The partnership between China and Western governments & corporations has hit a rough patch recently, namely the Hong Kong protests and how the NBA, Apple, and gaming company Blizzard have handled various responses to them on their platforms. I don’t have a lot to add on the matter, but I have read some interesting takes in the past few days that you might also want to take a look at.
I am not particularly excited to write this article. My instinct is towards free trade, my affinity for Asia generally and Greater China specifically, my welfare enhanced by staying off China’s radar. And yet, for all that the idea of being a global citizen is an alluring concept and largely my lived experience, I find in situations like this that I am undoubtedly a child of the West. I do believe in the individual, in free speech, and in democracy, no matter how poorly practiced in the United States or elsewhere. And, in situations like this weekend, when values meet money, I worry just how many companies are capable of choosing the former?
The gist of it is that 25 years ago, when the West opened trade relations with China, we expected our foundational values like freedom of speech, personal liberty, and democracy to spread to China.
Instead, the opposite is happening. China maintains strict control over what its people see on the Internet — the Great Firewall works. They ban our social networks where free speech reigns, but we accept and use their social networks, like TikTok, where content contrary to the Chinese Community Party line is suppressed.
The People’s Republic of China is the largest, most powerful and arguably most brutal totalitarian state in the world. It denies basic human rights to all of its nearly 1.4 billion citizens. There is no freedom of speech, thought, assembly, religion, movement or any semblance of political liberty in China. Under Xi Jinping, “president for life,” the Communist Party of China has built the most technologically sophisticated repression machine the world has ever seen. In Xinjiang, in Western China, the government is using technology to mount a cultural genocide against the Muslim Uighur minority that is even more total than the one it carried out in Tibet. Human rights experts say that more than a million people are being held in detention camps in Xinjiang, two million more are in forced “re-education,” and everyone else is invasively surveilled via ubiquitous cameras, artificial intelligence and other high-tech means.
We in the West should very well know what and who we are dealing with — China might be decked out in Louis Vuitton, but underneath, it is still a single-party, quasi-communist nation. Knowing the Western desperation for growth and the insatiable needs of the stock markets, China also knows it can yank anyone’s chain.
Huawei isn’t a recent problem. It was a problem a decade ago. The dynamic in this spat between the NBA and China isn’t new — China gets what China wants, not the other way around. Why are we being outraged now? The West signed up for this.
Malik quotes from Ian Bremmer’s newsletter:
in the west, the past decades have been marked by a view that china would eventually adapt to western norms, institutions, political and economic systems. but from an asian perspective, the opposite appears more likely. after all, of the last 2,000 years, china and india have led the global economy for the first 1800; europe and the united states only flipped the script for the last 200. now that’s about to change. and when it does, it’s going to happen quickly, powered by 1.4 billion increasingly urban, educated and technologically-connected chinese citizens. take the long view (and an asian perspective) and it’s a better bet that the west will adapt to the realities of chinese economic power, not the other way around.
Waffle House is prepared to make you breakfast at all hours of the day in any kind of weather. The restaurant chain is so widely respected for its severe weather preparedness that a former director of FEMA started using their stores as an indicator of how bad a particular storm or disaster was:
The “Waffle House Index,” first coined by Federal Emergency Management Agency Director W. Craig Fugate, is based on the extent of operations and service at the restaurant following a storm and indicates how prepared a business is in case of a natural disaster.
For example, if a Waffle House store is open and offering a full menu, the index is green. If it is open but serving from a limited menu, it’s yellow. When the location has been forced to close, the index is red. Because Waffle House is well prepared for disasters, Kouvelis said, it’s rare for the index to hit red. For example, the Joplin, Mo., Waffle House survived the tornado and remained open.
When any of the stores are in danger of being hit by severe weather, so-called “jump teams” are activated to be ready to deploy wherever needed.
Jump teams are made up of Waffle House contractors, construction workers, gas line experts, restaurant operators, food providers and other associates who are assembled and ready to go wherever needed at a moment’s notice. Their purpose is to help relieve local Waffle House operators and employees who need to evacuate, be with their families or tend to their homes when a storm hits, and help make sure restaurants are able to open quickly after a storm or stay open during a storm.
On Twitter, Blanks shared a photo of the four different pared-down menus that Waffle House prepares for disasters.
In the 1960s, Haddon Salt built up a small empire of fish & chips shops in North America — they eventually had more than 500 stores. That attracted the attention of Kentucky Fried Chicken, then flush with cash after their IPO. And then…
An initial Google search revealed that this shop was the last gasp of a once-sprawling fish-and-chips empire with hundreds of locations that started with an immigrant’s secret family recipe, flourished into an eight-figure deal with Colonel Sanders and ended in collapse.
It took several years and the research help of friends to track down Mr. Salt. We found him in a remote retirement community in Southern California’s desert. The rest you can see in the film before you.
For every icon there are those who were almost famous. And perhaps they, even more than their conqueror, have the lessons we need to hear.
Since it began operations in 2010, Uber has grown to the point where it now collects over $45 billion in gross passenger revenue, and it has seized a major share of the urban car service market. But the widespread belief that it is a highly innovative and successful company has no basis in economic reality.
An examination of Uber’s economics suggests that it has no hope of ever earning sustainable urban car service profits in competitive markets. Its costs are simply much higher than the market is willing to pay, as its nine years of massive losses indicate. Uber not only lacks powerful competitive advantages, but it is actually less efficient than the competitors it has been driving out of business.
This is one of those articles where I want to excerpt the entire thing; it’s just so jammed packed with goodies about a company that represents everything I hate about “tech” and Silicon Valley.
In reality, Uber’s platform does not include any technological breakthroughs, and Uber has done nothing to “disrupt” the economics of providing urban car services. What Uber has disrupted is the idea that competitive consumer and capital markets will maximize overall economic welfare by rewarding companies with superior efficiency. Its multibillion dollar subsidies completely distorted marketplace price and service signals, leading to a massive misallocation of resources. Uber’s most important innovation has been to produce staggering levels of private wealth without creating any sustainable benefits for consumers, workers, the cities they serve, or anyone else.
A later section is titled “Uber’s Narratives Directly Copied Libertarian Propaganda”.
In the early 1990s, a coordinated campaign advocating taxi deregulation was conducted by a variety of pro-corporate/libertarian think tanks that all received funding from Charles and David Koch. This campaign pursued the same deregulation that Uber’s investors needed, and used classic political propaganda techniques. It emphasized emotive themes designed to engage tribal loyalties and convert complex issues into black-and-white moral battles where compromise was impossible. There was an emphasis on simple, attractive conclusions designed to obscure the actual objectives of the campaigners, and their lack of sound supporting evidence.
This campaign’s narratives, repeated across dozens of publications, included framing taxi deregulation as a heroic battle for progress, innovation, and economic freedom. Its main claims were that thousands of struggling entrepreneurial drivers had been blocked from job opportunities by the “cab cartel” and the corrupt regulators beholden to them, and that consumers would enjoy the same benefits that airline deregulation had produced. In a word, consumers were promised a free lunch. Taxi deregulation would lead to lower fares, solve the problems of long waits, provide much greater service (especially in neighborhoods where service was poor), and increase jobs and wages for drivers. Of course, no data or analysis of actual taxi economics showing how these wondrous benefits could be produced was included.
Horan reserves a healthy chunk of his criticism for the media, whose unwillingness to critically cover the company — “the press refuses to reconsider its narrative valorizing Uber as a heroic innovator that has created huge benefits for consumers and cities” — has provided a playbook for future investors to exploit for years to come. Blech. What a shitshow.
