 operating margin of 32%, compared to a (9%) in 2019. While some companies can post steady and smooth operating margins, COIN's will be much lumpier, at least until it is less Bitcoin becomes less volatile. Also, COIN has $188 million of cryptocurrencies on its balance sheet, comprised mainly of $130 million of Bitcoin and $24 million of Ether. There will be opportunities to purchase COIN, when short-term investors sell. This will likely occur as COIN ramps up its expenses or when Bitcoin falls.</p><p><b>Price Target:</b></p><p>Over the next month or so, we anticipate most sell-side analysts will publish targets on COIN. Unfortunately, most will use revenue multiples to determine their price targets. Manole Capital only owns companies that generate earnings and free cash flow, so we are loathe to utilize revenue multiples for price targets. We find that companies that use revenue multiples to justify a valuation are often incapable of generating important free cash flow. We are fine with companies investing in their future to ensure growth, but we cannot invest in companies that aren't concerned with free cash flow. For us, using the crutch of a revenue multiples isn't something we are comfortable doing.</p><p>Fortunately, for this analysis of COIN, the company generates plenty of profit and free cash flow. We conservatively model COIN's revenue next year at $4.6 billion. Also, we believe it can add a point or two to EBITDA margins, into the mid-40% range. That would be 2021 EBITDA of $2.1 billion or $11.89 per share. We don't want to sound like a \"wise old sage\", but in the \"olden days\", investors could utilize reasonable EV (enterprise value) to EBITDA multiples in the 10x to 15x range. Maybe, if a company was experiencing fantastic growth and was getting acquired, you might see an EBITDA multiple approach 20x. Nasdaq, ICE and CBOE all have trailing EV to EBITDA multiples in the mid-to-high teens. In order to be remotely close to where COIN will trade this week, we would have to use a MarketAxess (MKTX) or Tradeweb (TW) lofty TTM EV to EBITDA multiples of roughly 45x. We just don't believe EV to EBITDA is the proper valuation metric to currently use. Should we use another cryptocurrency company like Silvergate (SI) and estimate a valuation using their EV to EBITDA multiple? At 108x trailing EBITDA, that would be a waste of time.</p><p>To arrive at a realistic COIN price target, let's just model earnings and use a premium forward P/E multiple. If we apply a tax rate of 25% (not assuming any tax loss carryovers), we can estimate an EPS in 2021 of $8.50.</p><p>Using that $8.50 per share in EPS, we then want to apply an exchange-like multiple, adding in a premium for COIN due to its exceptional growth. The average publicly-traded exchange trades at a forward P/E multiple of 20x. The table below provides some different targets, based upon the premium P/E one believes COIN deserves.</p><p><b>Forward P/E Multiple 25x 30x 40x 45x 50x</b></p><p>Premium to Peers 20% 50% 100%</p><p>COIN Target $213 $255 $340 $381 $426</p><p>On Wednesday, initial projections are looking for COIN to trade towards $65 billion, which implies $350 per share. We fully anticipate COIN rocketing past $400 and potentially closing the day in the $500 per share range. This would imply a market capitalization of COIN of $93 billion, which is approaching the $100 billion level that have been rumored to have occurred on some private exchanges.</p><p><b>Conclusion:</b></p><p>We expect COIN's direct listing on April 14th to be \"hot\".</p><p>In a typical IPO, companies raise capital and provide exclusive, early access to large institutions. With wire houses placing shares into large institutions and asset managers first, retail investors often get shut out. Retail platforms like Schwab, Ameritrade, Robinhood, Fidelity typically cannot access IPOs for their customers.</p><p>Since COIN has over $1 billion of cash on its balance sheet and does not need capital, it has decided to do a direct listing. The advantage of a direct listing is that it will enable retail investors to purchase COIN at the same time as larger institutions. Once COIN begins to trade freely on the Nasdaq exchange, both retail and institutional traders can participate. With 186 million shares outstanding, the market will ultimately determine what share price COIN trades at. We expect a flood of market orders, creating an interesting first day of trading.</p><p>Is the lofty valuation we just laid out fair? Probably not, but that's what the market will determine. Is this a realistic scenario? Are our forecasts too conservative? Should you be an aggressive buyer? We think our estimates are fair, but COIN will likely immediately trade towards an aggressive multiple.</p><p>If you don't want to pay that kind of forward multiple for COIN, there are other alternative. Maybe you should consider an investment in some of the other (and less expensive) exchanges, like Nasdaq or CBOE? These companies do not have the same growth prospects as COIN, but they do come with a much smaller price tag.</p><p>We believe that COIN is a safe, trusted and easy-to-use platform for trading digital currencies. Some investors believe that they have \"missed out\" on the meteoric rise of Bitcoin, so they might chase a position in COIN. Others will look at COIN as a long-term opportunity to own the dominant digital currency exchange.</p><p>In our opinion, owners should be willing to pay a premium for COIN shares, but they should also be prepared for significant volatility and competition. Only you know your specific risk/reward tolerances. Only time will tell the answers to some of these questions, but we'll get a good idea on Wednesday, once COIN trading begins.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Thinking About Buying Coinbase? - Here's Your Note</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nThinking About Buying Coinbase? - Here's Your Note\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-14 23:14 GMT+8 <a href=https://seekingalpha.com/article/4419039-thinking-of-buying-coinbase><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Wednesday,Coinbase shares open at $381 on Nasdaq, valuing cryptocurrency exchange at $99.6 billion.SummaryCoinbase is going public today.Instead of reading their +300 page S-1, read our 19 page note....</p>\n\n<a href=\"https://seekingalpha.com/article/4419039-thinking-of-buying-coinbase\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"COIN":"Coinbase Global, Inc."},"source_url":"https://seekingalpha.com/article/4419039-thinking-of-buying-coinbase","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1145468327","content_text":"Wednesday,Coinbase shares open at $381 on Nasdaq, valuing cryptocurrency exchange at $99.6 billion.SummaryCoinbase is going public today.Instead of reading their +300 page S-1, read our 19 page note.We discuss: digital currencies, store of value, medium of exchange.Plus, a deep dive into COIN's model, storage, trading, price target.Manole Capital Management - Bitcoin & Coinbase (COIN) - April 2021What is FINTECH?Manole Capital Management exclusively focuses on the emerging FINTECH sector. For some investors, FINTECH means We define FINTECH as \"anything utilizing technology to improve an established process.\"* Source: This is a Business Insider slide on the FINTECH EcosystemFor us, the quintessential FINTECH business is the payment industry. As you can see in this FINTECH ecosystem Business Insider slide, we bolded thePayments and Remittancesspace, as that is our preferred area to invest. Others can invest in FINTECH's through Alternative Finance companies or digital banks or Insurtechs, but for us, we love the payment sector. We are attracted to the predictable, sustainable and recurring revenues of their businesses, where they essentially earn revenue per swipe economics.When most investors discuss FINTECH, they rarely (if ever) discuss the exchanges. Similar to these payment and transaction-based models, many of the exchanges also earn revenue, free cash flow and profits per transaction or trade. When it comes to trading certain assets (interest rates, equities, commodities, foreign currency, etc), there tends to be high barriers to entry or an impregnable moat around certain franchises. While many of these businesses are not recession proof, they have proven to be recession resistant.Financials:While Financials only represent 11.3% of the S&P 500 (as of March 2021), roughly 3/4rd's of this sector's weight is comprised of traditional financial institutions, like banks and insurance companies. These businesses are typically credit sensitive, with opaque and complex balance sheets. To simplify the banking model, the underlying asset is the US dollar and they simply look to borrow that capital at a low fee and lend it out to borrowers at a higher rate. This spread business can generate excellent returns, but it comes with a risk. Is the bank following a solid and time-tested risk model? Are borrowers credit worthy?If an investor has exposure to the Financial sector, one should have a strong opinion on the 10-year yield. The 10-year stands at 1.7% and has significantly risen over the last several months. The Financial sector has a 5-year rolling correlation with the 10-year Treasury of 67% (per Scotiabank and Bloomberg research). We simply choose to not invest in banks and business models that don't have ourideal characteristics (click here).As we stated above, we are attracted to businesses that generate steady and recurring and free cash flow. Unfortunately, most Financials are not transaction based business models.Our Goal:This note will review digital currencies, Bitcoin and the opportunity in the exchange space. We will use our over two decades of experience following and owning exchanges to draw some parallels for this new asset class. For example, there are \"big picture\" matters concerning storage, access, theft, usage, documentation, identity, rights and dozens of other issues. Blockchain and technology advancements theoretically solve some of these problems, but unfortunately not all.Some digital currency or technology experts might find this analysis rudimentary. Others are new to this asset class and want a primer on the industry. That's our primary goal or target, is to provide an initial 30,000 foot view on digital currencies and then dive into the details of the largest (and soon to be public) exchange.As always, we strive to present our work in a very readable format. If they had the patience to read our research, we attempt to write our notes so our 80-year father or 14-year old son could easily understand. We will try our best to review the requirements to be considered a currency, volatility, pricing, digital wallets, NFT's (non-fungible tokens), stable coins and some other digital currency issues. After that, we will do a fairly deep dive into Coinbase (ticker COIN). You can read their nearly 300-page S-1 filing with theSEC (click here)or you can let us serve as your \"Cliff Notes\" version. We will discuss their business model, how they generate revenue, their advantages and disadvantages, as well as provide a framework for valuation and a price target. We hope you find this latest research from Manole Capital topical and interesting.Digital Currencies:In our 1st quarter 2021 investor newsletter, which we published on Seeking Alpha, we discussed COIN's business and its opportunity. We wrote a couple pages on the subject, but felt it deserved a much larger and dedicated piece of research.Before we dive into Coinbase, we wanted to provide our thoughts on Bitcoin and digital currencies. As we stated in the opening paragraph, Manole Capital believes the payments industry is the dominant FINTECH sector. Over the last 5 years, we have done a significant amount of work on digital currencies, trying to understand their best usage, functionality and role in the future of payments. Are digital currencies a threat to the payment networks, processors and merchant acquirers? In order to answer these questions, one has to understand how a typical payment transaction occurs. Who processes, clears and settles a card transaction?We have written dozens of articles on this subject, which can easily be viewed here. In our opinion, there are two main requirements for something to be considered a viable currency. One is that it must be a \"store of value\" and the second is that it must be a \"medium of exchange\".The Requirements To Be A Currency:In order to be a viable currency, two specific requirements are needed. One is that the currency should be a\"store of value\".This is often defined as any asset that can smoothly maintain its economic value, rather than rapidly depreciating. The other requirement is that the currency should be a\"medium of exchange\" or an instrument used to facilitate the sale, purchase or trade of goods between parties.In terms of speed and efficiency, there is no comparison when comparing the centralized payment system to Bitcoin's decentralized platform. Visa processes 1,700 transactions per second and it claims to have 40x the spare capacity, to handle 65,000 transactions per second. PayPal (PYPL) stated that during the 2020 holiday shopping season, it processed over 1,000 transactions per second. Using Bitcoin and its blockchain for global purchases and payments can process roughly 7 transactions per second.As technology improves, one could argue Bitcoin processing will improve. However, if Bitcoin were to get used for payments, the conversion of crypto holdings into US dollars will dramatically increase overall network transactions. We are big believers in the concept of...\"if it ain't broke, don't fix it!\"There are significant acceptance advantages to the existing payment ecosystem. Visa and Mastercard are accepted in over 200 countries and at over 40 million global merchants. Their payment acceptance brands stand for trust and allows billions of purchase transactions to occur each year. The Visa and Mastercard logos are known around the world, permitting the exchange of goods and services in seconds. While Bitcoin is slowly becoming more recognizable, it simply does not have the same acceptance. We believe the existing payment ecosystem handles the \"medium of exchange\" process well. The overall payment landscape is a well-oiled machine, that involves three to four parties, approving transactions in in roughly 1 to 2 seconds.We have discussed the long-term opportunity for a FINTECH company or two to create a \"Super App Holy Grail\". This would be allowing customers to transact with their mobile phone, in whatever currency they wish, at all global merchants. Getting consumers to get rid of their leather wallets is easier said than done. Even though we consider ourselves to be fairly technologically savvy, we still have a wallet that looks a lot like Seinfeld's George Costanza's.Several companies have recently announced their intentions to help spur Bitcoin acceptance. On March 30th, 2021, PYPL announced the launch of its \"Checkout with Crypto\" option. Participating merchants (initially ½ of PYPL's 29 million) can offer their customers the ability to pay for purchases using Bitcoin, Litecoin, Ethereum or Bitcoin Cash. How will this work? Once a PYPL customer purchases or stores crypto holdings in their PYPL digital wallet, he/she will be permitted to use those funds at checkout. When a transaction occurs, PYPL users will see the option to apply their balance to complete a purchase. When customers choose this payment option, PYPL will exchange their crypto for US dollars through its clearinghouse partner, Paxos. The transaction will occur based upon a spot market rate, with a 50 basis point spread built in. PYPL will then remit payment (in US dollars) to the merchant, to satisfy the exchange of goods or services.While this sounds easy, there are significant hurdles. Certain details are still emerging, but customers using this service must buy their crypto within their PYPL digital wallet. This will satisfy PYPL's adherence to Know Your Customer (KYC) guidelines, but it doesn't solve all potential hiccups. The four cryptocurrencies PYPL said customers can use, are likely to cause problems. The SEC and IRS have not deemed these to be currencies, but instead, consider them capital assets. If they were to be used for payment, the underlying client will potentially have capital gain taxes, if their PYPL digital wallet has paper gains. If you are making a $20 purchase at Walgreen's, we don't believe customers are wanting to consider the tax ramifications of using their Bitcoin balance in their digital wallet. That potential $20 purchase could potentially cost you a tax liability of 100%.Even if we ignore the large tax issues, there are additional worries. So, if the cryptocurrency in your digital wallet is going to be used to fund purchases, who is going to pay for it? Merchants will have to pay for the cost of converting cryptocurrencies into US dollars, whatever that cost might be. There will be the traditional merchant discount rates applied, but this will ultimately be another cost for merchants to bear. Besides a company like Tesla, that has a dynamic CEO, do you envision merchant's dying to accept additional costs to help their customers transact? Especially when cards are so ubiquitous?So,Teslahas decided it will accept Bitcoin as a form of payment. What does this really mean? If a consumer has a sizeable gain in Bitcoin and wishes to use it to purchase a \"free\" Tesla, there are serious tax consequences. Just like selling an appreciated stock, where a consumer has to pay capital gains taxes, Bitcoin would be under the same burden. Until the IRS classifies Bitcoin as a currency, and not property, this tax problem will remain.The second problem comes if the Tesla buyer decides to return his/her new vehicle. Tesla reserves the right to pay the consumer back in cash, worth the original purchase price, not in Bitcoin. If Bitcoin jumps in value since the original transaction date, the consumer would be negatively impacted. If Bitcoin falls in price, Tesla could return a depreciated Bitcoin to the car buyer. Are there hundreds of thousands of consumers yearning to purchase a Tesla with Bitcoin? We doubt there's too many, especially if they are aware of the tax issues.Last week, Visa announced it would use various FINTECH API's (application programming interface) offered by cryptocurrency custodian and privately-held Anchorage. Visa plans to settle transactions using US dollar stablecoin, powered by the Ethereum blockchain. Once again, this is exciting news, but will likely encounter problems and take a while to come to fruition.Before one uses Bitcoin to transact at the POS (point of sale), be actually believe it can become an excellent opportunity for money transfer. Western Union is about to turn 170 years old and can be considered the original FINTECH company. However, moving paper currency around the world is not terribly technologically advanced. Visa has launched an expanded version of itsDirectplatform, which will allow for cross border disbursements. Visa's platform supports real-time domestic and cross-border person-to-person, business-to-small business and business-to-consumer use cases, so the options are endless. Bill Sheley is the global head of Visa Direct, and he stated, \"Visa is innovating to give financial institutions, governments, individuals and businesses new ways to pay and get paid beyond the card.\"On the \"store of value\" front, the total addressable market for assets is enormous. For example, art and collectibles are a $20 trillion market, gold is $10 trillion, real estate is $200 trillion, bonds are $100 trillion and equities are another $30 trillion.50% of gold is used in jewelry and another 1/3 is used in electronics. While gold used to back fiat currencies, Britain dropped the gold standard in 1931. The US followed suit in 1933 and totally abandoned the gold standard in 1973. There are additional issues to consider like fixed or variable supply, as well as volatility concerns.We agree that digital currencies are becoming a feasible \"store of value\". In our opinion, digital currencies have significant challenges to becoming a \"medium of exchange\". With that caveat, the opportunity for the crypto-economy and digital currencies to thrive is still open ended and vast.Inflation:The world is always looking for additional asset classes and stores of value, especially as governments keep the currency printing presses running 24 hours a day, 7 days a week.Last year, the Federal Reserve printed an unprecedented amount of dollars, roughly 1/5 th of all US dollars ever printed. On a daily basis, the Bureau of Engraving and Printing produces over $500 million over 38 million notes.If you are the United States and the dollar is considered the dominant global currency, your perception of Bitcoin (or any digital assets) should be of concern. The ability of countries to simply print money should inherently be inflationary, yet Federal Reserve Chairman Jerome Powell continues to seek to get the US at and above 2% annually.A couple of weeks ago, the Biden administration announced an infrastructure bill, called the American Jobs Plan, with a $2 trillion spending target. In March of 2021, US government passed a $1.9 trillion stimulus package. This followed a December of 2020 stimulus package of $900 billion, as well as a CARES Act in March 2020 bill of $2.2 trillion. We are not making a statement about the merits of any of these packages and stimulus programs. We simply are trying to point out the massive amount of money that is getting printed.Many cryptocurrency bulls will cite inflationary worries with fiat currencies for why their digital cryptocurrencies assets are undervalued. We understand this argument, but always come back to an initial framework. If you are the US or the European Union or Chinese government, would you be able to control your society if there wasn't a viable currency in place? Would economies function without government control of its fiat currency? If cryptocurrencies become widely accepted and are considered a better version of payment, would governments be able to function? If the US couldn't issue additional debt to fund its spending initiatives, would it even exist? We just don't believe government regulators will allow certain cryptocurrencies to thrive, especially if it threatens their sovereign currencies.We tend to look at this as a simple supply and demand equation. While Bitcoin has currently issued 18.7 million tokens, there is only a maximum of 21 million that can be created. That fixed supply is counter to some governments. For example, there are countries that have taken the printing of fiat currency too far. Zimbabwe is but one example of runaway inflation. Here's a picture of one of their 100 trillion bills. Yes, that's a 100 trillion. Do you want to be a trillionaire? Simply buy one on eBay for $8.99,by clicking here.Source: This is a picture of Zimbabere's currency, that I took on myiPhoneAs this Piper Sandler chart shows, Bitcoin now has a market capitalization of roughly $1 trillion. If we look at the top 10 digital assets by market capitalization, the vast majority of market share falls to just 2 currencies.* Source: This is a Piper Sandler slide/chartIt is estimated that Bitcoin is over 55% of all cryptocurrency market capitalization and Ethereum is roughly 11%. Cryptocurrencies like Tether, Binance Coin, Stellar, Cardano, Litecoin have a modest following and just 1% to 2% market share (all under $50 million in market cap).Digital currencies should be considered assets, as they can be represented digitally, dynamically transmitted, and stored safely in the cloud. However, digital assets and cryptocurrencies have a long way to go to become used in our globally interconnected economies.Rules & Regulations:In a perfect world, we think all assets should trade 365 days a year and 24 hours a day. In this hypothetical environment, assets should immediately process and settle and fees to transact should be modest. Why does the NYSE only officially operate from 9:30 am to 4:00 pm EST Monday through Friday (and not on holidays)? There are trades that occur pre-market and post-market hours, but liquidity and volumes are sparse. The simple answer is that this is the way it has always occurred and why should we change something that isn't broken.The traditional exchanges have always had a set period of time where they are \"open for business\", but this is changing. For example, the technology backbone of the CME Group (ticker CME) is called Globex. It essentially permits 24/7 trading to occur on its electronic platform for equities, interest rates, commodities, foreign exchange and other assets. After years of investing in international growth, roughly 1/5 th of all volumes come from outside of the US.In order to have access to Globex, there are rules one needs to adhere to, as exchanges are heavily regulated entities. Just like banks need to conduct AML (anti-money laundering) and KYC (know your customer) due diligence on its customer base, the exchanges need to follow strict guidelines enforced by their regulators.As of today, we believe there are over 50 distinct blockchain protocols which support more than 7,500 various digital assets. Unfortunately, the financial systems are not known as entities that are quick to adopt change and technology. The world has embraced the internet, as a revolutionary and transformational platform. However, financial systems are not comfortable seamlessly exchanging data, information and assets. There are numerous activities like cross border payments or peer-to-peer payments that are ideally suited for technological advancements, but rules and regulations exist to stymie growth.The goal of an open and transparent financial system is honorable, but not terribly realistic. In terms of managing one's assets, especially money, the process can be cumbersome.Volatility:If we accept cryptocurrency as a digital asset, we then want to better understand how value is determined, where it can be stored and how best to process and handle its exchange. With decentralized assets, the network allows participants to transact without intermediaries. Who sets the value and determines price?The most notable cryptocurrency is Bitcoin and it has a CAGR of over 150%, from 2013 to 2020. In 2017, it rose 1,318%, but then fell by (72.6%) in 2018. In 2020, it rose over 302% and it currently is up well over 50% this year. Since January of 2017, there have been 5 corrections of 50% of more in Bitcoin, so it can be wildly volatile.We are slowly getting comfortable with digital assets and cryptocurrencies as a \"store of value\" and believe they will become a viable asset in one's diversified portfolio. Each individual or entity needs to determine their own risk and reward framework, so cryptocurrency might be 10 basis points or 10% of one's portfolio.Opinions on Bitcoin are changing every day. Back in 2018, the CEO of Blackrock (Larry Fink) called Bitcoin a currency \"for money launderers.\" A year earlier, JP Morgan CEO, Jaime Dimon called Bitcoin a \"fraud\" and threated to fire any bank employee who dealt with the currency. Fast forward to today: Blackrock (in January 2021) enabled two of its mutual funds to purchase Bitcoin, and a JP Morgan analyst recently published that he thinks Bitcoin could rise to $146,000.Recently, large institutional interest has boosted the price of certain digital assets. High profile investors like John Tudor Jones (May 2020) and Stanley Druckenmiller have made sizeable purchases of various digital currencies. Other companies like Microstrategy (August 2020) and Tesla (Feb 2021) have made sizeable transactions for their firm's balance sheet.Stable Coins:A stable coin is simply a digital asset that is attempts to lower volatility by pegging itself to an actual fiat currency or physical asset (ex: gold). For example, Tether has a market capitalization of over $40 billion, is backed by US dollars and it's the largest cryptocurrency stable coin. One of the risks associated with stable coins is ensuring that the proper amount of fiat currency is held in reserve to match the amount of stable coins in circulation.In prior official commentary, the Governor of the Central Bank of Russia - Elvira Nabiullina - stated that Russa was against any form of private currency, as it threatened financial sovereignty. Russia's Ministry of Internal Affairs also was considering seizing all digital currencies and claiming cryptocurrencies criminal activity. Now, in January 2021, the Bank of Russia began to test a ruble-based stable coin. While starting cautiously, the Russian Central Bank is exploring the possibility of issuing its own digital currency. There are numerous countries that are investigating the process of issuing CBDC's or Central Bank Digital Currencies. China has studied the process of issuing a digital yuan, the European Central Bank is looking into a digital Euro.Other governments and regulators have highlighted the risks of digital currencies. The UK's Financial Conduct Authority called crypto assets \"high risk, speculative investments\" where investors \"should be prepared to lose all their money.