Large gaps between accelerating technologies and stagnating social norms create lucrative opportunities. But these opportunities are only available for a limited time. In that moment, people can capitalize on the difference between the real and perceived state of the world. I call this sliver of opportunity the “Go-For-It-Window.”
You know you’ve found the Go-For-It Window when you’re simultaneously woke and confused; when you’re shocked your idea doesn’t already exist; when you know something nobody else does; and when it feels like others see the world in black and white, while you see the world with vibrant, technicolor glasses.
Opportunity and popularity are inversely correlated. Sometimes, the paths that look safe are the riskiest, and vice versa. If you’re looking for an under-exploited opportunity, you’ll have to go against the herd. Thus, I frame the Go-For-It Window with a quote from investor Jim Grant: “Successful investing is about having people agree with you… later.”
As a general rule, people are blind to opportunities in the Go-For-It Window. But in retrospect, they seem blindingly obvious. To remove the blinders, you have to escape the myopia of social norms. As Alex Danco said in my interview with him: “Investors arbitrage the state of the world today — before they get started — with the state of the world after they’re done disrupting it.”
Good news. You don’t need any secret knowledge to discover ideas in the Go-For-It Window. But you will need a blend of James Bond confidence and a willingness to ignore the taunts of the crowd. Otherwise, you’ll drown in the sweat of criticism.
To illustrate how the Go-For-It window shows up in real life, I’ll draw on four examples: two from the past, two from the present. I’ll take each in turn.
Past Examples of the Go-For-It-Window:
Airbnb: When I first started using Airbnb, half of my friends thought I was insane. Renting a stranger’s home was reserved for hippie couch surfers who were running away from their childhood. Airbnb didn’t just extend the frontier of technology. It pioneered a new social norm. By matching latent demand with under-utilized supply, Airbnb’s founders commoditized trust, changed the way we travel, and capitalized on the Go-For-It-Window.
NBA Three-Pointer: The NBA introduced the three-pointer in the 1979-80 season. Social norms, not math, halted adoption. At first, people thought the three-point shot was a cheesy gimmick. In the first season after it was introduced, making 21 three-pointers in a season was strong enough to rank in the top 20. But in 2016, Stephen Curry made 13 three-pointers in a single game. The three-pointer was introduced almost four decades ago. And yet, the truth still defies intuition. Since most NBA teams still don’t shoot as many three-pointers as they mathematically should, the Go-for-It Window is still open.
Current Examples of the Go-For-It-Window:
Skip the graduate degree: Too many kids go to graduate school. But graduate school isn’t as necessary as it once was. People can build their own credentials now. They can start a project, write online, or record YouTube videos. This year, thousands of MBA graduates will enter the workforce with more than $100,000 in student debt. Graduate school isn’t just expensive. It’s time-consuming too. If you want to demonstrate value to a future employer, there are cheaper and faster alternatives to graduate school. For example, starting a successful blog is a simple way to build your credentials. Employers know that a strong personal blog signals intelligence and curiosity, so when they find a writer they admire, they sometimes try to hire them. Kids know this. Parents don’t. Thus, the-Go-For-It-Window is open for people who want to start writing online.
Here Come Home Schools: In the next decade, somebody will build a billion-dollar business for home schooling. The Go-For-It Window is wider than the Grand Canyon. People can teach themselves now. The bottleneck to learning is curiosity, not access to information. As the famous line in Good Will Hunting goes: “You wasted $150,000 on an education you coulda got for $1.50 in late fees at the public library.” Most public schools are suboptimal. And private schools are walk-right-out-the-door-expensive. A study by the National Center for Education Statistics found that 20 percent of college graduates didn’t have basic quantitative math skills. Only one-third of college graduates could read a complex book and comprehend what they were reading. Homeschooling startups will match students with parents and teachers. Together, communities of parents will hire teachers and pool resources for toys, books, and computers. As it stands, the logistics are easy compared to the societal challenges. People don’t like taking risks with their children. Will society look down upon children who are homeschooled? Will homeschooling harm college acceptance rates? Or will the university landscape change as well?
The Go-For-It-Window is the hanging curve ball in the middle of the plate. It’s the right opportunity at the right time.
Opportunities in the Go-For-It-Window close fast. They’re fleeting. When you sense an opportunity, act on it. Research the idea, speak with industry experts and outline a solution.
No matter who you are, where you work, or what you’re interested in, there are hidden opportunities in front of you. If you’re blinded by outdated social norms, you’ll miss opportunities in the Go-For-It Window.
Maps don’t have to be accurate. In fact, many of the best maps are inaccurate. On purpose.
Every map serves a goal. Sailors use maps to navigate the distant seas, pilots use maps to navigate the expansive skies, and drivers use maps to navigate the winding pavement. Often, they shine because they’re not accurate.
For example, the map of New York’s subway shrinks the massive borough of Staten Island and makes Manhattan look bigger than it really is. And yet, because the map is so inaccurate, it’s easy to read.
Not-to-scale New York Subway Map
To Scale New York Subway Map
Believe it or not, maps weren’t always easy to read.
In 1933, Henry Beck saw that the London Underground was too hard to understand, so he simplified the subway map. He controversially abandoned geographic accuracy, which was the standard for maps until then. Instead, Beck focused on connections between trains and the network of stations.
People who look at subway maps want to see the station names and the path of each subway line. If they need to transfer, it should be easy for them to find the connection point.
The faster, the better.
There are many ways to visualize a city. The old map of the New York subway system (shown below) is ugly and confusing. The colors are dull, the trains are tough to follow, and the information hierarchy is poorly presented.
For years, the New York subway map was hard to read and even harder to use. Then, Massimo Vignelli arrived. By combining graceful sans-serif fonts with straight lines and bright colors, he transformed the New York subway map.
Since the Vignelli map serves the needs of the commuter, it’s geographically inaccurate. Rather than drawing the map to scale, the map expands the dense areas and contracts the sparse ones. Manhattan, where most of the action takes place in New York, is bigger.
The hierarchy of information is clear. There are no messy angles. Rather, all the lines run only at 45 or 90-degree angles. Readers can orient themselves because the borough names are big, the dots make it easy to find your stop, and the subway lines are illuminated by bright colors.
Plus, the Vignelli map is beautiful. And if you look closely, you’ll see Vignelli’s influence in the modern New York subway map.
Compared to Vignelli’s design, the modern map adds information without compromising utility. For example, in Vignelli’s map, Central Park is a square. But in the modern map, the Central Park rectangle reflects its true shape. To guide tourists, it covers more than the subways.
The name of the map on the top-right corner is “New York City subway with bus and railroad connections.” It highlights bridges, airports, tunnels, the PATH train across the Hudson River, and ferry routes to New Jersey and Governors Island.
And like many well-designed maps, the modern map is inaccurate.
Friendship gives flavor to life. Rather than treating friendship as a nice-to-have luxury, reserved for people who have their lives in perfect order, we should cultivate friendship intentionally and treat it as the necessity it is. We need to be intentional in our pursuit of it, especially as we age.
Like a marriage, the best friendships require investment, compromise, and sacrifice. By creating shared alignment, trust, and companionship, strong friendships nourish the soul and sharpen the mind.
The Loneliness Epidemic
America’s loneliness epidemic is a direct result of the structure of American life. Work is changing and modern life keeps us distanced and disconnected from the people we love.
Loneliness plagues modern life. In big cities like New York, where I live, people lack community. In a city where everybody is chasing their dream with the focus of a hawk swooping down for the kill, it can be hard to forge deep relationships. We should reject the status quo.
Last summer, I moved into an apartment with a close friend. By living together, we could spend more time together. But after going more than 50 days without a meaningful conversation, we decided to schedule time together with a calendar invite. A calendar invite… for my roommate. What is going on?
Turns out, it isn’t just me. In a book calledBowling Alone, sociologist Robert Putnam studied the decline of social interactions in America through the lens of declining participation in labor unions, fraternal organizations, and religious groups. Putnam contrasts the struggles of building friendships in urban communities with “The Sprawl Civil Penalty,” which states that urban sprawl and suburbia lowers community involvement by roughly 20 percent. As a result, American communities have lower trust, reciprocity, information, and cooperation than they once did.
The world Putnam describes is a long way away from the post-World War II American society, where big unions and tight neighborhoods ran the show. The hollowing out of friendship is tragic: and 25% of them have no confidants or close friends. None.
Zero.
The mobility of modern life doesn’t help. According to one longitudinal study which tracked best friend pairs, people moved 5.8 times on average over a period of 19 years. But people aren’t just moving more. They’re moving farther too. Epidemiologist David Bradley tracked the lifetime movement of four generations in his family. His great-grandfather’s entire life took place in a square of only 40 kilometers, his grandfather’s took place over 400, 4,000 for his father, and his own extended to every corner of the globe across 40,000 square kilometers. The geographic circle of life has expanded, so friendship strategies that depend on constant proximity are no longer effective. In the modern world, you cannot cultivate a strong, multi-decade circle of friends unless you are intentional about it.
I refuse to accept that weak friendships are the price of ambition and career success. In response, I’ve developed a philosophy of friendship.
Deep Bonds Take Time
I’m not talking about the temporary, friction-free relationships that social technologies make so easy. No. I’m talking about friendships where two identities merge. The kinds that stretch across decades, the kinds that blossom into extended family, and the kinds of friends who your kids call “Auntie” and “Uncle.”
Friendship is vital to your whole spirit — your being, your character, your mind, and your health. And yet, all too often, humans don’t realize what’s essential until they are in trouble, so they dismiss the power of friendship when things are going well.
I take extra care to prioritize extended time with friends. If you want a deep conversation, you need time. Instead of spending two or three hours with somebody, I prefer to spend two or three days with them. More, if possible.
After 24 hours, the small talk disappears, and after 48 hours, philosophizing is inevitable. The benefits are exponential.
“When was the last time you had a great conversation? A conversation that wasn’t just two intersecting monologues, but when you overheard yourself saying things you never knew you knew, that you heard yourself receiving from somebody words that found places within you that you thought you had lost, and the sense of an “eventive” conversation that brought the two of you into a different plane and then forthly, a conversation that continued to sing afterwards for weeks in your mind? Conversations like that are food and drink for the soul.
Like a massage, time softens the human heart. With each tick of the clock, the soul awakens to the layers of trust and tender vulnerability required for a deep conversation. Nurtured by the trusted cradle of companionship, time steers conversations in rich and unexpected directions.
A good conversation exists at the outer edge of consciousness. Luckily, there are proven ways to spark transcendent dialogue. Laugh. Have fun. Don’t gossip. Find a quiet place. Then, shake things up and go somewhere else. By changing your environment, you change the energy of conversation, and when you switch up the energy and move to a new place, people blossom into a kaleidoscope of personalities.
The benefits of friendship compound. Friends who act with grace and sincerity over a series of repeated interactions will be gifted with selfless generosity and loving kindness.
A Model for Friendship
Before his sudden death in 2008, John O’Donahue wrote a beautiful book on friendship called Anam Cara. Anam is the Gaelic word for soul; Cara is the word for friend, so Anam Cara means soul friend.
In the early Celtic church, an Anam Cara was a teacher, companion, and spiritual guide with whom you revealed the hidden intimacies of your life: your dreams, your fears, your hopes, your struggles, and your insecurities. With them, you can open your heart, stretch your mind, and freed from the Orwellian cage of judgment, you can take off your mask and be seen as you are.
Rather than homogenizing or imitating each other, soul friends sprout in different directions. They praise the other’s unique and unusual nature, and as they do, their friendship warms the soul. As John O’Donahuewrote:
“In this love, you are understood as you are without mask or pretension. The superficial and functional lies and half-truths of social acquaintance fall away… When you really feel understood, you feel free to release yourself into the trust and shelter of the other person’s soul…Love is the only light that can truly read the secret signature of the other person’s individuality and soul.”
By freeing you to speak with honesty and communicate with love, your Anam Cara frees you to explore the wildest possibilities within you. No matter who you are, what you do, or how much money you make, this kind of companionship will foster alignment, safety, and growth.
The Fruits of Friendship: Alignment, Safety, and Trust
1. CareerAlignment
A strong network is fuel for career success. Unfortunately, most networking advice is garbage. It leads to transactional relationships, robotic interactions, and long nights at loud, head-shaking networking events where you count the seconds before it’s okay to put down your drink and storm out the door.
Thank u, next.
Early in your career, the most important aspect of networking is building relationships with up-and-coming people who have similar interests. Scooter Braun, a talent manager who represents Justin Beiber, Kanye West, and Martin Garrix, had this to say aboutnetworking:
“The mistake of youth is thinking that the mentors you need are older than you. That you should work on getting in a room with some powerful person because that’s going to change your life. It’s not true. What changes your life is your peers… The people you rise up with. They’re your power base. Not the person who’s already done it.”
Most people see a strong divide between “work friends” and “life friends,” but that will never work for me. My life and my work are one-in-the-same.
Peers are the engine of career success. Together, the ones you’re closest to comprise your “10 Club.”
The 10 Club is a group of 10 people you want to work with later in life, and every member should be kind, ambitious, and generous. Travel together, meet their families, and attend their weddings. Get to know them. Then, team up and support each other.
Or as Shakespeare said: “grapple them to your soul with hoops of steel.”
2. Safety
Beyond the 9-to-5, friends provide safety.
Trusted friends magnify the shine of life. In turbulent times, they smoothen the ride. And in moments of joy and ecstasy, they make the world a richer, more saturated place. In that way, friends are like a trampoline. They soften the fall so we jump like a Marvel superhero: the 360-backflip, the swirling mid-air corkscrew, and the WWE wrestling moves that would otherwise make your mom’s hair grey. If the landing wasn’t so cushy, you wouldn’t even attempt the jump.
Choose your friends carefully. You will rise and fall to the level of the company you keep. As a general rule, you should spend time with people who energize you, inspire you, and make you proud to call them a friend.
The mark of a great friend is somebody who believes in you, looks out for you, and has your best interests in mind. Those who give you honest feedback, even when the truth is hard to share and even harder to hear are worth their weight in gold. When you acknowledge their feedback, friends become like bumpers at a bowling alley. They let you bounce around, but not too much. By protecting you from stupid decisions, they free you to go all out and bowl for strikes.
The Buddhists have a name for this: Kalyana-Mitra — a “noble friend.” Since nobody can see their life totally, they confront people when they misstep even when doing so is awkward and uncomfortable. Like mirrors, even when we’re blind to our own actions, the words of a Kalyana-Mitra reflect your true self.
Once you find a Kalyana-Mitra, invest in their friendship. Accelerating feedback loops is the fastest way to accelerate your learning or improve your behavior, and when you give excellent people a clear window into your life, their feedback will be invaluable. Unfortunately, most friends can’t really help each other. Since they don’t communicate with depth, honesty, or frequency, they gloss over their true challenges, many of which are taboo to discuss. But the shine on top will never fix the cracks beneath the surface.
When you speak with somebody at length, you realize that everybody — yes, everybody — faces a waterfall of challenges. In difficult moments, friends serve as guides. Through dialogue and feedback, they help us navigate the unknown, alleviate suffering, and dodge the bullets of everyday life.
The algebra of a well-lived life puts friendship in the center of the equation.
Shared experiences — especially novel, challenging, and unfamiliar ones — are the best way to foster tight bonds. Host a retreat. Travel with friends. Rent a car, start driving, and see where you end up. One close friend says that relationships, from friends to lovers, are only built once bodily fluids start flowing: tears, blood, sweat, and you know… whatever else.
Struggle and shared experiences are like fuel for friendship. My closest childhood friend was born out of hours on the golf course and the ruthless pursuit of a spot on a college golf team.
Together, my friend Zander (an outstanding writer) and I traveled across the state of California, where we played in ultra-competitive golf tournaments and crashed in two-star motels. Rituals emerged. Starbucks sandwiches for breakfast, In-N-Out Burgers for dinner, and Krispy Kreme Doughnuts for dessert. During our senior year, we hosted a charity golf tournament for theBonnie J. Addario Lung Cancer Foundation, which is the most I’ve ever enjoyed working on a project.
(Quick story: On the day of the tournament, we arrived to the course early. We snagged the keys to the golf cart and sped out onto the course. Literally. Five minutes into the ride, we looked at each other, smiled, nodded heads, and turned the drive into a go-kart race. Game on, Zander: first person to get to the fourth hole wins. In the thick of the moment, we made a sharp 90 degree turn onto a narrow, wood chipped path. Then, the maintenance guy found us, stopped us, and like a cop, pulled out his walkie-talkie and snitched to the Director of Golf. Golf cart privileges: REVOKED).
In short, Zander and I have years of shared context. As John Lilly wrote:
“The special thing about having that much context, and people around who know & believe in you is how much they can frame the year that’s past, and the year ahead. Your tribe has the context about you & your life — and can remind you, when you need it, of who you are, and who you can be. And beyond all that, it just feels good (and restorative, and challenging) to come home once a year, and see friends & allies, and tell all the old jokes, and just listen about where you’ve each been, and plan about what’s to come.”
