Episode 104

full
Published on:

11th Oct 2024

Bad Bets

This week, we take a look at making bets that go wrong, and how it’s often difficult to tell if a bet is a bad one in the short term. Was Meta’s bet on VR a bad bet? Maybe in the short term, but perhaps not in the long term. Media companies have made their fair share of bad bets over the years, although there weren’t many options available. Will the parade of AI deals join the pile of bad bets? Plus… Good Product with a VERY special guest Steve Katelman.

Transcript
Brian Morrissey:

We're back.

Brian Morrissey:

Alex is back from conferences or demos.

Brian Morrissey:

What are we doing?

Alex Schleifer:

I was, uh, I had investor events that I had to attend.

Alex Schleifer:

So,

Brian Morrissey:

got to butter up the money, people.

Brian Morrissey:

Uh, Troy, we're doing a public appearance together later.

Brian Morrissey:

I can't wait for that.

Brian Morrissey:

closing keynote.

Alex Schleifer:

Wow.

Brian Morrissey:

Going to Hudson yards.

Brian Morrissey:

Is it, it's Hudson yards, right?

Troy Young:

I don't know.

Troy Young:

I'm looking forward to you telling me where to go and when, cause I

Brian Morrissey:

Uh, yes,

Brian Morrissey:

welcome to People vs.

Brian Morrissey:

Algorithms show about connecting the dots in technology, media, and culture.

Troy Young:

I noticed is wearing those, uh, those glasses that you can record with.

Troy Young:

Is that right?

Alex Schleifer:

Yeah, I am.

Alex Schleifer:

I was, I was, I've been doing the experiment of, seeing how long it takes for people to notice.

Alex Schleifer:

It took my wife, three hours to notice I was wearing them, and then she said, Ugh.

Alex Schleifer:

Um,

Brian Morrissey:

which, class are, they're not the meadow

Alex Schleifer:

they're the meta Ray Ban smart glasses.

Brian Morrissey:

Oh, they are.

Brian Morrissey:

Those are smart classes.

Alex Schleifer:

Yeah, they look pretty good.

Alex Schleifer:

But, I mean, they don't have anything showing up on screen, it's just What's very nice is that you have a speaker over your ear so you don't have to put stuff in your ear and I think that's the killer feature.

Alex Schleifer:

I don't really, I don't really want the cameras on them, I just want the speakers.

Alex Schleifer:

I just want Apple to make like AirPods that are glasses,

Brian Morrissey:

Yeah, this, this points to like an amazing future.

Brian Morrissey:

What could go wrong?

Brian Morrissey:

Couldn't even, couldn't imagine.

Brian Morrissey:

Mass surveillance by everyone?

Brian Morrissey:

Yeah, can't wait for those to be in the locker rooms.

Alex Schleifer:

yeah, well, I'm, I just took a picture and I'm just

Brian Morrissey:

This is great.

Brian Morrissey:

I can't wait.

Brian Morrissey:

Did you see that?

Brian Morrissey:

Like, I don't even know if it was true.

Brian Morrissey:

I don't know what's true anymore.

Brian Morrissey:

There's some, somebody hacked these, apparently, like Harvard, that was then dox people.

Brian Morrissey:

just you, they fed it through, image recognition, facial recognition, and we're able to basically go around and see who people are and, um,

Alex Schleifer:

I mean.

Alex Schleifer:

I mean, when all the pieces of technology exist in some form, you can imagine that somebody's going to put them together, right?

Alex Schleifer:

Like using a photo of yourself, you can pay a service or even use free services to find a bunch of stuff about yourself.

Alex Schleifer:

And then you tie that to an always on camera on glasses.

Alex Schleifer:

Yeah, you're there.

Brian Morrissey:

Yeah, so privacy will go from being a human right to basically a luxury good.

Alex Schleifer:

it's kind of like people feel icky about having, you know, cameras on glasses and I do, I don't, I don't particularly like it.

Alex Schleifer:

But it's also the killer feature that everybody wants is something that reminds them of everyone's name, you know, when you walk into a room, like we all want that secretly, you know,

Brian Morrissey:

Yeah, lanyards.

Brian Morrissey:

This is a solved problem.

Troy Young:

Hello.

Troy Young:

My

Alex Schleifer:

in conferences.

Brian Morrissey:

Troy will wear the lanyard later.

Brian Morrissey:

You'll wear the lanyard, right?

Troy Young:

I don't usually wear the line.

Brian Morrissey:

Yeah,

Brian Morrissey:

Do you ever leave like a name tag on when you leave one of these events?

Brian Morrissey:

Just walking around New York City with a name tag on?

Brian Morrissey:

Um,

Alex Schleifer:

way to get mugged.

Brian Morrissey:

so this hurricane, had gone through, Florida.

Brian Morrissey:

I, I was not there.

Brian Morrissey:

It was too dangerous.

Brian Morrissey:

So I came to New York for advertising week, which is a very strange event.

Brian Morrissey:

Do you know about advertising week, Alex?

Alex Schleifer:

I think I might have done something for it at some

Brian Morrissey:

Oh, really?

Brian Morrissey:

It's been around for 20 years and, it is a great celebration of, the great industry of advertising.

Brian Morrissey:

So you're missing it.

Brian Morrissey:

A lot of panels.

Brian Morrissey:

A lot of, a lot of parties by technology, ad tech companies.

Brian Morrissey:

I don't know.

Brian Morrissey:

Have you done anything, Troy?

Brian Morrissey:

Advertising week related?

Troy Young:

Well, I don't know if this is related.

Troy Young:

I went to a book launch last night from, my friend, Lauren Sherman

Brian Morrissey:

Oh, okay.

Brian Morrissey:

Yeah.

Troy Young:

Fernandez launched their book

Brian Morrissey:

The Victoria's Secret book.

Troy Young:

Correct.

Troy Young:

Yeah.

Troy Young:

Yeah.

Troy Young:

It was fun.

Troy Young:

Good to meet, see a bunch of people.

Brian Morrissey:

Okay.

Brian Morrissey:

I think this, this hurricane, but I can't tell whether this is a minority experience of it, because it's become very much, In the information space.

Brian Morrissey:

There's a lot of there's characters coming out of it.

Brian Morrissey:

There's some guy called Lieutenant Dan, who wrote out the storm in, in the Bay and Tampa on a 20 foot boat.

Brian Morrissey:

and Caroline Calloway, who, I believe is, by some thought to be the worst influencer in the world.

Brian Morrissey:

At least she's been christened that, she's down in Sarasota.

Brian Morrissey:

She's also riding out the storm.

Brian Morrissey:

she's promoting her book.

Brian Morrissey:

Everything's an excuse for content.

Brian Morrissey:

A lot of content creators are out there.

Brian Morrissey:

And then of course, a lot of misinformation.

Brian Morrissey:

and there is a disturbing number of people that think that the government apparently controls the weather.

Brian Morrissey:

It's not that I've noticed.

Alex Schleifer:

I mean anything more than one seems to be disturbing to me.

Alex Schleifer:

I don't know if it's a, I don't know if it's, if it's as substantial as the news makes it out to be.

Alex Schleifer:

But you know, a lot of people, enough people believe that the Earth is flat for there to be a conference business built around it, right?

Brian Morrissey:

Oh, is

Alex Schleifer:

always see like , oh, flat earthers have

Troy Young:

we're, we're speaking at it later.

Brian Morrissey:

Oh,

Alex Schleifer:

where

Brian Morrissey:

is that what this is

Alex Schleifer:

Exactly.

Troy Young:

Um, I, I don't know.

Troy Young:

I mean, it's just people playing around in the information space.

Troy Young:

Brian, I don't know how many people really believe that

Brian Morrissey:

Well, I think that's the interesting thing is when you get into these, more confined spaces, when you get beyond mass media, is that, you start to lose sense of like, what is like widespread and what is not, you know, sometimes I find if I spend too much time on, on X, it's completely warped my sense of reality.

Brian Morrissey:

Like, I'm like, there, no, this is not how, Quote unquote the majority of people like are seeing the war.

Brian Morrissey:

I think it's going to be interesting as we retreat into these these niche spaces Because it does warp your sense of what real is like going on X like for me I would think that like a large group of Americans believe that the government controls the web

Troy Young:

Hmm.

Troy Young:

Maybe you need to follow different people.

Brian Morrissey:

No, it's not followed because it's, it's all algorithmic.

Alex Schleifer:

Yeah, I mean, I think that's,

Troy Young:

that I turned on the news last night and came home and, you know, it's a strange world.

Troy Young:

I, the, the, Main screen was, you know, photos of, or live video feed from Tampa.

Troy Young:

the the ticker bar at the bottom was updates on the war in the Middle East.

Troy Young:

And then below that was the, the record breaking day in the markets.

Troy Young:

you, you start to wonder, what is this place we live in, right?

Troy Young:

Like it's, it's a strange world to, to navigate.

Brian Morrissey:

the presidential election is in its, homestretch.

Brian Morrissey:

And again, just to go back to this information space theme.

Brian Morrissey:

It's really remarkable that the approaches that the campaigns are taking.

Brian Morrissey:

Now, obviously, American elections have become these battlegrounds over, over niches, basically niches of voters, whether it's in the collar counties around Philadelphia or in, you know, The Midwest or demographically, there's a lot of fight for young, low information voters at this point, right?

