Thinks 433

NYT: “Rosemary Salomone’s “The Rise of English” explores the language wars being fought all over the world, revealing the political, economic and cultural stakes behind these wars, and showing that so far English is winning. It is a panoramic, endlessly fascinating and eye-opening book, with an arresting fact on nearly every page. English is the world’s most widely spoken language, with some 1.5 billion speakers even though it’s native for fewer than 400 million. English accounts for 60 percent of world internet content and is the lingua franca of pop culture and the global economy. All 100 of the world’s most influential science journals publish in English. “Across Europe, close to 100 percent of students study English at some point in their education.””

Elliot Kukla: “Laziness is more than the absence or avoidance of work; it’s also the enjoyment of lazing in the sun, or in another’s arms. I learned through my work in hospice that moments spent enjoying the company of an old friend, savoring the smell of coffee or catching a warm breeze can make even the end of life more pleasurable. As the future becomes more tenuous, I want to teach my child to enjoy the planet right now. I want to teach him how to laze in the grass and watch the clouds without any artificially imposed sense of urgency. Many of the ways I have learned to live well in a chronically ill body — by taking the present moment slowly and gently, letting go of looking for certainty about the future, napping, dreaming, nurturing relationships and loving fiercely — are relevant for everyone living on this chronically ill planet.”

Harold Demsetz: “A tax levied on corporate profits reduces the care and effort owners will put into its operation, since part of the return that would have been received by owners will go to the state. De facto, private owners of the corporation are saddled with a shirking partner, the state, which takes part of the revenue and provides none of the effort to improve the firm’s return. Consequently, the greater the corporate tax rate, the greater the incentive for corporate owners and managers to pursue the “quiet life.”” [via CafeHayek]

µniverse and Bharatverse: Web3 Explorations (Part 20)

µniverse – 4

I remember the early days of the Internet. I was a failing entrepreneur in Mumbai in the summer of 1994. Two years after my return to India, I wondered if I could be successful after a string of flops. It was then that I started reading about the Internet. Two months spent in the US using a dial-up browser convinced me that this was the future. And thus was born the idea of creating IndiaWorld as an electronic information marketplace to connect Indians globally.

As I read about Web3 now and look beyond the price volatility of Bitcoin and the other cryptocurrencies, there is a similar feeling that there is something new and exciting being created. What is needed is to think about how this can be applied – what are the second- and third-order effects of the decentralised infrastructure that is being constructed?

Just as the early years of the Internet offered the promise of digitisation of all that was not, Web3 can decentralise all that is not. It is up to us to imagine the use cases and the new “universes” that can be constructed.

The Economist wrote recently about the promise of Web3:

The history of modern computing is of a constant struggle between decentralisers and recentralisers. In the 1980s the shift from mainframes to personal computers gave individual users more power. Then Microsoft clawed some of it back with its proprietary operating system. More recently, open-source software, which users can download for nothing and adapt to their needs, took over from proprietary programs in parts of the industry—only to be reappropriated by the tech giants to run their mobile operating systems (as Google does with Android) or cloud-computing data centres (including those owned by Amazon, Microsoft and Google).

The web3 movement is a reaction to perhaps the greatest centralisation of all: that of the internet. As Chris Dixon, who oversees web3 investments at a16z, explains it, the original, decentralised web lasted from 1990 to about 2005. This web1, call it, was populated by flat web pages and governed by open technical rules put together by standards bodies. The next iteration, web2, brought the rise of tech giants such as Alphabet and Meta, which managed to amass huge centralised databases of user information. Web3, in Mr Dixon’s telling, “combines the decentralised, community-governed ethos of web1 with the advanced, modern functionality of web2”.

This is possible thanks to blockchains, which turn the centralised databases to which big tech owes its power into a common good that can be used by anybody without permission. Blockchains are a special type of ledger that is not maintained centrally by a single entity (as a bank controls all its customers accounts) but collectively by its users. Blockchains have outgrown cryptocurrencies, their earliest application, and spread into NFTs and other sorts of “decentralised finance” (DeFi). Now they are increasingly underpinning non-financial services.

It is time to reinvent the world brand customer relationships and rethink them in the context of Web3, blockchains, and cryptocurrencies. There are hundreds of billions of dollars being wasted because of reacquisition and wrong acquisition. Tapping into those is one of the biggest business opportunities in tomorrow’s digital first world. The µniverse, constructed as a DAO with the right rules and incentives, is waiting to be built.