\" US Treasury Secretary (and former Federal Reserve Chairwoman) Janet Yellen has warned on investing in digital currencies too. Just a week ago, India's Reserve Bank took a fairly bearish tone on digital currencies. Rumors are that India is looking to pass a law outlawing cryptocurrencies and making anyone trading or holding them punishable with sizeable fines. India's Finance minister is Nirmala Sitharaman and she said India's Cabinet will shortly issue a final ruling on the matter and that the governments ruling is \"under preparation and nearing completion\".Will additional countries look to make cryptocurrencies illegal? These type of comments act as a governor to adoption and change. Politicians and governments are worried about losing control of their economies. Statements like this are further evidence that governments will remain a headwind. We aren't going to put this in the realm of a new \"space race\", but the country that embraces this technology first might have an early advantage versus those that are afraid of change.Digital Currency Conclusion:This quick digital currency discussion was created to set the framework for an analysis of Coinbase (ticker COIN). Will digital currencies replace traditional payment systems? We do not believe it will, but continued adoption and traction in digital currencies is noticeable.Is Bitcoin poised to climb higher, or will it crash? We simply don't know. What we do know is that we prefer to own the medium where these \"assets\" trade. We would compare this to the Gold Rush of the mid-1800's. Back in 1849, owning Levi Strauss made a fortune selling picks, pans and shovels to '49ers looking for gold. Back then, some would say, \"There's gold in those mountains.\"Nowadays, there's a huge opportunity in the collection of data and information. We truly have no idea what the price of Bitcoin will do, except we know that it will be very volatile. As we know, volatility leads to trading, which should equate to profits for the exchanges. Speaking of exchanges, let's now discuss another exchange and upcoming FINTECH direct listing - COIN.Introduction to Coinbase (ticker COIN):The stated goal of COIN is \"to create an open financial system for the world.\" While this is altruistic, it seems to be fairly broad based goal. It is noble to strive to create a financial system that is transparent for all mankind. It might be more prudent to strive to provide an end-to-end infrastructure and technology platform for all types of cryptocurrencies.From our perspective, it might be judicious for COIN to focus its attention on providing value adding services for all types of digital currencies. If COIN becomes the dominant exchange where anyone can easily and securely send and receive Bitcoin, it will thrive. If COIN can create an efficient and accessible marketplace for the emerging digital assets community, it can be a massive success. There are hundreds of platforms that want to democratize access to the crypto-economy, but COIN (as the oldest and most recognizable brand) seems to have an early lead in this race.Coinbase:COIN was started in 2012 and it has built a trusted platform for accessing various crypto currencies. Using blockchain technology, COIN has simplified the user experience and reduced the complexity of purchasing, selling and holding digital currencies. In its early days, COIN was primarily just used for sending and receiving cryptocurrencies. Then, it became a trusted platform for those seeking to invest in various currencies. We liken this period as COIN's realization that it needed to become an \"exchange\" or intermediary between buyers and sellers. It has since launched cryptocurrency payments, distribution capabilities, storage, borrowing and lending services.As this chart from COIN shows, there are over 45 different cryptocurrencies investors can purchase and another 90 that can be stored at COIN.* Source: This is a slide/chart from COIN's S-1However, two primary digital currencies dominate COIN's total trading volumes. In 2020, Bitcoin represented 41% of COIN's trading volumes and 15% came from Ethereum. While this 56% is a decline from 2019 levels (72% of the total mix), we envision both will remain the primary digital currencies traded on COIN.Revenue:Over the last several years, COIN has materially grown its revenue. In 2019, revenue $533 million and it impressively grew to $1.3 billion last year. As we show in our pie chart, in 2020, COIN's $1.28 billion of revenue grew 130% year-over-year and was a mix of 86% Transactional, 3% Subscription & Services and 11% \"Other\".On April 6th, COIN reported 1st quarter 2021 results and the metrics were eye popping. Last quarter, COIN generated $1.8 billion in revenue, which exceeded the prior two years combined.In 2020, 86% of COIN's total revenue wasTransactionalin nature. This means revenue was derived from sending, receiving, investing and spending cryptocurrencies. When it comes to Transactional revenue, we like to look at the fee as a percentage of total volume traded.COIN provided this diagram and it shows exactly what products are inside of each of its revenue classifications. The remaining 15% of total revenue came fromSubscription & Services,which COIN classifies as paying, distributing, storage, and from borrowing and lending cryptocurrencies.* Source: This is a slide/chart from COIN's S-1Storing earns custodial fee revenue, which we will dissect in a couple of pages. Staking revenue comes from validation on a proof-of-stake blockchain transaction. License revenue is generated from users of its Analytics services. Lastly, COIN can earn campaign revenue or distribution fees when its constructs educational materials for issuers. For cryptocurrency issuers, COIN earns revenue for helping the platform engage with its users, in the form of educational videos or tasks, when cryptocurrencies are attempting to widen their distribution, marketing and acceptance. While these ancillary services are nice, the real opportunity is trading.Customer Type:In its S-1 regulatory filing, COIN showed its product portfolio, separated from retail users, institutions and other ecosystem partners. One has to understand that different clients are paying different rates. Over the last 8 quarters, this revenue rate has averaged 0.61%, with a high of 0.80% in the 1st quarter of 2019 and a low of 0.50% in the 4th quarter of 2020.Looking at the last 8 quarters, we can clearly see that both retail and institutional trading volumes have exploded higher. It is interesting to see that Retail was bigger at $45 billion in the 1 st quarter of 2018 than it was at the end of last year at $32 billion. Also, one can see that Institutional trading volumes have gone from $11 billion in the 1 st quarter of 2018 and now are over $57 billion.* Source: This is a slide/chart from COIN's S-1COIN has different fees depending on whether or not the client is retail or institutional, as well as whether or not the client uses Coinbase or Coinbase Pro, which we will discuss this later on, in our pricing section.Trading volumes:In terms of exchanges, it all comes down to volumes. Crypto exchange volumes have soared, because of strong interest from both retail and institutional clients. This type of growth will not continue, but volatility tends to drive overall volumes.Looking at this Compass table, one can clearly see that volumes noticeably increased in 2018, following the rise of Bitcoin in December of 2017. What happened in late 2017 that helped drive future trading volumes? Well, CBOE and CME both launched Bitcoin future contracts that month.* Source: This is a slide/chart from CompassSo far in 2021, COIN has experienced 298% growth in ADV (average daily volumes). What did Bitcoin increase last year? Just over 300%. There's clearly a very high correlation between Bitcoin's recent price and COIN's future ADV.One of our favorites aspects of investing in the exchanges is the ability to simply model the businesses in Excel. The large, publicly-traded exchanges provide wonderful transparency for investors, by posting daily volumes. We liken this to Goldman Sachs or Morgan Stanley providing real-time insights into their prop desk trading results. You shouldn't hold your breath for that level of transparency, right?Bitcoin, Bitcoin and Bitcoin:In the real estate business, the common phrase is that the 3 most important items are \"location, location and location.\" For digital currency exchanges, we believe the 3 most important products are \"Bitcoin, Bitcoin and more Bitcoin.\"On COIN's platform, the volumes tend to be concentrated in a few different currencies. In 2019, BTC or Bitcoin was 58% of COIN's trading volumes, but that fell to 41% in 2020. ETH or Ethereum was 14% in 2019 and that grew slightly last year to 15% of COIN's total. The biggest category jump came from \"other\", which was 18% in 2019 and grew to 44% last year.Having multiple products to transact in is obviously key, but COIN is cryptocurrency dependent. Yes, tokens like Dogecoin might come in and out of favor, but COIN is dependent upon higher Bitcoin and Ethereum prices.A great aspect to owning CME is their transparency. Not only does CME provide daily ADV, but they provide details on open interest. We like to follow open interest, as it is a leading indicator of future volumes. Also, CME provides details on large open interest holders (called LOIH's) or those owners of a minimum of $7.5 million of Bitcoin futures. Over the last couple of months, CME has hit all-time highs in volumes in Bitcoin futures trading. This year, Bitcoin futures contracts on the CME have averaged 13,800 contracts per day, up 42% year-over-year.Like CME, COIN has invested heavily in its technology to give its customers access to a deep pool of cryptocurrency liquidity. Like we just described, this liquidity can act as a virtuous cycle. Volumes beget more volumes and leading more customers onto the platform.Pricing:We focus on the trading volume of an exchange, but also try to model how revenues are generated from this volume. Each trade does not generate the same level of revenue, as different traders tend to pay different prices.In derivative exchange land, we often look at commission prices as RPC or rate per contract. For example, CME charges $0.478 a contract to trade interest rates, $0.545 to trade equities, $0.764 to trade foreign currency, $1.397 to trade metals, $1.336 to trade agricultural commodities and $1.124 to trade energy. Within each product, prices can vary. For example, WTI crude is a different trading price versus natural gas contracts. While CME is trying to get more retail customers into trading futures and options, the vast majority of its volumes are from institutions.At COIN, there are different fees for different clients. COIN has two main fee structures, one called Coinbase Pro and the other called Coinbase Prime. Here's a quick look at the pricing tiers, as discussed in the S-1 filing, based upon whether or not a client is taking or providing liquidity (called taker fee and maker fee).* Source: This is a slide/chart from CompassTransaction revenue, as a percentage of total volumes traded, has averaged 0.61% over the last 8 quarters. Over these 2 years, retail client transactional revenue has increased from 1.27% up to 1.47%. For institutional clients, revenues as a percentage of volumes traded has fallen from 0.07% down to 0.05%. Clearly, retail customers pay significantly more than institutional clients to trade.Also, unlike transacting in a stock, COIN calls its transaction based revenue \"staking\" revenue. This is earned from transaction validation on a proof-of-stake blockchain, when COIN's nodes successfully creates or validates a certain block. This revenue is recognized when the rewards are available for transfer and at the point when the block creator or validation is complete. The metrics that determine the staking revenue are driven by quantity, price and rewards rate.Customers:The strengths of COIN's platform seem to be its vast and extensive network of contacts. COIN is leveraging its trusted brand to attract those that want access to transact or store cryptocurrencies.COIN's growth strategy is based upon driving more customers onto its platform and becoming the de-facto platform for cryptocurrency. Just like the online brokers did in the 1990's, the key to growth was adding new accounts and clients to the platform.In this COIN chart, one can see the exceptional growth in verified users or those that have \"demonstrated an interest\" in COIN's platform. In addition to these users, there are another 7,000 institutional customers, across roughly 100 countries.* Source: This is a slide/chart from COIN's S-1These verified users have registered for an account and confirmed either their email address or a phone number. In our model, we are not terribly interested in tracking verified users as a key metric. While it is nice to know who interested in cryptocurrencies, it is much more important to understand who is willing to transact.As you can see in this Compass Point chart, COIN has 2.8 million MTU or monthly transacting users. In order to be considered a customer needs to have logged in and transacted one time, over a 28-day rolling period.* Source: This is a slide/chart from CompassIt is interesting to see that there were 2.7 million MTU's in the 1 st quarter of 2018 and 2.8 million MTU's at the end of last year. Over those 2 years, MTU's dramatically declined and then lifted. As of today, COIN has roughly 3 million MTUs, which was up +180% year-over-year, but we like to think of it as only 7% of its verified total accounts.This reminds us of the online brokerage business, back in the 1990's and 2000's. For years, the primary goal of marketing executives at the online brokers was to generate more and more accounts. The theory was that with new accounts, clients would eventually look to consolidate their relationships with one or possibly two firms. Once an account was opened, the goal was to increase wallet share from that satisfied customer.For online brokerages, driving customers typically comes from TV advertising. One cannot watch CNBC or Bloomberg or Fox Business without seeing advertisements for Schwab, TD Ameritrade, E*Trade, Fidelity or Interactive Brokers. Robinhood was very successful in opening up investment accounts for the emerging Gen-Z demographic, but its well-publicized issues in late January (regarding prohibiting \"meme stocks\" purchases) might impact its torrid account growth.How does COIN plan on increasing its exposure and customer base? Our guess is that it will look to increase its marketing spend. The ROI or return on investment of TV marketing is somewhat opaque. We anticipate COIN learning from its foray into marketing and advertising, with some successes, as well as some failures.The best avenue to increase accounts and customers is to offer a product that cannot be easily replicated. COIN can continue its account growth by launching new and innovative products, as well as offering access to new cryptocurrencies.While BTC or Bitcoin is the dominant cryptocurrency today, maybe there will be a new and exciting cryptocurrency in vogue tomorrow. Over the last few months, Dogecoin has garnered significant attention and media coverage. While we shake our head and do not understand the fascination with this cryptocurrency, the goal for COIN is to attract and become the go to platform for those that wish to transact. COIN needs to expand its support of all digitally native cryptocurrencies and help to tokenize new assets.Storage:While the vast majority of COIN's revenue is trading based, COIN does earns subscription and service revenue when customers choose to safely store their cryptocurrencies on its platform.COIN is one of the most trusted exchanges in the crypto space and operate as a \"qualified custodian\". This means that they have a separate company, called Coinbase Custody, which operates as a standalone, independently-capitalized business. Under New York State Banking Law, Coinbase Custody is considered a fiduciary. All digital assets are segregated and held in a trust. COIN has never suffered a hack that led to loss of funds and cannot afford to ever have that breached.As you can see in this COIN asset chart shows, there has been excellent growth on the platform. At the end of 2020, COIN had $90.3 billion in assets on its platform, which was up +432% year-over-year.* Source: This is a slide/chart from COIN's S-1Of these assets, 70% was from Bitcoin and another 13% were Ethereum. Clearly, those two currencies represent the bulk of COIN's platform assets.Wallets:The leather wallet in your pocket holds a combination of cash and credit/debit cards. However, cryptocurrencies and tokens need to be kept in a crypto wallet. \"Hot wallets\" are connected to the internet and are considered much less secure, while \"cold wallets\" are kept offline. Most cryptocurrency custodians employ \"cold\" storage to safely hold a client's digital assets.Acting as a cold cryptocurrency custodian (say that 3x fast), COIN derives fee revenue based on a percentage of the daily value of customer accounts. The assets under custody are a function of quantity, price and type of cryptocurrency asset.Custody:In addition to hot versus cold wallets, there are two primary ways to store your Bitcoin. The first is called self-custody. This is when an individual or entity has complete control of their Bitcoin. This entails maintaining and controlling your own private key. When it comes to Bitcoin storage, there is a popular self-custody mantra that says, \"not your keys, not your coins\". This implies that if you do not control the private key for your Bitcoin, it is not truly your Bitcoin.The second way to store your Bitcoin is to outsource it to a trusted custodian, like Kraken, Coinbase, Anchorage or others. In this case, the custodian stores your Bitcoin for you and they have control over its private key. Kraken is security focused and has an time-tested private key management practice. In its 10-years of existence, it has never been hacked.Whether one decides to self-custody or use an outsourced custody provider for storing your Bitcoin, two critical issues must be discussed. The first is trust. Do you trust the custodial firm that holds your Bitcoin? If one self-custodies, they bear the risk of lost private keys, break-ins or natural disasters. On the other hand, self-custody ensures you control your own Bitcoin. The obvious downside of self-custody is that one can lose all of your Bitcoin, if it is not stored properly.Do you trust the bank that holds your checking account or brokerage firm that holds your stocks? US financial institutions are some of the most highly regulated companies in the world and most have proven themselves to be good custodians of our assets. Maybe we can exclude Lehman Brothers and AIG from that statement, but it is fair statement for the other 10,000+ financial institutions in the US.Does trusting a firm called Kraken, with millions of dollars' worth of Bitcoin, sound like a sound idea? Some might prefer to custody with a firm like Bank of New York, which announced in March of 2021, that it intends to enter the Bitcoin custody business. However, does Bank of New York have the technological expertise and security protocols of newer entrants like Kraken? With a random name like Manole Capital, we clearly don't place too much emphasis on one's name. We do however appreciate 3 rd party, independent industry rankings. Kraken has been voted the #1 most secure cryptocurrency exchange by ICO Ratings.The second key issue to consider is protection and safety. Cryptocurrency custodians and exchanges are a prime target for hackers. There are hundreds and potentially thousands of thieves looking to steal your Bitcoin private key. PayPal and Robinhood recently sent warnings instructing their clients to install two factor authentication onto their digital wallets / account. Also, governments can force companies to freeze funds, if they perceive illegal activity or fraudulent behavior.Trusting someone else to store and manage your Bitcoin is a challenging decision. There have been a few custody firms to have disastrous results (i.e. Mt. Gox), but there are also extremely competent businesses that can trusted to hold your cryptocurrencies. For us, we prefer an expert store our assets, as opposed to keeping it under the proverbial mattress.Characteristics:As we mentioned earlier, there are certainideal characteristicswe look for in our investments. COIN has a strong brand name and dominates its cryptocurrency niche. Its platform is scalable and by leveraging certain blockchain advancements, COIN can provide a safe and secure environment for its customers.We often look for our companies to have dominant market shares, high barriers to entry and what Warren Buffett calls a \"moat around the franchise\". Regardless of industry, we always focus on an investment's market share. In terms of COIN's cryptocurrency market share, it has risen from 4.5% in 2018 to 8.3% in 2019 up to 11.0% in 2020.For exchanges, there is typically 1 or 2 firms that dominate the trading of a specific asset. These exchanges have the best liquidity and the tightest bid/ask spreads. For example, the CME dominates US interest rate trading, as well as WTI crude trading. Intercontinental Exchange dominates the Brent crude marketplace. Once an exchange begins to control trading for a certain asset, it is very difficult for a competitor to steal market share. Some try to lower trading pricing and commissions, but this usually is only temporary. Investors are always seeking best execution and will usually return to the marketplace with the most liquidity and tightest bid/ask spreads. From an exchange standpoint, this is definition of dominant market share, competitive advantage or possessing a moat around your franchise.Ideally, COIN is looking to become the one-stop shop for those wishing to buy, sell and/or store cryptocurrency. COIN has many of the desirable characteristics we look for in an investment, but it does have risks.Risk #1: BitcoinFor a business like COIN, there are literally dozens of risks. For starters, cryptocurrencies are volatile and we anticipate COIN's stock will be highly correlated to the price of BTC, Bitcoin and other important cryptocurrencies.As we have mentioned, the underlying price of these cryptocurrencies helps to determine COIN's revenue and profits. Possibly the biggest risk for owning COIN stock will be its reliance and dependency on rising Bitcoin and Ethereum prices.Risk #2: CompetitionOn the retail front, COIN has numerous competitors. For example, both Square's Cash App (36 million users) and PayPal (375 million accounts) are offering mobile-based wallets, primarily to retail clients. Customers can purchase various cryptocurrencies on both Square and PayPal and store them for free.Over time, we expect both of these firms to begin to allow wallet holders to transact in whatever currency he/she wishes. For example, a customer can use their Square Cash App wallet to transact at over 3 million Square merchant acquiring locations. This mobile wallet will permit credit or debit transactions, but might also permit the user to utilize their Bitcoin balance. There are numerous issues that still need to be resolved on this front, but this is what we have been calling \"closing-the-loop\".Risk #3: RegulationsExchanges are highly regulated entities and they must learn to engage with their regulators for the benefit of all market participants. COIN is subject to a regulated environment, but the rules and landscape are dynamic. Unlike US financials, with a known regulator, the laws and rules cryptocurrencies are subject to are constantly changing. As COIN moves more of its business to international markets, it will have additional governmental issues to deal with.The new SEC Chairman is Gary Gensler. Gensler was the head of the CFTC from May 2009 to January 2014 and was the primary regulator for the derivative exchanges. In his tenure at the CFTC, Gensler attempted to write rules and regulations for the swap markets, as suggested in the Dodd Frank Act of 2010 (following the Financial Crisis). Now that Gensler is at the SEC, one of his first challenges is what to do about regulating and providing oversight on Bitcoin and other digital currencies. He is not new to digital currencies, as he was a professor at MIT's Sloan School of Management after his stint at the CFTC. He primarily taught about blockchain technology and cryptocurrencies.As of today, there are only a few crypto funds available to investors. Grayscale has over $38 billion in assets and is the sponsor of the Grayscale Bitcoin Trust (OTC:GBTC), which is provides Bitcoin exposure for qualified investors. GBT investors have a $25,000 minimum investment and currently pay a 2.5% management fee.Many firms (Skybridge Capital, Valkyrie Digital, Fidelity Investments, VanEck, WisdomTree, etc) have announced their intention to offer Bitcoin ETF's. attempted to get the SEC to approve Bitcoin ETF's. As of now, the SEC has not approved any of these filings, but it will ultimately have to make a decision on the subject. Earlier SEC rejections were based upon problems with volatility, transparency, market surveillance and market and price manipulation. We expect a positive Bitcoin ETF to be approved by the SEC in 2021.In addition to SEC regulation, we anticipate the Federal Reserve to explore the subject too. Chairman Jay Powell, in official Congressional testimony, has officially stated that the Fed is looking into the idea of a \"fully digital dollar\". This type of \"Fed coin\" would likely need Congressional and White House approval and it is very much in the early innings of its examination. Chairman Powell is still dealing with the ramifications of a global pandemic and a soft US economy, so a CBDC might not be his first or even second priority right now.Risk #4: SecurityAs with any exchange, security and safety is paramount. We anticipate that COIN will be subject to thousands of cybersecurity attacks. Hackers, criminals and even foreign countries might find it worthwhile to breach COIN's platform. COIN's valuation is dependent upon it keeping its first-mover advantage and its reputation as a dominant cryptocurrency custodian. Security, for customers and partners, cannot be underestimated and COIN will have a very large target on its back.Scale & EBITDA Margins:For us, we always like to model in operating or EBITDA margins, as well as free cash flow for our exchanges. In 2020, EBITDA margins for the largest exchanges were impressive. Here is a table of the dominant four exchanges and their EBITDA margins last year, as compared to COIN. Looking at the 2020 EBITDA margins of its publicly-traded exchange peers, provides interesting insights. Last year, CBOE posted 68% EBITDA margins and CME and ICE each posted margins in the 62% to 63% range. Despite trailing their competitors, Nasdaq had impressive EBITDA margins of 55%, that would be the envy of most companies. One key takeaway is that all of the exchanges are generating impressive margins with excellent leverage and scale opportunities.Exchanges: CBOE CME ICE NDAQ vs COIN2020 EBITDA Margins 68% 62% 63% 55% 41%These exchanges have spent billions of dollars building out a scalable platform, that has enormous operating leverage. Each and every transaction that occurs is extremely high incremental margins. Most do not provide guidance on future or forward revenue, but they do have decent insight into expenses. The CME typically will provide forward expense guidance in the 2% to 5% range each year. Expenses don't dramatically increase each and every year, but do modestly rise.How does COIN compare? Well, COIN is still constructing its exchange and heavily investing in its infrastructure. Last year, technology and development expenses were $271.7 million or 21% of COIN's total revenue. In 2019, this expense line item was 35% of revenue.In 2020, COIN's expenses grew 50% year-over-year to $868.5 million. At this early stage of its lifecycle, we are pleasantly surprised to see that COIN is generating positive operating leverage (expense growth less than revenue growth).As you can see in this Compass Point chart, over the last 8 quarters, COIN's Adjusted EBITDA margins have steadily improved. Are they peaking or at an all-time high? No, but the best part about COIN's current margin trajectory is where we see it going.* Source: This is a slide/chart from CompassIn its S-1, Brian Armstrong (COIN's CEO) stated a focus on operating profits, as it tries to manage its expense growth. He said, \"We may earn a profit when revenues are high, and we may lose money when revenues are low.\" He then went on to state that \"our goal is to roughly operate the company at break even, smoothed out over time.