That decade of travel, conversation, and hitting golf balls under the moonlight in his backyard bound us like superglue. From the inside jokes about Family Guy to our endless impersonations of our high school physics teacher and the girl in our American history class who fell asleep every… single… day, John Lilly’s words perfectly describe my friendship with Zander.
Most importantly, it’s friends like Zander, who, through direct and earnest feedback, illuminate my blind spots.
3. Growth
Conversation unshackles the mind from its usual constraints. When we keep our thoughts inside, our minds look like dark, murky water. But like a river, clarity requires flow.
Speaking is thinking. When we share our ideas, we discover unexpected insights and unlock the hidden realms of suppressed thought and forgotten ideas. Through the unexpected randomness of conversation, we maximize intellectual serendipity and explore the contours of our own minds.
So often, time with friends is seen as unproductive or an inefficient distraction from the main task of being productive and achieving our goals. Paradoxically, even though city life fuels ambition by aggregating millions of people into a dense metropolis, it makes it hard to build friendships.
But when you find the right friends, the opposite is true. Intelligence is enriched by kindness. If people don’t trust you, they won’t open up to you. As Visakan Veerasamy wrote:
“If you care about having an interesting life, you have to care about winning over other people – so that you can access that information. If you really want to be smart, you’re going to have to tap into people’s perspectives, insights, questions and so on. You can’t learn it all from books and essays – because there’s a lot of “living knowledge” that never makes it into those things.”
These words came to life during weekly sessions with my friend Chris Sparks. Chris’ work is one-of-a-kind. He coaches high performance knowledge workers and wanted to accelerate the growth of his coaching business. He built his skills the hard way: through hundreds of hours consulting entrepreneurs and thousands of hours playing poker (at one point, Chris was ranked as one of the top 20 online poker players in the world).
Fortunately, due to my marketing background, I was the right person to help him build his business. In exchange, he helped me tweak my daily habits and develop my online course.
We met weekly. Within five months, I had successfully launched an online course. Ultimately, without kindness and generosity, I wouldn’t have been able to absorb Chris’ living knowledge and use it to launch Write of Passage.
The Utility of Friendship
As the world changes faster and faster, the utility of friendship will increase. The people in your “10 Club” will help you navigate the future and point your career in a productive direction. Like cartographers, friends who help each other and map out the future together have an advantage.
Cultivating these life-long, work-centric friendships can come with tradeoffs. Building friendships doesn’t scale. On one hand, you want to build relationships with enough people, so that when you’re ready to start a company or recruit for an executive position, at least one person in your friend group will be able to join you. But on the other hand, deep time is the best way to build friendships, and there’s only so much time in the day.
Instead of growing your Rolodex, double down on your best friendships, and find your 10 Club.
Note: This was originally a letter to myself. Then, I sent it to a couple friends, and now I’m sharing it publicly. In it, I outline my philosophy of friendship and the kinds of people I want to surround myself with in my 20s.
Acknowledgements: Special thanks to Vinay Debrou, Ryan Blake, Sid Jha, Derek Urben, and Nicolas Marescaux for editing drafts of this essay. And thank you to Kevin Kwok for sparking these ideas in the podcast we recorded together.
Business operations is like a water-filled bucket.
The only difference is that the water never stops flowing, and the bucket is always changing size. When the bucket reaches a new scale, the material that used to hold it together stops working. You can’t anticipate where the leaks will occur before the hole breaks. Whenever a leak occurs, you have to scramble to patch the hole and prevent the flow of water. In short, build a checklist.
Before I went to college, I spent a lot of time flying airplanes. Pilots are always looking at checklists. They have pre-flight checklists, take-off-checklists, in-air checklists, safety checklists, stall checklists, landing checklists, and shut down checklists. There’s a checklist for everything. That’s why flying is so safe. Throughout the history of aviation, whenever there has been a crash, pilots have responded by creating a new checklist or improving an existing one. That way, the problems of the past are prevented for the future.
Checklists will help you get more done faster. Instead of relying on yourself, you can prevent errors and mistakes by externalizing repeatable processes into checklists.
Like the aviation industry, you shouldn’t stop at checklists. Look for systemic issues and identify repeated mistakes. Make checklists for every repeated process, so the same problems don’t happen twice. Aim to make sure the problem never happens again. One-time problems are fine; repeated ones are a failure.
As Alfred Whitehead once said: “Civilization advances by extending the number of important operations which we can perform without thinking of them.”
The less you have to think, the better. When you’re fully dependent on your memory, consider making a checklist. Don’t under-estimate the compounding benefits of fixing small operational leaks. Externalizing your processes is the best way to see them with clear eyes. Inefficiencies stand out like a lone tree on a desert plateau. Once the checklist is made, almost anybody in the organization can perform that operation.
Improvements shouldn’t end with checklists. Once you’ve externalized your system, you should try to automate it. Checklists are a smart first step, but their success is limited by the diligence of the people who run them.
My inspiration comes from Warren Buffett. In his 1991 letter to shareholders, Buffett wrote about the difference between a franchise and a business. Franchisees don’t depend on the talents of their operators. Bad managers will hurt the business, but they can’t destroy it. In contrast, a business can be killed by poor management. People are the bottleneck because the company can only survive if it’s a well-oiled machine with strong management.
The number of operations you’ll need will grow faster than the business. Taken as an absolute, each aspect of the business is simple. Taken as a collective, all the moving parts will make your hair turn grey. Don’t let brains be the bottleneck. A system that depends on the memory of its employees will never scale.
Even from the beginning, you want to think like a Buffett-defined franchise. It doesn’t matter who is making your burrito at Chipotle. The food is made by recipe, and the portions are made in standard sizes. No matter where you are, every Chipotle has the same beige chairs, metal tables, and tin aluminum. Chipotle’s chefs, vendors, and store managers all follow checklists.
Work in systems. The faster you can create checklists for the business, the faster you can automate it. And the faster you can automate it, the more profitable the business will be.
Whenever the bucket leaks, default to the checklist habit.
44 million Americans collectively owe $1.5 trillion in student debt, a 457% increase since 2003.
Since 1991, tuition has increased by more than 300%, according to the US Department of Labor’s “tuition and school fees” component of the Consumer Price Index. Tuition isn’t rising because professor pay has increased. Instruction costs accounted for only 28% of cost increases from 2000 to 2010. Faculty salaries have not risen proportionally to these tuition increases.
Why is the cost of college rising so fast?
Two theories named (1) Baumol’s Cost Disease and (2) the Bowen Effect account for the rising cost of a college education.
(Editor’s note: I want to remind you that college education is outside my circle of competence. Please take everything with a grain of salt. I am a curious outsider, perplexed by the rising costs of college. If you have a different perspective, I want to hear it).
Baumol’s Cost Disease
Baumol’s Cost Disease explains why some sectors of the economy become more productive while others stagnate. William Baumol’s original study, published in 1966, covered the performing arts sector. He found that, compared with the 19th century, orchestras require the same number of musicians to play a Beethoven string quartet. In the meantime, the real wages of musicians had skyrocketed.
Arts institutions had to increase their wages in order to attract the best musicians. Due to cost increases, the productivity, defined as the effectiveness of productive effort measured by the rate of output per unit of input, had fallen since the 19th century. In productive industries, firms increase their productivity each year. When they do, they get more bang for their buck. But in some industries, particularly labor-intensive ones such as the symphony, productivity doesn’t increase as fast.
In short, higher education has a volume problem. Each year, universities hire more and more administrative staff. As a result, overhead, administration, and tuition costs have exploded. The university system is a tangled, redundant, inefficient cobweb.
Figure 1: Expenditures for academic functions and faculty salaries have not increased as fast as tuition prices. Source: Alex Danco.
The Bowen Rule
The Bowen Rule’s influence on rising education prices is twice as strong as Baumol’s Cost Disease. Writing in 1980, Howard Bowen, the president of Grinnell College argued that non-profit universities will spend everything they have. If you increase their revenue, their costs will go up too. This creates a revenue-to-cost spiral: higher revenues lead to higher costs, and higher costs lead to higher revenues.
Bowen wrote:
“Administrators have an incentive to spend every dollar that is available. They cannot spend more without appearing incompetent, but spending less would forgo the opportunity to make some members of their constituencies happier. Whatever is available is spent. … Revenues are the lid on expenditures during each period. Since existing resources are frozen in place, the resources required for the new initiatives that arise each year can only come from new revenues. Some of these new initiatives will be driven by competition; most will be the pet projects of faculty, administrators, or board members.
In business, new initiatives are chosen on the basis of their expected return. In higher education, priorities are determined by internal politics.
Because all the revenues are spent each year, costs typically increase as a result of these initiatives. If money is given to faculty to start a new program, for instance, that additional money will be expected in the next academic year as well.”
The Bowen Rule, also known as the “revenue theory of cost” is governed by five rules:
The dominant goals of institutions are educational excellence, prestige, and influence.
There is virtually no limit to the amount of money an institution could spend for seemingly fruitful educational ends.
Each institution raises all the money it can.
Each institution spends all it raises.
The cumulative effect of the preceding four laws is toward ever increasing expenditure.
Even when universities raise money, they don’t have an incentive to save it. If they raise more than they need. It is hard for prospective students to judge the quality of an undergraduate degree. Students only purchase the degree once, so universities don’t worry much about satisfying repeat visitors. Many equate a university’s sticker price with the quality of an education, causing colleges to spend as much as possible per student, which drives prices up. When they’re applying for university, students can’t gauge the quality of an education. To be sure, actual tuition hasn’t increased as much as posted tuition fees. But the effects are still dire.
The Incentives
Limited by imperfect information, students favor the schools with the best reputations. To maximize prestige, colleges invest in peripheral, reputation-building assets such as rock climbing walls, movie theaters, and dorm rooms that are fancier than the local Hyatt hotel. As a university’s reputation increases, so does the inflow of grants, donations, and research contracts. As long as money is available, it will be spent. As long as it’s spent, total costs will increase, thereby causing costs to skyrocket.
I’d love to hear your feedback. Send me your thoughts, criticisms, and ideas in a direct message on Twitter. When you do, please don’t nitpick. Constructive feedback will lead to a more productive dialogue that’ll be better for both of us.
Special thanks to Alex Danco, whose post on college education inspired me to investigate these ideas for myself.
I’m going to describe an industry. Then, you’re going to guess which one I’m talking about. You have three choices: commerce, education, or politics.
Since World War II, the industry has been relatively stable. The big players haven’t changed. They’ve built relationships with financiers and journalists. Until recently, the industry structure looked like it would exist forever.
But now, things are changing. Within the industry, the pace of change is quick. When people talk about the industry, they talk about madness and uncertainty. Weird things are happening. The future is uncertain. The establishment doesn’t control the industry like it once did. The establishment’s decline is giving rise to a new breed of internet-natives, who are following a new playbook that the establishment cannot compete against.
Commerce, education or politics: Which industry am I talking about?
The answer: All the above. Yep, you read that right. The exact same thing is happening in all three industries.
The striking parallels between commerce, education, and politics isn’t a coincidence. In fact, it’s inevitable. In the past decade, the information environment has inverted from information scarcity to information abundance, and the effects are evident in every corner of society.
What the hell is going on?
In this essay, I’ll answer this question.
I’ll show how the shift from information scarcity to information abundance is transforming commerce, education, and politics. The structure of each industry was shaped by the information-scarce, Mass Media environment. First, we’ll focus on commerce. Education will be second. Then, we’ll zoom out for a short history of America since World War II. We’ll see how information scarcity creates authority and observe the effects of the internet on knowledge. Finally, we’ll return to politics and tie these threads together.
The Roadmap
Pillar #1: Commerce
The Rise of Mass Media
The Fall of Mass Media
Pillar #2: Higher Education
The Rise of Higher Education
The Fall of Higher Education
Shift #1: From Scarcity to Abundance
Shift #2: From One-Way to Two-Way
Britannica to Wikipedia
Pillar #3: Politics
State of the Union
The Collapse of the Overton Window
The Memes of Production
The Future of Politics
The Medium is the Message
What the Hell is Going On?
Pillar #1: Commerce
America’s biggest Consumer Packaged Goods (CPG) companies are losing market share. Across consumer goods industries, brand loyalty is dying. The percentage of affluent consumers in the top 5% of household income who can identify their favorite brand is in sharp decline (see Figure 1).
The reason is simple: brands are about trust and signaling. They’re a substitute for incomplete information. When information is scarce and asymmetric, consumers flock to trusted brands. But in many parts of the economy, when consumers have reviews at their fingertips, they no longer defer to brands when they make a purchasing decision.
To be sure, the internet has made some brands stronger, particularly in domains of incomplete information where people don’t know each other very well. The more an industry is about signaling, the more brand matters. That’s why brands matter so much in industries like fashion and beauty. Signaling brands are context-dependent. Signaling brands thrive in environments with high geographic and social mobility. When mobility is high, information asymmetry is the norm. As a result, we use heuristics such as brand associations to gauge strangers. Just consider the differences in behavior between big cities and small towns. Big cities are full of strangers, but small towns are brightened by hugs and handshakes all the way down. In small cities, where everybody already knows each other, the utility of signaling brands is diminished.
Figure 1. Percentage of affluent consumers in the top 5% of household income who can identify their favorite brand is in sharp decline. Source: L2
Before the internet, sellers usually had more information than customers. information was asymmetric. Writing in his 1970 Nobel Prize-winning paper, George Akerlof discussed the Market for Lemons. In it, he observed that the quality of goods in markets with asymmetric information decreases over time, leaving only low-quality products. Handicapped by information asymmetries, customers were unable to distinguish good cars from bad cars. Eager to turn a profit, sellers masked low-quality cars as high-quality ones. They exploited their information advantages and ripped off customers, causing the entire market to suffer. This created an unfortunate feedback loop. Customers became skeptical. The average quality of cars declined, which caused customers to lower their expectations. People stopped buying used cars. Sellers of quality used cars, even honest sellers, could no longer sell their cars. The quality of cars on the market degraded, until cheap and broken cars were all that remained.
The used car market was limited by information asymmetries, not a lack of demand. The detrimental effects of information asymmetries paved a path for major brands like CarMax and the “certified pre-owned” departments of multinational car brands, such as Mercedes-Benz. They reduced information asymmetries and built moats around their trusted brands.
How Commerce and Mass Media are Connected
Commerce and media are interdependent. You can’t understand commerce without understanding the media environment.
The union of advertisers and Mass Media shaped post-World War II commerce. Major media outlets, such as television networks and newspapers, had a monopoly on distribution to customers. Centralization in distribution mirrored the centralization in advertising agencies and media conglomerates. The four major advertising agency holding companies (Omnicom, WPP, Interpublic, and Publicis) were built for a Mass Media world with limited media outlets. These agencies lived at the heart of cultural influence. They influenced advertising, design, marketing, media buying, and public relations. Likewise, six global media conglomerates (Time Warner, Disney, NewsCorp, Vivendi Universal, Bertelsmann, and Viacom) controlled the production and distribution of content. Financed, in part, by relationships with the aforementioned advertising agencies, these powerful conglomerates cross-promoted their own films, magazines, books, and television series.
Skeptical and unaware of obscure brands, people with money to spend flocked to big brands with big-time name recognition. Habits formed. Once a person trusted a brand, they kept buying its products. From 1923-1983, in the top 25 CPG categories, 20 market leaders maintained #1 share the entire time. Spurred by steep barriers to entry for emerging competitors, advertising and shopping environments—which were defined by scarcity—ensured the continual success of America’s biggest brands.
Fueled by economies of scale, the big got bigger. In 1958, the average company in the S&P 500 had been there an average of 61 years. Only the biggest brands could afford television advertising and endure costly funnel inefficiencies. As Charlie Munger, Warren Buffett’s longtime business partner observed:
“In effect, if you didn’t have a big volume, you couldn’t use network TV advertising — which was the most effective technique. So when TV came in, the branded companies that were already big got a huge tailwind.”
With a near-monopoly on television advertising, America’s biggest brands sold average products for average people in average households. Here’s how Simon Cowell, the famous American Idol judge explained his gift for identifying musical talent:
“I have average tastes. If you looked in my collection of DVDs, you’d see Jaws and Star Wars. In the book library, you’d see John Grisham and Sidney Sheldon. And if you look in my fridge, it’s children’s food — chips, milkshakes, yogurt.”
Big brands lined the shelves of Wal-Mart and the aisles at Walgreens. Small brands with unique value propositions were impossible to find. Television equalized culture. The rich and poor consumed the same entertainment at the same time. In the 1950s, 70 percent of American television sets sometimes tuned into I Love Lucy. Millions of Americans were in sync. They watched the same shows at the same time.