Thinks 432

From a PwC report on how to do M&A better. One of the points: “The findings underline that the capabilities premium for both leverage and enhancement deals is a powerful expression of value creation. Leverage deals, in which the buyer uses its capabilities to strengthen the target, performed slightly better on average than enhancement deals, in which on-boarding new capabilities often comes with greater complexity.”

Five ways to avoid the pitfalls of binary decisions: from strategy+business. “Before you decide, check how the question is framed to ensure you have all the information you need and have considered all your options…It’s critical for executives to overcome this cognitive tendency to quickly make insufficiently informed binary choices. A decision to buy or sell, keep a project in-house or outsource it, work in the office or work from home, to name a few examples, can make or break a business and a career. And an in-between or hybrid option might be best. For instance, designating someone a leader versus a manager artificially limits the person’s potential because executive roles require both skill sets. And the sharing economy was built by injecting alternatives into binary decisions, such as whether to own an automobile. Moving beyond binary choices creates a nuanced perspective on potential risks and opportunities.”

strategy+business on why the first five minutes of a meeting shape its outcome. “The basic idea is that to support people and move critical objectives forward, leaders need to ask themselves four questions: Why are you meeting? Who needs to be there? What conversation needs to happen? And how can you create the conditions that will enable that conversation? In my experience, leaders are often able to answer the first three questions with just a little extra effort. But they usually come up empty when it comes to the last one.”

µniverse and Bharatverse: Web3 Explorations (Part 19)

µniverse – 3

The next question to consider: how can Web3 ideas enhance Atomic Rewards?

Three tweaks to the Mu points system can create an even better solution. First, MuCo should think of Mu as tokens. Second, it should put an upper limit on the number of tokens in circulation with clear rules governing their minting – introduction into circulation. Third, MuCo should create an exchange enabling the Mu tokens to be traded between brands and customers. The impact of these enhancements will be that the value of Mu can now increase over time – thus making the Mu token holders (customers) as investors. The key to making this work is the assumption that incentives offered in the form of Mu can indeed nudge customer behaviour as desired by marketers. Games have done this very well; it still remains to be seen whether it can work in the real world.

Since the absolute quantum of Mu tokens is capped, over time brands requiring them will need to buy them via the exchange from customers (or potentially, other brands who have bought them earlier.) This “exchange” will enable the creation of a marketplace where the price of Mu will be determined by buyers and sellers, rather than a centralised entity. It is similar to how bidding on keywords for advertising on Google is determined via an auction.

As Mu tokens acquire value beyond what is set by MuCo, it can become an “attention crypto-currency”. Transactions are stored on the blockchain to ensure transparency. Every customer now has a “Mu Wallet” where they can hold their tokens. And as marketers and customers see value, the usage of the tokens can also diversify. A MuBox (or micronbox, as I have termed it previously) can aggregate all messages with rewards into a single inbox. A MuBrowser can address privacy and generate rewards. These would be the baby steps to creating the µniverse, a virtual world where brands and customers can engage with each other.

Let’s take this further. One of the biggest challenges that a brand has is new customer acquisition. Suppose they incentivised existing customers to help them get new ones via referrals. Let’s take the example of Netflix which is having growth hiccups in India. Suppose Netflix would allow me as a customer to check who among my social network is a customer. If I can then persuade those in my network who are not Netflix customers to sign-up, I can be rewarded with Mu tokens. This makes referrals targeted and rewarding. Each of us is a micro-influencer and we all know the power of word of mouth. What’s been missing is the knowledge of whom to persuade and an incentive to do so. Atomic Rewards in the form of Mu tokens can be the answer. Web3 tokens can thus drive network effects to solve not just attention recession but also the cold start problem that many brands have – in an efficient manner, where the cost of acquisition can be taken as a percentage of the sale value, thus creating an infinite budget for new customer acquisition.

Thinks 431

John Thornill writes about Covid entrepreneurs: “Based on past experience, most of these new businesses will fail, or will fail to grow. But those that succeed could help transform economies around the world. Historic US data shows that surges in new business formation have, with a short time lag, led to corresponding surges in productivity, says John Haltiwanger, professor of economics at the University of Maryland. “Younger businesses are highly innovative, put competitive pressure on mature businesses and lead to productivity growth.” Many governments are currently intent on regulating Big Tech, for understandable reasons. But this should not distract them from nurturing a fresh Covid generation of creatively destructive entrepreneurs, who may be best placed to exploit the business parklands of the post-pandemic world.”