Design firm Pentagram has brought in a new partner to their New York office, information designer Giorgia Lupi, who joins heavy hitters like Michael Bierut, Paula Scher, and Eddie Opera. I remain fascinated with how Pentagram operates:
Established in 1972, the firm has a collectivist attitude and adheres to a longstanding constitution, which exists in its original form with only small modifications. It spreads profits and decision-making power equally among its self-governed partners — all designers — irrespective of seniority or how much business they brought in during a given year. There’s no CEO. The partners do collaborate with one another, often across disciplines, but essentially operate their own studios, though the local offices meet on a weekly basis and the entire group convenes twice a year. These all-partner meetings, chaired by one of the partners on a rotating basis, are about sharing work with the group and discussing business dynamics, Pentagram’s publishing program, its website, and trends in the industry.
The process for bringing in a new partner can take years from start to finish and requires the unanimous consent of the rest of the partners:
“One vote against and it’s over, truly,” says Miller. “We’ve seen it happen.”
I’ve often thought about if a collective structure could work for independent content sites. I wouldn’t want to sell kottke.org to anyone, but the idea of sharing resources and infrastructure with a couple dozen similar sites is appealing. You could collect the sites into a membership bundle; hire dedicated staff for customer support, ad sales, & devops; do cross-promotion, syndicate the content via a meta-site, and generally help small indie sites punch above their weight. This is what The Deck could have evolved into, I suppose. Aw well.
John Driscoll is the CEO of a healthcare company called CareCentrix. In an opinion piece in The Guardian, he wrote about the success of a plan his company implemented where they froze the salaries of the top 20 executives and gave significant raises to entry-level workers, from the federal minimum wage of $7.25/hr to $15/hr. Driscoll explains why the company decided to do this:
Assuming nothing went wrong, and assuming that our employees were living with another wage earner or working another part-time job, $7.25 hourly wage might be sufficient.
The reality is that for many of us, things do go wrong, and I had emails from my new teammates to prove it.
One was from a customer service representative — a young mother with a family, who had lost her apartment in a fire and did not have enough money for diapers. Another email soon followed — this employee had missed a few bills and was living out of her car with her child.
This drove me crazy: how did we get to the point where one of our employees had to apologetically ask for financial support so she and her family could put a roof over their heads?
While some of our elected officials congratulated us for creating jobs, I felt that we were failing some of our employees, and the communities we were based in. The more our executive team parsed through the requests for assistance, the more we all became uncomfortable with the mismatch between what we asked of our employees and what we provided to them in turn.
And the real kick in the groin about the plan? It wasn’t even that tough to implement!
I challenged the chief financial officer to see how deeply we would have to freeze wages in order to reach our goal of a base rate of $15 per hour.
The answer was that we did not have to go very deep. Over the last few decades executive salaries have skyrocketed. That translates into accelerated wage growth in the highest tiers of executives throughout American business, and it affects every company.
What that meant for our company was that if we just froze the wages of our most senior team — less than 20 executives - we could radically increase the wages and improve the lives of nearly 500 of our teammates.
The conversation with our executives was straightforward. We were in the midst of a turnaround. We were demanding much from every corner of the company. Small financial sacrifices from those at the top could be life changing for those at the bottom of our wage scale. We needed to do it to build a real sense of Team CareCentrix. They agreed.
And it worked really well. Duh. It drives me bananas that more companies don’t see the benefit of doing this versus implementing compensation policies that serve only to line the pockets of the people in char— oh waaaaait, it actually makes perfect sense why this is happening. The shareholders of these companies should start calling bullshit on that sort of behavior with more regularity though.
The symbol above represents extinction. The circle signifies the planet, while the hourglass inside serves as a warning that time is rapidly running out for many species. The world is currently undergoing a mass extinction event, and this symbol is intended to help raise awareness of the urgent need for change in order to address this crisis. Estimates are that somewhere between 30,000 and 140,000 species are becoming extinct every year in what scientists have named the Holocene, or Sixth Mass Extinction. This ongoing process of destruction is being caused by the impact of human activity. Within the next few decades approximately 50% of all species that now exist will have become extinct. Such a catastrophic loss of biodiversity is highly likely to cause widespread ecosystem collapse and consequently render the planet uninhabitable for humans.
The symbol and a stencil template are available for download “for non-commercial purposes”.
There’s a disclaimer at the bottom of the page about merchandise, which reads in part:
No extinction symbol merchandise exists, and it never will do. The free use of the extinction symbol by individuals in their personal artwork or other forms of expression is strongly welcomed and encouraged, but any form of commercial use of the symbol is completely against its ethos and should therefore be refrained from. To reiterate, please do not use the symbol on any items that will be sold, or for any other fundraising purposes. There are no exceptions to this policy.
Here’s the thing: I want a t-shirt with the extinction symbol on it so I can signify my support (in a small way) for climate justice. If I’m reading this correctly, I can make a t-shirt for myself but not have one made for me? Or can I have a single print-on-demand shirt made for me at cost? Making my own shirt (I’d need to buy a bunch of single-use supplies) or getting a one-off printed doesn’t seem very climate-friendly at all. How about taking orders from other interested folks (like you all) and selling the shirts at cost? That seems much more climate-friendly but also firmly against the symbol maker’s strict policy.
I think we’re bumping up against an inconvenient truth about capitalism here: it is sometimes (or perhaps even often) the most efficient and least wasteful way to produce something because it’s actually a deeply collectivist endeavor. Let’s say you’re holding a climate protest, 100,000 people are coming, and those people want to bring shirts or signs or other protest equipment to the protest to “advertise” their displeasure to those watching, near and far. Is it more climate friendly for all those people to individually buy supplies and each produce their own things or would it be better to rely on a organization whose sole purpose is to produce protest supplies (using carbon-free energy and materials) and pay them more than the cost of the supplies so they can provide their employees a living wage and even advertise their services a little so they can actually remain in the protest supplies business and take even more advantage of economies of scale to keep prices down? Run it as a non-profit if you’d like. That seems far less wasteful to me than people buying one-off supplies, even on a group basis.
You might interject here that producing anything that uses any natural resources for such a protest is wasteful and unethical. I think that’s a fair point! What’s the ROI for protest materials? Is it wasteful to spend a little CO2 now to possibly save a bunch of CO2 in the future or is it smart? Gah, all I want is a shirt to express myself! Are there any simple and ethical solutions in a world that’s so densely networked and interconnected?
Over the past three years, a number of restaurants across the geographic and economic spectrum of America have experimented with eliminating tipping. The practice is outdated, creates a difficult-to-justify wage imbalance between servers and cooks, and can result in mistreatment of staff (racism, sexual harassment) because of the fucked-up power dynamic it creates.
But as Grub Street’s Nikita Richardson writes, the no-tip test has largely failed, with many of those places going back to the old ways. This happened for three main reasons:
1. No tips meant higher prices printed on the menu, and customers stayed away from what they perceived as more expensive meals. That $12 burger became a $14.50 burger and all of a sudden, people knew what they were actually paying for their food. What’s interesting is that in another situation (say, having to pay to check a bag on a flight), people would be upset at not knowing the price up front and having a “hidden charge” added to their bill when they’re drunk and happy at the end of a meal.
2. Servers can make more at tipping restaurants. Places that went tip-free lost a bunch of their staff to places that still had tipping.
Meanwhile, by raising menu prices and thus revenues, the extra money would go toward higher wages for kitchen staff, who could start making $12 to $15 an hour at a time when the state minimum wage was $8.75.
But, it turned out, many front-of-house staffers were more concerned with making money than with maintaining the moral high ground. This February, Meyer admitted that he had lost 30 to 40 percent of his “legacy” staffers since 2015. (One Meyer employee told Grub last year that her wages dropped from $60,000 per year to $50,000 under the new policy.) While he insisted that the employees that replaced them “understand ‘Hospitality Included’ and are thrilled about it,” added employee attrition in an industry where turnover is already 1.5 times that of the private sector average has to hurt.
