Stealing Signs - Issue 39
Come for the Network..., The Higher Ed Bubble, Costco Capitalism, Video Games as the Future of Education?, Hivestack raises $$
Worth Reading
Come for the Network, Pay for the Tool
Toby Shorin, Director @ Other Internet
…you may wonder: “why don’t users just want one place to manage all their communities?” Today’s existing tools will continue to be sufficient for some communities, and Discord and Slack’s robust bot APIs are capable of solving somecommunity needs. But fundamentally, they are still based on chat, and chat simply isn’t the right core user experience for many other communities. Unique functionality and bespoke interfaces provide distinct advantages that off-the-shelf tooling can never achieve.
Paid communities, Toby suggests, are a new frontier for brands to deepen their connection with users. This trend is likely to accelerate rapidly as customers look for for 1:1 relationships with the products and services they use frequently, and brands begin to realize it’s the next medium of differentiation — in other words, spiffy UI/UX, an authentic story, and brand values are now table stakes, so communities will emerge as a way to cultivate a superior customer experience and foster brand loyalty.
I’m a member of a few paid communities all of which live in Slack: CB Insights, Lenny’s Newsletter, and Everything Marketplaces. These groups are tremendously valuable largely because it’s a closed space for members to ask questions, debate, collaborate, and is access to a new network of interesting people. The value this provides the brands, or owners of these communities, though, is arguably greater than the value to any individual member. All of the great things each individual ember experiences, the brand experiences in aggregate. Members associate invigorating conversations and introductions to new people with the brand, which keeps them (us) coming back for more.
Toby also dives into the paid communities’ business model — a paid subscription. He notes this model is great: low customer acquisition costs and long lifetime value, but that this monetization strategy is not enough to reach a large scale. Paid subscription for just a community is not venture-scalable, but the more dynamic a community becomes the higher the revenue per user, the lower the acquisition cost, and the longer the lifetime value. Toby poses a lightly edited inverse of the business maxim coined by Chris Dixon, “come for the tool, stay for the network” — come for the network, pay for the tool. Like SaaS tools and services added communities, paid communities will add tools, additional content, and services over time to expand their business model, improve economics, and increase value for their members.
The Higher Education Bubble
Erik Torenberg, Village Global
Colleges acting like nightclubs is ironic because learning itself is inherently positive-sum. If you learn something, you teach it to me, and then I know it — now we both know it. If we teach others, they know it and can teach others. It's unbounded. Universities aim to be positive sum in their rhetoric, but are zero sum in practice.
Education is being unbundled. We’re seeing a flurry of new methods to deliver educational content, develop skills and expertise, and customize eduction for the individual. Higher education is especially susceptible to new innovators in education because, as Erik notes, universities are zero sum and the value is largely rooted in credentialism.
The two unbundling approaches I’m particularly interested in are: 1. Learning in public, and 2. Resume/credential replacements.
Learning in public. Whether it be writing online, building a company, or creating a product, the internet allows anyone to instantly share their creations with the entire world. The advantages of sharing creations directly with the entire world vs. with a class or professor is that the creator has instant access to feedback much faster and more diverse than the traditional educational system allows for. This means creators can iterate, acquire knowledge, and enhance their skills much more efficiently than ever before.
This newsletter happens to be a prime example of learning in public.
Resume/credential replacements. Why rely on letter grades and name brand internships when an individual can demonstrate their skills, expertise, and evolution of thought to a prospective employer? While the traditional education system may take decades to erode, the way in which individuals demonstrate their education is changing much faster. In other words, resumes will fade before higher education. Examples include GitHub contributions, a Webflow website repository, personal blogs, and a VSCO feed.
Calling back to Toby’s post above, paid communities may be to the education system as GitHub contributions are to resumes. imo, the most valuable piece of a university is the network one develops while enrolled. Erik notes:
The smartest kids in the world will continue to flock to the most prestigious universities, and it makes sense for many of them to do so. Universities have network effects that are hard to beat, in spite of itself.
Paid communities would be compelling university substitutes if they can replicate said network effects. For example, the “I’d do anything for a Harvard grad,” turns into, “I’d do anything for a member of Lenny’s Newsletter Community.” To extend this example, individuals could parlay membership of multiple paid communities into a sort of curriculum, like a student would have a course load at a traditional university — 4-6 different paid communities forming a complete education in product management, journalism, teaching, chemistry, or programming via expert 1:1’s, member panels, group workshops, member experiences, etc.
Costco Capitalism
Bryan Lehrer, Other Internet
That you can simultaneously crave cold pressed juice, but not bat an eye at the inherent questions of sustainability that surround a $1.50 1/4 pound all beef hot dog seems to embody the Costco ethical stance well: Sustainability or Ethics are not things rooted in facts but perceptions.
Costco shows the futility of this kind of neoliberal logic — that ethical concerns can be clumsily and painlessly shopped around. Once again it's in this almost apolitical stance that Costco reveals a lot about its ethics, and its subsequent perception from the public gaze. Costco is not an ethical maverick or trend setter. It is a trend follower, both in culture and product. It's through swiftly following the lead of its mainstream customers that Costco is able to circumvent the PR crises that surrounds much the corporate landscape right now. Costco can never be seen as Evil because that would mean the bulk of its customers view themselves as Evil.
Costco has received it’s fair share of excellent business breakdowns, but Bryan’s is the most through-provoking piece I’ve come across.
He examines Costco through the lens of the consumer value formula (pictured below) and explores the relationship between positive and negative externalities and price discount ratio.