\"This has proven to be true, when one considers that COIN generated $533 million in revenue in 2019, but lost $30m of profit that year. Then, in 2020, COIN produced $527 million of EBITDA on $1.2 billion of revenue. Clearly, the exchanges can generate very impressive profit margins, at scale.The real benefit for the exchanges comes when volatility spikes and volumes soar. As this happens, assuming the exchanges properly manages this rising volatility, profitability climbs. As more and more volumes transact on a platform, free cash flow (and margins) is very attractive. Operating margins at its other publicly-traded exchanges have been high for years and do not fluctuate significantly from year-to-year. As revenues surprise to the upside, because volatility spikes, these exchanges typically reward their shareholders with buybacks and special dividends. As much more mature businesses, these exchanges tend to allow this leverage upside to fall to the bottom line. We anticipate that COIN will choose to re-invest any revenue upside towards marketing, growing its customer base, improving its platform, and building up its infrastructure.Valuation:In their 1st quarter 2021 release, management provided a low-to-mid-to-high range for a number of key metrics. In terms of MTU's, COIN management provided low guidance of 4.0 million and high guidance of 7.0 million. In 2019, the net revenue per MTU was $37 and it increased to $49 last year. Over the last 8 quarters, the net revenue per MTU range has grown from $26 in the 1 st quarter of 2019 up to $59 in the last quarter of 2020.In our modeling and analysis, we will stick with management guidance, which ranges from $35 million to $45 million in net revenue per MTU. This implies revenue for the final three quarters of the year could be in the $3.48 billion on the low side and up to $4.64 billion on the high side. If we simply average these low and high ranges, 2021 revenue would be $4.1 billion. Considering COIN did $1.8 billion in revenue in the 1 st quarter alone, it is probably safe to assume that 2021 revenue will approach $4 billion this year. Our model is fairly detailed, but for this exercise, we will use a nice round $4.0 billion in 2021 revenue. Then, for 2022, we will assume 15% growth, to $4.6 billion. This does not seem like we are being aggressive. In fact, we wouldn't be surprised if COIN generates this level of revenue a full year earlier.Without making an assumption on future volume growth, we need to estimate profit margins for COIN. Over the next decade, we would expect COIN to post EBITDA margins into the mid-50's%. Over the next one to two years, we would like COIN to annually increase margins by 200 basis points. This should be do-able, even with COIN making significant investments in their operational technology and platform.Stock Trading vs Fundamentals:It can be challenging to sometimes separate the volatility of a stock from its underlying fundamentals. For example, the primary exchange to trade interest rates is the CME. When it comes to trading Brent crude, most traders prefer ICE (although WTI is primarily traded on CME). While both of these exchanges trade hundreds of other products and assets, those two products (interest rates and Brent crude) tend to materially impact the exchange stock price.When it comes to COIN, we anticipate the stock will trade very closely to the price of Bitcoin and Ethereum. If both digital currencies continue to rise, COIN's stock will be a solid success. If Bitcoin falls by (80%), like it did in 2019, COIN's stock will dramatically fall. In a world with massive Bitcoin volatility, COIN's underlying fundamentals should be good. In theory, COIN's stock should correlate and reflect the volatility of Bitcoin and Ethereum, not just their upward trajectory. However, we fully anticipate COIN's stock to trade in-line with the success or failure of Bitcoin.Today's reality is that certain market participants are not long-term investors. Many unfortunately consider stocks as pieces of paper, as short-term trading instruments. If Bitcoin were to struggle and decline in value, that volatility and environment would be excellent for COIN. In fact, that might be a great time to \"dip one's toe\" into a position. However, the Reddit and Wall Street Bets community is more likely to consider short-term trading momentum than bottoms up, underlying fundamentals.As we discussed earlier, COIN generated an impressive 2020 operating margin of 32%, compared to a (9%) in 2019. While some companies can post steady and smooth operating margins, COIN's will be much lumpier, at least until it is less Bitcoin becomes less volatile. Also, COIN has $188 million of cryptocurrencies on its balance sheet, comprised mainly of $130 million of Bitcoin and $24 million of Ether. There will be opportunities to purchase COIN, when short-term investors sell. This will likely occur as COIN ramps up its expenses or when Bitcoin falls.Price Target:Over the next month or so, we anticipate most sell-side analysts will publish targets on COIN. Unfortunately, most will use revenue multiples to determine their price targets. Manole Capital only owns companies that generate earnings and free cash flow, so we are loathe to utilize revenue multiples for price targets. We find that companies that use revenue multiples to justify a valuation are often incapable of generating important free cash flow. We are fine with companies investing in their future to ensure growth, but we cannot invest in companies that aren't concerned with free cash flow. For us, using the crutch of a revenue multiples isn't something we are comfortable doing.Fortunately, for this analysis of COIN, the company generates plenty of profit and free cash flow. We conservatively model COIN's revenue next year at $4.6 billion. Also, we believe it can add a point or two to EBITDA margins, into the mid-40% range. That would be 2021 EBITDA of $2.1 billion or $11.89 per share. We don't want to sound like a \"wise old sage\", but in the \"olden days\", investors could utilize reasonable EV (enterprise value) to EBITDA multiples in the 10x to 15x range. Maybe, if a company was experiencing fantastic growth and was getting acquired, you might see an EBITDA multiple approach 20x. Nasdaq, ICE and CBOE all have trailing EV to EBITDA multiples in the mid-to-high teens. In order to be remotely close to where COIN will trade this week, we would have to use a MarketAxess (MKTX) or Tradeweb (TW) lofty TTM EV to EBITDA multiples of roughly 45x. We just don't believe EV to EBITDA is the proper valuation metric to currently use. Should we use another cryptocurrency company like Silvergate (SI) and estimate a valuation using their EV to EBITDA multiple? At 108x trailing EBITDA, that would be a waste of time.To arrive at a realistic COIN price target, let's just model earnings and use a premium forward P/E multiple. If we apply a tax rate of 25% (not assuming any tax loss carryovers), we can estimate an EPS in 2021 of $8.50.Using that $8.50 per share in EPS, we then want to apply an exchange-like multiple, adding in a premium for COIN due to its exceptional growth. The average publicly-traded exchange trades at a forward P/E multiple of 20x. The table below provides some different targets, based upon the premium P/E one believes COIN deserves.Forward P/E Multiple 25x 30x 40x 45x 50xPremium to Peers 20% 50% 100%COIN Target $213 $255 $340 $381 $426On Wednesday, initial projections are looking for COIN to trade towards $65 billion, which implies $350 per share. We fully anticipate COIN rocketing past $400 and potentially closing the day in the $500 per share range. This would imply a market capitalization of COIN of $93 billion, which is approaching the $100 billion level that have been rumored to have occurred on some private exchanges.Conclusion:We expect COIN's direct listing on April 14th to be \"hot\".In a typical IPO, companies raise capital and provide exclusive, early access to large institutions. With wire houses placing shares into large institutions and asset managers first, retail investors often get shut out. Retail platforms like Schwab, Ameritrade, Robinhood, Fidelity typically cannot access IPOs for their customers.Since COIN has over $1 billion of cash on its balance sheet and does not need capital, it has decided to do a direct listing. The advantage of a direct listing is that it will enable retail investors to purchase COIN at the same time as larger institutions. Once COIN begins to trade freely on the Nasdaq exchange, both retail and institutional traders can participate. With 186 million shares outstanding, the market will ultimately determine what share price COIN trades at. We expect a flood of market orders, creating an interesting first day of trading.Is the lofty valuation we just laid out fair? Probably not, but that's what the market will determine. Is this a realistic scenario? Are our forecasts too conservative? Should you be an aggressive buyer? We think our estimates are fair, but COIN will likely immediately trade towards an aggressive multiple.If you don't want to pay that kind of forward multiple for COIN, there are other alternative. Maybe you should consider an investment in some of the other (and less expensive) exchanges, like Nasdaq or CBOE? These companies do not have the same growth prospects as COIN, but they do come with a much smaller price tag.We believe that COIN is a safe, trusted and easy-to-use platform for trading digital currencies. Some investors believe that they have \"missed out\" on the meteoric rise of Bitcoin, so they might chase a position in COIN. Others will look at COIN as a long-term opportunity to own the dominant digital currency exchange.In our opinion, owners should be willing to pay a premium for COIN shares, but they should also be prepared for significant volatility and competition. Only you know your specific risk/reward tolerances. Only time will tell the answers to some of these questions, but we'll get a good idea on Wednesday, once COIN trading begins.","news_type":1},"isVote":1,"tweetType":1,"viewCount":1172,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":321901605,"gmtCreate":1615387686607,"gmtModify":1703488317511,"author":{"id":"3573905892850027","authorId":"3573905892850027","name":"意粉Ethan","avatar":"https://static.tigerbbs.com/3d1a89a25620ab26ecc8fb0f21b12c93","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3573905892850027","authorIdStr":"3573905892850027"},"themes":[],"htmlText":"crypto datas 1","listText":"crypto datas 1","text":"crypto datas 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22:38","market":"us","language":"zh","title":"谁为乔布斯写下「致敬疯子」的广告词","url":"https://stock-news.laohu8.com/highlight/detail?id=2146002531","media":"极客公园","summary":"编者按：1997年，被「罢黜」的乔布斯重新回归执掌苹果公司，除了将「让苹果再次伟大」，乔布斯还参与推出了传世的「Think Different」系列广告。\nThink Different 广告中没有展","content":"<p>编者按：1997年，被「罢黜」的乔布斯重新回归执掌苹果公司，除了将「让苹果再次伟大」，乔布斯还参与推出了传世的「Think Different」系列广告。</p>\n<p>Think Different 广告中没有展示或提及任何苹果产品，只是向甘地、毕加索、爱迪生、卓别林、爱因斯坦、约翰·列侬、马丁·路德·金、鲍勃·迪伦等一系列具有反叛和革新精神的天才和伟人致敬。</p>\n<blockquote>\n 向那些疯狂的家伙们致敬他们我行我素他们桀骜不驯……\n</blockquote>\n<p>由乔布斯亲自配音的广告词「致敬疯子」（To the Crazy Ones），早已成为科技互联网从业者的「圣经」，现在看来依然让人热血沸腾。</p>\n<p>在 Walter Isaacson 撰写的官方传记《乔布斯传》中，作者暗示这段传世的广告词出自乔布斯之手。其实，这是一个美丽的误会。</p>\n<p>Siltanen & Partners 公司首席创意官 Rob Siltanen，在《财富》杂志刊文，回顾了 20 多年前，他与乔布斯创造出《Think Different》广告创意，以及如何将「一坨屎」的脚本，变成了日后脍炙人口的「致敬疯子」广告词的幕后故事。</p>\n<p>苹果「Think Different」广告背后的故事</p>\n<p>随着苹果公司近年来的显著成功，尤其是近期乔布斯去世，不少人开始回顾「Think Different」系列广告的个中亮点，尤其是那段题为《To the crazy ones》这系列文案对苹果公司具有历史性的影响。</p>\n<p>关于这些广告是如何创作、由谁构思、怎样呈现给乔布斯这些问题，有许多不同版本的描述。所以我想，是时间把我关于这件事的看法，和「Think Different」广告背后的故事分享给大家。<img src=\"https://static.tigerbbs.com/71cd762a17cf9b5d2619b9ff3bbc2fb3\" tg-width=\"360\" tg-height=\"497\" referrerpolicy=\"no-referrer\">Rob Siltanen</p>\n<p>Rob Siltanen 曾是 TBWA/Chiat/Day 最年轻的创意总监，获过《时代》《滚石》《今日美国》《广告周刊》年度广告、艾美奖年度最佳广告、五个广告被纽约博物馆的现代艺术馆永久珍藏、汽车行业内最成功的新品发布会和几乎所有广告行业的顶级荣誉：从 One Show 金奖到 Clio 金奖到艾菲奖的全场大奖。</p>\n<p>至于，为什么我知道当时发生的一切？我当时在场，参与了整个过程最核心的部分。我当时是 TBWA/Chiat/Day 的创意总监和执行合伙人，与当时的 CEO 兼首席创意长 Lee Clow 一起负责苹果的提案，我们领导并主要负责这次提案的工作。而我也参与了这次提案从提案前，提案中以及提案后的项目全过程。每一次只要乔布斯亲自参与的沟通会议，我都有 Involve。</p>\n<p>在写这篇文章的时候，我翻出了那时候的手稿和我在整个职业生涯中一直坚持记录的创意日志，以及我在 1997 年为苹果制作这一系列广告时保存的文档（它们最终被证明是很有用的）。在这些日志当中，我找到了在我们试图将苹果重新带回人们视线中的那个时期，我所记录下的数不清的笔记和概念。我还找到了我提交给乔布斯的「To the crazy ones」的原始脚本，和大量粗略的草稿。</p>\n<p>虽然我以前也曾在网络上看到一些关于「Think Different」的构思过程的不太准确的文章和评论，但真正促使我写这篇文章的是最近出版的 Walter Isaacson 的《乔布斯传》。在这部书里，作者暗示，乔布斯创作并写出了「Think Different」广告的大部分广告词。而这是不正确的。因此，我要在此修正这一说法，以还原历史的本来面目。</p>\n<p>乔布斯常常高度参与苹果的广告和苹果公司的其他各方面事务，但他却不是「To the crazy ones」的幕后主创。事实上，他对广告作品的苛刻要求，最终对苹果公司在商业上的重大转型起了举足轻重的作用。正如你将在下文中看到的那样，我最初提交给乔布斯的「The crazy ones」脚本的灵魂，和这个脚本的开头和结尾，在最终的那个著名的版本中都保留了下来，即使乔布斯最开始将我的脚本称为「一坨屎」。我也看过一些关于「To the crazy ones」最初是如何构思的不那么正确的文章。有几个人在整个创意过程中起了重要作用，而著名的「Think Different」的口号，以及将这个口号与一些历史上的梦想家的黑白照片放在一起的概念，是一个非常有创意的人提出的——他是我的朋友 Craig Tanimoto，TBWA/Chiat/Day 当时的美术指导。</p>\n<p>我读过很多关于乔布斯的精彩事迹，以及他对他的妻子、儿女和妹妹是如何温暖而充满爱意。他在斯坦福大学的毕业典礼上的演讲，是我听到过的最感人和最鼓舞人心的演讲之一。史蒂夫有令人惊叹的远见，我觉得，就算说他是当今世界上最有成就的那一类人，也毫不为过。但我也看过很多对于乔布斯的批评，我必须说，我亲眼目睹并亲身经历了他的痛斥和他易怒的脾气——它们有时针对几个人，有时直接冲我而来。这并不是愉快的经历。虽然我非常敬佩乔布斯的卓越成就和非凡激情，但我面对他常常呈现出的那种伤人感情的、居高临下的个性并没有太多耐心。在这一方面，Lee Clow 做得非常好。Lee 不仅仅是一位创意天才，在和乔布斯一起工作的过程中，他表现出了圣人般的耐心。</p>\n<p>有不少人问我乔布斯是个什么样的人，通常我会把他描述成米开朗基罗、密斯. 凡德罗（现代建筑大师）和亨利. 福特的结合体，再加一点约翰. 麦肯罗（美国网球运动员）和马基雅维利的特质。乔布斯是一个强有力的驱动者，没有这个无情而又充满自信的掌舵者，苹果不可能如此迅速地从一个别人眼中的笑柄变成「你梦想拥有它的股票」的公司。但乔布斯不是靠他自己一个人完成这个转变的。许多能力杰出而富有献身精神的人在这中间起了关键性的作用，而这一转变，是从「Think Different」这一系列广告开始的。</p>\n<p>在这里，我将讲述这个故事。<img src=\"https://static.tigerbbs.com/346017c94ccb3e92a263fc13b35dc0f9\" tg-width=\"558\" tg-height=\"397\" referrerpolicy=\"no-referrer\">「Think Different」系列广告截图</p>\n<p>与乔布斯的第一次会面</p>\n<p>那是 1997 年 7 月初，Lee Clow 愉快地走进我的办公室，告诉我说，我们要飞往圣何塞，然后驱车前往库比蒂诺的苹果总部，和乔布斯谈谈苹果广告代理的事情。当时，史蒂夫刚刚回归苹果，出任 CEO，他希望能做出一些改变。在飞机上，Lee 告诉我，他坚信乔布斯会「亲手交给我们」这笔业务。苹果当时的广告代理商是 BBDO，十年前，他们赢得了这项本属于 Chiat 的业务。Lee 认定，Chiat/Day 当初就不应该失去苹果的业务，基于这个原因，乔布斯很有可能用他的方式和我们这家苹果的前代理商重修旧好。</p>\n<p>那时候，我们的广告公司正发展得一帆风顺，不但被各个顶尖的行业杂志评为年度广告公司，而且我们赢得了许多业务，包括几个未经提案就被我们收入囊中的大项目。那一年，我 33 岁，是一位创意总监兼公司的执行合伙人，负责尼桑和英菲迪尼这两个全公司最大的项目。我刚刚为尼桑创作了著名的「玩具篇」广告，被评为年度最佳广告，而我们的尼桑和英菲尼迪这两个小组中，有许多当时业内最有才华的创意人。想到能够为苹果工作，能在汽车行业以外的地方大展拳脚，我们都感到非常振奋。</p>\n<p>在飞往苹果总部的飞机上，Lee 对我说，如果我们被要求和其他广告公司进行比稿，他将会婉言拒绝这笔业务。这么多年以来 Lee Clow 总是和我一起吃午饭，他总是告诉我广告公司为了一个比稿而投入大量的精力和财力是非常荒谬的。现在一切看上去我们已经胜券在握，并且我也很同意 Lee 的观点，我们不应该去比稿。这不仅是因为我们的公司是当时红得发紫的广告公司，也是因为 Lee 曾经创作过苹果历史上最优秀的广告作品。我们觉得，如果这个案子不交给我们做，那简直是对我们的一种侮辱。</p>\n<p>当我们来到苹果总部的时候，一位秘书带我们进了一个大会议室，并说乔布斯稍后就到。Lee 和乔布斯有 10 年没见了，我期待着史蒂夫会给他一个温暖的拥抱，和一句「欢迎回家」式的问候。但情况并非如我想象。</p>\n<p>乔布斯走进会议室，穿着他标志性的黑色高领套头毛衣、短裤和一双拖鞋。虽然一幅休闲装扮，但他却是个彻头彻尾的商人。</p>\n<p>寒暄和互相介绍都非常简短，而且，关于那些黄金时代——那些 Lee 以及 Chiat 的老伙伴们为乔布斯创作了苹果历史上最令人肃然起敬的广告的光辉岁月，完全没有被提及。乔布斯基本上就只是说：「很高兴见到你。谢谢你的到来。现在，让我们谈谈正事吧。」他接着说，苹果现在是「大出血」，公司的状况比他想象得更糟糕。他说：「我们有相当棒的产品，但我们还需要解决一些其他的问题。我会对广告出品严格把关。我已经在和几个广告公司联系会面，看看应该把这个案子给谁做。我会和几个相当不错的广告公司谈谈，如果你们有兴趣的话，我邀请你们参加比稿。」当时我心想，好吧，这可和计划中的不一样。</p>\n<p>乔布斯接着说，整个过程会很快，他不需要看到看到花哨的执行，只需要一些初步的概念和想法。他说：「我不准备做电视广告，只需要在电脑杂志上打些广告，直到我们把公司里的问题解决了。」在这一点上，Lee 表现得镇定内敛，而我则发现乔布斯比我想象得更加霸道和傲慢。他给我的印象是：我们只是又一家有幸得到他接见的公司。我也完全不同意他的广告策略。我插嘴道：「这个世界上有一半的人认为苹果就要完蛋了。在电脑杂志上做一些小打小闹的广告，对你没有任何意义。你需要的是，向世界证明苹果还是强如雄狮。没有人会站在饮水机边上跟同事聊起一则杂志广告。你需要做一些更大的、更出位的动作。你需要电视广告，和其他一些真正能给你带来动力的东西。」我接着说，每一家广告公司都能跟你说得天花乱坠，但你需要看到真正的创意执行，才能判断一个创意的力量。</p>\n<p>「好啊，那就向我展示你们这些家伙所认为的最好的创意和执行吧！」乔布斯反击道。这对我们来说不是一个好开头，但我不介意唱白脸，因为我相信 Lee 很快就能把这事儿彻底结束掉。「好吧，这事儿由 Lee 说了算」，我说。几个小时前，Lee 曾经告诉我，我们不会参加比稿，所以我把头转向 Lee，以为他会说「谢谢，但我们不比稿」。但他只是平静地说「好吧，如果你更喜欢你正在洽谈的其他机构，为什么你不找他们中的一家为你服务呢？」乔布斯说，他可能会这么做。然后 Lee 告诉乔布斯，「我会回去考虑一下，明天给你电话。」</p>\n<p>在驶向圣何塞机场的出租车上，我问 Clow 到底是怎么了：「我以为你会说我们不比稿呢。」Clow 说，「我改变主意了。如果我们赢得这个案子，我们将成就一个伟大的故事。我要把这个案子赢回来。」</p>\n<p><img src=\"https://static.tigerbbs.com/8eee2df6c41a9c5edb5ece59d460f2ec\" tg-width=\"640\" tg-height=\"858\" referrerpolicy=\"no-referrer\">苹果公司的来访者通行牌。图片由作者提供</p>\n<p><b>创作过程</b></p>\n<p>回到公司，我召集了我们的创意团队，向他们简要介绍了这个任务。他们大多是我的尼桑项目组中的成员，还有几个初级美术指导，他们是 Lee 的创意助手。我们没有时间去等待一个很长的策划书出炉，或者制作一个详细的创意简报。我们必须尽快解决「如何使苹果公司走上正轨」这个问题。</p>\n<p>这个团队里的所有创意人都是苹果电脑的资深用户。他们不仅仅只是「了解」这个品牌——多年来，他们每天使用它，并且热爱它。他们确实不需要一个正式的策划书。我让大家马上开始创意思考，一周之后再来审视我们的工作。与此同时，我们的客户团队、策划人员和新的业务团队也帮我们尽可能多地收集资料，分析苹果在市场上的强项和弱势。</p>\n<p>苹果在各种创意行业中拥有一批品牌发烧友。所以我们想，也许为苹果「止血」的最好方法就是让我们所听说过的支持苹果的名人们来为这个品牌做推荐。我们发现，大导演斯皮尔伯格和著名歌手斯汀等名人使用苹果电脑，其他的几个创意界的明星也是苹果电脑使用者。不过，我们也看到了一些关于苹果的负面评论，许多商业领域的人将苹果电脑称为「玩具」，认为它不能胜任「真正的」运算工作。同时，舆论界开始暗示购买苹果电脑是一种愚蠢的行为，他们宣扬苹果已经很小的市场份额正在日益缩水，并且苹果的一部分应用程序是来自于 PC。苹果当时真是面目不堪，情状丑陋——但我们相信，在这丑陋的状况之中，孕育着美好的机会。</p>\n<p>接下来的那一周，我们在公司里的大会议室里集合，每个人都把自己的作品张贴在墙上。整个房间里贴满了照片、素描、粗略的想法和标语。你看过电影《美丽心灵》里，整个房间的每一寸墙壁都贴满纸张的那一幕吗？当我们有一个新的提案或者一个大项目需要准备的时候，我们的会议室通常就是这样的。这场比稿也不例外。大约有四个不同的团队展示了他们的作品，但都表现平平。数量不一定能带来质量。</p>\n<p>但有一个广告跃入我的眼帘。它强烈地吸引了我的眼球。</p>\n<p>这是一个广告牌的创意作品，只是简单地呈现一些革命性的人物和事件的黑白照片。包括一张爱因斯坦的照片、一张托马斯. 爱迪生的照片、一张甘地的照片，还有一张把花放在枪管里的越战时期的反战照片。照片顶部是苹果的彩虹色 Logo，以及「Think Different」字样。别的什么也没有。</p>\n<p><img src=\"https://static.tigerbbs.com/77259106242c4243a79959b9d914de44\" tg-width=\"840\" tg-height=\"1156\" referrerpolicy=\"no-referrer\">「Think Different」系列广告</p>\n<p>这个系列的作品是由一位很有才华的美术指导 Craig Tanimoto 创作的。Craig 与我共事多年（主要是在尼桑项目中），他总是能从独特的角度来看待事物。几年后，当我成立了自己的广告公司，Craig 成了我第一批聘请的创意人之一。</p>\n<p>在充斥着电脑照片和老套的名人照的房间里，Craig 的作品显得醒目而新鲜。但同时，这个作品还需要有人来做些解释。</p>\n<p>我问 Craig 这一系列作品有什么含义，他说，「IBM 有一个广告运动，叫『Think IBM』，我想，苹果和 IMB 非常不同，所以我想『Think Different』会很有趣。然后我想，如果把这个语句和世界上思维最不同寻常的人的照片放在一起，那将会非常酷。」</p>\n<p>彩虹标志和与之形成鲜明对比的黑白照片放在一起，在我眼里，这似乎更能突显「Think Different」这句宣言。它就是苹果现在迫切需要的那种夺人眼球而又引人深思的广告。Clow 也非常喜欢这个广告，因此，我们让在场的每一个人都开始创作这则广告在电视和其他媒体上的版本。</p>\n<p><img src=\"https://static.tigerbbs.com/5247f7a3b9adfad3e95b0cc6d69a68df\" tg-width=\"1080\" tg-height=\"805\" referrerpolicy=\"no-referrer\">「Think Different」和苹果的 Logo 放在一起的手稿，图片由作者提供</p>\n<p><img src=\"https://static.tigerbbs.com/7d5a6e6f04089ec22d5b62ac5db8e1cc\" tg-width=\"1080\" tg-height=\"1448\" referrerpolicy=\"no-referrer\">杂志广告的素描草稿，图片由作者提供</p>\n<p>在这个时候，整个团队的人都开始了电视脚本的构思，一些美术指导开始寻找其他可以用在杂志广告上的著名的黑白照片。同时，Clow 和公司里最有才华、最具艺术性的广播制作人 Jennifer Golub 一起，寻找这些传奇人物的影像资料。通常当我们准备一个项目提案，或者要开始从头构思一个广告活动的时候，我们会创建一个我们叫做「rip-o-matics」的东西，或者一个表达我们的「情绪」和「概念」的视频。这些视频通常只会提交给客户看，作为广告作品的背景设置。在真正创作电视广告时，由于成本高昂，你必须把时间控制在 30 秒或 60 秒的时间之内；但在「情绪」视频中，时长不是问题，因为它的首要目的，是创造广告的感觉和调性。</p>\n<p>Clow 提出了一个很有启发性的想法：使用 Seal 的那首令人铭刻于心的歌曲「Crazy」，用其中的关键歌词「We're never going to survive unless we get a little crazy」作为整个视频的引导力量。我和 Clow 用小卡片来诠释这个创意：纵观整个历史，真正的梦想家总是逆潮而上，想法与众不同，而苹果，就是为这一类人而打造的工具。</p>\n<p>随着视频的播放，一系列的卡片逐一呈现：</p>\n<blockquote>\n There are people who see the world differently.They see things in new ways.They invent, create, imagine.We make tools for these kinds of people.Because while some might see them as the crazy ones,we see genius.（FADE TO APPLE LOGO AND TAGLINE)Think different.\n</blockquote>\n<p>「换个角度看待世界」</p>\n<p>这则由 Chiat 公司里的剪辑师 Dan Bootzin 剪辑的视频，极富感染力。时长在 2 分钟左右。我们竭尽全力要把它删减成一个 60 秒的版本，因为我们认为，如果我们赢得了比稿，乔布斯会把它作为电视广告来投放。但是原有的歌词没法用在删减版里面。虽然我觉得这个视频作为一个表达内心，传达情绪的作品，是非常优秀的。但我相信我能写出想到更贴合的主题，更有力量的东西。我想，如果乔布斯喜欢我们提出的这个方向，我就再写一个更有冲击力的版本。</p>\n<p>随着这支「情感满溢」的视频的完成，户外广告和印刷品广告也准备就绪，TVC 的故事板也构思好了。我们花了一天的时间，在公司内部做提案预演。在一般的提案中，我们会有三到四个人，扮演不同的角色来进行演示。但是因为 Clow 和乔布斯过去的关系，并且我们只有一个系列的广告需要呈现，因此我提议由 Clow 来完成整个提案——从创作背后的思考到创意执行的全过程，都由他来讲述。Lee 是一个令人惊叹的演讲者，再加上他个人对苹果有强烈的情感，以至让我觉也开始觉得，其他人的加入只会会打断他流畅自如的演绎。Lee 和我们团队的其他成员都同意这一观点。</p>\n<p><img src=\"https://static.tigerbbs.com/62f56c87fdcca28e2806f13f9e42e540\" tg-width=\"1080\" tg-height=\"552\" referrerpolicy=\"no-referrer\">「Think Different」系列户外广告</p>\n<p><b>提案</b></p>\n<p>我们中的几个人飞往圣何塞，被领到苹果公司的一个小会议室里，准备我们的演讲。乔布斯和其他几个苹果的人走了进来，那天，他看上去情绪高涨。Clow 开始提案了。他越说越激情澎湃。他把乔布斯带入我们的思路中，向他展示了户外、平面和电视广告。他紧密结合了我们的「情绪」视频，并且总结说，他认为这才是苹果应该做的广告，而作为代理商，我们是最合适的选择。</p>\n<p>乔布斯在整个过程中非常安静，但是显得很有兴趣，现在该是他发话的时候了。他环顾了充满了整个房间的「Think Different」的广告牌，然后说，「这是伟大的创意，这的确是伟大的……但我不能做这样的广告。人们已经认定我是个自大狂了，如果再把苹果的 Logo 放在这些天才人物的上面，媒体一定会对我冷嘲热讽的。」整个会议室里鸦雀无声。「Think Different」是我们准备的唯一一则广告，我想这下我们完蛋了。然后乔布斯停顿了一下，环顾四周，几乎是自言自语地大声说，「我这是在做什么？去它的。这是我们应该做的事情。这是伟大的广告。我们明天谈谈吧。」就在几秒钟之内，在我们每个人的眼前，他来了个 180 度的大转弯。</p>\n<p><b>提案通过之后</b></p>\n<p>当我们正式赢得苹果的案子之后，如我所料，乔布斯说他想把那则视频拍成电视广告。他对这则视频十分着迷，并且想把它剪成一个 60 秒的版本。我们告诉他，我们在提案之前已经试过了，但没有成功；不过我们会继续做一些尝试。于是我们试了一次又一次，但是都没有成功。从 Seal 那里拿到版权也遇到了一些小麻烦，但总算没什么大问题。Seal 这首歌的歌词是这则视频里强有力的要素，如果我们把它删减，或者干脆弃之不用，这则广告就失去了它的力量。Lee 和我飞回苹果处理一些基本的工作，并且告诉乔布斯，原来的「情绪」视频本来就没有打算用在电视广告中，而且我们也无法删减它。他对此有点不高兴。我告诉他我将会为这个广告写一份更好的文案。我总是为 Robin Williams 主演的电影《死亡诗社》所深深感动，电影中一些特别的桥段对我产生了非常重要的影响。这部电影中的情绪和语境，与我想要为苹果捕捉到的东西十分贴近。下面是一些《死亡诗社》中引起我共鸣的关键台词，它们最终转化为苹果广告脚本的创作灵感。</p>\n<blockquote>\n We must constantly look at things in a different way. Just when you think you know something, you must look at it in a different way. Even though it may seem silly or wrong, you must try. Dare to strike out and find new ground.Despite what anyone might tell you, words and ideas can change the world.We don't read and write poetry because it』s cute. We read and write poetry because we are members of the human race. And the human race is filled with passion. Poetry, beauty, love, romance. These are what we stay alive for. The powerful play goes on and you may contribute a verse. What will your verse be?（译文：我们必须不断地用不同的方式来看问题。当你认为你已经了解了一件事情，你必须用不同的角度来看待它。哪怕这样看起来可能会很傻，甚至是错的，你都必须去尝试它。要敢于开拓，发现新的天地。无论任何人跟你说什么，语言和思想可以改变这个世界。我们读诗和写诗不是因为它可爱。我们读诗和写诗，因为我们是人类的一员。而人类，充满了热情。诗歌、美、爱、浪漫。这就是我们活着的目的。充满力量的戏剧正继续上演，而你可以献上一首诗。你的诗是什么样的？）\n</blockquote>\n<p><img src=\"https://static.tigerbbs.com/bb213c87b00db4cd0560bb7efe793003\" tg-width=\"1080\" tg-height=\"618\" referrerpolicy=\"no-referrer\">再见船长：我们读诗、写诗并不是因为它们好玩，而是因为我们是人类的一分子</p>\n<p>我引用了《死亡诗社》中的几句台词，并问史蒂夫是否看过这部电影。他说，「当然看过。Robin Williams 和我是好朋友。」我告诉史蒂夫我会写一些有相似调性的东西，我们一周之内还会回来。</p>\n<p>我回到了公司，无休止地日夜工作。我的创意日志里写满了无数手稿和脚本。我抱着「这是从 Robin Williams 口中说出的话」的心态去写每一句话。有两个小节我十分钟爱。一个是开头，它像一首诗的标题：</p>\n<blockquote>\n To the crazy ones. Here's to the misfits. The rebels. The troublemakers. The people who see the world differently.（译文：致那些疯狂的人。那些不合时宜的人。那些叛逆者。那些麻烦制造者。那些用不同的方式看待这个世界的人。）还有结尾：The people who are crazy enough to believe they can change the world are the ones who actually do.（译文：那些疯狂到真的相信自己能够改变世界的人，才是真正改变世界的人。）\n</blockquote>\n<p>我觉得这个开头充满了力量，因为我把它和一些天才们的图像放在一起，它一定会给人强大的震撼。我想到了历史上最耀眼的人物和他们的奋斗历程。他们中的许多人历经磨难，而我已逐渐看清他们的共同特点。像苹果一样，他们都有惊人的远见；但也像苹果一样，他们都曾被贴上「不讨人喜欢」的标签。马丁. 路德. 金在被公众当做圣人之前，一直被看成是一个麻烦制造者；叛逆者特德·特纳（CNN 的创办者）在第一次试图兜售 24 小时新闻频道的时候，被当成一个笑柄；爱因斯坦在成为全世界最伟大的思想者之前，也被认为是个满脑子疯狂想法的家伙。同样，在 1997 年，苹果被批评是只适合「创意人」使用的「玩具」，因为它和别的电脑有着不一样的操作系统。因此，我认为，这一篇文案既是对苹果粉丝的宣言，也能够让不认同苹果的人重新审视他们对苹果的认识，并且认识到，差异是一件好事。拉尔夫·沃尔多·爱默生（美国思想家）曾说过：「伟大意味着被误解。」而我相信，这就是「Think Different」广告背后的核心思想。</p>\n<p>我觉得这个脚本的结尾既精炼简洁又富有诗意，是整篇文案中我最喜欢的部分。写到中间的部分，我有一点纠结，并且写了无数个版本，因为这是一个转折的部分，需要在这里说明苹果和这些天才人物的关系和共性，而又不能显得太生硬，不能显得像强行兜售。最后，我写出了几个我认为不错的版本。我把它们拿给 Lee 看，他也认为这些都不错。他对文案做了一些微调，我们粗剪了一个由我配音的 60 秒的电视广告。我们让办公室里的几个同事看了这个版本，一些人说，这让他们兴奋不已。</p>\n<p><img src=\"https://static.tigerbbs.com/c1a924ab001e20e7bf8bb318e794f3ae\" tg-width=\"800\" tg-height=\"560\" referrerpolicy=\"no-referrer\">1997 年的乔布斯</p>\n<p>我和 Lee 飞往库布蒂诺，亲自为乔布斯放映这段广告片。当时房间里只有我们三个人。我们放了一遍片子，当它结束的时候，乔布斯说：「这太差劲了！我讨厌它！这坨广告公司做出来的狗屎！我还以为你会写一些像《死亡诗社》那样的东西！这就是一坨屎！」</p>\n<p>Clow 说了一些「好吧，我想你不想再看一遍了」之类的话。而乔布斯还在咆哮着，说他要找《死亡诗社》的编剧，或者一些「真正的作家」来为他写文案。</p>\n<p>我被他一长串的责骂吓了一跳。我用心、用灵魂去创作这则作品，并且我相信我在整个广告创作中起了关键的作用，但他却对我大发雷霆。我对他说，「乔布斯，你可能不喜欢这则广告片，但它不是一个烂广告。」乔布斯依然坚称他认为这就是坨屎。而 Clow 则试图平息乔布斯的怒火，说我们会回去再多做些尝试。</p>\n<p><img src=\"https://static.tigerbbs.com/721103429d941cbebad279e9e6ef43de\" tg-width=\"600\" tg-height=\"446\" referrerpolicy=\"no-referrer\">「To The Crazy Ones」早期的手稿，Rob 原来想让 Robin Williams 来为这则广告配音（图片由作者提供）</p>\n<p>我提交给乔布斯的原始脚本（从我的文档中找出来的）如下。如你所见，它和最终播出的版本非常接近。</p>\n<blockquote>\n To the crazy ones.Here's to the misfits. The rebels. The troublemakers.Her's to the ones who see the world differently.They're the ones who invent and imagine and create.They're the ones who push the human race forward.While some may see them as the crazy ones, we see genius.Because the people who are crazy enough to believe they can change the world are the ones who actually do.FADE TO APPLE LOGO AND LINE「Think different.」以下为译文：致那些疯狂的人。那些不合时宜的人。那些叛逆者。那些麻烦制造者。那些用不同的方式看待这个世界的人。那些去发明、去想象、去创造的人。那些推动人类向前发展的人。当一些人将其视为疯子的时候，我们将其视为天才。因为那些疯狂到真的相信自己能够改变世界的人，才是真正改变世界的人。（画面淡出，苹果 Logo 和「Think Different」淡入。）\n</blockquote>\n<p>当我和 Clow 走出苹果大楼的时候，我告诉他我已经为了这个脚本做了我所有能做的一切，他最好还是换一个人去和乔布斯打交道。我告诉他苹果这个案子占用了我太多的时间，现在，作为公司的两个最大项目，尼桑和英菲迪尼小组的创意总监，我需要把更多时间花在我的本职工作上。Clow 同意了。</p>\n<p>回到公司以后，我像原来那样，把精力投入到我们的汽车客户上。同时，Lee 把苹果的电视广告脚本的任务分配给了公司的几个文案，并且从外面请了一些著名的自由撰稿人来帮忙。其中一位文案叫 Ken Segall，他是我们在赢得苹果业务之后聘用的一位很有天赋的文案和创意总监。Ken 过去曾与乔布斯一起共事，Clow 说服他离开了原来在纽约的公司（Y&R），跳槽到洛杉矶来负责苹果业务。Ken 抵达洛杉矶之后，很快就接到任务，和其他文案一起撰写苹果的电视广告脚本。有一天，Ken 走进我的办公室，对我说：「乔布斯看完了一大堆脚本，他绕了一大圈，还是回到原点……我们准备按照你的『Crazy Ones』的脚本写下去。我做了一些改动，希望你别介意。」</p>\n<p>Ken 为电视脚本添加了一些优美的语句，并且创作了一个加长版，以便于杂志广告和报纸广告的投放。他添加进去的东西真是好极了，它们真正提升了整个片子，但又完整地保留了原稿的灵魂和精髓。</p>\n<p>虽然我们非常希望《死亡诗社》的主演 Robin Williams 能为这则广告配音，但他拒绝做任何形式的广告。于是我们只好请 Richard Dreyfuss 来配音。我一直认为 Tom Hanks 或 Dreyfuss 是除了 Robin Williams 之外最好的选择。Clow 总是想要乔布斯自己来配音，但我听过乔布斯配音的版本，我不认为那是最好的。乔布斯配音的那版似乎太过于强调自我了，而 Dreyfuss 的版本则非常精彩。我后来还让 Robin Williams 为奥运广告配音——他完全是来帮忙，因为这是无偿的——他的表现也非常令人惊喜。Dreyfuss 以一种缓慢、坚毅而又独一无二的语调来为「Crazy ones」配音，使每一个词都显得更加重要。在我心目中，Dreyfuss 是最为完美的选择，他的配音达到了难以超越的巅峰。</p>\n<p>户外广告和电视广告出街后，苹果很快成为大众讨论的话题。也并不全都是说好话的，一位《洛杉矶时报》的作者讽刺这场广告运动，「苹果用一堆死人来做广告真是再合适不过了，因为这个品牌也快要死了。」但，最好的事情是——不论说它好还是说它坏，人们已经开始讨论这个原本快要从他们视野中消失的品牌。人们频繁地谈论它。苹果当然还活着，就算不是强如雄狮，也能给人深刻印象。这些广告再次点燃了苹果的忠实粉丝们的热情，争取到了骑墙派的支持，并且让那些曾经认为苹果又傻又酷的受众们一夜之间开始以全新的方式来看待这个品牌。苹果恢复了活力，它即将创造历史了。</p>\n<p><img src=\"https://static.tigerbbs.com/139902d581be73495214c26771fa74a1\" tg-width=\"1080\" tg-height=\"1448\" referrerpolicy=\"no-referrer\">「Think Different」的获得 Clio 奖时的创意人员名单，乔布斯被列在「文案」名单中（图片由作者提供）</p>\n<p>总结</p>\n<p>虽然整个广告概念不是乔布斯创作的，但他对这个广告运动也功不可没。正是他做出决定，选择了正确的广告商，进行了正确的广告运动。他运用了他巨大的影响力，牢牢抓紧了人才，将人们团结在他周围。我从来没有见过有人能够做到像他一样。没有乔布斯，这样一个庞大的广告运动根本无法实施。但是，尽管乔布斯获得了比他之前的商人更了不起的成就，也是因为他获得了许多人的帮助。而如果没有那些忘我工作的广告人，苹果从星星之火到燎原之势的转变，可能就不会发生。</p>\n<p>「Think Different」广告推出后，尽管没有重要的新产品推出，苹果公司还是很快感觉到了它的推动力。12 个月之内，苹果的股价翻了三倍。「Think Different」广告推出一年后，苹果的多彩 iMac 面市。这款电脑代表了一种革命性的设计，它成为了历史上最畅销的电脑。但如果没有「Think Different」广告活动作为先导和支持，这些果冻色、软糖状的电脑可能又会被媒体和公众认为是苹果推出的又一款「玩具」。</p>\n<p>即使和乔布斯的争论令我痛苦，但这件事情还是有了一个很好的结果。「Think Different」广告赢得了许多荣誉，而「Crazy Ones」也获得了不少年度广告奖项。</p>\n<p>在创意人员名单上有很多人的名字——而 Clow 也把乔布斯给加上了。我认为这很酷，因为一个广告活动确实需要很多人的支持和奉献。Craig Tanimoto 和我一起继续愉快地共事，为其他品牌创作广告。我们保持着亲密的友情。Ken Segall 后来为 iMac 的面市创作了精彩的广告。在最后回到纽约之前，他为苹果公司创作了大量优秀的作品。</p>\n<p>其他几位杰出的创意人也为这个广告做出了相当大的贡献——如 Yvonne Smith、Margaret Midget Keen、Jessica Shulman、Jennifer Golub 和 Dan Bootzin。他们为苹果的事业奉献了自己的才华和大量的时间。此外还有 Chait 优秀的媒介总监，Monica Karro，还有 Duncan Milner、Eric Grunbaum 和 Susan Alinsangan 这些优秀的创意人，他们用一个接一个梦幻般的广告让苹果这把火越烧越旺——当然，这些和 Lee Clow 的才干、引导以及耐心是分不开的。</p>\n<p>尽管乔布斯的逝世令全世界哀痛，但他留给这个世界的遗产和影响将会被永远铭记。我不禁在想，也许他的生命被死神无情地剪短了，但他留下的回忆，比我们所有人的生命都要长。苹果公司干得也很漂亮。他们 1997 年的时候还深陷困境，而今年，他们已经成为了世界上最有价值的公司。疯狂吗？你最好相信它。</p>","source":"jkgy","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>谁为乔布斯写下「致敬疯子」的广告词</title>\n<style 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}\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n谁为乔布斯写下「致敬疯子」的广告词\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-28 22:38 北京时间 <a href=https://mp.weixin.qq.com/s/aImgVzw_C7aMEs7fhRESVQ><strong>极客公园</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>编者按：1997年，被「罢黜」的乔布斯重新回归执掌苹果公司，除了将「让苹果再次伟大」，乔布斯还参与推出了传世的「Think Different」系列广告。\nThink Different 广告中没有展示或提及任何苹果产品，只是向甘地、毕加索、爱迪生、卓别林、爱因斯坦、约翰·列侬、马丁·路德·金、鲍勃·迪伦等一系列具有反叛和革新精神的天才和伟人致敬。\n\n 向那些疯狂的家伙们致敬他们我行我素他们...</p>\n\n<a href=\"https://mp.weixin.qq.com/s/aImgVzw_C7aMEs7fhRESVQ\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"https://static.tigerbbs.com/de1a3efca4d9c931922bccc94c9a95bc","relate_stocks":{"AAPL":"苹果"},"source_url":"https://mp.weixin.qq.com/s/aImgVzw_C7aMEs7fhRESVQ","is_english":false,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2146002531","content_text":"编者按：1997年，被「罢黜」的乔布斯重新回归执掌苹果公司，除了将「让苹果再次伟大」，乔布斯还参与推出了传世的「Think Different」系列广告。\nThink Different 广告中没有展示或提及任何苹果产品，只是向甘地、毕加索、爱迪生、卓别林、爱因斯坦、约翰·列侬、马丁·路德·金、鲍勃·迪伦等一系列具有反叛和革新精神的天才和伟人致敬。\n\n 向那些疯狂的家伙们致敬他们我行我素他们桀骜不驯……\n\n由乔布斯亲自配音的广告词「致敬疯子」（To the Crazy Ones），早已成为科技互联网从业者的「圣经」，现在看来依然让人热血沸腾。\n在 Walter Isaacson 撰写的官方传记《乔布斯传》中，作者暗示这段传世的广告词出自乔布斯之手。其实，这是一个美丽的误会。\nSiltanen & Partners 公司首席创意官 Rob Siltanen，在《财富》杂志刊文，回顾了 20 多年前，他与乔布斯创造出《Think Different》广告创意，以及如何将「一坨屎」的脚本，变成了日后脍炙人口的「致敬疯子」广告词的幕后故事。\n苹果「Think Different」广告背后的故事\n随着苹果公司近年来的显著成功，尤其是近期乔布斯去世，不少人开始回顾「Think Different」系列广告的个中亮点，尤其是那段题为《To the crazy ones》这系列文案对苹果公司具有历史性的影响。\n关于这些广告是如何创作、由谁构思、怎样呈现给乔布斯这些问题，有许多不同版本的描述。所以我想，是时间把我关于这件事的看法，和「Think Different」广告背后的故事分享给大家。Rob Siltanen\nRob Siltanen 曾是 TBWA/Chiat/Day 最年轻的创意总监，获过《时代》《滚石》《今日美国》《广告周刊》年度广告、艾美奖年度最佳广告、五个广告被纽约博物馆的现代艺术馆永久珍藏、汽车行业内最成功的新品发布会和几乎所有广告行业的顶级荣誉：从 One Show 金奖到 Clio 金奖到艾菲奖的全场大奖。\n至于，为什么我知道当时发生的一切？我当时在场，参与了整个过程最核心的部分。我当时是 TBWA/Chiat/Day 的创意总监和执行合伙人，与当时的 CEO 兼首席创意长 Lee Clow 一起负责苹果的提案，我们领导并主要负责这次提案的工作。而我也参与了这次提案从提案前，提案中以及提案后的项目全过程。每一次只要乔布斯亲自参与的沟通会议，我都有 Involve。\n在写这篇文章的时候，我翻出了那时候的手稿和我在整个职业生涯中一直坚持记录的创意日志，以及我在 1997 年为苹果制作这一系列广告时保存的文档（它们最终被证明是很有用的）。在这些日志当中，我找到了在我们试图将苹果重新带回人们视线中的那个时期，我所记录下的数不清的笔记和概念。我还找到了我提交给乔布斯的「To the crazy ones」的原始脚本，和大量粗略的草稿。\n虽然我以前也曾在网络上看到一些关于「Think Different」的构思过程的不太准确的文章和评论，但真正促使我写这篇文章的是最近出版的 Walter Isaacson 的《乔布斯传》。在这部书里，作者暗示，乔布斯创作并写出了「Think Different」广告的大部分广告词。而这是不正确的。因此，我要在此修正这一说法，以还原历史的本来面目。\n乔布斯常常高度参与苹果的广告和苹果公司的其他各方面事务，但他却不是「To the crazy ones」的幕后主创。事实上，他对广告作品的苛刻要求，最终对苹果公司在商业上的重大转型起了举足轻重的作用。正如你将在下文中看到的那样，我最初提交给乔布斯的「The crazy ones」脚本的灵魂，和这个脚本的开头和结尾，在最终的那个著名的版本中都保留了下来，即使乔布斯最开始将我的脚本称为「一坨屎」。我也看过一些关于「To the crazy ones」最初是如何构思的不那么正确的文章。有几个人在整个创意过程中起了重要作用，而著名的「Think Different」的口号，以及将这个口号与一些历史上的梦想家的黑白照片放在一起的概念，是一个非常有创意的人提出的——他是我的朋友 Craig Tanimoto，TBWA/Chiat/Day 当时的美术指导。\n我读过很多关于乔布斯的精彩事迹，以及他对他的妻子、儿女和妹妹是如何温暖而充满爱意。他在斯坦福大学的毕业典礼上的演讲，是我听到过的最感人和最鼓舞人心的演讲之一。