Thinks 1166

Economist: “The sort of social networking that Facebook pioneered is disappearing. The most obvious change is the shift to video on today’s networks. The explosive success of TikTok, a Chinese-owned short-video app which launched in 2017 and quickly had young people hooked, has sparked a wave of copycats…The bigger change to social feeds is under the bonnet. At first, social networks showed chronological updates from users’ contacts: their friend just got engaged, their uncle was storming the Capitol and so on. As the volume of posts grew, the networks employed algorithms to prioritise posts that had proved popular among the user’s friends. Now a new phase has begun. TikTok decided that, rather than guessing what people would like based on their “social graph”—that is, what their family and friends liked—it would use their “interest graph”, which it inferred from the videos they and people like them lingered on. And rather than show content created by people they followed, it would serve up anything it thought they might like…Social media are more popular than ever, but social networks are dying.” More: “The striking feature of the new social media is that they are no longer very social. Inspired by TikTok, apps like Facebook increasingly serve a diet of clips selected by artificial intelligence according to a user’s viewing behaviour, not their social connections. Meanwhile, people are posting less. The share of Americans who say they enjoy documenting their life online has fallen from 40% to 28% since 2020. Debate is moving to closed platforms, such as WhatsApp and Telegram.”

WSJ: “When it’s time to pick a new chief executive officer, boards often wrestle with whether to select an insider who already knows the company’s challenges or an outsider who can shake things up. The paper’s author, Tingyu Du, a Ph.D. student at UCLA Anderson School of Business, describes CEOs promoted from subsidiaries as “hybrid CEOs” and says her research suggests these types of leaders seem to be especially effective during times of economic and/or industry turbulence. “Hybrid CEOs perform better than insiders or outsiders because, on the one hand, they are knowledgeable about the company culture and capabilities, and on the other hand, they have an outsider mindset, being more open to new ideas, and they haven’t been part of the head office,” she says.”

FT: “Professors Huggy Rao and Bob Sutton realised they were on to something when executives in their management and innovation classes at Stanford University began to offer vivid descriptions of the obstacles standing in the way of their work.  “I work in a frustration factory,” said one who had enrolled in their latest course. Another, from a California technology company, was more blunt. “Professor, I’m swimming in a sea of shit. I’ve barely got my head above the water. And you want me to show initiative? How is that possible?” Once Sutton and Rao had unleashed the exasperation of staff entangled in red tape, worn down by petty rules and procedures, and held back by nitpicking managers and indecisive leaders, it was hard to stop them. Employees talked about “death by meeting,” “the tower of no”, “blowhard bosses” and “leadership by gobbledegook”. The duo, who together have devoted more than 70 years to teaching and studying organisational behaviour, started to collate and categorise the evidence of this frustration. Seven years later, they have distilled it into a new book, The Friction Project.”

WSJ: “Few of us start the day without a to-do list, but they can hurt as much as they help. For every item checked off, another hits an unexpected obstacle and two more tasks get added. By the end of the day, our to-do list is often longer than it was in the morning, deflating any sense of progress. Taking the opposite tack—a “done” list—can give you that burst of motivation that to-do lists sometimes fail to inspire, die-hard practitioners say. Instead of obsessing over what you still have to do, take an inventory of everything you’ve already done. The idea is to recognize small wins, no matter how mundane. Together, they can add up to a greater sense of achievement, says Gretchen Rubin, who has written books about happiness and forming good habits.”

Nucore: A Thought Experiment (Part 4)

Netcore 2.0 – 2

Here is an excerpt from Netcore Progency: A Profipoly Catalyst:

Netcore 1 is the business we do today: a combination of CPaaS (channels) and martech solutions (for engagement, experience and personalisation). As our website puts it, Netcore offers ”The Martech OS for your Profitable Growth” by “Empowering marketers to create meaningful customer connections through our AI-powered Customer Experience and Personalization platform.”

