Good morning, it's Paul here!

Internet disruption

This is probably the biggest investing theme of our times. As I've mentioned many times before, many sectors have already, or are in the process of being turned upside down by the internet. Therefore I feel it's essential to carefully think about business models of all companies we invest in, and ponder what opportunities & threats might emerge from the internet.

A wider issue is that internet disruption has made value investing much more dangerous than in the past. We can no longer just assume that mean reversion will kick in, and low PER stocks/sectors gradually recover. All too often, low PER stocks now are companies that are struggling to stand still, as internet disrupters eat away at their market share (e.g. estate agents Foxtons (LON:FOXT) or Countrywide (LON:CWD) ).

It also presents bargains (such as Next (LON:NXT) sub-£40 recently) where the market seemingly ignored its highly successful internet business, and priced it wrongly as a declining business.

Why am I mentioning this again? Well, I read yesterday that Tom Winnifrith wrote about a tiny investment being made by Concha (LON:CHA) in a startup called UcaDO. This company intends to offer a free property listings site. This is intended to not only cut out the need for estate agents, but presumably also cuts out the need for Rightmove (where I have a short position), Zoopla, etc.

The idea is that UcaDO hopes to make money from charging relevant businesses such as removals firms, tradesmen, etc, to connect with people who are moving house, and UcaDO earns referral fees. That sounds a neat idea. Although whether the revenues would be enough to cover the considerable costs of building & maintaining a listings site, is open to question. Above all, the marketing costs of telling people that the free property listings site exists and persaude them to use it, would be very large. A quick google search shows there are other free listings sites already out there.

Then it struck me that surely the above model is ideal for Google? They've got the people & computing power to knock up a simple property listings sites in no time. If they let property agents, and individuals…

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