Kumar Mangalam Birla: “The world is awash in capital and there has perhaps rarely been a better time to be an entrepreneur, as everyone from angel investors to the public markets line up to back ideas. The competition for investment opportunities and the Fear of Missing Out (FOMO) have driven up valuations of many fledgling companies to stratospheric levels. Historically, the key question for any new business was whether it fulfilled an unmet consumer need. A hallmark of some new businesses today is that they seek to use the brute force of capital, combined with smart technology and operations, to create new needs that you did not even know existed!…Ultimately, my own view is that at some stage unit economics will have to matter. And trusty old concepts like cash flows and gross margins will guide behavior and actions. The only sustainable moat is the one based on intellect. Large waves of cheap capital will eventually erode all other entry barriers.”

Atanu Dey: “Good governance can work miracles. Lee Kuan Yew demonstrated that. Bad governance can reduce a very capable nation to destitution. Nearly every government that India has had since 1947 has demonstrated that. It is hard to avoid blaming Indians for the lousy leaders they elect. First, they are not very keen on understanding the problem. And when they are faced with hard truths, too many are too ready to find excuses to deny the reality.”

µniverse and Bharatverse: Web3 Explorations (Part 18)

µniverse – 2

Another company working to solve the digital advertising problem is Gener8ads. From a 2019 Forbes article: “Gener8, a U.K. based company is launching … a browser add-on, as opposed to a separate browser, that allows consumers to block ads they don’t want to see but get paid to view those they personally identify as being of interest (see graphic above). Consumers are thus allowed to select the type of ads they want to see and this applies across the web (excluding Facebook). For each ad viewed, the user receives tokens that they can either convert into currency or donate to charity… By using Gener8’s system, advertisers can reach an interested audience and collect additional data in a way that allows for even better future targeting.”

Attention is important. Brave and Gener8ads have focused on new customers and advertising. My  starting point is a brand’s existing customers. What brands need is a mechanism to pay for attention (time) because the alternative in the event of a customer churning is to pay 100 times more to the adtech platforms for reacquisition. This is where “Atomic Rewards” comes in.

Search Engine Journal writes about a recent Google which shows 90% of customers will share their email address for a small incentive, such as a discount. “It’s not possible to deliver relevant ads without gathering at least some data on who the ads are being served to. Customers understand this, and are willing to cooperate to a certain extent. The study finds that consumers are most willing to share information they don’t view as invasive and identifying. That can include information such as their gender, postal code, age, interests, and previous purchases.”

In our context, consider an entity (MuCo) which creates a pan-brand attention and engagement loyalty program. Brands can buy Mu from MuCo and reward their customers for specific actions linked to attention, engagement and zero-party data. Customers collect Mu from across their favourite brands and then can redeem them at the Mu Shop.

This is akin to what happens with credit card points today. They are aggregated across spends with multiple brands and can be redeemed at the store offered by the credit card company. There are also other pan-brand programs like Payback and Intermiles which reward transactions and enable customers to aggregate points in a single account. Airline loyalty programs have also expanded their offerings to enable earning via spending at affiliated merchants. All these programs are focused on the transfer of money, while MuCo is themed around attention and engagement (time).

Let’s look at this from the viewpoint of the end customer. I get push messages from various brands. As I open these emails, click through to the brand properties (website or app), provide personal information, fill out surveys, I earn Mu. I am being rewarded for my attention. Because Mu works across brands, the earning potential in a month can be significant. (Two alternatives to Mu are the use of a brand’s own loyalty program and Brand Tokens, an attention-specific loyalty program limited to a single brand.) The rewards are a form of gamification; marketers can thus influence my behaviour with specific incentives and nudge me along the buying journey. When I have sufficient Mu, I can go to the Mu Shop and redeem the points.

Over time, the ways to earn Mu can be expanded beyond push messages to the brand’s properties and in the physical world. In essence, a brand is paying for my attention, as an alternative to incentivising only transactions or paying ad tech companies to reacquire me in the event that I churn. Today’s B2C and D2C companies spend a large chunk of their capital on discounts and reacquisition; Atomic Rewards in the form of Mu offer an alternative pathway to building loyalty via gamification.

