Thinks 535

Atanu Dey: “Fixed costs are ubiquitous, except in the most trivial and primitive production systems. Consider the ordinary soda can. We thoughtlessly use and discard soda cans, and justifiably so. They are cheap and not worth a second thought. However if you think about it, it’s an absolutely miraculous product of modern technology and engineering. They are only cheap because they are produced, and used, by the billions. If they were only consumed by the thousands, or even millions, they’d be too expensive. It’s an example of the chicken and egg dynamics: they are cheap because they are produced by the billions, and they are used by the billions because they are cheap…Scale economies and high fixed costs are important features of the modern world. But they pale in comparison to the importance of innovation that comes from investment in research and development. Without R&D, there would be no advances in technology at the rate we are used to. And that’d be the end of our constantly advancing world.”

Matt Beloni: “If you look at what’s happened over the past three decades in the entertainment business, there’s been a pretty solid business model built on the linear cable business, and everybody knows that that is not going to last forever. So over the past five to seven years, you’ve seen all of these legacy companies completely discard their business model and chase these streaming customers, because Netflix had been so successful to get to 220 million subscribers around the world. So then, what happens when the business model that you are chasing is absolutely under attack by Wall Street? Netflix has lost about 70 percent of its value in the past few months, and there’s a real sense of dread and anxiety around Hollywood. Oh my god, what did we do? We tossed aside a pretty good business to chase this bottomless pit of money that it takes to compete in the global streaming race. And what if the promised billion subscribers that are supposedly going to be there, thanks to the Netflix model, what if those don’t materialize? Where does that leave us now?”

Tyler Cowen asks: “How much should you criticize other people?” A few suggestions: “1. “Complain less” is one of the very best pieces of wisdom.  That is positively correlated with criticizing other people less, though it is not identical either. 2. If you criticize X to Y, Y wonders whether you criticize him to others as well.  This problem can increase to the extent your criticism is biting and on the mark.”

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Rajesh Jain

An Entrepreneur based in Mumbai, India.

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