My regular NYC spot was one of the restaurants that experimented with eliminating tipping, and I can report that the staff was indeed quite skeptical about it and they switched back to the old method very soon. (I believe they kept the raises for the chefs though somehow.)
3. Tips make diners feel powerful. With tipping, you become the boss of your server or bartender and are responsible for a large chunk of their take-home pay.
Generally speaking, Americans hated the practice of tipping when it was first introduced in the late 19th century, perceiving it as a form of bribery for service workers who should simply do their jobs. But as we’ve adjusted to it, tipping has become undeniably intertwined with a sense of power.
Short of walking into the kitchen and telling off the chef, tipping is the easiest way to express satisfaction or dissatisfaction with a dining experience.
As a customer, I loved not tipping. I don’t feel the need to have power over the staff in a restaurant, I want cooks & chefs to get paid as well as servers, and I’ve acclimated to factoring the tip into my dining expenses. But it seems that Americans in the aggregate do care about those things, and so here we are.
If you can’t afford to tip 20 percent of the total amount that you spend at a restaurant, you can’t afford to eat at that restaurant.
And if your meal is bad?
You still tip. If something truly egregious happened, you ask to speak privately with a manager. If you do not want to speak privately with a manager, and would rather correct this perceived slight by tipping less or not tipping at all, you do not actually care about your perceived slight; you’re just using it as an excuse to be a dick.
In 2014, I shared a short film by Shaun Bloodworth called The Putter about Cliff Denton, a master scissors craftsman for a company called Ernest Wright & Sons.
A person who makes scissors by hand is called a putter, short for putter togetherer. The Putter is a four-minute silent film by Shaun Bloodworth that shows putter Cliff Denton making scissors.
The film went viral and the once-struggling company was inundated with orders and launched a very successful Kickstarter campaign for a special pair of kitchen scissors. But as I wrote in a sad update back in June, the company was struggling and on the verge of collapse:
Under new leadership, the company vowed to carry on and fulfill all of the Kickstarter orders, but a message to Kickstarter backers yesterday revealed the company was deep in debt and would be “going into receivership”. It also revealed that Wright had taken his own life.
In late October, a story on the company’s web site called Keeping the Heritage Alive revealed that a pair of Dutch entrepreneurs, Paul Jacobs and Jan Bart, have purchased the company with an eye towards investing in the workshop and its workers while keeping the mission the same.
When we acquired the assets of the company, there had been decades of decline and recent tragedy. The machinery was in neglect and although the workers had done all they could to keep the ship afloat, the heritage was slipping away.
To make sure that Ernest Wright continues to manufacture quality, handmade scissors, we’ve invested heavily in the workshop. By researching how to improve production, new machinery has been introduced that salutes the heritage and skill of our Putters. We’re working hard to keep the craft alive. Cliff Denton and Eric Stones, each with over 60 years worth of experience, are currently passing on their knowledge to new apprentices.
This seems like a really good outcome for the company, its employees, and the city of Sheffield. Now go buy some scissors.
Tavi Gevinson started Rookie in 2011 when she was 15 years old and late last week announced that the online magazine was ceasing publication. The stories about the struggle of independent online media in the age of Google & Facebook are well-worn by now, but the first couple of pages of Gevinson’s letter really resonated with me and with what I’m doing (and not doing) here at kottke.org. This paragraph specifically:
It has sometimes felt like there are two Rookies: There’s the publication that you read, that I also love reading, writing for, and editing; and then there is the company that I own and am responsible for. The former is an art project; the latter is a business. Each one needs and feeds the other, but when I started Rookie at age 15, I saw the two as mutually exclusive. Rookie had been founded, in part, as a response to feeling constantly marketed to in almost all forms of media; to being seen as a consumer rather than a reader or person. In my black-and-white view of the world, the idea of capitalizing on an audience seemed cynical, selfish, and something only evil adults do. It would be misleading to say I was a total purist, though, because I also thought Rookie was really good, and that it should reach people rather than be small and struggling. I wanted it to be able to hire more editors, pay contributors more, and grow so that not everything would need my oversight and other voices could be more prominent. I also wanted Rookie to eventually be a source of income for me, which I didn’t need it to be when I was a teenager and living at home. In those first few years, however, just the day-to-day running of the site was brain-consuming enough without also actively trying to make it as profitable as possible. And, that was the part I was most passionate about, and adept at: collaborating with writers and artists, curating and editing their work, and watching the conversations that would unfold around it.
Over the years, kottke.org could have gone in many different directions — possible acquisitions by Conde Nast publications, funding, partnerships — but I could never convince myself that any of those options would actually make the site any better or make me any happier. I thought then, and I still think now (more than ever actually), that growing the reach and operations of the site would be a terrific idea, but the business challenge is tougher than ever. Thanks to the support of my readers through the membership program (more on that in a second), the business side is stable-ish and I’ve been able to grow modestly here and there (e.g. the weekly Noticing newsletter written by Tim Carmody), but the scope of this enterprise from a financial standpoint is still just one person. Adding another full-time person to the mix sounds easy, but doubling the size of your business is rocket-ship growth, even when you’re tiny. So I continue to put almost 100% of my efforts into writing the site and almost 0% into things like audience growth, business development, promotion, or marketing…and hoping that the product will continue to speak for itself. This feels both like the right way forward for me and also idiotic, like the foundation of this house I’ve spent 20 years building is slowly rotting away out from under us. It’s a real catch-22 that keeps me up some nights.
But back to Rookie. I’m a little surprised that Gevinson didn’t pursue subscriptions or a membership program, but I can relate to what she writes here:
I also know that the idea of taking money from readers made me feel an immediate and intimidating sense of responsibility. (In retrospect, that may have been a more manageable kind of responsibility than money from investors, and could have been a hint to how I’d feel about investors, but you can’t know what you don’t know.)
The first time I tried funding kottke.org with reader support back in 2005, I ended up scrapping the scheme after a year because of that same “intimidating sense of responsibility”. Now with the membership program, it feels more like the site and the business part are in greater alignment…that this is something we’re all doing together for similar reasons. There should have been a way for a site with a strong sense of community like Rookie to come up with a membership plan that seemed collaborative and not extractive, that felt good for everyone. But maybe Gevinson was just ready to move onto other challenges in other arenas. God knows I can empathize with that myself.
Sears has filed for bankruptcy protection and plans to close hundreds of stores in an effort to keep the company afloat. The Sears catalog is perhaps one of the most important and under-appreciated innovations in American life. Starting in 1888 with a mailer advertising watches and jewelry, Sears introduced millions of Americans to in-home shopping by using the growing networks of the railroad and US Postal Service, much like Amazon and other retailers would using the internet decades later.
The time was right for mail order merchandise. Fueled by the Homestead Act of 1862, America’s westward expansion followed the growth of the railroads. The postal system aided the mail order business by permitting the classification of mail order publications as aids in the dissemination of knowledge entitling these catalogs the postage rate of one cent per pound. The advent of Rural Free Delivery in 1896 also made distribution of the catalog economical.
Every time a black southerner went to the local store they were confronted with forced deference to white customers who would be served first. The stores were not self-service, so the black customers would have to wait. And then would have to ask the proprietor to give them goods (often on credit because…sharecropping). The landlord often owned the store. In every way shopping reinforced hierarchy. Until Sears.
The catalog undid the power of the storekeeper, and by extension the landlord. Black families could buy without asking permission. Without waiting. Without being watched. With national (cheap) prices!