Social cohesion, at the scale of major events like I Love Lucy and The Super Bowl, was impossible without Mass Media. Before television, so many people had never watched the exact same event at the exact same time. The Super Bowl is the biggest collective event left. It’s a national ritual. Every year, on the first Sunday of February, America stops to watch helmets clash on the field and celebrities perform at halftime. For most of the game, our attention is scattered between food, friends and the game. We care mostly about the chips and guacamole until the commercials, when all conversation stops and across America, 100 million sets of eyes focus on the television in front of them. At work the next day, as you wait for your coffee to brew, everybody talks about their favorite commercials. Television networks and advertisers grew on the same prosperous vine.
As a kid, back when I was no taller than Spongebob Squarepants, I read the sports section of the newspaper every morning. Growing up in San Francisco, I had four choices: The San Francisco Chronicle, The Oakland Tribune, The San Jose Mercury News, and The New York Times. Reading the newspaper was my favorite ritual. But now, my daily sports entertainment comes from internet bloggers who tweet in their underwear. Unless I’m on an airplane with no Wi-Fi and out of battery on my phone, I won’t read the newspaper. The internet is better on every dimension: cost, convenience, depth, speed, personalization. You name it. Location no longer limits my choices.
The Mass Media ecosystem worked in perfect balance: television networks were intertwined with the advertisers who supported them, the products they sold, and the ways consumers bought and sold products. Television. Cars. Newspapers. Beer. Radio. Deodorant. It’s an integrated system.
Mass market products were designed to reach the largest group of people. They served the broadest tastes. Procter & Gamble, which topped the list of America’s largest advertisers operated with a simple formula. As Ben Thompson wrote in Dollar Shave Club and the Disruption of Everything:
“P&G leveraged these resources in a simple formula that led to repeated success:
1. Spend significant resources on developing new products (more blades!) that can command a price premium.
2. Spend even more resources on advertising the new product (mostly on TV) to create consumer awareness and demand.
3. Spend yet more resources to ensure the new product is front-and-center in retail locations everywhere.”
For multiple decades, Procter & Gamble dominated consumer goods. You undoubtedly know their products, such as Charmin, Old-Spice, Vicks, Oral-B, Swiffer, Tide, and Mr. Clean. P&G grew its total addressable market with mass media advertising and distribution agreements with every major supermarket and pharmacy. They went into big box retailers, purchased finite shelf space, and expanded in-store real estate through brand extensions and favorable product placement. Gillette (owned by Procter & Gamble) raised prices, increased their margins, and sold “more blades for more money,” sometimes without improving the underlying product. Here’s Ben Thompson:
“That’s exactly what had happened with the Mach 3, Gillette’s previous top-of-the-line model: Gillette increased blade and razor revenue by nearly 50% with basically no change in underlying demand, easily making back the $750 million it cost to research and develop the razor, simply through its ability to charge a premium for new technology, create awareness and demand through advertising, and capture consumers through retail shelf dominance.”
Procter & Gamble’s success was locked-in and impossible to deny. That lock-in was made stronger by P&G’s long roster of brands, which gave the company massive scale efficiencies in logistics and manufacturing. The world’s largest advertiser basically doubled its revenue every decade from 1950 to 2010. Without the consent of Retail Buyers, products didn’t make it to the shelves. Propelled by strong relationships with those buyers and access to shelf space, a scarce resource in the pre-internet economy, Procter & Gamble ensured prime product placement in retail stores and commanded a price premium as a result.
As any savvy CPG executive can attest, the internet has accelerated the pace of change in the consumer goods industry. The traditional methods of content creation, marketing, and advertising no longer work.
The psychology of the internet looks nothing like the Super Bowl. The internet is hyper-fragmented. It’s an isolated, personalized, asynchronous, choose-your-own-adventure experience. Brands, which used to be mass-produced, are now micro-targeted. The internet has unlimited shelf space, so monopolizing brick and mortar shelves is no longer a defensible strategy. Enabled by low startup costs and just-in-time manufacturing, thousands of small internet-native “Micro Brands” are springing to life. Scott Belsky, the Chief Product Officer of Adobe’s Creative Cloud, calls this The Attack of the Micro Brands:
“This mass of micro brands with massively efficient marketing are, in aggregate, having a much bigger impact than anyone thinks. Using hyper-targeted marketing, just-in-time manufacturing, and social media, these brands find and engage their audience wherever they may be.”
Micro brands are on the rise. They’re attacking mascara, mattresses, and everything in between. They have low overhead costs, elegant design, and hyper-efficient customer acquisition strategies.
And yet, due to the fragmentation of the internet, they’re nearly invisible in the real world. Even if you’re one of millions of people looking at the same brand’s website, you’ll never know it. For that reason, we underestimate the potency of internet trends, such as the rise of micro brands. Their collective command over attention and consumer dollars is soaring up and to the right. Their advertising executives prefer efficient, micro-targeted, easy-to-measure advertisements over the entertaining, mass-appeal, hard-to-measure campaigns the world’s largest advertising agencies specialize in.
By creating unlimited shelf space and reducing information asymmetries, power in the internet age is shifting from suppliers to customers. The world is increasingly demand driven. Customers have more choices than ever before. They can buy anything, at any time. Through the internet, brands can serve a long-tail of unmet consumer needs, which weren’t served by big box retailers. Small direct-to-consumer brands are popping up left and right. Their products go beyond their utilitarian purposes and reflect the identities of people who buy them. From dairy-free yogurt, to anti-razor bump grooming products, to the assortment of milks (oat, almond, skim, soy, coconut, rice, hemp, plant, cashew, macadamia, hazelnut, pea, flax, peanut, walnut) so large that you need a rolodex to keep track of them all, the products themselves differentiate these upstart brands from incumbents.
These internet upstarts have real-world impact. Ten years ago, if you walked into your local corner store to look for ice cream, you saw familiar, mass market brands: Magnum, Breyers, and Häagen-Dazs. If the corner store was hip, they also had Ben & Jerry’s, which always felt like a special treat. But you rarely saw more than four options. Walk into the same store today. The shelves are a 180-degree contrast. You’ll find all kinds of ice cream: Halo-Top, Talenti, So Delicious, Ciao Bella, and Coconut Bliss. Some are vegan. Others are dairy-free. All of them appeal to a unique customer segment and wouldn’t exist without the internet.
Armed with an order of magnitude more information today than they had a decade ago, customers are informed and educated. With smartphones at their fingertips, shoppers can go online, research a car, read reviews, and arrive at a car dealership familiar with all the models, tradeoffs and associated costs.
After purchasing the product, customers can rate their experiences on platforms like Yelp, Amazon and TripAdvisor. One-time games have become iterated games. Since every customer can share positive and negative experiences on the internet, brands have an incentive to treat every customer with care and respect. Reputation is now public and quantified. The long term matters more than it used to. As reviews propagate and personalized recommendations pop up right in front of us, we defer less to brands as a proxy for quality. Armed with reviews and Google search, consumers can bypass salesmen and research products themselves. Mass Media advertising, the weapon of choice for America’s biggest companies, isn’t as effective as it once was.
Figure 3: Big brands are losing share of America’s GDP Pie. Source: L2.
Big brands are losing share of America’s GDP pie. Small brands are like the phoenix, rising out of their ashes. Birthed by the seeds of low startup costs, infinite digital shelf space, and hyper-targeted advertising, direct-to-consumer companies with strong brand identities and hyper-efficient ad targeting are unbundling big retail brands. Options for consumers have exploded. Earlier today, I walked into CVS and counted the number of available shampoo brands. 15 brands. 4 parent companies. As I write this sentence, I’m searching for shampoo on Amazon. Amazon sells more than 10,000 kinds of shampoo. The Everything Store has launched 66 new private label brands in the last 18 months.¹
Still supported by a cracking Mass Media ecosystem, big CPG brands are hanging on for dear life. Legacy advertisers, distribution channels, and the Mass Media once formed an impenetrable holy trinity. But now, that trinity rests on wobbly ground, and its parts will decompose into fossils of the Mass Media era.
The process of decay has already begun. Among the top 100 consumer-packaged good (CPG) brands, 90 percent experienced a decline in market share in 2015. In the past three years, over $17 billion in sales has evaporated from the 10 largest U.S. packaged-food companies. As the balance of power shifts from broadcast media to the internet, advertisements to reviews, and big brands to small ones, the post-World War II consumer brand landscape can sniff its final days.
To summarize: in the Mass Media age, standardized, brand-name companies, aimed at the broadest possible market, dominated the production, marketing, and distribution of products. For years they raised prices, grew revenues, and increased their advertising spend. But now, due to the internet, the Mass Media ecosystem weakens every day. With democratized manufacturing, unlimited shelf space, and easy-to-use advertising platforms, big mass-appeal brands are losing market share to a consortium of small, targeted, internet-native brands.
Pillar #2: Higher Education
The Rise of Higher Education
Like a fish in water, we’re unaware of the integration between our education system, the corporate structure, and our media environment.
Education flows down from the needs of employers. Companies outsource their recruiting efforts to universities, who gauge the quality of applicants on their behalf. Employers benefit, but students pay the price in time and debt. Accreditation is a signal of competence, so HR directors save time and money by restricting their applicant pool to graduates from top-tier universities. Ivy League graduates, for example, passed a quality bar which made them attractive to employers.
To ease the recruiting process, universities built intimate relationships with employers. They justified exorbitant tuition costs by funneling graduates to respected, well-paying companies, such as big banks and consulting firms. Universities invested in relationships with successful alumni and career development departments, so they could boast about the jobs their graduates accepted. Knowing this, aspiring students and their parents fought tooth and nail for coveted spots at Ivy League universities.
As a result, college acceptance is a brutal zero-sum competition, where an ever-expanding number of applicants fight for a limited number of university spots.
The system wasn’t always so crazy. Historically, there was a strong correlation between the reputation of the university and the quality of its education. Limited by the reach of their words, before the internet, top-tier professors could only teach hundreds of students at a time. Since professors couldn’t easily record or distribute their lectures, students had to witness them first-hand.
Through economies of scale, universities aggregated books and research papers. They bragged about the size of their libraries and purchased expensive JSTOR memberships for students. Knowledge and geography were inter-connected. Universities attracted like-minded students, professors and researchers. Since knowledge could only be accessed at top-tier universities, strong network effects emerged. Two universities, Harvard and Yale, produced 12 of America’s 44 presidents.
For decades, this system worked well for the people who attended college.
The system benefited students, professors, universities, and employers. (1) Students gained access to valuable knowledge and boosted their chance at career and personal success, (2) professors accelerated their careers through privileged access to university resources, and (3) universities built their brands, attracted recurring revenue streams, grew their endowments, and (4) tied their curriculums to the needs of cozy corporate partners.
Over time, though, the system bloated. Tuition rose faster than inflation. Students needed more and more education just to find a job, which created a chronic oversupply of PhDs. Even as the quality of a standard undergraduate education barely improved, the amount of education required for even the simplest of jobs increased. Entry-level workers, such as waiters and retail clerks, required a university degree. Adjusted for inflation, we’re spending more than twice as much per student, compared to the early 1970s. Median real wages for college graduates have flattened, as median real wages for high-school graduates have decreased.²
Previously, the success of universities depended on privileged access to information. But today, there’s more information on the smartphone in your pocket than in the university library. Before Google, when people wanted to know something, they either (1) trekked to the local library, where they searched through endless shelves of books and drawers of little cards, or (2) spoke to somebody who knew something they didn’t, such as a librarian or a college professor. Libraries were rare and expensive. They were mostly located in cities. People who didn’t have access to libraries or subject matter experts had limited access to information. Information is easier to access today, by an order of magnitude.
With oceans of knowledge at their fingertips, digital natives use the internet to educate themselves. They crawl physics pages on Wikipedia, fall down YouTube rabbit holes, and communicate with other enthusiasts on obscure Discord servers. One friend, a 19-year-old kid from a rural town in Western Ireland, taught himself to build a fusion reactor on the internet. He explored high vacuum equipment, high voltage electronics, neutron detection, and plasma physics. When he had questions, he didn’t meet experts in person. Instead he posted questions on fusor.net, an online forum for nuclear fusion reactor constructors. He relishes the independence of learning on the internet. When he needs money, he crowdsources it with online campaigns instead of relying on an institution.
As colleges lost their monopoly on information, college became less about learning and more about signaling. Whatever value they once provided is diminishing. Peter Thiel argues that college has become an expensive insurance policy for upper middle class parents who don’t want to see their children fall through the cracks of society.
Even as the cost of tuition increased, the value of university went unquestioned. Colleges bundled education and signaling. Students who thrived in boring classes signaled traits to employers, like conscientiousness, intelligence and conformity. Now, due to the proliferation of information on the internet and the rise of affordable and effective alternatives, the university will unbundle. As it does, people will question its value. Emerging forms of accreditation will reduce the value of college as a signaling tool, and students will be increasingly uneasy about the cost and time required to receive a diploma.
The Fall of Higher Education
Three trends will initiate the downfall of higher education: (1) the global rise in the number of college graduates, (2) the rise in education costs, and (3) new methods of educating and accrediting students. This downfall will be further hastened by the explosion of information, which students can access for free on the internet.
The cost of a university education grew linearly, as the number of global college graduates grew exponentially. As a result, college degrees aren’t as valuable as they once were. Higher spending has yielded no improvement in the quality of higher education since 1973. The absolute return of a college degree has decreased 10-15% since the late 1990s. Basic supply and demand can explain this phenomenon. Since college degree holders aren’t as scarce as they used to be, employers look for applicants with higher and higher levels of education. Bryan Caplan, an economics professor at George Mason University calls this credential inflation, where the level of education required to find a job increases.
Caplan offers the following thought experiment: “Would you rather have a Princeton diploma without a Princeton education, or a Princeton education without a Princeton diploma? If you pause to answer, you must think signaling is pretty important.” In pursuit of signaling value, students flocked to universities. To be sure, actual tuition hasn’t increased as much as posted tuition fees. But the effects are still dire. Over 44 million Americans collectively owe $1.5 trillion in student debt, a 457% increase since 2003.
That’s insane.
Paradoxically, as college degrees become commoditized, the cost of acquiring them continues to rise. Since 1991, tuition has increased by more than 300%, according to the US Department of Labor’s “tuition and school fees” component of the Consumer Price Index.
Tuition isn’t rising because professor pay has increased. Instruction costs accounted for only 28% of cost increases from 2000 to 2010. Faculty salaries have not risen proportionally to these tuition increases.
Colleges can stagnate and it doesn’t matter. The value of education can only be measured on a long, multi-decade time cycle. Even then, the success of alumni is a result of a multitude of factors, which are difficult to isolate and account for. Since there’s no way to measure the quality of an education, universities are gauged by superficial optics such as sticker price, acceptance rates, and questionable rankings systems.
As their monopoly on information disappeared, colleges justify their existence with increased amenities. Money that isn’t spent is re-allocated to other departments, so there’s no incentive to save. Expensive new initiatives present a problem: as long as money is available, it will be spent; as long as it is spent, total costs will increase. These incentives trickle down through the organization, causing costs to skyrocket.
We’re bankrupting our students. The percentage of student borrowers with $20,000 or more in student debt has doubled over the last decade. Half of those borrowers don’t begin paying off principal until they’re 35. Student debt is a full-blown national crisis.
Figure 4: College tuition and fees have increased by more than 300% since 1991. Source: Vox
Like mass media and mass commerce, the average university is on the brink of collapse. Its structure is a rotting legacy of the Industrial Age. For years, anybody who wanted to learn on their own lacked the means to do so. Now, anybody with an internet connection has access to information. Harvard and Stanford will be okay, but dark days are ahead for mid-tier universities.
Burdened by rising costs and unable to justify tuition prices, mid-tier universities are on the brink of bankruptcy. Clayton Christensen, who coined the term “disruption,” predicts 50% of the 4,000 colleges and universities in the United States will be bankrupt in the next 10 to 15 years. The challenges are most acute for mid-size liberal arts schools such as Concord University in West Virginia. Its freshman enrollment fell 19% in five years. It burned through $12 million in reserves, and now it can’t afford to tear down to empty dormitories.
Likewise, the US Department of Education predicts that in the coming years, closure rates of small colleges and universities will triple and mergers will double. Anecdotally, my friends who work in higher education say that universities are waking up to their own demise and pending bankruptcy. For example, the President of Hampshire College, a small liberal-arts school in Massachusetts says the under-endowed university is seeking a merger. Bruising financial and demographic realities threaten the university’s survival. Hampshire is at risk of closing in the next 18 months and may not enroll an incoming class in the fall.
Now that information is easy to access and new employer signaling mechanisms are emerging, exorbitant university costs are increasingly difficult to justify. The transition away from universities will be slow but new accreditation systems will be the final nail in the mid-tier university coffin.
Like multinational conglomerates, the information explosion has crushed university monopolies. Information has moved from a position of scarcity to abundance. As alternatives emerge, universities will lose their stranglehold on consumer dollars. Instead of following the well-worn path of university, students are supporting low-cost alternatives and proving their worth without college degrees. “Paying your dues” isn’t as necessary as it once was.
