Sorry for the delay this week. I know how important consistency is. I was very sick on Sunday morning through Monday morning (i.e., I did not sleep on Sunday night). I managed to get the short-version of the briefing out Monday evening, but that was all I was capable of. This is a longer version with the more “time sensitive” content. I will push the rest to this coming Tuesday (along with whatever else comes up over the next few days).
Part two of the interview with Chris Chapo will be released tomorrow.
Spotify: Monday’s essay was largely about Clubhouse, but it was tangentially about Spotify. Daniel Ek, Spotify’s CEO, had a keynote session last week explaining the future of the company (which I quoted in the essay). If you want to dive deeper into this, he followed the session with an interview with The Verge, and a public Q&A with investors. Ben Thompson at Stratechery wrote two pieces as well that I enjoyed.
Google: Richard Gingras, Google’s VP of news, has said their “news showcase” program is will not be profitable and is a “subsidy for news organizations”. Commercial terms these are not.
Clubhouse Land Grab: As mentioned in "Tuesday’s follow-up, there is value in getting in early in a new channel. Benedict Evans spelled it out even more:
Clubhouse Marketing: Clubhouse is tied to your phone, so unlike Twitter there are no “corporate accounts”. At least that is the theory. The rule is already being broken as the “Kool-Aid Man” is hosting rooms about advertising.
Zoom: Zoom has ridden COVID to become a $100B+ product that is masquerading as a company. They are now looking for “what’s next” and have decided they are going to move into contact center software. Feels like the result of a McKinsey consulting project (“These are our assets and capabilities, let’s scour every industry on the planet and figure out where we have a competitive advantage to move into an adjacent attractive industry”). A friend did this for a CD-maker back in 2005 - they were on the top of the world, but they saw the future and needed to figure out how to rise the “next wave”. The recommendation was they get into medical device products.
NFTs: Non-fungible tokens have blown up as a discussion topic in the last few weeks. The idea is you can be the “single owner” of a digital asset is an intriguing one. There may millions of reproductions of the Mona Lisa, but only the Louvre owns the real one. Now the NBA is selling single ownerships of basketball dunks that are selling for thousands of dollars. It seems absurd, but so are sports trading cards. Scarcity is a powerful tool. I may write an essay on this in the future, but in the meantime you could do worse than reading Alec Danco’s take.
DTC Amazon Spend: DTC companies are the latest group to have “discovered” Amazon’s ad network. Digiday has a profile of a bunch of them that have doubled or more their spend in the last few months on the channel. If you have not figured out your baseline ROI for Amazon ads yet, you should. If the ROI is there (and it is for many companies), the channel has real scale now
Being different: If you want to increase awareness a good lever is being different so people talk about you. Not sure that will help in this case, but at least the real estate agent is trying… (Just scroll through the images of the house… I won’t ruin it by sharing an image)
Canada Post: CP is giving every Canadian household a free postage-paid postcard (value ~$1.08 CAN). This is ALMOST a good idea. People are not sending mail the way they used to. It is a good theory that if you get them to send one card, some subset will get into a new habit of sending more (or maybe the people who receive the card will send one back?). And CP’s real cost to send a card is very low - the system is below capacity. Costs are not 100% fixed, but the variable component is relatively small. So why is it ALMOST a good idea? Because they are giving the cards to everyone, instead of gifting it to half of the households in the country. CP has ALL the user data. If they gifted to half they would find out what the actual impact of the free postcard was and whether it would be worth doing again (or what demographics it worked for, which it did not, how long the effects lasted, etc). Instead, by giving to everyone the best they can hope for is looking at overall consumer mailing volume before and after - which has a million cofounders. What a waste.
Automate Disney: Part of the reason Facebook and Google dominate online advertising is because the ads are really effective. But part of the reason is that it is super easy to buy an ad on their platforms. Other producers and platforms (like Amazon and Walmart) are realizing this. Disney is the latest that has now announced they are aiming to move 50% of their ad sales to self-serve programatic by 2024. If you reduce friction on something, you get more of that something.
Tiger Woods: Tiger Woods had a very serious car accident last week. What a perfect time to promote the car he was driving? Not every “move fast” marketing move is the right one. Related: The road where Tiger crashed has had “excess deaths” from car accidents for year, but no one got around to doing anything about it. Until now. That is the power of celebrity.