This excellent piece by Antonia Noori Farzan has more info. Reading this, I couldn’t help but think of blind auditions, the practice of auditioning orchestra musicians behind a screen to help cut down on gender bias during the hiring process. While not entirely free of bias — opportunities for discrimination by postal workers and Sears employees were still possible — the Sears ordering process was essentially a blind retail transaction, a screen placed between the store and black customers. (The catalog also advertised racist costumes so obviously Sears wasn’t some bastion of social progressivism…they simply wanted to sell more goods to more kinds of people.)
One of Hancock’s discoveries was Sears’ response to the needs of a rural South in which literacy was rare. For someone who could neither read nor write, placing orders and following written protocols were problematic. Richard Sears responded with a policy that his company would fill any order it received, no matter what the medium or format. So, country folks who were once too daunted to send requests to other purveyors could write in on a scrap of paper, asking humbly for a pair of overalls, size large. And even if it was written in broken English or nearly illegible, the overalls would be shipped.
With Sears declaring bankruptcy, it’s worth remembering how much impact this company had on American music. In my research into blues and other traditional styles, I found that many, many musicians started out on Sears instruments.
Even under Jim Crow, music was an avenue for upward mobility for African Americans, and Sears and other mail-order retailers were more than happy to provide them with instruments.
Mr. Systrom, Instagram’s chief executive, and Mr. Krieger, the chief technical officer, notified Instagram’s leadership team and Facebook on Monday of their decision to leave, said people with direct knowledge of the matter, who spoke on condition of anonymity because they were not authorized to discuss the matter publicly.
In a press release, the pair explained their decision a little:
We’re planning on taking some time off to explore our curiosity and creativity again. Building new things requires that we step back, understand what inspires us and match that with what the world needs; that’s what we plan to do.
Facebook released a statement from CEO Mark Zuckerberg on Twitter (for some weird reason):
Kevin and Mike are extraordinary product leaders and Instagram reflects their combined creative talents. I’ve learned a lot working with them for the past six years and have really enjoyed it. I wish them all the best and I’m looking forward to seeing what they build next.
Sarah Frier’s piece at Bloomberg suggests the pair left because Zuckerberg and the mothership were meddling more and more with Instagram:
Kevin Systrom and Mike Krieger, who have been at the company since Instagram’s acquisition by Facebook in 2012, had been able to keep the brand and product independent while relying on Facebook’s infrastructure and resources to grow. Lately, they were frustrated with an uptick in day-to-day involvement by Zuckerberg, who has become more reliant on Instagram in planning for Facebook’s future, said the people, who asked not to be identified sharing internal details.
Without the founders around, Instagram is likely to become more tightly integrated with Facebook, making it more of a product division within the larger company than an independent operation, the people said.
For years, Systrom and Krieger were able to amicably resist certain Facebook product initiatives that they felt went against their vision, while leaning on Facebook for resources, infrastructure and engineering talent. A new leader may not be able to keep the same balance, or may be more willing to make changes that help the overall company at the expense of some of Instagram’s unique qualities.
Instagram is my favorite app by a mile — it eclipsed Twitter some time ago in that category — and might be the best mobile-native app ever. It is also, I believe, the future of Facebook Inc., a better product with a more favorable trajectory than the sprawling (and now heavily tainted) main FB service. I think Facebook would be doing Instagram and its users a real disservice if they folded it into the mothership instead of giving Instagram room to be the best service it can be on its own terms. This is a strangely conservative move on Zuckerberg’s part, an optimization where a higher degree of freedom and experimentation is called for. I guess we’ll see how this plays out.
This is the context for whatever dispute drove Systrom and Krieger’s resignation: not only do they not actually control their own company (because they don’t control monetization), they also aren’t essential to solving the biggest issue facing their product. Instagram Stories monetization is ultimately Facebook’s problem, and in case it wasn’t clear before, it is now obvious that Facebook will provide the solution.
My take is still that FB shouldn’t lean so heavily on Instagram for monetization. Even after many years, the service still has some growth and evolving to do to develop into the heir apparent Zuckerberg & his executive team is looking for. (thx, david)
Before the film, business at the firm was so slow that staff were only working two days a week. When the video took off online, the company received two years’ worth of orders in a single day. Two years later in June 2016, the company launched a Kickstarter campaign for a throwback pair of kitchen scissors and ended up making four times their goal from more than 3600 backers.
Outwardly, this seemed to be one of those stories about how an old school company found a new audience and a second chance on the internet. But internally the company was struggling, hamstrung by a series of setbacks. Problems with design and machining the new scissors model delayed production for a year and two key employees, including putter Cliff Denton, were off the job due to illness. Shaun Bloodworth, the filmmaker, died waiting for a liver transplant. And then in February 2018, the news broke that Nick Wright, the company’s managing director, had died suddenly.
Under new leadership, the company vowed to carry on and fulfill all of the Kickstarter orders, but a message to Kickstarter backers yesterday revealed the company was deep in debt and would be “going into receivership”. It also revealed that Wright had taken his own life. Here’s the full message from Pam Addy, the current managing director of Ernest Wright & Sons. (Note: this includes a portion of a final letter written by Wright before he died.)
Hello everyone, this is Pam.
Following the death of Nick Wright, who took his own life in February, myself and the rest of the Ernest Wright team have endeavored to honour all you Kickstarter backers who pledged money for the Kutrite design of kitchen scissors. Unfortunately, only now am I aware of the extent of the business debt incurred prior to my taking over as Director on March 22 2018, so it is with great sadness I announce that Ernest Wright & Son Ltd will be going into receivership.
If you have not received your goods, you will be contacted by the Insolvency Practitioner in due course. Following advice from them, if you paid by Credit Card you may wish to contact your card provider, to see whether they will refund you the money paid.
Nick wrote a final letter. In this letter were personal messages including one to Kickstarter people:
“I tried so hard, this was no scam, I just could not make it happen. Too much pressure, not enough resource or time. I am so very genuinely sorry to you all.”
What a sad situation for Wright’s family and the company. It’s tempting to want to draw conclusions between the finances, the campaign, and Wright’s death, but we don’t actually know much about the situation. But I do think this highlights the potential disconnects between mental health & business, publicity & success, and success & happiness. The internet can seem so intimate but ultimately it’s a thin view of an individual’s or company’s reality. (thx, dawn)
Update: The company’s fortunes are looking up after a pair of Dutch entrepreneurs bought it. More here.
Important note: The NY Times has retracted the story at the heart of their award-winning Caliphate podcast. The alleged terrorist they interviewed has been charged by the Canadian government for perpetrating a terrorist hoax.
For the past several weeks, I have been listening to the NY Times’ fantastic and unsettling podcast series Caliphate. The series follows Times foreign correspondent Rukmini Callimachi as she attempts to figure out the inner workings of ISIS. Callimachi and her producer & fellow reporter Andy Mills talk to an Islamic State member from Canada about how he was recruited, investigate the group’s organization, and dig through documents left behind by ISIS as they were driven out of Mosul in July 2017. The podcast is quite upsetting and tough to listen to at times, but I highly recommend doing so.
Here are a few things I kept thinking about while listening:
1. The recruitment process is fascinating. As Callimachi and the recruit talk about how he was persuaded to join up, you can see how young people are enticed by the promise of an Islamic state, of living an ideologically pure life according to one’s religion. What the ISIS recruiters tell them makes sense, it’s logical. (It’s all the things they don’t tell them…therein lies the rub.)