The dominance of universities mirrored the dominance of large corporations. Universities aggregated students, professors, scientists, and human resource departments. Operating in an environment of information scarcity, universities were accreditation machines. They increased funding, not by increasing their class sizes–they have to protect their precious acceptance rates after all–but by increasing tuition and growing their endowments. But now, many universities are in trouble. On the internet, the means of learning are free.
Many of my smartest young friends skipped college and found other ways to differentiate themselves—for free—in less than two years. They followed a simple three step process: First, they found an obscure topic or an emerging industry where lack of experience wasn’t an issue. Then, they researched it obsessively. Once they built a knowledge base, they advertised their skills and attracted opportunities by sharing knowledge on the internet.
As of now, there’s no viable mass-market alternative to college. Speaking from personal experience, I was nowhere near prepared to enter “the real world” after high school. I had no drive, no marketable skills, and didn’t know the first thing about balancing a checkbook. College was a safe place to grow up, learn social skills, and find my footing in an environment with limited consequences.
In a society ruled by parents who won’t let their children out of sight, where light bruises stir up a level of anxiety once reserved for the death of a loved one, college is a opportunity to escape the panopticon of mom and dad and make decisions for themselves. We live in a society with few, if any, coming-of-age rituals. The resiliency of college is the exception that proves the rule. For now. ³
Ten years from now, online lectures will be more entertaining and personalized than anything students can experience in-person. New, internet-native forms of education like Lambda School are emerging. Students can access information without universities and professors can scale their expertise on the internet. Spurred by the shift from information scarcity to information abundance, the structure that held the university system together rests on shaky ground. To be sure, entertaining online lectures aren’t enough to overthrow the university system. Accreditation is the final pillar holding the system together. Accreditation methods will form slowly, so the transition away from universities will be gradual.
To summarize: in the Mass Media age, universities had exclusive access to funding and information. They attracted top-tier professors, scientists, and students who couldn’t achieve their goals without university resources, which gave them massive pricing power and ensnared an entire generation in the shackles of student debt.. But on the internet, professors can teach more students and make more money online. For example, Jordan Peterson already makes more than $500,000 per year in donations. Mid-tier, liberal arts schools are most in trouble. In the next decade, triggered by the explosion of information, universities will lose market share to a collection of startup schools and online education platforms.
The rise and upcoming fall of commerce and universities frame the context for two big shifts, which account for the weirdness of contemporary society: (1) how information scarcity creates authority, and (2) the transition from one-way communication to two-way communication.
Two Big Shifts
Shift: #1: From Scarcity to Abundance — How Information Scarcity Created Authority
Growth in information, which has historically been (1) slow and additive and (2) only done by gatekeepers, is now (3) exponential, and (4) can be created and distributed by anyone.
As Martin Gurri wrote in Revolt of the Public: “More information was generated in 2001 than in all the previous existence of our species on earth. In fact, 2001 doubled the previous total. And 2002 doubled the amount present in 2001, adding around 23 “exabytes” of new information—roughly the equivalent of 140,000 Library of Congress collections.”
Figure 5: More information was generated in 2001 than in all the previous existence of our species on earth. Source: Revolt of the Public
According to Gurri, modern information technology enables the public, composed of amateurs, to break the power hierarchies of the industrial age. As the floodgates of information open, the public, organized on social media networks, is clashing with hierarchical, Industrial-era governments and institutions. To illustrate the point, Gurri cites political uprisings such as the Arab Spring in Egypt and the Occupy Movement in the United States.
In their attempt to maintain power, the incumbents have forced their old top-down framework onto our new, networked society. More information is published in a week than you can read in a lifetime. The explosion of information is leading to a clash between two opposing modes of organizing life: one hierarchical, industrial, and top-down; the other, networked, egalitarian, and bottom-up.
Authority and information are two sides of the same coin. They come from the same source: information scarcity. As access to information increases, the number of authorities around a given piece of information decreases. It’s like a see-saw. As one goes up, the other goes down.
When credentials carry predictable weight, students undergo torturous processes of testing and accreditation. Since people defer to credentialed workers in complex domains where information is scarce, the sleepless nights are worth it. Students trade years of pain and toil for a lifetime of respect and expertise. In London, for example, taxi drivers spent years learning London’s landmarks, businesses, and its labyrinth of 25,000 streets. The New York Times called it “the most difficult test in the world.” GPS and Google Maps obsoleted the need for accredited drivers. Easy access to Google Maps expanded the supply of London cars-for-hire by an order of magnitude. ⁴
In complex domains or when information is scarce, people defer to credentialed workers, such as doctors with medical school degrees, and trained lawyers who can interpret jargon and technical language on their behalf. Once they graduate or pass the test, it’s all downhill. Once the monopoly on information is lost, so too is blind trust.
Due to the information explosion, society’s faith in institutions is corroding.
The grand hierarchies of the Industrial Age are in decline. Large institutions used to be like a Swiss army knife, equipped with tools for any scenario. They tackled problems forcefully and shouldered the responsibility of society’s greatest challenges. High-achieving college graduates dreamed of working for big companies such as AT&T, Ford, and Dow Chemical. Instead of leading a small business, people felt that serving as a cog in a large, industrial machine offered a higher point of leverage.
“The overwhelming feeling was that a big company was a best place to go work, because it was the place where the opportunity in front of you was highest, and where you could personally have the most positive impact on the world… ‘Small business is small because of nepotism and the roll-top desk outlook, the argument goes; big business, by contrast, has borrowed the tools of science and made them pay off. It has its great laboratories, its market-research departments, and the time and patience to use them. The odds, then, favor the man who joins big business.”
The organizational mindset fueled American industry. Fueled by unprecedented institutional efficiency, American business shipped products at unimaginable scale. But now, the calculus of careers has tilted. Entrepreneurship is cool. Rather than joining an institution, the young people I speak with dream of starting their own company. Founding a company is the ultimate status symbol. Graduating students dream of working for Silicon Valley startups, and eventually, starting their own business. Nobody interviews at a company thinking they’ll work there for life.
The tide has shifted and people don’t trust authority like they used to. The same institutions that once commanded so much American praise have lost their edge and versatility. They look less like a Swiss army knife and more like your grandma’s dull, rusty, 19th-century butter knife. They’re slow and stodgy, bloated and inefficient.
Political risk is growing in parallel. The rumble of instability is louder and louder each day. Threats of revolution are visible around the world, at a faster and faster rate.
Martin Gurri, author of the aforementioned Revolt of the Public, has a simple thesis: “The information technologies of the twenty-first century have enabled the public, composed of amateurs, people from nowhere, to break the power of the political hierarchies of the industrial age… Industrial hierarchies are no longer able to govern successfully in a world swept to the horizon by a tsunami of information.” Institutions and governments have lost their iron grip over truth and information. Trust in government peaked during JFK’s presidency when 70 to 80 percent of Americans trusted the President. But now, we find the opposite.
Americans don’t trust the government like they once did. By the start of Barack Obama’s second term in 2013, trust in government fell to 19 percent. Bureaucrats and institutions, which were once propped up by an age defined by broadcasting, are threatened by two-way discussions on the internet, where everybody can comment.
Shift #2: From One-Way to Two-Way
The Broadcast era was shaped by high barriers to entry, which centralized the entire media industry. At the peak of the Broadcast Era in the 1960s, fewer than 25 companies monopolized the information cables of radio, television, books, magazines, and music.
There were four television networks, five book publishing houses, five record companies, and seven motion picture studios that controlled most of what America consumed. Powerful and authoritative, these media conglomerates shaped the hearts and minds of millions of Americans. They shaped narratives and controlled ideologies. Information flowed in one direction, from producer to consumer.
No individual illustrates the media’s all-encompassing influence better than Walter Cronkite. “The Most Trusted Man in America” served as an anchorman for the CBS Evening News for 19 years. Cronkite’s nickname was rooted in fact. According to The Quayle Poll, a survey which measured trust in public figures, Cronkite sat at the top of the list and was the only newsman to appear on it. Everybody else on the list of trusted people was a politician. Yes, you read that right. Times have changed.
Image 6. Walter Cronkite: The Most Trusted Man in America. Source
Sitting at the nexus of American television, Cronkite covered every NASA space shot, from the early Mercury launches, to the Apollo 8’s jaw-dropping, eye-watering orbit around the dark side of the Moon; he covered every major national event from the elation of America’s bicentennial celebration to the despair of the Kennedy assassination. When Cronkite spoke, America listened. In 1968, Cronkite traveled to Southeast Asia, where he barely escaped from Saigon alive, to interview generals and G.Is, and see the Vietnam War with his own eyes.
In 1965, Americans consented to the Vietnam War. An October 1965 poll showed that 64 percent of Americans approved of the involvement in Vietnam. Spurred by Cronkite, the tenor of American opinions reversed. And by January 1969, 52 percent thought the Vietnam War was a mistake.
How did American opinions change so fast?
In his 1968 “Report from Vietnam,” a CBS news special, Cronkite didn’t just report the facts. With words that would alter the course of a nation, he criticized the war and described it as a stalemate.
Image 7: President Lyndon Johnson, watching live at the White House. Source
Back on the American mainland, chomping at his nails with nervous trepidation, President Lyndon B. Johnson watched Cronkite’s broadcast.
His hair greying by the second, the President stooped towards the television, as his back slouched like the fallen soldiers before his eyes. LBJ sensed a shifting tide. Heart pumping, legs bouncing, eyes glued to Cronkite’s live report, President Johnson said to his press secretary: “If I’ve lost Cronkite, I’ve lost Middle America.” Everything changed. One man. One night. One report. In a centralized media environment, that’s all it took to sway American consciousness and alter the course of an international war.
In typical fashion, Walter Cronkite concluded his CBS Evening News Broadcasts with his famous closing words: “And that’s the way it is.” Speaking with the authority of God, Cronkite’s words laid the ground-truth narrative from which all other discussion followed. A little more than a month after Cronkite’s broadcast, on Sunday, March 31st, Johnson announced he would not seek another term as President.
What does “The Cronkite Moment” say about politics in the age of broadcasting?
When information sources were limited, we traded truth for coherence.
Trigger warning: the media was never truthful. There, I said it. To be fair, the media didn’t actively deceive the public either. Rather, a small number of editors and journalists had outsized influence over public opinion, and naturally they had blind spots. Their errors of omission included Kennedy’s affairs, Johnson’s corruption, and Reagan’s dementia. News editors were like high priests, standing in front of an obedient society, perched upon a pulpit, made strong by a direct line to millions of Americans.
As the three letter outlets waved their batons, the masses responded like sheep. In pursuit of social cohesion, the range of opinions were kept artificially narrow. Even when media outlets disagreed with each other, they operated within an implicit set of assumptions and a narrow range of acceptable opinions. Media moguls had more than money; they had power. Absolute power. Even when inaccuracies were reported, consumers couldn’t respond at scale.
Capitalizing on their power, mistakes were silenced by the authority figures who made them. People with a different perspective had no means to distribute their rebuttal or share their point-of-view. For most people, the maximum level of participation available to consumers was what channel to watch or what newspaper to read. Personal opinions stayed personal. Normal people did not have the means to spread their ideas or lead large-scale social movements. A select few were more ambitious. Some wrote letters to the editor. Others told their friends. When they did, the spread of their rebuttals were limited to face-to-face conversations.
But the effectiveness of both responses was limited by reach. An editor had to approve every published response. Even when they were accepted, responses hid in the back of the newspaper, behind hundreds of stories which were determined by media titans and their editors. Most people focus on media bias. However, the media’s real power comes not from swaying opinions about existing stories, but from deciding to report something at all.
For decades, editors left thousands of important stories off radio, newspapers, and televisions. Without awareness of an issue, people are uninformed because they don’t even know an issue exists. But on the internet, mistakes are made out in the open, in public, where everybody can see them. Transgressions are captured, shared, and amplified by the force of virality.
During the 20th century, as the world became more complex, information flows simplified.
Like a coxswain yelling to his team of obedient rowers, leaders controlled the dissemination of information and determined the movement of the entire group. Even as global population skyrocketed from 1.6 billion in 1900 to 6 billion in 2000, media driven cohesion kept the group together. Millions of people moved in near-magical synchronicity. Stroke! Stroke! Stroke!
Even if it was distorted, the masses were united by a shared reality. As long as people rowed at the same speed, society thrived. This strategy of simplifying information flows and ignoring the many shades of complexity with black and white interpretations of the news was extremely successful. So successful, in fact, that in the 20th century, America led the greatest wealth creation boom in human history. We replaced horses with cars, steam with oil, shacks with skyscrapers, trails with highways, and candles with electricity. For the most part, it was a massive success.
Now, we’re moving from a narrative oligopoly to a narrative democracy.
Narrative control is no longer monopolized. The arbiters of truth have fragmented. Millions of people, historically constrained by the reach and spread of their ideas, can theoretically reach anybody in the world with an internet connection. The truth has always existed, but until recently, we haven’t had the means to uncover and distribute it.
Britannica to Wikipedia
The shifts we’ve outlined so far can be seen in the changing of the guard from Encyclopedia Britannica to Wikipedia.
Even as Wikipedia gained traction, only a small percentage of people thought Wikipedia stood a chance against Encyclopedia Britannica. These skeptics were informed by precedent. Since the Egyptian Library of Alexandria , knowledge had been monopolized by institutions and certified by authoritative people who separated fact from fiction.
Britannica encyclopedias lined the walls of school libraries and American homes.
Its editors separated the signal from the noise, certainty from uncertainty, and knowledge from heresy. The public had no choice but to embrace Britannica’s role as an arbiter of truth. Most people didn’t even question its legitimacy. In all things politics, education, and media, people deferred to the trusted word of authorities.
Britannica was costly to use. It was heavy and hard to search through. There were many volumes, and owning them all was prohibitively expensive. Carrying a Britannica dictionary felt like lifting weights at the gym. If you could carry all of them, you deserved a gold medal at the Olympics. The information inside the covers was expensive to transport, so the encyclopedias cost a pretty penny. Due to its ubiquitous brand recognition, Britannica had the final word. Everybody trusted it.
Wikipedia is the opposite.
It’s free, not expensive; digital, not analog; crowd-sourced, not editor-driven; continually updated, not fixed forever. Britannica is organized by subjects, Wikipedia by hyperlinks. Britannica is organized in alphabetical order. Wikipedia is a web of references with no beginning or end. Wikipedia is made by the people, for the people. It’s a collective memory machine where knowledge is accessible to everybody with a smartphone. All of Wikipedia — yes, every single article — can be saved for offline access, right on your smartphone.
For years, factual disputes were settled by the Britannica in the living room. Now, they’re settled by instant Google searches, most of which lead to Wikipedia. Open the Britannica in your grandparents’ living room and you’ll find outdated facts and figures. Wikipedia, though, is always evolving. The shift from Britannica to Wikipedia is indicative of our changing information environment, and as the architecture of information shifts, so will the structure of society.
Most visibly, this shift is taking place in the political sphere.
Pillar #3: Politics
State of the Union
America, one of the most prosperous countries in the world, is drowning in skepticism and uncertainty. Trust in institutions is plummeting. Less than half of Americans trust the media. As Uri Friedman wrote in The Atlantic:
“Edelman [a communications marketing firm], which for 18 years has been asking people around the world about their level of trust in various institutions, has never before recorded such steep drops in trust in the United States… This is the first time that a massive drop in trust has not been linked to a pressing economic issue or catastrophe…
This is a global, not an American issue… And it’s undermining confidence in all the other institutions because if you don’t have an agreed set of facts, then it’s really hard to judge whether the prime minister is good or bad, or a company is good or bad.”
The daunting statistics don’t end there. People are anxious, angry, distrustful, and outraged. American adults report being 39% more anxious than a year ago. 91 percent of respondents in a recent Quinnipiac University poll said the “acrimony in politics” was a serious problem. As one author wrote: “most Americans are angry, seething, or filled with rage.”
Why is this happening?
The Collapse of the Overton Window
In political science, the “Overton Window” represents the range of acceptable opinions in society.
Rather than controlling speech itself, people can control speech by determining the limits of acceptable conversation. As Noam Chomsky, the father of modern linguistics said: “The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum….”
Before cable, the limits of acceptable speech were enforced by political parties, who, due to their incentives for mass appeal, encouraged political centrism. With the stroke of a pen, small groups set narratives for the masses. Every town has one or two newspapers and three TV stations — all centrist, pro-business, and respectful of authority. Newspapers and television stations monopolized the distribution of information within their local territory. Through their power, they built social cohesion by eliminating diverse opinion and creating a shared intellectual ground for citizens.
As media theorist Andrey Miroshnichenko wrote in Human as Media:
“People do not make personal judgments on every issue, but are satisfied by socially established points of view. And journalism is the most effective way of developing and spreading general points of view… As a side effect, cohesion eliminates opinions that are too different. It acts as a kind of universal averaging. The media of mass information are the media of mass incubation, which grow identical pictures of the world in people’s heads.”
Political parties depended on the media to spread their ideas. Through favors and relationships, political parties won elections for their politicians. Similar to media, commerce, and education, the status quo stayed the same. Like lions in the wild, wealthy and connected American families thrived in the Mass Media environment. Like in commerce and education, political outcomes perpetuated the status quo. Money and connections with the media swayed elections as much as the voters themselves.
