Early Indications May 2021: A New Kind of Television

After spending much of the past two and a half years researching and writing a book about online video (YouTube, TikTok, Twitch, et al), my attention recently turned to streaming TV in a recreational capacity. After burning through iTunes’ offerings, I resubscribed to Netflix after a long hiatus, and there I encountered “Formula 1: Drive to Survive.” As a chapter in media history, it’s a brilliant success story, albeit a complicated one. The more I watched, the more I researched, and the more surprises I discovered.

The show is currently running in season 3, focused on the Covid-shortened 2020 racing season. So even though Netflix began filming in 2018, the story begins two years prior. That’s when Liberty Media, John Malone’s US-based holding company, began the process of buying the Formula 1 series for $4 billion. Like Major League Baseball, F1 racing fans were aging out and not being replaced at younger demographics. Like the NFL, Malone’s team saw media exposure as a winning strategy: recall that there was a Nickelodeon play-by-play simulcast of an NFL game last year, and note that the new NFL media deal gives Amazon exclusive rights to game inventory that will likely involve cross-promotion on its Twitch game-streaming network. The power of long-form sports documentaries is well proven: last year’s Michael Jordan 10-hour marathon on ESPN was a cultural touchstone during the early months of lockdown.

So media exposure helps F1 reach new audiences. What’s in it for Netflix? Despite a content creation budget in the $15 billion range, satisfying global audiences is not simple. It’s hard to know how many US shows have historically found footholds overseas (and both “Masterpiece Theater” and “The Great British Baking Show” crossed the Atlantic from the other direction), but the politics of culture now dictate that Netflix can’t endlessly run “Orange is the New Black” in Indonesia (and elsewhere), and stand-up comedy is far from universal. Merely rebroadcasting US shows to the globe was going to be problematic, and the appetite for nature documentaries is finite. No national broadcaster could take Netflix’s global perspective on F1, and few events can attract such diverse viewership. It’s truly a perfect fit, one impossible to conceive even ten years ago.

Formula 1 racing is truly a global phenomenon, with races everywhere from Australia to Azerbaijan and Brazil to Bahrain. Although the car manufacturers (“constructors”) are overwhelmingly European, most headquartered in England, the drivers come from farther afield: England, the Netherlands, France, Mexico, and Spain are represented. As a result, Netflix gets content that plays well in much of the globe and F1 gets exposure for its member teams. Although it’s no surprise that some drivers have emerged as media stars (Daniel Ricciardo, an Aussie of Italian descent, likes the camera and vice versa), several of the team principals have emerged from general anonymity and contribute personality, intense competitiveness, and cut-throat politicking to the mix. Mercedes’ Toto Wolff is an investor who owns a 1/3 stake in the team, stands 6’ 4,” and is worth about $800 million. At Red Bull, Christian Horner has won 4 F1 constructor championships, is married to former Spice Girl Geri Halliwell, and lives on a massive English estate. Aston Martin’s Otmar Szafnauer was born in Romania, educated in Detroit, and worked for both Ford and Honda. All of them, and their peers, contribute to the episodes’ realism with relatively frank on-camera talk. 

The series has achieved its objective of explaining the sport to new fans, pulling them into the various rivalries and dramas, and creating story lines from pre-shot footage. I can’t imagine how many hours of video mush have been culled down to the ~10 hours per season. Backstory upon backstory was documented (Finn Valtteri Bottas was shot naked in his sauna months before winning a race), and races invariably deliver ample surprises that must be accommodated. Two British motorsports journalists provide exposition when necessary: why is team X filing a technical challenge against team Y, why does driver A hold a grudge against team-owner B, why does driver C have a particularly good record racing in the rain, etc, Although purists grumble that the season isn’t really documented (a standard year includes ~20 races) because each event doesn’t get a recap, crashes like last year’s terrifying fire that Haas driver Romain Grosjean survived through incredible luck and strength of will cannot be ignored. Thus the scripting of the Netflix shoots can only go so far: reality will dictate some percentage of the final product.

What makes for such gripping yet universal television? It’s a long list:

1) Tech

F1 is essentially the overlay of aerospace onto automotive. Exotic materials, massive data telemetry feeds, incomprehensible horsepower:weight ratios, and minuscule competitive differences are underplayed in this viewer’s opinion. The design of a brake duct, of all things, was found (and not found: F1 is nothing if not political) to have created unfair advantage likely measured in tenths of a second per lap. One thing I’d love to see explained better: the steering wheel is a digital control surface, each custom made and costing up to $150,000. Drivers get radio traffic from the spotting/analysis team, but all manipulations of wing surfaces, front-to-rear braking ratios, battery regeneration (the cars have hybrid engines), and engine management are under driver control via dozens of knobs and switches operated mostly by thumbs on the wheel’s front; paddle shifters are on the rear.

2) Tires

For all the cars’ titanium and carbon fiber, tires are incredibly important, though the series doesn’t really teach the point very well. Part of the reason is that all teams use rubber supplied by Pirelli, and only certain compounds and structures (dry slicks vs grooved rain surfaces) are made available on a given race weekend. One thing you’ll never see is a refueling: cars must run an entire race on the initial tank. This adds considerable weight to the freakishly light vehicles, increasing tire wear early in the race, so determining when to run hard, durable-but-slippery tires versus soft, faster ones (you can tell by the color of the print which is which) is a huge aspect of race strategy.

3) Demographics

The current crop of up-and-coming drivers is incredibly young, and most of them grew up together starting in karting. Current points leader Max Verstappen is 23 years old with 124 F1 starts and 47 top-3 finishes to his credit, and five of the top 10 points leaders are under 25.

4) Money

F1 team budgets will be constrained next year amidst a massive set of rules changes governing everything from gearboxes to aerodynamics (a team’s wind tunnel costs can be a material item, for example), but for now, the Mercedes and Ferrari factory teams have budgets estimated at north of $300 million. Just moving the cars, garages, and other structures around the globe is a massive enterprise. The luxury lifestyle associated with such venues as Monte Carlo and Singapore shows up in the Netflix series as well: watches and fashion eyewear are prominent, and the sometimes-too-young-to-drink drivers have insane vehicles for off-track use. (Hilariously, one McLaren driver is shown going to the grocery in an orange hypercar only to find out there is no place to stow 2 bags of food.) In another episode, a young driver is told by his personal manager that endorsing after-shave gel is a more promising avenue than razors, given the weak facial-hair game that he and many other drivers bring. For now, oil-company logos are prominent, having replaced alcohol and tobacco at the forefront. How that changes with vehicle electrification will be fascinating. The IT world has plenty of representation: HP, Dell, SAP, several antivirus firms, Cognizant, Microsoft, and Cisco all show up. 