Netcore 2 needs to evolve this vision to create the Profipoly Stack, breakthrough ideas and innovations to unify data, experience, and communications, for driving engagement, conversion, and retention. While it retains the SaaS essence, it pushes the boundaries of what our platform can achieve.

Netcore 3 steps away to create a startup, a new business to create an amalgam of software and service, with an adtech-style performance pricing model. This is Netcore Progency, a paradigm shift in the martech space. Its mission? Profipoly engineering…By seamlessly combining SaaS and service under a single umbrella, by leading with an AI-first “profipoly stack”, by focusing on the Blue Ocean customers neglected and ignored by marketing teams, by championing new metrics like the EnCoRe Triad, by advocating performance-based compensation models, and by eliminating constraints on marketing budgets, Netcore Progency positions itself uniquely. It aims to steer Netcore from the saturated martech stacks markets, carving a niche as a trailblazing, category-defining entity.

…The progency can drive a flywheel of innovations because of its proximity to end customers and their daily lives. The learnings on what works and what doesn’t will not be channelised through marketing teams anymore. More data will help generate sharper insights for even better outcomes. The progency has as much skin in the game as the brand – in fact more, because the progency is making upfront investments and is paid only when revenues grow. The progency introduces a discontinuity in the martech market – a new model very different from the old. It is what Google did when it shifted the industry from the impression-based pricing (CPM) to action-based pricing (CPC).

…Netcore would need to build on two fronts: the tech stack to stay ahead of the game, and the people factory, to ensure there are specialists who can combine the product and AI insights with their own judgement to deliver the right outcomes for brands. It would be an exciting future – a blue ocean in the red ocean. This is an opportunity to transform not just Netcore’s future, but also change the course for tens of thousands of brands who have forced themselves into captivity with their senseless AdWaste spending.

The ideas for Nucore are compelling – the Profipoly Stack, Progency model, Inbox Commerce, Email 2.0, Atomic Rewards constitute a differentiated blueprint. To build a billion-dollar revenue business in the next 4-5 years, Nucore can consider seamlessly blending Netcore’s existing AI-powered product suite with services. This necessitates not just cutting-edge tech innovation but also pioneering business model innovation. Nucore has a ripe opportunity to tap into the $200 billion AdWaste pool by leading the profipoly transition for consumer brands. This could be Nucore’s purpose – liberating countless consumer businesses from the shackles of profitless growth models to the promised land of profitable forever growth. By combining performance-aligned pricing with game changing martech capabilities and services, Nucore can steer brands away from flashy vanity metrics to meaningful business outcomes. In the process, it has a shot at building sustainable competitive advantages that constitute the underpinnings of a profipoly of its own. If it stays laser focused on this North Star while excelling across product, people, and partnerships, Nucore can profoundly transform martech – and in the process itself journey towards the billion-dollar goal, one brand profipoly at a time.

Thinks 1165

Donald Boudreaux: “The market is filled with impressively sensitive, nuanced, and fast feedback mechanisms that inform and incite each participant to adjust his and her actions in ways that improve the prospects not only of this individual to better satisfy his or her desires, but to improve also the prospect of countless strangers doing so. The overall result is a highly complex order of individual plans and interactions that enable participants to improve their lives as they see fit. To assert that the market order is random is akin to asserting that the existence of opposable thumbs on humans or of gills on fish is random…The results of the spontaneous market order of course are never perfect. Only an immature mind uses such a standard for guiding policy. Nor will these results, even if they are ‘perfect’ according to some reasonable standard, fully satisfy the material or aesthetic or ideological desires of any individual. Only an infantile mind imposes this solipsistic criterion. But decentralized market processes are – by far – the best means of improving as much as possible the prospects for any randomly chosen individual to achieve as many as possible of his or her desires.”