Marketing to Employees
McKinsey: McKinsey has had a rough public relations year. The firms managing director, Kevin Sneader, settled with 48 States on the firms role in the opioid crisis. After he did so, he wrote an internal letter to all the consultants and alumni saying that McKinsey needs to “do better”. He also implemented new policies that would restrict who McKinsey would work with in the future. This was great for managing hit pieces from the NYTs and making the young American employees (and potential employees) feel better about the firm. But it was not so good for the senior partners outside of America who (1) Felt McKinsey did NOT do anything wrong, and (2) Want the ability to serve (for example) the school boards in Saudi Arabia (which was banned by the new policy - the partners can no longer serve specific “problematic” governments and the school board sits under the government). The result was that Sneader was removed by the other senior partners as Managing Director after his single term in leadership. This may have been the first time in the firms history a MD was outed after a single term (If may have happened sometime between 1967-1976 — I have not been able to get trusted data from that period). If everything is about marketing to employees, then apparently you also need to understand customer segmentation and which groups it is most important to appeal to…
Dr Seuss: The publisher of Dr Seuss is pulling six books that they have decided have inappropriate images. Consumers are not driving this. Retailers are not driving this. But employees… (Note: I tried to buy all six books, but already most are priced at $1000+ for used copies on Amazon…)
New York Times: Donald McNeil was the NYTs reporter who was fired to saying the N-word while chaperoning high school students two years ago (the context was, he was asking for clarification of what was said when the student asked for his thoughts on an event that had happened to the student). McNeil has now written a four-part Medium post explaining everything that happened in detail - including that the reason he was given for why he was told to submit his resignation was that he had “lost the newsroom” - i.e., the pressure was coming from the employees he was working with…
Ireland: In the interests of privacy, the country has banned Facebook from taking action on what it can learn from scanning posts. Which means Facebook can no longer trigger alerts when their algorithm believes someone is about to self-harm or commit suicide in Ireland (Facebook can continue monitoring in the rest of the world - and do so). Privacy has trade offs - in this case death prevention.
Russia: Journalists love a LITTLE bit of corruption. It allows them to get access to information (and expose greater levels of corruption). Russia has so much corruption that any “private” information the government is for sale and journalists can get access to just about anything. But it has so much corruption that if they publish the wrong thing they could “disappear”.
Europe: When you join Clubhouse it pulls your contacts so you you have people to follow (and they can follow you). This is the bare minimum it needs to build any sort of social network, but it is illegal in Europe (since you can’t give permission to share the contact information of people in your contacts). It makes it very hard to build a new social network in the EU. Even better would be if Clubhouse could have pulled your Twitter contacts to build an interest graph (which is what Instagram did), but Twitter and Facebook have both stopped the ability of new services to do that. They say they are standing up for privacy (and they are) and it would be illegal to even offer the functionality in Europe ) which it would be). But it conveniently kneecaps future social network competition. A better solution would be to REQUIRE the large networks to allow new networks to pull their social graphs, but that would be an invasion of privacy and the opposite direction regulation is going. Privacy has trade-offs.
America: The Biden administration has admitted to using Zoom (which may or may not be easy for the Chinese government to spy through) for classified official government business. Their explanation is that they use an “extra secure” government version of Zoom and that they inherited it from the previous administration. This is why the great period television show “The Americans” was pure fiction. The characters on both sides in that fictional show were far too competent.
Google: Google will stop targeting ads based on web browsing history. This is a nice PR move for a tactic that does not work very well anyway. Search advertising based on what you are searching for is far more effective than “who you are” or what you searched for last week (what you BOUGHT last week on the other hand…)
Walgreens/CVS: The pharmacies are collecting contact information when people register for COVID vaccines. Then they are planning to use those “registers users” to “promote stores” and “tailor marketing”. Translation: They are using COVID as a lead generation tool. Wonder what the value of the leads will end up being?
Ideas matter: Essay from a subscriber. It’s common to say that ideas are worthless, it is all in the execution. But many potential start-up founders are struggling searching for an idea. And VCs still want to hear the idea before they found you. Why do we say ideas don’t matter? Mostly because of selection effect. A good idea likely doesn’t matter to MOST people, because they will fail anyway. But it matter for the people who ARE able to execute.