5) Team dynamics

Each of 10 constructor teams has two drivers. Many have noted that the most intense rivalries on the track can come as two drivers in theoretically identical cars fight to keep their place (about 20% of seats turn over annually) in a brutal results-driven business. Teams wrangle with other teams, poaching drivers, protesting tactics or tech, and strategically outspending in some domain or another. On non-factory teams, drivers that come with funding have an edge, so Red Bull gets some help from Sergio Perez’s long business association with Carlos Slim, and Aston Martin driver Lance Stroll happens to be the son of the team owner. Cash-strapped Haas, the only US-based team, has a similar deal with driver Nikita Mazepin, whose father is a Russian oligarch.

6) Adrenalin

The executive producer of Drive to Survive, James Gay-Rees, produced the notable documentary of racing legend Ayrton Senna in 2010 (the same year he also put out “Exit through the Gift Shop”) so he knows how to handle racing sequences. At this level of skill, wheel-to-wheel footage can be gripping, and Drive to Survive offers glimpses of straightaway acceleration, spinouts, and just plain racing that make for great viewing. 

It would be nice to have more. At the same time, Gay-Rees is balancing multiple forces: 

1) The Netflix series is a partnership with F1, now newly media-savvy, so it’s not going to expose anything too incriminating.

2) The series has to hold viewers in multiple markets across the world, so somebody’s cultural/aesthetic norms are likely to be irritated at every turn.

3) The outcome is not known before the race, so even though it would make for great narrative if Ferrari driver Charles Leclerc were to win in his hometown race at Monte Carlo, that’s not how things worked out. I have no doubt hours of off-season interviews and other footage were shot to set up that story line, so I’ll be watching next spring to see if that’s how the producers frame that episode.

4) The objective was to broaden the sport’s appeal. While that mission has been achieved, longtime fans and some of the subjects grumble about the portrayal of heroes and villains, fixtures and interlopers, winners and stragglers. 

In the end, the fact that viewers are sufficiently invested to protest everything from perceived oversights to inaccurate engine sounds shows how effectively the series achieved its multiple objectives. I can’t wait to see what next March brings when season four drops, and I'm now sufficiently engaged to be able to tell you the top 5 points leaders among the F1 drivers. Mission accomplished, indeed.

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Early Indications May 2021: Lessons from Germany?

The premise for this newsletter isn’t original: there are numerous books, podcasts, and movies that point to various places in the world that organize things in different ways than we do in the US. Here, I’m not going for cheap laughs (comparing French school lunches to US fare) or easy moralizing (parental leave in the Nordic countries). Instead, I’ll point to four areas where we in the US might learn from the Germans, but in each case, there’s an asterisk: the German model is vulnerable in some way, so none of these is presented as a silver bullet. There is precedent: the German state retirement system, with its retirement age of 65, was a key influence on Franklin Roosevelt at the dawn of Social Security. What else is there to learn from?

1) German cars

Germany’s auto industry, dating back to Karl Benz’s 1886 patent, predates everyone else’s, and its leading brands still set the standard for a particular combination of precision, luxury, performance, and social prestige. Whether in profit margins, motorsports results, or resale value, German automakers have set the standard for well over a century. Some of this leadership appears to be uniquely German: when Daimler Benz owned Chrysler and the latter built vehicles designed by the former, the aforementioned qualities did not translate. Get into a Mercedes blindfolded then into a Lexus or Cadillac, and there are numerous cues that cannot be copied: the seat cushioning, the sound of the door closing, the interior noise level all give the imitators away. The same used to be true of the often-imitated BMW 3-Series: it was the driver-focused benchmark that everyone from GM to Nissan to Audi tried to copy. And it always defied imitation; it appears that only internal marketing-driven design changes could knock the 3-Series off its engineering-earned podium.

Given that every automaker in the world has been studying German automakers under various microscopes, it seems unlikely that anyone could challenge their leadership, but the age of internal combustion is coming to an end. Electric vehicles are under development by everyone in the industry, and the success criteria for those are still unclear. It does appear that every automaker outside of Tesla has underestimated the role of software (whether for user experience, battery management, or driver automation), the Germans included. Perhaps more of a threat comes from the bicycle, and specifically the e-bike, as a more sensible solution to urban mobility. At the 150th birthday of Benz’s invention, there is no guarantee German automobiles will still be the world standard - especially if dashboard menus still look as though they were designed by SAP.

2) Sports team ownership

I just learned this in the last week: German football teams are partially owned by clubs — essentially by local fans — in a unique structure. 50% of shares plus 1 share are held by the club, preventing wealthy owners from running the clubs in ways that conflict with fans’ interests. Profit is not the main priority, and the result is that German football is characterized by high-quality play, reasonable ticket prices, and organizational stability. (Germany also has four World Cup wins, second only to Brazil’s five, three of which included Pele.) US-based sport franchise owners and Russian billionaires have bought clubs in England, which has no such rule, and fans are revolting. In the US, only one professional sports club is owned by the fans (answer below), and league rules expressly forbid this structure from ever being replicated.

As the short-lived attempt to form a European Super League illustrated however, the German model may not be sustainable (it was only implemented in 1998). For one thing, German player salaries are lower than what clubs in other countries can pay. Secondly, investment in the health of the club often requires outside investment, so if a partial owner sustains involvement in the club for 20 years, they can be allowed to acquire a controlling interest. This clause is beginning to take effect at several clubs.  Either way, the 50% + 1 model may not survive the next decade. (Trivia answer: the Green Bay Packers)

3) Beer

In 1516, Duke Wilhelm IV decreed that all beer brewed in the state of Bavaria must contain only three ingredients: water, barley, and hops (yeast hadn’t been discovered yet). It remained codified in German law until 1987, when it had to be modified as part of membership in the European Union. A new German law took effect in 1993, but many brewers still adhere to the Reinheitsgebot. The decree doesn’t have the effect one might think it does: such staples as wheat beer and most darks can’t be brewed in strict accordance with the law.