2. The eerie parallels between ISIS and an American business. They’ve got the onboarding process and the rapid expansion plan of a startup like Uber (down to the “ask forgiveness, not permission” tactics). They use tools like YouTube, Tumblr, and Twitter to market themselves with professionally produced videos and marketing materials. When they seized power in an area, ISIS kept much of the existing bureaucracy in place and set about winning hearts and minds by improving services for the people living there.
The world knows the Islamic State for its brutality, but the militants did not rule by the sword alone. They wielded power through two complementary tools: brutality and bureaucracy.
ISIS built a state of administrative efficiency that collected taxes and picked up the garbage. It ran a marriage office that oversaw medical examinations to ensure that couples could have children. It issued birth certificates — printed on Islamic State stationery — to babies born under the caliphate’s black flag. It even ran its own D.M.V.
The documents and interviews with dozens of people who lived under their rule show that the group at times offered better services and proved itself more capable than the government it had replaced.
In the podcast, they talked to residents living in ISIS-controlled areas who say that garbage collection and availability of electricity improved after ISIS took over.
As the group grew, they diversified their income:
One of the keys to their success was their diversified revenue stream. The group drew its income from so many strands of the economy that airstrikes alone were not enough to cripple it.
Ledgers, receipt books and monthly budgets describe how the militants monetized every inch of territory they conquered, taxing every bushel of wheat, every liter of sheep’s milk and every watermelon sold at markets they controlled. From agriculture alone, they reaped hundreds of millions of dollars. Contrary to popular perception, the group was self-financed, not dependent on external donors.
More surprisingly, the documents provide further evidence that the tax revenue the Islamic State earned far outstripped income from oil sales. It was daily commerce and agriculture — not petroleum — that powered the economy of the caliphate.
ISIS was in some ways a model business: adept at PR and marketing, focused on the financial bottom line, sweated the details, and they wanted to keep their “customers” happy.
3. The stated goal of ISIS in establishing a caliphate — to turn back the cultural clock to the time of Muhammad — reminded me slightly of similar efforts here in the US: MAGA, etc.
The podcast is available at Apple or on Spotify. If you are a NY Times subscriber, you get early access to episodes.
The always pertinent Ben Thompson considers Apple and Amazon (plus Facebook and Google) and how they each focus on customers. He starts by wondering which of these companies has the best chance at hitting the one trillion market cap first. Focusing on the first two, he offers this interesting comparison.
I mean it when I say these companies are the complete opposite: Apple sells products it makes; Amazon sells products made by anyone and everyone. Apple brags about focus; Amazon calls itself “The Everything Store.” Apple is a product company that struggles at services; Amazon is a services company that struggles at product. Apple has the highest margins and profits in the world; Amazon brags that other’s margin is their opportunity, and until recently, barely registered any profits at all. And, underlying all of this, Apple is an extreme example of a functional organization, and Amazon an extreme example of a divisional one.
Two very different business operating in very different ways.
Both, taken together, are a reminder that there is no one right organizational structure, product focus, or development cycle: what matters is that they all fit together, with a business model to match. That is where Apple and Amazon are arguable more alike than not: both are incredibly aligned in all aspects of their business. What makes them truly similar, though, is the end goal of that alignment: the customer experience.
I’ll skip over much of his section on disruption and Clayton Christensen but if you don’t already know about his take on the matter, have a look at his thorough analysis of Apple vs the disruption theory. Basically, the theory doesn’t account for user experience and Apple manages to not overshoot the price customers want to pay because it understands the value its superior user experience provides.
Apple seems to have mostly saturated the high end, slowly adding switchers even as existing iPhone users hold on to their phones longer; what is not happening, though, is what disruption predicts: Apple isn’t losing customers to low-cost competitors for having “overshot” and overpriced its phones. It seems my thesis was right: a superior experience can never be too good — or perhaps I didn’t go far enough. (Emphasis mine.)
Thompson then looks at Amazon’s focus on custom experience, including an important aspect which Bezos explained in his most recent letter to shareholders.
One thing I love about customers is that they are divinely discontent. Their expectations are never static — they go up. It’s human nature. We didn’t ascend from our hunter-gatherer days by being satisfied. People have a voracious appetite for a better way, and yesterday’s ‘wow’ quickly becomes today’s ‘ordinary’. […] (Emphasis mine.)
What is amazing today is table stakes tomorrow, and, perhaps surprisingly, that makes for a tremendous business opportunity: if your company is predicated on delivering the best possible experience for consumers, then your company will never achieve its goal.
By focusing on user experience, Amazon is constantly aiming higher and never overshooting what customers want to pay, thus making itself very hard to disrupt.
He closes with Facebook and Google who are focused on advertisers, which makes them less (end)user focused and less popular.
Both, though, are disadvantaged to an extent because their means of making money operate orthogonally to a great user experience; both are protected by the fact would-be competitors inevitably have the same business model.
This Mckinsey piece summarizes some of Ajay Agrawal thinking (and book) on the economics of artificial intelligence. It starts with the example of the microprocessor, an invention he frames as “reducing the cost of arithmetic.” He then presents the impact as lowering the cost of the substitute and raising the value of the complements.
The third thing that happened as the cost of arithmetic fell was that it changed the value of other things—the value of arithmetic’s complements went up and the value of its substitutes went down. So, in the case of photography, the complements were the software and hardware used in digital cameras. The value of these increased because we used more of them, while the value of substitutes, the components of film-based cameras, went down because we started using less and less of them.
He then looks at AI and frames it around the reduction of the cost of prediction, first showing how AIs lower the value of our own predictions.
… The AI makes a lot of mistakes at first. But it learns from its mistakes and updates its model every time it incorrectly predicts an action the human will take. Its predictions start getting better and better until it becomes so good at predicting what a human would do that we don’t need the human to do it anymore. The AI can perform the action itself.
The very interesting twist is here, where he mentions the trope of “data is the new oil” but instead presents judgment as the other complement which will gain in value.
But there are other complements to prediction that have been discussed a lot less frequently. One is human judgment. We use both prediction and judgment to make decisions. We’ve never really unbundled those aspects of decision making before—we usually think of human decision making as a single step. Now we’re unbundling decision making. The machine’s doing the prediction, making the distinct role of judgment in decision making clearer. So as the value of human prediction falls, the value of human judgment goes up because AI doesn’t do judgment—it can only make predictions and then hand them off to a human to use his or her judgment to determine what to do with those predictions. (emphasis mine)
This is pretty much exactly the same thing as the idea for advanced or centaur chess where a combination of human and AI can actually be more performant than either one separately. We could also link this to the various discussions on ethics, trolley problems, and autonomous killer robots. The judgment angle above doesn’t automatically solve any of these issues but it does provide another way of understanding the split of responsibilities we could envision between AIs and humans.
The author then presents five imperatives for businesses looking to harness AIs and predictions: “Develop a thesis on time to AI impact; Recognize that AI progress will likely be exponential; Trust the machines; Know what you want to predict; Manage the learning loop.” One last quote, from his fourth imperative:
The organizations that will benefit most from AI will be the ones that are able to most clearly and accurately specify their objectives. We’re going to see a lot of the currently fuzzy mission statements become much clearer. The companies that are able to sharpen their visions the most will reap the most benefits from AI. Due to the methods used to train AIs, AI effectiveness is directly tied to goal-specification clarity.
In the ensuing thread, a former Twitter employee chimed in to say that “the single biggest correlation with people unfollowing an account [on Twitter] was whenever an account tweeted anything at all”. And someone else chimed in with “historically the biggest problem of newspaper subscriptions: physical delivery of the damn things leads to churn!” I also remarked that this reminded me of Jon Bois’ amazing Chart Party episode on Barry Bonds, where he concludes (spoilers!) that in 2004, Bonds would have finished with essentially the same on-base percentage if he hadn’t used a bat for the entire season.