Vanity Fair: “The question is, is the place we’re about to go, into the era of spatial computing, going to make our lives better, or will it become the next technology that becomes a necessity, where we can’t live in a world that’s not augmented? I think Joswiak had it half right when he said, ​​“It feels like we’ve reached into the future and grabbed this product. You’re putting the future on your face.” I think it’s the other way around. Apple is taking us into the future, into a new era of computing. Some of us are running as fast as we can to get there, and others are being dragged, kicking and screaming. But we’re all going. We’re going to the moon, and we’re going to look around at the ghostly luminescence of ancient dust under a black, star-studded sky, and we’ll just know that this is the future of computing and entertainment and apps and memories, and that this apparatus wrapped around our head will change everything.”

Bill Ready: “Social media has really started to consume all of media. And a big thing that has shifted is that, even 10 years ago, 15 years ago, consumers made explicit choices in the media they were going to consume. If somebody wanted to turn on a 24-hour news channel and listen to people shout about politics, or wanted to put on family-friendly content, they could make an explicit choice to do that. If social media becomes the vast majority of your media consumption, you have lost that choice. On most platforms, your only choice is to swipe, to continue scrolling.”

Economist on devices like Apple’s Vision Pro: “What all these devices have in common is that they mostly do away with screens, keyboards and mice. Thanks to “generative” artificial intelligence (AI), computers are getting good at listening to, reading and watching stuff—and understanding it. That means hardware can be controlled by voice, gesture or image rather than touch. AI is thus enabling new “form factors”—tech-speak for gadgets in new shapes and sizes, just as the iPhone looked different from older handsets.”

FT: “Generative artificial intelligence should be welcomed as a giant mash-up machine to enhance creativity…The founder of one generative AI company tells me we are rapidly entering the age of “generative media”. “The internet and social media brought the cost of distribution down to zero. Now, thanks to gen AI, the cost of creation is also going close to zero,” he says. That trend could lead to an explosion of creativity, for both good and bad. It may also deepen concerns over disinformation and intellectual property theft.”

Nucore: A Thought Experiment (Part 3)

Netcore 2.0 – 1

Netcore powers customer communications and engagement for B2C/D2C companies, while Unbxd enables search, product discovery, and product information management. Together, we have built a $100 million business. Customers for Netcore range across eCommerce and retail, banking and finance, travel, and media. Unbxd is focused primarily on eCommerce companies with hundreds or thousands of SKUs. The current business model is a combination of usage-based pricing (messages sent, searches done) and platform fees based on the size of user base or product catalog.

I have discussed about Netcore 2.0 in some of my previous writings.

I wrote in 4M and Netcore 2.0: A Framework for Exponential Growth:

This new incarnation, Netcore 2.0, must be grounded in a clear understanding of the new realities of the marketplace. It’s no longer about how many messages are sent or how many active users are on the platform each month. Instead, the emphasis must shift to demonstrating tangible value to brands.

Netcore’s revenue model too must evolve, moving away from flat-rate charges to a performance-based model. In this new paradigm, Netcore’s success is directly tied to the success we drive for our clients. The more incremental sales we drive or the more AdWaste we help reduce for brands, the more revenue we generate. Such a shift not only ties Netcore’s growth to the value we provide to our customers but also differentiates us in a crowded marketplace, paving the way for a new chapter of sustainable growth and success.

In essence, Netcore 2.0 is not just a version upgrade, it’s a metamorphosis – a strategic pivot to a new way of thinking, a new way of delivering value, and a new way of growing. The ultimate goal is to create new kinds of ‘magical’ products – those that can power the next money machine, build an unassailable moat, and carve out a monopoly in the martech space. By focusing on utility and driving demonstrable value for brands, Netcore 2.0 can set itself on the path towards achieving these objectives.

… Netcore’s evolution involves evolving from a ‘units and users’ martech company with a comprehensive unistack, to a ubiquitous entity providing tangible utility and meaningful uplift. This transformation enables us to accelerate our customers towards their ‘profipoly’ goals. In doing so, Netcore transcends from being a mere tool to becoming an indispensable ally in our customers’ quest to create their unique profipolies.