Political parties are intertwined with the mass media. Consider this: had Hillary Clinton won the 2016 election — and she almost did — America’s presidential lineage would have looked like this: Bush, Clinton, Bush, Obama, Clinton. Without help from the media, political candidates couldn’t reach voters at scale, in a cost-effective manner.
Political parties are bigger than the people who work for them. They are a set of relationships and a well of tactical knowledge. They consist of partisan media members, advertisers, donors, associations, interest groups, consultants, and of course, politicians. Political parties built intimate relationships with donors to fund their advertising efforts. Local organizations, such as churches and labor unions lead get-out-the-vote efforts.
“Parties are not just politicians, but coalitions of actors who care intensely about certain policy outcomes. These actors work together to get politicians elected who will serve their interests; voter interests are a means, not an ends. And… such parties succeed because they control all of the apparatus necessary to win elections.”
Voter interests were a means, not an end. In exchange for voter support, political parties ensured the election of their politicians by building relationships with editors, journalists, and media executives.
Now, that’s changing.
The media’s monopoly saw its first cracks with the rise of cable, and now, due to the internet, the Mass Media environment is going to crumble. The internet — where everyone can find, select, edit, and distribute content — has already left its mark. The Overton Window has been shattered. The media is no longer a barrier against diverse thought and opinion. Extreme opinions, which were once squashed by the Mass Media environment, can survive on the internet, where a viral message can spread to every corner of the globe.
The Memes of Production
Ordinary individuals have seized the memes of production.
The internet obsoleted the 20th-century political configuration. Political parties can no longer monopolize political messaging. Through Facebook, Twitter and other social media platforms, hundreds of fragmented organizations and thousands of individuals can persuade the electorate. Instead of relying on political parties, politicians are bypassing the mass media and connecting with voters directly on social media. On Facebook, anybody can reach the 150 million American voters who are registered on the platform, as long as they have the money to do so.
They use the internet to garner support, raise money, and drive get-out-the-vote efforts. Ben Thompson outlined three shifts: “(1) Previously information was gated by newspapers and TV stations with geographic monopolies; this began to break down with cable and was completely swept away by the web, (2) the Internet made it possible to connect directly with voters to share information, collect money, and drive get-out-the-vote (GOTV) efforts, and (3) all of those voters are reachable via just a handful of platforms, especially Facebook.”
As a result, the political parties are now handicapped by precedent and convention. Since they no longer control the means of information dissemination, political parties can no longer silence fringe issues or unorthodox candidates. In response, the political structure will shift away from the status quo. Due to the changing structure of the media, it’s inevitable. If I had to bet, I think America will continue as a two-party state due to the structure of the electoral system. Beyond that, all I know is this: in response to the new media environment, political parties will have to adopt a new set of roles and responsibilities.
“Politics and communication are nearly synonymous; all politics, after all, is nothing more and nothing less than communication applied in the service of power. Only by understanding the relative access to and control over information and communications technology, which has grown ever more complex over the centuries, can we understand the ebb and flow of politics, of culture, and of the human condition itself.”
As experts of persuasion and communication, winning politicians connect with voters through the savvy use of emerging communications platforms.
Media business models follow the attention, but do so with a lag.⁵ Media-savvy politicians arbitrage attention. When they out-innovate their competition, they are rewarded with cheap reach and a lack of competition. As the information environment transforms, we should expect tomorrow’s politicians to follow the same strategy. During the 20th century, “the people” were an ambiguous, lifeless mass. They couldn’t organize themselves, so organization came down from the commands of people who controlled the media. Nothing else was possible; deference to authority was the structural destiny of the Mass Media age. A multitude of forces are converging to transform the political environment. Distrustful of politicians and their parties, voters want politicians born outside the traditional political establishment.
As power shifts from a small mass of powerful constituents to a large mass of individual voters, politicians serve the voters directly instead of the needs of their political parties, where voters were just a means to an end. As the balance of power shifts away from political party affiliates to communication maestros, donors can no longer dictate political outcomes.
Every new medium of communication produces a chain of revolutionary consequences at every level of politics. Like a mountain range long in the distance, despite the hazy details of a future difficult to interpret, we can see the general outlines. The influencers of today are the politicians of tomorrow. Candidates with reach have organic built-in distribution, access to owned data and organic customer insights, and lower get-out-the-vote costs. Media savviness will be an essential skill for political success.
How people look and speak will be crucial to their success, and I wouldn’t be surprised if the politicians of tomorrow look more like celebrities than traditional politicians.
“The political candidate who understands TV–whatever his party, goals or beliefs–can gain power unknown power in history… TV is revolutionizing every political system in the Western world. For one thing, it’s creating a totally new type of national leader, a man who is much more of a tribal chieftain than a politician.”
Abraham Lincoln, who wrote with ravishing prose, thrived in the age of lengthy political debates, which were the media sensation of 1858. As television took hold, Kennedy outshined Nixon with a youth and charisma that lit up televisions nationwide during the 1960 presidential debates. A president like William Taft, who was 340 pounds, would never be elected in an age where what is seen is as important as what is said.
Kanye or Kim Kardashian have a better chance of becoming president than the average, down-the-middle senator. Due to their reach and influence, both of them can already influence policy decisions and sway the American electorate, and they’re not burdened by a track record of senate votes. Moving forward, the most successful politicians will bypass the media and connect with the people directly. This new media environment gives non-traditional candidates from outside the traditional political system an advantage. As Naval Ravikant wrote: “Social media allows the masses to bypass the Mass Media, gatekeeper of the elites. Anti-establishment candidates are the future.”
The Future of Politics
Instead of relying on political parties for reach and fundraising, politicians reach voters with entertainment and emotional, easy-to-understand talking points. Rather than appealing to the parties, the most successful politicians will bypass the media and establish a direct connection with voters.
The 2016 Presidential Election was our waking up moment.
Trump has exposed the media’s weaknesses. As an observer, I was struck by the disconnect between what the media reported and the feelings of Americans on the ground. The media played one game. Trump played another. Trump’s campaign was loud, colorful and aggressive. Like a circus, eyes were glued to the show. Donald Trump invested little in traditional advertising, de-legitimized major media outlets, and connected with voters directly. Even as he invested less in advertising than Clinton or his Republican opponents, he dominated the media coverage and received unprecedented levels of attention. His apparent shortcomings helped, not hurt, his candidacy. Attacks benefited his campaign.
The media was caught in a Catch-22: cover Trump and he’ll win the election; ignore him and you’ll lose viewers and revenue. Media businesses thrived during the election. The rate of growth for New York Times newspaper subscriptions increased ten-fold over the previous year. Cable news viewership exploded during the election, which boosted ad revenue.
As Campbell Brown wrote for Politico during the election:
“Trump doesn’t force the networks to show his rallies live rather than [doing] real reporting. Nor does he force anyone to accept his phone calls rather than demand that he do a face-to-face interview that would be a greater risk for him. TV news has largely given Trump editorial control. It is driven by a hunger for ratings… Trump’s candidacy is largely a creation of a TV media that wants him, or needs him, to be the central character in this year’s political drama… Trump arrived on the scene as a kind of manna from hell.”
On the surface, Trump and television networks engaged in a vicious shouting match. In reality, both benefited from show and scandal. Trump received three times more TV exposure than Ted Cruz and John Kasich combined. According to the New York Times, by March 2016, six months before the election date, Trump had received more than $2 billion worth of free earned media. Nobody has the advertising budget to compete with a figure that high. As television networks were drowning, Trump arrived with a floating, cash-filled raft.
They aired Trump’s speeches live and uninterrupted, as his opponents received nothing more than soundbites. Trump arrived just as the networks yelled “Mayday, Mayday.” The more they covered Trump, the more they danced to the music of check deposits. CBS president Leslie Moonves said: “It may not be good for America, but it’s damn good for CBS.” Or in the words of one Washington-based reporter: “‘Holy shit, Trump’s the best thing that’s ever happened to our business!’”
In short, as the amount of information exploded, the media — with business models built for an environment of information scarcity — engaged in a Faustian Bargain. Naval Ravikant said it best: “The Internet commoditized the distribution of facts. The ‘news’ media responded by pivoting wholesale into opinions and entertainment.”
To be sure, I don’t want to ascribe too much weight to Trump’s election. I’m conscious of the human tendency to ignore probabilities in hindsight and wrap a narrative around every event, with a bias towards recent ones. With that said, I am confident of this: President Trump would not have won under the old Mass Media laws of media and politics. Trump’s win was made possible by the shift from information scarcity to information abundance. People are overwhelmed by the volume of information and contradictions between media outlets.
Everybody’s competing for attention. A president like Trump, who’s as divisive as he is entertaining, is the inevitable result. Instead of appealing to political parties, Trump spoke the language of the American electorate. He acknowledged their fears and understood their desires. He was loudest on Twitter, but dominated Facebook. Distrustful of career politicians, voters supported Trump’s ability to “tell it like it is.”
Image 8. Source: The Most Important Voting Blocs Behind the Republican Candidates, NYTimes
The irrefutable impact of information abundance is evident around the world. Tension began to boil after the 2008 financial crisis. Enabled by social media, political activism bubbled up. People rebelled against established hierarchies and questioned authorities. As Martin Gurri wrote: “Uncertainty is an acid, corrosive to authority. Once the monopoly on information is lost, so too is our trust. Every presidential statement, every CIA assessment, every investigative report by a great newspaper, suddenly acquired an arbitrary aspect, and seemed grounded in moral predilection rather than intellectual rigor.”
In the television environment, the public had few structural options. They couldn’t act. But on the internet, the public no longer marches to the sole, concordant beat of Mass Media. Instead, they participate, creating a cacophony of opinions.
People who scapegoat Jack Dorsey and Mark Zuckerberg miss a fundamental truth. Twitter didn’t happen to politics. Facebook didn’t happen to politics. The internet happened to politics. The shifts are structural and until we understand that, we can’t have an intelligent conversation about the state of the world. The common narratives, which are exaggerated by the media’s incentive to sensationalize the news, blind us to the real problems that plague society.
“The current elite class, having lost its monopoly over information, has been stripped, probably forever, of the authorizing magic of legitimacy… That is the current predicament. Every step forward must start there.”
Fake news is a red herring. The average US citizen has more ways to be informed than they did 30 years ago. Although fake news—fabricated and verifiable false reporting—was a phenomenon during the election, it had an insignificant effect on the media ecosystem of the presidential election.” According to Harvard’s Berkman Klein Center for Internet & Society, fake news didn’t influence the election outcome. Or as one Twitter user wrote: “If the news is fake, imagine history.” Fake news isn’t the problem. Reality is.
Information overload has pernicious side effects. According to Tyler Cowen, too much information can lead to a cynical population that expects little from its leaders:
“Today’s elite no longer have the cultural shield that once made it harder for outsiders to take a crack at them… Probably the single biggest change in American life has been a dramatic decline in the cost and inconvenience of getting information… An informed populace, however, can also be a cynical populace, and a cynical populace is willing to tolerate or maybe even support cynical leaders. The world might be better off with more of that naive moonshot optimism of the 1960s.”
Groups that were once passive and neutered by the media environment, used the internet to gather around shared interests and beliefs. In America, the Tea Party rose on the right and the Occupy Wall Street protests came from the left. Both of them fought against “the system.” By the fall of 2016, the public’s trust in the news had fallen to 19 percent — an all-time low. In another poll, only 9 percent of Americans said they liked Congress, suggesting a lower approval rating than cockroaches, head lice, or traffic jams. The failures of leaders and institutions are compounded by an alienated and unforgiving public. The parties are unbundling into dozens of passionate war-bands, united by social or political causes.
Protests sprung up around the world. Many of them leveraged the power of images and video, instead of text. In Tunisia, a street vendor in the provincial town of Sidi Bouzid walked into a public square and burned himself to death in front of a camera. In Egypt, Spain, and Israel, young, middle-class, and university-educated people protested and led mass movements.
In Brazil, leaders of the Free Brazil Movement, a conservative Libertarian movement, are using YouTube, WhatsApp, and Facebook to reach voters. Inspired by Breitbart’s actions in the United States, leaders of the Brazilliant movement imagine a future where every elected candidate has a YouTube channel. The party was on the front page of YouTube every day in the month leading up to the recent Brazilian election. Social media savvy is an effective way to attract votes. In the words of one party member: “I guarantee YouTubers in Brazil are more influential than politicians.”
Truth will become a collective endeavor. Right now, our collective truth making systems are in a nascent stage. Like a toddler, they’re in complete disarray. As a result, we don’t know who to trust or how to discover truth. We need new ways to verify truth, certify intelligence, and organize society. When producing and distributing information was expensive, only the best content was published. On the internet, where everybody has a megaphone, content is filtered not before publication, but at distribution. It’s a self-governing system, where attention-grabbing information spreads and dull information rots inside the internet’s dark and dusky crannies.
The internet will transform society in its own image. The pen is racing across the page and the ink is still wet.
To summarize: in the Mass Media age, big political parties succeeded by integrating with Mass Media, which maintained a narrow Overton Window. Establishment candidates with establishment policies performed best. The internet is transforming politics. It has shattered the Overton Window, de-legitimized authorities, loosened the grip of political parties over electoral outcomes, and opened a platform for media-savvy politicians to bypass the Mass Media and reach voters directly. When those voters get angry, they riot, rebel, and protest. In turn, the internet enables political revolutions and perpetuates the success of celebrity, anti-establishment politicians.
The Medium is the Message
The shape of the media environment determines the structure of society. The environment that new technologies such as the internet create is more important than anything it is used to transmit. Every major communications breakthrough re-shapes our environment, re-structures society, and re-wires human consciousness.
Society changed when people shifted from horses to cars. People moved out of cities and into the suburbs. Shopping malls, fast food chains, expressways, and drive-in restaurants emerged as well.
Even if its effects are subliminal, communications technologies are no different. They affect the social, economic, political, and religious patterns by which a society operates. For example, the alphabet led to the emergence of nationalism, individualism, mathematics, industrialization, mass production, the Reformation and the Renaissance.
Marshall McLuhan is the father of media studies. His books are a beginner’s guide to the internet age. He’s famous for a simple observation: the medium is the message, which means there is more to learn from the effects of a medium (radio, television, the internet, etc.) than the messages distributed via that medium. For example, rather than studying a radio show, we should study the effects of radio on society. As McLuhan observed:
“All media work us over completely. They are so pervasive in their personal, political, economic, aesthetic, psychological, moral, ethical, and social consequences that they leave no part of us untouched, unaffected, unaltered. The medium is the message. Any understanding of social and cultural change is impossible without knowledge of the way media work as environments… But environments are invisible. Their ground-rules, pervasive structure, and overall patterns elude easy perception.”
Like fish in water, we’re blind to how the technological environment shapes our behavior. The invisible environment we inhabit falls beneath the threshold of perception. Everything we do and think is shaped by the technologies we build and implement. When we alter the flow of information through society, we should expect radical transformations in commerce, education, and politics. Right now, these transformations are contributing to anger and anxiety, especially in politics.
By understanding information flows, we gain a measure of control over them. Understanding how shifts in information flow impact society is the first step towards building a better world, so we can make technology work for us, not against us.
What the Hell is Going On?
“The future is in disorder. A door like this has cracked open five or six times since we got up on our hind legs. It is the best possible time to be alive, when almost everything you thought you knew is wrong.” — Tom Stoppard
The same shift from information scarcity to information abundance is reshaping commerce, education, and politics.
On a quick glance, the evolution of these sectors appears to have nothing in common. Upon closer inspection, we find shocking similarities. To recap: The shape of information flow determines the structure of society. After World War II, the world was defined by Mass Media. Large institutions, such as corporations, universities and political parties set the agenda for society. For the most part, life in America improved.
In the 1970s, American attitudes began to shift. Even as institutions bloated, their dominance and authority were propped up by information asymmetries, centralized media control, and the uni-directional flows of information through Mass Media. By changing the balance of informational influence, the internet inverts the Mass Media paradigm.
“A generation ago, the public could exist only as a passive audience. Information was dispensed on the industrial model: top-down and one-to-many. That was the great age of the daily newspaper and famous anchormen on the model of Walter Cronkite…. People from nowhere, free of institutional entanglements, pushed the elites out of the strategic heights of the information sphere. Almost immediately, great institutions in every domain of human activity began to bleed authority—a process that, as we have seen, is now approaching the terminal stage for many of them.”
Big institutions used to have unquestioned control over the narrative. Their dominance once seemed eternal. But now, they’re losing their monopoly over the dissemination of ideas.
The explosion of information has undermined and obsoleted the 20th-century organizational model. Big brands are losing market share. Big universities are going bankrupt. Big political parties are splintering and losing their control over the political narrative. In their wake, small businesses who connect with audiences and serve the unique needs of consumers are thriving; digitally-native universities who can educate, entertain, accredit, and find work for students will blossom; likewise, politicians who can bypass the media and connect with voters directly are commanding attention, influencing policy and stepping into office.
