Mary Meeker's USA, Inc. Report

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Basic Summary of America's Financial Statements

This is an extensive report by Mary Meeker (currently with Kleiner Perkins, formerly with Morgan Stanley), on the fiscal condition of the USA. I haven't read through the whole thing yet, but what I have read is very good. Both the summary and full pdf are available above.

Comments (18)

Feb 25, 2011

Non-technology report by M. Meeker? First one?

Feb 25, 2011

I would think so. The post on Techcrunch said she included a slide on America's flat revenue at her Web 2.0 talk last year, and got more questions about that than the rest of the presentation combined; evidently she has been preparing this report ever since (in other words, since before she left MS).

Feb 25, 2011

I am looking forward to meeting her one day. Have read all her reports.

Feb 25, 2011

I am looking forward to meeting her one day. Have read all her reports.

I guess seeing her through the window of her bathroom doesn't quite cut it anymore...

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Feb 25, 2011

Definitely not the woman i want to be in a bathroom with =)

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Feb 25, 2011

This looks way better than her normal tech reports because it actually has text.

I'm getting so sick of all her other reports. They're all the same. It's like "mobile is growing fast as shit. now i'm going to flip through 300 pages of brightly colored charts that tell you the same thing i just said." then every tech/internet blog/person gushes about how brilliant and insightful mary's latest report is.

Working as the analyst that puts together those PPTs for her must be one of the most miserable jobs in the world.

Feb 25, 2011

You guys actually like what she has to say? I've never read a Meeker report, but she seems to be hated in tech banking. I thought Jonathan Knee's "Accidental Investment Banker" exposed her.

Feb 25, 2011

Knee doesn't have a sterling reputation either, and it's not like Accidental Investment Banker was exactly an unbiased account...

Feb 25, 2011

"she seems to be hated in tech banking" - wow, never heard this. can you please elaborate further on this.

Feb 25, 2011

i don't think she's hated in tech banking. i know quite a few internet investor types who always forward around her reports and mention how insightful they are. a lot of these people I don't hold in very high regard as investors. hah.

i don't think that much of her. i just read the passage from Accidental Investment Banker that was mentioned and i agree with some of it. she says these things in her presentation as if they are amazing and incredibly profound, but in reality they've already been said tons of times by other people in other places. mobile's growing really quickly? wow, thanks mary! this is incredibly insightful! i didn't see the hundreds of other research reports and blogs that were already talking about the crazy growth of mobile.

a lot of the material in her presentations seems to be just used for effect. like making a spectacle of the info she's presenting. the internet crowd just eats this shit up when anyone talks about how their business/space is amazing and growing so quickly and changing the world. you can say it a thousand times and it's always profoundly brilliant.

Feb 25, 2011

i just read the passage from Accidental Investment Banker that was mentioned and i agree with some of it.

Can you please reference the passage, if it's easy for you (not expecting you to spend any significant time on it)?

Feb 25, 2011

her reports kind of remind me of this video:
except her reports can't use animation and music to make them even more spectacular. and her subject matter in a given report is more narrow, so the stats become almost redundant and get boring as they are repeated over hundreds of slides.

this video was cool the first time i saw it and I still think it's pretty cool. lots of interesting stats covering a wide variety of subjects. less cool as i saw it cloned a million times over, and way less cool if the subject matter is more narrow.

and i'm not saying meeker's presentations are clones of this. for all i know, these people may have been inspired by something like a meeker report. but her's are way more boring. shooting a bunch of shock stats about the internet's growth at me from a firehouse doesn't give me more than superficial info about how the internet is developing.

Feb 26, 2011

this one is sick too!
[quote=bankbank]her reports kind of remind me of this video:

Feb 25, 2011

@SP.Mavrodi, it's long. Spans almost an entire chapter, from what I remember. Might post later.

@bankbank, that's what I was getting at. A bunch of hyperbole highlighting high-level growth trends. That and the suggestion that her "Queen of the Net" status was a self-perpetuating hype machine whose basis was only a few good calls during the dot com era are what make me pause when people speak glowingly of her work. Again, I've never read her shit, but I just don't hear good things about her.