In Netcore’s Profipoly Strategy, I discussed about the goal for Netcore 2.0 should be to build a “profipoly” – a profits monopoly – by using cutting-edge martech innovations to focus on maximising revenue from the most valuable customer segments, leading to exponential forever profitable growth. This requires shifting budgets from new customer acquisition to building deeper relationships and increasing lifetime value of existing customers. To drive this transition, Netcore 2.0 launch solutions like Inbox Commerce to get an initial foothold, and provide both SaaS and services with performance-based pricing. I wrote: “Netcore can tap into the vast AdWaste spending, exponentially grow the martech category, shape the next chapter of strategy in the digital world, and forge its Profipoly journey… The prize is the $200 billion AdWaste – which is many times the size of today’s martech industry. This is a unique moment in time: just as Generative AI promises to upend fortunes of companies and industries, Netcore can do the same in the world of Martech with its own profipoly strategy.”

Thinks 1164

Erica Benner: “Democracies have always presented themselves as beacons of human progress. In 431BC, the statesman Pericles declared that Athens’s democracy was “the school for all Greece” — while over the past two centuries, democracy warriors everywhere have measured their countries’ success or failure by comparison with western models: American, British, French, Swedish. It’s harder to do now that these formerly self-congratulating democracies are doing battle with new and older demons. Today, millions of people around the world crave freedom from authoritarian rule. Yet when they hear almost daily that the liberal heartlands are plagued with inflation, strikes, high crime rates, gun violence and ill-informed voters who care little about truth, many of them doubt that democracy is the best alternative…Even well-crafted institutions can’t function without popular support. Change has to start with our own attitudes. Take other people’s beliefs and discomforts more seriously than ideologies that preach faith in the inevitable progress of whatever you think best. Fight to take power back, of course, from democracy’s most obvious enemies — extremists, insatiable plutocrats and tyrannical leaders. But also take a more modest, closer-to-home kind of responsibility: for getting our own hypercompetitive societies and psyches into better shape.”

FT: “Virtually every large passenger plane that is flown in the western world is built by Airbus or Boeing. Their five-decade transatlantic rivalry has been the bedrock of explosive growth in passenger numbers and led to innovations that have driven down the cost of flying and made mass market travel a reality. The European group has held the crown as the world’s largest plane maker by deliveries for the past five years and now holds a market share of 62 per cent in the lucrative narrow-body segment of the commercial market, according to aviation consultancy Cirium…“The duopoly is working”, says Nick Cunningham at Agency Partners a consultancy in London. “There is no competition worth talking of yet, though the Comac C919 will very gradually displace the Max 8 and A320neo in China.””

Om Malik: “Apple Vision Pro has ultra-high-resolution displays that deliver more pixels than a 4K TV for each eye. This gives you a screen that feels 100 feet wide with support for HDR content. The audio experience is just spectacular. In time, Apple’s marketing machine will push the simple message — for $3,500, you get a full-blown replacement for a reference-quality home theater, which would typically cost ten times as much and require you to live in a McMansion.” [via Arnold Kling]

What happened in 17th century England (a lot) – a list by Tyler Cowen. The century started with the founding of the East India Company (1600) and Shakespeare publishing Hamlet (1603).

Nils Karlson: “Classical liberals rejoice in individual development and self-authorship, entrepreneurship, diversity and tolerance, moral pluralism, mutual respect, free speech and rational discourse, science, in different virtues, and human flourishing. Together these dimensions of liberalism reinforce each other.” [via CafeHayek]

Nucore: A Thought Experiment (Part 2)

Disruption – 2

Here are some more examples of disruption (with inputs from ChatGPT, Claude, and Bard).