Brian Morrissey:

whether that's young men, young women, I mean, just this week, Trump was on a, was on like a comedy podcast.

Brian Morrissey:

meanwhile, Kamala Harris, was on call her daddy, podcast and then Tim Waltz walls got, He got deployed to He was on a Twitch stream.

Troy Young:

These are the new talk show appearances, right?

Troy Young:

This is the podcast election.

Alex Schleifer:

I mean, if you look at the numbers, like, if you look even at the nightly shows, numbers and stuff like that, they get completely destroyed by those YouTubers and podcasters, right?

Alex Schleifer:

And then on top of that, politicians get like you know, like more time to talk and it's, and it's less likely to be like, a serious reporter that's going to ask them questions.

Alex Schleifer:

So they might, I mean, I think she did 60 Minutes, right?

Alex Schleifer:

And then she did a bunch of podcasts.

Alex Schleifer:

And then Howard Stern, I think it's a smart media strategy.

Alex Schleifer:

I mean, I think that's just the way things are today.

Troy Young:

She

Alex Schleifer:

people are finally, she did Colbert.

Alex Schleifer:

But Colbert, you can see those things like those, those nightly numbers aren't, aren't that big, but then it's all the kind of YouTube clips that and tick tock.

Alex Schleifer:

You know, that, that, that make, make up for it.

Alex Schleifer:

it's just a very, I mean, it's finally, I think it's finally shifted.

Alex Schleifer:

I don't know how the next election looks like, you know.

Alex Schleifer:

Is there still the 60 minutes and stuff like that beyond that, you

Brian Morrissey:

Yeah, but I think this, this, this carries over into, I mean, to me, what's interesting is presidential campaigns are incredibly compressed, right?

Brian Morrissey:

And so they, sometimes, they're a harbinger of, of trends that will wash over, the entire media ecosystem.

Brian Morrissey:

They just have, they just, there's more urgency in, in these kinds of,

Alex Schleifer:

Maybe we can put a clip of that, podcast appearance by Donald Trump on, on flagrant, it's Andrew Schultz and Akash Singh, I think.

Flagrant:

I have a hard time doing it to them because I'm based, you know, I'm basically a truthful person but, and, and frankly, no, but frankly, no, but frankly,

Alex Schleifer:

it's quite something because he starts talking and they, they burst into uncontrollable laughter and it's, it's glorious.

Alex Schleifer:

So

Brian Morrissey:

well, they can't help it.

Brian Morrissey:

I mean, he's, he's funny.

Brian Morrissey:

He knows he's funny, right?

Brian Morrissey:

Right.

Alex Schleifer:

but it's more like he says, I think he says something at some point, like I'm a truthful person and, and, and the host cannot contain himself.

Alex Schleifer:

Uh, it's definitely good entertainment, you know?

Brian Morrissey:

I think it's fine that it's not just like, I think when it's like, yeah, the New York times editorial board, I mean, at this point it is low information voters and it's fine.

Brian Morrissey:

Like most of the decisions that are being made are based on like vibes.

Brian Morrissey:

So this is fine.

Brian Morrissey:

You get like a cut of their jib and see if, See if it sticks.

Brian Morrissey:

I don't know.

Brian Morrissey:

I don't think it's such a bad.

Alex Schleifer:

Why would you think it's bad?

Brian Morrissey:

Well, I think that there is, there's a knee, knee jerk reaction within sort of institutional media because it's viewed as a threat, right?

Brian Morrissey:

so, you know, You know, a report came out about Tiktok being used as a news source and, oh, surprise, surprise, you know, most people on Tiktok are not following like institutional news accounts or journalists, they're following quote unquote creators, right?

Brian Morrissey:

And it's part of, I think, the, the waning power of, the overall news media.

Brian Morrissey:

I think it's like, it doesn't get replaced.

Brian Morrissey:

There's just more sources of information now.

Brian Morrissey:

And so obviously anyone trying to influence public opinion, whether you're an advertiser or a politician and politicians are basically advertisers.

Brian Morrissey:

you're going to diversify how you reach people because.

Brian Morrissey:

That just makes sense.

Alex Schleifer:

I mean, I think it's just more at the end of the day, everything's entertainment.

Alex Schleifer:

People are trying to maximize their minutes, you know, by making them entertaining.

Alex Schleifer:

And I, and this is all about, having so much access to commentary, right?

Alex Schleifer:

everybody really kind of wants commentary that's contextualized into something they like.

Alex Schleifer:

So it's either, you know, watching the original Daily Show because they made the news fun.

Alex Schleifer:

And then we found out very quickly, right, that most young people that was 10 years ago was, were getting the news from the Daily Show, right?

Alex Schleifer:

And then that switched over to kind of the YouTube sphere gurus on the left and the right that recontextualize the news.

Alex Schleifer:

So the news ecosystem is still there.

Alex Schleifer:

They all use clips, you know, from CNN and everything like that, or they all talk about this article they read, but they're just recontextualizing it for their audience.

Alex Schleifer:

And I think we're just building layers of abstraction between the news, and people.

Alex Schleifer:

And then what politicians have found out is, well, let's go straight to the commentators.

Troy Young:

Yeah.

Troy Young:

It's funny though, the, the buildup to any election is about a process of understanding promises and policy and character, so that you can minimize the risk of making a decision as a collective.

Troy Young:

We used to filter all of that through, a small group of elites that would allow, that would, that would provide us with a construct and information to make a decision, and now, it's coming at you from.

Troy Young:

You know, every direction and it's turned into a, you know, like a weirdo beauty pageant and it's just, you know, so you, you, it's just hard to understand, first of all, how you make the decision.

Troy Young:

I mean.

Troy Young:

and then, you know, I think more troubling is how we hold or how we manage accountability after that decisions made, you know, in terms of you have someone who's elected that's doing things that cost people lives that change the fabric of a country that, you know, that have real consequence.

Troy Young:

And so.

Troy Young:

You know, if, if the run up to this thing is a sham and we don't make good decisions and then afterward we're sort of incapable of kind of holding people to account because there's no good information, that's really troubling, right?

Troy Young:

it's hard to understand where the checks and balances are in a system that at the, you know, at the end of, of it all have, have real consequence to how people live.

Brian Morrissey:

Yeah.

Brian Morrissey:

I think a lot of that is again, Trump scrambled everything, but I think when you look back at the rise of Trump, I think one of the mistakes that the, the, the quote unquote, the news media made was to get sucked into the, the daily Trump show drama.

Brian Morrissey:

And instead of focusing on government accountability, like, I think that a lot of, news, newspapers in particular should get out of the endorsement business.

Brian Morrissey:

I think they've scrambled, they've scrambled it up too much and, that's not the role to me, telling people how to vote.

Brian Morrissey:

the role is to hold government accountable.

Brian Morrissey:

I don't care who's in office.

Brian Morrissey:

Eric Adams was pretty clearly corrupt from the beginning.

Brian Morrissey:

The fact that it, you know, nobody was covering that.

Brian Morrissey:

You know, nobody was, was digging into that.

Brian Morrissey:

Now, is that because of politics?

Brian Morrissey:

I have no idea.

Brian Morrissey:

But like, this idea of, of getting swept up into the drama, Of the politics versus actually holding government accountable.

Brian Morrissey:

Like I don't care who's running the government.

Brian Morrissey:

That's that to me is a very viable role.

Troy Young:

That's

Troy Young:

why this Balmer thing that we highlighted a couple weeks ago is I think important, which is a sort of media brand built around just the facts and explaining them to people.

Alex Schleifer:

Right, but the problem is you're building these, can't really blame the media, and I can't believe I'm saying that because of the way the system is built.

Alex Schleifer:

And there's a profit motive attached to it.

Alex Schleifer:

And having opinionated media is what people want right now.

Alex Schleifer:

So everybody's kind of pulled into that.

Alex Schleifer:

And then when the biggest show in town is Trump making either a fool of himself or showing people the light, then, the, the, the news outlets need, need to cover it and, and they're, they're trying to run a business and I think.

Alex Schleifer:

at the end of the day, what's probably healthier is that we have more access to content and layers of abstraction and people that can, you know, provide, you know, context via YouTube or podcasts on top of the news.

Alex Schleifer:

That seems to be where the thing is settling because I think we're gonna, wait a while if we think that there's going to be a news source that come that's, that does all these things, right?

Alex Schleifer:

That says like, well, we're just going to be about the facts and we're, and it's successful because people want.

Alex Schleifer:

You to pick a side every it's like it's just such a strong Force when there is none of that, when there is not that much choice, then sure, sure.

Alex Schleifer:

Yeah, we'll all look at something and it'll be factual.

Alex Schleifer:

But, when I can choose a new source, that is fun to watch that kind of blast the other sides that has an opinion, I'll choose that.

Alex Schleifer:

and that's, what's happening right now, you know, like it's, you can't really blame the media.

Alex Schleifer:

Like, what are you going to do if you run one of these businesses?

Alex Schleifer:

not cover Trump, not do this.

Brian Morrissey:

I wouldn't say

Brian Morrissey:

not cover Trump, you know, we're going to talk about bad bets, right?

Brian Morrissey:

I think, I think betting on the op being like the opposition was a bad long term bet.

Brian Morrissey:

It was a, it was a very good short term bet and all the incentives, the profit incentives were there to take the resistance role.

