Finding order in chaos
What makes Tiktok tick, what's going on with Slack and Airbnb, and the potential flaws in modern economic theory. This is issue #005 of Forward.
Have you ever built a side project you didn’t give much thought to, only to check in on it later to see it performing far above your expectations? That’s pretty much what happened to Ben Chestnut. A simple tool Chestnut’s team built to help clients automate a repetitive task is today a $700m/year business.
Do you know what tool we’re talking about? Stay tuned till the end of this issue to find out.
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The smarts behind a TikTok feed
Tiktok has taken the world by storm. Every few years, we see a new social media platform come up. But this time, it's just a little bit different. What's really interesting is not Tiktok in itself, but more broadly how AI is likely to change our mental models on platforms. The rise of AI is fundamentally going to change how ecosystem users interact with platforms.
Tiktok's parent company Bytedance is an AI powerhouse. Tiktok is just one of several 'instances' of its AI prowess. To understand how AI will change platforms of the future, we need to understand TikTok. Read this excellent piece by The New Yorker.
How Tiktok holds our attention
Did we get economics wrong?
What happens when a physicist announces that most of what we know about economics is wrong? Ole Peters’ paper ‘The Ergodicity Problem in Economics’ claims that a lot of modern economics fails to accurately predict how humans behave because of the tendency of outliers to skew perceptions.
While Peters isn’t winning himself many fans among economists, his paper is causing a flutter among many noted thinkers, suggesting there might be a fire behind the smoke after all.
Defensive tactics
Slack had it pretty good through most of the 2010s. The company was heralded as the email killing, a productivity-boosting savior that burgeoning office workforces desperately needed. Add a powerful set of integrations with the who’s who of business productivity, and it looked like everything was coming up aces for the chat software producer.
Then, it stepped straight into the crosshairs of Microsoft.
The Redmond-based firm’s Slack clone — Microsoft Teams — has been quickly eating into Slack’s market share, thanks to Microsoft’s powerful distribution and cross-selling through its expansive software suit. So Slack did what was necessary, it found an ally.
Enter Salesforce.
The acquisition of Slack by Salesforce is a classic defensive merger, argues Matt Stoller. Here’s his in-depth take on the matter.
Where do we go from here?
Here’s an interesting thought experiment. What would our cities be designed like, if cars didn’t exist?
We take the status quo for granted, but rarely stop to think about the sheer impact the motor car has had on our surroundings. In the same vein, we most likely haven’t fully grasped the impact the smartphone has had on our lives. Which brings us to another interesting thought experiment, what is the next revolutionary technological shift?
Batteries? IoT? Blockchain? AI? AR/VR?
“I've come up with a set of rules that describe our reactions to technologies:
1. Anything that is in the world when you’re born is normal and ordinary and is just a natural part of the way the world works.
2. Anything that's invented between when you’re fifteen and thirty-five is new and exciting and revolutionary and you can probably get a career in it.
3. Anything invented after you're thirty-five is against the natural order of things.”
― Douglas Adams, The Salmon of Doubt
The importance of getting it right
AirBnb, or Air bed and breakfast, as Brian Chesky, Joe Gebbia, and Nathan Blecharczyk first called it 13 years ago, was not a ‘sexy’ idea. It didn’t even really create anything new. Travel existed, hotels existed, bed and breakfasts existed, and people let out rooms in their own homes. However, it did manage to find the sweet spot that existed right in between all these and unlock a new, lucrative market. In the end, AirBnb went on to become far more successful than even its founders imagined, and is poised on the verge of a hotly anticipated IPO even after the travel and hospitality industries were put through the grinder this year. The Airbnb S1 form has some interesting insights, which have been broken down in some detail in this fantastic piece 👇
One could argue that Airbnb was in the right place at the right time. Or perhaps, that it just did the right thing.
All hail the new king
BTC is above $23k. The world's largest cryptocurrency has rallied 35% in the past week leading it to multiple new all-time highs.
Over the last 4,000 years, gold has reigned as the world’s foremost store of value. From being used to preserve the wealth of Egyptian Pharaohs through the afterlife to lying in bars in modern vaults, it has been the sound money that civilization was built on.
Up until this moment.
There is a new money in town, Bitcoin.
Bitcoin is a new species of money.
Stuff we loved this week
Reading up on the routines of successful CEOs and emulating them has become cool. Intermittent fasting, an affinity for black T-Shirts and turtlenecks, standing desks, and whatnot. For a change of pace, here’s an analysis of what systems and routines made a comedy legend — Jerry Seinfeld.
A social network is a SaaS tool? Sure, if you’re talking about ‘Status-as-a-Service’. Check out this mind-bending read on how social networks effectively offer our monkey brains the reward of ‘status’.
If you’re a regular Forward reader, Nassim Nicholas Taleb is probably a familiar name. Taleb’s concept of antifragility — that robust systems tend to become stronger through shock and chaos — is something we’d like to incorporate into our personal lives too. If you’re in the same boat, here are a few quick tips to get started.
For all the time we spend wondering about life and the universe, human beings rarely stop to contemplate the marvels that are the bodies we occupy. In his latest book, Bill Bryson does just that, and it’s a riveting read.
Food for thought
What’ll you be doing in 2030? Not owning a lot of stuff, if the World Economic Forum (WEF) is to be believed. The WEF published this interesting set of predictions back in 2016 on what life in 2030 will be like, which includes organ printing, minimal meat consumption, and an exorbitant carbon tax. There was no pandemic in the picture then, but the general outline seems fairly accurate even four years later.
You may have come across Jeff Bezos’ famous ‘two pizza rule’. But have you heard of his communication to Amazon employees about the ‘perfect free-standing handstand’ — signifying the importance of communicating how hard things are?
Here's what Bezos said in his 2018 Letter to Shareholders:
"A close friend recently decided to learn to do a perfect free-standing handstand. No leaning against a wall. Not for just a few seconds. Instagram good. She decided to start her journey by taking a handstand workshop at her yoga studio. She then practiced for a while but wasn't getting the results she wanted. So, she hired a handstand coach. Yes, I know what you're thinking, but evidently, this is an actual thing that exists. In the very first lesson, the coach gave her some wonderful advice. "Most people," he said, "think that if they work hard, they should be able to master a handstand in about two weeks. The reality is that it takes about six months of daily practice. If you think you should be able to do it in two weeks, you're just going to end up quitting." Unrealistic beliefs on scope – often hidden and undiscussed – kill high standards. To achieve high standards yourself or as part of a team, you need to form and proactively communicate realistic beliefs about how hard something is going to be – something this coach understood well."
In a world where Internet culture has inspired an endless flurry of ‘six-minute abs workouts’ and ‘3x portfolio multiplier in 3 months’ programs, clearly communicating the enormity of difficult tasks can make all the difference.
Did you know that the value of global equities has hit $100T — 115% the value of global GDP. How would you interpret this? We’d love to hear from you in the comments. 💬
Thanks for taking the time to read this issue of Forward. If you loved it, let us know in the comments and share it with your friends. In case you haven’t subscribed yet, just drop your email below and we’ll take care of the rest.
Oh, and that little tool that quietly made Ben Chestnut’s company money without them realizing how big it’d become? It was a little email software that you now know as MailChimp.
That’s all from us for now. We’ll see you again in two weeks.
Until next time,
Your friends at NEO