Thinks 430

Tim O’Reilly: “With crypto and Web3 more generally, there is a similar kind of real-world bet that blockchain technology will reshape the plumbing of the financial industry. If it succeeds, the winners will eventually be rewarded with enormous profits, justifying the price that has been paid. Crypto might be a bubble, a flash in the pan that will enrich some speculators while impoverishing others. But it might also be a fundamental innovation that will lead to greater prosperity for all of society. And to many, that’s a bet worth placing.”

strategy+business recommends “Open Strategy”: “Traditionally, a small set of executives develop strategy behind closed doors, then broadcast it to the organization. For leaders to invite others to contribute is often seen as a sign of weakness, diminishing the leaders’ stature, authority, and control. However, the reality is that leaders often find it difficult to develop imaginative ideas on their own, shackled as they are by their conventional wisdom and groupthink. Encouraging their employees to sign up for a newly developed strategy is harder still, considering that they haven’t been given a say in how the strategy should be implemented. It’s therefore no surprise that between 50% and 90% of strategies fail (including well-known examples at giant companies such as Nokia, GE, and Daimler). The authors boldly argue that a lack of openness is a bigger obstacle to success than the wrong strategic framework, a lack of intelligence, or poor consultants. Open strategy is more than a set of tactics or tweaks to an existing strategy. It requires leaders to believe that strategy is likely to be more distinctive and actionable if more people are involved. Open leaders show vulnerability by admitting what they don’t know. They respond to unfamiliar ideas with a “yes, and” mindset: “yes, this is a great idea, and to make it work in our company, we need to do X.”

David Perell: “Whether you’re writing essays or solving physics proofs, the process of thinking is the same. Putting ideas onto paper deepens your thought process and forces you to concretely express what you’re thinking. The more you get ideas onto paper, the less effort your brain has to devote to memory. Knowing that the pieces you’ve already solved are waiting on the page for you allows you to move into new intellectual territory and explore the depths of an idea.”

µniverse and Bharatverse: Web3 Explorations (Part 17)

µniverse – 1

Brands are faced with three challenges: the rising cost of new customer acquisition driving a “doom loop” of spending on Google and Facebook, attention recession among existing customers which leads to retention recession and continuous churn, and retaining existing customers since competitors are persistently targeting them for acquisition. Brands selling through marketplaces have another challenge: how to build direct relationships with their customers since marketplaces do not share customer information.

These challenges can be reconsidered thus. In the world of martech, the focus needs to be building deep relationships with existing customers so that the need to constantly offer transaction-linked incentives can be obviated. This needs brands to shift the focus to the upstream of attention, engagement and habits to create “hooked customers”. In the world of adtech, the power of the intermediaries (Google, Facebook in digital advertising, Amazon in marketplaces, and Instagram and Tiktok in influencer marketing) drives up spending and creates barriers to profitable growth.

Solutions need to be thought about against the backdrop of three colliding worlds: customer loyalty, gamification and crypto. In other words, how can brand-customer relationships be reimagined in a Web3 world? This is where the idea of the µniverse comes in, with attention tokens as one key building block.

An early foray into the world of “attention tokens” has been done by Brave. From its white paper:

Digital advertising is broken. The marketplace for online advertising, once dominated by advertisers, publishers and users, has become overrun by “middleman” ad exchanges, audience segmentation, complicated behavioral and cross-device user tracking, and opaque cross-party sharing through data management platforms. Users face unprecedented levels of malvertisements and privacy violations. Mobile advertising results in as much as $23 per month in data charges on the average user’s data plan, slow page loads, and as much as 21% less battery life. In response, over 600 million mobile devices and desktops (globally) employ ad blocking software and this number is growing. Traditional publishers have lost approximately 66% of their revenue over the past decade, adjusted for inflation. Publishers face falling revenue, users feel increasingly violated, and advertisers’ ability to assess effectiveness is diminished.

The solution is a decentralized, transparent digital ad exchange based on Blockchain. The first component is Brave, a fast, open source, privacy-focused browser that blocks third party ads and trackers, and builds in a ledger system that measures user attention to reward publishers accordingly. Brave will now introduce BAT (Basic Attention Token), a token for a decentralized ad exchange. It compensates the browser user for attention while protecting privacy. BAT connects advertisers, publishers, and users and is denominated by relevant user attention, while removing social and economic costs associated with existing ad networks, e.g., fraud, privacy violations, and malvertising. BAT is a payment system that rewards and protects the user while giving better conversion to advertisers and higher yield to publishers. We see BAT and associated technologies as a future part of web standards, solving the important problem of monetizing publisher content while protecting user privacy.