史蒂夫有令人惊叹的远见，我觉得，就算说他是当今世界上最有成就的那一类人，也毫不为过。但我也看过很多对于乔布斯的批评，我必须说，我亲眼目睹并亲身经历了他的痛斥和他易怒的脾气——它们有时针对几个人，有时直接冲我而来。这并不是愉快的经历。虽然我非常敬佩乔布斯的卓越成就和非凡激情，但我面对他常常呈现出的那种伤人感情的、居高临下的个性并没有太多耐心。在这一方面，Lee Clow 做得非常好。Lee 不仅仅是一位创意天才，在和乔布斯一起工作的过程中，他表现出了圣人般的耐心。\n有不少人问我乔布斯是个什么样的人，通常我会把他描述成米开朗基罗、密斯. 凡德罗（现代建筑大师）和亨利. 福特的结合体，再加一点约翰. 麦肯罗（美国网球运动员）和马基雅维利的特质。乔布斯是一个强有力的驱动者，没有这个无情而又充满自信的掌舵者，苹果不可能如此迅速地从一个别人眼中的笑柄变成「你梦想拥有它的股票」的公司。但乔布斯不是靠他自己一个人完成这个转变的。许多能力杰出而富有献身精神的人在这中间起了关键性的作用，而这一转变，是从「Think Different」这一系列广告开始的。\n在这里，我将讲述这个故事。「Think Different」系列广告截图\n与乔布斯的第一次会面\n那是 1997 年 7 月初，Lee Clow 愉快地走进我的办公室，告诉我说，我们要飞往圣何塞，然后驱车前往库比蒂诺的苹果总部，和乔布斯谈谈苹果广告代理的事情。当时，史蒂夫刚刚回归苹果，出任 CEO，他希望能做出一些改变。在飞机上，Lee 告诉我，他坚信乔布斯会「亲手交给我们」这笔业务。苹果当时的广告代理商是 BBDO，十年前，他们赢得了这项本属于 Chiat 的业务。Lee 认定，Chiat/Day 当初就不应该失去苹果的业务，基于这个原因，乔布斯很有可能用他的方式和我们这家苹果的前代理商重修旧好。\n那时候，我们的广告公司正发展得一帆风顺，不但被各个顶尖的行业杂志评为年度广告公司，而且我们赢得了许多业务，包括几个未经提案就被我们收入囊中的大项目。那一年，我 33 岁，是一位创意总监兼公司的执行合伙人，负责尼桑和英菲迪尼这两个全公司最大的项目。我刚刚为尼桑创作了著名的「玩具篇」广告，被评为年度最佳广告，而我们的尼桑和英菲尼迪这两个小组中，有许多当时业内最有才华的创意人。想到能够为苹果工作，能在汽车行业以外的地方大展拳脚，我们都感到非常振奋。\n在飞往苹果总部的飞机上，Lee 对我说，如果我们被要求和其他广告公司进行比稿，他将会婉言拒绝这笔业务。这么多年以来 Lee Clow 总是和我一起吃午饭，他总是告诉我广告公司为了一个比稿而投入大量的精力和财力是非常荒谬的。现在一切看上去我们已经胜券在握，并且我也很同意 Lee 的观点，我们不应该去比稿。这不仅是因为我们的公司是当时红得发紫的广告公司，也是因为 Lee 曾经创作过苹果历史上最优秀的广告作品。我们觉得，如果这个案子不交给我们做，那简直是对我们的一种侮辱。\n当我们来到苹果总部的时候，一位秘书带我们进了一个大会议室，并说乔布斯稍后就到。Lee 和乔布斯有 10 年没见了，我期待着史蒂夫会给他一个温暖的拥抱，和一句「欢迎回家」式的问候。但情况并非如我想象。\n乔布斯走进会议室，穿着他标志性的黑色高领套头毛衣、短裤和一双拖鞋。虽然一幅休闲装扮，但他却是个彻头彻尾的商人。\n寒暄和互相介绍都非常简短，而且，关于那些黄金时代——那些 Lee 以及 Chiat 的老伙伴们为乔布斯创作了苹果历史上最令人肃然起敬的广告的光辉岁月，完全没有被提及。乔布斯基本上就只是说：「很高兴见到你。谢谢你的到来。现在，让我们谈谈正事吧。」他接着说，苹果现在是「大出血」，公司的状况比他想象得更糟糕。他说：「我们有相当棒的产品，但我们还需要解决一些其他的问题。我会对广告出品严格把关。我已经在和几个广告公司联系会面，看看应该把这个案子给谁做。我会和几个相当不错的广告公司谈谈，如果你们有兴趣的话，我邀请你们参加比稿。」当时我心想，好吧，这可和计划中的不一样。\n乔布斯接着说，整个过程会很快，他不需要看到看到花哨的执行，只需要一些初步的概念和想法。他说：「我不准备做电视广告，只需要在电脑杂志上打些广告，直到我们把公司里的问题解决了。」在这一点上，Lee 表现得镇定内敛，而我则发现乔布斯比我想象得更加霸道和傲慢。他给我的印象是：我们只是又一家有幸得到他接见的公司。我也完全不同意他的广告策略。我插嘴道：「这个世界上有一半的人认为苹果就要完蛋了。在电脑杂志上做一些小打小闹的广告，对你没有任何意义。你需要的是，向世界证明苹果还是强如雄狮。没有人会站在饮水机边上跟同事聊起一则杂志广告。你需要做一些更大的、更出位的动作。你需要电视广告，和其他一些真正能给你带来动力的东西。」我接着说，每一家广告公司都能跟你说得天花乱坠，但你需要看到真正的创意执行，才能判断一个创意的力量。\n「好啊，那就向我展示你们这些家伙所认为的最好的创意和执行吧！」乔布斯反击道。这对我们来说不是一个好开头，但我不介意唱白脸，因为我相信 Lee 很快就能把这事儿彻底结束掉。「好吧，这事儿由 Lee 说了算」，我说。几个小时前，Lee 曾经告诉我，我们不会参加比稿，所以我把头转向 Lee，以为他会说「谢谢，但我们不比稿」。但他只是平静地说「好吧，如果你更喜欢你正在洽谈的其他机构，为什么你不找他们中的一家为你服务呢？」乔布斯说，他可能会这么做。然后 Lee 告诉乔布斯，「我会回去考虑一下，明天给你电话。」\n在驶向圣何塞机场的出租车上，我问 Clow 到底是怎么了：「我以为你会说我们不比稿呢。」Clow 说，「我改变主意了。如果我们赢得这个案子，我们将成就一个伟大的故事。我要把这个案子赢回来。」\n苹果公司的来访者通行牌。图片由作者提供\n创作过程\n回到公司，我召集了我们的创意团队，向他们简要介绍了这个任务。他们大多是我的尼桑项目组中的成员，还有几个初级美术指导，他们是 Lee 的创意助手。我们没有时间去等待一个很长的策划书出炉，或者制作一个详细的创意简报。我们必须尽快解决「如何使苹果公司走上正轨」这个问题。\n这个团队里的所有创意人都是苹果电脑的资深用户。他们不仅仅只是「了解」这个品牌——多年来，他们每天使用它，并且热爱它。他们确实不需要一个正式的策划书。我让大家马上开始创意思考，一周之后再来审视我们的工作。与此同时，我们的客户团队、策划人员和新的业务团队也帮我们尽可能多地收集资料，分析苹果在市场上的强项和弱势。\n苹果在各种创意行业中拥有一批品牌发烧友。所以我们想，也许为苹果「止血」的最好方法就是让我们所听说过的支持苹果的名人们来为这个品牌做推荐。我们发现，大导演斯皮尔伯格和著名歌手斯汀等名人使用苹果电脑，其他的几个创意界的明星也是苹果电脑使用者。不过，我们也看到了一些关于苹果的负面评论，许多商业领域的人将苹果电脑称为「玩具」，认为它不能胜任「真正的」运算工作。同时，舆论界开始暗示购买苹果电脑是一种愚蠢的行为，他们宣扬苹果已经很小的市场份额正在日益缩水，并且苹果的一部分应用程序是来自于 PC。苹果当时真是面目不堪，情状丑陋——但我们相信，在这丑陋的状况之中，孕育着美好的机会。\n接下来的那一周，我们在公司里的大会议室里集合，每个人都把自己的作品张贴在墙上。整个房间里贴满了照片、素描、粗略的想法和标语。你看过电影《美丽心灵》里，整个房间的每一寸墙壁都贴满纸张的那一幕吗？当我们有一个新的提案或者一个大项目需要准备的时候，我们的会议室通常就是这样的。这场比稿也不例外。大约有四个不同的团队展示了他们的作品，但都表现平平。数量不一定能带来质量。\n但有一个广告跃入我的眼帘。它强烈地吸引了我的眼球。\n这是一个广告牌的创意作品，只是简单地呈现一些革命性的人物和事件的黑白照片。包括一张爱因斯坦的照片、一张托马斯. 爱迪生的照片、一张甘地的照片，还有一张把花放在枪管里的越战时期的反战照片。照片顶部是苹果的彩虹色 Logo，以及「Think Different」字样。别的什么也没有。\n「Think Different」系列广告\n这个系列的作品是由一位很有才华的美术指导 Craig Tanimoto 创作的。Craig 与我共事多年（主要是在尼桑项目中），他总是能从独特的角度来看待事物。几年后，当我成立了自己的广告公司，Craig 成了我第一批聘请的创意人之一。\n在充斥着电脑照片和老套的名人照的房间里，Craig 的作品显得醒目而新鲜。但同时，这个作品还需要有人来做些解释。\n我问 Craig 这一系列作品有什么含义，他说，「IBM 有一个广告运动，叫『Think IBM』，我想，苹果和 IMB 非常不同，所以我想『Think Different』会很有趣。然后我想，如果把这个语句和世界上思维最不同寻常的人的照片放在一起，那将会非常酷。」\n彩虹标志和与之形成鲜明对比的黑白照片放在一起，在我眼里，这似乎更能突显「Think Different」这句宣言。它就是苹果现在迫切需要的那种夺人眼球而又引人深思的广告。Clow 也非常喜欢这个广告，因此，我们让在场的每一个人都开始创作这则广告在电视和其他媒体上的版本。\n「Think Different」和苹果的 Logo 放在一起的手稿，图片由作者提供\n杂志广告的素描草稿，图片由作者提供\n在这个时候，整个团队的人都开始了电视脚本的构思，一些美术指导开始寻找其他可以用在杂志广告上的著名的黑白照片。同时，Clow 和公司里最有才华、最具艺术性的广播制作人 Jennifer Golub 一起，寻找这些传奇人物的影像资料。通常当我们准备一个项目提案，或者要开始从头构思一个广告活动的时候，我们会创建一个我们叫做「rip-o-matics」的东西，或者一个表达我们的「情绪」和「概念」的视频。这些视频通常只会提交给客户看，作为广告作品的背景设置。在真正创作电视广告时，由于成本高昂，你必须把时间控制在 30 秒或 60 秒的时间之内；但在「情绪」视频中，时长不是问题，因为它的首要目的，是创造广告的感觉和调性。\nClow 提出了一个很有启发性的想法：使用 Seal 的那首令人铭刻于心的歌曲「Crazy」，用其中的关键歌词「We're never going to survive unless we get a little crazy」作为整个视频的引导力量。我和 Clow 用小卡片来诠释这个创意：纵观整个历史，真正的梦想家总是逆潮而上，想法与众不同，而苹果，就是为这一类人而打造的工具。\n随着视频的播放，一系列的卡片逐一呈现：\n\n There are people who see the world differently.They see things in new ways.They invent, create, imagine.We make tools for these kinds of people.Because while some might see them as the crazy ones,we see genius.（FADE TO APPLE LOGO AND TAGLINE)Think different.\n\n「换个角度看待世界」\n这则由 Chiat 公司里的剪辑师 Dan Bootzin 剪辑的视频，极富感染力。时长在 2 分钟左右。我们竭尽全力要把它删减成一个 60 秒的版本，因为我们认为，如果我们赢得了比稿，乔布斯会把它作为电视广告来投放。但是原有的歌词没法用在删减版里面。虽然我觉得这个视频作为一个表达内心，传达情绪的作品，是非常优秀的。但我相信我能写出想到更贴合的主题，更有力量的东西。我想，如果乔布斯喜欢我们提出的这个方向，我就再写一个更有冲击力的版本。\n随着这支「情感满溢」的视频的完成，户外广告和印刷品广告也准备就绪，TVC 的故事板也构思好了。我们花了一天的时间，在公司内部做提案预演。在一般的提案中，我们会有三到四个人，扮演不同的角色来进行演示。但是因为 Clow 和乔布斯过去的关系，并且我们只有一个系列的广告需要呈现，因此我提议由 Clow 来完成整个提案——从创作背后的思考到创意执行的全过程，都由他来讲述。Lee 是一个令人惊叹的演讲者，再加上他个人对苹果有强烈的情感，以至让我觉也开始觉得，其他人的加入只会会打断他流畅自如的演绎。Lee 和我们团队的其他成员都同意这一观点。\n「Think Different」系列户外广告\n提案\n我们中的几个人飞往圣何塞，被领到苹果公司的一个小会议室里，准备我们的演讲。乔布斯和其他几个苹果的人走了进来，那天，他看上去情绪高涨。Clow 开始提案了。他越说越激情澎湃。他把乔布斯带入我们的思路中，向他展示了户外、平面和电视广告。他紧密结合了我们的「情绪」视频，并且总结说，他认为这才是苹果应该做的广告，而作为代理商，我们是最合适的选择。\n乔布斯在整个过程中非常安静，但是显得很有兴趣，现在该是他发话的时候了。他环顾了充满了整个房间的「Think Different」的广告牌，然后说，「这是伟大的创意，这的确是伟大的……但我不能做这样的广告。人们已经认定我是个自大狂了，如果再把苹果的 Logo 放在这些天才人物的上面，媒体一定会对我冷嘲热讽的。」整个会议室里鸦雀无声。「Think Different」是我们准备的唯一一则广告，我想这下我们完蛋了。然后乔布斯停顿了一下，环顾四周，几乎是自言自语地大声说，「我这是在做什么？去它的。这是我们应该做的事情。这是伟大的广告。我们明天谈谈吧。」就在几秒钟之内，在我们每个人的眼前，他来了个 180 度的大转弯。\n提案通过之后\n当我们正式赢得苹果的案子之后，如我所料，乔布斯说他想把那则视频拍成电视广告。他对这则视频十分着迷，并且想把它剪成一个 60 秒的版本。我们告诉他，我们在提案之前已经试过了，但没有成功；不过我们会继续做一些尝试。于是我们试了一次又一次，但是都没有成功。从 Seal 那里拿到版权也遇到了一些小麻烦，但总算没什么大问题。Seal 这首歌的歌词是这则视频里强有力的要素，如果我们把它删减，或者干脆弃之不用，这则广告就失去了它的力量。Lee 和我飞回苹果处理一些基本的工作，并且告诉乔布斯，原来的「情绪」视频本来就没有打算用在电视广告中，而且我们也无法删减它。他对此有点不高兴。我告诉他我将会为这个广告写一份更好的文案。我总是为 Robin Williams 主演的电影《死亡诗社》所深深感动，电影中一些特别的桥段对我产生了非常重要的影响。这部电影中的情绪和语境，与我想要为苹果捕捉到的东西十分贴近。下面是一些《死亡诗社》中引起我共鸣的关键台词，它们最终转化为苹果广告脚本的创作灵感。\n\n We must constantly look at things in a different way. Just when you think you know something, you must look at it in a different way. Even though it may seem silly or wrong, you must try. Dare to strike out and find new ground.Despite what anyone might tell you, words and ideas can change the world.We don't read and write poetry because it』s cute. We read and write poetry because we are members of the human race. And the human race is filled with passion. Poetry, beauty, love, romance. These are what we stay alive for. The powerful play goes on and you may contribute a verse. What will your verse be?（译文：我们必须不断地用不同的方式来看问题。当你认为你已经了解了一件事情，你必须用不同的角度来看待它。哪怕这样看起来可能会很傻，甚至是错的，你都必须去尝试它。要敢于开拓，发现新的天地。无论任何人跟你说什么，语言和思想可以改变这个世界。我们读诗和写诗不是因为它可爱。我们读诗和写诗，因为我们是人类的一员。而人类，充满了热情。诗歌、美、爱、浪漫。这就是我们活着的目的。充满力量的戏剧正继续上演，而你可以献上一首诗。你的诗是什么样的？）\n\n再见船长：我们读诗、写诗并不是因为它们好玩，而是因为我们是人类的一分子\n我引用了《死亡诗社》中的几句台词，并问史蒂夫是否看过这部电影。他说，「当然看过。Robin Williams 和我是好朋友。」我告诉史蒂夫我会写一些有相似调性的东西，我们一周之内还会回来。\n我回到了公司，无休止地日夜工作。我的创意日志里写满了无数手稿和脚本。我抱着「这是从 Robin Williams 口中说出的话」的心态去写每一句话。有两个小节我十分钟爱。一个是开头，它像一首诗的标题：\n\n To the crazy ones. Here's to the misfits. The rebels. The troublemakers. The people who see the world differently.（译文：致那些疯狂的人。那些不合时宜的人。那些叛逆者。那些麻烦制造者。那些用不同的方式看待这个世界的人。）还有结尾：The people who are crazy enough to believe they can change the world are the ones who actually do.（译文：那些疯狂到真的相信自己能够改变世界的人，才是真正改变世界的人。）\n\n我觉得这个开头充满了力量，因为我把它和一些天才们的图像放在一起，它一定会给人强大的震撼。我想到了历史上最耀眼的人物和他们的奋斗历程。他们中的许多人历经磨难，而我已逐渐看清他们的共同特点。像苹果一样，他们都有惊人的远见；但也像苹果一样，他们都曾被贴上「不讨人喜欢」的标签。马丁. 路德. 金在被公众当做圣人之前，一直被看成是一个麻烦制造者；叛逆者特德·特纳（CNN 的创办者）在第一次试图兜售 24 小时新闻频道的时候，被当成一个笑柄；爱因斯坦在成为全世界最伟大的思想者之前，也被认为是个满脑子疯狂想法的家伙。同样，在 1997 年，苹果被批评是只适合「创意人」使用的「玩具」，因为它和别的电脑有着不一样的操作系统。因此，我认为，这一篇文案既是对苹果粉丝的宣言，也能够让不认同苹果的人重新审视他们对苹果的认识，并且认识到，差异是一件好事。拉尔夫·沃尔多·爱默生（美国思想家）曾说过：「伟大意味着被误解。」而我相信，这就是「Think Different」广告背后的核心思想。\n我觉得这个脚本的结尾既精炼简洁又富有诗意，是整篇文案中我最喜欢的部分。写到中间的部分，我有一点纠结，并且写了无数个版本，因为这是一个转折的部分，需要在这里说明苹果和这些天才人物的关系和共性，而又不能显得太生硬，不能显得像强行兜售。最后，我写出了几个我认为不错的版本。我把它们拿给 Lee 看，他也认为这些都不错。他对文案做了一些微调，我们粗剪了一个由我配音的 60 秒的电视广告。我们让办公室里的几个同事看了这个版本，一些人说，这让他们兴奋不已。\n1997 年的乔布斯\n我和 Lee 飞往库布蒂诺，亲自为乔布斯放映这段广告片。当时房间里只有我们三个人。我们放了一遍片子，当它结束的时候，乔布斯说：「这太差劲了！我讨厌它！这坨广告公司做出来的狗屎！我还以为你会写一些像《死亡诗社》那样的东西！这就是一坨屎！」\nClow 说了一些「好吧，我想你不想再看一遍了」之类的话。而乔布斯还在咆哮着，说他要找《死亡诗社》的编剧，或者一些「真正的作家」来为他写文案。\n我被他一长串的责骂吓了一跳。我用心、用灵魂去创作这则作品，并且我相信我在整个广告创作中起了关键的作用，但他却对我大发雷霆。我对他说，「乔布斯，你可能不喜欢这则广告片，但它不是一个烂广告。」乔布斯依然坚称他认为这就是坨屎。而 Clow 则试图平息乔布斯的怒火，说我们会回去再多做些尝试。\n「To The Crazy Ones」早期的手稿，Rob 原来想让 Robin Williams 来为这则广告配音（图片由作者提供）\n我提交给乔布斯的原始脚本（从我的文档中找出来的）如下。如你所见，它和最终播出的版本非常接近。\n\n To the crazy ones.Here's to the misfits. The rebels. The troublemakers.Her's to the ones who see the world differently.They're the ones who invent and imagine and create.They're the ones who push the human race forward.While some may see them as the crazy ones, we see genius.Because the people who are crazy enough to believe they can change the world are the ones who actually do.FADE TO APPLE LOGO AND LINE「Think different.」以下为译文：致那些疯狂的人。那些不合时宜的人。那些叛逆者。那些麻烦制造者。那些用不同的方式看待这个世界的人。那些去发明、去想象、去创造的人。那些推动人类向前发展的人。当一些人将其视为疯子的时候，我们将其视为天才。因为那些疯狂到真的相信自己能够改变世界的人，才是真正改变世界的人。（画面淡出，苹果 Logo 和「Think Different」淡入。）\n\n当我和 Clow 走出苹果大楼的时候，我告诉他我已经为了这个脚本做了我所有能做的一切，他最好还是换一个人去和乔布斯打交道。我告诉他苹果这个案子占用了我太多的时间，现在，作为公司的两个最大项目，尼桑和英菲迪尼小组的创意总监，我需要把更多时间花在我的本职工作上。Clow 同意了。\n回到公司以后，我像原来那样，把精力投入到我们的汽车客户上。同时，Lee 把苹果的电视广告脚本的任务分配给了公司的几个文案，并且从外面请了一些著名的自由撰稿人来帮忙。其中一位文案叫 Ken Segall，他是我们在赢得苹果业务之后聘用的一位很有天赋的文案和创意总监。Ken 过去曾与乔布斯一起共事，Clow 说服他离开了原来在纽约的公司（Y&R），跳槽到洛杉矶来负责苹果业务。Ken 抵达洛杉矶之后，很快就接到任务，和其他文案一起撰写苹果的电视广告脚本。有一天，Ken 走进我的办公室，对我说：「乔布斯看完了一大堆脚本，他绕了一大圈，还是回到原点……我们准备按照你的『Crazy Ones』的脚本写下去。我做了一些改动，希望你别介意。」\nKen 为电视脚本添加了一些优美的语句，并且创作了一个加长版，以便于杂志广告和报纸广告的投放。他添加进去的东西真是好极了，它们真正提升了整个片子，但又完整地保留了原稿的灵魂和精髓。\n虽然我们非常希望《死亡诗社》的主演 Robin Williams 能为这则广告配音，但他拒绝做任何形式的广告。于是我们只好请 Richard Dreyfuss 来配音。我一直认为 Tom Hanks 或 Dreyfuss 是除了 Robin Williams 之外最好的选择。Clow 总是想要乔布斯自己来配音，但我听过乔布斯配音的版本，我不认为那是最好的。乔布斯配音的那版似乎太过于强调自我了，而 Dreyfuss 的版本则非常精彩。我后来还让 Robin Williams 为奥运广告配音——他完全是来帮忙，因为这是无偿的——他的表现也非常令人惊喜。Dreyfuss 以一种缓慢、坚毅而又独一无二的语调来为「Crazy ones」配音，使每一个词都显得更加重要。在我心目中，Dreyfuss 是最为完美的选择，他的配音达到了难以超越的巅峰。\n户外广告和电视广告出街后，苹果很快成为大众讨论的话题。也并不全都是说好话的，一位《洛杉矶时报》的作者讽刺这场广告运动，「苹果用一堆死人来做广告真是再合适不过了，因为这个品牌也快要死了。」但，最好的事情是——不论说它好还是说它坏，人们已经开始讨论这个原本快要从他们视野中消失的品牌。人们频繁地谈论它。苹果当然还活着，就算不是强如雄狮，也能给人深刻印象。这些广告再次点燃了苹果的忠实粉丝们的热情，争取到了骑墙派的支持，并且让那些曾经认为苹果又傻又酷的受众们一夜之间开始以全新的方式来看待这个品牌。苹果恢复了活力，它即将创造历史了。\n「Think Different」的获得 Clio 奖时的创意人员名单，乔布斯被列在「文案」名单中（图片由作者提供）\n总结\n虽然整个广告概念不是乔布斯创作的，但他对这个广告运动也功不可没。正是他做出决定，选择了正确的广告商，进行了正确的广告运动。他运用了他巨大的影响力，牢牢抓紧了人才，将人们团结在他周围。我从来没有见过有人能够做到像他一样。没有乔布斯，这样一个庞大的广告运动根本无法实施。但是，尽管乔布斯获得了比他之前的商人更了不起的成就，也是因为他获得了许多人的帮助。而如果没有那些忘我工作的广告人，苹果从星星之火到燎原之势的转变，可能就不会发生。\n「Think Different」广告推出后，尽管没有重要的新产品推出，苹果公司还是很快感觉到了它的推动力。12 个月之内，苹果的股价翻了三倍。「Think Different」广告推出一年后，苹果的多彩 iMac 面市。这款电脑代表了一种革命性的设计，它成为了历史上最畅销的电脑。但如果没有「Think Different」广告活动作为先导和支持，这些果冻色、软糖状的电脑可能又会被媒体和公众认为是苹果推出的又一款「玩具」。\n即使和乔布斯的争论令我痛苦，但这件事情还是有了一个很好的结果。「Think Different」广告赢得了许多荣誉，而「Crazy Ones」也获得了不少年度广告奖项。\n在创意人员名单上有很多人的名字——而 Clow 也把乔布斯给加上了。我认为这很酷，因为一个广告活动确实需要很多人的支持和奉献。Craig Tanimoto 和我一起继续愉快地共事，为其他品牌创作广告。我们保持着亲密的友情。Ken Segall 后来为 iMac 的面市创作了精彩的广告。在最后回到纽约之前，他为苹果公司创作了大量优秀的作品。\n其他几位杰出的创意人也为这个广告做出了相当大的贡献——如 Yvonne Smith、Margaret Midget Keen、Jessica Shulman、Jennifer Golub 和 Dan Bootzin。他们为苹果的事业奉献了自己的才华和大量的时间。此外还有 Chait 优秀的媒介总监，Monica Karro，还有 Duncan Milner、Eric Grunbaum 和 Susan Alinsangan 这些优秀的创意人，他们用一个接一个梦幻般的广告让苹果这把火越烧越旺——当然，这些和 Lee Clow 的才干、引导以及耐心是分不开的。\n尽管乔布斯的逝世令全世界哀痛，但他留给这个世界的遗产和影响将会被永远铭记。我不禁在想，也许他的生命被死神无情地剪短了，但他留下的回忆，比我们所有人的生命都要长。苹果公司干得也很漂亮。他们 1997 年的时候还深陷困境，而今年，他们已经成为了世界上最有价值的公司。疯狂吗？你最好相信它。","news_type":1},"isVote":1,"tweetType":1,"viewCount":1082,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":101784492,"gmtCreate":1619944151016,"gmtModify":1619944151016,"author":{"id":"3573905892850027","authorId":"3573905892850027","name":"意粉Ethan","avatar":"https://static.tigerbbs.com/3d1a89a25620ab26ecc8fb0f21b12c93","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3573905892850027","authorIdStr":"3573905892850027"},"themes":[],"htmlText":"这篇文章不错，转发给大家看看","listText":"这篇文章不错，转发给大家看看","text":"这篇文章不错，转发给大家看看","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/101784492","repostId":"1125984791","repostType":4,"isVote":1,"tweetType":1,"viewCount":1195,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":101784240,"gmtCreate":1619944138780,"gmtModify":1619944138780,"author":{"id":"3573905892850027","authorId":"3573905892850027","name":"意粉Ethan","avatar":"https://static.tigerbbs.com/3d1a89a25620ab26ecc8fb0f21b12c93","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3573905892850027","authorIdStr":"3573905892850027"},"themes":[],"htmlText":"这篇文章不错，转发给大家看看","listText":"这篇文章不错，转发给大家看看","text":"这篇文章不错，转发给大家看看","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/101784240","repostId":"2132672645","repostType":4,"isVote":1,"tweetType":1,"viewCount":1620,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":379677371,"gmtCreate":1618736363993,"gmtModify":1618736363993,"author":{"id":"3573905892850027","authorId":"3573905892850027","name":"意粉Ethan","avatar":"https://static.tigerbbs.com/3d1a89a25620ab26ecc8fb0f21b12c93","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3573905892850027","authorIdStr":"3573905892850027"},"themes":[],"htmlText":"这篇文章不错，转发给大家看看","listText":"这篇文章不错，转发给大家看看","text":"这篇文章不错，转发给大家看看","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/379677371","repostId":"342866514","repostType":1,"repost":{"id":342866514,"gmtCreate":1618199946734,"gmtModify":1618811575837,"author":{"id":"36979109942400","authorId":"36979109942400","name":"小虎周报","avatar":"https://static.laohu8.com/f7b172cf773c77a3f0df67695c126b51","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"36979109942400","authorIdStr":"36979109942400"},"themes":[],"title":"踩上网课风口，Coursera引领在线教育新风尚","htmlText":"事件 3月31日，在线教育平台 <a target=\"_blank\" href=\"https://laohu8.com/S/COUR\">$Coursera, Inc.(COUR)$</a> 正式在纽交所上市，发行价为美股 33 美元，上市首日股价上涨 36%，截至上周五收盘累计上涨62%，市值达70亿美元。 Coursera意为“课程的时代”，是世界上最大的在线学习平台之一，旨在同世界顶尖大学合作，在线提供免费的网络公开课程。它将学习者，教育者和机构的生态系统与高质量内容，学历，数据、技术联系在一起。 投资要点 三个主要业务线：2C、2B以及学位课程。其中，Coursera在商业上最为成功的仍是价格亲民的普通付费产品，其次是面向企业的产品，最后才是昂贵的在线学位产品。 疫情后获客提升：2017年至2020年四年间，Coursera的注册用户数大涨150%。缘于疫情的推动，2020年，平台注册用户数逼近7700万人，同比增长65%。 一直增长一直亏：公司2020年营收年增长率约为59％，和大部分野蛮生长时期的平台公司一样，Coursera用户数虽然大幅增长，但公司业绩还处在“赔本赚吆喝”的阶段。2020年Coursera净亏损进一步扩大至6681万元，同比增长了43%。公司预计，随着可扩展的课程、用户和市场营销活动以及开展其他增长活动，在一段时间内无法盈利。 国际化带来前景：整体有超过80%的注册学习者来自美国以外。截至2020年12月31日，Coursera注册学习者排名前五的国家分别是；1）美国；)印度；3）墨西哥；4）巴西；5）中国。值得一提的是，为了在中国拓展业务，Coursera开始和中国多所本地大学和企业进行了合作。 飞轮效应：公司借助免费大学课程，吸纳有学习想法的潜在学员，其中部分转化为付费学员，学校机构的收入增加，再反哺到内容生产、课程优化上，强化自身品牌，良","listText":"事件 3月31日，在线教育平台 <a target=\"_blank\" href=\"https://laohu8.com/S/COUR\">$Coursera, Inc.(COUR)$</a> 正式在纽交所上市，发行价为美股 33 美元，上市首日股价上涨 36%，截至上周五收盘累计上涨62%，市值达70亿美元。 Coursera意为“课程的时代”，是世界上最大的在线学习平台之一，旨在同世界顶尖大学合作，在线提供免费的网络公开课程。它将学习者，教育者和机构的生态系统与高质量内容，学历，数据、技术联系在一起。 投资要点 三个主要业务线：2C、2B以及学位课程。其中，Coursera在商业上最为成功的仍是价格亲民的普通付费产品，其次是面向企业的产品，最后才是昂贵的在线学位产品。 疫情后获客提升：2017年至2020年四年间，Coursera的注册用户数大涨150%。缘于疫情的推动，2020年，平台注册用户数逼近7700万人，同比增长65%。 一直增长一直亏：公司2020年营收年增长率约为59％，和大部分野蛮生长时期的平台公司一样，Coursera用户数虽然大幅增长，但公司业绩还处在“赔本赚吆喝”的阶段。2020年Coursera净亏损进一步扩大至6681万元，同比增长了43%。公司预计，随着可扩展的课程、用户和市场营销活动以及开展其他增长活动，在一段时间内无法盈利。 国际化带来前景：整体有超过80%的注册学习者来自美国以外。截至2020年12月31日，Coursera注册学习者排名前五的国家分别是；1）美国；)印度；3）墨西哥；4）巴西；5）中国。值得一提的是，为了在中国拓展业务，Coursera开始和中国多所本地大学和企业进行了合作。 飞轮效应：公司借助免费大学课程，吸纳有学习想法的潜在学员，其中部分转化为付费学员，学校机构的收入增加，再反哺到内容生产、课程优化上，强化自身品牌，良","text":"事件 3月31日，在线教育平台 $Coursera, Inc.(COUR)$ 正式在纽交所上市，发行价为美股 33 美元，上市首日股价上涨 36%，截至上周五收盘累计上涨62%，市值达70亿美元。 Coursera意为“课程的时代”，是世界上最大的在线学习平台之一，旨在同世界顶尖大学合作，在线提供免费的网络公开课程。它将学习者，教育者和机构的生态系统与高质量内容，学历，数据、技术联系在一起。 投资要点 三个主要业务线：2C、2B以及学位课程。其中，Coursera在商业上最为成功的仍是价格亲民的普通付费产品，其次是面向企业的产品，最后才是昂贵的在线学位产品。 疫情后获客提升：2017年至2020年四年间，Coursera的注册用户数大涨150%。缘于疫情的推动，2020年，平台注册用户数逼近7700万人，同比增长65%。 一直增长一直亏：公司2020年营收年增长率约为59％，和大部分野蛮生长时期的平台公司一样，Coursera用户数虽然大幅增长，但公司业绩还处在“赔本赚吆喝”的阶段。2020年Coursera净亏损进一步扩大至6681万元，同比增长了43%。公司预计，随着可扩展的课程、用户和市场营销活动以及开展其他增长活动，在一段时间内无法盈利。 国际化带来前景：整体有超过80%的注册学习者来自美国以外。截至2020年12月31日，Coursera注册学习者排名前五的国家分别是；1）美国；)印度；3）墨西哥；4）巴西；5）中国。值得一提的是，为了在中国拓展业务，Coursera开始和中国多所本地大学和企业进行了合作。 飞轮效应：公司借助免费大学课程，吸纳有学习想法的潜在学员，其中部分转化为付费学员，学校机构的收入增加，再反哺到内容生产、课程优化上，强化自身品牌，良","images":[{"img":"https://static.tigerbbs.com/a59b59c7b95db38b26dab2d6beddd197","width":"775","height":"463"},{"img":"https://static.tigerbbs.com/db5b9d2ba82124e1999d8de7921dc894","width":"774","height":"541"},{"img":"https://static.tigerbbs.com/3c8d86ee464270a2f315026b463d3e80","width":"778","height":"446"}],"top":1,"highlighted":2,"essential":2,"paper":2,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/342866514","isVote":1,"tweetType":1,"viewCount":0,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":6,"langContent":"CN","totalScore":0},"isVote":1,"tweetType":1,"viewCount":1585,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":379985997,"gmtCreate":1618654422719,"gmtModify":1618654422719,"author":{"id":"3573905892850027","authorId":"3573905892850027","name":"意粉Ethan","avatar":"https://static.tigerbbs.com/3d1a89a25620ab26ecc8fb0f21b12c93","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3573905892850027","authorIdStr":"3573905892850027"},"themes":[],"htmlText":"这篇文章不错，转发给大家看看","listText":"这篇文章不错，转发给大家看看","text":"这篇文章不错，转发给大家看看","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/379985997","repostId":"347037137","repostType":1,"isVote":1,"tweetType":1,"viewCount":742,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":344553196,"gmtCreate":1618417507515,"gmtModify":1618417507515,"author":{"id":"3573905892850027","authorId":"3573905892850027","name":"意粉Ethan","avatar":"https://static.tigerbbs.com/3d1a89a25620ab26ecc8fb0f21b12c93","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3573905892850027","authorIdStr":"3573905892850027"},"themes":[],"htmlText":"这篇文章不错，转发给大家看看","listText":"这篇文章不错，转发给大家看看","text":"这篇文章不错，转发给大家看看","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/344553196","repostId":"1145468327","repostType":2,"repost":{"id":"1145468327","kind":"news","pubTimestamp":1618413259,"share":"https://www.laohu8.com/m/news/1145468327?lang=&edition=full","pubTime":"2021-04-14 23:14","market":"us","language":"en","title":"Thinking About Buying Coinbase? - Here's Your Note","url":"https://stock-news.laohu8.com/highlight/detail?id=1145468327","media":"seekingalpha","summary":"Wednesday,Coinbase shares open at $381 on Nasdaq, valuing cryptocurrency exchange at $99.6 billion.S","content":"<p>Wednesday,Coinbase shares open at $381 on Nasdaq, valuing cryptocurrency exchange at $99.6 billion.</p><p><img src=\"https://static.tigerbbs.com/a50d61593da06ef4cdd7abd4eb27fc76\" tg-width=\"840\" tg-height=\"470\" referrerpolicy=\"no-referrer\"></p><p><b>Summary</b></p><ul><li>Coinbase is going public today.</li><li>Instead of reading their +300 page S-1, read our 19 page note.</li><li>We discuss: digital currencies, store of value, medium of exchange.</li><li>Plus, a deep dive into COIN's model, storage, trading, price target.</li></ul><p>Manole Capital Management - Bitcoin & Coinbase (COIN) - April 2021What is FINTECH?</p><p>Manole Capital Management exclusively focuses on the emerging FINTECH sector. For some investors, FINTECH means We define FINTECH as \"anything utilizing technology to improve an established process.\"</p><p><img src=\"https://static.tigerbbs.com/2ef8760c1da50e1776b14e4c10295f65\" tg-width=\"1133\" tg-height=\"692\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a Business Insider slide on the FINTECH Ecosystem</i></p><p>For us, the quintessential FINTECH business is the payment industry. As you can see in this FINTECH ecosystem Business Insider slide, we bolded the<i>Payments and Remittances</i>space, as that is our preferred area to invest. Others can invest in FINTECH's through Alternative Finance companies or digital banks or Insurtechs, but for us, we love the payment sector. We are attracted to the predictable, sustainable and recurring revenues of their businesses, where they essentially earn revenue per swipe economics.</p><p>When most investors discuss FINTECH, they rarely (if ever) discuss the exchanges. Similar to these payment and transaction-based models, many of the exchanges also earn revenue, free cash flow and profits per transaction or trade. When it comes to trading certain assets (interest rates, equities, commodities, foreign currency, etc), there tends to be high barriers to entry or an impregnable moat around certain franchises. While many of these businesses are not recession proof, they have proven to be recession resistant.</p><p><b>Financials:</b></p><p>While Financials only represent 11.3% of the S&P 500 (as of March 2021), roughly 3/4rd's of this sector's weight is comprised of traditional financial institutions, like banks and insurance companies. These businesses are typically credit sensitive, with opaque and complex balance sheets. To simplify the banking model, the underlying asset is the US dollar and they simply look to borrow that capital at a low fee and lend it out to borrowers at a higher rate. This spread business can generate excellent returns, but it comes with a risk. Is the bank following a solid and time-tested risk model? Are borrowers credit worthy?</p><p>If an investor has exposure to the Financial sector, one should have a strong opinion on the 10-year yield. The 10-year stands at 1.7% and has significantly risen over the last several months. The Financial sector has a 5-year rolling correlation with the 10-year Treasury of 67% (per Scotiabank and Bloomberg research). We simply choose to not invest in banks and business models that don't have ourideal characteristics (click here).</p><p>As we stated above, we are attracted to businesses that generate steady and recurring and free cash flow. Unfortunately, most Financials are not transaction based business models.</p><p><b>Our Goal:</b></p><p>This note will review digital currencies, Bitcoin and the opportunity in the exchange space. We will use our over two decades of experience following and owning exchanges to draw some parallels for this new asset class. For example, there are \"big picture\" matters concerning storage, access, theft, usage, documentation, identity, rights and dozens of other issues. Blockchain and technology advancements theoretically solve some of these problems, but unfortunately not all.</p><p>Some digital currency or technology experts might find this analysis rudimentary. Others are new to this asset class and want a primer on the industry. That's our primary goal or target, is to provide an initial 30,000 foot view on digital currencies and then dive into the details of the largest (and soon to be public) exchange.</p><p>As always, we strive to present our work in a very readable format. If they had the patience to read our research, we attempt to write our notes so our 80-year father or 14-year old son could easily understand. We will try our best to review the requirements to be considered a currency, volatility, pricing, digital wallets, NFT's (non-fungible tokens), stable coins and some other digital currency issues. After that, we will do a fairly deep dive into Coinbase (ticker COIN). You can read their nearly 300-page S-1 filing with theSEC (click here)or you can let us serve as your \"Cliff Notes\" version. We will discuss their business model, how they generate revenue, their advantages and disadvantages, as well as provide a framework for valuation and a price target. We hope you find this latest research from Manole Capital topical and interesting.</p><p><b>Digital Currencies:</b></p><p>In our 1st quarter 2021 investor newsletter, which we published on Seeking Alpha, we discussed COIN's business and its opportunity. We wrote a couple pages on the subject, but felt it deserved a much larger and dedicated piece of research.</p><p>Before we dive into Coinbase, we wanted to provide our thoughts on Bitcoin and digital currencies. As we stated in the opening paragraph, Manole Capital believes the payments industry is the dominant FINTECH sector. Over the last 5 years, we have done a significant amount of work on digital currencies, trying to understand their best usage, functionality and role in the future of payments. Are digital currencies a threat to the payment networks, processors and merchant acquirers? In order to answer these questions, one has to understand how a typical payment transaction occurs. Who processes, clears and settles a card transaction?</p><p>We have written dozens of articles on this subject, which can easily be viewed here. In our opinion, there are two main requirements for something to be considered a viable currency. One is that it must be a \"store of value\" and the second is that it must be a \"medium of exchange\".</p><p><b>The Requirements To Be A Currency:</b></p><p>In order to be a viable currency, two specific requirements are needed. One is that the currency should be a<b>\"store of value\".</b>This is often defined as any asset that can smoothly maintain its economic value, rather than rapidly depreciating. The other requirement is that the currency should be a<b>\"medium of exchange</b>\" or an instrument used to facilitate the sale, purchase or trade of goods between parties.</p><p>In terms of speed and efficiency, there is no comparison when comparing the centralized payment system to Bitcoin's decentralized platform. Visa processes 1,700 transactions per second and it claims to have 40x the spare capacity, to handle 65,000 transactions per second. PayPal (PYPL) stated that during the 2020 holiday shopping season, it processed over 1,000 transactions per second. Using Bitcoin and its blockchain for global purchases and payments can process roughly 7 transactions per second.</p><p>As technology improves, one could argue Bitcoin processing will improve. However, if Bitcoin were to get used for payments, the conversion of crypto holdings into US dollars will dramatically increase overall network transactions. We are big believers in the concept of...\"if it ain't broke, don't fix it!\"</p><p>There are significant acceptance advantages to the existing payment ecosystem. Visa and Mastercard are accepted in over 200 countries and at over 40 million global merchants. Their payment acceptance brands stand for trust and allows billions of purchase transactions to occur each year. The Visa and Mastercard logos are known around the world, permitting the exchange of goods and services in seconds. While Bitcoin is slowly becoming more recognizable, it simply does not have the same acceptance. We believe the existing payment ecosystem handles the \"medium of exchange\" process well. The overall payment landscape is a well-oiled machine, that involves three to four parties, approving transactions in in roughly 1 to 2 seconds.</p><p>We have discussed the long-term opportunity for a FINTECH company or two to create a \"Super App Holy Grail\". This would be allowing customers to transact with their mobile phone, in whatever currency they wish, at all global merchants. Getting consumers to get rid of their leather wallets is easier said than done. Even though we consider ourselves to be fairly technologically savvy, we still have a wallet that looks a lot like Seinfeld's George Costanza's.</p><p>Several companies have recently announced their intentions to help spur Bitcoin acceptance. On March 30th, 2021, PYPL announced the launch of its \"Checkout with Crypto\" option. Participating merchants (initially ½ of PYPL's 29 million) can offer their customers the ability to pay for purchases using Bitcoin, Litecoin, Ethereum or Bitcoin Cash. How will this work? Once a PYPL customer purchases or stores crypto holdings in their PYPL digital wallet, he/she will be permitted to use those funds at checkout. When a transaction occurs, PYPL users will see the option to apply their balance to complete a purchase. When customers choose this payment option, PYPL will exchange their crypto for US dollars through its clearinghouse partner, Paxos. The transaction will occur based upon a spot market rate, with a 50 basis point spread built in. PYPL will then remit payment (in US dollars) to the merchant, to satisfy the exchange of goods or services.</p><p>While this sounds easy, there are significant hurdles. Certain details are still emerging, but customers using this service must buy their crypto within their PYPL digital wallet. This will satisfy PYPL's adherence to Know Your Customer (KYC) guidelines, but it doesn't solve all potential hiccups. The four cryptocurrencies PYPL said customers can use, are likely to cause problems. The SEC and IRS have not deemed these to be currencies, but instead, consider them capital assets. If they were to be used for payment, the underlying client will potentially have capital gain taxes, if their PYPL digital wallet has paper gains. If you are making a $20 purchase at Walgreen's, we don't believe customers are wanting to consider the tax ramifications of using their Bitcoin balance in their digital wallet. That potential $20 purchase could potentially cost you a tax liability of 100%.