The 1980s were a time of major change in beer brewing worldwide: Jimmy Carter deregulated home brewing in 1979, then the three west-coast US states all allowed brewpubs in 1982 and 1983. Lots of brewpubs were launched by some of those home brewers, and 2/3 of the 1500 US breweries as of 2010 launched as brewpubs. Craft beers have established a substantial foothold in Germany, bringing the westward migration of German, Czech, and Belgian beer-loving immigrants full circle as a US trend is now reshaping alcohol consumption in Europe.

Part of the German appeal of craft brewing is the same rebellion against mass-produced characterless beer that has taken hold in the US, where craft is approaching 20% of the market. In Germany, the #2 brewer is Anheuser-Busch InBev: Beck’s, Franziskaner, Hasseröder, Löwenbräu, and Spaten are owned by the Belgian-based multinational. The #1 German beer maker, Radeberger Gruppe, exports very little to the US. As we will see in bullet 4), global consolidation is challenging many tenets of German economics and culture.

4) Mittelstand

Germany’s heavy reliance on mid-sized firms is well known even though the term and its definition are unclear. According to an Economics Minister who helped nurture the sector, the concept is “much more of an ethos and a fundamental disposition of how one acts and behaves in society" than a statistical or legal designation. These mid-sized firms can rightfully be called the backbone of the German economy, employing 60% of the workforce and contributing heavily to the nation’s favorable trade balance by exporting everything from orthopedic devices (Otto Bock) to electronic transducers (Sennheiser). Given such a powerful auto industry, it’s not surprising that Germany’s machine-tool sector is the best in the world.

But the Mittelstand is under siege from several directions. Bureaucracies, regulations, and passivity (especially in later generations of a family-run company) can contribute to a lack of innovation. The quest for global scale means that increasing productive output, entering more and more geographic markets, and reinventing the market offering take on more urgency. AKG, a mid-sized Austrian headphone/microphone company, is now owned by Samsung, for example: the “tweeners” markets, never easy, get more pressure applied by global giants every year. Finally, according to at least one investment bank, German mid-sized companies have been slow to embrace digital transformation. One reason for this may be a shortage of skilled labor, a common complaint in most economies. All of these factors should temper any excessive optimism about some magical properties of mid-sized companies.

The US used to have a similar sector: Magnavox made TVs, Schwinn made bicycles, and Bass made shoes, all on native soil. The advent of container shipping, a strong dollar, incredible inflation in health-care costs, and a handful of other factors drove much of the US manufacturing base offshore. Remnants remain: upholstered furniture, metal fabrication (think trailers and RVs), bookbinding. Otherwise, most US manufacturing relates to cars, high technology, aerospace/defense, and chemicals and refining. All of these tend to be capital-intensive, increasingly high-skilled, and rich in intellectual property. Each of these factors makes it difficult for a mid-sized firm to thrive while staying mid-sized. Germany is different, for certain, but the Mittelstand cannot be immune from global competitive forces in perpetuity.

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Where does all this leave us? As President Biden attempts to drive foundational change in the social and economic fabric, there is much to learn from countries where inheritance taxes, universal pre-kindergarten, and wide environmental responsibility are already in place. With any policy at any level, there will always be unexpected consequences and the more we learn from countries like Germany — about what to emulate and what to avoid — the better those new policy outcomes can be.

Early Indications March 2021: What is infrastructure?

As I write, President Biden has announced a few more details of what is being called an “infrastructure bill” to be considered by Congress. While many important details remain to be clarified, the spending priorities are disappointing both for what is overemphasized and what is absent. It’s also telling that the announced $2 trillion price tag includes many billions for investments that have nothing to do with the nation’s physical plant.

Here are the top 10 priorities, ranked by estimated price tag. In the absence of a detailed proposal, I’m using CNN’s reporting as my source.

1) Home care, including allowing home health aides to unionize  $400 billion

2) ~2 million housing units built/retrofitted                                      $213 billion

3) Electric vehicle incentives and investments                               $174 billion

4) Roads/bridges                                                                            $135 billion

5) Water mains and pipes                                                               $111 billion

6) Remediate/repair school buildings                                             $100 billion

7) Broadband, including urban and rural connectivity                    $100 billion 

8) Workforce development                                                             $100 billion

9) Mass transit                                                                                  $85 billion

10) Amtrak                                                                                        $80 billion

Airports are far down the list, at $25 billion, near “inland waterways” at $17 billion.

In a traditional reading of “infrastructure” as shared underpinnings for public transit, connectivity, and commerce, only items 4, 5, 7, 9, and 10 really qualify. (Schools are traditionally a local phenomenon, funded by property and other taxes, possibly with an assist from the state.) These traditional infrastructure items, were they isolated, would cost about a quarter of what is being proposed, at $511 billion.

Many items are clearly part of a commitment to righting historic inequalities: improving housing options for low- and moderate-income families is a policy goal, but how do these housing units count as infrastructure? Similarly, raising the wages and ideally the skills of home-health aides improves their lot in life, but what’s in it for the cared-for? Finally, workforce development is a perennial budget item but what exactly does this mean? Note that Google has recently launched an online certification program to equip people for jobs at one of more than 150 participating companies — no college degree required. Is job reskilling best considered as a federal priority, or maybe it’s better addressed at the state level, where job losses and employment needs can be viewed more specifically and with less overhead. In short, economic justice initiatives are important enough to debate on their merits on a case-by-case basis, not be smuggled in under false labeling.

How widely shared are the benefits of these investments? 2 million housing units will certainly improve life for maybe 8-10 million individuals, and there will be some spillover effects as nearby property values should benefit from the investment. Even assuming a 2-for-1 neighbors:residents multiplier, that still only gets us to about 25-30 million beneficiaries, or less than 10% of the US population. Air travel is an expensive purchase, meanwhile, and I couldn’t find statistics for what percent of U.S. citizens took a flight in 2019, but 811 million flight-seats were occupied by U.S. citizens in that year. If we know that the average U.S. adult flew 2.5 times in 2017, and that kids represent a minority of air travelers, that puts the direct beneficiaries of a robust airline network in the 40% range of the population. Yet housing (by definition, not shared) is slated to receive about 9x the funding allocated to airports (a classic infrastructure play, albeit not a green one).