Brian Morrissey:

I don't know how the election is going to turn out, but there's, according to the betting markets, it's going in Trump's direction.

Brian Morrissey:

Right.

Brian Morrissey:

And.

Brian Morrissey:

I don't think it's a coincidence that, you know, taking the opposition role, if that was like genuine, really didn't work at all, right?

Brian Morrissey:

And, and the, the trust numbers have just gone down for, for news media.

Brian Morrissey:

So that was a bad bet, I would say.

Troy Young:

Do you want to introduce this idea of bad bets as a segment?

Brian Morrissey:

I want Alex to.

Alex Schleifer:

I was looking at, you know, past episodes that we had.

Alex Schleifer:

And we, we, we made a lot of, predictions, around AI and then that's the different companies were doing was either Microsoft kind of going on it, all in on, on open AI, you know, Zuckerbergs, Berg's bet on the metaverse, Google's kind of, you know, Feeling that Google was kind of caught like a rabbit in the headlights.

Alex Schleifer:

There were, there were lots of, you know, Microsoft spending 70 billion on Activision.

Alex Schleifer:

and the world looks pretty different now.

Alex Schleifer:

And some of these have been, you know, bad bets and then also bad calls by us, I think, and I wanted us to, to kind of review them and then also look at, at media, bad bets and good bets, you know, some things that we might have not expected would have worked, have worked, uh, some things have fizzled out.

Alex Schleifer:

So I thought we would, we would look at kind of decisions, ours and, and theirs, that might've been bad.

Alex Schleifer:

Does that make sense?

Brian Morrissey:

Yeah, that makes sense.

Alex Schleifer:

this is why I actually bought and wore my meta glasses today.

Alex Schleifer:

Because I was always coming in hot against meta and I think they've been having, they've been doing gangbusters.

Alex Schleifer:

All it took was Zuckerberg to get like a six pack.

Alex Schleifer:

and now everybody loves him.

Alex Schleifer:

but I still think, you know, that the metaverse bet was a bad bet.

Alex Schleifer:

And, Apple did the worst bets of all, which is it got, you know, pulled into this fight with the vision pro and then completely dropped it because turned out that the next wave was AI.

Alex Schleifer:

And it's interesting if you look at where we were a year ago or a hundred episodes ago, two years ago and where we are today, people are sitting in very different positions and I would say Google sitting way is way better than it, and I thought it would be Apple's in the worst position that I thought it would be medicine, a better position that I thought it would be and Google's open AI and Microsoft's open AI that might not, you know, have been, the best decision, but we'll see about that.

Alex Schleifer:

So

Troy Young:

do you think is a bad What's a bad bet in media, Brian?

Brian Morrissey:

Wait, let me, let me stick with, with tech for instance, because I think you can't really compare the two because like, bad bets.

Brian Morrissey:

I mean, it's bad bets with like monopoly money.

Brian Morrissey:

Like, so Apple made a bad bet.

Brian Morrissey:

It's it's market cap is up 28 percent in the past year.

Brian Morrissey:

That's a bad bet.

Brian Morrissey:

That's what, that's what losing looks like in these industries.

Brian Morrissey:

I mean, this is basically Lena Kahn's like arguments.

Brian Morrissey:

Like it doesn't matter if you're the house, like you can't lose.

Brian Morrissey:

so if you're sitting on a pile of cash, if you're Google and you have basically the greatest business model ever invented, you can make.

Brian Morrissey:

Like 50 bad bets, just make the bet at that point, like, is Oculus a bad bet?

Brian Morrissey:

Who cares?

Brian Morrissey:

Like, I mean, they have so much leverage in these businesses that to compare it to like a media business, they can't make big bets.

Brian Morrissey:

you can take moon shots when you have a stranglehold on these markets.

Brian Morrissey:

is it even a bet when there's no downside?

Alex Schleifer:

I don't think there was no downside I think Meta's had to work really hard to kind of work its way out of, of, you know, the situation they were in with, with all that, you know, investment into the metaverse to talk about the metaverse.

Alex Schleifer:

And now their story makes a lot more sense.

Alex Schleifer:

Now the bad bet was betting against meta.

Alex Schleifer:

because I think, I actually think Zuckerberg is also a smart guy and they've worked really hard to, to move out of that, but the

Troy Young:

Maybe don't be too quick to say the Metaverse is a bad bet.

Troy Young:

I mean, I just disagree with that.

Alex Schleifer:

Well, I mean, maybe in 10 years, but I think, I think the, that

Troy Young:

I mean, there is no path to a new platform, you know, this, all of the stuff that, the stuff you're wearing on your face without the Metaverse.

Troy Young:

And I would argue that The metaverse was an accelerant for their AI development because the AI and kind of metaverse go hand in hand and now they've done You know the extremely hard work and investment required to build the competency in hardware that you know TBD but it looks like it's gonna pay off

Troy Young:

so

Troy Young:

in you know I mean, I I don't think it was maybe you know a clear

Alex Schleifer:

that's why I'm saying like my.

Alex Schleifer:

betting against Meta was the bad bet.

Alex Schleifer:

I'm calling that out and, and part of that is that I think that the thing that they demoed, at their event, the glasses that kind of like looks somewhat like glasses and can project, mixed reality in front of your eyes.

Alex Schleifer:

they're still big and they still cost like 10, 000 to make, but I thought we were 15 years away from that.

Alex Schleifer:

You know, I didn't think, I didn't think we were, we were that close to that.

Alex Schleifer:

And that's completely changed the game.

Alex Schleifer:

And it's probably, you know, Apple might have something in their lab running like that, but I think it's just, that was, they just threw fuel on that fire and I, and I expect we will have these types of products, you know, in the next two,

Troy Young:

think Brian's point is, is terrific that, you know, when your company's throwing off billions of dollars in cash flow and, you know, the market's preventing you from acquiring your way to the next, you know, equilibrium that, you know, you throw a huge amount of money at innovation and, you know, the, the path is, is non linear.

Troy Young:

I think that the biggest bad bet I would, I would, to transition the conversation to media, I would say would be, probably CNN and, the bet there was they could, you know, continue to rely on, cable news is the primary distribution, you know, environment for them and that they would, you know, build a big free website.

Troy Young:

And had they changed the way they thought about, you know, their primary distribution vehicle and everything that would be required to serve that.

Troy Young:

New customer.

Troy Young:

you know, CNN would look more like the New York Times, that have built, you know, a subscription based business against cohorts, diversifying news to games to lifestyle and figuring out how to, to build, you know, really, you know, a trusted kind of, you know, app based relationship on the phone that will sustain the subscription business.

Troy Young:

And now you see, you know, CNN kind of coming to the.

Troy Young:

the paid, you know, internet based or DTC game really late.

Troy Young:

And, you know, still a lot of profit in the business because of, you know, the, the cable system.

Troy Young:

But I, I think that the transition is going to be really, really hard and they're, they're, they're sort of a day late.

Troy Young:

A dollar short

Troy Young:

that so they they they could have made a different bet on shifting distribution much earlier And the company would have looked a lot different.

Brian Morrissey:

What do you think broadly, though, within the publishing landscape, from the beginning of the internet, was like the worst bets?

Brian Morrissey:

Now, a lot of them, I don't know what the alternative was.

Brian Morrissey:

Like, you know, betting, betting on distribution you don't control.

Brian Morrissey:

you know, throwing your lot in with the platforms.

Brian Morrissey:

Clearly in retrospect, bad bet.

Alex Schleifer:

was like stage two, right?

Alex Schleifer:

So stage one was deciding to put out free content

Brian Morrissey:

Okay, yeah, free content, but that,

Alex Schleifer:

then that forced you to generate more traffic that only the platforms could give you.

Alex Schleifer:

And then you sold your soul to the platforms.

Alex Schleifer:

That was like the second sin, right?

Alex Schleifer:

you know, and then that the cap was out of the bag after that, for sure.

Alex Schleifer:

Right.

Brian Morrissey:

right, but like, were those truly bad bets?

Brian Morrissey:

Because it wasn't like you're, you're sitting there like meta or anything you can do like, whatever man is up 82 percent the last year.

Brian Morrissey:

is that because they made good bets?

Brian Morrissey:

I don't know.

Brian Morrissey:

I mean, it's just, that's just how it goes.

Alex Schleifer:

I don't want to bring it back into tech, but I wouldn't underplay the fact that there's like real consequential decisions that these guys are making

Brian Morrissey:

of course they make consequential decisions.

Brian Morrissey:

I'm just saying that

Alex Schleifer:

and, and it doesn't mean like in, in tech, especially with these.

Alex Schleifer:

The big guys, it's not like the bets are going to, yes, you know, maybe the, the media bets we're talking about are the catering budget of meta, right?

Alex Schleifer:

And the bad bets are existentials for the CNNs of the world, but that doesn't mean that not like hugely consequential and, allowing the companies to kind of dominate in whatever fields are emergent.

Brian Morrissey:

like opening up three mile, island again, I guess that's a medium sized bet for Microsoft, or is

Alex Schleifer:

oh yes, they opened up a nuclear plant just to, to, to power the LLM.

Alex Schleifer:

But, mean, I think the CNN, but the thing about that, that kind of baffles me is that everybody was seeing that the car couldn't make the jump over the cliff, right?