Narratives, which once imbued gatekeepers with authority and prestige, are now instantly fact-checked by a skeptical public. Less than a generation ago, when the production and distribution of information was prohibitively expensive, the public had limited access to information.
We’re whirling in an information vortex. Dizzy and disillusioned, our compass steers us in the wrong direction. Magnetic north points towards the best practices of the industrial age, but when we follow them we veer off course. The magnetic field has reversed. We’ve entered a digital, two-way, information-rich world where millions of people can produce and distribute content at scale. We need to recalibrate our collective compass.
The media environment is like a crystal ball. By observing it, we can predict the future. Commerce will become quirkier, education will be overhauled, and politicians will increasingly look like anti-establishment celebrities. Industrial, Mass Media structures are obsolete and unfit for our new environment. Just as we cannot pick up a palm tree in Los Angeles and expect it to grow on the North Pole, systems from the Mass Media Age will not work in the Internet Age.
Unaware of our contemporary environment, we’ve resorted to anger, anxiety, and rage. From commerce, to education, to politics, rather than running away from these technologies, we should run towards them. Until we understand and adapt to our digital environment, we will not be able to reap its fruits.
Hey! By now, you probably have thoughts on the ideas in this essay. I’d love to hear them. I want to hear your thoughts, criticisms, and responses. What came to mind as you read this essay? What surprised you? Anything you disagree with? Send me an email or a direct message on Twitter. When you do, please don’t nitpick. Constructive feedback will lead to a more productive dialogue that’ll be better for both of us.
Acknowledgments
Essays like this are a team effort. This essay was inspired by a frustrating conversation at Thanksgiving dinner. They say not to talk about politics, and guess what… we talked about politics. However, the disagreement was productive. It sent me on a long journey to dig deeper and find my own answers.
I’d also like to thank Nik Sharma, Drew Austin, and Adil Majid for the conversations that led to this post. Each of them contributed unique insights that I could not have arrived at on my own.
Footnotes
¹ The Cambrian Explosion of new brands is increasing competition and fueling innovation. Instead of funneling cash towards advertising (in 2014, Procter & Gamble spent $10.1 billion on advertising) emerging brands are funneling funds towards research and development. The top 200 advertisers account for only 51% of total advertising (41% of digital), but 80% of television advertising. Nestle spends 2% of their annual net revenue on research & development. Pepsi, 1%. Procter & Gamble, 3%. Kraft-Heinz, 4%. Rather than investing in Research & Development, big companies invested in advertising. As CircleUp, an investment platform for early-stage consumer brands noted:
“Big consumer companies are slow to adapt to changing consumer tastes because they spend so little on researching what those tastes are.”
² The university system didn’t just benefit students. By funding scientists and researchers, universities fueled scientific progress. Funding, collaboration and the distribution of ideas centered around research universities. Scientists lacked the resources to pursue ambitious projects on their own. As Martin Gurri wrote in Revolt of the Public:
“The price of affluence has been the centralization and institutionalization of research. An iron triangle of government, the universities, and the corporate world controls the careers of individual scientists. Consequently, the ideal of the lonely and disinterested seeker after truth has been superseded by that of the scientist-bureaucrat.”
Their success was limited as much by their ability to attract funding and research support as the quality of their ideas and the significance of their scientific discoveries. Dependent on universities for funding, scientists rarely stepped too far outside the status quo for fear of ostracism. Gurri continues:
“Though the various fields of science differ greatly, scientific success, in general, has been defined less by the quality of the findings than by the ability to bring in “research support”—funding for the institution. Practitioners have risen to the top of the science establishment by serving, faithfully and with few qualms, their institutional masters.”
³ Attending college is still the obvious choice. The relative marginal returns to education seem to be higher, and that’s what matters to the decision maker. However, there’s a distinction to be made. Actual paid tuition also hasn’t gone up nearly as much as posted fees. Community college is underrated. Nobody cares where you went for your first few years of college. They only care about what your diploma says. Moreover, it’s often easier to transfer into elite schools than to apply as a freshman. Sure, most community colleges don’t offer the dream of campus life. The parties are smaller and the sports are irrelevant. But community colleges promise much less student debt. Attending a community college for the first two years and transferring to a big name school for the last two is an under-exploited path.
⁴ Background checks and identity verification played a role as well. Together, they commoditized trust, which increased passenger safety.
⁵ Hedge funds smell blood in the water and are shorting advertising agencies. “From Mad Men to Math Men,” wrote one author. According to the Financial Times:
“Hedge funds have also taken out short positions worth $2.2 billion in the shares of Omnicom, equivalent to 13 percent of its total shares, according to Markit data, as well as a $426m bet against the stock of Interpublic… Hedge funds that have borrowed shares worth £920m in order to sell them short have realized large gains.”
If you ever need help, run to a village. Trust me, I know.
I spent a month in San Lucar de Barrameda, a small village in Southern Spain. It wasn’t the beaches or the food that I remember most. Nope. I remember the generosity. Safety was never an issue there. Time and time again, people were kind, supportive, and trustworthy.
In San Lucar, it seemed like everybody went out of their way to help each other. Each Sunday, the entire town congregated at Church. They sang their prayers, ate delicious paella, and gossiped about others in the town. The gossip was integral to the safety of the city. Instead of relying on policemen, citizens policed themselves. Everybody knew about people who mis-behaved, so people had an incentive to cooperate and help their neighbors. Kind people were welcome anywhere. Mean people were scorned and ridiculed.
In San Lucar, selfish behavior is unacceptable. But in New York, a city with 8 million people, selfish behavior is the norm. It’s a dog-eat-dog mentality. Policemen are everywhere and sirens are the sound of the city. During rush hour on 5th Avenue, pedestrians fight like soldiers on a battlefield. They step over homeless people, weave through strangers, and J-Walk through red lights.
Why are people so cooperative in San Lucar, but so selfish in New York?
The author argues that people behave differently in one-time interactions versus repeated ones. When people believe they will only interact once, they have an incentive to behave selfishly. But if they know the interaction will be frequent and repeated, they will likely cooperate.
Frequent interactions promote stable cooperation. As Axelrod writes:
“If you are unlikely to meet the other person again, or if you care little about future payoffs, then you might as well defect now and not worry about the consequences for the future…. The evolution of cooperation requires that individuals have asufficiently large chance to meet again so that they have a stake in their future interaction.”
Cooperation is determined by the length and frequency of interactions. If two individuals are likely to meet again, they will likely cooperate. If not, they likely won’t.
Tit-For-Tat: The Master Algorithm
Believe it or not, there’s an optimal way to behave in repeated interactions.
This simple strategy is called Tit for Tat. Reciprocity is the name of the game. Under the rules of Tit-for-Tat, players cooperate on the first move in a series of repeated interactions. Then, they mirror the other player in every subsequent move. After the first interaction, if the other person cooperates, they cooperate. If the other person defects, they defect. It’s simple.
Tit-for-Tat benefits from its own clarity. It’s easy to recognize and hard to exploit. It strikes the optimal balance of kindness, retaliation, forgiveness, and clarity.
Unlike eye-for-an-eye, Tit-for-Tat can be positive sum. Eye-for-an-eye shrinks the pie. If one person loses an eye and retaliates by taking the other person’s eye, both people are left with one eye. Thus, eye-for-an-eye is a sub-optimal strategy. As people retaliate, the total number of resources diminish.
Tit-for-Tat is different. It can be positive sum. When people cooperate, the pie expands. Both parties gain resources. Therefore, in an environment of frequent and repeated interactions, Tit-for-Tat is the optimal way to behave.
Rules for Everyday Life
Axelrod’s lessons are applicable in every day life.
To recap: Tit-for-Tat teaches us that in a one-time interaction, cooperation is difficult to achieve. The incentive to cooperate is low. To promote cooperation, people should interact more often.
Cooperation is maximized when people plan to communicate often, for a long time. The more people interact, the greater the incentives for cooperation will be. When interactions are frequent and prolonged, patterns of cooperation emerge. That’s why people are so kind in villages and so selfish in cities.
How about a practical example?
Consider the work environment. Pretend you’re a freelancer preparing to work with a major bank. As you structure the contract, you have multiple payment options. You can (1) receive one big lump sum at the end of the project once all the work has been delivered or (2) receive multiple payments over time (50% up-front, 25% half-way through the project, and 25% once the project is complete).
You should take the second option. Every time.
As Axelrod wrote:
“The great enforcer of morality in commerce is thecontinuing relationship, the belief that one will have to do business again with this customer, or this supplier, and when a failing company loses this automatic enforcer, not even a strong-arm factor is likely to find a substitute… if the other player is not likely to be seen again, defecting right away is better than being nice.”
In business and in life, the lessons of game theory are simple: cooperate at the beginning of the relationship. After that, mirror the other person’s behavior. Turn one-time interactions into repeated ones, increase the frequency of those interactions, and village-like cooperation will emerge.
I’d love to hear your feedback. Send me your thoughts, criticisms, and ideas in a direct message on Twitter. When you do, please don’t nitpick. Constructive feedback will lead to a more productive dialogue that’ll be better for both of us.
Quick note: Robert Caro deserves all the credit for the ideas in this post. Originally written for friends, it’s a distillation of ideas at the beginning of Master of the Senate, the third volume in Caro’s biography of President Lyndon B. Johnson.
Americans should know the story of the senate. Writing in the late 1700s, the Framers of the Constitution made the House dynamic and the Senate stable.
But why?
Here’s the backstory: The founders of America were scared of tyranny and wary of executive authority. As they drafted the constitution and dreamed up America’s laws to-be, they gave Congress power to collect taxes, coin money, declare wars, raise and support Armies, maintain a Navy, and borrow money on the credit of the United States. Rather than giving the President power to declare war like European monarchs, the Framers of the Constitution handed that power to Congress.
The powers of Congress didn’t end there. Congress was independent of the President and as a check on the President’s authority. If need be, Congress could remove the President through impeachment or override the President’s vetoes of their acts.
Among Congress, the powers were split between the House of Representatives and the Senate. As Robert Caro wrote: “While the House of Representatives was given the ‘sole power of impeachment,’ the Senate was given the ‘sole power to try all Impeachments…’ The House could accuse; only the Senate could judge, only the Senate [could] convict. The power to approve presidential appointments was given to the Senate alone; a President could nominate and appoint ambassadors, Supreme Court justices, and all other officers of the United States, but only ‘by and with the Advice and Consent of the Senate.’”
And of course, the world looked nothing like it does today. The states were fragmented by culture. Word spread no faster than the gallop of a horse. The South’s leading spokesperson, John C. Calhoun of South Carolina, a former Vice President of the United States who served under John Quincy Adams and continued under Andrew Jackson, proposed a step that would go a long way towards shattering the union. Here’s how Robert Caro recounted it: “any state unwilling to abide by a law enacted by the national government could nullify its borders.” Senators complained that their individual sovereignty, their rights and their freedoms, were being trampled by federal unification.
America hadn’t colonized the continent from east to west. The frontier was wide open, and senators didn’t know where to take the country. As Caro wrote: “the price of public lands in the west: the West wanted the price kept low to attract settlers from the East and encourage development; the East wanted the price kept high so its people would stay home, and continue to provide cheap labor for Northern factories.”
The Constitution demanded collaboration between the President and the Senate. We learned that in school, but here’s where it gets interesting, especially with the wave of rising “populism” around the world today.
The Framers of the Constitution weren’t just scared of a single person aggregating power. They were scared of too much democracy. The Aristocrats who penned the constitution feared and adored the people. They saw them a gift and a curse. At once, the aristocracy gave the people power as they withheld it.
As Robert Caro wrote: “The Framers of Constitution feared the people’s power because they were, many of them, members of what in America constituted to an aristocracy, and aristocracy of the educated, the well-born, and the well-to-do, and they mis-trusted those who were not educated or well-born or well-to-do.” Above all else, the Aristocrats wanted to protect their property rights against those who didn’t own any property.
When it came to democracy, the Framers followed the Goldilocks principle: not too little, not too much. .
Here’s Caro: “The Framers wanted to check and restrain not only the people’s rulers, but the people; they wanted to erect what [James] Madison called ‘a necessary sense’ against the majority will.’ To create such a fence, they decided that the Congress would have not one house but two, and that while the lower house would be designed to reflect the popular will, that would not be the purpose of the upper house.”
The House was the popular branch. The Senate, the deliberate one.
The Senate’s architecture proved to be a careful balancing act. It heard the wisdom of crowds as it protected against the madness of crowds. As James Madison said: “first to protect people against their rulers, and protect the people against the transient impressions into which they themselves might be led… The use of the Senate is to consist in its proceeding with more coolness, with more system, and with more wisdom, than the popular branch.”
The constitution ensured that the Senate could protect the people against themselves, and simultaneously ensured that the Framers armored the Senate against the people. Should America be too Democratic, and grant too much power to the House, Madison worried that government would have a propensity “to yield to the impulse of sudden and violent passions, and to be seduced by factitious leaders into intemperate and pernicious resolutions.”
At the time, little states feared that the more populous states would gain a commercial advantage and earn outsized influence over presidential and national policies. Small states wanted an equal voice in Congress. In what history books call “The Great Compromise,” the Framers agreed that “while representation in the House would be by population, in the Senate it would be by states; as a result of that provision, a majority of the people could not pass a law; a majority of the states was required as well.”
The first Senate of the United States consisted of twenty-six men. Two men for each of the 13 colonies. To guard against the winds of passionate lunacy, Senators would not be elected by the people. One Senator said: “The people should have as little to do as may be about the government… They lack information and are constantly liable to be misled.”
Another said: “The evils we experience flow from an excess of democracy.” Before their election, Senators passed through a filter, distilled by the will of the people. As Caro wrote: “Senators would be elected not by the people but by the legislatures of their respective states — a drastic filtration since in 1787 the franchise was so narrow that the legislatures themselves were elected by only a small percentage of the citizenry.”
Senate provisions against the madness of the populous didn’t end there. The Senate would be firm and independent. Long term lengths would arm Senators against the mood of the day.
The Senate, the more deliberate branch, would move with prudence and predictability. It would control the House, the democratic branch with short term lengths, where optinions would change quickly. As Madison wrote: “What good is the rule of law if “no man… can guess what the [law] will be tomorrow?”
Members of the House had to be 25 years of age. The Senate, 30. Senators made treaties and managed foreign affairs, so the Framers added extra years to the acceptable age minimum. As Caro wrote: “And around the Senate as a whole there would be an additional, even stronger, layer of armor. Elections for Senators would be held every two years, but only for a third of the Senators. The other two-thirds would not be required to submit their record to the voters at that time… This last piece of armor made the Senate a “stable institution indeed.”
Senators would serve a six-year term — longer than Presidents. Members of the House would serve for two-years. Presidents, four. The Senate would operate by a staggered-term principle. Only one-third of the total membership would be up for re-election every two years. As one historian wrote: “It is therefore literally not possible for the voters ever to get at anything approaching a majority of the members of the Institution at any one time. “
So there it was: Dynamism for the House. Stability for the Senate.
I’d love to hear your feedback. Send me your thoughts, criticisms, and ideas in a direct message on Twitter. When you do, please don’t nitpick. Constructive feedback will lead to a more productive dialogue that’ll be better for both of us.
First, the pivot to video. Then, the pivot to podcasting. Now, the pivot to subscription.
What’s happening?
Media companies are struggling. They’re missing revenue targets and laying off employees. Cash is drying up. Runways are shrinking.
Mic raised $60 million and grew to 165 employees, but sold for $5 million. In 2018, Vox missed revenue targets by ~15%, Verizon Media Group laid off 7% of its staff, Buzzfeed laid off 200 employees, and Condé Nast plans to paywall all digital content after reporting losses of $120 million in 2017.
To combat these challenges, satisfy investors and grow top-line revenue, the media industry is hungry for new business models, predictable revenue streams, and increased customer lifetime value.
Here’s the bitter truth: subscription will only work for a small number of differentiated media companies, like The New York Times and the New Yorker. Most media companies don’t have the culture, the personnel or the brand affinity to pursue a subscription model. Once the promise of subscription media fades, media companies will make their next move: the pivot to owned commerce.
What is owned commerce?
Owned commerce is beyond selling a few hundred t-shirts and hoodies with your logo on them. We’re talking about launching, acquiring or licensing entirely new brands, with the same target demographic these media companies are targeting. Think Fuck Jerry’s What Do you Meme, Tasty’s One Top, or Fat Jewish’s White Girl Rose. They’re just the tip of the iceberg for what is about to come.
What’s Happening?
Before we discuss owned commerce, let’s talk about what’s happening at the intersection of media and commerce. The democratization of logistics and manufacturing, propelled by emerging digital shopping channels, has sparked a Cambrian explosion of DTC companies.