Streaming: Given streaming is making so much more money for the music industry than it has in decades, why are artists complaining they are making so much less? Because the number of artists are growing even faster than the $$s from music - there are more people to share that revenue with… This is what happens when friction is reduced.
TorStar: The Canadian publisher is launching a casino to help subsidize their news business. Another example of content and product merging.
COVID and the New World Order
Sports: The relative appeal of sports participation has changed dramatically in the past year. Up: Skateboarding (+34.2%), tennis (+22.4%), pickleball (+21.3%), table tennis (+13.1%) and bicycling (+12.9%). Down: Gymnastics (-18.1%), volleyball (-16.6%), cheerleading (-11.8%) and bowling (-11.5%). I’m surprised the changes were not more extreme.
The Flu: The southern hemisphere avoided the flu this year. Now we are seeing the same thing in the Northern Hemisphere. There have only been 1,400 documented cases of the flu in America this season (down from 174,000 last year at this time)
Working from Home: Back in 2013-2017 a study found that employees who worked from home (without having a provided office) had 0.3-0.4 more rooms in their house and spent +6.5%-7.4% more of their income on housing. If people don’t go back to the office, those are some good back-of-the-envelope numbers for estimating what the increase housing demand will look like over the next few years.
Used cars: Used car prices are in some cases HIGHER than new car prices. How is this possible? The driver seems to be supply limits. New car prices have not moved in response to supply restrictions, which has resulted in reduced selection and wait lists. But used car prices are far more flexible, and when demand goes up, dealers are fine raising prices - even if the prices are higher than a comparable new car.
Malls: When COVID is over, the big question is what will go back to the old way, and what will stay in this new way? Mostly the stock market thinks things will go back to the old way - even companies that are hurting (but will survive), a years worth of profit doesn’t matter very much. But for malls, the market thinks things will only get worse… Bloomberg has a story about the current valuation of malls being down 60% from pre-COVID (and they were not doing so hot in January 2020 either…). It really looks like the over-retailing of the US will get a correction after this year.
AI, Machine Learning and GPD-3
“AI Bias”: A lot has been written about “AI Bias”, but often the issue is more simple - bureaucratic incompetence. In Arizona a new rule was created to trigger early release from prison. The rule was added to their “computer system”, but it did not get added correctly, so the rule was never implemented and no one was released according to the new law. You can’t blame the computers for everything.
Data is not the new oil: A better metaphor is that “Data is the new sand”. It is catchy. I think it will catch on. It is a lot better than “data IS the new oil” that was ALSO catchy and was a talking point for the last decade.
Animating photos: Imagine if your photos could move like real people? Now with the help of a new AI tool they can. It was build as a tool to animate old family photos, but people immediately started using it on historical figures: Vasily Blokhin (and others), Frederick Douglass, Harriet Tubman, Alan Turing, Abraham Lincoln (1), Abraham Lincoln (2), Oscar Wilde, Albert Einstein, Marie Curie, Robert Oppenheimer, Nicolai Tesla, Schrödinger, Bohr, Mona Lisa, King Richard III, Mark Twain, Pericles, Napoleon Bonaparte, Caesar Augustus… It is easy to use. If you make an interesting one let me know and I will share it here.
Notorious H.P.L.: Sound imitation has gotten so good that they can now choose a performer and simulate their performance of any text. Here is the Notorious B.I.G. rapping H.P. Lovecraft.
Home Healthcare products: Series A company. $10MM in revenue in 2020. $30MM expected in 2021. Looking for a CMO strong in digital marketing. Remote (located anywhere). Let me know if you are interested.
Inbreeding: First theory- inbreeding makes you dumb. Second theory- Dumb rulers hurt the performance of their country. The Economist shares findings from a recent working paper by Nico Voigtländer and Sebastian Ottinger of the University of California at Los Angeles, that shows both theories hold water. When looking at 331 European monarchs between 990 and 1800, monarchs that were more inbred rank lower in performance by historians and, on average, lost more land area for their countries during their time in power. This chart is jaw dropping:
Over- and under-confidence: People tend to over estimate their capabilities is just about everything (especially things that are tied to ego like intelligence, sense of humor, leadership capability, and driving ability…). But they under-estimate their ranking in income… (From the DailyShot)
Progress: A single modern container ship has 3x the capacity than all vessels combined in the entire world in the 16th century (and uses 1% of the manpower)
Keep it Simple,