Physical products have decisive advantage over software products. Software needs them to work—and Apple owns all the premium hardware owned by the cohort of people who have the spending power—which is more than the spending power of all android devices combined—unless a company manages to make electronics better than AAPL, free trade comes to an end and the earth’s supply chains balkanise or something we are unable to foresee happens, so place your bets to accord.
GOOGL like meta, is a mere tenant inside the AAPL ecosystem—and has no more leverage than a third party seller has over AMZN. This, ladies and gentleman, is the reason why GOOGL does not afford to pay a dividend because it doesn’t really own anything—this is true—just look at all of the hardware projects they’ve had. In the feud between Larry and Larry, Ellison will win out in the end because oracle software is an essential commodity, this is also why you see GOOGL doing so much to build relationships with heads of state while oracle doesn’t.
Meta, formerly known as Facebook, can no longer make money off people using Apple devices.
play time’s over—time to go home, son
You can touch, feel and even smell—the scent of a smartphone
You can not touch, feel or even smell—the scent of intangible software like Facebook. Whereas you can touch, feel and even smell—a smartphone, an AirPod and a wrist computer watch—physical things—no amount of advertising will change this. This is the reason Apple wins at technology—by making real things.
Apple owned the real estate while Facebook was a mere tenant and apple threw them out
Meta’s earning report shows people did not switch to android in order to see more relevant ads on Facebook—instead the advertisers switched to Google ads so they could reach the iPhone users with their ads. The markets have corrected because of this 1 reason.
Google pays Apple a tribute
Google will be next because Google is already paying Apple a tribute to the tune of about $9 Billion. Advertising is doing a full circle and smart marketers—are moving away from ‘vanishing’ ads and moving towards persistent channels like SMS, email and physical mail. This transition will not happen in 5 years—it will take about 20 years to complete—it seems like Alphabet is oblivious to this.
What happens to the brilliant advertising experts at Meta
I will put 20% of all my wealth in a company which wants to become the Meta of the physical world. A social network which understands the fact pheromones play the decisive role in connecting the world—it’s called Starbucks. If you want to start, invest in and operate the next big advertising company, it will be this company and you will need the expertise of these people. In an outrageous move, Meta could choose to admit this and make the biggest pivot in the history of online business by announcing, they will now connect the world physically. If Mark Zuckerberg does this, he will go out in history as one of the most even-headed entrepreneurs in history.
The only way for Google to remain relevant will be to buy these 5 keys businesses
a Klayvio for postcards
an autonomous vehicle direct mail delivery company
Disclaimer: if you have stake steak in amazon, do not read this article, this is not financial advice—I firmly believe in consuming only the media which reinforces your worldview—consuming all other media creates decision fatigue and creates a loss of focus.
tldr; you will see amazon become the McDonals-Superstore as their margins continue to decline, they will have no choice but to vertically integrate and get into price wars with McDonalds for real estate and supermarkets for inventory.
Good will creates multi generational customers
Shopify has good-will, people like Shopify because it seems like they genuinely want the dtc-entrepreneur to succeed. Shopify is also severely limiting, it is sluggishly slow, does not allow you to customise the checkout process from the get go and does not offer for free everything that Klayvio does—and still I would want my kids to use it to sell stuff, never on Amazon.
Good will creates higher margins because people like to give more money to people they like
I will not hesitate to pay $1000 in Facebook ad spend for my kid’s shopify store—because I know—by spending a grand on Facebook ads, I will have a pixel which knows who wants to buy the product on top of which email addresses of every customer and possibly cell numbers I can text to all I want if my kid ran a FREE+Shipping offer to discover a new star business. I can even get their permission to send them direct mail. I will never pay $1000 to amazon ads because I will get 0 email addresses.