</p><p>Even if we ignore the large tax issues, there are additional worries. So, if the cryptocurrency in your digital wallet is going to be used to fund purchases, who is going to pay for it? Merchants will have to pay for the cost of converting cryptocurrencies into US dollars, whatever that cost might be. There will be the traditional merchant discount rates applied, but this will ultimately be another cost for merchants to bear. Besides a company like Tesla, that has a dynamic CEO, do you envision merchant's dying to accept additional costs to help their customers transact? Especially when cards are so ubiquitous?</p><p>So,Teslahas decided it will accept Bitcoin as a form of payment. What does this really mean? If a consumer has a sizeable gain in Bitcoin and wishes to use it to purchase a \"free\" Tesla, there are serious tax consequences. Just like selling an appreciated stock, where a consumer has to pay capital gains taxes, Bitcoin would be under the same burden. Until the IRS classifies Bitcoin as a currency, and not property, this tax problem will remain.</p><p>The second problem comes if the Tesla buyer decides to return his/her new vehicle. Tesla reserves the right to pay the consumer back in cash, worth the original purchase price, not in Bitcoin. If Bitcoin jumps in value since the original transaction date, the consumer would be negatively impacted. If Bitcoin falls in price, Tesla could return a depreciated Bitcoin to the car buyer. Are there hundreds of thousands of consumers yearning to purchase a Tesla with Bitcoin? We doubt there's too many, especially if they are aware of the tax issues.</p><p>Last week, Visa announced it would use various FINTECH API's (application programming interface) offered by cryptocurrency custodian and privately-held Anchorage. Visa plans to settle transactions using US dollar stablecoin, powered by the Ethereum blockchain. Once again, this is exciting news, but will likely encounter problems and take a while to come to fruition.</p><p>Before one uses Bitcoin to transact at the POS (point of sale), be actually believe it can become an excellent opportunity for money transfer. Western Union is about to turn 170 years old and can be considered the original FINTECH company. However, moving paper currency around the world is not terribly technologically advanced. Visa has launched an expanded version of its<i>Direct</i>platform, which will allow for cross border disbursements. Visa's platform supports real-time domestic and cross-border person-to-person, business-to-small business and business-to-consumer use cases, so the options are endless. Bill Sheley is the global head of Visa Direct, and he stated, \"Visa is innovating to give financial institutions, governments, individuals and businesses new ways to pay and get paid beyond the card.\"</p><p>On the \"store of value\" front, the total addressable market for assets is enormous. For example, art and collectibles are a $20 trillion market, gold is $10 trillion, real estate is $200 trillion, bonds are $100 trillion and equities are another $30 trillion.</p><p>50% of gold is used in jewelry and another 1/3 is used in electronics. While gold used to back fiat currencies, Britain dropped the gold standard in 1931. The US followed suit in 1933 and totally abandoned the gold standard in 1973. There are additional issues to consider like fixed or variable supply, as well as volatility concerns.</p><p>We agree that digital currencies are becoming a feasible \"store of value\". In our opinion, digital currencies have significant challenges to becoming a \"medium of exchange\". With that caveat, the opportunity for the crypto-economy and digital currencies to thrive is still open ended and vast.</p><p><b>Inflation:</b></p><p>The world is always looking for additional asset classes and stores of value, especially as governments keep the currency printing presses running 24 hours a day, 7 days a week.</p><p>Last year, the Federal Reserve printed an unprecedented amount of dollars, roughly 1/5 th of all US dollars ever printed. On a daily basis, the Bureau of Engraving and Printing produces over $500 million over 38 million notes.</p><p>If you are the United States and the dollar is considered the dominant global currency, your perception of Bitcoin (or any digital assets) should be of concern. The ability of countries to simply print money should inherently be inflationary, yet Federal Reserve Chairman Jerome Powell continues to seek to get the US at and above 2% annually.</p><p>A couple of weeks ago, the Biden administration announced an infrastructure bill, called the American Jobs Plan, with a $2 trillion spending target. In March of 2021, US government passed a $1.9 trillion stimulus package. This followed a December of 2020 stimulus package of $900 billion, as well as a CARES Act in March 2020 bill of $2.2 trillion. We are not making a statement about the merits of any of these packages and stimulus programs. We simply are trying to point out the massive amount of money that is getting printed.</p><p>Many cryptocurrency bulls will cite inflationary worries with fiat currencies for why their digital cryptocurrencies assets are undervalued. We understand this argument, but always come back to an initial framework. If you are the US or the European Union or Chinese government, would you be able to control your society if there wasn't a viable currency in place? Would economies function without government control of its fiat currency? If cryptocurrencies become widely accepted and are considered a better version of payment, would governments be able to function? If the US couldn't issue additional debt to fund its spending initiatives, would it even exist? We just don't believe government regulators will allow certain cryptocurrencies to thrive, especially if it threatens their sovereign currencies.</p><p>We tend to look at this as a simple supply and demand equation. While Bitcoin has currently issued 18.7 million tokens, there is only a maximum of 21 million that can be created. That fixed supply is counter to some governments. For example, there are countries that have taken the printing of fiat currency too far. Zimbabwe is but one example of runaway inflation. Here's a picture of one of their 100 trillion bills. Yes, that's a 100 trillion. Do you want to be a trillionaire? Simply buy one on eBay for $8.99,by clicking here.</p><p><img src=\"https://static.tigerbbs.com/375ab15b324158141f0eceee4633e5ca\" tg-width=\"900\" tg-height=\"900\" referrerpolicy=\"no-referrer\"></p><p><i>Source: This is a picture of Zimbabere's currency, that I took on myiPhone</i></p><p>As this Piper Sandler chart shows, Bitcoin now has a market capitalization of roughly $1 trillion. If we look at the top 10 digital assets by market capitalization, the vast majority of market share falls to just 2 currencies.</p><p><img src=\"https://static.tigerbbs.com/4f0caa7a9dbd54216c5e67fb83199d42\" tg-width=\"859\" tg-height=\"576\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a Piper Sandler slide/chart</i></p><p>It is estimated that Bitcoin is over 55% of all cryptocurrency market capitalization and Ethereum is roughly 11%. Cryptocurrencies like Tether, Binance Coin, Stellar, Cardano, Litecoin have a modest following and just 1% to 2% market share (all under $50 million in market cap).</p><p>Digital currencies should be considered assets, as they can be represented digitally, dynamically transmitted, and stored safely in the cloud. However, digital assets and cryptocurrencies have a long way to go to become used in our globally interconnected economies.</p><p><b>Rules & Regulations:</b></p><p>In a perfect world, we think all assets should trade 365 days a year and 24 hours a day. In this hypothetical environment, assets should immediately process and settle and fees to transact should be modest. Why does the NYSE only officially operate from 9:30 am to 4:00 pm EST Monday through Friday (and not on holidays)? There are trades that occur pre-market and post-market hours, but liquidity and volumes are sparse. The simple answer is that this is the way it has always occurred and why should we change something that isn't broken.</p><p>The traditional exchanges have always had a set period of time where they are \"open for business\", but this is changing. For example, the technology backbone of the CME Group (ticker CME) is called Globex. It essentially permits 24/7 trading to occur on its electronic platform for equities, interest rates, commodities, foreign exchange and other assets. After years of investing in international growth, roughly 1/5 th of all volumes come from outside of the US.</p><p>In order to have access to Globex, there are rules one needs to adhere to, as exchanges are heavily regulated entities. Just like banks need to conduct AML (anti-money laundering) and KYC (know your customer) due diligence on its customer base, the exchanges need to follow strict guidelines enforced by their regulators.</p><p>As of today, we believe there are over 50 distinct blockchain protocols which support more than 7,500 various digital assets. Unfortunately, the financial systems are not known as entities that are quick to adopt change and technology. The world has embraced the internet, as a revolutionary and transformational platform. However, financial systems are not comfortable seamlessly exchanging data, information and assets. There are numerous activities like cross border payments or peer-to-peer payments that are ideally suited for technological advancements, but rules and regulations exist to stymie growth.</p><p>The goal of an open and transparent financial system is honorable, but not terribly realistic. In terms of managing one's assets, especially money, the process can be cumbersome.</p><p><b>Volatility:</b></p><p>If we accept cryptocurrency as a digital asset, we then want to better understand how value is determined, where it can be stored and how best to process and handle its exchange. With decentralized assets, the network allows participants to transact without intermediaries. Who sets the value and determines price?</p><p>The most notable cryptocurrency is Bitcoin and it has a CAGR of over 150%, from 2013 to 2020. In 2017, it rose 1,318%, but then fell by (72.6%) in 2018. In 2020, it rose over 302% and it currently is up well over 50% this year. Since January of 2017, there have been 5 corrections of 50% of more in Bitcoin, so it can be wildly volatile.</p><p>We are slowly getting comfortable with digital assets and cryptocurrencies as a \"store of value\" and believe they will become a viable asset in one's diversified portfolio. Each individual or entity needs to determine their own risk and reward framework, so cryptocurrency might be 10 basis points or 10% of one's portfolio.</p><p>Opinions on Bitcoin are changing every day. Back in 2018, the CEO of Blackrock (Larry Fink) called Bitcoin a currency \"for money launderers.\" A year earlier, JP Morgan CEO, Jaime Dimon called Bitcoin a \"fraud\" and threated to fire any bank employee who dealt with the currency. Fast forward to today: Blackrock (in January 2021) enabled two of its mutual funds to purchase Bitcoin, and a JP Morgan analyst recently published that he thinks Bitcoin could rise to $146,000.</p><p>Recently, large institutional interest has boosted the price of certain digital assets. High profile investors like John Tudor Jones (May 2020) and Stanley Druckenmiller have made sizeable purchases of various digital currencies. Other companies like Microstrategy (August 2020) and Tesla (Feb 2021) have made sizeable transactions for their firm's balance sheet.</p><p><b>Stable Coins:</b></p><p>A stable coin is simply a digital asset that is attempts to lower volatility by pegging itself to an actual fiat currency or physical asset (ex: gold). For example, Tether has a market capitalization of over $40 billion, is backed by US dollars and it's the largest cryptocurrency stable coin. One of the risks associated with stable coins is ensuring that the proper amount of fiat currency is held in reserve to match the amount of stable coins in circulation.</p><p>In prior official commentary, the Governor of the Central Bank of Russia - Elvira Nabiullina - stated that Russa was against any form of private currency, as it threatened financial sovereignty. Russia's Ministry of Internal Affairs also was considering seizing all digital currencies and claiming cryptocurrencies criminal activity. Now, in January 2021, the Bank of Russia began to test a ruble-based stable coin. While starting cautiously, the Russian Central Bank is exploring the possibility of issuing its own digital currency. There are numerous countries that are investigating the process of issuing CBDC's or Central Bank Digital Currencies. China has studied the process of issuing a digital yuan, the European Central Bank is looking into a digital Euro.</p><p>Other governments and regulators have highlighted the risks of digital currencies. The UK's Financial Conduct Authority called crypto assets \"high risk, speculative investments\" where investors \"should be prepared to lose all their money.\" US Treasury Secretary (and former Federal Reserve Chairwoman) Janet Yellen has warned on investing in digital currencies too. Just a week ago, India's Reserve Bank took a fairly bearish tone on digital currencies. Rumors are that India is looking to pass a law outlawing cryptocurrencies and making anyone trading or holding them punishable with sizeable fines. India's Finance minister is Nirmala Sitharaman and she said India's Cabinet will shortly issue a final ruling on the matter and that the governments ruling is \"under preparation and nearing completion\".</p><p>Will additional countries look to make cryptocurrencies illegal? These type of comments act as a governor to adoption and change. Politicians and governments are worried about losing control of their economies. Statements like this are further evidence that governments will remain a headwind. We aren't going to put this in the realm of a new \"space race\", but the country that embraces this technology first might have an early advantage versus those that are afraid of change.</p><p><b>Digital Currency Conclusion:</b></p><p>This quick digital currency discussion was created to set the framework for an analysis of Coinbase (ticker COIN). Will digital currencies replace traditional payment systems? We do not believe it will, but continued adoption and traction in digital currencies is noticeable.</p><p>Is Bitcoin poised to climb higher, or will it crash? We simply don't know. What we do know is that we prefer to own the medium where these \"assets\" trade. We would compare this to the Gold Rush of the mid-1800's. Back in 1849, owning Levi Strauss made a fortune selling picks, pans and shovels to '49ers looking for gold. Back then, some would say, \"There's gold in those mountains.\"</p><p>Nowadays, there's a huge opportunity in the collection of data and information. We truly have no idea what the price of Bitcoin will do, except we know that it will be very volatile. As we know, volatility leads to trading, which should equate to profits for the exchanges. Speaking of exchanges, let's now discuss another exchange and upcoming FINTECH direct listing - COIN.</p><p><b>Introduction to Coinbase (ticker COIN):</b></p><p>The stated goal of COIN is \"to create an open financial system for the world.\" While this is altruistic, it seems to be fairly broad based goal. It is noble to strive to create a financial system that is transparent for all mankind. It might be more prudent to strive to provide an end-to-end infrastructure and technology platform for all types of cryptocurrencies.</p><p>From our perspective, it might be judicious for COIN to focus its attention on providing value adding services for all types of digital currencies. If COIN becomes the dominant exchange where anyone can easily and securely send and receive Bitcoin, it will thrive. If COIN can create an efficient and accessible marketplace for the emerging digital assets community, it can be a massive success. There are hundreds of platforms that want to democratize access to the crypto-economy, but COIN (as the oldest and most recognizable brand) seems to have an early lead in this race.</p><p>Coinbase:</p><p>COIN was started in 2012 and it has built a trusted platform for accessing various crypto currencies. Using blockchain technology, COIN has simplified the user experience and reduced the complexity of purchasing, selling and holding digital currencies. In its early days, COIN was primarily just used for sending and receiving cryptocurrencies. Then, it became a trusted platform for those seeking to invest in various currencies. We liken this period as COIN's realization that it needed to become an \"exchange\" or intermediary between buyers and sellers. It has since launched cryptocurrency payments, distribution capabilities, storage, borrowing and lending services.</p><p>As this chart from COIN shows, there are over 45 different cryptocurrencies investors can purchase and another 90 that can be stored at COIN.</p><p><img src=\"https://static.tigerbbs.com/f91cd70c100e3a8159938dd730935867\" tg-width=\"767\" tg-height=\"319\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from COIN's S-1</i></p><p>However, two primary digital currencies dominate COIN's total trading volumes. In 2020, Bitcoin represented 41% of COIN's trading volumes and 15% came from Ethereum. While this 56% is a decline from 2019 levels (72% of the total mix), we envision both will remain the primary digital currencies traded on COIN.</p><p><b>Revenue:</b></p><p>Over the last several years, COIN has materially grown its revenue. In 2019, revenue $533 million and it impressively grew to $1.3 billion last year. As we show in our pie chart, in 2020, COIN's $1.28 billion of revenue grew 130% year-over-year and was a mix of 86% Transactional, 3% Subscription & Services and 11% \"Other\".</p><p>On April 6th, COIN reported 1st quarter 2021 results and the metrics were eye popping. Last quarter, COIN generated $1.8 billion in revenue, which exceeded the prior two years combined.</p><p>In 2020, 86% of COIN's total revenue was<i><b>Transactional</b></i>in nature. This means revenue was derived from sending, receiving, investing and spending cryptocurrencies. When it comes to Transactional revenue, we like to look at the fee as a percentage of total volume traded.</p><p>COIN provided this diagram and it shows exactly what products are inside of each of its revenue classifications. The remaining 15% of total revenue came from<i><b>Subscription & Services,</b></i>which COIN classifies as paying, distributing, storage, and from borrowing and lending cryptocurrencies.</p><p><img src=\"https://static.tigerbbs.com/b0466f39ad66c6fefeaeee25b50847fb\" tg-width=\"922\" tg-height=\"716\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from COIN's S-1</i></p><p>Storing earns custodial fee revenue, which we will dissect in a couple of pages. Staking revenue comes from validation on a proof-of-stake blockchain transaction. License revenue is generated from users of its Analytics services. Lastly, COIN can earn campaign revenue or distribution fees when its constructs educational materials for issuers. For cryptocurrency issuers, COIN earns revenue for helping the platform engage with its users, in the form of educational videos or tasks, when cryptocurrencies are attempting to widen their distribution, marketing and acceptance. While these ancillary services are nice, the real opportunity is trading.</p><p><b>Customer Type:</b></p><p>In its S-1 regulatory filing, COIN showed its product portfolio, separated from retail users, institutions and other ecosystem partners. One has to understand that different clients are paying different rates. Over the last 8 quarters, this revenue rate has averaged 0.61%, with a high of 0.80% in the 1st quarter of 2019 and a low of 0.50% in the 4th quarter of 2020.</p><p>Looking at the last 8 quarters, we can clearly see that both retail and institutional trading volumes have exploded higher. It is interesting to see that Retail was bigger at $45 billion in the 1 st quarter of 2018 than it was at the end of last year at $32 billion. Also, one can see that Institutional trading volumes have gone from $11 billion in the 1 st quarter of 2018 and now are over $57 billion.</p><p><img src=\"https://static.tigerbbs.com/6b80fa39db4f3163a635e88da58642ed\" tg-width=\"846\" tg-height=\"524\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from COIN's S-1</i></p><p>COIN has different fees depending on whether or not the client is retail or institutional, as well as whether or not the client uses Coinbase or Coinbase Pro, which we will discuss this later on, in our pricing section.</p><p><b>Trading volumes:</b></p><p>In terms of exchanges, it all comes down to volumes. Crypto exchange volumes have soared, because of strong interest from both retail and institutional clients. This type of growth will not continue, but volatility tends to drive overall volumes.</p><p>Looking at this Compass table, one can clearly see that volumes noticeably increased in 2018, following the rise of Bitcoin in December of 2017. What happened in late 2017 that helped drive future trading volumes? Well, CBOE and CME both launched Bitcoin future contracts that month.</p><p><img src=\"https://static.tigerbbs.com/7170f3967e17422584307fc937c403b5\" tg-width=\"689\" tg-height=\"691\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from Compass</i></p><p>So far in 2021, COIN has experienced 298% growth in ADV (average daily volumes). What did Bitcoin increase last year? Just over 300%. There's clearly a very high correlation between Bitcoin's recent price and COIN's future ADV.</p><p>One of our favorites aspects of investing in the exchanges is the ability to simply model the businesses in Excel. The large, publicly-traded exchanges provide wonderful transparency for investors, by posting daily volumes. We liken this to Goldman Sachs or Morgan Stanley providing real-time insights into their prop desk trading results. You shouldn't hold your breath for that level of transparency, right?</p><p><b>Bitcoin, Bitcoin and Bitcoin:</b></p><p>In the real estate business, the common phrase is that the 3 most important items are \"location, location and location.\" For digital currency exchanges, we believe the 3 most important products are \"Bitcoin, Bitcoin and more Bitcoin.\"</p><p>On COIN's platform, the volumes tend to be concentrated in a few different currencies. In 2019, BTC or Bitcoin was 58% of COIN's trading volumes, but that fell to 41% in 2020. ETH or Ethereum was 14% in 2019 and that grew slightly last year to 15% of COIN's total. The biggest category jump came from \"other\", which was 18% in 2019 and grew to 44% last year.</p><p>Having multiple products to transact in is obviously key, but COIN is cryptocurrency dependent. Yes, tokens like Dogecoin might come in and out of favor, but COIN is dependent upon higher Bitcoin and Ethereum prices.</p><p>A great aspect to owning CME is their transparency. Not only does CME provide daily ADV, but they provide details on open interest. We like to follow open interest, as it is a leading indicator of future volumes. Also, CME provides details on large open interest holders (called LOIH's) or those owners of a minimum of $7.5 million of Bitcoin futures. Over the last couple of months, CME has hit all-time highs in volumes in Bitcoin futures trading. This year, Bitcoin futures contracts on the CME have averaged 13,800 contracts per day, up 42% year-over-year.</p><p>Like CME, COIN has invested heavily in its technology to give its customers access to a deep pool of cryptocurrency liquidity. Like we just described, this liquidity can act as a virtuous cycle. Volumes beget more volumes and leading more customers onto the platform.</p><p><b>Pricing:</b></p><p>We focus on the trading volume of an exchange, but also try to model how revenues are generated from this volume. Each trade does not generate the same level of revenue, as different traders tend to pay different prices.</p><p>In derivative exchange land, we often look at commission prices as RPC or rate per contract. For example, CME charges $0.478 a contract to trade interest rates, $0.545 to trade equities, $0.764 to trade foreign currency, $1.397 to trade metals, $1.336 to trade agricultural commodities and $1.124 to trade energy. Within each product, prices can vary. For example, WTI crude is a different trading price versus natural gas contracts. While CME is trying to get more retail customers into trading futures and options, the vast majority of its volumes are from institutions.</p><p>At COIN, there are different fees for different clients. COIN has two main fee structures, one called Coinbase Pro and the other called Coinbase Prime. Here's a quick look at the pricing tiers, as discussed in the S-1 filing, based upon whether or not a client is taking or providing liquidity (called taker fee and maker fee).</p><p><img src=\"https://static.tigerbbs.com/cba2058d6aac36d1f5fa59d2261be3c1\" tg-width=\"527\" tg-height=\"649\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from Compass</i></p><p>Transaction revenue, as a percentage of total volumes traded, has averaged 0.61% over the last 8 quarters. Over these 2 years, retail client transactional revenue has increased from 1.27% up to 1.47%. For institutional clients, revenues as a percentage of volumes traded has fallen from 0.07% down to 0.05%. Clearly, retail customers pay significantly more than institutional clients to trade.</p><p>Also, unlike transacting in a stock, COIN calls its transaction based revenue \"staking\" revenue. This is earned from transaction validation on a proof-of-stake blockchain, when COIN's nodes successfully creates or validates a certain block. This revenue is recognized when the rewards are available for transfer and at the point when the block creator or validation is complete. The metrics that determine the staking revenue are driven by quantity, price and rewards rate.</p><p><b>Customers:</b></p><p>The strengths of COIN's platform seem to be its vast and extensive network of contacts. COIN is leveraging its trusted brand to attract those that want access to transact or store cryptocurrencies.</p><p>COIN's growth strategy is based upon driving more customers onto its platform and becoming the de-facto platform for cryptocurrency. Just like the online brokers did in the 1990's, the key to growth was adding new accounts and clients to the platform.</p><p>In this COIN chart, one can see the exceptional growth in verified users or those that have \"demonstrated an interest\" in COIN's platform. In addition to these users, there are another 7,000 institutional customers, across roughly 100 countries.</p><p><img src=\"https://static.tigerbbs.com/0b0ae20183f76b5f50213a6fba41d49f\" tg-width=\"671\" tg-height=\"663\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from COIN's S-1</i></p><p>These verified users have registered for an account and confirmed either their email address or a phone number. In our model, we are not terribly interested in tracking verified users as a key metric. While it is nice to know who interested in cryptocurrencies, it is much more important to understand who is willing to transact.</p><p>As you can see in this Compass Point chart, COIN has 2.8 million MTU or monthly transacting users. In order to be considered a customer needs to have logged in and transacted one time, over a 28-day rolling period.</p><p><img src=\"https://static.tigerbbs.com/37e82feeeec96702e21745ad5bdc1c48\" tg-width=\"706\" tg-height=\"416\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from Compass</i></p><p>It is interesting to see that there were 2.7 million MTU's in the 1 st quarter of 2018 and 2.8 million MTU's at the end of last year. Over those 2 years, MTU's dramatically declined and then lifted. As of today, COIN has roughly 3 million MTUs, which was up +180% year-over-year, but we like to think of it as only 7% of its verified total accounts.</p><p>This reminds us of the online brokerage business, back in the 1990's and 2000's. For years, the primary goal of marketing executives at the online brokers was to generate more and more accounts. The theory was that with new accounts, clients would eventually look to consolidate their relationships with one or possibly two firms. Once an account was opened, the goal was to increase wallet share from that satisfied customer.</p><p>For online brokerages, driving customers typically comes from TV advertising. One cannot watch CNBC or Bloomberg or Fox Business without seeing advertisements for Schwab, TD Ameritrade, E*Trade, Fidelity or Interactive Brokers. Robinhood was very successful in opening up investment accounts for the emerging Gen-Z demographic, but its well-publicized issues in late January (regarding prohibiting \"meme stocks\" purchases) might impact its torrid account growth.</p><p>How does COIN plan on increasing its exposure and customer base? Our guess is that it will look to increase its marketing spend. The ROI or return on investment of TV marketing is somewhat opaque. We anticipate COIN learning from its foray into marketing and advertising, with some successes, as well as some failures.