Newsletters you’re better off not sending, newspapers you shouldn’t publish, and pitches you should never swing at. Was WOPR right in WarGames? Is the only winning move not to play?
Global thermonuclear war notwithstanding, this issue highlights the need to keep in mind why you’re playing a particular game in the first place. I often return to something that Ludicorp (makers of Flickr) had on their about page from a book by Charles Spinosa et al. about the goal of business:
Business owners do not normally work for money either. They work for the enjoyment of their competitive skill, in the context of a life where competing skillfully makes sense. The money they earn supports this way of life. The same is true of their businesses. One might think that they view their businesses as nothing more than machines to produce profits, since they do closely monitor their accounts to keep tabs on those profits.
But this way of thinking replaces the point of the machine’s activity with a diagnostic test of how well it is performing. Normally, one senses whether one is performing skillfully. A basketball player does not need to count baskets to know whether the team as a whole is in flow. Saying that the point of business is to produce profit is like saying that the whole point of playing basketball is to make as many baskets as possible. One could make many more baskets by having no opponent.
The game and styles of playing the game are what matter because they produce identities people care about. Likewise, a business develops an identity by providing a product or a service to people. To do that it needs capital, and it needs to make a profit, but no more than it needs to have competent employees or customers or any other thing that enables production to take place. None of this is the goal of the activity.
The people who work for newspapers want to provide their readers with high quality information.1 Barry Bonds wants to play baseball, be competitive, and provide entertainment to the fans instead of standing bat-less in the batter’s box; the Giants & MLB presumably want those things as well. With my efforts here and with the newsletter, I’m not playing a subscriber or profits maximization game — I want to share my ideas & information that I find and connect with people. This isn’t to say that you shouldn’t keep your eye on how much money you make or how many subscribers you’ve got for a relatively new newsletter,2 but keeping your purpose firmly in mind while you do those things is of paramount importance. Otherwise you’re just stalemating yourself.
We’re witnessing many counter-examples to this in American journalism right now, where corporations are buying up newspapers and, in an effort to maximize profits, firing “expensive” journalists and producing a lower-quality product that’s unsatisfying to their employees and readers alike.↩
The other issue with the newsletter situation in particular is you’re seeing a small but loud negative signal (people unsubscribing) but not seeing a much larger but quiet positive signal (everyone else reading the newsletter with some degree of satisfaction); this is probably an example of availability bias. That results in a perception that’s 180° from reality…which is, you know, not helpful!↩
From visual journalist Fritz Schumann, a short, poignant documentary on Hoshi Ryokan, a Japanese hotel built on a hot springs that has been run by the same family for 1300 years, making it the oldest running family business in the world.
This ryokan (a traditional japanese style hotel) was built over a natural hot spring in Awazu in central Japan in the year 718. Until 2011, it held the record for being the oldest hotel in the world.
Houshi Ryokan has been visited by the Japanese Imperial Family and countless great artists over the centuries. Its buildings were destroyed by natural disasters many times, but the family has always rebuilt. The garden as well as some parts of the hotel are over 400 years old.
The ryokan is now on its 46th generation of ownership. As you might expect, the changing role of the family in Japanese society has put the future succession of the hotel to the next generation in jeopardy. (via open culture)
Warren Buffett’s net worth is right around $84 billion. Each morning before he drives himself to work, he tells his wife how much his McDonald’s breakfast is going to cost — $2.61, $2.95, or $3.17 — and she puts the exact change in the cup holder for him to pay with. No, really:
According to another club owner, year two was supposed to be more difficult than the first year…but that was not Crowley’s experience:
About a year ago, I remember talking to another owner of another club and he said something along the lines of “I know you had a great first season, but the second season is the hardest” — e.g. the novelty will wear off, the crowds will thin, etc. I remember being scared shitless by this piece of advice but our club experienced quite the opposite. Our overall attendance numbers were up (despite us having one fewer match on the schedule) and our biggest crowds were considerably larger than last year’s bigger crowds (and we hit our goal of 1000+ fans/game… twice!)
That stuck with me as I read the rest of the piece (which is written in plain, straightforward prose that’s perfectly readable even if you aren’t into soccer or business). I began gathering reasons as to why Stockade FC has thrived when other clubs might how found it difficult and framed them as lessons for anyone who runs a business or is in a leadership position.
1. The first thing is Crowley’s obvious enthusiasm and passion for soccer, starting a business, and his Kingston community (he and his family split their time between Kingston and NYC). No specific excerpt for this one (aside from this photo)…it’s infused throughout everything he’s written about the experience.
2. Be relentless. Sweat the details. Track everything you can. Look for opportunities everywhere to increase revenue and decrease expenses. Be practical. This is just one example of many:
Our hotel costs were ZERO because we designed our schedule so that we would not have an overnight trip. If you remember from last year, we did a 3 day / 2 night / 2 match trip through New Hampshire and Maine (aka: 2 nights in a hotel + 3 meals * 14 rooms). Dropping this trip from the schedule saved us a fortune. To say this another way: Our current business model (tickets/sponsors/merch) supports “day-trips by bus” and not “overnight trips and/or flights”.
3. Look for opportunities to build and grow from above:
With that said, and before we get real deep into Stockade FC data, I’m happy to share that this past weekend I was elected to the NPSL’s Board of Directors at our league’s Annual Operating Meeting (AOM). I am now one of 12 Board Members (and one of 2 representatives of the Northeast Region) operating under a two-year term. The Board Seat gets me a little closer to the bigger-picture decision making and the longer-team strategic planning for our league. It is literally the “seat at the table” I was referring to above and I’m excited to get back to work helping to build from the bottom up.
4. Look for opportunities to build and grow from below:
This is important to the club because a break-even club can operate forever. And this is important to me because I know that if we we can keep Stockade FC going for 10 years, we will have the opportunity to see the kids that we have inspired this season & last season trying out for our squad in a few years time. The idea of a Stockade FC squad full of kids who have been cheering on our club since they were 8, 10, or 12 years old is one of the things that motivates and inspires me the most about this entire project.
5. Do the right thing and often you’ll notice it’s a good business decision as well.
Game Day expenses were down 15% because we stopped buying bottled water for every match and instead started used refillable 10 gallon Gatorade jugs. A win for Mother Earth is a win for Stockade FC! (Btw, getting off plastic bottles, and the waste they produced, was an explicit goal of ours for this season.)
6. Acknowledge that you cannot do it alone. Crowley and his team bring some serious leadership and expertise to the table, but Stockade FC runs on volunteers from the community. Embrace them and don’t take them for granted.
And it’s impossible to talk about Stockade FC without talking about our $0 “Staff” costs. Our entire club is run by volunteers — sometimes an army of 30+ people who show up on game days to help with everything from setup + take down + scoreboard + clock + merchandise + tickets + managing the crowd + leading the youth teams at halftime + emceeing the halftime show + singing the national anthem + announcing on the PA + doing color commentary on the live stream + 100 other tasks. Without you all none of this would come together in the way that it does, so thank you! #WeAreStockade
7. I don’t know what business lesson this holds, but this is the perfect little detail about the club:
Our ticket prices were designed so a family of four can attend for $20 ($8 + $8 + $2 + $2 = $20). This is one of the many things I’m *really, really* proud of.
8. Don’t skimp where it matters and give back. Too many comp tickets for player’s families or first responders isn’t going to make or break your season.
It’s worth noting that less than 10% of attendance for any given is from comp tickets. This year we gave comp tickets to (a) press, (b) players family (4 tix max), (c) ballboys and ballgirls, (d) Radio Woodstock contest winners, (e) First Responder & Military Appreciation Nights.