Fast Fashion (Zara, H&M): Fast fashion retailers like Zara and H&M disrupted the fashion industry with their ability to quickly bring the latest trends from the runway to store shelves. They reduced the time it takes to design, produce, and distribute clothing, significantly outpacing traditional fashion brands. This has forced many established apparel companies to rethink their production and supply chain strategies. (Shein is doing something similar.)

Low-Cost Airlines (Southwest, Ryanair, Indigo): These airlines revolutionised the aviation industry by offering no-frills service at significantly lower prices than traditional carriers. They focused on cost-saving strategies such as using secondary airports and maintaining a single type of aircraft. This approach not only opened air travel to a broader customer base but also pressured traditional airlines to reevaluate their business models.

IKEA in Furniture Retail: IKEA’s approach to furniture retailing, with its focus on affordable, flat-packed, self-assemble furniture and a unique in-store experience, disrupted the traditional furniture industry. Their model made stylish, functional design accessible to a broader market and challenged other furniture retailers to innovate in design, pricing, and customer experience.

Aldi and Lidl in Grocery Retail: These German discount supermarket chains disrupted the grocery retail industry with their low-price strategy, limited selection of mostly private-label brands, and efficient store operations. This model has challenged traditional supermarkets, leading many to adopt similar cost-cutting measures and increase their own private-label offerings.

Dollar Shave Club in Personal Grooming: Dollar Shave Club disrupted the razor industry, traditionally dominated by a few major companies, by offering a subscription-based service delivering razors and grooming products directly to consumers. This model, combined with clever marketing, challenged the pricing and distribution strategies of established players. Warby Parker disrupted optical glasses by designing stylish frames sold directly online at low prices, cutting out intermediaries.

Examples from Finance: Square provided small credit card readers that plugged into smartphones, allowing small merchants to accept payments anywhere. This disrupted traditional POS systems and payment processors. Robinhood pioneered zero-fee stock trading through a mobile app, putting pressure on incumbent brokerages. Zerodha did something similar in India. Affirm provides instant point-of-sale loans on online purchases as an alternative to credit cards.

Chipotle in Fast Food: Chipotle redefined “fast food” by offering made-to-order, fresh, and locally-sourced ingredients at a slightly higher price point than McDonald’s or Burger King. They tapped into growing consumer demand for transparency and healthier alternatives, disrupting the fast-food industry through a focus on quality and sustainability.

Peloton in Fitness: This company brought high-end cycling experiences into living rooms with interactive exercise bikes and virtual classes. Peloton created a fitness community that transcended geographic limitations and disrupted the traditional gym model by offering convenience and personalised training.

In many of these examples, the startups reinvented business models in addition to introducing new technologies. They identified segments where customers were open to alternatives and incumbent solutions were weakest. By gaining traction there first before going upmarket, they achieved disruption. The key takeaway is that disruption often starts from the low end, gets product-market fit with overlooked users first, and then improves from that beachhead to compete directly against incumbents. Established players often struggle to respond in time due to organisational inertia.

Disruption is about innovative thinking and reimagining how things can be done. Let’s now apply this to the world which Netcore operates in – enabling brands with customer engagement, conversion, and retention.

Thinks 1163

Wired: “[Chris] Dixon’s new book, Read Write Own: Building The Next Era of the Internet, argues that despite all the drama, scams, and lost fortunes, blockchain technology is morally neutral. He asserts that regulators must discriminate between dangerous misapplication and productive experimentation to avoid squandering the technology’s potential benefits. The book is a self-interested caution against overcaution—please don’t throw out the blockchain baby with the grimy crypto bathwater. Dixon outlines a cultural divide within the crypto industry. One faction, which he terms the “crypto casino,” is interested only in financial speculation and includes many schemers and fraudsters. The other faction believes that blockchain is not just a form of accounting ledger, but a new computing platform that opens up horizons far grander than just new forms of financial trading. So far, the first faction is winning.”

