Discover more from Margins by Ranjan Roy and Can Duruk
Links on the Margins (March 18th)
Wartime CEOs, Oligopoly bailouts, Coronavirus visualizations
Ranjan here. Things are weird right now. My co-host Can and I are experiencing two very opposite quasi-quarantine experiences on opposite coasts. I’m trying to deal with two very young children while working in a Manhattan 2br. Can is going stir crazy living by himself in a SF 1br. I would give anything for five minutes of solitude, while he is pining for just being out and about with a group of friends.
I would’ve imagined being stuck indoors would be the perfect time to write and write and write, but right now I’m just trying to stabilize to whatever this new reality is.
In this week’s link roundup we have an eerily prescient 2011 Atlantic piece on globalization, a 2011 Ben Horowitz post on leadership, an analysis on why DTC companies are imploding, a few incredible visualizations on flattening the curve….and a Tom Brady video. Yup, I had to.
Stay safe and sane and enjoy the links!
The Atlantic - Chrystia Freeland
Thanks to Readwise, a service that sends me random highlights (from Instapaper and Kindle) from my past reading, I came back to this incredible piece from Chrystia Freeland, a former prominent journalist who became the Prime Minister of Canada.
Our writing has regularly touched on the promise and perils of globalization. As we’re all getting locked down into our homes and cities, everything feels, a bit more, well, local. I’ve started following all of our local representatives on Twitter. I even had the local TV news on in the morning (that didn’t really help). This entire piece is eerily prescient in just how well it predicts the dangers of a place-less, transnational elite:
The circles we move in, Hutchins explains, are defined by “interests” and “activities” rather than “geography”: “Beijing has a lot in common with New York, London, or Mumbai. You see the same people, you eat in the same restaurants, you stay in the same hotels. But most important, we are engaged as global citizens in crosscutting commercial, political, and social matters of common concern. We are much less place-based than we used to be.”
Peacetime CEO/Wartime CEO (2011)
You won’t normally find me sharing blog posts by VCs that could double as LinkedIn broetry. But, given the current business climate, I couldn’t help but thinking back to this post from Ben Horowitz from a long time back. I will confess, when starting Informerly, I was probably sitting at WeWork and reading this kind of stuff and maybe fist-pounding with another founder on the floor. But it’s a memorable one, and something to think more about in the coming months:
Peacetime CEO does not raise her voice. Wartime CEO rarely speaks in a normal tone.
Peacetime CEO works to minimize conflict. Wartime CEO heightens the contradictions.
Peacetime CEO strives for broad based buy in. Wartime CEO neither indulges consensus-building nor tolerates disagreements.
SoftBank Owned Patent Troll, Using Monkey Selfie Law Firm, Sues To Block Covid-19 Testing, Using Theranos Patents
What a headline, right? This is a ridiculous story featuring Softbank, Theranos, and one of the buzziest hedge funds from when I was in trading (Fortress). It’s a reminder there is a lot of fuckery that continues on in the underbellies of the tech world:
So, this SoftBank-owned patent troll, Fortress, bought up Theranos patents, and then set up this shell company, "Labrador Diagnostics," which decided that right in the midst of the Covid-19 pandemic it was going to sue one of the companies making Covid-19 tests, saying that its test violates those Theranos patents, and literally demanding that the court bar the firm from making those Covid-19 tests.
Tim Wu - NY Times
I really don’t like the American airline companies. While Big Tech firms present the dangers of market concentration in new and unpredictable ways, there is nothing novel about the Amerian airline oligopoly. Prices went up for consumers. Experience degraded. They all profited. Immensely.
Tim Wu, author of the Attention Merchants, one of the books that I can definitively say changed the way I think, and still holds up after a few years, wrote for the NYTimes on the topic. And the entire thing infuriated me:
Instead, American blew most of its cash on a stock buyback spree. From 2014 to 2020, in an attempt to increase its earnings per share, American spent more than $15 billion buying back its own stock. It managed, despite the risk of the proverbial rainy day, to shrink its cash reserves. At the same time it was blowing cash on buybacks, American also began to borrow heavily to finance the purchase of new planes and the retrofitting of old planes to pack in more seats. As early as 2017 analysts warned of a risk of default should the economy deteriorate, but American kept borrowing. It has now accumulated a debt of nearly $30 billion, nearly five times the company’s current market value.