Since World War II, the best consumer product companies monopolized the creation and distribution of products. In manufacturing, distribution and advertising, they benefited from economies of scale. Large factories drove down manufacturing costs. Through distribution partnerships, they bought up shelf space in big box retail stores. By advertising on mass media channels, brands stayed top of mind for consumers. The big got bigger. Only the largest brands could endure expensive advertising funnel inefficiencies. As the saying goes, “We know half of our advertising works, we just don’t know which half.”
Nestle spends 2% of their annual net revenue on research & development. Pepsi, 1%. Procter & Gamble, 3%. Kraft-Heinz, 4%. Rather than investing in Research & Development, big companies invested in advertising. As CircleUp, an investment platform for early-stage consumer brands noted:
“Big consumer companies are slow to adapt to changing consumer tastes because they spend so little on researching what those tastes are.”
By controlling the production and distribution of products, the big consumer companies ensured their continual success. Startups couldn’t compete. The barriers to entry were too high. As Charlie Munger said:
“You can get advantages of scale from TV advertising… If you were Procter & Gamble, you could afford to use this new method of advertising. You could afford the very expensive cost of network television because you were selling so damn many cans and bottles. Some little guy couldn’t. And there was no way of buying it in part. Therefore, he couldn’t use it. In effect, if you didn’t have a big volume, you couldn’t use network TV advertising — which was the most effective technique. So when TV came in, the branded companies that we already big got a huge tail wind.”
Like a bear in the winter, the big players adapted to their environment. With colossal advertising budgets and an arsenal of widely appealing products, they took advantage of mass media. But now, the environment is changing. Many of the hallmarks and core capabilities of multinational consumer product companies are now headwinds, not tailwinds.
Plummeting logistics, manufacturing and advertising costs have sparked a storm of digitally native brands. With the internet’s unlimited shelf space, monopolizing brick and mortar shelves is no longer a defensible strategy. Enabled by low startup costs and targeted digital marketing on Google and Facebook, hundreds… thousands… of small internet-native brands are springing to life. They have low overload, elegant design, and hyper-efficient customer acquisition strategies.
“This mass of micro brands with massively efficient marketing are, in aggregate, having a much bigger impact than anyone thinks. Using hyper-targeted marketing, just-in-time manufacturing, and social media, these brands find and engage their audience wherever they may be.”
From mascara to mattresses, a direct-to-consumer brand has flooded every industry. There are no more first-mover advantages. The lallapalooza of digitally native brands is a gift and a curse. It’s easier than ever to start a company, but harder than ever to scale one. Competition among consumer product companies has increased, thereby increasing customer acquisition costs.
Digital CPMs are rising. Companies, big and small, are investing more in digital marketing. Advertising inventory on Facebook and Google is saturated. As any economics professor would tell you, when demand for something rises faster than the supply of it, prices rise. Competitive bids for scarce inventory, addressed to the same audience, drives up demand for the same real estate within a feed or a story, causing ad prices to skyrocket.
Spend is up. Impressions are down. Prices are up.
Advertising on Facebook became 70% more expensive between 2017 and 2018, while ad spend on Facebook grew 40% during Q2 2018. Cost per click is growing 23% month-over-month and 85% year over year.
What’s Going to Happen Next?
“Sizable, loyal audiences will be of the most coveted “products” over the next decade.” — Web Smith
Companies will pivot to owned commerce. Why? Media companies believe they will have a competitive advantage over traditional DTC players because they understand how to connect with their audience better than product-first DTCs.
Many DTC companies have tried to launch media properties with varying success. For example, Casper launched Van Winkle, the brand’s standalone online publication, in 2015, but quickly shut it down after struggling to deal with the site’s independence from the brand.
Media properties believe years of experience engaging with their audiences will give them enough insight to begin launching products and creating new brands. However, just like the many media pivots previously, only a few players will succeed in the pivot to owned commerce. More specifically, only the media brands (and influencers) who truly have brand loyalty will be able to successfully launch owned commerce brands.
True brand loyalty means that people would miss your company if it disappeared. The best heuristic for the differentiation of a media company is “Need vs. Feed.”
If you need a company, you seek it out or opt-into communication from it. “Need companies” are the email newsletters you subscribe to, the creators you talk about with friends, the podcasts you listen to weekly, and the writers who’ve blown your mind so many times that you’ll never miss a word again. They have extremely loyal audiences. Many have direct relationships with them. Readers become followers and followers become customers, brand evangelists, and voluntary product advisors.
“Feed companies” are the opposite. They’re undifferentiated. They try to be everything to everyone. But in reality, there’s nothing to no-one. Most feed-discovered content is interchangeable. To be sure, there are exceptions, such as Casey Neistat and Kylie Jenner.
If you want to know if a company is a Need or Feed company, you can ask a simple question: Are you looking for their content or is the content finding you?
Those media brands who do truly have brand loyalty know more about their audience than “Feed” companies. Instead of having many viewers who stumble upon your content through a google search, “Need” companies can leverage their frequent interactions with their customers by gathering lots of data on their wants and needs.
Data-savvy, audience aware publishers are armed with a treasure trove of expertise. They know what types of content people resonate with, what kinds of products people interact with and the frequency with which they do both.
The Netflix Approach
So how will media companies with loyal followings determine which owned commerce products to launch?
First, publishers build audience intelligence by promoting other companies’ products. After seeing the data on what performs well, they will launch and promote their own. I call this “The Netflix Approach.” It’s enabled by a combination of owning and knowing audiences.
First, Netflix acquired large volumes of streaming rights through partnerships with media companies, such as Starz and Disney. The user experience was excellent, so Netflix attracted passionate brand loyalty. As their pockets deepened, they expanded their user base. Informed by the data they acquired by streaming content from other studios, Netflix augmented licensed content with its own original shows, such as House of Cards.
Backed by data and informed by human creativity, Netflix matches the efficiency of Silicon Valley with the artistry of Hollywood. Speaking of the success of House of Cards, Netflix’s Chief Content Officer Ted Sarandos said:
“It was generated by algorithm. I didn’t use data to make the show, but I used data to determine the potential audience to a level of accuracy very few people can do…We’ve been collecting data for a long time. It showed how many Netflix members love The West Wing and the original House of Cards. It also showed who loved David Fincher’s films and Kevin Spacey’s.”
Today, Netflix favors its own, original content. Almost everything on the Netflix home page is an original. At the end of 2018, Birdbox, a Netflix original movie was viewed by 45 million people over its first seven days. Astoundingly, Netflix spent almost nothing on marketing or promotion.
As Matthew Ball, the former Head of Strategy at Amazon Studios wrote:
“The reality is that the most valuable real estate in the world is the top fold of Netflix home page. And Netflix not only controls it, they don’t rent it to anyone. You can buy a billboard, Amazon’s homepage, Facebook, Snapchat. Not Netflix. It’s only for Netflix. And it reaches, if Netflix chooses (actively or via algorithm) to promote the content, millions more than any ad placements – and more effectively, as it’s bottom of the funnel (audiences are in the mood to watch and just a click away). But you don’t see the “spend” on the P&L.
This is a huge advantage as it creates several virtuous cycles where Netflix can outspend on content and make more of it, yet de-risk viewership and payback because it simply out-reaches everyone else.”
In summary, Netflix followed a six step process: (1) Create a brand people love, (2) gain early revenue traction by selling other companies’ products, (3) collect data on user behavior, (4) create owned products based on data insights, (5) sell those products to your existing audience, and (6) iterate and improve those products.
In the pivot to owned commerce, publishers will implement “The Netflix Approach.” Using their existing audiences as guinea pigs, they’ll advertise products for other companies. In turn, they’ll acquire engagement data and learn about their audiences. Informed by user behavior and emerging trends, they’ll launch their own white-label products. Once the products are launched, they’ll use customer data to iterate and improve their offerings.
The Pivot to Owned Commerce
The publishers of today are the commerce companies of tomorrow. Publishers with organic reach can launch and test products without paid media. Intimate customer touch-points remove the need for focus groups. With shopping experiences that are native and true to the brands DNA, they can scale fast, with relatively low investment. They can A/B test every ad, evaluate customers with engagement data, and use real-time data to iterate and improve creative. By diversifying their revenue streams, they’ll decrease business risk and increase their revenue multiples.
Powered by organic distribution, “Need Content” publishers are armed with competitive advantages that cannot be bought on Facebook, Instagram, Google, or Amazon. Brand loyalty, trust and credibility can’t be bought. It must be earned over time. Influencers and media companies have spent years building relationships with their audiences and know their audience better than any competitor possibly could. All media companies will follow the herd to owned commerce, but only “need content” publishers with trust and credibility will succeed.
Content and commerce are converging. Publishers who appeal to owned audiences will win the upcoming pivot to owned commerce.
I’d love to hear your feedback. Send me your thoughts, criticisms, and ideas in a direct message on Twitter. When you do, please don’t nitpick. Constructive feedback will lead to a more productive dialogue that’ll be better for both of us.
“Reading books is the real-life version of collecting mushrooms in Super Mario.” — Some random guy on Twitter
Reading is a cheat code. Improving what you consume is the fastest way to accelerate your pace of progress.
Time is scarce, so you can’t read everything. You have to make tradeoffs. As you choose what to read, you walk a balance between thinking differently and knowing more than others.
Read an enormous amount of books. More than you think you need to, not the ones that everyone else is reading, and ideally covering a wide range of topics. Informational edge is found in obscure, hard-to-digest sources. Get comfortable with weird parts of the internet.
Domain expertise is great, but you also want to build a breadth of knowledge. That way, you can identify patterns and sense emerging trends.
If you have the means, pay for the content you consume.
Even better if it’s a subscription, where the creator is optimizing for lifetime value. That way, you know their incentives are aligned with yours. The logic of the business model dictates the content. Most ad-based content is optimized for clicks, and most paid content advertises for engagement. Ad-supported content is fine, but don’t make it your default. Attention is too valuable to waste time on most free content.
Building a Habit
Reading is a way of life. A great book will stretch and strengthen your mind — an experience that’s taxing as it unfolds, but fulfilling in retrospect.
Most of us don’t devote enough attention to accelerating our learning. In fact, most people expect learning to decelerate over time. School kills our innate curiosity. After college, people lose interest in self-improvement.
Voracious learning requires consistent focus and discipline. Reading is rarely the easy choice. The modern world is filled with distraction, superficial entertainment, and demands on our attention. This makes deep reading difficult, even though the benefits of doing so are immense and compound over time.
Read, Read, Then Read Some More
“You could try to pound your head against the wall and think of original ideas or you can cheat by reading them in books.” – Patrick Collison
Read a lot.
When you first begin your reading habit, it’s best to focus on having fun. Cultivating a habit is hard. The best way to stick with it is to have fun with it. Resist the temptation to finish every book you start and discard bad books as soon as possible. It always feels wrong, but that’s okay.
Once reading becomes a habit, people automatically navigate towards more productive reading. As their knowledge grows, they refine their tastes.
However, there’s an even faster way to improve the quality of what you read: start writing publicly. Feedback loops and forcing functions are powerful self-improvement tools. Open your ideas to public critique and the quality of your inputs will improve.
My reading is driven by five goals:
Enjoy learning
Improve my writing
Appreciate the world
Earn respect from my peers
Develop a well-rooted worldview
Based on these values, I developed five reading heuristics.
Reading Heuristics
1. Trust Recommendations — But Not Too Much
While most people will recommend new books, old books that’ve stood the test of time are likely the best use of your attention. To be sure, there are exceptions to this. Depending on what line of work you’re in, there are must-read, “cannon books.” Those are probably worth your time
I try not to look for the best books. Instead, I hunt for forgotten old books and under-valued new ones. Crucially, this heuristic guides me towards ideas that nobody is talking about.
When I interview or meet somebody I admire, I always ask for book recommendations.
Don’t trust what everybody in society is reading. Trust what the people you respect are reading instead. Find people whose recommendations you trust and read what they recommend.
2. Tame the Thrillers
Seek thoughtful, opposing views from thoughtful people whose thought processes you respect.
Read books that the ideal version of yourself (in 20 years) would have been proud to have read. If you’re reading challenging or intimidating books, you’re probably on the right track. Reading the right books is challenging and uncomfortable.
Strive to relish this challenge. Always ask: Am I actually progressing or is this source giving me the illusion of progress?
As a kid, I was always scared of upside-down roller coaster rides. But after I went on my first one, I realized how much I missed by choosing the easy rides instead. The up-side down roller coasters are the most memorable rides at almost any theme park. A little bit of challenge up-front leads to large, long-term rewards. Tame the thrillers. You won’t regret it.
3. Blend a Bizarre Bowl
Arthur Schopenhauer once said: “The task is not so much to see what no one has yet seen, but to think what nobody yet has thought about that which everybody sees.”
It’s usually better to attack a subject from all sides than to attack it directly. Read in clusters. For example, I’ve been learning about the history of New York. Instead of reading a book directly about “The History of New York,” I’ve explored the Art Deco art movement, influential New York City political figures, the history of St. Marks Place, financial history, and New York City architecture.
Read books that intimidate you. Have a bias for books that would push most people away. These books are either too long, too difficult, or too counter-intuitive, but they will likely contain information that will give you an edge and spew out interesting, unexpected ideas.
As Eugene Wei wrote:
“You can try to improve how much you learn from each book, but probably the greatest gains from selecting the right set of books to read. Those books are likely older than the ones that are really popular today.”
One problem: there are so many options. This makes selection difficult. 304,912 books were published or re-published in the United States in 2013. There are immense benefits to choosing the right book. The right book at the right time will re-thread the tapestry of your psyche.
Seek diversity in your reading life. New ideas come from the weird juxtaposition of ideas. If you’re reading this, you’ve already won the lottery. Whether you’re on your phone or your computer, you have access to more computing power than all of NASA had during the Apollo days, when they sent a man to the moon. Through the internet, the vast majority of human knowledge rests right in your fingertips.
If you leverage the internet properly, you’ll be exposed to a bizarre blend of ideas from all corners of humanity. As a general rule, Informational edge is found in obscure, hard-to-digest sources. It’s the weird books that will change you.
Connecting insights across time and space will spark fresh ideas. As Rene Descartes wrote:
“The reading of all good books is like a conversation with the finest minds of past centuries.”
Connecting insights across time and space will spark fresh ideas.
On the internet, you can connect with ideas from all corners of the world, from the pyramids of Giza, to the temples of Athens, to the skyscrapers of New York. Diversity helps.
Here’s an example: Right now, I’m reading a book about Austrian Economics, the history of art from ancient times to the modern era, a collection of essays on the role of media throughout history, urban politics in New York City, and another on how music works.
If you’re reading a book published in the past 50 years, listen to interviews with the author while you read the book. YouTube is the best school in the world. It’s like a coffee shop with direct, right-into-your-ear access to the world’s smartest people. It will improve comprehension and give you a stronger connection with the writer.
Over time, you’ll blend a bizarre bowl of ideas and develop a unique and interesting worldview.
4. Trust the Lindy Effect
The Lindy Effect says that the future life expectancy of non-perishable things like books is proportional to their current age. As Nassim Taleb once wrote:
“If a book has been in print for forty years, I can expect it to be in print for another forty years. But, and that is the main difference, if it survives another decade, then it will be expected to be in print another fifty years. This, simply, as a rule, tells you why things that have been around for a long time are not “aging” like persons, but “aging” in reverse. Every year that passes without extinction doubles the additional life expectancy.”
If you read what everybody else is reading, you’ll think what everybody else is thinking. Have a bias for books that would push most people away, especially if they are still in print after many years. These books are either too long, too difficult, or too counter-intuitive, but they will likely contain information that will give you an edge.
I must admit, this isn’t always the case. Many old books are wordy and verbose, which makes them annoying to read. That’s okay. Remember, these are general rules. Most of my favorite books were written 10 – 70 years ago.
The media is paid to get your attention. Recently, a reporter for a major news magazine said her success depends solely on page views. Sometimes, she writes seven articles per day. In her words: “My job is to write faster than I can think.” And yet, her average article is read by more than 500,000 people.
We’re stuck in a violent and continuous storm of news. The vast majority of news has no informational value. It’s entertainment, with a veneer of importance.
As Naval Ravikant observed:
“The Internet commoditized the distribution of facts. The “news” media responded by pivoting wholesale into opinions and entertainment.”
Avoid 99% of the news. If the news is significant, the information will find you. Don’t believe me? Try reading last year’s newspaper. If you do read news, read old news.
Time is like a filter for quality. The older the problem, the older the solution. Read books that’ve stood the test of time. When in doubt, have a bias towards old, weird books.
5. Favor Biographies over Self-Help
Walk into a book store, and you’ll see tons of self-help books on the recommended shelves. Unless you counter with some resistance, you’re likely reading too many self-help books.
Biographies are written about outliers. The best biographies are the ones the subject doesn’t approve of. Life is messy and complicated. A good biographer tells a fair and balanced story — they balance the good with the bad. Through biographies, you explore the cost of ambition and the price of success.
You don’t just learn about a person. You learn about their time and place. Let biographies age before you read them. In general, the older biographies are better.
