Edition 8

Skidding e-bike tires, rethinking privacy, where there is[n't] smoke, Tesla shifting gears, return of Clippy, and more...

Welcome to the eighth weekly edition of Nowism.

This Week 

Cycling out of the Pandemic Era

The Covid era has been a time of abnormal behavior, with almost all trend lines reverting to the norm. Sales of eBikes are just one example of this. What we often saw was future demand being pulled forward, but many companies misunderstood this to be a new era of acceleration towards a new trend line. I'll write a more thorough piece in the future that revisits the predictions I made at the time and highlight the very few things that were permanently changed.

Beyond the misguided beliefs about a new era of acceleration, it seems that the Van Moof story is one about an era of easily-accessible, cheap capital.

The economics of selling, shipping, and insuring premium e-bikes to markets that are rife with bicycle theft is always going to be incredibly difficult, if not impossible. Was it only possible to sustain that business by having unfettered access to cheap capital? In a world of rising rates, even if demand projections were accurate, it begs the question of whether or not a business model like Van Moof's could remain feasible.

There's probably much more to this story than meets the eye, but at its heart, it's a story about how really exciting, innovative business models can only work in historically low-interest rate environments. How many more businesses that raised boatloads of cheap capital over the past few years will fail simply because they can't work when their cost of capital goes up by a few percentage points?

Privacy Paradox

When and where I grew up, a book would be sent around every year to everyone's house showing the names, addresses, and phone numbers of all the residents. It was just how things were, and nobody cared.

Nowadays, people are much more cautious about their personal data. They get outraged by self-driving cars recording videos to avoid crashes and worry about their Roomba sharing details about their living room dimensions or chair positions for advertising purposes.

Norway recently banned Facebook from showing ads based on user's interests. However, a lot of the concerns about data and privacy seem rather silly to me. We assume that all this data is incredibly valuable to advertisers or other nefarious actors, but in reality, it's often quite useless.

Consumers have been led to believe that companies are experts at using data to serve targeted ads or tailor their products and services to individual customers, but in practice, most companies are quite inept at doing so. Even after sharing my passport number with American Airlines 25 times a year as a frequent traveler, their systems are incapable of remembering it.

So, are businesses and regulators wrong to assume that people care deeply about their data and privacy? Have vocal minorities driven the narrative of fear-mongering and exaggerated claims, such as "data is the new oil?"

Smart Cigarettes? 

This week, Juul announced a new “IoT” smart vape with built-in age verification, as reported here.

The vaping industry is a topic that fascinates me. It raises many interesting questions. We are unsure whether it is safe or harmful in the long term, or whether it helps people quit or start smoking. We rarely talk about the environmental damage caused by the disposal of 300-500 million battery-powered vapes each year. The branding and packaging in this industry are impressive, yet seldom discussed or used for learning.

We also rarely discuss secondhand smoke and whether it is harmful or at what distance. We do not talk about whether vaping should be prohibited in the same spaces as smoking. Vaping is a significant issue in schools. In my nephew's school, for example, all but one toilet block is now closed, and a staff member waits outside to detect smoke. However, they haven't been informed that vape vapor is not visible in the same way as smoke, nor can it be detected by smell or smoke alarms.

The vaping industry is a fascinating case of disruption. The incumbents in the tobacco industry are focused on farming and food expertise while vaping companies consider it a consumer electronic device requiring electrical and software engineers. Both aim to fulfill the same "job to be done," albeit from radically different approaches.

In sum, vaping is a fascinating area that intersects business, technology, regulation, marketing, psychology, innovation, and business transformation.

Tesla's Strategic Shift

No one really knows how to value Tesla. Is it an energy company that happens to make a lot of cars, a car company with an out-of-control P/E ratio, or a software company that can make 90% profit on full self-driving software? Recent developments like this suggest the latter.

Something interesting seems to be happening with Tesla's strategy. It appears that Musk sees the window closing on Tesla's ownership of the EV marketplace and is intelligently pivoting the company's strategy to become a supplier of software. This coincides with Tesla opening up its charging stations to other manufacturers, as covered in an earlier edition of this newsletter.

Zooming out on both developments, it's hard not to see Tesla becoming the owner of the rails and the default software provider, à la Apple App Store meets Microsoft Office. By doing so, Tesla can maintain its astronomically high tech-like valuations. Otherwise, it will just be a car company that will see its market share shrink over the coming years.

Clippy Strikes Back

Speaking of Microsoft Office… Generative AI always felt a bit like a 2023 version of Microsoft Clippy to me.

Now, Microsoft is offering built-in access to ChatGPT in Office for $30 per month, as reported by Fortune. Microsoft's market value rose by as much as 6% or $154bn billion on this one announcement, which is more than tenfold what it invested in OpenAI. As always, I think we'd be better off rethinking software around AI instead of just adding it to existing software. We should use it for more mundane tasks, like creating processes that eliminate the need for sending emails instead of automating the writing of emails.

Need a Moment? Maybe chew it over with just a Twix.

A while back, I observed that these days it's harder to expense a $3 Twix from a hotel minibar than it is to call a potentially pointless meeting that costs $20,000 of other peoples' time. It's great to see Shopify making simple software and plugins to allow people to track the cost of arranging a meeting, as reported by Bloomberg.

Little Ones

You can now search for ads on TikTok by brands, rather useful to see what companies are doing.

You can also search all brands from this library of ads on Google. 

First ever proper magazine cover made with Generative AI launches.

Goldman Sachs now thinks a US recession won’t happen, it’s only 20% likely in the next 12 months. 

I found the World Happiness Report for 2023, download it here. 

Great interview with the Shein head of strategy explaining quite how tiny the batches they order are ( just 10-100 units) before ramping up production immediately if it sells. 

Apple is making its own LLM, I have no idea why. 

IMAX Cinemas are still running on Palm Pilot OS, so much of our future is constructed on the foundations of the past. 

I wonder what an LLM trained only on Reddit comments and other forums would look like, well,  now you know. 

How Allbirds lost its way - A piece that’s rather interesting, but the truth is fashion is fickle, expecting a company to IPO on the basis of one model of shoe that people liked was nuts. 

Quotes of the month

“More information is just a form of procrastination.”

– Russ Roberts

“Your calendar is a better measure of success than your bank account.”

– James Clear

“Nothing in life is as important as you think it is when you are thinking about it.”

– Daniel Kahneman

“Better to get your dopamine from improving your ideas than having them validated.”

– Nat Friedman

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