9. “Think globally, act locally” isn’t just for activism. Stockade FC streamed their games online and sold merch to people from around the world. Their story is resonating around the country and the world. Hell, I live 300 miles away and I’m gonna try my damnedest to make it to a Stockade FC home game this summer.
Streaming continues to be an important part of the Stockade FC story — we know our story is being followed by people outside the Hudson Valley (and outside the USA!) and so streamed matches that are *enjoyable to watch* are a core part of our story.
10. Small teams can act big. The same forces that allowed Instagram’s 13-person company to get acquired by Facebook for $1 billion enable small teams to produce, for instance, a live-streaming experience that rivals the big networks for not a whole lot of money and effort.
And this year, our rockstar team of tech-savvy volunteers has raised the bar for what it means to stream a 4th Division soccer game. Last year’s goals were about “consistency” — “we gotta stream every match”. This year’s goals were around “professionalism” — let’s work in on-air graphics, color commentary and multiple cameras. The team officially outdid themselves when we had live video streaming from a drone during our Conference Championship match (for serious!)
11. Have larger goals that are outside the strict purview of your business. The goal of the US men’s national team winning a World Cup in the next 30 years isn’t going to sell more tickets, but having that as part of your story is going to open up opportunities for your club and everyone else.
Do something to make USA soccer better, faster. We started our club because we ultimately want to make soccer in the United States better, faster. (My original back-of-a napkin goal was: “What can we as fans do to better the US Mens National Team’s odds of winning a World Cup in our lifetime”).
12. Get involved in your local community. But not just that, actually give a damn about your local community and the people and other businesses in it. With everyone working together, you raise all the boats. Non-zero sum games, yo!
On some level, we’ve done much much more than “create a soccer team” — we’ve built something that folks in Kingston have started to rally around and are proud of, and we’ve helped to leverage some of that momentum and excitement and energy into a mechanism that could transform parts of Kingston’s actual urban infrastructure (through this $10M grant). We’re just a tiny, tiny, tiny part of the grant… but, hey, we’re a part of it!
13. Celebrate when successful team members move on to bigger opportunities. Build a team that people want to be a part of because they can develop the skills to move up (either inside your team or outside of it).
Last season, Stockade FC midfielder Dylan Williams got picked up by Australian 2nd division club Launceston City FC. This year, goalkeeper David Giddings got picked up by Swedish 3rd division team Värnamo Södra. Two players from our 2016 squad (Matel Anasta & Matt Koziol) were invited to play in last year’s NPSL Showcase (aka: NPSL All-Star Game w/ scouts) and we’ve expecting 1 or 2 players from our 2017 team will be invited to play in next year’s Showcase.
14. Success begets success. Winning the league obviously helped attendance and raised the team’s profile locally and nationally. But winning the league started with hiring the right coaches and finding the right players…and that started with all the other things on this list. It all connects.
15. Share your knowledge with others. From the start, one of Crowley’s goals has been to run a completely transparent club. He shares every single detail and the club’s finances are an open book. He writes clearly and enthusiastically without a lot of jargon. Move past thinking that other teams are your competition and start thinking about how everyone can work together to achieve larger goals by sharing what works and what doesn’t with each other. Compete on the field but collaborate in the community.
As a tiny business owner without employees or a real-world presence, some of this doesn’t apply to me, but I’ve found Crowley’s posts about Stockade FC incredibly valuable not when thinking about kottke.org from a business perspective but also when considering larger questions about how I want to live my life. Thanks, Dennis!
I don’t know when this ran, but I liked this brief article published in Private Eye magazine called Zuckerberg Announces Revolutionary New Foundation to Eliminate Disease.
The genius founder of Facebook, Mark Zuckerberg, has announced an inspiring new foundation to which he and his wife will donate huge amounts of their fortune in a bid to defeat all disease over the next century.
“It’s called the government,” said Mr. Zuckerberg. “For such a long time I’ve been pondering how I can make a real difference with the enormous fortune I’ve amassed by concocting clever tax structures that minimise any tax liability from my firm.
“Imagine my shock when it turned out that this ‘government’ is devoted to ending disease. Not only that, it also has side projects dedicated to running schools, hospitals, a road system, parks, a national infrastructure, and lots of other worthy projects which make this planet a decent place to live.
I’m proud to announce that I’ll be giving lots of money to the ‘government’, as I’ve decided to call it, and I fully expect to get a lot of really fantastic publicity out of it.”
- Each partner invested $5000 in the business…and they took no other outside investment. Yep, 0 to $600 million in about five years with no VC.
- Early on, when asking about getting investors, Rahal’s dad told him “You need to shut up and sell 1,000 bars.” Is that the best and most succinct business advice ever?
- They designed the packaging for their first bar in PowerPoint…and Rahal put his cell phone number on it. Whatever it takes.
Voracious reader Tyler Cowen recently visited an Amazon Store for the first time and posted some impressions.
1. It is a poorly designed store for me, most of all because it does not emphasize new releases. I feel I am familiar with a lot of older titles, or I went through a more or less rational process of deciding not to become familiar with them. Their current popularity, as measured say by Amazon rankings, does not cause me to reassess those judgments. For me, aggregate Amazon popularity has no real predictive power, except perhaps I don’t want to buy books everyone liked. “A really smart person says to consider this again,” however, would revise my prior estimates.
6. I consider myself quite pro-Amazon, still to me it feels dystopic when an attractive young saleswoman says so cheerily to (some) customers: “Thank you for being Prime!”
Some of his observations match those of other reviewers from when the store opened back in May. On my last trip to NYC, I visited the same store as Cowen (also for the first time) and it didn’t change my opinion about the visibility of the data in the store:
Other bookstores have books arranged according to best-seller lists, store-specific best-sellers, and staff recommendations, but I’ve never seen any store layout so extensively informed by data and where they tell you so much about why you’re seeing each item. Grocery store item placement is very data driven, but they don’t tell you why you’re seeing a display of Coke at the end of the aisle or why the produce is typically right at the entrance. It’ll be interesting to see if Amazon’s approach works or if people will be turned off by shopping inside a product database, a dehumanizing feeling Frommer hints at with “a collection of books that feels blandly standard” when compared to human curated selections at smaller bookstores.
Walking around, I half-expected to see SQL queries accompanying some of the displays — “SELECT * FROM books WHERE rating > 4.8 AND pub_year = 2017 ORDER BY number_sold”. Amazon definitely needs to figure out how to get a little weird into their stores, a little of the human touch. Toning down the data talk would help. A more casual typeface might work too — not Comic Sans but perhaps something at least approaching handwritten? They’ve got so so much data about how people buy books…they just need to be more clever about how they slice and dice it. Maybe look for books that exhibit the Napoleon Dynamite Problem? Find people with interesting wishlists?
Entrepreneurship is like one of those carnival games where you throw darts or something.
Middle class kids can afford one throw. Most miss. A few hit the target and get a small prize. A very few hit the center bullseye and get a bigger prize. Rags to riches! The American Dream lives on.
Rich kids can afford many throws. If they want to, they can try over and over and over again until they hit something and feel good about themselves. Some keep going until they hit the center bullseye, then they give speeches or write blog posts about “meritocracy” and the salutary effects of hard work.
Poor kids aren’t visiting the carnival. They’re the ones working it.
That’s a pretty succinct summary of the “born on third base and thinks they hit a triple” effect…and it doesn’t just apply to entrepreneurship or being rich.
As Casper flourished through 2014 and early 2015, I learned, it enjoyed a mutually beneficial relationship with Sleepopolis and similar sites. For many bloggers, in fact, Casper was among the first mattress companies to offer affiliate commissions, leading its competitors to respond in turn. The reviews sites were key parts of what marketers call the “purchase funnel,” converting a vague interest in mattresses into awareness of a specific brand, and often the decision to buy it. Many consumers were Googling terms like “best mattress,” landing on sites like Sleepopolis, and learning about e-tailers like Casper for the first time.