Good will attracts talented actors to the system
As you can see, if you know a thing or three about DTC e-com, you will never start off on amazon because you know better, you want to own your customers, your 1,000 true fans, you consider adspend as an investment, not a sunk cost.
bad will creates single-generation-companies
There is a growing number of sellers on amazon who have been suspended for no apparent reason, amazon is holding their money, they are having to call lawyers to restore their accounts. Do you think these people will want their kids to start their first e-com store on amazon?
bad will creates low margins and price wars—if you subsidise price you become a charity—charities are not marketplaces
People who still choose to sell on amazon will inevitably have to fight price wars with others because people who are inclined to making fat margins want to have actual LTVs, they want their cac to be lower than their LTV and the only viable way to do this is off amazon. On top of having to compete on price with amazon. Laughable.
bad will attracts bad actors to the system
Amazon is on an irreversible path of gathering a critical mass of bad will, especially among the most important people in the eco-systems, third party sellers. Wanting to eat everybody’s lunch, including your own third party sellers will attract similar actors to your platform—in the end—the consumer will bear the price and the consumer does not easily forget bad experiences.
Amazon is not showing any signs of course correction—this means they either do not understand this, or do not want to understand this and are already planning an exit with the real estate assets in 2070
This is in violation of the ‘law of category’—doing ads was a part of this—Bezos said he will never do this—he was probably persuaded by ‘data’—when data goes against first principles—data is wrong—not first principles
If you are a third party seller amazon wants to compete with you should slowly move away from amazon—surely move away from amazon
If you are an online retailer planning to move to amazon—first cultivate leverage over amazon so they worry about you leaving the platform—not you having to worry about them suspending you for a Byzantine reason—you can always de-risk this and assign wholesalers to sell on amazon
If you are an aspiring e-commerce seller you should learn from this and not start by selling on amazon from the get go—go the organic route—get your 1,000 true fans—this is worth it
If this continues only price sensitive customers will use amazon—amazon will have to compete directly with supermarkets for sales and McDonalds for real estate—I think amazon has already figured this out and is already buying real estate in tier 2 towns and cities, they expect these urban centres to grow and become the only viable choice for buying food and home and living items.
The growth of amazon is directly tied with fertility rates, infrastructure spending and them vertically integrating the entire business.
What made Facebook a success—will make Uber, a 1-sided marketplace—a success
Most Uber drivers have no choice but to drive an Uber
1-sided marketplaces are not marketplaces. How Uber is draining more energy than it is giving back to the world and why there is no fix for this
1 historical precedence in favour of Uber—Cotton farmers
The super app is a step towards media selling—if there’s 1 person who can pull this off and combine Uber with QVC and Google Maps, it is Barry Diller—he’s up there with Steve Jobs
the only way I see Uber saving itself is doing these 9 things—in the order
—plus there’s no harm in coming up with a city based digital currency anyway
Disclaimer: If you are easily swayed by opinions of others, do not read this—especially If you have a stake steak in Uber.
What made Facebook a success—will make Uber, a 1-sided marketplace—a success
Let us begin with what makes Facebook a success—the gold standard of dopamine monetisation—we’ll use it to measure Uber. The reason people are addicted to facebook is the dope—facebook has been cultivating in your brain since 2004, a little over 18 years by showing you only the things which will make you want to come back for more, again and again and again.
Facebook is the best at this—though YouTube is surely coming close. For facebook this is a matter of life, If your product must survive, every bit of your product must exist to give more energy to the consumer, creating a net positive energy. Facebook has spent billions of dollars to perfect this—they’ve got machines which can predict with an astounding level of accuracy if a user will buy a product off facebook ads within the next few days—which is a good thing, people should buy more things—it is good for the economy.
Most Uber drivers have no choice but to drive an Uber
Most Uber drivers have no choice but to drive an Uber. Uber has done a good job of making this cohort of human beings into ‘dopamine zombies’ by monetising the promise of finding interesting members of opposite sex under the pretext of making a living—this is not a way to make a living because this takes more energy than it gives back. Facebook does in a cleaner way—takes less energy of both sides of the marketplace. If your product does not give back more energy to the consumer than it takes from them—you do not have a product.
Moreover, Uber drivers are at a point in life where they are probably the unhappiest. How can you expect Uber riders to feel good riding with them? How can unhappy drivers create a net positive outcome for the consumer—a rich experience which will make the consumer keep coming back for more—like facebook makes you keep coming back for more, again and again and again.