…In the ecosystem, advertisers will give publishers BATs based on the measured attention of users. Users will also receive some BATs for participating. They can donate them back to publishers or use them on the platform. This transparent system keeps user data private while delivering fewer but more relevant ads. Publishers experience less fraud while increasing their percentage of rewards. And advertisers get better reporting and performance.

Thinks 429

Kevin Kwok: “If you’re reading this, you’ve likely used Zillow, Glassdoor, and Expedia before. It’s hard to look on the internet for anything related to real estate, jobs, or travel and NOT see one of Rich Barton’s companies. Their ubiquity is stunning. But it’s not coincidental. Rich Barton’s companies all became household names by following a common playbook. The Rich Barton Playbook is building Data Content Loops to disintermediate incumbents and dominate Search. And then using this traction to own demand in their industries. Or as he puts it “Power to the People.””

ARK Invest Big Ideas 2022

Brian Chau: “A midwit is typically described as someone with an IQ score between 85 and 115; more colloquially, it describes a person with slightly above-average ability in any domain—someone who is able to pass basic qualifications and overcome standard hurdles but who is in no way exceptional. For a dominant political party, this is an obvious constituency and exactly the type of person you want on your side. While midwits often are preferable to dimwits for obvious reasons, they’re also preferable to an elite (those with exceptional abilities but who may not wield power) that might one day decide to overturn existing structures and ways of doing things…First, incumbent institutions disproportionately select for midwits; second, ideologically conformist midwits select for others of the same ideology, which can be done through hiring decisions, HR law, or employee activism; third, the selection process is amplified further by incentives—because ideological conformity benefits midwits, they change procedures to elevate themselves over their less conformist but more productive colleagues; fourth, the increase in ideological conformity skews selection further toward midwits. This cycle helps explain why incumbent institutions become stagnant or decline, and eventually become incapable of doing what they were created to do.” [via Arnold Kling]

µniverse and Bharatverse: Web3 Explorations (Part 16)

The Future

Let us combine the ideas of network effects and Web3 tokens (NEWT, as I have termed the combo), and virtual worlds to solve the problems of Attention Recession in marketing and Voter Aggregation in politics. For this, let us extend our imagination to constructing two virtual worlds: µniverse (pronounced mu-universe) and Bharatverse (which probably needs a better name).

Domain Marketing Politics
Network Entities Brands and Customers Voters and Candidates
Problem Attention Recession Voter Aggregation
Solution Atomic Rewards United Voters of India
Token Mu Bhim
Virtual World µniverse Bharatverse

As I wrote at the start of this series, what I am doing here is sparking the imagination. For this, we need to create a vocabulary and give labels to what we are mentally constructing. This helps us bring these worlds to life in our mind’s eye.

Good science fiction does this very well. Apple TV brought Issac Asimov’s Foundation series to life. So does The Expanse, based on the books by James Corey (the joint pen name of authors Daniel Abraham and Ty Franck), and available on Amazon Prime Video. For the few hours that we spend reading or watching, we are transported into a different world. In the modern world, some of the digital games that are available do much the same.

My purpose in imagining µniverse is to consider possibilities. What if brands could reward us for our actions? How would that change our behaviour? Brands have always focused on transactions, but not as much on the upstream of attention, engagement and habit formation. How could they do it? Just appealing to our emotions is not going to be enough. This is where the incentives come in – via Atomic Rewards. To make such a system work, it would need to be pan-brand. How can such a mechanism be created so that half the digital ad spending billion being wasted on reacquisition and wrong acquisition via Google and Facebook is channelised to prospects and customers to create a win-win relationship for both sides?

The purpose with Bharatverse is much bigger. The future of a billion Indians has been deeply damaged by our politicians. Freedom, the prerequisite for prosperity, is withering in India as successive governments keep increasing interventions in our personal and commercial lives. No political party is going to do anything different – they are all cut from the same cloth of maximising power of those at the top and their cronies. India’s politics needs a disruption and it is not going to come from within the political class. It needs a people’s revolution. The mobile phone can be the transformation agent. There is a need to educate people, change their minds and channel their votes. Only a Swatantra Lok Sabha can free India from the fetters imposed by politicians and put Indians on an irreversible path to prosperity. How can such a future be realised – not in a generation but with the next election?

Every future begins with an idea in a mind. µniverse and Bharatverse are two such ideas.