Alex Schleifer:

Like, and they were just going, no, no, no, let's do it.

Alex Schleifer:

Let's like, let's not pump the brake.

Alex Schleifer:

Let's go this, this way.

Alex Schleifer:

We're going to, we're going to jump that cliff.

Alex Schleifer:

And, what happens in the room when they make decisions like that?

Alex Schleifer:

What do they

Troy Young:

I I mean the real time bet on this is happening right now I mean really happen.

Troy Young:

I I I like your point you guys that you're saying when you were in that and you were not only Optimizing a media business for a new type of content creation.

Troy Young:

So for example, if you were a print business that made a publication or a newspaper, you had to learn how to do all the other things, right?

Troy Young:

You had to learn how to publish at a new frequency with more intimacy, with all of, you know, with, you know, challenged by the kind of, Personality and authenticity of a world where everybody could create.

Troy Young:

And so you had to learn a kind of new content creation, vocabulary, and new mediums and new rules of distribution.

Troy Young:

And you're like, Holy shit, one's going down, you know, 10, 20, 30 percent a year.

Troy Young:

We got to figure out how to make money quickly to get this thing going.

Troy Young:

So it's like you know, whether it's a, it's better, it's just really survival.

Troy Young:

And, and, and then you can kind of reflect back on it and say, well, what if we had, instead of doing all of that, we just really focused on niches on quality content on subscription when, by the way, there was, you know, very little consumer appetite for subscription or infrastructure to make it kind of frictionless on the internet.

Troy Young:

And you didn't have the sort of tech investment to do it.

Troy Young:

But right now the real time.

Troy Young:

new bet that all the media companies are entering into.

Troy Young:

We saw Hurst do it last week.

Troy Young:

We've seen, you know, dot dash Meredith do it.

Troy Young:

New York times.

Troy Young:

Everybody is we're, we're selling arms to a new aggregator.

Troy Young:

Right.

Troy Young:

And, and like we are saying, okay, well on the margin, we can use that

Brian Morrissey:

But you're talking about the AI

Troy Young:

30, um, all the AI deals.

Troy Young:

Yes.

Troy Young:

And anybody that uses AI realizes that it is.

Troy Young:

Just like the last model where the aggregators completely slaughtered media, because it was a better interface to information that aggregated multiple players into a single well executed interface.

Troy Young:

And now we're doing it all over again.

Troy Young:

And the interface is even more powerful because there's AI behind it.

Troy Young:

And we're saying we'll

Troy Young:

close the gap.

Troy Young:

I mean, look at what's, what it really means is.

Troy Young:

We'll close the gap between basically historic or evergreen content that the LLMs did well at the beginning, like all the knowledge in the world with current real time knowledge, right?

Troy Young:

Cause we're going to give you all our current stuff that we're making.

Troy Young:

And now the new interface AI is going to be, you know, twice as useful as search was.

Troy Young:

And, you know, I mean, the simple math of it is it solves a consumer problem better.

Troy Young:

And yeah, I looked at the new.

Troy Young:

a Google prototype the other day and, basically think of the SIRP response as being a generative response to whatever you want, how to get a stain out of one, you're, you know, like a stain out of clothing.

Troy Young:

So that was all generated.

Troy Young:

And then below that was a bunch of what I would call, you know, content or content marketing, like an article from Tide and an article from, you know, You know, better homes and gardens in a little strip in the middle.

Troy Young:

And then below it, three or four big links directly to sellers of the product.

Troy Young:

So think generative response, a little tiny media layer, and then commerce.

Troy Young:

You with me?

Troy Young:

and, and and so that is the replacement.

Troy Young:

That's your reality media.

Troy Young:

That's, you know, in the best case scenario for the replacement

Brian Morrissey:

I would say take, take the middle position because

Troy Young:

well, the middle position.

Troy Young:

is the content that's creating the generative result.

Troy Young:

And the bottom position is the sort of abdication of the affiliate economy to the aggregator, right?

Troy Young:

Commerce going to direct commerce to, to F from, you know, beginning point to end point.

Troy Young:

Right.

Troy Young:

And that little poor middle layer, not only is getting no screen to, you know, screen visibility, but it, you know, it's given its content up to the, to the generative response above.

Troy Young:

And it's given the performance revenue, i.

Troy Young:

e.

Troy Young:

affiliate revenue to the spot below.

Troy Young:

It's like, that's

Troy Young:

death.

Alex Schleifer:

if you look at the playbook that's been used, it's not even a new playbook, it's been used many times over, right?

Alex Schleifer:

Where, I don't think it's entirely intentional, but this is what happens, right?

Alex Schleifer:

tech company makes a platform, they build up the platform's utility by using content that is, commercial content, high quality commercial content, they might get in trouble, then they make deals and as they make deals, they get, they get the consumer used to a new behavior and they reduce all that friction until they figure out a way to get content for free.

Alex Schleifer:

You start out, it's actually a piracy site.

Alex Schleifer:

People go there to see NBC universal shows.

Alex Schleifer:

They get sued.

Alex Schleifer:

They build up all that infrastructure, make a bunch of deals with a bunch of people, but all of a sudden consumer behaviors have changed to become a huge platform.

Alex Schleifer:

So most of that content gets created for free by creators, in an economy.

Alex Schleifer:

This will, I mean, it's the same thing.

Alex Schleifer:

Like if you think that you're kind of abstracting the, the, the, the content consumption so much from, from the writers.

Alex Schleifer:

You know, in the New York Times building, and you're going to survive that.

Alex Schleifer:

It's kind of like, it's kind of a scary thought, because at some point, it turns out you have the greatest editor in the world.

Alex Schleifer:

You have training data that has learned from all the greatest writers in the world.

Alex Schleifer:

So it means that anybody's like Twitter stream can be turned into a thoughtful article if that's what you want to read or like a bullet point list if that's what I want to read.

Alex Schleifer:

And, I don't, I don't think that endgame looks very good for media.

Alex Schleifer:

And, and I don't, I think there's a world where we wouldn't even notice because the models are so intelligent that they're just grabbing all that free and available content that people are willing to put into, onto the web, and turn it into high quality content.

Alex Schleifer:

And, I mean, we listened to that podcast that was generated.

Alex Schleifer:

That's just the beginning.

Alex Schleifer:

Like that's, that's the stuff that I feel like, if you're, if you're just in the content creation business today, what you were benefiting from is an infrastructure to where you can create a high quality product, which most people don't have access to, but that's changing, right?

Alex Schleifer:

Like you're getting people used to new behavior and then that's impossible to work.

Brian Morrissey:

So, So, Troy, is this a bad bet though?

Brian Morrissey:

I mean, is this cause like, yes, the deals are not great.

Brian Morrissey:

Like they're not going to get a lot of money and it's, it's pretty, the, the track record is pretty set at this point.

Brian Morrissey:

But again, I'm left with what are the alternatives?

Brian Morrissey:

This is I feel like.

Brian Morrissey:

The publishing industry has been like a basketball team that's down 12 points with two minutes to go.

Brian Morrissey:

You're just trying to extend the game.

Brian Morrissey:

like that's all you're trying to

Troy Young:

Well, if you know, the sports analogy is you probably have to rebuild for a few years and, you know, get rid of your expensive talent and find a bunch of new talent.

Troy Young:

And, you know, I think that what all of this means is that.

Troy Young:

The constraining function in media companies, unlike, as you pointed out in tech companies is bridging past a future with limited resources.

Troy Young:

And so the only way that you can bet on something that is longer term is to have mass rationalization of your cost and so, and, and, and Rishad Tobacco wallet makes this point in a recent post that that he made, you need a new kind of organizational structure that bridges inside and outside in new ways where, the sort of, as he calls it, the 2 dimensional, you know, structure of.

Troy Young:

That implies authority in, in what was the kind of traditional org chart needs to give way to something way more flexible, way more organic, way different than we've seen in the past, which fundamentally means a rethinking, I think, of the relationship between, employer and employee.

Troy Young:

And, and, and I, I do think that, that this is, it is a really important thing.

Troy Young:

Like the, you know, That's what struck me about, about that, that article, which is like, we need to rethink the pact and, and, and what it means is that, yeah, you may have more of, instead of a employee employer relationship, you may have something that's Flexible over time.

Troy Young:

That's the defined by maybe a minimum payment that, that is almost like a retainer over time where health care isn't either on or off, where you can have a kind of primary and secondary relationship.

Troy Young:

Your primary relationship might hold your, you know, your health benefits and, you know, a small payment over time, and you can flex that up or down.

Troy Young:

and, and you're free by the way, which you never used to be to, you know, do a podcast with media company, a, while you do your own independent gig on sub stack,

Troy Young:

you know, and, and media companies traditionally have tried to put, I mean, I used to do this, try to put.

Troy Young:

A very firm wall around, you know, the talent relationship.

Troy Young:

And I just think that that's not going to work anymore and enter in this discussion, a beleaguered group of people that have felt like they've been, you know, they were the sort of, you know, They were the fuel in the machine for a broken media industry, which are the editors and writers and people that make the thing that, you know, we told to make more, make it faster.

Troy Young:

You know, you earn your audience, you know, hit the numbers and they're saying, no, fuck that.

Troy Young:

Like we're going to unionize and we're going to try to find a little bit of power in this relationship when that.