While Uber has successfully created a dopamine response for drivers, it is simply not enough—I know this first hand—I’ve driven Uber, the ring tone of incoming ride is thrilling, exciting and it feels amazing to hear it—I’m sure if I heard it right now, I’d want to reinstall the app under the pretext of finding an interesting member of the opposite sex on my way back home—BUT—I’ve learnt not do it, I know the odds of this happening is 1 in a 100—Uber will rob me of my energy, create decision fatigue and ruin my next day—not a good thing. As you can see, Uber is abusing the dopamine response on the supply side and is incapable, be design, of replicating the same for the consumer. This, ladies and gentleman is the definition of a 1-sided marketplace. 1-sided marketplaces do not exist, for long.
1-sided marketplaces are not marketplaces. How Uber is draining more energy than it is giving back to the world and why there is no fix for this
Uber can not subsidise supply & demand forever giving the impression of being a marketplace, it will remain only that, a mere impression.
The ROI on riding with people who have their own problems is truly pedestrian—this takes a toll on your emotional and physical well being. Giving away the most precious thing you have—your energy to an unprofitable enterprise is a bad business. Uber is betting on people who have no other choice but to pursue this enterprise—a strategy nonetheless—a good one, nein.
The idea people with surplus supply of cars, energy and time will to do this forever is flawed— like the idea of doing an unpaid internship all your life is flawed—people who have a surplus supply of cars have choice, and driving an Uber because someone on the other side of the block wants a ride to God-knows-where puts these happy drivers squarely out of the supply pool—because these people value their energy.
Uber can always choose to bet on consistently high unemployment rates in order to steady the supply of willing volunteers drivers, this is not a good bet, in ways more than 1.
Self driving cars have been coming tomorrow for the last 5 years now, even if they come—the idea of riding without a human connection is an affront to me—it has no historical precedence—it will never happen.
1 historical precedence in favour of Uber—Cotton farmers
Cotton farmer life expectancy is on decline—whereas every other node of the cotton value chain has increased their profits. This proves that there will always be a cohort of people to drive Uber because they think they have no other choice.
However, there is 1 problem with this argument. Cotton farmers live in rural areas and have little choice of finding a better enterprise—Uber drivers live in cities and have more opportunity. As millennials gain awareness, flexible work & disposable income—Uber will have a growing quantitative supply problem—adding to the unfixable qualitative woes.
The super app is a step towards media selling—if there’s 1 person who can pull this off and combine Uber with QVC with Google Maps, it is Barry Diller—he’s up there with Steve Jobs
Imagine for a moment—Uber is a super app for each city—an app which is Google Maps, Airbnb, TripAdvisor and many other things—this app sells ads like Google Maps.
Media selling for Uber is becoming a self fulfilling prophecy—Dara Khosrowshahi is a protege of Barry Diller’s.
Barry Diller is man of rare disposition. He understands what the customers want without having to ask them and if there is 1 person who can pull off combining Uber with QVC and Google Maps, it will be him—and he’s up for it as well—he only has to start his career all over again.
the only way I see Uber saving itself is doing these 9 things—in the order
—Cut all costs by 80%—sans remorse. —Pivot to classifieds for on demand, local service providers, go hyperlocal yesterday. —The usp is quick payment for the suppliers and for buyers getting service on the push of a button—with a percentage of commission which service providers will consider insignificant—they can run paid ads on the platform. —Internalise the fact this business model does not exist, first to themselves, then to the employees and then to the investors. —Spend $100 million dollars and create an educational content machine in the next 5 years shamelessly copyShopify compass(see what I did there?) and let the local entrepreneurs create value at the neighbourhood level—something they would actually like to pass on to their children —Become the nextdoor of service hailing —And finally the most liberating thing yet, leave ride hailing as an afterthought—leave it—it doesn’t work—it’s not a business—imagine what a relief this will be for so many people.
If this hyperlocal, service-hailing-super-app manages to become a way for people to express neighbourhood pride—it will become the app the world really needs—an app which governments will inevitably want to white label and own.
Spare a thought for these people, the senior execs at Uber and similar enterprises who have their identities tied to the ride hailing business. Even if these people wanted to move on and do something worthwhile, they will need all the support they can get. If you know someone like this, share this with them.
the next big thing on the consumer internet is map based app like snapchat, live commerce, it is simply the moving of QVC to Google Maps—this QVC on Google Maps will be the next big thing on the internet
what’s the first question you ask someone when you meet them? What do you do for a living. You are always curious about what other people does because what you do is who you are and it is a part of your identity.