Donald Boudreaux’s headline for a post: “Buying Votes With Your Own Money Is Illegal; Buying Votes With Other People’s Money Is Good Politics.”

Perry Bacon Jr.: “The journalism industry itself and the public need to fully embrace a shifted landscape. The era when many news outlets were also successful businesses is over — and might never return. Foundations, wealthy individuals, average Americans and even local and state governments, much more than in the past, are being asked to subsidize news outlets through subscriptions or donations. Public radio stations holding fundraising drives used to be an anomaly in an industry largely funded by advertising. But in the future, it is likely that lots of news organizations will essentially be charities, asking rich people and also you to help them provide a critical service that the market won’t support. So what kind of journalism should Americans be willing to fund? Three kinds in particular. Government and policy news, particularly at the local and state levels; watchdog journalism that closely scrutinizes powerful individuals, companies and political leaders; and cultural coverage, from important books and movies to faith and spirituality.”

Elisa Gabbert: “I read somewhere once that all the books you read in your lifetime, in the order that you read them, form an entirely unique text. In a sense this is trivially true — no one eats all the same meals as you, either. But to me this idea is profound, almost a philosophy. We each read our own book, an uber-book. All the millions of words I have looked at, that spectral, unbindable text — it’s not inside me, exactly, but it did pass through me, and only me. I’ve been keeping annotated lists of every book I finish for almost 10 years. The lists have become a way of living. The first was a whim, just something to do. This, it turns out, is how you follow Rilke’s command — you must change your life by accident. I decided to make the list public, and so I was suddenly accountable for reading in a way I never had been. It was as though I had someone to impress, although the list was almost entirely for myself, to help me remember more of what I read. I began reading to impress myself, to be better than myself.”

Nucore: A Thought Experiment (Part 1)

Disruption – 1

A colleague at work asked me an interesting question recently, “If Netcore were a startup today, what would you do differently?” It got me thinking. At times, when we are running an established business, we become tethered to our existing products and customer base. Innovative ideas, while ever-present, tend to be overshadowed by the looming presence of our current, larger-scale operations. Another way to therefore frame the question would have been: “If Netcore were a startup today and tasked with disrupting companies like Netcore, what would you do?” In this series, I will try and answer this question. I will call this startup “Nucore”, a name that resonates with the idea of a rejuvenated Netcore, blending the freshness of “New’” with the foundational elements of “Netcore+Unbxd” (NU) at its heart.

Disruption is how our world advances. Old gives way to new, small challenges the big, startups (or upstarts) take on established incumbent businesses. As Clay Christensen has written in “The Innovator’s Dilemma”, this is often achieved by the smaller company targeting overlooked segments, offering innovative or more affordable solutions, and capitalising on new technologies or business models. The disruptive company eventually moves upmarket, capturing a significant market share, and sometimes displacing the incumbents entirely.

Here are a few notable examples of such disruptions (with help from ChatGPT, Claude and Bard).

Netflix vs. Traditional Cable and Blockbuster: Netflix began as a mail-order DVD service but quickly pivoted to online streaming. This innovation fundamentally disrupted the traditional cable TV and movie rental industries. Companies like Blockbuster, once a market leader in movie rentals, failed to adapt quickly enough to this new model and eventually went out of business. Netflix’s model of convenient, on-demand, subscription-based streaming became the new norm in home entertainment.

Uber and Lyft vs. Traditional Taxi Services: Uber and Lyft revolutionised urban transportation by making it easy to hail a ride via a smartphone app. These companies bypassed the traditional taxi model, offering a more convenient, often cheaper, and user-friendly service. Their entry into the market significantly impacted traditional taxi and livery services, forcing many to adapt or face declining market share.

Airbnb vs. Traditional Hotels: Airbnb created a new model in the hospitality industry by enabling homeowners to rent out their spaces to travellers. This peer-to-peer platform offered more varied and often cheaper accommodations compared to traditional hotels. Airbnb’s model expanded the travel accommodation market and put competitive pressure on established hotel chains to innovate and diversify their offerings.