Troy Young:

When that pact becomes, you know, more rigid on account of a contract between a company and a union.

Troy Young:

I'm really concerned about that because what the future demands is way more flexibility in that relationship.

Troy Young:

And, and, and so, so I, you know, I'm concerned that not you have these beleaguered media companies that are, you know, that are massively constrained by their, by low trust employee relationships and it's very troubling.

Brian Morrissey:

Bingo.

Brian Morrissey:

I think that the one thing that comes through, I mean, you've, you've been singed by union battles before, is, when I talk with people running these organizations and just hearing, I just don't see how they can turn around the ship with the kind of adversarialness that has been embedded within these organizations.

Brian Morrissey:

I don't, I don't get it.

Brian Morrissey:

it's just, it's really, really difficult to run these businesses.

Brian Morrissey:

And so much of.

Brian Morrissey:

The battles right now are counterproductive.

Brian Morrissey:

And, you know, if you look at that, it's not, it's not stopping the layoffs, the cuts are going to happen regardless.

Brian Morrissey:

And I just don't understand how you can get to that more flexible model.

Brian Morrissey:

With this kind of industrial approach to, employee employer relations.

Brian Morrissey:

I mean, I think the dock worker strike was a harbinger and how AI and automation, in this case, it was automation of the ports.

Brian Morrissey:

Assume AI is involved somehow.

Brian Morrissey:

Always is, was a major part of it.

Brian Morrissey:

And this is coming, you know, the, the, the negotiations are all within these media companies are going to be increasingly about how AI is applied.

Brian Morrissey:

And that is just going to slow down the adoption of these models that are needed because non unionized places are not going to wait.

Brian Morrissey:

And so I think it's going to be a, a, it's going to be a liability, I think, in a lot

Brian Morrissey:

of, for these companies that are trying to turn around their models.

Alex Schleifer:

it seems like there's a future structure.

Brian Morrissey:

singed on Twitter if this gets out into the union people.

Brian Morrissey:

It's like the worst thing.

Brian Morrissey:

It's impossible, by the way, to assign a story as an editor to any reporter to write about the impact of unions on this business.

Brian Morrissey:

Because they either won't write about it, because they're going to get attacked on, on Twitter.

Brian Morrissey:

By their friends, or they're just going to advocate.

Brian Morrissey:

and just like turn, turn a blind eye to

Alex Schleifer:

seems, it seems like, when you're somebody talented, that's joins a club.

Alex Schleifer:

a corporation, they come to you with a set of things that you couldn't have on your own.

Alex Schleifer:

Right?

Alex Schleifer:

And it used to be infrastructure.

Alex Schleifer:

Well, that's all, like all the infrastructure is available for free anywhere.

Alex Schleifer:

It used to be distribution, well, that's also available everywhere.

Alex Schleifer:

and then it used to be like, well, but you can make more money here.

Alex Schleifer:

Well, that's kind of also going out the door because we're seeing all these talented p people, you know, turning their, Their audience into, you know, newsletter signups or whatever.

Alex Schleifer:

So I think you need to have a new structure where you hire less people.

Alex Schleifer:

you invest less in infrastructure, but you kind of give the promise to everyone that, you know, if you're successful, you guys are all going to be rich, you know, in some ways kind of a tech, playbook where I can't see if you're, if, if you're in any way, somewhat successful, why are you staying, why are you staying in a.

Alex Schleifer:

in a media structure, if you could,

Brian Morrissey:

Well, I will take a little bit of the opposite because I, Taylor,

Brian Morrissey:

the Renz, yes, but Taylor, the Renz was an example of this.

Brian Morrissey:

And Kyle Chayka, one of our, our former guests wrote an article and was nice enough to quote me.

Brian Morrissey:

in the article in the New Yorker about this and, you know, Taylor, she's, she's very dramatic and I like Taylor, but, she's very dramatic and gets in lots of conflicts.

Brian Morrissey:

And I think she's totally made for, for the independent path, not for being inside of the Washington Post or the New York Times or the Atlantic or anything like that is just not the way those, those, those brands operate.

Brian Morrissey:

but I think that that story really highlighted, A lot of the upsides of taking the independent path.

Brian Morrissey:

Now what I said to Kyle also though, and like, he knows really well, is when you're within those organizations though, they make your shit way better.

Brian Morrissey:

Way better.

Brian Morrissey:

like I'm always, I've been like, I've been in a couple of New Yorker stories and it always, it's always a kick that like the fact checker calls and goes over the quotes, goes over everything and it's like, and a lot of writers really need good editors.

Brian Morrissey:

A lot of

Brian Morrissey:

writers are

Alex Schleifer:

goes back to, well, okay, but it goes back to, I guess I'm forming a thesis, right.

Alex Schleifer:

Where you used to provide infrastructure, right.

Alex Schleifer:

And that infrastructure was very valuable.

Alex Schleifer:

You literally couldn't put word words in a form that people could get right.

Alex Schleifer:

And as

Alex Schleifer:

time goes by.

Brian Morrissey:

not going to set type.

Alex Schleifer:

exactly.

Alex Schleifer:

And as, as time went by that infrastructure, became more and more available, more and more free.

Alex Schleifer:

And now I believe that with AI, right, because it's all interconnected, the infrastructure of editing,

Brian Morrissey:

Yeah.

Alex Schleifer:

I'm going to start writing a newsletter for the company and the way I do it,

Brian Morrissey:

Can I sell ads on it?

Alex Schleifer:

You can, absolutely.

Alex Schleifer:

Uh, I, uh, we

Brian Morrissey:

Your investors are going to love this.

Brian Morrissey:

It's going to be a new like

Alex Schleifer:

Um, but a way I do it is I use this app called Cleft and it will, I'll just speak into it.

Alex Schleifer:

Like I'll just speak into it with a bunch of ideas that I have.

Alex Schleifer:

It'll record 30 transcribes that turns it into like a contextual list of things, bullet points.

Alex Schleifer:

I grabbed that bullet point.

Alex Schleifer:

I dropped it, drop it into chat GPT, turn it into voice mode on my commute.

Alex Schleifer:

I discuss all the points I want to make.

Alex Schleifer:

Then I ask it to write Transcribed first draft of my newsletter, then it spits it out, ask it to make it shorter, then I put it in a thing, I then rewrite it, but it takes me like, it

Brian Morrissey:

sounds so complicated, Alex.

Brian Morrissey:

I just order a cup of coffee and sit down

Brian Morrissey:

for

Alex Schleifer:

you're a writer, you're, you're a writer that like seems to be able to write without

Brian Morrissey:

This is all taking away that skill.

Brian Morrissey:

I appreciate that.

Alex Schleifer:

But you see what I mean?

Alex Schleifer:

Like, I think even, even video editing stuff that is time consuming will, will, will be kind of all that infrastructure is no longer, you no longer need the New York Times or CNN.

Alex Schleifer:

You can create great stuff

Alex Schleifer:

in

Brian Morrissey:

think, I think the hard part will be around things like legal, like services that are not able to be automated yet.

Brian Morrissey:

for instance, liability insurance.

Brian Morrissey:

Substack initially tried to like, you know, have something about this.

Brian Morrissey:

You can get sued.

Brian Morrissey:

powerful people

Brian Morrissey:

like

Brian Morrissey:

suing

Alex Schleifer:

Brian, I, I, where I'm sitting right now, I can tell you there's probably 10 businesses saying there's this new creative economy.

Alex Schleifer:

What do they need?

Alex Schleifer:

Liability insurance.

Alex Schleifer:

Okay.

Alex Schleifer:

Let's make a four click thing.

Alex Schleifer:

That is liability insurance.

Alex Schleifer:

They already did it with, you know, there's already all these startups like pilot that handled basically like a whole CFO system, right?

Alex Schleifer:

All of the things that made you.

Alex Schleifer:

Made it difficult to, you know, to, to, to exist outside of a corporation is being automated.

Brian Morrissey:

Yeah, that's true.

Brian Morrissey:

I mean, I think

Troy Young:

yeah, I would, I would, I would bring it back to one thing that media companies, you said that a good media brand or the infrastructure of a media company makes you better.

Troy Young:

Brian, I totally understand that.

Troy Young:

One thing that media does is packages, you know, it turns content into a form that is More rewarding to read, I suppose, and I think that that's really the ultimate use case of AI because packaging becomes personalized and it becomes, you know, multi format.

Troy Young:

Is delivered in a way that you wanted bullets, paragraphs, audio, video, whatever.

Troy Young:

And so that role in media, which is we take information from reporters and smart people and package it.

Troy Young:

we package it with a brand.

Troy Young:

We package it with editors.

Troy Young:

We package it with images.

Troy Young:

All of that is being automated.

Brian Morrissey:

Hmm.

Alex Schleifer:

we've seen the decline of the brand package, right?

Alex Schleifer:

more people use things like Google News or Apple News and, and don't even care about the source, right?

Alex Schleifer:

turns out you only care about like, it's like, it's like music albums, right?

Alex Schleifer:

Like, I like this song, I like that song, and, and Spotify turned it into playlists.

Alex Schleifer:

And we all lament the, the loss of the album, the art of the album, but that's not what people want.

Alex Schleifer:

And AI is actually incredible

Alex Schleifer:

at at

Troy Young:

Hold

Troy Young:

on one sec, guys.

Troy Young:

Just, just one sec.

