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Topic: essays

There’s this idea that anything can be represented by an equation that produces a number. The newsworthiness of random information. The love between two people. The strength of a familial bond. A specific person’s curiosity, the very boundaries of their imagination. Nothing is off limits, nothing out of reach. It’s dedication to the precision and accuracy of those numbers that has had a critical role in recent mega-IPOs like Facebook and Google. Acting in concert, those numbers drive the companies that in turn have defined the very interface of the consumer internet itself: An algorithmically ordered list. That list may be of stories or search results or friend suggestions or ads, it doesn’t matter.

These companies have recursive virtuous scaling because the bigger they grow, the more data they have to refine and improve the equations generating those numbers. The better sort of the list of options develops increasingly well understood and valuable behaviors. It’s not easy to copy, either. If you're a number company all the work to generate those numbers is so distributed throughout the organization, no single employee has too much power. This is why there’s no real risk when the head of feed or search goes to a competitor, it’s simply not possible for one human to contain the entire ruleset within their head. They understand important chunks and strategy, sure, but not everything that goes into creating the best order in all contexts. Even if someone managed to surmount that impossible mountain of information, the product they apply that information to would be different[1][2]. Different network, different humans, different motivations.

Not all companies care about numbers in the same way. Apple, for example, cares about experience. The unboxing experience. The experience of holding an object in your hands. The unique experience of software crafted specifically for a particular hardware. Snap, Airbnb, Stripe, Uber, each try to set themselves apart based on end to end experience which helps build brand[3]. These companies are ostensibly easier to copy because their complexity is hidden under outrageously unreasonable amounts of hard work, focus, and determination. The way they fight off competition is by moving quickly to capture marketshare, by successfully predicting the future, by obsessively going ten times beyond what's reasonable and then going another hundred more just for kicks[4]. They aren’t explicitly trying to reduce abstract concepts or human behaviors to a number that can be sorted and compared to another number objectively. The subjective experiences they create can be measured and those measurements compared, but the aim is always the experience, not the measurement itself.

Number companies tend to fail to recognize what they are. Experience companies tend to fail to recognize their internal definition of “unreasonable” isn't. A company understanding its nature is critical to its execution in context over time. Because that nature drives all manner of decisions big and small, from what people to hire and the relative importance of various roles to core product strategy. Look at how Netflix suggests movies. Their determination to give their customers the very best ordered list of movies revealed to them the value of creating their own content. Netflix doesn’t care about the art of film or anything like that, it's beholden to making the algorithms better and better and that knowledge guides what gets filmed. This understanding will have tremendous impact on the future as folks grapple with the popular acronyms of today. AI (ML, NLP, etc.) VR AR… these are all technologies in search of a use case, in search of a market.

An open question is: If the UI for the consumer internet has thus far been an ordered list, what, if anything, replaces that list? Could anything possibly? That's a big question for number and experience companies alike but it’s a far more pressing concern for the number companies that are bound to its fate. Conversational UIs were the first best guess. Voice is currently the strongest contender at this point. When you’re a number-driven company, the obvious future is no longer producing an ordered list from which to choose, but to provide the singular discrete answer[5] via some form of artificial intelligence. That is an incredibly daunting task for a market that may not actually materialize. The real question for Google and Facebook is not: Can AI become more advanced and human-like? But rather: When do humans actually want to talk to a computer as opposed to another human?

This is where experiential-focused companies have an advantage because they aren’t bound to a strict interface dictated by a foundation based upon numbers powering the order of a list. And it’s not because of any inherent value of experience over numbers, it’s that as of right now there’s no obvious next step. This ambiguity is pure opportunity. The next punctuation in the equilibrium is on the horizon and it will lay a foundation on which the next generation of companies will be built. Like mobile identity (attention) before it, the fundamental truth powering the next generation of technologies won’t be obvious and it possibly won’t be apparent until looked at in hindsight. Whoever discovers it, however, will have the run of their lives ahead of them.

________

[1] You see this with high-profile name brand hires all the time. Why are these people unable to single handedly recreate success of company A at company B? Is the person not as good as advertised? Maybe, but also because company B is not company A and the same rules don’t apply for company B’s product. I suppose if the name brand person were truly great, they would see that and adjust but company A was never the creation of a single person.

[2] This is why Instagram had to sell to Facebook. Without direct access to Facebook’s years of experience scoring images, Instagram may not have been successful in transitioning to a number company after they ran out of gas in terms of innovation. Filters were great when phone cameras were weak, but now that they’ve improved? What’s the next innovation there? Instagram would have had to answer that question on their own and given how small that company was at the time of the sale and the expertise of the founders, they were not in a good position to do so.

[3] If the #deleteuber cycle is any indication, Travis Kalanick’s resignation from the advisory council is a perfect example of the importance of brand for that company. There’s no magic number they produce, there’s a feeling—and this feeling is true for all sides of the marketplace; for riders and drivers alike. If that feeling is too closely aligned with a bad feeling, that’s going to hurt business. Self-driving cars can solve for one side of the market when they’re ready for prime-time, but not both, and Uber needs to survive long enough to see that future.

[4] Snap—as noted in its S-1—understands the need to keep pushing beyond what’s reasonable and to keep innovating. Facebook has basically ceded the future to Snap by not demonstrating any ability in terms of innovation for a very long time. What helped Facebook kneecap Twitter, will allow Snap to slip through its fingers. Because unlike Twitter, Snap knows exactly what kind of company it needs to be and while its metrics may sound similar to Facebook’s, its methods and what it’s aiming to produce are not. Facebook is Facebook because every other major competitor committed suicide and they scavenged those remains for the best bits, not because it was some product visionary. The thing with photocopying an innovator is that by the time you’re happy with the copy, the original creator has already learned more about their product and moved on to something new based off those learnings.

[5] However, voice, like text, has no real facial expressions, no subtly in its ability to communicate. The voice “emojis" will probably initially be a standard set of tones programmed into the artificial voice. Why have the AI doctor say it's 88% confident in its diagnosis when you can have a confident tone in its speaking voice?

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