I know, I know. This really isn’t standard Margins fare. But my senior year of college, through a confluence of incredibly random events, I ended up at the Superbowl in New Orleans. I had been (and am still) a lifelong Patriots fan, and this was just something that changes you forever, for the better.
It was long before Tom Brady became, well, Tom Brady. It was long before we became the evil empire. It was as pure as it gets. I genuinely wish this kind of sports fandom experience for every single person who has ever cared out there.
And hopefully we can get our sports back soon.
I’ve been stocking up from Amazon for the past couple weeks before the virus truly hit the US. But with being holed up at home, my impulse purchases went through the roof. I think I’ve bought something every day or so. We’ve all come to think of Amazon as this warehouse in the sky where anything and everything just appears at the press of a button. Nothing is ever out of stock, and it just works. Well, maybe not. We might soon come to the unfortunate realization that putting all our supply-chains in one Amazon cart might not have been a good idea. Even Amazon has its limits, and it will break.
With the coronavirus crisis having already affected large swaths of American culture and the economy, there's no real reason to think that the world's largest retailer will be spared. Amazon is facing pressure from three different sides: Increased demand from consumers, the very real potential of coronavirus spreading through a warehouse, and supply chain interruptions.
Marker from Medium
I feel like it’s been a while since I rambled here on whether or not some company is a tech company. I dont want to say it’s Warby Parker’s fault that we (and by we, I do not mean myself) think of selling stuff online does make you a tech company, that can raise money from tech company venture capitalists and then experience tech company growth with tech company margins and then have a tech company exit. But, come on, obviously selling stuff online does not a tech company make. A neat website is neat, and there are some marketing integrations here and there, but it’s an operations business. And the finance does catch up to you, as I said before. And also, I like my Warby Parkers, thank you very much.
Perhaps the original mistake of the DTCs wasn’t in their vision, but in their decision to take the venture capital in the first place. Now under pressure to grow even faster and at greater scale than they otherwise would have had to naturally, they are being confronted with what happens when growth slows down, the cash starts running out, and investors are expecting their returns.
It is hard to think of anything but the virus (the virus? coronavirus? The coronavirus?) these days. The now infamous “flatten the curve” visualization courtesy of The Economist and CDC has probably saved hundreds of lives already, if not thousands. But how does staying home help flatten the curve? The folks at Washington Post did an amazing visualization of a simulated disease spreading through different populations, some in which people move around and some not. It’s utterly scary to watch, and I have to say it hit me hard when I went back to the times I had put others at risk. You need to go through the entire thing and let it sink in. It will change you.
Simulitis is not covid-19, and these simulations vastly oversimplify the complexity of real life. Yet just as simulitis spread through the networks of bouncing balls on your screen, covid-19 is spreading through our human networks — through our countries, our towns, our workplaces, our families. And, like a ball bouncing across the screen, a single person’s behavior can cause ripple effects that touch faraway people.
Has your mind melted yet from all the virus coverage yet? Mine is on the precipice. I’ve mentioned before how this felt like what people in Turkey had been experiencing for years daily, but I think we are almost past that. Everyone is reading more news. We are all trying to figure has happened this passing hours, what is happening right outside our doorstep, and what is coming our way.
According to Chartbeat, another popular content analytics platform for major publishers, “coronavirus” dominates the top spots in two major categories: the number of people simultaneously reading articles about a topic and the time spent reading those articles. While Chartbeat’s data shows the number of articles published last week was down slightly compared to the same week a year earlier, the number of page views was up 33 percent. The amount of time spent actively scrolling, clicking, and reading articles was also up significantly (30 percent) in that time.
One more thing…
And meanwhile, there’s this. It is pretty revealing that the founder of a social media news site, powered by user generated content, is unhappy with what he’s seeing on his platform and has to plead to news organizations to lower their paywalls. I can’t tell if this insanely ironic, or inartfully phrased. It does make one wonder what the end goal here should be? I think that this crisis shows how we need sustainable news organizations more than ever (many others agree) and social media is a good addition to the mix but no substitute.