Indeed, one would never have predicted looming lawsuits from a friendly 2015 email exchange, in which Casper CEO Philip Krim attempted to court an affiliate marketer named Jack Mitcham, who ran a Sleepopolis-like site called Mattress Nerd.
In January 2015, Krim wrote Mitcham that while he supported objective reviews, “it pains us to see you (or anyone) recommend a competitor over us.”
Krim went on: “As you know, we are much bigger than our newly formed competitors. I am confident we can offer you a much bigger commercial relationship because of that. How would you ideally want to structure the affiliate relationship? And also, what can we do to help to grow your business?”
I was just thinking the other day about how these companies like Casper formed to undercut the price gouging mattress stores and now, with millions of VC dollars behind them, they’re pulling their own brand of underhanded tricks to manipulate people into buying their products. In five years, Casper will probably have dozens of retail stores and 10 different kinds of mattress at different price points — they already have more than a dozen stores and 3 models ranging from $600 to $1850 — just like the companies they are trying to replace. Their origin story won’t matter…VC-fueled marketing will paper over all of that and, tada, meet the new boss, same as the old boss.
Apple is the biggest company in the world and they sell one of history’s most successful consumer products. As the total human population of Earth becomes a limiting factor in the iPhone’s continued sales growth (see also Facebook), they are perhaps running into problems designing a desirable product that they need to produce 200 million times over the course of a year.
This is one of those areas where Apple may be the victim of its own success. The iPhone is so popular a product that Apple can’t include any technology or source any part if it can’t be made more than 200 million times a year. If the supplier of a cutting-edge part Apple wants can only provide the company with 50 million per year, it simply can’t be used in the iPhone. Apple sells too many, too fast.
People commonly think that scale is an unambiguously good thing in production, but the tremendous scale at which Apple operates shows this not to be the case. Annual iPhone production is so large that Apple is likely experiencing diseconomies of scale, a phenomenon one doesn’t often hear about. What significant, break-through technology can a company practically introduce to 300 million new devices in a year?
Honda established itself in America with the Civic and Accord — both good, solid but basic cars. But big profits in the automotive world don’t come from basic cars that sell for commodity prices. Those profits come from cars that get consumers so excited that they’ll pay a premium price just to have one. The Prelude was Honda’s first attempt at an exciting car.
The Prelude was Honda’s technological leading edge. Features that are now expected from Honda, like the double-wishbone suspension under the Accord, fuel injection, and VTEC electronic variable valve timing system showed up first on the Prelude before migrating across the Honda line (though VTEC first showed up on the 1990 Acura NSX).
Keen observations all around and it will be interesting to see if Apple can benefit from this strategy.
One of my favorite business model suggestions for entrepreneurs is, find an old UNIX command that hasn’t yet been implemented on the web, and fix that. talk and finger became ICQ, LISTSERV became Yahoo! Groups, ls became (the original) Yahoo!, find and grep became Google, rn became Bloglines, pine became Gmail, mount is becoming S3, and bash is becoming Yahoo! Pipes. I didn’t get until tonight that Twitter is wall for the web. I love that.
To which I added:
A slightly related way of thinking about how to choose web projects is to take something that everyone does with their friends and make it public and permanent. (Permanent as in permalinked.)
Produced by Square, Made In Iowa tells the story of what happened after the Electrolux plant closed in the small town of Webster City, Iowa in 2011. The company had decided to move those jobs to Mexico and in the years after the closing, the unemployment rate in the town rose from about 3% to 10%. The video shows how the town rallied around the reopening of the movie theater and pursued an entrepreneurial strategy of revitalizing downtown through opening a number of small businesses. That approach brought the town’s unemployment rate back up to 3%.
But that’s not the entire story. The new jobs are mostly non-union and pay less than Electrolux jobs did. The town’s pivot was not entirely a bootstrap effort…the former workers had the government’s assistance and the advantage of their union’s negotiation of benefits. From a 2013 NPR story about the plant closure:
On March 31, 2011, Electrolux shut its washer-dryer plant in Webster City and sent the jobs to Juarez, Mexico. The employees were warned more than a year in advance of the closure, and many used the time to pay off debt and begin thinking about a new career.
Because their jobs had left the country, the laid-off workers qualified for federally funded retraining. A large number enrolled in two-year programs at community colleges and have been living off unemployment benefits as they learn new skills.
And those new businesses downtown are possible in part because people have access to healthcare through the ACA.
It seems relevant at this point to mention that in the 2016 election, the county in which Webster City is situated went for Trump 58.6% (to Clinton’s 35.8%). I mean, bootstrap all you want, but just don’t forget the massive governmental safety net that makes it possible for communities to recover when shit like this goes down and which party wants to dismantle it.
Jay-Z has a new album out today called 4:44 and it’s available exclusively on the streaming music service he owns, Tidal. But that’s not the only catch. To hear the album, you need have been a Tidal customer before today or you need to switch your mobile service to Sprint (or be a current Sprint customer).
This is all part of Tidal’s $200 million deal with Sprint and it makes very little sense to me. It’s a nice extra for current Sprint subscribers, but I can’t imagine that many people are going to sign up for Sprint just to hear an album. And Tidal’s gonna get a bunch of pissed-off first-time subscribers who will sign up thinking they’ll have access to the album but, oops!, they actually don’t. Dumb.
Rumor has it the exclusive is only for a week and then it’ll be elsewhere…which seems like a lot of fuss for very little reward.
Amazon’s New Customer is a really great analysis by Ben Thompson of Amazon’s strategy and why Amazon bought Whole Foods: they purchased a new customer for Amazon infrastructure, not a retailer. Early on in the piece, Thompson lays this one on us:
Amazon’s goal is to take a cut of all economic activity.
No qualifiers. All economic activity. In the world. Sort of a Dutch East India Company for the internet age. Thompson explains how they’re going to do it and why fresh food is such a strategic hole for them.
As you might expect, given a goal as audacious as “taking a cut of all economic activity”, Amazon has several different strategies. The key to the enterprise is AWS: if it is better to build an Internet-enabled business on the public cloud, and if all businesses will soon be Internet-enabled businesses, it follows that AWS is well-placed to take a cut of all business activity.
On the consumer side the key is Prime. While Amazon has long pursued a dominant strategy in retail — superior cost and superior selection — it is difficult to build sustainable differentiation on these factors alone. After all, another retailer is only a click away.
This, though, is the brilliance of Prime: thanks to its reliability and convenience (two days shipping, sometimes faster!), plus human fallibility when it comes to considering sunk costs (you’ve already paid $99!), why even bother looking anywhere else? With Prime Amazon has created a powerful moat around consumer goods that does not depend on simply having the lowest price, because Prime customers don’t even bother to check.
This, though, is why groceries is a strategic hole: not only is it the largest retail category, it is the most persistent opportunity for other retailers to gain access to Prime members and remind them there are alternatives. That is why Amazon has been so determined in the space: AmazonFresh launched a decade ago, and unlike other Amazon experiments, has continued to receive funding along with other rumored initiatives like convenience store and grocery pick-ups. Amazon simply hasn’t been able to figure out the right tactics.
When I heard about the Whole Foods deal, the first thing I thought about was Amazon Go. The company has been trying to experiment with different retail environments, but without the proper scale, it doesn’t make a lot of sense. Whole Foods gives them a chance to develop their fresh food delivery infrastructure at scale…so that they can offer it to other customers just like they do with AWS.
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