Feb 25, 2011

All of the cultural phenomena described here relating to the boom's impact on investment banking and investment bankers generally sometimes took outsized shape at Morgan Stanley because of a single individual: Mary Meeker, Queen of the Net.12
Mary Meeker had been a fairly undistinguished PC and computer soft- ware research analyst in the early 1990s, slaving away on reports covering companies like Microsoft and Compaq. She had joined the equity research division of Morgan Stanley in 1991, and prior to the Internet boom had never appeared in the rankings of the Institutional Investor magazine's prestigious survey of analysts. Indeed, because of some bad market calls she had made, at one point Meeker had come close to being fired.
But Meeker had discovered the Internet early and championed its potential as coauthor (with her then colleague Chris DePuy) of The Internet Report just four months after taking Netscape public in 1995. The following year HarperCollins commercially published the report as a book--a first for a research report. This book and its successor volumes became the standard reference for venture capitalists but, more important, played a key role in legitimizing for public investors this entire sector, which had yet to demonstrate an ability to generate profits. When Institutional Investor's influential annual survey first created an Internet category in 1996, Meeker was ranked number one and stayed in that position for four straight years, being displaced by Henry Blodget of Merrill Lynch in 2000. Meeker then disappeared from the rankings altogether once the bust hit in 2001.
As a kind of unofficial spokesperson for the entire sector, Meeker became Morgan Stanley's not-so-secret weapon in the market-share wars
140 The Accidental Investment Banker
for technology banking business. Other investment banks belatedly tried with varying degrees of success to establish their own ready-for-prime- time celebrity Internet analysts, but Mary had an insurmountable first mover advantage during a boom that would only last a few short years. Ironically, these jealous competitors probably never suspected the extent to which at Morgan Stanley many not so secretly wished they could give her away.
The problem was that having Mary Meeker at Morgan Stanley created client expectations that simply could not be fulfilled. This was partly a func- tion of the overwhelming demand for all things Meeker. But it was exac- erbated by Meeker's stubborn insistence that she be consulted on any decision touching on her "space." And her celebrity was such that Morgan Stanley acceded to a very broad definition of the realm within which Meeker had unchallenged authority.
The impracticality of any single person playing the role that Meeker reserved for herself was apparent. During the height of the craze, the Morgan Stanley switchboard received many hundreds of calls for Meeker in any given day. These calls were from well-intentioned individuals who thought if they could just get 15 minutes of Mary's time she would be happy to sponsor their venture in the public markets and make them rich. The problem was that a single research analyst can reasonably cover at most around 20 com- panies. And Mary's existing responsibilities simply precluded the possibil- ity of her sponsoring any but a few companies. Still, so overwhelming was Mary's value to the franchise that she was rumored to have made as much as $15 million annually during the height of the boom, an unheard of sum for a research analyst.
Many of the calls directed to her--not to mention the many thousands of e-mails--were from bankers within Morgan Stanley who had import- ant clients that wanted just a moment of Mary's time. Some wanted to take a subsidiary public, others wanted investment advice and a few just wanted to meet the celebrity of the moment. Needless to say, a very small proportion of the calls, even from relatively senior people inside the bank, were answered, much less were the requests satisfied.
Morgan Stanley generally had a system of banking "gatekeepers" for its research analysts. Any requests for an analyst's time were screened by the banker most knowledgeable about the industry. For example, I was the gate- keeper for publishing analyst Doug Arthur. This took very little time for me but helped Doug manage his time and ensured that I was aware of
Cracks in the Facade 141
whatever was going on in my sector. Ultimately, regulators would target the ability of bankers to improperly influence supposedly independent research analysts' views for particular scrutiny. As a result of the reforms instituted in the wake of these controversies, today no banker is likely to be able to speak with an analyst without a lawyer present. Then, however, research analysts were treated and compensated as if they were part of the investment banking team.
Mary required three gatekeepers. One of these, Ruth Porat, was a tal- ented and aggressive banker in her own right and had three secretaries to screen and schedule incoming requests. Another was Andre de Baubigny, a relatively junior banker from midtier Robertson Stephens whom Mary took a liking to and had hired as Morgan Stanley's chief Internet strategist to satisfy overflow requests for Internet expertise. The gentle, shy de Baubigny burnt out under the pressure after about a year, shortly after his second marriage foundered in a matter of weeks.13
Because relatively few people at Morgan Stanley spoke to Mary with any frequency, having access to Mary became viewed as an extremely valuable commodity, both internally and with clients. In the absence of any real- istic possibility of getting Mary's time, bankers turned not only to official gatekeepers to get some sense of her possible perspective on a particular idea or topic, but to other individuals perceived for one reason or another to have Mary's ear or her respect. An entire informal social hierarchy grew up based on how close or far from Mary a banker was thought to be. This was complicated by the fact that bankers had every incentive to pretend to be close to Mary, not just because of the status it bestowed but because of how difficult it was for anyone to verify one way or another.
These issues were not unique to Morgan Stanley but they were exacer- bated by Meeker's star power and her relative unwillingness to delegate. Many of our competitors dealt with this problem by hiring a legion of Internet research analysts each focusing on some alleged Internet subspecialty or other--e-commerce, portals, B2B, entertainment, software, and the like. The problem at Morgan was that Mary held that any company even tan- gentially related to the Internet required her personal approval before the firm could sponsor it regardless of whether she actually covered it. As more and more companies were trying to reposition themselves as Internet businesses, this exponentially expanded Mary's potential reach. And given her unique place in the new economy, no one, it seemed, was willing to say "no" to Mary Meeker.
142 The Accidental Investment Banker
In my world, media, the problem this created became quite acute, as it seemed every client we had was trying to recharacterize themselves as some kind of Internet play. We came up with the bright idea of organizing an "Internet Media Conference" in part to satisfy our clients whom we could never actually get invited to Mary's "real" Internet conference--one of the street's hottest tickets--but also as a subtle way to credentialize our tradi- tional media analysts as having all-important Web savvy. I was respons- ible for organizing the conference and kept Mary and her "gatekeepers" informed. By early 2000, I had already gotten commitments from Viacom chairman Sumner Redstone and AOL Time Warner CEO Jerry Levin to speak and had sent out save-the-date cards to investors announcing the conference for that summer. Then I got the call I had been dreading. "Mary says you can't call it Internet Media," said the gatekeeper. "Why?" I asked. "It will confuse investors," said the gatekeeper, "and besides she really hasn't been involved in the organization." "But," I pointed out innocently, "you and gate-keepers number two and three have been involved from the start, and we have copied Mary on everything." "She doesn't want it," said gatekeeper number one. Q.E.D.
After many months of negotiations it was finally agreed that we could call it the "Digital Media Conference." (The conference was held in June 2000 at the New York Hilton, quite successfully.)
Although Meeker's celebrity was a source of frustration to bankers hungry to exploit every revenue-generating business opportunity, it is clear in retrospect that in many instances she saved Morgan Stanley from itself. By enforcing her role as the ultimate bottleneck for doing Internet deals, Meeker ensured that there was some consistent quality control in an era in which there was often none. The evidence is that as a group, the companies she took public did better than those of other banks. And the reason ultimately that Meeker, unlike Henry Blodget, her counterpart at Merrill, never became a regulatory target is that she actually chose com- panies to take public based on quality. Her singular focus was determin- ing which company would be the leader in its category.
Of course some of these "categories" turned out not to support any business at all. Nor were the calls that she made universally right or even necessarily based on a depth of analysis that an investor should expect. It is hard to justify Meeker's continuing insistence, long after the Internet jig was up, that any company she sponsored should almost by definition be rated as an "outperform."
Cracks in the Facade 143
The fact that Meeker was committed to taking only the highest quality companies public in their respective categories did not mean that her work in pursuit of that goal was always of the highest quality itself. A compar- ison of the depth of financial analysis undertaken on comparable compan- ies by, say, Richard Bilotti, Morgan Stanley's cable analyst, and Meeker reveals a huge gulf. To be fair, the direct demands on Mary's time plus her insist- ence on keeping ultimate authority over any significant decision touching on the Internet meant that she almost of necessity could only fly by any particular situation at a fairly high level. This had ancillary effects on the quality of work produced by bankers who, as noted earlier, were by now of lower quality overall, also faced incredible demands on their time in the boom, and were desperate for the Internet "street cred" that Mary's impri- matur bestowed.
Accordingly, bankers hungrily waited for the latest set of standard pages that Mary used in her standard investor presentations so that they could mindlessly incorporate them into their own banking pitches. Flipping through the pages to their often rapt audiences, these bankers would then gravely intone that this was the way the royal "We" think about the "Space." The good news was that the pages Mary produced were easy enough to follow, even for a relatively junior banker with little Internet experience. The bad news was that they often bordered on the platitudin- ous. One of my favorite pages, which I saw reproduced literally hundreds of times for banker pitch books, appeared under the provocative heading "Who Will Emerge to Dominate the Internet?" The subheading continued authoritatively, "History of Media Has Taught Us . . ." The body of the page then followed:

1 is Awesome #2 is OK #3 is Tough #4 is Pits

5 is Huh? Who? Forgot . . .14

These handful of words were supposed to capture Mary's Internet Weltanschauung and leave the listener breathless. In many meetings I attended, it did. Of course, it is a perfectly valid observation that having leading market share is a good thing and that the further one is from that goal the worse off one is. It is something else altogether, however, to sug- gest that the particular gradations offered here were derived from careful
144 The Accidental Investment Banker
study of the history of media or that they added to the general pool of human knowledge.
In a 2001 article, Fortune's Peter Elkind argued that "Mary Meeker got so caught up in the allure of the Internet--the celebrity, the money, the thrill of dealmaking--that she forgot that she was supposed to be analyz- ing companies."15 Elkind also quoted an unnamed "friend" of Meeker as claiming that the reason she had not left Morgan Stanley in 1996 to follow Frank Quattrone--then head of Morgan Stanley's tech banking group and Meeker's mentor--was that she wanted to become a "star" in her own right. The desire to be a star, of course, had by this point become a fairly com- monplace aspiration on Wall Street. But while there is evidence that the extraordinary pressures of Meeker's celebrity undermined the quality of her work, there is no evidence that she used it to pursue an untoward agenda. If anything, her stardom may have made her all the more driven to be sure that she only picked winners. At worst, Meeker's fame caused her to per- sonalize the stock calls she made in a way that made it difficult for her to admit mistakes later.

Feb 25, 2011

^ I think that's the relevant section, I just ctrl-F'ed in the PDF

Feb 25, 2011


Great comment! Agree.

Are there any other specialists in the world of technology / internet / mobile, whose reports you consider a 'must read'?

Feb 25, 2011