Let’s look at the heavy commitment to electric vehicles. At one level, this feels close to the failed federal investment in the Solyndra solar-panel startup. How much will Washington once again attempt to pick winners? Depending on the day, Elon Musk might be the richest person in the world: private markets are investing heavily in electric vehicles, last I saw. Counting federal purchasing mandates, which are already underway in the new USPS delivery vehicle (which has both urban/electric and rural/internal combustion variants), the Biden plan allocates $220 billion to electric vehicles. Is there any doubt the market will swing that way? Reinstating the fuel-economy standards previously relaxed by the Trump administration would be more stick than carrot, and cost less. Meanwhile, the version of the proposal that I saw, that seeks 500,000 charging stations by 2030, made no mention of the electric grid. Both the proposed charging stations and the electric utilities’ role in western wildfires focus attention on the nation’s electrical infrastructure, which, like the water supply, desperately needs both modernization and hardening against terrorist attacks.

Let’s turn from means to ends. Concepts of micro mobility (bikes and e-bikes), “15-minute cities” including Paris and Ottawa, and civic commitments to outdoor recreation in places like Asheville and Duluth all reflect a vision of urban life as something very different from car-dependent sprawl. Given that the global pace of urban migration continues to accelerate, a serious infrastructure bill should be building the foundations of the city of tomorrow, not yesterday. Sure electric cars have a better carbon footprint than internal combustion vehicles — assuming the electric car isn’t charged by a coal-fired facility. But still better are far fewer cars, and reliable mass transit: cars don't scale, nor do they give a city the life and texture cafes and strolling do. Many malls are dying: what can be done with all those millions of square feet at the same time that we revitalize central cities?

Look at the Washington, DC region, the beneficiary of heavy federal transit funding. The Metro is falling apart or flaming out while not keeping pace with population growth, at the same time that the endless highway construction has done little to reduce commute times. Where are bike lanes? (These have the double benefit of also improving health.) Where is reliable mass transit? Where is a cost-effective way to travel from Dulles airport to downtown? The Amtrak funding, meanwhile, will largely be spent in the Boston-DC corridor, which means it’s unlikely that the US will have a true high-speed rail line by 2040. Japan, meanwhile, was running 130-mph trains at the 1964 Tokyo Olympics and France’s TGV service launched in 1981: that network’s trains regularly operate at 200 mph. 

In short, the infrastructure bill has little to inspire “moon shot” ambition or even due diligence on known crises-in-the-making. Rather, we get more road repair, more slow trains, more monopoly broadband. The Biden administration has a moment of historic need, a less oppositional Congress, and public appetite for new and better. Looking ahead to 2050, where are the walkable, bikeable, safe U.S. cities? Where is competitively priced broadband, possibly of the municipal variety? Where is tomorrow’s electric grid? Where are the relocations of coastal communities being pushed underwater by climate change, and the rethinking of those that are next on the list (hello Houston, I see you Miami)? Speaking of water, where are hard discussions about droughts and the unsustainable water allocations in the western U.S.? Replace lead piping, absolutely, but let’s not pretend that Los Angeles can siphon off more and more of its water supply from the Colorado River indefinitely.

There is a fight brewing in Congress, and I hope both that infrastructure gets properly defined and addressed, and that some of the parties take the opportunity to look farther ahead than the already-inevitable swing to electric vehicles. Great civilizations always boast great infrastructure, and it’s time to declare ourselves one way or the other.

Early Indications February 2021: Foundations and Scaffolding

First of all this month, I ask a favor. Last week, the website for a professional doctorate in information studies at Syracuse University went live. I direct that program, and we are looking for 10-12 mid-career leaders in information industries to join us in writing a thesis in information issues, broadly defined: enterprise architectures, misinformation/disinformation, the future of work, privacy/security, and data and analytics are all in play. The program teaches no content courses from the existing catalog: the members of the cohort will be sufficiently diverse and accomplished that finding common ground would be impossible. Rather, we focus on the writing of a 5-chapter thesis, with each chapter a common semester deliverable in semesters 4-8. Methods courses and topic selection precede those semesters, and semester 9 is devoted to thesis defenses. The course is mostly synchronous on-line, with 12 of 51 credits being earned in 2 1-week residencies per year. These residencies will offer topical seminars of broad interest: those of you who attended my Center for Digital Transformation meetings at Penn State will have had a taste of these. Cost is on par with an executive MBA or many DBAs, about $100k; no financial aid is available through the program.

The ask: because we had to wait nearly a year for state of New York approval of the program design, we are on a very short runway to fill this year’s class that will begin with a May 24 residency. Applications are due March 15 for preferred consideration, but we will look at later candidates if the class doesn’t fill. We have 5 applications already submitted, from fascinating people of substantial accomplishment: the cohort will be 3 years of the best conversation you’ve ever had, I predict. 40 more people have already registered for information sessions this week: Wed March 3 for the general population and Thursday the 4th for military and veterans. Here are the links: please forward them to anyone you know who might be interested, or let them know to email me directly to set up a call. Thank you for the assist.

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Let me start by enumerating a few themes, which I’ll then try to tie together.

As I watched the World Wide Web emerge early in my professional career, I shared the hopeful positivism (or, more accurately, positivist hopefulness) of Tim Berners-Lee and his intellectual kin. Having recently finished a doctoral dissertation in which I learned to construct Boolean queries inside expensive CD-ROM data sets, I was ecstatic to find in Google plus the Web the biggest research library ever conceived, much less built. Some readers may know that in ancient libraries, including Alexandria, books were chained to the shelves: print knowledge was that valuable. Now (circa 1996), I didn’t know if information actually wanted to be free, but a whole lot suddenly became so. From access to such wealth, it was a short hop to the belief that people could operate under less uncertainty and make better, fact-based choices and decisions.