Troy Young:

Hey, Steve, what do you need from

Alex Schleifer:

Steve?

Troy Young:

You know, it's, he shows up now and then.

Troy Young:

Yeah,

Alex Schleifer:

might show up later in

Alex Schleifer:

the episode, hopefully.

Alex Schleifer:

Can you get him, can you get him back later on to do a good product?

Brian Morrissey:

Oh yeah, that's good foreshadowing.

Alex Schleifer:

all right, okay.

Troy Young:

do that.

Troy Young:

You know Steve, he's a big hunk of a man.

Brian Morrissey:

What were we talking about?

Brian Morrissey:

Oh, yeah.

Brian Morrissey:

Oh, but there's still a halo, right.

Brian Morrissey:

To, to brands.

Brian Morrissey:

Like, I mean, like we talked with Emily, I think we talked about it, but I've talked to her about it, Emily Sundberg, who was a former guest on here.

Brian Morrissey:

I mean, she still writes for occasionally for, you know, brand publications, because there's, there's still a halo to that.

Brian Morrissey:

Right.

Brian Morrissey:

cause I was like, well, economically it

Troy Young:

Brands are still an important connective tissue.

Troy Young:

You know, I was thinking about this, I was, you know, Taboola, if nothing else, has been important.

Troy Young:

Incredibly successful in grabbing an immense amount of supply at the bottom of pages all over the internet, right?

Troy Young:

Like huge from Apple news to Yahoo to publisher ABC, like they're everywhere.

Troy Young:

And then you ask yourself, even if there is good content in some of those slugs below an article, right?

Troy Young:

Why do you dismiss them?

Troy Young:

Right.

Troy Young:

It's, and part of it is that a good piece of content might be next to a toe fungus, you know, content marketing slug.

Troy Young:

And.

Troy Young:

the truth is, is that without the net, all those chunks of content, those individual pieces of content without context, without brand at the bottom of a page are useless to me because there's nothing to signal quality or, you know, relevance.

Troy Young:

And, you know, I think it's for, for their part, the part, part of it is just the system where anybody can inject content into something that's going to spray all over the internet, but, you know, and, and as a result, there's, there's never.

Troy Young:

There's never any context.

Troy Young:

And in that world where pieces of content are completely disaggregated from the signals you need to say, am I going to spend time here or not?

Troy Young:

They're, they're random.

Troy Young:

They're totally random.

Troy Young:

And then the price of them drops to the price of randomness.

Brian Morrissey:

So I have, I have a question then.

Brian Morrissey:

Was, was betting on the open web a bad bet?

Brian Morrissey:

You should have stuck with Pathfinder.

Brian Morrissey:

Yeah, I mean like the open web seems like it's disappearing.

Brian Morrissey:

it doesn't have a lot of, people who are

Troy Young:

is the open web disappearing though?

Troy Young:

I

Troy Young:

don't think that's true.

Troy Young:

I think we have to be careful when we say that.

Troy Young:

I mean, new interface forms like OpenAI exists on the OpenWeb.

Troy Young:

I use it on the OpenWeb.

Troy Young:

I get, I continue to get a lot of information from the OpenWeb.

Troy Young:

Reddit's on the OpenWeb.

Troy Young:

we get our email on the OpenWeb.

Troy Young:

You know, the OpenWeb, it never take away my OpenWeb, you son of a bitch.

Brian Morrissey:

This is

Brian Morrissey:

definition.

Brian Morrissey:

This is definitional.

Brian Morrissey:

You know what I mean by

Alex Schleifer:

I think it's a tricky question to answer though, because it's, it's, it's multifaceted.

Alex Schleifer:

One, like, if the open web had an infrastructure for payments built into it early on, which, which, which

Alex Schleifer:

people, I think, like, Which, which should have, but like there was a philosophical kind of disagreement around whether or not that should be the case.

Alex Schleifer:

I think media companies would have been less pressured into moving all their content into, you know, platforms, which in turn made the open web less relevant for this type of stuff.

Alex Schleifer:

But it still remains like one of the best, ways to distribute

Troy Young:

think of, yeah, I mean, it really, there's all, there's, there's payments and then there's access to native functionality on devices that really limited it to be more of a dumb document repository.

Troy Young:

And then we spent years and years and years putting JavaScript on top of it to make it behave like something more sophisticated and it never quite did.

Troy Young:

Got there,

Troy Young:

which gave way more power to the, to people that made apps.

Troy Young:

Apps are naturally, you know, are natural, have a power law more so than the open web.

Alex Schleifer:

well, I mean, also, also both, you know, Google and especially Apple is incentivized not to make the web better, right?

Alex Schleifer:

There are lots of things like, you know, putting a website as a, as a, app, as a shortcut app on your, on your iPhone's desktop is just, you know, complicated and messy enough so that it's not compelling.

Troy Young:

by the way, pet peeve, pet peeve number 2000.

Alex Schleifer:

I think it's a new segment.

Troy Young:

no,

Brian Morrissey:

I would be

Troy Young:

a pet peeve.

Troy Young:

Um,

Alex Schleifer:

I think it's

Troy Young:

So, so Apple, Apple has had years to muscle their way into premium content through the acquisition of Texture and the creation of Apple News and Now it's a, it's a, what is it?

Troy Young:

A left swipe, on your, on your phone.

Troy Young:

It's built into, you know, a kind of native notification system.

Troy Young:

They have every single advantage in the world and the interface to content via Apple news sucks.

Troy Young:

It's so bad.

Troy Young:

It's so hard to find stuff there for you feed is ridiculous.

Troy Young:

And, you know, they've tried to work in audio and, you know, interactivity and games and stuff, but Apple really has, to me, has squandered what could have been the most beautiful interface to information.

Brian Morrissey:

And it's wildly successful.

Brian Morrissey:

That's

Troy Young:

Well, because they have

Alex Schleifer:

it's there.

Brian Morrissey:

what I mean.

Brian Morrissey:

It's like, it doesn't I want to make these bets where like, no matter It's like, yeah, let's make a bet.

Brian Morrissey:

Tail, tails we win.

Brian Morrissey:

Heads we win.

Brian Morrissey:

I don't know.

Brian Morrissey:

What is the

Alex Schleifer:

I think we're gonna,

Brian Morrissey:

I'm surprised they don't produce worse stuff.

Brian Morrissey:

Because without that kind of downside risk

Alex Schleifer:

I can't help but to think that it would be the best thing for companies like Apple and Google that, people come in and start, that governments come in and start just like messing with their structures.

Alex Schleifer:

Because I think at this stage, It is actually, you know, the ability to make bad bets that have very little repercussion is kind of cancerous in an organization.

Alex Schleifer:

You know, it let Google just like stagnate and, and that got an existential risk when they noticed they didn't really invest in, in, in, in just like building consumer AI as they, as they should have.

Alex Schleifer:

And, and it would, you know, it could be a great thing, for Apple.

Alex Schleifer:

If the, in, if there was like somebody that forced them to open up the app store, it would be a great thing for Google.

Alex Schleifer:

If, somebody, uh, you know, forced them to open up the app store or, or broke them apart, because then it would actually get like all of this energy and this talent and this technology that they've created.

Alex Schleifer:

kind of accumulated to be used to actually compete in the market.

Brian Morrissey:

So wait, are they still doing this sort of hoarding of talent kind of thing?

Alex Schleifer:

Oh yeah,

Alex Schleifer:

for sure.

Alex Schleifer:

I mean, man, they, they, they, you know, they, they, they buy companies for hundreds of millions of dollars just to

Brian Morrissey:

yeah, well, that's another sort of aspect, you know, the DOJ came out with its proposed remedies in the search case and, you know, they're going there.

Brian Morrissey:

I mean, they're saying that, you know, this probably needs structural.

Brian Morrissey:

I don't know if they'll get, get, get this through.

Brian Morrissey:

And these things are always tied up forever.

Brian Morrissey:

Right.

Brian Morrissey:

But the fact that it's now widely being discussed, the structural remedies, not because, you know, I think you can only get away with it so long.

Brian Morrissey:

I mean, these consent decrees.

Brian Morrissey:

Every single time they're violated, and these fines just don't stop these companies at all.

Brian Morrissey:

you know, look at Facebook with, what is it, Whatsapp?

Brian Morrissey:

It's just like, it doesn't, it doesn't work.

Brian Morrissey:

So, I think it'll be interesting to see if that actually comes to pass.

Brian Morrissey:

And they're, I mean, I wrote a little bit of today about what this kind of post Google, I don't mean post Google, Google's going away, but like, you know, Google's grip as basically the, the dictator of the internet, you know, being, loosened is going to be massive.

Troy Young:

Yeah, the one of the, I struggled a little bit to me, any big company, a big company is defined by market power.

Troy Young:

Market power largely means some type of moat because you have a network effect or distribution dominance or some kind of hold on, you know, talent or resources.

Troy Young:

And, You know, big companies are sort of by definition inefficient and, sort of exist and kind of float along because they have this unnatural power that, that prevents them from being disrupted at any moment by someone more nimble, you know, smarter, think, thinking new ways.

Troy Young:

And so if you break down Google, there's really like five or six entities that.

Troy Young:

All each of them have their own market power dynamic.

Troy Young:

That could be separate companies and thrive as such.