Amazon vs. Retail Stores: Amazon started as an online bookstore and expanded to become a one-stop shop for everything. Its success lies in its vast selection, competitive pricing, and a highly efficient logistics system. Amazon’s growth has disrupted traditional retail stores, contributing to the phenomenon known as the “retail apocalypse,” where numerous brick-and-mortar stores have seen a significant decline or have closed.

Tesla vs. Traditional Automakers: Tesla’s approach to electric vehicles (EVs) has been disruptive in the automotive industry. By focusing solely on EVs, Tesla challenged the notion that electric cars were inferior to gasoline-powered ones. They combined high performance with environmentally friendly technology, which has pushed traditional automakers to accelerate their own EV programs.

Spotify vs. Music Industry: Spotify introduced music streaming, providing consumers with unlimited access to millions of songs for a monthly fee. This disrupted the traditional model of album sales and forced the music industry to embrace new distribution channels.

Entrepreneurs excel at identifying and exploiting market gaps, embodying the essence of disruption by transforming overlooked opportunities into thriving ventures. Their knack for innovation reshapes industries, often creating entirely new markets or redefining existing ones.

Thinks 1162

Eric Schmidt: “Today’s large language models, the computer programs that form the basis of artificial intelligence, are impressive human achievements. Behind their remarkable language capabilities and impressive breadth of knowledge lie extensive swaths of data, capital and time. Many take more than $100 million to develop and require months of testing and refinement by humans and machines. They are refined, up to millions of times, by iterative processes that evaluate how close the systems come to the “correct answer” to questions and improve the model with each attempt. But as models become more sophisticated, this approach may prove insufficient. Some models are beginning to exhibit polymathic behavior: They appear to know more than just what is in their training data and can link concepts across fields, languages, and geographies. At some point they will be able to, for example, suggest recipes for novel cyberattacks or biological attacks—all based on publicly available knowledge.”

Bianca Bosker: “If I learned one thing as a [museum] guard, it’s that sometimes being forced to look at an artwork, even when you don’t want to, is life-changing. I’m going to leave you alone with a piece. Challenge yourself to notice five things. If you get stuck, move: Get closer, walk backward or go around it. Notice the most obvious things, the most surprising things, the things that grab your eyeballs despite yourself. Fight the urge to see what you expect to be there; focus instead on what is there. Maybe ask yourself how you’d describe the piece. Or let yourself wonder what it was made with. I’m not concerned with whether you think it’s good. Just watch the thing in front of you.”

FT: “[JP Morgan] gets much of its moneymaking raw material — its $2.4tn of deposits — nearly for free. For instance, despite rising interest rates across the debt spectrum, and some money market funds paying interest rates of 5 per cent or more, JPMorgan is taking a very different tack. It pays 0.01 per cent annually on its checking accounts and 0.02 per cent annually on its savings accounts (or at least mine). That is about as close to zero as you can get, giving it access to trillions of dollars of raw material for just about nothing. No wonder that as interest rates have risen since the Federal Reserve started pivoting in 2022, JPMorgan has been raking in profits. It is still paying depositors interest payments from the previous, zero-interest rate cycle while charging its borrowers interest rates based on the current much higher rate card. Bonanza! You may wonder why the bank does this. The answer is simple. Because it can. JPMorgan is perceived as the safest place to keep your money, thanks to the so-called fortress balance sheet that Dimon tells people he has created. And when the various US regional banks melted down last year, where did depositors run, if they could?”

