- The NYT has a deeper look at Spotify's deal with Joe Rogan, and its consequences. The piece includes a higher reported cost for the Rogan exclusive ($200m vs $100m, though that higher number might result from a different treatment of earn-outs). It's another example of the usual media cycle: when there's a new distribution model, the early winners master distribution and the long-term winners own content; Spotify is working to own its own content, but being the high bidder can either mean paying more than other people will pay or buying things other people are afraid to own.
- PETITION has a downbeat view on the rapid grocery delivery business. My view on these companies has been: yes, they're insanely capital-intensive, but delivering a frequently-purchased product means collecting cohort data very quickly. It's an interesting coordination mechanism that so many of these companies are competing in New York, since it's a way for them to fight a sort of one-time tournament to determine who is best at operating a delivery network or at least making a convincing case to investors (being sufficiently good at either is enough to satisfy the victory condition). Extrapolating from their unit economics excluding user acquisition costs is a mistake, but extrapolating from a one-time loss-intensive launch is a mistake, too.
- Also in the NYT, a look at Squarespace's forward-thinking approach to podcast advertising. Advertising has both relationship and transactional elements, especially in the early stages when the norms and metrics haven't been established. This creates an opportunity for venture-style advertising: buy lots of ads in a growing medium, on the grounds that once everyone knows what a "CPM" is, your CPM will be lower than that of new entrants.
- Abraham Thomas of Pivotal on Minsky Moments in venture capital: when a particular trade gets popular, there's a magical period where realized risk-adjusted returns are going up, but likely future risk-adjusted returns are going down, driven both by higher risk and worse returns. Especially important: more money moving into VC means that investors get early markups, which makes it more likely than an average fund today will show the same year 1-2 performance an absolutely exceptional one would have gotten historically. This is straight out of Minsky: capital inflows produce cosmetically better risk-adjusted returns, which encourages more inflows.
- Kyle Harrison on the professionalization of startups. This is partly a celebration of how much more available tech tools and best practices are than they used to be—but also an acknowledgement that starting a startup is no longer the outsider thing to do. This is the fate of any interesting trend: by the time there's a name for it, there's a sense in which it's over. That's both correlation and causation. Lots of trends are mean-reverting; starting a startup was popular in 1999, wildly contrarian in 2002, and popular again by the early 2010s. Some of this was driven by media (Y Combinator applications inflected upwards after The Social Network came out), and some of it is because industries naturally get more institutional as they get bigger. For anyone trying to make a living or a decent return, the good news is that a lot more money is made after the point where something stops being cool. But the loss of coolness is still a loss.
- That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea: if you want to understand Netflix-the-streaming-giant today, it's great to start with Netflix-the-shaky-DVD-company circa the early 2000s. This book is a pretty early look, starting just before the founding and ending with the IPO. Among other things, it's a great peek into how hard it is to work with big hardware companies, especially on new technologies. It also shows Netflix's scrappier side; before they had a massive marketing budget and lots of Oscars, their tactics included having ringer accounts on movie forums that hyped up an amazing new site where you could get DVDs delivered by mail.
- Drop in any links or thoughts that would be of interest to Diff readers.
- What business is miss-monetized, rather than under-monetized? Some businesses rely on ads when they could do subscriptions, or use usage-based pricing rather than all-you-can-eat subscriptions.
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