Troy Young:

So YouTube has a massive network effects as being the video aggregation point for millions of creators and millions of consumers connected by an algorithm and a brand that supports that.

Troy Young:

You know, natural business, huge in and of its own right, cloud, particularly when you add AI to cloud, huge business, right?

Troy Young:

Search is the connective tissue of the open web.

Troy Young:

You know, Android is the thing that controls millions and millions and millions of mobile phones and, and, and the connective tissue for an economic.

Troy Young:

a marketplace called the app store.

Troy Young:

So all of these businesses are in their own rights, businesses with distinct distribution, power moats, network effects, et cetera.

Brian Morrissey:

Ad tech, you forgot ad tech.

Brian Morrissey:

Let's not

Troy Young:

ad tech.

Troy Young:

which is, yeah.

Troy Young:

And, and all, and all of them to me, when you add AI onto them and the sophistication and investment required to manage AI on top of them makes them that much more powerful.

Troy Young:

Like add AI to search and suddenly it's the only place to get answers, add AI to search and suddenly it's the place that connects a content query to a commercial query, add AI to, you know, a YouTube video marketplace and it becomes the clearinghouse for all content that's harder and harder to permeate, add AI to the cloud and it becomes the You know, the place that not only delivers, you know, basic compute to you, but also solves your problems and, and has the density of something that's thinking on your behalf.

Troy Young:

So, you know, it's like someone ought to break Google up and it'll be just fine.

Troy Young:

There's like, there's like a bunch of things that can stand alone inside of that company.

Brian Morrissey:

Yeah, and and the AI in ad tech is the PMAX, you know, I mean, they're just gonna do end to end black box

Troy Young:

Oh, you add AI to add tech and it just becomes something that people, you can't even deconstruct anymore.

Troy Young:

You know,

Alex Schleifer:

yeah,

Brian Morrissey:

ending

Alex Schleifer:

yeah, perfect.

Troy Young:

bad bets, bad bets from Alex Schleifer.

Alex Schleifer:

Well, I mean, just to maybe just one last point.

Alex Schleifer:

And actually, ironically, it was the Google's bad bet here might have been that they, um, actually allowed secondary stores to open up because they went fully open source and, and, Apple.

Alex Schleifer:

At the ruling against Apple's App Store, it, you know, Apple's still allowed to have a locked down App Store, but Google, because it had other stores and was, then forced to kind of strong arm people into installing the Play Store, they, you know, they had a much weaker case.

Alex Schleifer:

so

Troy Young:

Yeah, because they had to do those deals.

Troy Young:

yeah,

Troy Young:

I mean, there's lots of bad, here's a bunch of bad bets that we can watch going forward, right?

Troy Young:

Obviously, you know, we can put the ones behind us that are That are, you know, seemingly already played out like cable made a bad bet by giving up, you know, dominance to streamers and, oracle made a bad bet on ad tech when they, you know, paid way too much for moat and grapeshot and blue kai and that all evaporated.

Troy Young:

So oracle never did ad tech, We're about to see what the outcome is.

Troy Young:

Is Elon and Tesla's bet on camera versus LIDAR at way lower cost, a bad bet or a good bet?

Troy Young:

And so today is the, you know, we robot event, where, Tesla is going to introduce their next generation of self driving vehicles.

Troy Young:

Apparently, the difference between putting LIDAR on a Waymo and, you know, a bunch of cheap sensing camera devices on, on, on, on a Tesla, the, the, the economic difference is massive.

Troy Young:

We'll see whether or not the, you know, the, the sort of Elon bet is a good bet because of, because it's cheaper, but it can't actually get to the place of self driving.

Troy Young:

So, you know, that's a big bet.

Troy Young:

You know, there's lots of bets like, you know, again, SpaceX made a bet on fundamentally changing the economics of, of, of space.

Troy Young:

Right?

Troy Young:

Like, you know, shooting a rocket up at one tenth the cost of NASA that enabled them to do repeat missions and put satellites into space.

Troy Young:

And so that was a good bet, right?

Troy Young:

That one's proven.

Troy Young:

I like this.

Troy Young:

I like this construct, Alex.

Troy Young:

Good versus bad bets.

Troy Young:

And there's the ones that we don't know yet.

Alex Schleifer:

yeah, we should do another episode on, on, on, on good bets, coming up, but I got to run.

Brian Morrissey:

All right, we have to do good product.

Brian Morrissey:

We're gonna have a guest good product.

Brian Morrissey:

Is

Brian Morrissey:

that

Alex Schleifer:

yeah.

Troy Young:

Well, there's a guy

Alex Schleifer:

in?

Troy Young:

here, you know,

Brian Morrissey:

Your

Brian Morrissey:

house guest?

Troy Young:

well, yeah, he he gets up and he tells my kids to make him coffee and, walks around in his underwear.

Alex Schleifer:

Can you, can you introduce him for people who don't know who he is like myself?

Troy Young:

well, he's kind of a legend in the, advertising world.

Troy Young:

I call, I used to lovingly call him the Hunter S Thompson of advertising.

Troy Young:

And, he, for many years, many, many years, Played a pivotal partnership role at Omnicom, connecting, you know, the, that, media holding or that advertising holding company to all the big tech companies.

Troy Young:

And so it was well known by everybody in the industry and these big character lovable guy.

Troy Young:

And he, drops by now and then and

Troy Young:

seemingly sort of takes

Alex Schleifer:

great.

Alex Schleifer:

So, So, let's bring him on.

Brian Morrissey:

Let's do good product.

Brian Morrissey:

Is it time for good product?

Troy Young:

Good product

Troy Young:

we got steve cattleman as a guest good product commentator here.

Brian Morrissey:

Isn't it Ketelman?

Troy Young:

it katelman or cattleman?

Troy Young:

It's both

Brian Morrissey:

Interesting.

Troy Young:

steve Why don't you try to figure out a way to get over here?

Troy Young:

Hold on one sec guys

Brian Morrissey:

We have a special guest, good product here from Steve Kattelman Kattelman,

Troy Young:

Okay, hold on.

Brian Morrissey:

a legend of, the advertising industry, particularly the ad tech, uh, ecosystem.

Brian Morrissey:

Seeing him.

Brian Morrissey:

I think I last saw you, Steve, lounging poolside at the Fontainebleau.

Troy Young:

hear you guys.

Troy Young:

Is that a problem?

Brian Morrissey:

No, that's fine.

Brian Morrissey:

We're just talking about you.

Troy Young:

They're talking about you, and you don't, you don't hear anything.

Troy Young:

Hold on one sec.

Troy Young:

Looks like it's good stuff.

Troy Young:

It is good.

Troy Young:

We'll just take these off for a sec.

Alex Schleifer:

Are you guys gonna share

Troy Young:

Hold on.

Troy Young:

Just a minute.

Troy Young:

Don't touch me.

Troy Young:

I can't help it.

Troy Young:

Can you say something, Brian?

Brian Morrissey:

Yes.

Troy Young:

I can hear you.

Brian Morrissey:

Okay, I don't know if that's gonna work with the Echo, but Steve, we do good, good product.

Brian Morrissey:

I think Troy has briefed you on it.

Brian Morrissey:

Do you have a good product for us?

Troy Young:

You had a whole bunch.

Troy Young:

I, yeah, I listed off five to 10 things that I thought were good,

Brian Morrissey:

right, we'll choose one,

Troy Young:

well, no, no, they're all sort of, uh, good products.

Troy Young:

First thing that came to mind was, you know, I'm a homeowner in Nebraska and anytime I need to glue something, I said, liquid nails, liquid nails is a product that you know, that if you squeeze it out of the tube and stick something to a wall, it's going to stay.

Troy Young:

My next, do you want to comment on it or do you want me to just

Brian Morrissey:

Well, I'll just, is that different from Crazy Glue?

Brian Morrissey:

I mean, I'm an

Troy Young:

different than Krazy Glue.

Troy Young:

Krazy Glue doesn't work.

Troy Young:

Krazy Glue gets all over your fingers and sticks your fingers together.

Troy Young:

Liquid nails, takes a little longer to dry.

Troy Young:

But, you know, like it's just, I remember commenting for the past 15 years, that every time I buy liquid nails, It's a product that actually does what it's supposed to do.

Troy Young:

So I've always been impressed with liquid nails.

Troy Young:

It's just something my, my, my heart feels.

Troy Young:

Steve, this broadcast ironically is brought to you by Liquid Nails.

Troy Young:

Oh, it is.

Troy Young:

Good.

Troy Young:

So good.

Troy Young:

That's, anyway.

Brian Morrissey:

That's nails with a Z, right?

Troy Young:

Liquid Nail, I don't know.

Troy Young:

It's got a, it says gold, gold label.

Troy Young:

Next thing, also related to Nebraska.

Troy Young:

I am a proud member of the Ultimate Sip Club from Panera Bread.

Troy Young:

And Panera breads are all over the place.

Troy Young:

And Panera, not only do you get free wifi, but you get for 11.

Troy Young:

99 a month, unlimited drinks.

Troy Young:

I thought it was 12.

Troy Young:

99.

Troy Young:

in Omaha, Nebraska.

Troy Young:

It's almost like a, Planet Fitness.

Troy Young:

It depends on where you, where you start.

Troy Young:

It's kind of the opposite of Planet Fitness.

Troy Young:

Oh, no, no, no.

Troy Young:

This is good stuff.

