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Don't just be a reporter
What AI does well
The notes AI writes now are much better than before, and AI can be a great reporter. In a new, complicated area like ABF substrates or printed circuit boards, it helps get up to speed quickly. It can't quite pick into the future, and it can't pick stocks.
The scuttlebutt approach
What still wins is the scuttlebutt approach from Philip Fisher's Common Stocks and Uncommon Profits, written in the 1950s: talk to suppliers, customers, and competitors, and look for the key characteristics of leading companies. A firm using it can hold 2,500 to 3,000 face-to-face meetings with management teams in a year.
The AppLovin analysts
Two ad tech analysts show the pattern. Ad tech is historically a terrible industry, but they figured out the AppLovin story before anybody else and followed it while it was private. They learned the competitors and the terminology, went to the Las Vegas app advertising conference, and talked to scores of people. They also built the model and developed a relationship with the CEO, Adam Foroughi. It is hard to see AI doing that work.
What was Fisher's scuttlebutt method?
Philip Fisher laid it out in his 1958 book Common Stocks and Uncommon Profits. He advised researching a company by talking to its customers, suppliers, competitors, and former employees, beyond reading its reports. His book listed fifteen points to check about a business. Warren Buffett has said he is about 85 percent Benjamin Graham and 15 percent Fisher.
Where does the word scuttlebutt come from?
A scuttlebutt was the water cask on a sailing ship, with a hole, or scuttle, cut in it for dipping a cup. Sailors gathered around it to drink and trade gossip. The word came to mean rumor and informal talk in general. Fisher used it for the information that comes from talking to people around a business.
Why has ad tech been a hard business?
Ad tech sits between advertisers and publishers, and the space has filled with intermediaries that each take a cut. Terence Kawaja's well-known LUMAscape diagrams showed hundreds of companies crowded into the category. Large platforms such as Google and Meta also run their own advertising systems. That leaves independent companies with thin margins.
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