</p><p>The best avenue to increase accounts and customers is to offer a product that cannot be easily replicated. COIN can continue its account growth by launching new and innovative products, as well as offering access to new cryptocurrencies.</p><p>While BTC or Bitcoin is the dominant cryptocurrency today, maybe there will be a new and exciting cryptocurrency in vogue tomorrow. Over the last few months, Dogecoin has garnered significant attention and media coverage. While we shake our head and do not understand the fascination with this cryptocurrency, the goal for COIN is to attract and become the go to platform for those that wish to transact. COIN needs to expand its support of all digitally native cryptocurrencies and help to tokenize new assets.</p><p><b>Storage:</b></p><p>While the vast majority of COIN's revenue is trading based, COIN does earns subscription and service revenue when customers choose to safely store their cryptocurrencies on its platform.</p><p>COIN is one of the most trusted exchanges in the crypto space and operate as a \"qualified custodian\". This means that they have a separate company, called Coinbase Custody, which operates as a standalone, independently-capitalized business. Under New York State Banking Law, Coinbase Custody is considered a fiduciary. All digital assets are segregated and held in a trust. COIN has never suffered a hack that led to loss of funds and cannot afford to ever have that breached.</p><p>As you can see in this COIN asset chart shows, there has been excellent growth on the platform. At the end of 2020, COIN had $90.3 billion in assets on its platform, which was up +432% year-over-year.</p><p><img src=\"https://static.tigerbbs.com/fa49892f328f6968397671bfc6bfbab1\" tg-width=\"887\" tg-height=\"689\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from COIN's S-1</i></p><p>Of these assets, 70% was from Bitcoin and another 13% were Ethereum. Clearly, those two currencies represent the bulk of COIN's platform assets.</p><p><b>Wallets:</b></p><p>The leather wallet in your pocket holds a combination of cash and credit/debit cards. However, cryptocurrencies and tokens need to be kept in a crypto wallet. \"Hot wallets\" are connected to the internet and are considered much less secure, while \"cold wallets\" are kept offline. Most cryptocurrency custodians employ \"cold\" storage to safely hold a client's digital assets.</p><p>Acting as a cold cryptocurrency custodian (say that 3x fast), COIN derives fee revenue based on a percentage of the daily value of customer accounts. The assets under custody are a function of quantity, price and type of cryptocurrency asset.</p><p><b>Custody:</b></p><p>In addition to hot versus cold wallets, there are two primary ways to store your Bitcoin. The first is called self-custody. This is when an individual or entity has complete control of their Bitcoin. This entails maintaining and controlling your own private key. When it comes to Bitcoin storage, there is a popular self-custody mantra that says, \"not your keys, not your coins\". This implies that if you do not control the private key for your Bitcoin, it is not truly your Bitcoin.</p><p>The second way to store your Bitcoin is to outsource it to a trusted custodian, like Kraken, Coinbase, Anchorage or others. In this case, the custodian stores your Bitcoin for you and they have control over its private key. Kraken is security focused and has an time-tested private key management practice. In its 10-years of existence, it has never been hacked.</p><p>Whether one decides to self-custody or use an outsourced custody provider for storing your Bitcoin, two critical issues must be discussed. The first is trust. Do you trust the custodial firm that holds your Bitcoin? If one self-custodies, they bear the risk of lost private keys, break-ins or natural disasters. On the other hand, self-custody ensures you control your own Bitcoin. The obvious downside of self-custody is that one can lose all of your Bitcoin, if it is not stored properly.</p><p>Do you trust the bank that holds your checking account or brokerage firm that holds your stocks? US financial institutions are some of the most highly regulated companies in the world and most have proven themselves to be good custodians of our assets. Maybe we can exclude Lehman Brothers and AIG from that statement, but it is fair statement for the other 10,000+ financial institutions in the US.</p><p>Does trusting a firm called Kraken, with millions of dollars' worth of Bitcoin, sound like a sound idea? Some might prefer to custody with a firm like Bank of New York, which announced in March of 2021, that it intends to enter the Bitcoin custody business. However, does Bank of New York have the technological expertise and security protocols of newer entrants like Kraken? With a random name like Manole Capital, we clearly don't place too much emphasis on one's name. We do however appreciate 3 rd party, independent industry rankings. Kraken has been voted the #1 most secure cryptocurrency exchange by ICO Ratings.</p><p>The second key issue to consider is protection and safety. Cryptocurrency custodians and exchanges are a prime target for hackers. There are hundreds and potentially thousands of thieves looking to steal your Bitcoin private key. PayPal and Robinhood recently sent warnings instructing their clients to install two factor authentication onto their digital wallets / account. Also, governments can force companies to freeze funds, if they perceive illegal activity or fraudulent behavior.</p><p>Trusting someone else to store and manage your Bitcoin is a challenging decision. There have been a few custody firms to have disastrous results (i.e. Mt. Gox), but there are also extremely competent businesses that can trusted to hold your cryptocurrencies. For us, we prefer an expert store our assets, as opposed to keeping it under the proverbial mattress.</p><p><b>Characteristics:</b></p><p>As we mentioned earlier, there are certainideal characteristicswe look for in our investments. COIN has a strong brand name and dominates its cryptocurrency niche. Its platform is scalable and by leveraging certain blockchain advancements, COIN can provide a safe and secure environment for its customers.</p><p>We often look for our companies to have dominant market shares, high barriers to entry and what Warren Buffett calls a \"moat around the franchise\". Regardless of industry, we always focus on an investment's market share. In terms of COIN's cryptocurrency market share, it has risen from 4.5% in 2018 to 8.3% in 2019 up to 11.0% in 2020.</p><p>For exchanges, there is typically 1 or 2 firms that dominate the trading of a specific asset. These exchanges have the best liquidity and the tightest bid/ask spreads. For example, the CME dominates US interest rate trading, as well as WTI crude trading. Intercontinental Exchange dominates the Brent crude marketplace. Once an exchange begins to control trading for a certain asset, it is very difficult for a competitor to steal market share. Some try to lower trading pricing and commissions, but this usually is only temporary. Investors are always seeking best execution and will usually return to the marketplace with the most liquidity and tightest bid/ask spreads. From an exchange standpoint, this is definition of dominant market share, competitive advantage or possessing a moat around your franchise.</p><p>Ideally, COIN is looking to become the one-stop shop for those wishing to buy, sell and/or store cryptocurrency. COIN has many of the desirable characteristics we look for in an investment, but it does have risks.</p><p><b>Risk #1: Bitcoin</b></p><p>For a business like COIN, there are literally dozens of risks. For starters, cryptocurrencies are volatile and we anticipate COIN's stock will be highly correlated to the price of BTC, Bitcoin and other important cryptocurrencies.</p><p>As we have mentioned, the underlying price of these cryptocurrencies helps to determine COIN's revenue and profits. Possibly the biggest risk for owning COIN stock will be its reliance and dependency on rising Bitcoin and Ethereum prices.</p><p><b>Risk #2: Competition</b></p><p>On the retail front, COIN has numerous competitors. For example, both Square's Cash App (36 million users) and PayPal (375 million accounts) are offering mobile-based wallets, primarily to retail clients. Customers can purchase various cryptocurrencies on both Square and PayPal and store them for free.</p><p>Over time, we expect both of these firms to begin to allow wallet holders to transact in whatever currency he/she wishes. For example, a customer can use their Square Cash App wallet to transact at over 3 million Square merchant acquiring locations. This mobile wallet will permit credit or debit transactions, but might also permit the user to utilize their Bitcoin balance. There are numerous issues that still need to be resolved on this front, but this is what we have been calling \"closing-the-loop\".</p><p><b>Risk #3: Regulations</b></p><p>Exchanges are highly regulated entities and they must learn to engage with their regulators for the benefit of all market participants. COIN is subject to a regulated environment, but the rules and landscape are dynamic. Unlike US financials, with a known regulator, the laws and rules cryptocurrencies are subject to are constantly changing. As COIN moves more of its business to international markets, it will have additional governmental issues to deal with.</p><p>The new SEC Chairman is Gary Gensler. Gensler was the head of the CFTC from May 2009 to January 2014 and was the primary regulator for the derivative exchanges. In his tenure at the CFTC, Gensler attempted to write rules and regulations for the swap markets, as suggested in the Dodd Frank Act of 2010 (following the Financial Crisis). Now that Gensler is at the SEC, one of his first challenges is what to do about regulating and providing oversight on Bitcoin and other digital currencies. He is not new to digital currencies, as he was a professor at MIT's Sloan School of Management after his stint at the CFTC. He primarily taught about blockchain technology and cryptocurrencies.</p><p>As of today, there are only a few crypto funds available to investors. Grayscale has over $38 billion in assets and is the sponsor of the Grayscale Bitcoin Trust (OTC:GBTC), which is provides Bitcoin exposure for qualified investors. GBT investors have a $25,000 minimum investment and currently pay a 2.5% management fee.</p><p>Many firms (Skybridge Capital, Valkyrie Digital, Fidelity Investments, VanEck, WisdomTree, etc) have announced their intention to offer Bitcoin ETF's. attempted to get the SEC to approve Bitcoin ETF's. As of now, the SEC has not approved any of these filings, but it will ultimately have to make a decision on the subject. Earlier SEC rejections were based upon problems with volatility, transparency, market surveillance and market and price manipulation. We expect a positive Bitcoin ETF to be approved by the SEC in 2021.</p><p>In addition to SEC regulation, we anticipate the Federal Reserve to explore the subject too. Chairman Jay Powell, in official Congressional testimony, has officially stated that the Fed is looking into the idea of a \"fully digital dollar\". This type of \"Fed coin\" would likely need Congressional and White House approval and it is very much in the early innings of its examination. Chairman Powell is still dealing with the ramifications of a global pandemic and a soft US economy, so a CBDC might not be his first or even second priority right now.</p><p><b>Risk #4: Security</b></p><p>As with any exchange, security and safety is paramount. We anticipate that COIN will be subject to thousands of cybersecurity attacks. Hackers, criminals and even foreign countries might find it worthwhile to breach COIN's platform. COIN's valuation is dependent upon it keeping its first-mover advantage and its reputation as a dominant cryptocurrency custodian. Security, for customers and partners, cannot be underestimated and COIN will have a very large target on its back.</p><p>Scale & EBITDA Margins:</p><p>For us, we always like to model in operating or EBITDA margins, as well as free cash flow for our exchanges. In 2020, EBITDA margins for the largest exchanges were impressive. Here is a table of the dominant four exchanges and their EBITDA margins last year, as compared to COIN. Looking at the 2020 EBITDA margins of its publicly-traded exchange peers, provides interesting insights. Last year, CBOE posted 68% EBITDA margins and CME and ICE each posted margins in the 62% to 63% range. Despite trailing their competitors, Nasdaq had impressive EBITDA margins of 55%, that would be the envy of most companies. One key takeaway is that all of the exchanges are generating impressive margins with excellent leverage and scale opportunities.</p><p><b>Exchanges: CBOE CME ICE NDAQ vs COIN</b></p><p>2020 EBITDA Margins 68% 62% 63% 55% 41%</p><p>These exchanges have spent billions of dollars building out a scalable platform, that has enormous operating leverage. Each and every transaction that occurs is extremely high incremental margins. Most do not provide guidance on future or forward revenue, but they do have decent insight into expenses. The CME typically will provide forward expense guidance in the 2% to 5% range each year. Expenses don't dramatically increase each and every year, but do modestly rise.</p><p>How does COIN compare? Well, COIN is still constructing its exchange and heavily investing in its infrastructure. Last year, technology and development expenses were $271.7 million or 21% of COIN's total revenue. In 2019, this expense line item was 35% of revenue.</p><p>In 2020, COIN's expenses grew 50% year-over-year to $868.5 million. At this early stage of its lifecycle, we are pleasantly surprised to see that COIN is generating positive operating leverage (expense growth less than revenue growth).</p><p>As you can see in this Compass Point chart, over the last 8 quarters, COIN's Adjusted EBITDA margins have steadily improved. Are they peaking or at an all-time high? No, but the best part about COIN's current margin trajectory is where we see it going.</p><p><img src=\"https://static.tigerbbs.com/44d11356cbdbc81549a9f5422e6e0e4f\" tg-width=\"567\" tg-height=\"426\" referrerpolicy=\"no-referrer\"></p><p><i>* Source: This is a slide/chart from Compass</i></p><p>In its S-1, Brian Armstrong (COIN's CEO) stated a focus on operating profits, as it tries to manage its expense growth. He said, \"We may earn a profit when revenues are high, and we may lose money when revenues are low.\" He then went on to state that \"our goal is to roughly operate the company at break even, smoothed out over time.\"</p><p>This has proven to be true, when one considers that COIN generated $533 million in revenue in 2019, but lost $30m of profit that year. Then, in 2020, COIN produced $527 million of EBITDA on $1.2 billion of revenue. Clearly, the exchanges can generate very impressive profit margins, at scale.</p><p>The real benefit for the exchanges comes when volatility spikes and volumes soar. As this happens, assuming the exchanges properly manages this rising volatility, profitability climbs. As more and more volumes transact on a platform, free cash flow (and margins) is very attractive. Operating margins at its other publicly-traded exchanges have been high for years and do not fluctuate significantly from year-to-year. As revenues surprise to the upside, because volatility spikes, these exchanges typically reward their shareholders with buybacks and special dividends. As much more mature businesses, these exchanges tend to allow this leverage upside to fall to the bottom line. We anticipate that COIN will choose to re-invest any revenue upside towards marketing, growing its customer base, improving its platform, and building up its infrastructure.</p><p><b>Valuation:</b></p><p>In their 1st quarter 2021 release, management provided a low-to-mid-to-high range for a number of key metrics. In terms of MTU's, COIN management provided low guidance of 4.0 million and high guidance of 7.0 million. In 2019, the net revenue per MTU was $37 and it increased to $49 last year. Over the last 8 quarters, the net revenue per MTU range has grown from $26 in the 1 st quarter of 2019 up to $59 in the last quarter of 2020.</p><p>In our modeling and analysis, we will stick with management guidance, which ranges from $35 million to $45 million in net revenue per MTU. This implies revenue for the final three quarters of the year could be in the $3.48 billion on the low side and up to $4.64 billion on the high side. If we simply average these low and high ranges, 2021 revenue would be $4.1 billion. Considering COIN did $1.8 billion in revenue in the 1 st quarter alone, it is probably safe to assume that 2021 revenue will approach $4 billion this year. Our model is fairly detailed, but for this exercise, we will use a nice round $4.0 billion in 2021 revenue. Then, for 2022, we will assume 15% growth, to $4.6 billion. This does not seem like we are being aggressive. In fact, we wouldn't be surprised if COIN generates this level of revenue a full year earlier.</p><p>Without making an assumption on future volume growth, we need to estimate profit margins for COIN. Over the next decade, we would expect COIN to post EBITDA margins into the mid-50's%. Over the next one to two years, we would like COIN to annually increase margins by 200 basis points. This should be do-able, even with COIN making significant investments in their operational technology and platform.</p><p><b>Stock Trading vs Fundamentals:</b></p><p>It can be challenging to sometimes separate the volatility of a stock from its underlying fundamentals. For example, the primary exchange to trade interest rates is the CME. When it comes to trading Brent crude, most traders prefer ICE (although WTI is primarily traded on CME). While both of these exchanges trade hundreds of other products and assets, those two products (interest rates and Brent crude) tend to materially impact the exchange stock price.</p><p>When it comes to COIN, we anticipate the stock will trade very closely to the price of Bitcoin and Ethereum. If both digital currencies continue to rise, COIN's stock will be a solid success. If Bitcoin falls by (80%), like it did in 2019, COIN's stock will dramatically fall. In a world with massive Bitcoin volatility, COIN's underlying fundamentals should be good. In theory, COIN's stock should correlate and reflect the volatility of Bitcoin and Ethereum, not just their upward trajectory. However, we fully anticipate COIN's stock to trade in-line with the success or failure of Bitcoin.</p><p>Today's reality is that certain market participants are not long-term investors. Many unfortunately consider stocks as pieces of paper, as short-term trading instruments. If Bitcoin were to struggle and decline in value, that volatility and environment would be excellent for COIN. In fact, that might be a great time to \"dip one's toe\" into a position. However, the Reddit and Wall Street Bets community is more likely to consider short-term trading momentum than bottoms up, underlying fundamentals.</p><p>As we discussed earlier, COIN generated an impressive 2020 operating margin of 32%, compared to a (9%) in 2019. While some companies can post steady and smooth operating margins, COIN's will be much lumpier, at least until it is less Bitcoin becomes less volatile. Also, COIN has $188 million of cryptocurrencies on its balance sheet, comprised mainly of $130 million of Bitcoin and $24 million of Ether. There will be opportunities to purchase COIN, when short-term investors sell. This will likely occur as COIN ramps up its expenses or when Bitcoin falls.</p><p><b>Price Target:</b></p><p>Over the next month or so, we anticipate most sell-side analysts will publish targets on COIN. Unfortunately, most will use revenue multiples to determine their price targets. Manole Capital only owns companies that generate earnings and free cash flow, so we are loathe to utilize revenue multiples for price targets. We find that companies that use revenue multiples to justify a valuation are often incapable of generating important free cash flow. We are fine with companies investing in their future to ensure growth, but we cannot invest in companies that aren't concerned with free cash flow. For us, using the crutch of a revenue multiples isn't something we are comfortable doing.</p><p>Fortunately, for this analysis of COIN, the company generates plenty of profit and free cash flow. We conservatively model COIN's revenue next year at $4.6 billion. Also, we believe it can add a point or two to EBITDA margins, into the mid-40% range. That would be 2021 EBITDA of $2.1 billion or $11.89 per share. We don't want to sound like a \"wise old sage\", but in the \"olden days\", investors could utilize reasonable EV (enterprise value) to EBITDA multiples in the 10x to 15x range. Maybe, if a company was experiencing fantastic growth and was getting acquired, you might see an EBITDA multiple approach 20x. Nasdaq, ICE and CBOE all have trailing EV to EBITDA multiples in the mid-to-high teens. In order to be remotely close to where COIN will trade this week, we would have to use a MarketAxess (MKTX) or Tradeweb (TW) lofty TTM EV to EBITDA multiples of roughly 45x. We just don't believe EV to EBITDA is the proper valuation metric to currently use. Should we use another cryptocurrency company like Silvergate (SI) and estimate a valuation using their EV to EBITDA multiple? At 108x trailing EBITDA, that would be a waste of time.</p><p>To arrive at a realistic COIN price target, let's just model earnings and use a premium forward P/E multiple. If we apply a tax rate of 25% (not assuming any tax loss carryovers), we can estimate an EPS in 2021 of $8.50.</p><p>Using that $8.50 per share in EPS, we then want to apply an exchange-like multiple, adding in a premium for COIN due to its exceptional growth. The average publicly-traded exchange trades at a forward P/E multiple of 20x. The table below provides some different targets, based upon the premium P/E one believes COIN deserves.</p><p><b>Forward P/E Multiple 25x 30x 40x 45x 50x</b></p><p>Premium to Peers 20% 50% 100%</p><p>COIN Target $213 $255 $340 $381 $426</p><p>On Wednesday, initial projections are looking for COIN to trade towards $65 billion, which implies $350 per share. We fully anticipate COIN rocketing past $400 and potentially closing the day in the $500 per share range. This would imply a market capitalization of COIN of $93 billion, which is approaching the $100 billion level that have been rumored to have occurred on some private exchanges.</p><p><b>Conclusion:</b></p><p>We expect COIN's direct listing on April 14th to be \"hot\".</p><p>In a typical IPO, companies raise capital and provide exclusive, early access to large institutions. With wire houses placing shares into large institutions and asset managers first, retail investors often get shut out. Retail platforms like Schwab, Ameritrade, Robinhood, Fidelity typically cannot access IPOs for their customers.</p><p>Since COIN has over $1 billion of cash on its balance sheet and does not need capital, it has decided to do a direct listing. The advantage of a direct listing is that it will enable retail investors to purchase COIN at the same time as larger institutions. Once COIN begins to trade freely on the Nasdaq exchange, both retail and institutional traders can participate. With 186 million shares outstanding, the market will ultimately determine what share price COIN trades at. We expect a flood of market orders, creating an interesting first day of trading.</p><p>Is the lofty valuation we just laid out fair? Probably not, but that's what the market will determine. Is this a realistic scenario? Are our forecasts too conservative? Should you be an aggressive buyer? We think our estimates are fair, but COIN will likely immediately trade towards an aggressive multiple.</p><p>If you don't want to pay that kind of forward multiple for COIN, there are other alternative. Maybe you should consider an investment in some of the other (and less expensive) exchanges, like Nasdaq or CBOE? These companies do not have the same growth prospects as COIN, but they do come with a much smaller price tag.</p><p>We believe that COIN is a safe, trusted and easy-to-use platform for trading digital currencies. Some investors believe that they have \"missed out\" on the meteoric rise of Bitcoin, so they might chase a position in COIN. Others will look at COIN as a long-term opportunity to own the dominant digital currency exchange.</p><p>In our opinion, owners should be willing to pay a premium for COIN shares, but they should also be prepared for significant volatility and competition. Only you know your specific risk/reward tolerances. Only time will tell the answers to some of these questions, but we'll get a good idea on Wednesday, once COIN trading begins.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Thinking About Buying Coinbase? - Here's Your Note</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nThinking About Buying Coinbase? - Here's Your Note\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-14 23:14 GMT+8 <a href=https://seekingalpha.com/article/4419039-thinking-of-buying-coinbase><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Wednesday,Coinbase shares open at $381 on Nasdaq, valuing cryptocurrency exchange at $99.6 billion.SummaryCoinbase is going public today.Instead of reading their +300 page S-1, read our 19 page note....</p>\n\n<a href=\"https://seekingalpha.com/article/4419039-thinking-of-buying-coinbase\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"COIN":"Coinbase Global, Inc."},"source_url":"https://seekingalpha.com/article/4419039-thinking-of-buying-coinbase","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1145468327","content_text":"Wednesday,Coinbase shares open at $381 on Nasdaq, valuing cryptocurrency exchange at $99.6 billion.SummaryCoinbase is going public today.Instead of reading their +300 page S-1, read our 19 page note.We discuss: digital currencies, store of value, medium of exchange.Plus, a deep dive into COIN's model, storage, trading, price target.Manole Capital Management - Bitcoin & Coinbase (COIN) - April 2021What is FINTECH?Manole Capital Management exclusively focuses on the emerging FINTECH sector. For some investors, FINTECH means We define FINTECH as \"anything utilizing technology to improve an established process.