A Market For (Almost) Everything
Donuts, X Creator Payouts, Legibility, and Liquidity
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Hi friends 👋,
Happy Tuesday! We’re in the thick of August, so I hope this email finds you either on a beach or working on something you don’t want to stop working on.
In either case, I hope you have better things to do than read a long newsletter.
Plus, yesterday was Puja’s birthday – happy birthday Puj!! So I had better things to do than to write one.
So let’s keep it short and give you something to chew on on the beach.
Let’s get to it.
A Market for Almost Everything
Used to be, a man wanted something to eat, he grew it or killed it and cooked it for himself.
Millennia ago, there was no market for food, no buyers or sellers. A man couldn’t, at the end of a long day, say, “Let’s just order tonight.” Couldn’t even go to a grocery store to get the ingredients and cook it himself. There was no price he could pay for a meal but his own direct labor.
Today, we do this:
That’s a real screenshot from my phone yesterday, and look, I fully admit $29.06 is an absurd amount of money to pay for a dozen donuts, but I had a choice:
Not get the donuts.
Spend half an hour wrangling the kids into the double stroller, walking to Dunkin’, ordering the donuts, and carrying them back home.
Just order the donuts and pay the delivery fee, service fee, and tip.
It was Puja’s birthday and she loves Dunkin’ Donuts, so A wasn’t an option. I chose C.
As much as people love sharing screenshots of food delivery fees in horror, there’s something kind of great about them.
There’s now a market – I can pay some price to get what I want. It’s legible – my time was clearly priced at the $9.76 fee + tip bundle. And it’s liquid – as soon as I decided I wanted the donuts, there was someone willing to get them for me for that $9.76, in less time than it would have taken me.
Something similar is happening, has happened, and will continue to happen everywhere you look: donuts, dating, stocks, jobs, revenge.
It’s like a law of physics, or at least a law of capitalism:
Markets emerge for almost everything and become more liquid and legible over time.
Take views. On Friday, I was sitting there minding my business, when I got an email from X:
The company formerly known as Twitter paid me $3,523.35 for tweeting, something I’ve been addicted to doing, for free, for years. That’s like a pack-a-day smoker waking up one morning to a big check from Marlboro simply for smoking a pack-a-day. (Tweeter beware: that does actually happen sometimes, but when it does, it’s because Marlboro gave you cancer.)
Twitter has always been very valuable to me. Not Boring and Not Boring Capital probably wouldn’t exist without it. But that value was indirect:
Find an idea on Twitter, write about it, get more subscribers, sell more sponsorships.
Or, newsletter shared on Twitter, more people subscribe, sell more sponsorships.
Or, tweet something insightful, impress a potential LP who invests in the fund.
Or, tweet something about an industry I’m exploring, find a founder we invest in.
I couldn’t have told you how much a view was worth. It wasn’t legible. And I couldn’t convert views directly into dollars. It wasn’t liquid.
With Creator Payouts, it’s both. Roughly 15 million views at $0.0002 per view, paid directly into my account.
That combination – legibility and liquidity – is as alluring as it is dangerous. It can tempt you into short-term moves at the expense of long-term ones.
In The Great Online Game, I wrote that, “Medium-level Twitter is Threads and engagement hacks. Twitter Mastery is indistinguishable from an ongoing game.”
Now, medium-level Twitter, the threads and engagement hacks, gets you paid. There are playbooks you can follow and accounts you can copy to build a following and produce mindless view fodder as predictably as a delivery person can make $9.76 for bringing me donuts.
You do so at the risk of getting stuck on medium, polishing away exactly the unique and weird curiosities and obsessions that might attract the other people with the same weird curiosities and obsessions. And you do so at the risk of being labeled, subconsciously, as an engagement hacker by the very people whose engagement might matter most to you.
As markets get more liquid and legible, it’s too easy to be mid, to be the rat in Steve Cutts’ Happiness:
But that’s not you! Resisting the temptation is more valuable now, too, because it’s harder.
As people contort themselves to please the algorithm for short-term payouts, there’s even more of the less legible, less liquid, but ultimately more important long-term value up for grabs for you if you continue to just be yourself and talk about whatever lights your fire, algorithm be damned.
Don’t get me wrong. I think it’s great that Twitter is sharing revenue with the creators who drive it, and I’ll happily take the money. I got donuts to buy. And I love that some people are making more money from tweeting than they do in their day job; what a world!
It’s just that Twitter is an easy toy example to make a bigger point:
It's useful to be aware of the trade-offs and incentives pulling at you as (almost) everything turns into a liquid and legible market.
Liquid and legible markets are, on balance, a great thing. They’re a sign of progress’ march.
The market for sending things to space is now liquid and legible. The market for compute is now liquid and legible. The market for intelligence is even becoming more liquid and legible.
Nine times out of ten, the right move is to simply and gratefully take advantage of that legibility and liquidity. Buy a SpaceX rideshare instead of building your own rocket. Use AWS instead of racking your own servers. Plug in OpenAI’s API instead of building your own foundation model. Hell, go farm views on Twitter to make the money to do that thing you really want to do, that only you can do.
If the liquid and legible market is in something that’s not core to who you are or what you want to do, by all means, squeeze that liquidity and legibility for all they’re worth. If paying someone $9.76 to pick up donuts means I get to spend 30 minutes writing or playing with my kids, I’ll make that trade all day. If Twitter wants to pay me to do exactly what I’d do anyway, awesome.
Just beware of the temptation to take the liquid and legible path ten times out of ten.
As markets become more liquid and legible, beta improves while alpha erodes. The average person in those markets is better off, but it’s harder to outperform. It’s easier than ever to make $1,000 by tweeting threads, and harder than ever to stand out as unique by doing so.
Know what you want to stand out for, how you’re different, what you can do that no one else can that can’t be captured by an algorithm or simple market signals, at least not yet.
There’s a market for almost everything.
The most valuable things will always be the ones that are hardest to price.
Thanks to Dan and Puja for editing!
That’s all for today! We’ll be back in your inbox on Friday with the Weekly Dose.
Thanks for reading,
Packy
Packy, well said. I think one important takeaway--one I'm trying to convey in my own work--is that there's always a trade-off, and the best thing we can do as writers is to get folks thinking about what these trade-offs are. There's no free lunch, and everything we get to have has a cost. If you can't figure out what that cost is easily, there's probably a good reason for that.
There is certainly a dichotomy, and probably not in the direction we want to see. With Twitter and YouTube for sure most everything needs to tie into health, wealth and relationships, and ideally involve fear and or sex, precisely because there is a quantifiable market. And it doesn't even have to be quantified on the "platform." Mid-level twitter as you point out works without creator royalties almost as well.
On balance though I "think" this is good so long as we can adjust. There are indeed super interesting and valuable creators making a living teaching physics and other topics on youtube.
I also agree with your point about avoiding the temptation. Many times, the real alpha, and real problems to derive solutions for, lie outside of existing quantified markets. Think environmental externalities and human/animal suffering.