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Subsidiaries

Shopify and its 1.7m merchants across 175 countries are an economic powerhouse. A truly positive development from the age of disruption, Shopify is creating more jobs than Walmart.

Amazon is known for e-commerce, Berkshire Hathaway for its portfolio and Google for its search again. While near-trillion dollar companies, there are so often multi-billion dollar subsidiaries also sitting on their books. Let’s look into the biggest subsidiaries that would likely be Fortune 500 companies in their own right.

Berkshire Hathaway is a textbook example. A US$630b company, Buffett and Munger are known as investment portfolio managers. Buying and selling shares in publicly owned companies, without involving themselves in management or operations. That’s mostly the case but Berkshire has a 100% ownership stake in names like Duracell Batteries, Netjets and GEICO insurance. In fact, their insurance business brings in US$61b annually, or 24% of $BRK’s revenue. Here is a full list of their private interests. 

The success of Apple’s AirPod business is often publicised. While a lot of the analysis that compares AirPods as a standalone business to the likes of Uber and Spotify is wrong, Apple now dominates the headphone market. The 110 million pairs of AirPods sold in 2020. Their wireless headphones account for 23% of all sales in Q2 2021. Their next closest competitor, Xiaomi, is at 9%. Other companies have put together a deep portfolio of subsidiaries not through innovation, but acquisition.

Under former CEO Bob Iger, Disney shifted away from cartoons and theme parks. Since 2006, Pixar, Marvel and Lucasfilm (Star Wars) have all been added to their portfolio. While Disney may be known for Mickey, Simba and Nemo, every year the top-grossing films list are filled with their movies. In 2019, 7 of the top 10 grossing films belong to Disney.

Finally, Amazon. Sitting on their balance sheet is probably the biggest subsidiary in the world should it be spun out…Amazon Web Services. AWS did US$16b in revenue in the last quarter. That’s similar to companies like Disney, Nike and Morgan Stanley. This is roughly 15% of Amazon’s revenue. 


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