People wiser than I knew better. As I discovered while researching my new book on YouTube and TikTok (coming next year from MIT Press, it looks like!), James Katz at Rutgers saw in 1998 the cost of removing gatekeepers to content dissemination. If everybody could publish an opinion, the Yeatsean center could not hold:

The Internet and the Web allow for the quick dissemination of information, both false and true; unlike newspapers and other media outlets, there are often no quality control  mechanisms on Web sites that would permit users to know what information is generally recognized fact and what is spurious

Years later, when DARPA ran the geospatial intel challenge of having ad hoc teams coordinate via social media to find 10 red weather balloons, I failed to grasp the importance of the counterintelligence efforts that slowed the winning team (out of MIT’s Media Lab) by spoofing IP addresses and GPS coordinates. Rewatching the 2010 video a couple weeks ago was another realization that the information universe does not only, or probably primarily, operate under logical assumptions. Rather, PT Barnum, Joseph Goebbels, and George Orwell seem to set much of the tone.

A second theme relates to the contention (by Scott Galloway among others) that COVID-19 was an accelerant more than a disruptor. The pandemic, and our responses to it, made socio-technical developments happen far faster than predicted: telemedicine visits, remote work, grocery/meal delivery, and Zoom schooling are all a permanent part of the cultural landscape only months after the initial lockdown. All of these new practices stress the existing infrastructure, whether it’s laptops for 5-year-olds, rural broadband, a sustainable economic model for car-share drivers, privacy practices for connected video cameras, or the simple but often impossible task of checking up with vulnerable neighbors and family members. This need to invest in 21st-century infrastructure — cultural, economic, and physical alike — was highlighted by The Economist in a recent article on mass transit. If buses and subways are not perceived to be safe from pandemic spread, people will turn to cars, with dire consequences for densely populated urban areas. New York, Tokyo, Hong Kong, and Mexico City cannot absorb all the migration headed their way with a car-based transport model. Gridlock, of every type, is not sustainable. At the same time, infrastructure is slow to rebuild, tough to expand, and expensive to maintain. Tax revenues are down everywhere, making the barriers to mass transit investment that much higher. And subways are far from the only economic priority.

Finally, it’s depressing to look at what the US tech sector has become. I’ve touched on this before, so won’t belabor the point. With the emergence of ad-revenue-powered software development, it’s hard to see tech innovation on the scale of the web browser, the search engine, the original online retail model, or the smartphone. Silicon Valley + Seattle have turned a lot of energy to scaling the aforementioned innovations, and many important developments have emerged, to be sure: mega-scale cloud computing, computational photography, and chipset design each exhibit true breakthroughs. For all of these upbeat notes, we must confront the failures of privacy protection, behavioral manipulation, energy consumption (with Bitcoin’s massive inefficiency exhibit A), and the industry’s contributions to economic inequality. Many business continue to run on Excel and email, again, tools that do not scale.

These three themes — access to knowledge fueled misinformation rather than enlightenment, the need to rejuvenate infrastructure, and Silicon Valley’s turn toward meal delivery and social media rather that worthier challenges — were floating around in my thinking as I read a short blog post by the tech journalist Om Malik (with a hat tip to Jan Chipchase for the pointer).

Malik posits that a precondition for getting anything done in a group is sharing an understanding of reality. He says it better than I could, and quotes the likes of psychologist Jerome Bruner:

"Our culturally adapted way of life depends upon shared meanings and shared concepts and depends as well upon shared modes of discourse for negotiating differences in meaning and interpretation,” the late psychologist Jerome Bruner wrote in The Acts of Meaning. “By following a set of rules governing interpersonal communication, people inadvertently modify their private, idiosyncratic conception of a state of affairs and reach a common understanding of that situation. As noted, these shared representations constitute the contents of a culture.” 

Given that Facebook is actively trying to build as many systems of meaning as there are ad market segments, and Google is imposing its own clustering algorithms on our ads, our emails, and our YouTube viewing, what counts as foundational bedrock in US (or any other) culture? Concepts (that carry critically important commitments) as essential as voting, epidemiology, and tolerance are no longer assumed. Millions of people are convinced that the US election outcome was fake, that the coronavirus is fake and/or a foreign plot, and that white supremacy is the core tenet of major political parties. Taken together, these beliefs undermine the foundations of western democracy. When people of different colors are successfully demonized as cover to extreme rent-seeking by white wealthy one percenters, and the blockage of economic mobility by the latter is blamed on the former, the consequences are truly life altering. As Anne Case and Angus Deaton make the case in their book Deaths of Despair, life expectancy, economic mobility, and personal wellbeing are all casualties of the past 40 years of health care, tax, and environmental legislation being written by industry lobbyists, many of them former legislators or aides, for the benefit of the already-wealthy.

A foundation holds a building up from the bottom. Good ones last centuries or millennia. Scaffolding is far more visible, but it is temporary and not typically structural. The belief that all people are created equal and are endowed with inalienable rights to life, liberty, and the pursuit of happiness is foundational and served the United States well for 200+ years. The frequent fights of outsiders to be let in to that promise attest both to the power of the promise and to the benefits to some groups of denying it to others. Now, as Malik laments, there appear to be fewer and fewer shared realities. Reality TV, the utter antithesis of its name, made the Kardashian family a multi-billion-dollar enterprise. Fake news has done the same for Rupert Murdoch and Mark Zuckerberg. Meanwhile, political parties of all persuasions are torn by internal fights over the shared reality in which players on the same team operate. Religions from Anglicans to Catholics are seeing disillusioned and emboldened members either defect or stay and sow dissent within the ranks: there are currently 19 different Baptist subdivisions, according to Baylor University’s research center devoted to the denomination. Epidemiologists and public health official acknowledge that they have done a poor job navigating nuance and clarity at a time when faith in science has been tested by both external political headwinds and internal narrowing of disciplinary foci.

The core question is both simple and troubling: without something common to believe in, groups of people splinter. Religion, science, government, and economics are all torn by divisions over both what is real and what matters. Sport can bring groups together, often temporarily, and even here, ESPN had to shut down comments on the website because flame wars were instant and usually vicious. The moderator of a historical outreach website -- not what one would expect to be a snakepit -- had to quit as the site's comments became a “cesspool.” 

