- Good morning from Germany, where I'm attending Frankfurt Book Fair. In the context of the themes of this newsletter, it’s interesting to reflect that Book Fairs have been run here since the fifteenth century because a local entrepreneur came up with a disruptive innovation, built a team, fell out with his VC and was screwed by his cap table. How many of today's innovations and how much local advantage will persist in another 500 years?
- On the subject of Gutenberg’s successors, two long reads on Amazon caught my eye this week. In the New Yorker, Charles Duhigg examines growing threats to the company, including regulatory intervention, unionisation and safety concerns. But if Duhigg’s piece is the ‘what’, Franklin Foer’s profile in The Atlantic is the ’why’, attempting to understand Bezos’s motivations, and is the more revealing for it: “What is Amazon… When I posed the question to Amazonians, I got the sense that they considered the company to be a paradigm—a distinctive approach to making decisions, a set of values, the Jeff Bezos view of the world extended through some 600,000 employees. This description, of course, means that the company’s expansion has no natural boundary; no sector of the economy inherently lies beyond its core competencies.”
- James Murdoch’s new company Lupa Systems is buying a minority stake in Vice, valuing the company at $4 billion. That’s down from a peak of $5.7 billion in 2018, after a torrid year for media valuations and for Vice in particular (Disney, which had put over $400 million into Vice, wrote down that investment in May). Now that Succession season 2 is over, media junkies will have to make do with Murdoch-watching again, and this is fascinating in that context. Along with the recent acquisitions of Refinery 29 and PopSugar, it’s also a bellwether for valuing digital media companies: as The Information points out, companies that were valued at 5-6x revenue a few years ago are now valued at 3-5x revenue (Vice is at the top end of that range).
- I’m working my way through a backlog of reading from earlier in the year and came across Bjorn Jeffery’s excellent piece on Strategy Taxes: “What is unreasonable is the asymmetry of continuing with business as usual. Doing the same thing as last year requires no preparation and little effort. But it represents the largest hidden cost of all big companies… This hidden cost is the tax you are paying for your current strategy. It’s the cost of not taking a new opportunity, or passing on an acquisition. Since it can’t be immediately quantified, it gets ignored.
- Facebook is planning to settle a class action suit alleging that it inflated viewership metrics by between 150 to 900%. The company questions whether advertisers relied on those metrics for their purchase decisions and maintains that the suit is without merit. (In related news, a reminder that only 3% of consumers trust marketing and advertising).
- More than three quarters of startup founders in a survey reported that starting a business has negatively affected their mental health. Screencloud CEO Mark McDermott talks about that phenomenon with great honesty in this piece.
- The average IPO return this year has dropped from 30% as at the end of June to just 6%.
- Finally, for a bit of fun: Bullshit.js is a browser plugin that does exactly what it says on the tin to buzzword-heavy webpages. I defy you not to laugh at the results if you apply it to the McKinsey about page (let alone this newsletter…)