SpaceX vs AWS: A New Challenge

A Recurring Pattern in Startup Ambition

The strategy appears straightforward: initially, a replica of an established digital platform is developed. Subsequently, claims of political bias are voiced. Following this, capital is secured through a Special Purpose Acquisition Company (SPAC). Finally, a challenge is issued to Amazon Web Services (AWS).

Is this understandable? The surprising element is that this isn’t merely a hypothetical scenario; it represents a pattern observed on at least two occasions.

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The initial instance of this funding approach was noted during the Trump SPAC transaction, which brought a collection of concepts and limited product development to the public market. A further example emerged recently with Rumble, an online video hosting service, and its proposed SPAC arrangement. Both entities harbor substantial long-term objectives, or at least articulate aspirations, to compete with established cloud service providers.

Analyzing Rumble’s Strategy

Achieving a valuation of approximately one hundred billion dollars may require around fifteen years to reach a position comparable to the major public cloud providers.

Let's examine Rumble’s plan to dominate the digital landscape. Startups, by their nature, are inclined to formulate ambitious strategies. Rumble’s ambition to challenge the collective strength of Amazon, Microsoft, and Google is, at the very least, a significant undertaking.

The scope of this challenge is considerable, and success is far from guaranteed.

Is This the Ultimate SPAC Deal?

Rumble, which identifies itself as a platform for unbiased video content, is set to merge with CF Acquisition Corp. VI. The completion of this transaction is anticipated during the second quarter of 2022, according to statements from both companies.

It’s understandable to be surprised by Rumble’s valuation of $2.1 billion, a figure projected for the time of its combination with the special purpose acquisition company. Information regarding the company remains relatively limited.

According to Crunchbase, the company’s only recorded funding round occurred in May 2021, with investment originating from Peter Thiel and J.D. Vance. At that time, the company’s estimated worth was approximately $500 million, as reported by The Wall Street Journal. The Journal also indicates that Rumble was established in 2013, gaining increased visibility recently as right-leaning individuals promoted it as a “more open and free-speech-focused” alternative to established video platforms like Meta and Alphabet.

Financial Details and Revenue

A question arises regarding the extent to which Peter Thiel can continue to support political candidates – J.D. Vance’s campaign is currently benefiting from his financial backing – while simultaneously criticizing Facebook, where he holds a board position. This situation is further highlighted by his investment in a platform that explicitly criticizes Facebook within its SPAC investor presentation.

Before delving into Rumble’s views on Facebook and other major internet companies, let’s examine the company’s financial performance, as detailed in Rumble’s SPAC documentation:

Further analysis of revenues was conducted through a review of various SEC filings:

Looking Ahead

The available revenue figures are relatively modest.

This leads us to consider the company’s future aspirations and strategic vision.

A Look Ahead

Rumble’s trajectory, transitioning from relative obscurity to a significant platform for right-leaning content, isn't simply a matter of perspective. The company itself acknowledges this evolution in its narrative.

Rumble’s SPAC deck details its growth from an unknown entity to a prominent position within a specific segment of the American political landscape.

It’s noteworthy to observe Glenn Greenwald featured within this SPAC deck. The inclusion of a shirtless individual and a depiction of former U.S. President Donald Trump’s raised fist is also quite remarkable.

The political context is crucial, not only for understanding the origins of Rumble’s content and its user base, but also for how the company defines its target market.

This chart, beyond being unexpectedly humorous – a sincere thank you to Peter for this presentation – presents a fundamentally flawed argument.

The notion that major corporations are obligated to host content they prefer not to would represent a significant departure from First Amendment principles. To characterize companies exercising their own speech rights as censorship is ironic. Furthermore, to suggest this is a partisan issue is particularly striking, considering that efforts to ban books originate from the same political faction advocating for increased platforming of their views.

Setting aside this irony, here’s Rumble’s projected path to substantial revenue generation:

A degree of rationale underlies this strategy. Should Rumble successfully attract and retain a large enough audience, it could incentivize advertisers to utilize its proprietary, in-house advertising services, thereby increasing the value derived from its user base. However, questions remain regarding Rumble’s operational capabilities, particularly given its difficulty with basic presentation formatting. If centering text in PowerPoint proves challenging, skepticism arises regarding their ability to develop a sophisticated real-time bidding system for online video.

Considering the scale of the challenge – competing with companies valued at three trillion dollars – observe the following ambitious plan:

The company acknowledges that the four “offerings” highlighted in the lower-left corner of the image are “currently in development.” This is a relevant detail.

Evaluating Rumble's Prospects Against Established IaaS Providers

It is a considerable risk to suggest that Rumble will successfully compete with the dominant players in the Infrastructure as a Service (IaaS) market, but a realistic assessment warrants skepticism.

This assessment isn't simply based on the inherent challenges of the market, but also on the historical performance of similar ventures, particularly those utilizing Special Purpose Acquisition Companies (SPACs).

The ambition of Trump Media & Technology Group to challenge major cloud platforms via a SPAC serves as a relevant case study. Examining its progress since the announcement of this plan reveals a concerning pattern:

Furthermore:

Consequently, it appears unlikely that Amazon Web Services (AWS) will face significant competitive pressure in the near future.