The tools that Berners-Lee and others invented have spread both knowledge and, maybe primarily if we are honest, divisiveness. One possibility is that people have been this divided for decades: white supremicists are as old as this nation. Now that they and everyone else have a public voice, maybe we are seeing a long-term lack of commonality that newspapers, TV stations, and book publishers covered over with their gatekeeping function. Alternatively, the collapse of Enlightenment epistemology took far longer than the history of the Internet, and it’s possible social media hastened the rise of pluralistic voices that could appeal to personal prejudice rather than shared norms of moral clarity, evidence-based argument, or peer review (none of which were as robust as its adherents claimed ).

In any event, as the world enters post-COVID-19 reality, which voices will gain the most adherents? Which institutions -- the press, government, academia, civil or spiritual religions -- can be either born or reborn as adequate to the moment? Which core beliefs can be reinvigorated — the US Declaration of Independence is acknowledged in foundation documents of roughly half the 192 countries at the United Nations — and which ones need to be invented in a post-newspaper, post-industrial, post-fact world? What ephemeral trends, scaffolding if you will, can draw adherents temporarily yet visibly and effectively? (The US Democratic Party struggled to counter the lies and insults Donald Trump consistent employed in 2016 and again in 2020: he successfully rewrote the rules of engagement, with help from the aforementioned Fox News and Facebook.) Without a foundation, preferably one in empirical reality, humanity is going to endure social chaos. My hunch is that we are seeing a race to master one of these new media channels with a compelling narrative: form and content will synch better than they do now, with substantial rewards for the entities that get there first.

Early Indications January 2021: Re-envisioning Shopping

According to a recent cover story in The Economist, 3 trends in Chinese e-commerce suggest a variety of paths that U.S. companies might follow. It’s a fun exercise to use these developments as a prism through which to rethink which people buy things online, how different demographics buy different things, and how a variety of adjacencies might be explored in various geographic, technical, and economic terrains.

However it is configured, Chinese e-commerce dwarfs any global online market. In addition to being big, it’s different in that Chinese commerce is much more likely to be conducted via a mobile device: 90% vs 43% stateside, for example. Finally, and most interesting for our purposes, Chinese e-commerce rarely uses storefront metaphors borrowed from physical retail. Social commerce (think neo-QVC live-streaming meets TikTok meets Facebook), serious omnichannel, and mobility affordances including gamification, geofencing, and precision coordination (“have the pizza arrive 10 minutes after I get home”) all can contribute to new ways to socialize, restock, entertain ourselves, and discover new hobbies, art, and cuisines.

There’s a lot going on there, so let’s back up and parse a few things. Buying stuff already performs a variety of functions. We need to procure vitamin water, salsa, ramen, and similar staples with some regularity; there’s not a lot of entertainment to be had here, except maybe when a group of roommates hosts a dinner party or something similar. Other purchases — engagement rings, headstones, kitchen renovations — are both more substantial and less frequent. Buying some things — cars for example — can be so onerous and frustrating that entirely new models such as Uber’s and Tesla’s can gain traction in part because people hated the old practices so much. In the US particularly, there exists a massive amount of physical retail space, much of it built on the idea that people went to stores (read malls) to engage in “retail therapy,” socialize, exercise, or just pass the time. Finally, buying things related to one’s hobby — fabric, model airplanes, kitchen tools, books — is an entirely different kind of retail, potentially as impulse-driven as a Netflix rental or as researched and rationalized as buying a car or dream vacation. All of these factors mean that retail can vary tremendously by locale: the US, for example, has swaths of extremely low population density, the world’s largest (measured on a per capita basis) physical retail footprint, a state-run logistics provider that performs abysmally, countless tax jurisdictions to navigate, and historically high income inequality. All of these matter for what shopping might look like.

When we say “online shopping” or “e-commerce,” then, it’s important to distinguish what flavor of shopping we mean: resupply, fashion, whimsy, gifting, information goods, and domestic infrastructure (think home appliances) each are conducted through different channels, at different life stages, in different human configurations, with varying amounts of forethought, entertainment value, and financial apparatus. That said, the Chinese megatrends (social commerce especially) present U.S. retail with intriguing starting points rather than blueprints. What might this kind of reconsideration of shopping lead to outside the particularities of the Chinese context?

1) Shopping can be social

Whether it’s picking out school outfits, outdoor gear, or food for the big picnic, shopping in packs can be fun. As those packs migrate from the mall to the smartphone, it feels like there are many potential models yet to be explored: Facebook is neither the first nor the last word here. Whether it’s impromptu alumni reunions among hall mates or military families keeping in touch across the world, how might we assemble ad hoc groups around some variety of commerce experience? Zoom-powered watch parties are already a way to share a binge or movie across distance — what if Shopify (which grew faster than Amazon last year) built an app inside Zoom to facilitate “shop parties,” whether at the sporting goods store, the boutique, or the appliance store as new homeowners attempt to navigate the refrigerators. Who’d “own” that app? How “sticky” would it be across shopping experiences (CVS to Lowe’s? Ulta to Gap?), demographics, or geographies?

2) Showing beats telling

In some ways, online video is catching up to the decades-old home shopping TV model, the in-store makeup counter, and the high school shop class. Before the Internet, people still had to figure out which cookware they liked, how to apply mascara, or how to drill a pocket hole. Teaching and demonstrating are a huge business — more people in the US watch celebrity chefs than cook gourmet meals. Both live-streaming and online video repositories are in their early stages, I believe, of being utilized within much more seamless and comprehensive commerce experiences. Again, what will be the principles of speciation? Will clustering happen around the demographic, the product category, the spending at stake (will a table saw video resemble a lipstick tutorial?), or the mega platform hosting the experience? Will Facebook spread itself too thin trying to be too many things to too many people? Speaking of Facebook, where might VR/AR fit into this model?

3) Shopping games

11 years on, game designer and professor Jesse Schell’s conference talk about gamification of real life remains compelling viewing. He noted how the physical and the virtual were coalescing, way before Pokemon Go; how point systems, dating back to Weight Watchers and supermarket loyalty programs (Green Stamps), continued to proliferate; and how the next wave of innovation would be less technical and more behavioral. He saw early on the power of the Facebook dopamine pump, as evidenced in Farmville (RIP), and helped inspire a wave of Internet-connected everyday items with his toothbrush example. Where might we head next? What mashups of YouTube, Twitter, Fortnite, Untappd, and Walmart will emerge? Among which demographics? In what product categories? What role might payment platforms like Visa or Venmo play? What about logistics providers like FedEx or UberEats?