Learn To Love it
At the end of the day, the most important part of reading is enjoying it. If you don’t enjoy reading, words won’t engage you, and if words don’t engage you, you’ll stop reading. Don’t let that happen. Do everything you can to enjoy reading.
1: From Bret Victor, a reading list of meaty material from the past year. His Reading Tip #1 in the sidebar is how I’d like my ideal self to read:
It’s tempting to judge what you read:
“I agree with these statements, and I disagree with those.”
However, a great thinker who has spent decades on an unusual line of thought cannot induce their context into your head in a few pages. It’s almost certainly the case that you don’t fully understand their statements.
Instead, you can say:
“I have now learned that there exists a worldview in which all of these statements are consistent.”
And if it feels worthwhile, you can make a genuine effort to understand that entire worldview. You don’t have to adopt it. Just make it available to yourself, so you can make connections to it when it’s needed.
2. Since I have limited experience reading fiction, these recommendations are biased towards non-fiction books. With that said, I’m trying to read more fiction. If you have suggestions, please let me know.
I’d to hear your feedback. Send me your thoughts, criticisms, and ideas in a direct message on Twitter. When you do, please don’t nitpick. Constructive feedback will lead to a more productive dialogue that’ll be better for both of us.
I write a weekly email called the Monday Musings. The most popular part of the newsletter is a section called “Coolest Things I Learned This Week.”
It’s fun and eclectic, interesting and intriguing. This is a collection of the most popular insights I shared in 2018.
Subscribe here if you want to see ideas like this every week.
Note: I’ve lost some of the sources for these factoids. If you see something that’s yours, and you’d like me to credit you, please email me. Happy to make the change for you.
“My job is to hold a mirror up to nature, which means I need to reflect true human nature — how we think, how act, and the great paradoxes in all our decisions.”
“To survive a Northern winter, bees change the composition of the swarm by shrinking the overall population, caulking the hive, getting rid of the deadweight males (i.e., ALL of the males), and laying just enough eggs to preserve a minimal survivable population through the winter and into spring.
They cluster together in the center of the hive, keeping the queen in the center, shivering their wings to create kinetic energy, occasionally sending out suicide squads to retrieve honey stores from the outer combs. They lower their metabolism by creating a cloud of carbon dioxide in the hive.
The mystery behind how birds navigate might finally be solved: it’s not the iron in their beaks providing a magnetic compass, but a newly discovered protein in their eyes that lets them “see” Earth’s magnetic fields.
The bird’s eye has a magnetic field detecting proteins in the retina, and their vision becomes skewed with an overlay tied to how that protein impacts regular sight.
The image below is an excellent, if speculative, reconstruction of what birds see. An overlay band against the sky, serving as a compass for migrating across the globe.
The same traits needed for outlier success are the same traits that increase the odds of failure… So be careful blindly praising successes or criticizing failures, as they often made similar decisions with slightly different levels of luck.
When writing is first introduced into a society, it is typically used mainly as a record of spoken language, but as writers eventually write for readers, not hearers, the language of text diverges from speech.
The Somali language had essentially no written tradition until 1972, when it became the official state language. Over a mere 20-year period, researchers have observed noticeable changes to the written language, such as the emergence of longer and more complex words and greater elaboration of sentence structure.
In contemporary architecture, the personality of the architect — not just the building — is the product.
[Today’s buildings have] a signature visual gimmick that plays well on Instagram and on the photo-heavy web sites that make up much of online architecture media.
The first starchitects traded in buildings that acted as symbols for specific places, at a time when cities were competing for visibility as well as capital on a global scale. The competition has intensified with the rise of the internet and the rebirth and globalization of Silicon Valley in the 2000s. Now Ingels and BIG are emblematic of an age in which every building must be a signature unto itself, acting as a branded digital image to spread online and as a proof of concept for the Bilbao effect—and, last of all, a physical space to inhabit.
Step 2: When you learn something, learn it to where you can explain it to a child.
Step 3: Instead of arbitrarily memorizing things, look for the explanation that makes it obvious.
Back to the Dawn of Time and The Early History of the Universe
Here’s what’s seen with the Hubble Telescope:
This image is known as the Hubble Extreme Deep Field.
In September of 2012, a team of scientists pointed the Hubble Space Telescope at a single tiny patch of sky and gradually built up an image over 23 days of observation.
The image contains 5,500 galaxies, each of which, in turn, contains billions of stars. This region of sky ordinarily looks empty because these galaxies are far too dim to be seen with the naked eye. Some of the galaxies are more than 13 billion light years away.
We are seeing them as they were just a few hundred million years after the big bang, near the dawn of time. If you have the eyes to see,this is what deep space and the early history of the universe looks like.
Virgil Abloh’s Zig-Zag Approach to Creativity
Use the zigzag approach to find a new space.
Linear thinking results in copies of past products.
Do opposites.
That space in between gives you a new experience that you can apply and problem solve and that’s why I work on so many things at one time.
— Virgil Abloh, Artistic Director at Louis Vuitton
None of these faces are real. All made up by AIs.
My All-Time Favorite Writing Advice
“When you understand that nobody wants to read your shit, your mind becomes powerfully concentrated.
You begin to understand that writing/reading is, above all, a transaction.
The reader donates his time and attention, which are supremely valuable commodities. In return, you the writer must give him something worthy of his gift to you.”
— Steven Pressfield
Emotions that you feel but could never explain until now.
Reminds me of one of my favorite quotes: “”The limits of language are the limits of your world.” – Ludwig Wittgenstein
Flag Colors by Latitude
I can’t stop watching this GIF from the World Cup.
A New Record for Successful Flights
202,157 successful flights were completed in a single day, on July 4th, 2018.
Imagine all the precise engineering, rigorous maintenance, international cooperation, and just people pooling their talents and resources required to make this happen. Flight is still the most advanced and spectacular human invention.
“The best advice I ever got was Jim Watson, who co-discovered DNA. Jim is brilliant, and as many brilliant people are a little bit crazy, and Jim has this admonishment which is double meaning, three words: ‘Avoid boring people.’ I love it, because what he’s saying is, ‘Stay away from people who are not interesting,’ avoid boring people, and, ‘Avoid boring people. Don’t be boring to people. Be interesting.’”
“Probably placebo effects rode on the coattails of a more important issue, regression to the mean. That is, most sick people get better eventually. This is true both for diseases like colds that naturally go away, and for diseases like depression that come in episodes which remit for a few months or years until the next relapse. People go to the doctor during times of extreme crisis, when they’re most sick. So no matter what happens, most of them will probably get better pretty quickly.”
“You could say, without losing a great deal, that the purpose of music is to make emotional textures [clear and understandable] enough to serve as a narrative canvas. Which is why the pop-psych idea of having a theme song for your life is so attractive when you are young. To be young is to feel with more intensity than your capacity for making emotions legible can handle. So you seek external scaffolding.”
The fastest-growing counties in the United States are all warm places.
Why Red Barns are Red
Barns are painted red because red paint is cheap. Red paint is cheap because iron is plentiful, and iron is plentiful because it is the final element formed out of a dying star.
Roger Federer is a Legend… Look at this shot!
Wait for it…
Wait for it…
Wait….
For….
It…..
The reaction is even better!
A Simple Formula for Writing Better Hooks
“Get 3 yes’s in 30 seconds.”
Readers should nod their head yes to the headline, subheading, and first sentence.
If they’ve made it to the third sentence, they’re ready for an interesting and compelling story.
A Map of Bird Migration
Nike’s first head of marketing, Rob Strasser published this memo 40 years ago.
The true artist is one who lives completely, harmoniously, who does not divide his art from living, whose very life is that expression, whether it be a picture, or music, or his behavior; who has not divorced his expression on a canvas or in music or in stone from his daily conduct, daily living. That demands the highest intelligence, highest harmony. To me the true artist is the man who has that harmony.
They believe that every impulse, every natural impulse, is not to be corrected, but to be sublimated, and to be beautified. They take a glorious interest in the beauty of nature. They cooperate with it. In many Japanese gardens, you don’t know where nature begins and art ends.
How camera lenses change the shape of your face
Childhood vs. Adult Boredom
This is What a Great Meme Looks Like
Quality of Conversation Increases with Time
Rather than spending two or three hours with somebody, I prefer to spend two or three days with them. More, if possible. Time has the effect of pushing conversation deeper. After 24 hours, the smalltalk disappears, and after 48 hours, philosophizing is inevitable. The quality of conversation and the persistence of shared memories increases exponentially with time.
The reason Hollywood is in LA is because the independent film makers were trying to escape Edisons film trust and LA was close enough to Mexico that they could skip the country if legal battles got too nasty.
Likewise, Palm Springs became the getaway of the stars because it was the exact number of miles they were allowed to roam while under contract to the big studios.
Here’s a map of religious belief as percentage of population.
Red is high percentage of local population with faith. Blue is low.
Paypal’s Founding Team
PayPal’s founding team was six people. Four of them were born outside of the United States. Five of them were 23 or younger. Four of them built bombs when they were in high school.
Marketing Lessons from American Express
Great marketers unlock massive amounts of value with little tweaks.
A great example: American Express. The “Member Since” date on AMEX cards means nothing. But according to estimates, the effect on customer loyalty is estimated to be worth more than $100 million!
How to Ask Good Questions
A good question is energizing. It’s an inviting challenge, it’s something that’s interesting and fun to pursue. It inspires a new way of seeing things, a new way of ordering information.
A good question is an act of pointing. First you survey the ideascape in front of you – maybe it’s shared territory between the two of you, or maybe it’s you looking over your conversation-partner’s shoulder – and then you try and identify the most compelling, interesting thing, and point to that.
“Funny” or “interesting” is a sort of compass or gyroscope that guides you away from stale questions.
Evolution and Death
“The most important component of evolution is death. Or, said another way, it’s easier to create a new organism than to change an existing one. Most organisms are highly resistant to change, but when they die it becomes possible for new and improved organisms to take their place.
This rule applies to social structures such as corporations as well as biological organisms: very few companies are capable of making significant changes in their culture or business model, so it is good for companies eventually to go out of business, thereby opening space for better companies in the future.”
— John Ousterhout, Stanford professor
An Incredible Aerial Image of New York City
Keyboard Shortcuts that will Save You A Lot of Time
Marketing is the Galapagos Islands of human behavior.
In the world of marketing, emotions trump truth. One powerful signal is worth one-thousand facts.
Since the creation of mass media, a small number of sophisticated individuals have molded mass consciousness.
As Edward Bernays wrote:
“Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. We are governed, our minds are molded, our tastes formed, and our ideas suggested, largely by men we have never heard of…. It is they who pull the wires that control the public mind.”
Today, we live in an attention-choked, trust-starved world. The vast majority of our decisions are hampered by imperfect information and made in a flash. As a crutch, we use signals to orient our actions and drive our decision-making. In short, we depend on marketing.
Human evolution depends on marketing too. Low-pitched voices are an adaptation to exaggerate body size. Men are, on average, 10% taller and 20% heavier than females. Yet, there is a twofold difference in pitch between the sexes. Since humans base their size estimates on voice pitch cues, low-pitched, deep-voiced speakers are perceived as being larger. Guided by insights like this one, marketers explore human behavior and exploit its quirks.
What is marketing?
Marketing helps us fake and flaunt our biological fitness. A flower is a weed with a marketing budget. They signal their health by releasing strong smells and blossoming into vibrant colors. Since the chemicals required to produce strong smells are also necessary for the production of nectar, bees are attracted to scented flowers. Humans use signals too. Marketers tap into the animalistic self. If you’re car doors open upwards, you’re rich. If you have a Mac, you’re creative. If you wear Supreme, you’re cool. That is marketing.
Marketing is building a reputation so customers know you have something to lose. If a business has a reputation that persists across time, they can’t cheat people in the short run, so they have to focus on the long run. By investing scarce resources, marketers signal their faith in their product. When everybody knows about a product, its reputation can be damaged. TV is inefficient. That’s why we like it. Subconsciously, we understand this: “As Seen on TV” isn’t the same as “As Seen on Facebook.” That is marketing.
Marketing changes how we are perceived by others when we use a product. Perspective is everything. In the words of Rory Sutherland: “If you stand and stare out of the window on your own, you’re an antisocial, friendless idiot. If you stand and stare out of the window on your own with a cigarette, you’re a fucking philosopher.” Nike shoes are overpriced pieces of cotton and Eva Foam. Throw LeBron James on a billboard and all of a sudden, you’ll run faster, lift heavier, and jump higher. Buying a diamond necklace from a street salesman, even if the stones are real, isn’t as satisfying as walking into Tiffany’s, walking up to a suit-clad salesman, asking for a necklace, and paying a premium for the one in the center of the chandelier-lit, Tiffany-turquoise box. That is marketing.
Marketing turns one-time games into repeated games. Game theory teaches us that cooperation is higher in repetitive interactions than single shot ones. Guided by instinct, consumers hunt for signals of repetitive games. In single shot games, businesses can rip people off and get away with it. However, in repeated games, brands will go out of business if they cheat people. Even if it’s subconscious, consumers know this. Experience creates trust: “Established in 1772” is a more powerful signal than “Established in 2014.” By advertising experience, brands signal care, commitment, and loyalty. The extra scoop of fries at Five Guys is an immediate expense with a long-term payoff. The logical man, says “make the cups bigger,” the accountant says “cut the extra fries,” but the customer says “I like Five Guys because they are never cheap.” Instead of milking the transaction, Five Guys signals their long-term commitment to their customers. Businesses signal their commitment towards the future with expensive long-term investments. For example, fashion brands advertise their long-term outlook with expensive real-estate. A brand who pays for prime real estate is less likely to screw you over than a bare-bones, pop-up fashion store. When a company goes above and beyond for their customers, they’re showing a long-term commitment to them. Since they care about maximizing lifetime value, brands who play repeated games are more likely to tell the truth and respect their customers. That is marketing.
Marketing is wasting money so customers know you care. In nature, what matters most is not the content of a message but the extent of its trustworthiness. Many flowers produce a smell, but bumblebees prefer smells which are produced by plants which are capable of producing nectar. Thank you notes warm the soul more than text messages. Too much efficiency can ruin an experience. Door-mans are redundant in the age of sliding doors. That’s the point. The inefficiency of a doorman makes us feel prestigious. Likewise, we send wedding invitations on gilt-edged cars, not by email; in swirly fonts, not Times New Roman. Newspaper print editions command more respect than their online equivalent. Reading the New Yorker print edition feels better than reading the same article online. Peahens admire peacocks for their large tails, precisely because large tails are loud, inefficient, and extravagant. As Rory Sutherland observed: Ferraris are appealing because they’re wasteful. They’re fragile, unreliable and cumbersome. Drive over a two-foot speed bump, and it might break down. And yet, anybody who can afford to waste money on a Ferrari can afford to waste money on a significant other. If women were attracted to men who drove expensive cars, they’d marry truck drivers. Marketing helps us shine in the eyes of others. It’s primitive and instinctual, irrational and sexual. That is marketing.
Marketing gives customers the words to promote your product. Marketers don’t just care about the initial customer. They also care about the initial customer’s friends. Well-known brands thrive in social settings, where we can show them off. Cars, clothes, and jewelry come to mind. In these categories, brands help us impress others and advertise our identities. In their advertisements, they drop keywords and memorable stories, which customers use to share the brand with friends and family. That is marketing.
Marketing is about the medium and the message. As consumers, we’re look at the message and the meta-message. Marketing is sensitive to context, so it doesn’t always create demand for a product. In Eastern Europe, under Communism, marketing often lowered product demand. Since most products worth owning were in short supply, marketing signaled the inferiority of a product. Even if the content is the same, due to the effort involved in sending the message, a hand-written thank you note will warm your heart, but you’ll forget about a thank you email. Even if the food is the same, cooking dinner for your date is kinder than ordering the same food from a local restaurant. By paying for a billboard in Times Square, a brand creates common knowledge, generates social proof and signals mass market appeal. That is marketing.
Marketing works best when it doesn’t feel like marketing. Since advertisements are not meant for conscious consumption, the best advertisements mirror their context. Advertisements should not stand out too much. In fact, they should entertain us and complement the experience. On TV, you’ll find premium ads; on social media, the best ads are raw and shaky; they look like the blurry photo Aunt Jane would post after pouring down too many drinks at Thanksgiving dinner. Take the ads away from Vogue — the glamorous ads away from the glamorous content — and customers will cancel their subscriptions. The ads make the magazine. Like all advertisements, their effects are hypnotic and subconscious, and as a result, they’re overlooked and underestimated. That is marketing.
Marketing is everywhere. It extends beyond the walls of business and has existed in nature for millennia. In humans, you’ll find marketing in the clothes we wear and the gifts we share. You’ll find it in the clothes we wear and the gifts we share; speech, posture, cars, homes, handshakes. You name it.
I’d love to hear your feedback. Send me your thoughts, criticisms, and ideas in a direct message on Twitter. When you do, please don’t nitpick. Constructive feedback will lead to a more productive dialogue, which will be better for both of us.