Troy Young:

This is, it's healthy.

Troy Young:

I thought it was soda drinks.

Troy Young:

Well, you can get a diet soda.

Troy Young:

Oh, you can also get iced tea.

Troy Young:

So it's unlimited coffee, unlimited sodas.

Troy Young:

And for a while they had this thing called charged iced teas.

Troy Young:

Charged iced teas were like five times the caffeine of coffee.

Troy Young:

and you could go fill it up anytime you wanted.

Troy Young:

They'd, I went there one day and it was gone and I said, what happened?

Troy Young:

They said, teenagers were going insane.

Troy Young:

So they have, you have to ask for it, behind the counter.

Brian Morrissey:

Oh, that's what, that's how you know it's the good

Troy Young:

when you're, you know, I, I, I drove to Burning Man and a couple of Airstreams and I, I checked on my phone all the time where the closest Panera bread was off the I 80 and I'd pull in and fill up all my, all my containers with soda and charged iced teas and coffees and checked my wifi.

Troy Young:

a wonderful product.

Troy Young:

I am, you know, I was happy with it.

Troy Young:

another relevation that I was very happy with also about moving to Nebraska.

Troy Young:

There's a phenomenon of unlimited car washes.

Troy Young:

And me being a student from Berkeley, I was always very upset about these people in the Midwest that were washing their cars every day.

Troy Young:

I just thought it was a waste, waste, waste.

Troy Young:

But with them, they have free vacuum cleaners.

Troy Young:

You can, you can, as long as you drive in through the exit and go in through the outdoor, as they say, led Zeppelin folklore.

Troy Young:

You could go vacuum your car, car for free, and they had sprays where you could clean your tires.

Troy Young:

You could clean your windows.

Troy Young:

All that.

Troy Young:

You do that.

Troy Young:

Is your car clean?

Troy Young:

Well, I mean, I, yeah, I have OCD.

Troy Young:

Okay.

Troy Young:

Yeah.

Brian Morrissey:

Yeah.

Brian Morrissey:

But I mean, this is, this is just a recurring revenue play, right?

Brian Morrissey:

I mean, I, I see these membership.

Brian Morrissey:

I went to a car wash for the first time in 20 years and they had memberships they were trying to shove down my

Troy Young:

Correct.

Troy Young:

Correct.

Troy Young:

You have, but they, they're very high tech.

Troy Young:

You can't cheat the system.

Troy Young:

They check, they scan your license plate, do all sorts of stuff.

Troy Young:

So roughly 20 a month, you can wash your one car as many times as you want.

Troy Young:

Again, kind of gross in concept, but with that, there's a way to game the system a little bit and use a, you know, vacuum your car and clean the windshield without paying

Brian Morrissey:

That's amazing.

Brian Morrissey:

It's amazing.

Brian Morrissey:

Alex, can you even do this in Europe?

Alex Schleifer:

in Europe, no I think car washing is outlawed.

Troy Young:

It is.

Troy Young:

I was, yeah, I was just in Scotland and nobody had the free, how do they clean their cars?

Troy Young:

Um, they, uh,

Troy Young:

put a

Brian Morrissey:

too poor.

Brian Morrissey:

They don't have

Troy Young:

on a, on a rag and go down and, uh, yeah.

Troy Young:

And they, the cars are on the wrong side of the street.

Troy Young:

It's all backwards.

Troy Young:

Yeah.

Alex Schleifer:

All right, well, thank you so much.

Alex Schleifer:

Oh, there's another one.

Troy Young:

There's more.

Troy Young:

I'm not done.

Troy Young:

I am.

Troy Young:

Are you, are you kidding me?

Alex Schleifer:

when Troy comes, usually when Troy comes here, he'll say something like, you know, an apple or bullshitting.

Brian Morrissey:

This is good.

Brian Morrissey:

This is like the closing keynote.

Troy Young:

Well, you missed it last week, Alex.

Troy Young:

It was bullshitting.

Alex Schleifer:

Oh, I heard it.

Alex Schleifer:

I listened

Alex Schleifer:

to it.

Troy Young:

we had a good one last night 'cause we were playing pool at the bar.

Troy Young:

Troy and I, met for a, a late dinner and then afterwards we went to a bar and I always think like I'm.

Troy Young:

I, again, moved to Nebraska, don't have a lot of friends, so I built a bar in my basement.

Troy Young:

I don't go out to bars 'cause there aren't really any good ones.

Troy Young:

But last night we were down in the East Village or somewhere and the idea of going to somebody else's place and getting a beer and, and drinking and you don't have to clean up and you can talk to strangers that you wouldn't normally talk to.

Troy Young:

I still love that phenomena and in this bar was a pool table.

Troy Young:

And another thing that I really love is pool tables in a nice local bar.

Troy Young:

Troy and I played, I, I beat him.

Troy Young:

Crushed me.

Troy Young:

Yeah, what else you

Brian Morrissey:

they should have, they should have pool, memberships at those bars, right?

Brian Morrissey:

Like, just unlimited pool.

Troy Young:

the 7 beer that they paid 60 cents for.

Troy Young:

Yeah.

Troy Young:

Yeah.

Troy Young:

And the pool table is high tech now.

Troy Young:

I don't know

Troy Young:

if you guys know this.

Troy Young:

You can now pay with a credit card.

Troy Young:

You just, you just tap your card on the table.

Troy Young:

It's, it's, it's everything's high tech.

Troy Young:

Yeah.

Troy Young:

So, and the English guy was a good competitor that we played.

Troy Young:

He was a little bit like, you know, trying to like, I made up a term called getting a sifo in.

Troy Young:

Well, Like it's when you take advantage of a moment that you shouldn't like, and he was doing that last night.

Troy Young:

Well, and he had that rule about putting the ball anywhere.

Troy Young:

What do you call it?

Troy Young:

Hold your ball in hand.

Brian Morrissey:

Yeah, ball in hand, so that's a,

Troy Young:

He also said, check this out, Brian, tell me what you think.

Troy Young:

If you scratch on the eight, you don't lose.

Troy Young:

Then this dude pulled up a rule book out of his phone.

Troy Young:

Like you can scratch on the eight, you lose dude.

Troy Young:

Get, get,

Brian Morrissey:

those are weenies.

Brian Morrissey:

Those people are weenies.

Brian Morrissey:

They're the, like, the people who insist that, like, who correct you when you use data, like, as

Troy Young:

Yeah, I mean, remember how handy that pool thing was?

Troy Young:

It was not like he was searching for the rules, he had it handy.

Troy Young:

For the record, For the

Troy Young:

record, the American association of billiards does you don't lose until the, eight ball is hitting the well, then you, you, thankfully you beat him and he, he

Troy Young:

left and the final, well, now that you're on the road a lot, you like, like me and others really appreciate YouTube TV, which is your cable box in your pocket, right?

Troy Young:

I was saying I do pay for, I pay a monthly subscription, which is because of the live TV, but I, I'm a fan of YouTube television.

Troy Young:

And also I was just in Scotland for 17 days and YouTube free version.

Troy Young:

I think it's phenomenal.

Troy Young:

I got so much good content.

Troy Young:

It was like, I always used to say back in the day, as I was a fan of the newspaper, because I, you know, I'd read a story and I didn't know that I was interested in this other story that was right next to it.

Troy Young:

It's similar to the YouTube television.

Troy Young:

It just plays stuff that it thinks you're interested in.

Troy Young:

I found out, I think it was kind of, I didn't realize it.

Troy Young:

YouTube television is pretty badass, dude.

Troy Young:

So good.

Troy Young:

This was better than if we had planned it.

Troy Young:

No, I didn't.

Troy Young:

I appreciate you coming by.

Troy Young:

All right.

Troy Young:

I'm going to go.

Troy Young:

Can you finish the laundry?

Troy Young:

I'm going to get rid of your laundry.

Troy Young:

I'm going to see you guys.

Troy Young:

Yeah.

Brian Morrissey:

See you, Steve.

Brian Morrissey:

Okay, we should leave it there

Brian Morrissey:

Good episode, guys.

Brian Morrissey:

Troy, I'm gonna see you later.

Brian Morrissey:

I still have a few topics you guys

Brian Morrissey:

want to

Alex Schleifer:

a leg.

Alex Schleifer:

I think, I

Brian Morrissey:

I didn't

Alex Schleifer:

dance number is going to,

Brian Morrissey:

I didn't do, I don't believe in panel prep call.

Alex Schleifer:

all right.

Alex Schleifer:

Well, good luck guys.

Brian Morrissey:

All

Brian Morrissey:

right.

Alex Schleifer:

Like remember, remember to tell everyone to like and subscribe and whatever they need to do.

Alex Schleifer:

Okay, we're on YouTube, we're on podcasting

Alex Schleifer:

platforms.

Alex Schleifer:

Max shamelessness,

Alex Schleifer:

Max Okay, all right, See you.

Troy Young:

So,

Next Episode All Episodes Previous Episode

Listen for free

Show artwork for People vs Algorithms

About the Podcast

People vs Algorithms
A podcast for curious media minds.
Uncovering patterns of change in media, culture, and technology, each week media veterans Brian Morrissey, Alex Schleifer and Troy Young break down stuff that matters.
Get our newsletters:
https://www.peoplevsalgorithms.com/
https://www.therebooting.com/