4) What is the buying unit?

For a time in the 1990s, B2B demand aggregators were the hottest startup category. Labs that needed a specific reagent could pool their demand, the thinking went, getting bulk pricing for small-quantity buyers. Ariba, Chemdex, and many (!) others sought to become a new kind of market intermediary. Later, the same thinking came to retail: if I need a printer, the lower coordination costs afforded by the Internet mean that I and 249 strangers also needing printers should be able to present HP or Canon with a bulk order just for us. Sites such as MobOffer sought to operationalize this idea. We’re used to supply aggregators: it’s what retail is premised on. But what if TikTok, AAA Motor club (which already does this for cruise line bookings), the Western Carolinas Organic Cheesemakers Association, or other groups could mobilize buying power for more goods and services that matter to their members? Then what happens if the buying groups are algorithmically constituted, much as Waze forms ad hoc anonymous social networks of proximate drivers?

5) Where is the application logic?

Not to sound too technical, but this is an important point. In the US, online commerce began with websites. The physical retail experience was very much front of mind; competitors fought over the shopping cart metaphor in court. Fast forward 25 years, and expand to ~150 countries, and 1995 US brick-and-mortar retail is no longer a universal frame of reference.

After about a decade of desktop web commerce, largely in the west, Apple built on Japan's early DoCoMo learnings and introduced the mobile app as a new programming model. Much of the website experience carried over, but there were glimpses of new retail experiences here and there (in-app purchases are one example). Now, with most of the planet connected via mobile devices and with billions of people who don’t remember driving to Walmart or Sears as their mental anchor, Chinese and other online commerce sites are putting commerce into messaging. 

This model makes sense: texting somebody at the store to remember the eggs, or asking someone at home what kind of beer Emily likes, has become habitual. This extreme drop in coordination costs (making grocery lists isn’t nearly as important as it was 20 years ago) suggests commerce could logically be proximate to messaging. In addition, group-texting provides another use case for embedding commerce. If a half-dozen people are convening on the impromptu picnic, figuring out who’s bringing hotdog buns could easily trigger a buying moment. In a permission-based scenario, if I let Krogers monitor certain of my text exchanges, the store could drop coupons, inventory availability, or price comparisons into my queue. If the word “seltzer” is used, and I’ve given opt-in approval, a prompt — “what flavor?”, “how many?”, or “brand preference?” — could get me to click-and-collect transaction with only a few voice commands, no shopping carts (metaphorical or physical) necessary. 

Speaking of physical vs virtual, embedded QR codes serve as hyperlinks between the messaging and brick-and-mortar domains. I can discover something on my phone and walk into a physical retailer to find the exact item and possibly get some form of discount or loyalty points. Here is another potential application of the gamification theme noted above, and another highly convenient omnichannel implementation.

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Some of these scenarios are already playing out in North America; others are still years off, if they ever take hold. Who’s poised to win, and who might need to scramble?

-Facebook has the reach across platforms, which they are more tightly integrating as we speak, and the behavioral know-how to learn how to trigger the desired consumer actions. Talk of breaking the platforms apart could slow Zuck down, at least initially.

-Google has failed to build social connections, dating back to Orkut and as recently as (I’m betting) Meet. In addition, search crawls don’t work across apps, but this is less of an issue when Android devices provide Google with lots of user data. If the messaging layer turns out to be a US variant of WeChat, hypothetically, that invisibility to web crawls could be a major impediment.

-Amazon hasn’t missed many steps over its 25 years, and I don’t see the Seattle Godzilla getting outflanked by a startup, by Walmart, by Alibaba, or by Facebook on social/mobile commerce. Amazon already leads the way in many aspects of omnichannel, for instance. Furthermore, as Scott Galloway notes, Amazon is unique in its ability to turn “core competency” logic on its head: rather than sticking to what differentiates it and outsourcing the hard back-office stuff, Amazon takes those hard back-office tasks — order management, data centers, and logistics so far — and gets so good at them that it can sell those services at a healthy profit. Finally, Amazon is also good at driving wedges into non-adjacent markets: Audible, Kiva, Twitch, Annapurna, and Blink were brilliant acquisitions. Now watch what Amazon will do with PillPack and Zoox.

Given the changes in London, Brussels, and Washington, along with the change in trajectory of the coronavirus, it’s hard to see how cross-border cultural transmission will fare in the coming year. Whatever happens to TikTok post-Trump, the future of Chinese tech companies in the west is uncertain for many reasons, air travel only one of them. As much as I think WeChat, AliPay, and Pinduoduo have much to teach us about what shopping is and can become, my gut says it will be firms that translate the Chinese (and Indonesian, and Japanese, and Korean) practices — rather than export them — that will gain traction in the US; Europe is sufficiently different that I won’t make any claims for what happens across the Atlantic. 

Early Indications December 2020: The bounce-back myth

Maybe it was all the Zoom toasts over the holiday pledging a return to in-person celebrations next year, but I’ve heard too much talk about the timetable for a return to “normal.” That is, there seems to be an expectation that after enough immunizations, life can somehow resume the rhythms and patterns that defined life in 2019. I don’t share this expectation: we have seen consequential political transitions in the EU, UK, and US, for starters. There has been a global financial recession. 2020 saw extreme climate events, including wildfires and hurricanes, that presage more such disasters. Nobody knows how many more businesses will close, permanently, in 2021. For one example, many people assembled Airbnb empires of multiple rental properties that now present impossible mortgage payments. It’s one thing to prevent evictions in the pandemic, but I doubt courts will stop foreclosures of such speculative properties whose impact on residential neighborhoods is not wholly positive. That’s just an initial accounting of the impact.

Here are a few questions identifying sectors, markets, and institutions that will emerge from 2020-21 forever changed.

1) What is the new media mix?