Tyler Cowen: “One of the better analogies for AI is the printing press. Johannes Gutenberg developed it in Germany in the middle of the 15th century, but its impact on Europe was greatest in the 16th and 17th centuries, when paper and publishing got much cheaper. The printing press helped to birth the Scientific Revolution in England and later the Industrial Revolution. It made democracy and near-universal literacy possible. It gave everyone a chance to read the world’s great books. At the same time, the printing press altered many status relationships. As more people read the Bible, for instance, Protestantism grew at the expense of Catholicism. That led to social instability and sometimes violent conflict, as reflected in the centuries-long European wars of religion. Now ask yourself: If you could go back in time and press the “pause” button on the development of the printing press, as some suggest we now do for AI, would you? For me at least, the answer is easy: No.”

The Profipoly Quest (Part 14)

Conquest

The ideas outlined here can help digital businesses move from Profitless to Profitable to Profipoly. Here is how the progression can look like.

A few points to note:

  • CLV impact is seen in revenue rising faster than costs
  • CAC reduction is seen as the percentage of revenues spent on adtech keeps reducing
  • The spending between adtech and martech gets more balanced
  • Profitability of the business keeps growing – hopefully leading to a flywheel effect over time

The journey can be summarised this:

  • Hi CAC + Lo CLV = Profitless
  • Hi CLV + Lo CAC = Profitable (Note: I have put CLV first because that is the key to reducing CAC)
  • (Hi CLV + Lo CAC)n = Profipoly

This is the quest that marketers need to embark on: a journey where they stop focusing only on growth but also take up the onus of driving profitability. In short, the CMO needs to become the Chief Profits Officer. (And that leap could also what drives the CMO to the corner office of the CEO!)

**

ChatGPT summary

The essay posits a transformative approach to digital marketing, focusing on the symbiotic relationship between Customer Acquisition Cost (CAC) and Customer Lifetime Value (CLV). It critiques the traditional marketing strategies that prioritize growth at the expense of profitability, leading to a high CAC and low CLV. To combat this, the essay suggests innovative methods such as Email 2.0, which enriches customer engagement through interactive content, and Progency, a product-led agency model driving efficient growth.

The essay emphasizes the historical significance of quests and likens the pursuit of a balanced CAC and CLV to such legendary endeavors. It advocates for a reorientation of marketing practices, urging marketers to evolve beyond mere growth metrics and adopt a holistic view that integrates acquisition and retention strategies. By doing so, digital businesses can create a ‘profipoly’—a monopoly of profits—ensuring sustainable, profitable growth.

Key ideas include leveraging technology such as AI and AMP for personalized communication, using gamification to enhance email marketing, and creating a unified customer view to tailor experiences and offers. The essay also underscores the necessity for marketers to rethink their role, suggesting that a focus on profitability could pave their way to leadership positions within companies. Overall, it calls for a bold reimagining of digital marketing where efficiency, innovation, and strategic thinking lead to exponential profitability.

Claude summary

The essay discusses strategies for B2C/D2C companies to optimize their customer acquisition costs (CAC) and customer lifetime value (CLV) in order to achieve profitable and sustainable growth (dubbed “Profipoly”).

Key problems highlighted are high CAC due to factors like ad waste and steep discounts, along with low CLV because of poor retention rates and funnel frictions. This leads to a profitless state.

Solutions revolve around innovations like Email 2.0 to boost engagement, Progency partnerships to drive performance marketing, using the BRTLNG framework to segment audiences, implementing velvet rope marketing for VIP customers, reducing ad waste with better targeting/attribution, and unifying data and channels.

The 30/60/90 day action plan focuses first on measurement hygiene and testing to reduce CAC waste, along with email journey mapping and referral programs to increase CLV. Progency partnerships on at-risk retention and new prospect acquisition are also recommended.

The end goal is to reach a “flywheel effect” between high CLV and low CAC that creates exponential profitable growth over time – dubbed “Profipoly.” This sees CLV growth outpacing CAC reduction, leading to higher revenues, lower costs, and exponentially increasing profit margins.

The key is for marketing to drive profitability, not just growth. This could elevate the CMO to become the Chief Profits Officer and eventually CEO. The essay provides a blueprint for the “Profipoly Quest.”