\"* Source: This is a Business Insider slide on the FINTECH EcosystemFor us, the quintessential FINTECH business is the payment industry. As you can see in this FINTECH ecosystem Business Insider slide, we bolded thePayments and Remittancesspace, as that is our preferred area to invest. Others can invest in FINTECH's through Alternative Finance companies or digital banks or Insurtechs, but for us, we love the payment sector. We are attracted to the predictable, sustainable and recurring revenues of their businesses, where they essentially earn revenue per swipe economics.When most investors discuss FINTECH, they rarely (if ever) discuss the exchanges. Similar to these payment and transaction-based models, many of the exchanges also earn revenue, free cash flow and profits per transaction or trade. When it comes to trading certain assets (interest rates, equities, commodities, foreign currency, etc), there tends to be high barriers to entry or an impregnable moat around certain franchises. While many of these businesses are not recession proof, they have proven to be recession resistant.Financials:While Financials only represent 11.3% of the S&P 500 (as of March 2021), roughly 3/4rd's of this sector's weight is comprised of traditional financial institutions, like banks and insurance companies. These businesses are typically credit sensitive, with opaque and complex balance sheets. To simplify the banking model, the underlying asset is the US dollar and they simply look to borrow that capital at a low fee and lend it out to borrowers at a higher rate. This spread business can generate excellent returns, but it comes with a risk. Is the bank following a solid and time-tested risk model? Are borrowers credit worthy?If an investor has exposure to the Financial sector, one should have a strong opinion on the 10-year yield. The 10-year stands at 1.7% and has significantly risen over the last several months. The Financial sector has a 5-year rolling correlation with the 10-year Treasury of 67% (per Scotiabank and Bloomberg research). We simply choose to not invest in banks and business models that don't have ourideal characteristics (click here).As we stated above, we are attracted to businesses that generate steady and recurring and free cash flow. Unfortunately, most Financials are not transaction based business models.Our Goal:This note will review digital currencies, Bitcoin and the opportunity in the exchange space. We will use our over two decades of experience following and owning exchanges to draw some parallels for this new asset class. For example, there are \"big picture\" matters concerning storage, access, theft, usage, documentation, identity, rights and dozens of other issues. Blockchain and technology advancements theoretically solve some of these problems, but unfortunately not all.Some digital currency or technology experts might find this analysis rudimentary. Others are new to this asset class and want a primer on the industry. That's our primary goal or target, is to provide an initial 30,000 foot view on digital currencies and then dive into the details of the largest (and soon to be public) exchange.As always, we strive to present our work in a very readable format. If they had the patience to read our research, we attempt to write our notes so our 80-year father or 14-year old son could easily understand. We will try our best to review the requirements to be considered a currency, volatility, pricing, digital wallets, NFT's (non-fungible tokens), stable coins and some other digital currency issues. After that, we will do a fairly deep dive into Coinbase (ticker COIN). You can read their nearly 300-page S-1 filing with theSEC (click here)or you can let us serve as your \"Cliff Notes\" version. We will discuss their business model, how they generate revenue, their advantages and disadvantages, as well as provide a framework for valuation and a price target. We hope you find this latest research from Manole Capital topical and interesting.Digital Currencies:In our 1st quarter 2021 investor newsletter, which we published on Seeking Alpha, we discussed COIN's business and its opportunity. We wrote a couple pages on the subject, but felt it deserved a much larger and dedicated piece of research.Before we dive into Coinbase, we wanted to provide our thoughts on Bitcoin and digital currencies. As we stated in the opening paragraph, Manole Capital believes the payments industry is the dominant FINTECH sector. Over the last 5 years, we have done a significant amount of work on digital currencies, trying to understand their best usage, functionality and role in the future of payments. Are digital currencies a threat to the payment networks, processors and merchant acquirers? In order to answer these questions, one has to understand how a typical payment transaction occurs. Who processes, clears and settles a card transaction?We have written dozens of articles on this subject, which can easily be viewed here. In our opinion, there are two main requirements for something to be considered a viable currency. One is that it must be a \"store of value\" and the second is that it must be a \"medium of exchange\".The Requirements To Be A Currency:In order to be a viable currency, two specific requirements are needed. One is that the currency should be a\"store of value\".This is often defined as any asset that can smoothly maintain its economic value, rather than rapidly depreciating. The other requirement is that the currency should be a\"medium of exchange\" or an instrument used to facilitate the sale, purchase or trade of goods between parties.In terms of speed and efficiency, there is no comparison when comparing the centralized payment system to Bitcoin's decentralized platform. Visa processes 1,700 transactions per second and it claims to have 40x the spare capacity, to handle 65,000 transactions per second. PayPal (PYPL) stated that during the 2020 holiday shopping season, it processed over 1,000 transactions per second. Using Bitcoin and its blockchain for global purchases and payments can process roughly 7 transactions per second.As technology improves, one could argue Bitcoin processing will improve. However, if Bitcoin were to get used for payments, the conversion of crypto holdings into US dollars will dramatically increase overall network transactions. We are big believers in the concept of...\"if it ain't broke, don't fix it!\"There are significant acceptance advantages to the existing payment ecosystem. Visa and Mastercard are accepted in over 200 countries and at over 40 million global merchants. Their payment acceptance brands stand for trust and allows billions of purchase transactions to occur each year. The Visa and Mastercard logos are known around the world, permitting the exchange of goods and services in seconds. While Bitcoin is slowly becoming more recognizable, it simply does not have the same acceptance. We believe the existing payment ecosystem handles the \"medium of exchange\" process well. The overall payment landscape is a well-oiled machine, that involves three to four parties, approving transactions in in roughly 1 to 2 seconds.We have discussed the long-term opportunity for a FINTECH company or two to create a \"Super App Holy Grail\". This would be allowing customers to transact with their mobile phone, in whatever currency they wish, at all global merchants. Getting consumers to get rid of their leather wallets is easier said than done. Even though we consider ourselves to be fairly technologically savvy, we still have a wallet that looks a lot like Seinfeld's George Costanza's.Several companies have recently announced their intentions to help spur Bitcoin acceptance. On March 30th, 2021, PYPL announced the launch of its \"Checkout with Crypto\" option. Participating merchants (initially ½ of PYPL's 29 million) can offer their customers the ability to pay for purchases using Bitcoin, Litecoin, Ethereum or Bitcoin Cash. How will this work? Once a PYPL customer purchases or stores crypto holdings in their PYPL digital wallet, he/she will be permitted to use those funds at checkout. When a transaction occurs, PYPL users will see the option to apply their balance to complete a purchase. When customers choose this payment option, PYPL will exchange their crypto for US dollars through its clearinghouse partner, Paxos. The transaction will occur based upon a spot market rate, with a 50 basis point spread built in. PYPL will then remit payment (in US dollars) to the merchant, to satisfy the exchange of goods or services.While this sounds easy, there are significant hurdles. Certain details are still emerging, but customers using this service must buy their crypto within their PYPL digital wallet. This will satisfy PYPL's adherence to Know Your Customer (KYC) guidelines, but it doesn't solve all potential hiccups. The four cryptocurrencies PYPL said customers can use, are likely to cause problems. The SEC and IRS have not deemed these to be currencies, but instead, consider them capital assets. If they were to be used for payment, the underlying client will potentially have capital gain taxes, if their PYPL digital wallet has paper gains. If you are making a $20 purchase at Walgreen's, we don't believe customers are wanting to consider the tax ramifications of using their Bitcoin balance in their digital wallet. That potential $20 purchase could potentially cost you a tax liability of 100%.Even if we ignore the large tax issues, there are additional worries. So, if the cryptocurrency in your digital wallet is going to be used to fund purchases, who is going to pay for it? Merchants will have to pay for the cost of converting cryptocurrencies into US dollars, whatever that cost might be. There will be the traditional merchant discount rates applied, but this will ultimately be another cost for merchants to bear. Besides a company like Tesla, that has a dynamic CEO, do you envision merchant's dying to accept additional costs to help their customers transact? Especially when cards are so ubiquitous?So,Teslahas decided it will accept Bitcoin as a form of payment. What does this really mean? If a consumer has a sizeable gain in Bitcoin and wishes to use it to purchase a \"free\" Tesla, there are serious tax consequences. Just like selling an appreciated stock, where a consumer has to pay capital gains taxes, Bitcoin would be under the same burden. Until the IRS classifies Bitcoin as a currency, and not property, this tax problem will remain.The second problem comes if the Tesla buyer decides to return his/her new vehicle. Tesla reserves the right to pay the consumer back in cash, worth the original purchase price, not in Bitcoin. If Bitcoin jumps in value since the original transaction date, the consumer would be negatively impacted. If Bitcoin falls in price, Tesla could return a depreciated Bitcoin to the car buyer. Are there hundreds of thousands of consumers yearning to purchase a Tesla with Bitcoin? We doubt there's too many, especially if they are aware of the tax issues.Last week, Visa announced it would use various FINTECH API's (application programming interface) offered by cryptocurrency custodian and privately-held Anchorage. Visa plans to settle transactions using US dollar stablecoin, powered by the Ethereum blockchain. Once again, this is exciting news, but will likely encounter problems and take a while to come to fruition.Before one uses Bitcoin to transact at the POS (point of sale), be actually believe it can become an excellent opportunity for money transfer. Western Union is about to turn 170 years old and can be considered the original FINTECH company. However, moving paper currency around the world is not terribly technologically advanced. Visa has launched an expanded version of itsDirectplatform, which will allow for cross border disbursements. Visa's platform supports real-time domestic and cross-border person-to-person, business-to-small business and business-to-consumer use cases, so the options are endless. Bill Sheley is the global head of Visa Direct, and he stated, \"Visa is innovating to give financial institutions, governments, individuals and businesses new ways to pay and get paid beyond the card.\"On the \"store of value\" front, the total addressable market for assets is enormous. For example, art and collectibles are a $20 trillion market, gold is $10 trillion, real estate is $200 trillion, bonds are $100 trillion and equities are another $30 trillion.50% of gold is used in jewelry and another 1/3 is used in electronics. While gold used to back fiat currencies, Britain dropped the gold standard in 1931. The US followed suit in 1933 and totally abandoned the gold standard in 1973. There are additional issues to consider like fixed or variable supply, as well as volatility concerns.We agree that digital currencies are becoming a feasible \"store of value\". In our opinion, digital currencies have significant challenges to becoming a \"medium of exchange\". With that caveat, the opportunity for the crypto-economy and digital currencies to thrive is still open ended and vast.Inflation:The world is always looking for additional asset classes and stores of value, especially as governments keep the currency printing presses running 24 hours a day, 7 days a week.Last year, the Federal Reserve printed an unprecedented amount of dollars, roughly 1/5 th of all US dollars ever printed. On a daily basis, the Bureau of Engraving and Printing produces over $500 million over 38 million notes.If you are the United States and the dollar is considered the dominant global currency, your perception of Bitcoin (or any digital assets) should be of concern. The ability of countries to simply print money should inherently be inflationary, yet Federal Reserve Chairman Jerome Powell continues to seek to get the US at and above 2% annually.A couple of weeks ago, the Biden administration announced an infrastructure bill, called the American Jobs Plan, with a $2 trillion spending target. In March of 2021, US government passed a $1.9 trillion stimulus package. This followed a December of 2020 stimulus package of $900 billion, as well as a CARES Act in March 2020 bill of $2.2 trillion. We are not making a statement about the merits of any of these packages and stimulus programs. We simply are trying to point out the massive amount of money that is getting printed.Many cryptocurrency bulls will cite inflationary worries with fiat currencies for why their digital cryptocurrencies assets are undervalued. We understand this argument, but always come back to an initial framework. If you are the US or the European Union or Chinese government, would you be able to control your society if there wasn't a viable currency in place? Would economies function without government control of its fiat currency? If cryptocurrencies become widely accepted and are considered a better version of payment, would governments be able to function? If the US couldn't issue additional debt to fund its spending initiatives, would it even exist? We just don't believe government regulators will allow certain cryptocurrencies to thrive, especially if it threatens their sovereign currencies.We tend to look at this as a simple supply and demand equation. While Bitcoin has currently issued 18.7 million tokens, there is only a maximum of 21 million that can be created. That fixed supply is counter to some governments. For example, there are countries that have taken the printing of fiat currency too far. Zimbabwe is but one example of runaway inflation. Here's a picture of one of their 100 trillion bills. Yes, that's a 100 trillion. Do you want to be a trillionaire? Simply buy one on eBay for $8.99,by clicking here.Source: This is a picture of Zimbabere's currency, that I took on myiPhoneAs this Piper Sandler chart shows, Bitcoin now has a market capitalization of roughly $1 trillion. If we look at the top 10 digital assets by market capitalization, the vast majority of market share falls to just 2 currencies.* Source: This is a Piper Sandler slide/chartIt is estimated that Bitcoin is over 55% of all cryptocurrency market capitalization and Ethereum is roughly 11%. Cryptocurrencies like Tether, Binance Coin, Stellar, Cardano, Litecoin have a modest following and just 1% to 2% market share (all under $50 million in market cap).Digital currencies should be considered assets, as they can be represented digitally, dynamically transmitted, and stored safely in the cloud. However, digital assets and cryptocurrencies have a long way to go to become used in our globally interconnected economies.Rules & Regulations:In a perfect world, we think all assets should trade 365 days a year and 24 hours a day. In this hypothetical environment, assets should immediately process and settle and fees to transact should be modest. Why does the NYSE only officially operate from 9:30 am to 4:00 pm EST Monday through Friday (and not on holidays)? There are trades that occur pre-market and post-market hours, but liquidity and volumes are sparse. The simple answer is that this is the way it has always occurred and why should we change something that isn't broken.The traditional exchanges have always had a set period of time where they are \"open for business\", but this is changing. For example, the technology backbone of the CME Group (ticker CME) is called Globex. It essentially permits 24/7 trading to occur on its electronic platform for equities, interest rates, commodities, foreign exchange and other assets. After years of investing in international growth, roughly 1/5 th of all volumes come from outside of the US.In order to have access to Globex, there are rules one needs to adhere to, as exchanges are heavily regulated entities. Just like banks need to conduct AML (anti-money laundering) and KYC (know your customer) due diligence on its customer base, the exchanges need to follow strict guidelines enforced by their regulators.As of today, we believe there are over 50 distinct blockchain protocols which support more than 7,500 various digital assets. Unfortunately, the financial systems are not known as entities that are quick to adopt change and technology. The world has embraced the internet, as a revolutionary and transformational platform. However, financial systems are not comfortable seamlessly exchanging data, information and assets. There are numerous activities like cross border payments or peer-to-peer payments that are ideally suited for technological advancements, but rules and regulations exist to stymie growth.The goal of an open and transparent financial system is honorable, but not terribly realistic. In terms of managing one's assets, especially money, the process can be cumbersome.Volatility:If we accept cryptocurrency as a digital asset, we then want to better understand how value is determined, where it can be stored and how best to process and handle its exchange. With decentralized assets, the network allows participants to transact without intermediaries. Who sets the value and determines price?The most notable cryptocurrency is Bitcoin and it has a CAGR of over 150%, from 2013 to 2020. In 2017, it rose 1,318%, but then fell by (72.6%) in 2018. In 2020, it rose over 302% and it currently is up well over 50% this year. Since January of 2017, there have been 5 corrections of 50% of more in Bitcoin, so it can be wildly volatile.We are slowly getting comfortable with digital assets and cryptocurrencies as a \"store of value\" and believe they will become a viable asset in one's diversified portfolio. Each individual or entity needs to determine their own risk and reward framework, so cryptocurrency might be 10 basis points or 10% of one's portfolio.Opinions on Bitcoin are changing every day. Back in 2018, the CEO of Blackrock (Larry Fink) called Bitcoin a currency \"for money launderers.\" A year earlier, JP Morgan CEO, Jaime Dimon called Bitcoin a \"fraud\" and threated to fire any bank employee who dealt with the currency. Fast forward to today: Blackrock (in January 2021) enabled two of its mutual funds to purchase Bitcoin, and a JP Morgan analyst recently published that he thinks Bitcoin could rise to $146,000.Recently, large institutional interest has boosted the price of certain digital assets. High profile investors like John Tudor Jones (May 2020) and Stanley Druckenmiller have made sizeable purchases of various digital currencies. Other companies like Microstrategy (August 2020) and Tesla (Feb 2021) have made sizeable transactions for their firm's balance sheet.Stable Coins:A stable coin is simply a digital asset that is attempts to lower volatility by pegging itself to an actual fiat currency or physical asset (ex: gold). For example, Tether has a market capitalization of over $40 billion, is backed by US dollars and it's the largest cryptocurrency stable coin. One of the risks associated with stable coins is ensuring that the proper amount of fiat currency is held in reserve to match the amount of stable coins in circulation.In prior official commentary, the Governor of the Central Bank of Russia - Elvira Nabiullina - stated that Russa was against any form of private currency, as it threatened financial sovereignty. Russia's Ministry of Internal Affairs also was considering seizing all digital currencies and claiming cryptocurrencies criminal activity. Now, in January 2021, the Bank of Russia began to test a ruble-based stable coin. While starting cautiously, the Russian Central Bank is exploring the possibility of issuing its own digital currency. There are numerous countries that are investigating the process of issuing CBDC's or Central Bank Digital Currencies. China has studied the process of issuing a digital yuan, the European Central Bank is looking into a digital Euro.Other governments and regulators have highlighted the risks of digital currencies. The UK's Financial Conduct Authority called crypto assets \"high risk, speculative investments\" where investors \"should be prepared to lose all their money.\" US Treasury Secretary (and former Federal Reserve Chairwoman) Janet Yellen has warned on investing in digital currencies too. Just a week ago, India's Reserve Bank took a fairly bearish tone on digital currencies. Rumors are that India is looking to pass a law outlawing cryptocurrencies and making anyone trading or holding them punishable with sizeable fines. India's Finance minister is Nirmala Sitharaman and she said India's Cabinet will shortly issue a final ruling on the matter and that the governments ruling is \"under preparation and nearing completion\".Will additional countries look to make cryptocurrencies illegal? These type of comments act as a governor to adoption and change. Politicians and governments are worried about losing control of their economies. Statements like this are further evidence that governments will remain a headwind. We aren't going to put this in the realm of a new \"space race\", but the country that embraces this technology first might have an early advantage versus those that are afraid of change.Digital Currency Conclusion:This quick digital currency discussion was created to set the framework for an analysis of Coinbase (ticker COIN). Will digital currencies replace traditional payment systems? We do not believe it will, but continued adoption and traction in digital currencies is noticeable.Is Bitcoin poised to climb higher, or will it crash? We simply don't know. What we do know is that we prefer to own the medium where these \"assets\" trade. We would compare this to the Gold Rush of the mid-1800's. Back in 1849, owning Levi Strauss made a fortune selling picks, pans and shovels to '49ers looking for gold. Back then, some would say, \"There's gold in those mountains.\"Nowadays, there's a huge opportunity in the collection of data and information. We truly have no idea what the price of Bitcoin will do, except we know that it will be very volatile. As we know, volatility leads to trading, which should equate to profits for the exchanges. Speaking of exchanges, let's now discuss another exchange and upcoming FINTECH direct listing - COIN.Introduction to Coinbase (ticker COIN):The stated goal of COIN is \"to create an open financial system for the world.\" While this is altruistic, it seems to be fairly broad based goal. It is noble to strive to create a financial system that is transparent for all mankind. It might be more prudent to strive to provide an end-to-end infrastructure and technology platform for all types of cryptocurrencies.From our perspective, it might be judicious for COIN to focus its attention on providing value adding services for all types of digital currencies. If COIN becomes the dominant exchange where anyone can easily and securely send and receive Bitcoin, it will thrive. If COIN can create an efficient and accessible marketplace for the emerging digital assets community, it can be a massive success. There are hundreds of platforms that want to democratize access to the crypto-economy, but COIN (as the oldest and most recognizable brand) seems to have an early lead in this race.Coinbase:COIN was started in 2012 and it has built a trusted platform for accessing various crypto currencies. Using blockchain technology, COIN has simplified the user experience and reduced the complexity of purchasing, selling and holding digital currencies. In its early days, COIN was primarily just used for sending and receiving cryptocurrencies. Then, it became a trusted platform for those seeking to invest in various currencies. We liken this period as COIN's realization that it needed to become an \"exchange\" or intermediary between buyers and sellers. It has since launched cryptocurrency payments, distribution capabilities, storage, borrowing and lending services.As this chart from COIN shows, there are over 45 different cryptocurrencies investors can purchase and another 90 that can be stored at COIN.* Source: This is a slide/chart from COIN's S-1However, two primary digital currencies dominate COIN's total trading volumes. In 2020, Bitcoin represented 41% of COIN's trading volumes and 15% came from Ethereum. While this 56% is a decline from 2019 levels (72% of the total mix), we envision both will remain the primary digital currencies traded on COIN.Revenue:Over the last several years, COIN has materially grown its revenue. In 2019, revenue $533 million and it impressively grew to $1.3 billion last year. As we show in our pie chart, in 2020, COIN's $1.28 billion of revenue grew 130% year-over-year and was a mix of 86% Transactional, 3% Subscription & Services and 11% \"Other\".On April 6th, COIN reported 1st quarter 2021 results and the metrics were eye popping. Last quarter, COIN generated $1.8 billion in revenue, which exceeded the prior two years combined.In 2020, 86% of COIN's total revenue wasTransactionalin nature. This means revenue was derived from sending, receiving, investing and spending cryptocurrencies. When it comes to Transactional revenue, we like to look at the fee as a percentage of total volume traded.COIN provided this diagram and it shows exactly what products are inside of each of its revenue classifications. The remaining 15% of total revenue came fromSubscription & Services,which COIN classifies as paying, distributing, storage, and from borrowing and lending cryptocurrencies.* Source: This is a slide/chart from COIN's S-1Storing earns custodial fee revenue, which we will dissect in a couple of pages. Staking revenue comes from validation on a proof-of-stake blockchain transaction. License revenue is generated from users of its Analytics services. Lastly, COIN can earn campaign revenue or distribution fees when its constructs educational materials for issuers. For cryptocurrency issuers, COIN earns revenue for helping the platform engage with its users, in the form of educational videos or tasks, when cryptocurrencies are attempting to widen their distribution, marketing and acceptance. While these ancillary services are nice, the real opportunity is trading.Customer Type:In its S-1 regulatory filing, COIN showed its product portfolio, separated from retail users, institutions and other ecosystem partners. One has to understand that different clients are paying different rates. Over the last 8 quarters, this revenue rate has averaged 0.61%, with a high of 0.80% in the 1st quarter of 2019 and a low of 0.50% in the 4th quarter of 2020.Looking at the last 8 quarters, we can clearly see that both retail and institutional trading volumes have exploded higher. It is interesting to see that Retail was bigger at $45 billion in the 1 st quarter of 2018 than it was at the end of last year at $32 billion. Also, one can see that Institutional trading volumes have gone from $11 billion in the 1 st quarter of 2018 and now are over $57 billion.* Source: This is a slide/chart from COIN's S-1COIN has different fees depending on whether or not the client is retail or institutional, as well as whether or not the client uses Coinbase or Coinbase Pro, which we will discuss this later on, in our pricing section.Trading volumes:In terms of exchanges, it all comes down to volumes. Crypto exchange volumes have soared, because of strong interest from both retail and institutional clients. This type of growth will not continue, but volatility tends to drive overall volumes.Looking at this Compass table, one can clearly see that volumes noticeably increased in 2018, following the rise of Bitcoin in December of 2017. What happened in late 2017 that helped drive future trading volumes? Well, CBOE and CME both launched Bitcoin future contracts that month.* Source: This is a slide/chart from CompassSo far in 2021, COIN has experienced 298% growth in ADV (average daily volumes). What did Bitcoin increase last year? Just over 300%. There's clearly a very high correlation between Bitcoin's recent price and COIN's future ADV.One of our favorites aspects of investing in the exchanges is the ability to simply model the businesses in Excel. The large, publicly-traded exchanges provide wonderful transparency for investors, by posting daily volumes. We liken this to Goldman Sachs or Morgan Stanley providing real-time insights into their prop desk trading results. You shouldn't hold your breath for that level of transparency, right?Bitcoin, Bitcoin and Bitcoin:In the real estate business, the common phrase is that the 3 most important items are \"location, location and location.\" For digital currency exchanges, we believe the 3 most important products are \"Bitcoin, Bitcoin and more Bitcoin.\"On COIN's platform, the volumes tend to be concentrated in a few different currencies. In 2019, BTC or Bitcoin was 58% of COIN's trading volumes, but that fell to 41% in 2020. ETH or Ethereum was 14% in 2019 and that grew slightly last year to 15% of COIN's total. The biggest category jump came from \"other\", which was 18% in 2019 and grew to 44% last year.Having multiple products to transact in is obviously key, but COIN is cryptocurrency dependent. Yes, tokens like Dogecoin might come in and out of favor, but COIN is dependent upon higher Bitcoin and Ethereum prices.A great aspect to owning CME is their transparency. Not only does CME provide daily ADV, but they provide details on open interest. We like to follow open interest, as it is a leading indicator of future volumes. Also, CME provides details on large open interest holders (called LOIH's) or those owners of a minimum of $7.5 million of Bitcoin futures. Over the last couple of months, CME has hit all-time highs in volumes in Bitcoin futures trading. This year, Bitcoin futures contracts on the CME have averaged 13,800 contracts per day, up 42% year-over-year.Like CME, COIN has invested heavily in its technology to give its customers access to a deep pool of cryptocurrency liquidity. Like we just described, this liquidity can act as a virtuous cycle. Volumes beget more volumes and leading more customers onto the platform.Pricing:We focus on the trading volume of an exchange, but also try to model how revenues are generated from this volume. Each trade does not generate the same level of revenue, as different traders tend to pay different prices.In derivative exchange land, we often look at commission prices as RPC or rate per contract. For example, CME charges $0.478 a contract to trade interest rates, $0.545 to trade equities, $0.764 to trade foreign currency, $1.397 to trade metals, $1.336 to trade agricultural commodities and $1.124 to trade energy. Within each product, prices can vary. For example, WTI crude is a different trading price versus natural gas contracts. While CME is trying to get more retail customers into trading futures and options, the vast majority of its volumes are from institutions.At COIN, there are different fees for different clients. COIN has two main fee structures, one called Coinbase Pro and the other called Coinbase Prime. Here's a quick look at the pricing tiers, as discussed in the S-1 filing, based upon whether or not a client is taking or providing liquidity (called taker fee and maker fee).