Now, what’s the second question you ask someone after the first one? Where do you live or if you’re smarter, where do you come from. So you can have more context on this person because in all marketing, context is everything.
In all marketing, context is everything because it helps you to put the other person in a box, they either go into the not-my-type-box, acquaintance-box or I-want-to-know-more-about-this-person-box. It’s the same with products, if you put a product in I-want-to-know-more-about-this-product-box, you will probably end up buying it.
Now imagine, if a person did not tell you where they live, and they did not tell you where they come from, how much of an inclination you will have of putting them into I-want-to-know-more-about-this. If you are like me, you will end up forgetting this person because this person has in a way offended you by not sharing context with you.
If on the other hand, this person tells you what they do, where they live, and where they come from, and if you vibe with them, you will put them in a nice box, the famous, the amazing I-want-to-know-more-about-this-person box. (by the way here’s the link you are looking for)
Now Imagine for a moment, if a product offer page told you absolutely nothing about who makes it, why they make it and where they make it, you will hardly buy it.
Now, ask yourself, do you immediately associate a physical address with an instagram page? No. Do you immediately associate a physical address with a Facebook page or a WhatsApp business account? No. Do you immediately associate a physical address with a Google Maps listing, Yes.
Google Maps listing is superior to all other social media listings because people immediately associate a physical address with a Google Maps listing, with time you will see Google Maps listings will continue to do better—this will become a clear precedence. And remember, all experiences are exponential.
This mimetic pattern is immutable, this mimetic pattern has worked the same way throughout history, this mimetic pattern is a part of how humans interact—physical addresses give vitality to the context of you, to your product and to your business. So, if you want to have first principles on your side, spend 80% of your resources cultivating a physical address on Google Maps.
Do you see the white dot on the top right corner of your instagram icon?
Do you also see the blue dot on the top right corner of your WhatsApp status icon?
They look very similar
This Friday, I felt an out-of-place-urge to use instagram right after archiving all my WhatsApp conversations
there had to be an explanation for this out-of-place-urge—this was an epiphany.
perhaps it’s because the similarity shared by these 2 icons
Meta could be sending from WhatsApp to instagram using subliminal messaging
the instagram icon could have been deliberately designed to remind users of unread notifications
or this is a complete coincidence
whichever the case, this coincidence seems to be working as a subliminal redirect
subtly suggesting users open instagram every time they use WhatsApp
Here are 3 insights, you as an operator should take from this
Meta is going all in on instagram and abandoning facebook—you can expect meta to never do anything without data insights—this is an indication of instagram decisively outgrowing facebook—ad revenue.
Meta is going all in on tiktok style content—It seems like I’m spending a decisive amount of time on instagram feed which appears under the search icon—it’s a mashup of what makes you keep coming back to instagram—Meta’s expertise of monetising dopamine is second to none on the consumer internet.
Subtle cues work amazingly well in products—if Meta is using this technique intentionally, you can be sure, very sure it works because it stands on billions of dollars of spending by Meta in understanding human behaviour. Subtle cues work best, subtle cues are the 80/20 of consumer internet, subtle cues drive not so subtle outcomes.
Here are 3 things, you as an operator should take action on—straight away
Your current product needs a successor—your ‘facebook’ needs an ‘instagram’—your current product, no matter how amazingly its performing right now or how much revenue its generating, it will eventually be replaced by something else—because this is a centuries old, naturally recurring historic precedence, everything which goes up in a logarithmic fashion, will go down in the same way—to be overtaken with something new. You must look for potential products, concentric or otherwise and trends your users will eventually move on to, you must preempt this with your own instagram, if you do this, your users will stay with you. What a nice thing to say this is!
If your product does leave the user with a better dopamine level than they opened it with—you do not have a product—restaurants do this, bookshops do this, all successful businesses do this. Every bit of your ‘instagram’ must exist to make the user leave more energised, happier and inspired than they arrived. This really is the only secret to all successful businesses.
Use subtle cues, they work wonders—spend 80% of your efforts on subtle cues in design, copy and all communication and on every customer touch points.
and you will have done 1 of the most important things for your business—and saved a few billion dollars—not bad for pocket change.
Usman Gondal 