The weight which each variable holds in the formula for Costco customers is quite unique. On the surface, it’s simple. The price discount ratio (P), or how discounted Costco goods are relative to similar goods elsewhere, is likely the most important factor for customers, which is similar to how consumers interact with other retailers. Where it gets interesting, though, is in the weighting of positive (A) and negative externalities (E). Costco is an extremely attractive business to consumers for reasons like fair pay for employees, low prices, and food court nostalgia — these positive externalities are so heavily weighted in this equation, Bryan notes, that any negative externalities, like sustainable and ethical product sourcing, are moot. He suggests that, due to the variable weighting, Costco “can't be evil,” — they provide too much value to customers for negative externalities to outweigh any positive variable in the consumer value formula. To extend this logic, one might ask what could Costco due to alienate their customers? Competitors like Walmart and Amazon have already trekked down the dangerous paths Costco could eventually find themselves on, but if their customers assign low weight to these negative externalities, how could Costco ever lose their passionate customer base if they did the same?
Bryan also includes and excellent supporting example of this dynamic at play — the city bus:
Riding a bus is dramatically cheaper than ride sharing or operating a personal vehicle, has positive externalities associated with it, but for some is seen as significantly inconvenient and unatractive compared to these other options. Even considering the well documented negative externalities of Uber, its raw utility creates more value for many than riding the bus.
Video Games are the Future of Education
Nabeel Qureshi, Palantir
Learning is just the act of engaging with an external thing and performing many conjecture/criticism loops, forming conclusions, and building on them to form a body of knowledge.
So it makes sense that video games would be the primary educational environment of the future: they are the best way we have of (a) creating simulations of reality (b) with fast feedback loops (c) accessible at low cost.
Nabeel suggests the fundamental principal of education is to give students and environment and tools where they can make discoveries themselves, which, it turns out, is not the strong suite of traditional education systems. He also suggests that students need to be able to choose what they want to learn and how to learn it, which traditional education systems don’t promote or even allow for. I largely agree, though I do think an ideal education system is a blend of Nabeel’s framework and the constraints of traditional education — freedom and structure. One advantage of the traditional education system is awareness, access, and promotion of new topics and experiences so that students can discover what and how they want to learn. Many students don’t know what or how they want to learn — I certainly didn’t when I began college.
The core of Nabeel’s piece is the hypothesis that video games will become a core component of education. Advantages of video games as a medium of eduction include that they’re simulations of reality, have fast feedback loops, and are accessible at low cost. This sentiment is interesting and likely directionally correct. But, I wonder if instead of video games increasingly used for educational purposes, the traditional educational system will borrow features of video games. Nabeel explicitly states that his post is not a call to gamify education or slap on game features to the existing system — it won’t work. And he’s right, it won’t work as an attempt to re-imagine education from the ground up. However, I think many of the foundational elements of traditional education will persist over time, so borrowing video game features and capabilities could result in borrowed benefits, too.
One interesting example of the gamification of the traditional education system is GVBACK, a digital game that allows students to move around a virtual campus with an avatar to access resources and collect points for completing tasks. The core value prop is fun, low-friction student and alumni donations — or the gamification of donations. While this is a video game per se, I see their core functionality as a feature traditional education establishments can leverage within the constraints of the existing system.
<stuff> Weekly
LOL Weekly: Jason Derulo Thought Cats Would Change the World
lololololol
"I thought it was gonna change the world… Even when I saw the trailer, I got chills down my spine!"
Funding Weekly: Hivestack
Hivestack is a global, full stack, marketing technology company that powers the buy and sell-side of programmatic digital out-of-home (DOOH) advertising. On the buy side, marketers use Hivestack’s Demand-Side Platform to create measurable campaigns that activate DOOH screens in real time based on consumer behaviour and audience movement patterns. On the sell-side, DOOH media owners use Hivestack’s Supply-Side Platform & Ad Exchange to attract programmatic revenue.
Hivestack raised a $7.51M Series A round from Investissement Quebec. I’m fascinated with this product. At it’s core, Hivestack makes digital out-of-home (DOOH) media buying look much like online ad buying— so buying a digital billboard ad is as easy and real-time as buying an ad on Facebook. imo this is a massive innovation. And on top of this, they’re leveraging the SaaS-enabled marketplace playbook: Ad buyers use Hivestack’s platform to programmatically purchase DOOH ads in real time (SaaS tool), and can connect and transact with ad sellers directly on the platform (marketplace).
Baseball Weekly: Pre-Pitch Predictions
Ethan Moore, Call Poly Baseball Analytics
If the model’s confidence is above a certain threshold, relay the most likely predicted pitch type to the batter.
This may trigger alarm bells and PTSD flashbacks to trash can banging in Houston, but let me explain why I think this is different. Firstly, this data is publicly available, and every team can freely make their own similar model. Secondly, the predictions are not guarantees (like the stolen signs were), so the team using this strategy is taking on risk that the model is wrong. Lastly, this model is just a more complex version of reminding a hitter in the box that the pitcher on the mound loves throwing his Fastball when behind in the count or that he loves doubling up on Curveballs. These are things that are already relayed to the batter, so I don’t see how this more complex message is morally any different.
Art Weekly: REVOK
Los Angeles-based artist Revok first became interested in art through his father’s collection of 60s and 70s album covers and comic books, as well as the skateboarding and graffiti scenes. For over two decades, Revok has continually pushed the boundaries—both creative and legislative—of street art, producing vibrant works that meld structured with dynamic colors and forms. A completely self-taught artist, Revok finds freedom in his naiveté. After years of a decidedly anti-institutional practice, Revok began making studio work, finding inspiration in his ability to refine the techniques he mastered as a street artist. His ultimate goal is to be constantly maturing and evolving as an artist, never confined by any one way of making work.