* Source: This is a slide/chart from CompassTransaction revenue, as a percentage of total volumes traded, has averaged 0.61% over the last 8 quarters. Over these 2 years, retail client transactional revenue has increased from 1.27% up to 1.47%. For institutional clients, revenues as a percentage of volumes traded has fallen from 0.07% down to 0.05%. Clearly, retail customers pay significantly more than institutional clients to trade.Also, unlike transacting in a stock, COIN calls its transaction based revenue \"staking\" revenue. This is earned from transaction validation on a proof-of-stake blockchain, when COIN's nodes successfully creates or validates a certain block. This revenue is recognized when the rewards are available for transfer and at the point when the block creator or validation is complete. The metrics that determine the staking revenue are driven by quantity, price and rewards rate.Customers:The strengths of COIN's platform seem to be its vast and extensive network of contacts. COIN is leveraging its trusted brand to attract those that want access to transact or store cryptocurrencies.COIN's growth strategy is based upon driving more customers onto its platform and becoming the de-facto platform for cryptocurrency. Just like the online brokers did in the 1990's, the key to growth was adding new accounts and clients to the platform.In this COIN chart, one can see the exceptional growth in verified users or those that have \"demonstrated an interest\" in COIN's platform. In addition to these users, there are another 7,000 institutional customers, across roughly 100 countries.* Source: This is a slide/chart from COIN's S-1These verified users have registered for an account and confirmed either their email address or a phone number. In our model, we are not terribly interested in tracking verified users as a key metric. While it is nice to know who interested in cryptocurrencies, it is much more important to understand who is willing to transact.As you can see in this Compass Point chart, COIN has 2.8 million MTU or monthly transacting users. In order to be considered a customer needs to have logged in and transacted one time, over a 28-day rolling period.* Source: This is a slide/chart from CompassIt is interesting to see that there were 2.7 million MTU's in the 1 st quarter of 2018 and 2.8 million MTU's at the end of last year. Over those 2 years, MTU's dramatically declined and then lifted. As of today, COIN has roughly 3 million MTUs, which was up +180% year-over-year, but we like to think of it as only 7% of its verified total accounts.This reminds us of the online brokerage business, back in the 1990's and 2000's. For years, the primary goal of marketing executives at the online brokers was to generate more and more accounts. The theory was that with new accounts, clients would eventually look to consolidate their relationships with one or possibly two firms. Once an account was opened, the goal was to increase wallet share from that satisfied customer.For online brokerages, driving customers typically comes from TV advertising. One cannot watch CNBC or Bloomberg or Fox Business without seeing advertisements for Schwab, TD Ameritrade, E*Trade, Fidelity or Interactive Brokers. Robinhood was very successful in opening up investment accounts for the emerging Gen-Z demographic, but its well-publicized issues in late January (regarding prohibiting \"meme stocks\" purchases) might impact its torrid account growth.How does COIN plan on increasing its exposure and customer base? Our guess is that it will look to increase its marketing spend. The ROI or return on investment of TV marketing is somewhat opaque. We anticipate COIN learning from its foray into marketing and advertising, with some successes, as well as some failures.The best avenue to increase accounts and customers is to offer a product that cannot be easily replicated. COIN can continue its account growth by launching new and innovative products, as well as offering access to new cryptocurrencies.While BTC or Bitcoin is the dominant cryptocurrency today, maybe there will be a new and exciting cryptocurrency in vogue tomorrow. Over the last few months, Dogecoin has garnered significant attention and media coverage. While we shake our head and do not understand the fascination with this cryptocurrency, the goal for COIN is to attract and become the go to platform for those that wish to transact. COIN needs to expand its support of all digitally native cryptocurrencies and help to tokenize new assets.Storage:While the vast majority of COIN's revenue is trading based, COIN does earns subscription and service revenue when customers choose to safely store their cryptocurrencies on its platform.COIN is one of the most trusted exchanges in the crypto space and operate as a \"qualified custodian\". This means that they have a separate company, called Coinbase Custody, which operates as a standalone, independently-capitalized business. Under New York State Banking Law, Coinbase Custody is considered a fiduciary. All digital assets are segregated and held in a trust. COIN has never suffered a hack that led to loss of funds and cannot afford to ever have that breached.As you can see in this COIN asset chart shows, there has been excellent growth on the platform. At the end of 2020, COIN had $90.3 billion in assets on its platform, which was up +432% year-over-year.* Source: This is a slide/chart from COIN's S-1Of these assets, 70% was from Bitcoin and another 13% were Ethereum. Clearly, those two currencies represent the bulk of COIN's platform assets.Wallets:The leather wallet in your pocket holds a combination of cash and credit/debit cards. However, cryptocurrencies and tokens need to be kept in a crypto wallet. \"Hot wallets\" are connected to the internet and are considered much less secure, while \"cold wallets\" are kept offline. Most cryptocurrency custodians employ \"cold\" storage to safely hold a client's digital assets.Acting as a cold cryptocurrency custodian (say that 3x fast), COIN derives fee revenue based on a percentage of the daily value of customer accounts. The assets under custody are a function of quantity, price and type of cryptocurrency asset.Custody:In addition to hot versus cold wallets, there are two primary ways to store your Bitcoin. The first is called self-custody. This is when an individual or entity has complete control of their Bitcoin. This entails maintaining and controlling your own private key. When it comes to Bitcoin storage, there is a popular self-custody mantra that says, \"not your keys, not your coins\". This implies that if you do not control the private key for your Bitcoin, it is not truly your Bitcoin.The second way to store your Bitcoin is to outsource it to a trusted custodian, like Kraken, Coinbase, Anchorage or others. In this case, the custodian stores your Bitcoin for you and they have control over its private key. Kraken is security focused and has an time-tested private key management practice. In its 10-years of existence, it has never been hacked.Whether one decides to self-custody or use an outsourced custody provider for storing your Bitcoin, two critical issues must be discussed. The first is trust. Do you trust the custodial firm that holds your Bitcoin? If one self-custodies, they bear the risk of lost private keys, break-ins or natural disasters. On the other hand, self-custody ensures you control your own Bitcoin. The obvious downside of self-custody is that one can lose all of your Bitcoin, if it is not stored properly.Do you trust the bank that holds your checking account or brokerage firm that holds your stocks? US financial institutions are some of the most highly regulated companies in the world and most have proven themselves to be good custodians of our assets. Maybe we can exclude Lehman Brothers and AIG from that statement, but it is fair statement for the other 10,000+ financial institutions in the US.Does trusting a firm called Kraken, with millions of dollars' worth of Bitcoin, sound like a sound idea? Some might prefer to custody with a firm like Bank of New York, which announced in March of 2021, that it intends to enter the Bitcoin custody business. However, does Bank of New York have the technological expertise and security protocols of newer entrants like Kraken? With a random name like Manole Capital, we clearly don't place too much emphasis on one's name. We do however appreciate 3 rd party, independent industry rankings. Kraken has been voted the #1 most secure cryptocurrency exchange by ICO Ratings.The second key issue to consider is protection and safety. Cryptocurrency custodians and exchanges are a prime target for hackers. There are hundreds and potentially thousands of thieves looking to steal your Bitcoin private key. PayPal and Robinhood recently sent warnings instructing their clients to install two factor authentication onto their digital wallets / account. Also, governments can force companies to freeze funds, if they perceive illegal activity or fraudulent behavior.Trusting someone else to store and manage your Bitcoin is a challenging decision. There have been a few custody firms to have disastrous results (i.e. Mt. Gox), but there are also extremely competent businesses that can trusted to hold your cryptocurrencies. For us, we prefer an expert store our assets, as opposed to keeping it under the proverbial mattress.Characteristics:As we mentioned earlier, there are certainideal characteristicswe look for in our investments. COIN has a strong brand name and dominates its cryptocurrency niche. Its platform is scalable and by leveraging certain blockchain advancements, COIN can provide a safe and secure environment for its customers.We often look for our companies to have dominant market shares, high barriers to entry and what Warren Buffett calls a \"moat around the franchise\". Regardless of industry, we always focus on an investment's market share. In terms of COIN's cryptocurrency market share, it has risen from 4.5% in 2018 to 8.3% in 2019 up to 11.0% in 2020.For exchanges, there is typically 1 or 2 firms that dominate the trading of a specific asset. These exchanges have the best liquidity and the tightest bid/ask spreads. For example, the CME dominates US interest rate trading, as well as WTI crude trading. Intercontinental Exchange dominates the Brent crude marketplace. Once an exchange begins to control trading for a certain asset, it is very difficult for a competitor to steal market share. Some try to lower trading pricing and commissions, but this usually is only temporary. Investors are always seeking best execution and will usually return to the marketplace with the most liquidity and tightest bid/ask spreads. From an exchange standpoint, this is definition of dominant market share, competitive advantage or possessing a moat around your franchise.Ideally, COIN is looking to become the one-stop shop for those wishing to buy, sell and/or store cryptocurrency. COIN has many of the desirable characteristics we look for in an investment, but it does have risks.Risk #1: BitcoinFor a business like COIN, there are literally dozens of risks. For starters, cryptocurrencies are volatile and we anticipate COIN's stock will be highly correlated to the price of BTC, Bitcoin and other important cryptocurrencies.As we have mentioned, the underlying price of these cryptocurrencies helps to determine COIN's revenue and profits. Possibly the biggest risk for owning COIN stock will be its reliance and dependency on rising Bitcoin and Ethereum prices.Risk #2: CompetitionOn the retail front, COIN has numerous competitors. For example, both Square's Cash App (36 million users) and PayPal (375 million accounts) are offering mobile-based wallets, primarily to retail clients. Customers can purchase various cryptocurrencies on both Square and PayPal and store them for free.Over time, we expect both of these firms to begin to allow wallet holders to transact in whatever currency he/she wishes. For example, a customer can use their Square Cash App wallet to transact at over 3 million Square merchant acquiring locations. This mobile wallet will permit credit or debit transactions, but might also permit the user to utilize their Bitcoin balance. There are numerous issues that still need to be resolved on this front, but this is what we have been calling \"closing-the-loop\".Risk #3: RegulationsExchanges are highly regulated entities and they must learn to engage with their regulators for the benefit of all market participants. COIN is subject to a regulated environment, but the rules and landscape are dynamic. Unlike US financials, with a known regulator, the laws and rules cryptocurrencies are subject to are constantly changing. As COIN moves more of its business to international markets, it will have additional governmental issues to deal with.The new SEC Chairman is Gary Gensler. Gensler was the head of the CFTC from May 2009 to January 2014 and was the primary regulator for the derivative exchanges. In his tenure at the CFTC, Gensler attempted to write rules and regulations for the swap markets, as suggested in the Dodd Frank Act of 2010 (following the Financial Crisis). Now that Gensler is at the SEC, one of his first challenges is what to do about regulating and providing oversight on Bitcoin and other digital currencies. He is not new to digital currencies, as he was a professor at MIT's Sloan School of Management after his stint at the CFTC. He primarily taught about blockchain technology and cryptocurrencies.As of today, there are only a few crypto funds available to investors. Grayscale has over $38 billion in assets and is the sponsor of the Grayscale Bitcoin Trust (OTC:GBTC), which is provides Bitcoin exposure for qualified investors. GBT investors have a $25,000 minimum investment and currently pay a 2.5% management fee.Many firms (Skybridge Capital, Valkyrie Digital, Fidelity Investments, VanEck, WisdomTree, etc) have announced their intention to offer Bitcoin ETF's. attempted to get the SEC to approve Bitcoin ETF's. As of now, the SEC has not approved any of these filings, but it will ultimately have to make a decision on the subject. Earlier SEC rejections were based upon problems with volatility, transparency, market surveillance and market and price manipulation. We expect a positive Bitcoin ETF to be approved by the SEC in 2021.In addition to SEC regulation, we anticipate the Federal Reserve to explore the subject too. Chairman Jay Powell, in official Congressional testimony, has officially stated that the Fed is looking into the idea of a \"fully digital dollar\". This type of \"Fed coin\" would likely need Congressional and White House approval and it is very much in the early innings of its examination. Chairman Powell is still dealing with the ramifications of a global pandemic and a soft US economy, so a CBDC might not be his first or even second priority right now.Risk #4: SecurityAs with any exchange, security and safety is paramount. We anticipate that COIN will be subject to thousands of cybersecurity attacks. Hackers, criminals and even foreign countries might find it worthwhile to breach COIN's platform. COIN's valuation is dependent upon it keeping its first-mover advantage and its reputation as a dominant cryptocurrency custodian. Security, for customers and partners, cannot be underestimated and COIN will have a very large target on its back.Scale & EBITDA Margins:For us, we always like to model in operating or EBITDA margins, as well as free cash flow for our exchanges. In 2020, EBITDA margins for the largest exchanges were impressive. Here is a table of the dominant four exchanges and their EBITDA margins last year, as compared to COIN. Looking at the 2020 EBITDA margins of its publicly-traded exchange peers, provides interesting insights. Last year, CBOE posted 68% EBITDA margins and CME and ICE each posted margins in the 62% to 63% range. Despite trailing their competitors, Nasdaq had impressive EBITDA margins of 55%, that would be the envy of most companies. One key takeaway is that all of the exchanges are generating impressive margins with excellent leverage and scale opportunities.Exchanges: CBOE CME ICE NDAQ vs COIN2020 EBITDA Margins 68% 62% 63% 55% 41%These exchanges have spent billions of dollars building out a scalable platform, that has enormous operating leverage. Each and every transaction that occurs is extremely high incremental margins. Most do not provide guidance on future or forward revenue, but they do have decent insight into expenses. The CME typically will provide forward expense guidance in the 2% to 5% range each year. Expenses don't dramatically increase each and every year, but do modestly rise.How does COIN compare? Well, COIN is still constructing its exchange and heavily investing in its infrastructure. Last year, technology and development expenses were $271.7 million or 21% of COIN's total revenue. In 2019, this expense line item was 35% of revenue.In 2020, COIN's expenses grew 50% year-over-year to $868.5 million. At this early stage of its lifecycle, we are pleasantly surprised to see that COIN is generating positive operating leverage (expense growth less than revenue growth).As you can see in this Compass Point chart, over the last 8 quarters, COIN's Adjusted EBITDA margins have steadily improved. Are they peaking or at an all-time high? No, but the best part about COIN's current margin trajectory is where we see it going.* Source: This is a slide/chart from CompassIn its S-1, Brian Armstrong (COIN's CEO) stated a focus on operating profits, as it tries to manage its expense growth. He said, \"We may earn a profit when revenues are high, and we may lose money when revenues are low.\" He then went on to state that \"our goal is to roughly operate the company at break even, smoothed out over time.\"This has proven to be true, when one considers that COIN generated $533 million in revenue in 2019, but lost $30m of profit that year. Then, in 2020, COIN produced $527 million of EBITDA on $1.2 billion of revenue. Clearly, the exchanges can generate very impressive profit margins, at scale.The real benefit for the exchanges comes when volatility spikes and volumes soar. As this happens, assuming the exchanges properly manages this rising volatility, profitability climbs. As more and more volumes transact on a platform, free cash flow (and margins) is very attractive. Operating margins at its other publicly-traded exchanges have been high for years and do not fluctuate significantly from year-to-year. As revenues surprise to the upside, because volatility spikes, these exchanges typically reward their shareholders with buybacks and special dividends. As much more mature businesses, these exchanges tend to allow this leverage upside to fall to the bottom line. We anticipate that COIN will choose to re-invest any revenue upside towards marketing, growing its customer base, improving its platform, and building up its infrastructure.Valuation:In their 1st quarter 2021 release, management provided a low-to-mid-to-high range for a number of key metrics. In terms of MTU's, COIN management provided low guidance of 4.0 million and high guidance of 7.0 million. In 2019, the net revenue per MTU was $37 and it increased to $49 last year. Over the last 8 quarters, the net revenue per MTU range has grown from $26 in the 1 st quarter of 2019 up to $59 in the last quarter of 2020.In our modeling and analysis, we will stick with management guidance, which ranges from $35 million to $45 million in net revenue per MTU. This implies revenue for the final three quarters of the year could be in the $3.48 billion on the low side and up to $4.64 billion on the high side. If we simply average these low and high ranges, 2021 revenue would be $4.1 billion. Considering COIN did $1.8 billion in revenue in the 1 st quarter alone, it is probably safe to assume that 2021 revenue will approach $4 billion this year. Our model is fairly detailed, but for this exercise, we will use a nice round $4.0 billion in 2021 revenue. Then, for 2022, we will assume 15% growth, to $4.6 billion. This does not seem like we are being aggressive. In fact, we wouldn't be surprised if COIN generates this level of revenue a full year earlier.Without making an assumption on future volume growth, we need to estimate profit margins for COIN. Over the next decade, we would expect COIN to post EBITDA margins into the mid-50's%. Over the next one to two years, we would like COIN to annually increase margins by 200 basis points. This should be do-able, even with COIN making significant investments in their operational technology and platform.Stock Trading vs Fundamentals:It can be challenging to sometimes separate the volatility of a stock from its underlying fundamentals. For example, the primary exchange to trade interest rates is the CME. When it comes to trading Brent crude, most traders prefer ICE (although WTI is primarily traded on CME). While both of these exchanges trade hundreds of other products and assets, those two products (interest rates and Brent crude) tend to materially impact the exchange stock price.When it comes to COIN, we anticipate the stock will trade very closely to the price of Bitcoin and Ethereum. If both digital currencies continue to rise, COIN's stock will be a solid success. If Bitcoin falls by (80%), like it did in 2019, COIN's stock will dramatically fall. In a world with massive Bitcoin volatility, COIN's underlying fundamentals should be good. In theory, COIN's stock should correlate and reflect the volatility of Bitcoin and Ethereum, not just their upward trajectory. However, we fully anticipate COIN's stock to trade in-line with the success or failure of Bitcoin.Today's reality is that certain market participants are not long-term investors. Many unfortunately consider stocks as pieces of paper, as short-term trading instruments. If Bitcoin were to struggle and decline in value, that volatility and environment would be excellent for COIN. In fact, that might be a great time to \"dip one's toe\" into a position. However, the Reddit and Wall Street Bets community is more likely to consider short-term trading momentum than bottoms up, underlying fundamentals.As we discussed earlier, COIN generated an impressive 2020 operating margin of 32%, compared to a (9%) in 2019. While some companies can post steady and smooth operating margins, COIN's will be much lumpier, at least until it is less Bitcoin becomes less volatile. Also, COIN has $188 million of cryptocurrencies on its balance sheet, comprised mainly of $130 million of Bitcoin and $24 million of Ether. There will be opportunities to purchase COIN, when short-term investors sell. This will likely occur as COIN ramps up its expenses or when Bitcoin falls.Price Target:Over the next month or so, we anticipate most sell-side analysts will publish targets on COIN. Unfortunately, most will use revenue multiples to determine their price targets. Manole Capital only owns companies that generate earnings and free cash flow, so we are loathe to utilize revenue multiples for price targets. We find that companies that use revenue multiples to justify a valuation are often incapable of generating important free cash flow. We are fine with companies investing in their future to ensure growth, but we cannot invest in companies that aren't concerned with free cash flow. For us, using the crutch of a revenue multiples isn't something we are comfortable doing.Fortunately, for this analysis of COIN, the company generates plenty of profit and free cash flow. We conservatively model COIN's revenue next year at $4.6 billion. Also, we believe it can add a point or two to EBITDA margins, into the mid-40% range. That would be 2021 EBITDA of $2.1 billion or $11.89 per share. We don't want to sound like a \"wise old sage\", but in the \"olden days\", investors could utilize reasonable EV (enterprise value) to EBITDA multiples in the 10x to 15x range. Maybe, if a company was experiencing fantastic growth and was getting acquired, you might see an EBITDA multiple approach 20x. Nasdaq, ICE and CBOE all have trailing EV to EBITDA multiples in the mid-to-high teens. In order to be remotely close to where COIN will trade this week, we would have to use a MarketAxess (MKTX) or Tradeweb (TW) lofty TTM EV to EBITDA multiples of roughly 45x. We just don't believe EV to EBITDA is the proper valuation metric to currently use. Should we use another cryptocurrency company like Silvergate (SI) and estimate a valuation using their EV to EBITDA multiple? At 108x trailing EBITDA, that would be a waste of time.To arrive at a realistic COIN price target, let's just model earnings and use a premium forward P/E multiple. If we apply a tax rate of 25% (not assuming any tax loss carryovers), we can estimate an EPS in 2021 of $8.50.Using that $8.50 per share in EPS, we then want to apply an exchange-like multiple, adding in a premium for COIN due to its exceptional growth. The average publicly-traded exchange trades at a forward P/E multiple of 20x. The table below provides some different targets, based upon the premium P/E one believes COIN deserves.Forward P/E Multiple 25x 30x 40x 45x 50xPremium to Peers 20% 50% 100%COIN Target $213 $255 $340 $381 $426On Wednesday, initial projections are looking for COIN to trade towards $65 billion, which implies $350 per share. We fully anticipate COIN rocketing past $400 and potentially closing the day in the $500 per share range. This would imply a market capitalization of COIN of $93 billion, which is approaching the $100 billion level that have been rumored to have occurred on some private exchanges.Conclusion:We expect COIN's direct listing on April 14th to be \"hot\".In a typical IPO, companies raise capital and provide exclusive, early access to large institutions. With wire houses placing shares into large institutions and asset managers first, retail investors often get shut out. Retail platforms like Schwab, Ameritrade, Robinhood, Fidelity typically cannot access IPOs for their customers.Since COIN has over $1 billion of cash on its balance sheet and does not need capital, it has decided to do a direct listing. The advantage of a direct listing is that it will enable retail investors to purchase COIN at the same time as larger institutions. Once COIN begins to trade freely on the Nasdaq exchange, both retail and institutional traders can participate. With 186 million shares outstanding, the market will ultimately determine what share price COIN trades at. We expect a flood of market orders, creating an interesting first day of trading.Is the lofty valuation we just laid out fair? Probably not, but that's what the market will determine. Is this a realistic scenario? Are our forecasts too conservative? Should you be an aggressive buyer? We think our estimates are fair, but COIN will likely immediately trade towards an aggressive multiple.If you don't want to pay that kind of forward multiple for COIN, there are other alternative. Maybe you should consider an investment in some of the other (and less expensive) exchanges, like Nasdaq or CBOE? These companies do not have the same growth prospects as COIN, but they do come with a much smaller price tag.We believe that COIN is a safe, trusted and easy-to-use platform for trading digital currencies. Some investors believe that they have \"missed out\" on the meteoric rise of Bitcoin, so they might chase a position in COIN. Others will look at COIN as a long-term opportunity to own the dominant digital currency exchange.In our opinion, owners should be willing to pay a premium for COIN shares, but they should also be prepared for significant volatility and competition. Only you know your specific risk/reward tolerances. Only time will tell the answers to some of these questions, but we'll get a good idea on Wednesday, once COIN trading begins.","news_type":1},"isVote":1,"tweetType":1,"viewCount":1172,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0}],"lives":[]}