The breakout of TikTok into mass consciousness has certainly been noteworthy over the past year, but it’s not the only important story. The game platform Roblox has been around for about a decade, but its hold on the under-10 demographic is stronger now than ever. TikTok is a key player in 12-24, and podcasts consumed voraciously by middle-agers are seeing huge investment by Amazon, Spotify, and others. YouTube has gained traction among every segment from 5 to 95. Two questions: who wins 21-34, especially if Facebook must divest Instagram? Also, what happens to legacy media: radio is in trouble for sure, and it’s not clear that network television can adapt to the streaming model. ABC, given both its Disney parent and its ESPN sister network, should be in better shape than CBS, for example, but how will we know?

2) What is the future of “date-night” entertainment?

Music venues are getting some bailout money, iirc, but I’m guessing Live Nation and its kin will see money sooner than small-footprint venues. Musicians are but one class of artists hit hard by the Covid recession, and many are doing clever podcasts, instructional videos, and the like to keep the electric bill paid, but this industry will bear watching. Similarly, what is the future of movie theaters? What, in particular, is the future of movie theaters in shopping malls, which have their own existential changes to confront? Going to the mall for a meal, some strolling, and a movie will not be as appealing in 2022 as it was in 2002, for lots of reasons. Restaurants, meanwhile, are closing by the thousands: how will new entrepreneurs address the mix of meal delivery, carry-out, catering, and interior table service? Will new ethnic cuisines fill some of the empty storefronts? Will the meal-delivery apps’ attractiveness persist post-Covid? A larger question informs many economic ones: how much will our cocooning get thrown off in a collective binge of sociality, and how much will staying in (from dining, from work, from shopping) define the new normal?

3) What’s ahead for the tech sector?

Will there be a new category of device or application that rearranges the landscape as the PC, Internet browser, search engine, or smartphone did? Will so many revenue streams continue to be ad-based? How will computer/app/smartphone companies address the mobility market (see #6 below)? How many Internet platforms will survive? Is Pinterest, for example, a feature or a product? Will health tech be a major new consumer market? Will Silicon Valley maintain its primacy? HP, Oracle, and Palantir are leaving, Google is distributing its operations, and California’s many drawbacks — regulatory, climatic, and cost-of-living — provide other areas with ample opportunity to demonstrate their attractiveness, particularly in a work from home world.

4) How will governments address budget shortfalls?

Covid-related expenses coupled with drops in tax receipts are presenting many cities and states with a grim scenario for the next few years. Education, social safety nets, policing, and other functions will shrink: many states have balanced budget provisions that preclude any form of borrowing. States with large tourism sectors (Nevada and Hawaii for starters) are especially hard hit. How will private philanthropy co-evolve with shrinking state and local programs? How much seed corn will be destroyed? That is, how many qualified job applicants will lack key skills in 2 or 10 years? How many foregone investments, in whatever form, will deprive future years of returns on industrial attractiveness, after-school programs, or mass transit maintenance? How many “deaths of despair” and “diseases of despair” will plague our towns and states going forward? 

5) What happens to education?

Apart from the budget crunch noted above, schools will cope with Covid-related fallout for years. How many teachers will get sick and/or burn out after this trying year? How will pedagogy evolve to include remote learning as a routine component? At the college and university level, schools with large endowments have enjoyed robust investment returns; all institutions with seen exceptional (one-time) costs soar, particularly for investments with no long-term payoff. Plexiglas shields come to mind, but so do (in the instance of Syracuse University) hundreds of thousands of saliva tests. Academic hiring freezes are prudent, given the uncertainties involved, but are creating logjams in PhD programs in which advanced students are staying on rather than graduate, see student loans come due, and face bleak job prospects. Maybe the biggest question: how many of the critically valuable (for both their skills and their tuition dollars) international students a) will be allowed and b) will choose to attend college or graduate school in the US vs Australia, Canada, France, Germany, or elsewhere?

6) How will people get around?

Electric cars are obviously big news, but bicycles are even more interesting, especially at the global level. Paris is changing its infrastructure to be more bike-friendly, driven by 2020's modal shift from subways (where the fear of Covid dropped ridership) to cycling at a mass level. Like bikes, standing desks are enjoying a work from home sales surge, but cycling is far healthier still. As the electric conversion proceeds, charging will continue to be an issue, for urban street-parkers in particular. As work from home changes the frequency and nature of commuting, what happens to urban office space and the associated parking infrastructure? 

Many eyebrows were raised by the recent news story that Apple’s Project Titan is still targeting a consumer-facing automotive product for 2024 or so. More interesting, to me, is Amazon, which has made no announcement. Consider:

-Amazon is learning a lot about drones, including path planning, machine vision, and vehicular control: three key competences of autonomous driving.

-Amazon employs some of the best machine learning talent on the planet.

-Amazon is building a fleet of more than 100,000 delivery vehicles (for comparison, the USPS fleet numbers about 200,000). Using autonomy internally or in a B2B scenario could be a smarter play than targeting individuals: Google Glass would have fared much better had it targeted industrial and commercial use cases rather than consumer behavior, a fact not lost on Jeff Bezos I’m sure.

-Amazon has effectively infinite computing capacity (and vast programming capacity) on tap.

That’s four reasons, constituting a unique footprint (UPS lacks AI server farms; Google lacks a massive fleet of vehicles), why Amazon could shake up mobility. Oh, and they just bought these guys.

That’s a cursory list: work, dining, mobility, education, entertainment, and media are all in play. I’m similarly interested in travel (who’s buying airline or ski resort stock right now?), supply chains/manufacturing (can Boeing reclaim its mojo?), and most important, health care. Ohio State just found heart damage in 15% of athletes who had tested Covid-positive (a scary-big percentage), but there’s no diagnostic as of yet to inspect the virus’s long-term impact on the brain regardless of whether senses of smell/taste rebound.

Yes Covid-19 has a relatively low death rate, so far, but in the nightmare scenario, millions of people worldwide could be cardio-pulmonary-neurological time bombs. It’s not improbable that we’ll see lung scarring, heart malfunction, and/or cognitive/emotional damage on a massive scale, threatening long-term debilitation (possibly including accelerated onset of Alzheimer’s) of huge numbers of people, some of whom were silently infected in 2020. (I’m not free-form speculating here: see here and here for starters.) That sure doesn’t sound like “the good old days” to me.