Hi Friends 👋,
Happy Monday. I said last week that I’d be sticking to a Sunday cadence, but a few of you mentioned that you like getting the newsletter on Mondays better, and I have the open rates to back that up. Jeff Bezos believes that the smartest people change their minds in the face of new facts. So Monday it is!
Dads Being Dads
I’m writing to you from beautiful New Jersey, where spent Saturday with my Dad and Sunday with Puja’s for Father’s Day. When we got a flat tire driving between our two houses on Sunday morning, Puja and I both pulled out our phones to call our dads and ask them what to do. They knew how to change a tire, and how to deal with a tire that wouldn’t come off, off the top of their heads, without having to look at a YouTube video. Dads are the best.
What I’m Reading
I finished listening to Exhalation by Ted Chiang (which was excellent and I highly recommend listening to), and it got me hooked on sci-fi short stories. So up next on the list is Radicalized by Cory Doctorow, the author of I, Robot. Someone on twitter described it as “Black Mirror with actual people instead of soulless sociopaths.” Good enough for me.
I’m still reading Range by David Epstein. Normally I speed through books and forget half of what I read, but I’m really enjoying taking this one slow, taking notes and trying to internalize its lessons. Which may be for the best - Epstein points out that people who study something, put it away for a while to do other things, and then come back to it are more likely to remember it for longer than people who chunk all of their studying in one session.
Links and Listens
🏢 The I in We by Reeves Wiedeman in New York Mag Intelligencer
Articles on WeWork have become appointment reading for me, and this may be the best one yet (so good that both Mike and Sudhir sent it to me - thank you!). WeWork articles are interesting to me professionally because they operate in the same industry as Breather, have grown at breakneck speed, and are the most talked-about company in our space.
Where they really get me, though, are on a personal level. I can’t get enough of Adam Neumann quotes. My favorite from the New York Mag article has Neumann painting WeWork in the role of international peacemaker: “I need to have the biggest valuation I can, because when countries are shooting at each other, I want them to come to me.”
There are more gems in this article than there are in Aladdin’s Cave of Wonders. Read it.
📈When Everything That Counts Can’t Be Counted by Josh Brown
In this excellent article that blends finance and some of the concepts that I wrote about in The Rise of the Natively Integrated Company, Josh Brown explores a question that investment market historian William Bernstein asked him: “What if the cost of capital never rises again?” This opposite of this question is one that I hinted about at the end of the piece on NICs - what happens to NIC when cheap money isn’t so freely available?
Brown’s thoughts on Bernstein’s question bode well for NICs. He sees that companies like WeWork, Airbnb, Amazon, and Netflix are achieving much higher multiples than their older competitors because they own ongoing relationships with their users and focus on things that even free money can’t buy, like intellectual property and brand. The same argument can also apply to private-market NICs like Harry’s, Zeus and Epidemic Sound - companies who focus on building brands, relationships with customers, and whose value chains are constructed in such a way that it’s nearly impossible for competitors to imitate by spending money alone.
Since she started putting it out in 1995, Mary Meeker’s Internet Trends report is always one of the most anticipated and most discussed documents in tech. This year’s edition is 333 slides short, so I’m pulling out a few of the most interesting tidbits for you:
Global internet penetration topped 50% in 2018, with 3.8B people connected to the internet
7 of the top 10 companies by market cap in the world are tech companies, led by Microsoft at $1T. Of those 7, 5 are in the US and 2 are in China.
E-commerce has grown from 14% to 15% of total global retail sales
Amazon/Twitter/Snap/Pinterest ad revenue (2.6x growth since Q1 ‘17) is growing faster than Google’s (1.4x) or Facebook’s (1.9x)
Meeker succinctly sums up my Natively Integrated Company argument:
“Effective + Efficient Marketing = One’s Own Product + Happy Customers + Recommendations”
Fortnite ships 1 major update per week
Freemium model started in gaming, then went to enterprise, and is just getting started in consumer
88% of people think the internet has been good for them personally, but only 70% think it has been good for society
47% of on-demand workers were previously unemployed, and remote workers have grown from 3% of the workforce in 2000 to 5% of the workforce today
There is a ton more in the presentation, including some company-specific data that prompted one twitter user to remark that it seems as if Mary Meeker can go to any company, ask them for any metric she wants, and get the answer. Find a nice quiet place, a couple of hours, and enjoy!
😴 Hit the Reset Button in Your Brain by Daniel Levitin in New York Times
Ok, now that we’ve seen how connected we are in Meeker’s report, it’s important to make sure to disconnect and hit reset on your brain every once in a while. Levitin cites neuroscience research that tells us that taking breaks from being connected and working, along with the occasional nap, actually makes us more productive and better at solving problems. Use this article as your justification for sleeping in.
🎱 All these balls are actually [redacted] on Reddit
In the tradition of The Dress, this image of 12 balls is the latest optical illusion to take the internet by storm. Can you name the color of each of the balls? Answer at the bottom.
This week, I will be diving into some follow-up articles on Natively Integrated Companies. If there are any questions you had or anything you’d be interested in me exploring, let me know.
Have a great week!
Answer: all of the balls are brown.