[HN Gopher] Betting on things that never change (2017)
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Betting on things that never change (2017)
Author : Brajeshwar
Score : 271 points
Date : 2022-11-21 14:14 UTC (8 hours ago)
(HTM) web link (collabfund.com)
(TXT) w3m dump (collabfund.com)
| A4ET8a8uTh0 wrote:
| There is something of a campaign going on now and it is not
| 'cool' to compliment some billionaires. Apart from this, there
| are valid real reasons to dislike to former Amazon's CEO.
|
| That said, reading his early interviews it hard not be impressed
| by the foresight and insight. I personally do think he got some
| things wrong ("if you can't measure it, you can't manage it"
| mantra being one of them ) or at least got others to
| misunderstand it, but it is hard to deny the results he helped
| manifest.
|
| It is the same impression I have of Thiel.
| cercatrova wrote:
| > _There is something of a campaign going on now and it is not
| 'cool' to compliment some billionaires._
|
| I've seen this when HN shifted from YC applicants, ie startup
| founders, to tech workers in general. There is quite a paucity
| of startup news that's not necessarily related to the wider
| tech ecosystem.
| nordsieck wrote:
| > I personally do think he got some things wrong ("if you can't
| measure it, you can't manage it" mantra being one of them )
|
| Could you explain this point more. I'm genuinely curious.
| triceratops wrote:
| https://en.wikipedia.org/wiki/Goodhart%27s_law
| extragood wrote:
| From my perspective: there are some things you fundamentally
| can't measure.
|
| One of the teams I manage is technical support (B2B SaaS).
| Support's core functionality in an organization is to prevent
| churn. If a customer reaches out to support, they have some
| issue that is blocking them from using your product
| effectively. If you are unable to unblock them, then you risk
| them switching to a competitor. The problem is that not
| _every_ support ticket /interaction will result in churn so
| we can't really directly measure how effective we are at our
| core function. So instead we measure the number of tickets
| raised, customer satisfaction, adherence to SLAs, etc, which
| is as good of an approximation as we can get with the
| resources we have available to us.
|
| In my case, those numbers all look reasonably good, so I'm
| treated as an effective manager, even though we don't (and
| maybe can't) really know how much churn we've prevented. I
| wish we could though - it would make my arguments to
| executives on behalf of the support team that much easier to
| say, hey we retained $XXXXXX in revenue over this period.
| A4ET8a8uTh0 wrote:
| Sure. Some context may be needed. I suppose my views are
| formed in this way partially, because I became an MBA after
| having soul crushing jobs, which does tend to change your
| perspective a little bit ( and give you an insight into what
| is going on in a head of the front line drone that is forced
| to implement orders the best way he/she can ).
|
| << "if you can't measure it, you can't manage it"
|
| 1. It is wrong in a literal sense. You obviously can. Maybe
| you should not ( which is a valid question to ask ), but you
| absolutely can manage things and not measure everything.
|
| 2. It is wrong when taken metaphorically to a logical
| conclusion. The mantra seems to encourage ( and did encourage
| based on some of the things managers tried to measure --
| lines of code come to mind ) measuring everything. In
| accounting, there is a concept similar law's 'de minimis' ( I
| kinda don't want to use that name, because I worry people
| wills start questioning that from tax perspective, which is
| its own animal I don't want to touch, but in practical terms,
| the name matches the concept exactly - basically 'too small
| to matter'), where accounting for some items in some
| processes is borderline pointless ( say a screw ). Every so
| often, people in accounting classes go 'but what if', 'but we
| can track it'. And the answer is invariably: 'You can, but is
| it worth it?'
|
| Naturally, you could counter it with: 'Well, you don't know
| if you don't measure it.', but there has to be a point at
| which the tracking of atoms get too crazy.
|
| So that is my basic thought on the matter. I can expand a
| little more, but I think that covers it. Note, I am not
| saying it is not worth it to measure stuff. I am saying it is
| important to be discriminating over what you pick to measure,
| because, people being people, will optimize for it.
| startupsfail wrote:
| If you purchase a toy at Amazon and it is contaminated with
| lead or cadmium paint, you would not notice. And even if you
| would, there is no one legally responsible. That outfit in
| China that sold it doesn't care. And Amazon is just a
| marketplace and is not responsible.
|
| Toy stores (Toys"R"Us) used to be a thing. They were legally on
| the hook, if they'd sell contaminated toys. Now no one is. And
| unfiltered toys from China are shipped directly.
| hippich wrote:
| Recently I relisted a simple 3d printed attachment for Nerf
| gun on Amazon. It got assigned to toys category. Listing
| never went live because they wanted all kinds of
| documentation about kids safety. Obviously it was not worth
| it for me and I dropped the idea.
|
| I did sell it in the past without all these issues. So things
| do change in terms of safety, and likely because there is at
| least some liability on Amazon
| mnsc wrote:
| I'm not an Amazon customer so it doesn't apply to me, but I
| hate/don't use Amazon because it's too cheap and deliver too
| fast.
| sedeki wrote:
| Do you live by this motto more generally? I'd love to have you
| as a customer.
| mnsc wrote:
| I also hate a lot of companies that are too expensive, trying
| to sell you status but not backing it up with quality. So I
| would love it if you could sell me high quality products that
| are repairable and doesn't unnecessarily tax neither our
| planet nor the humans involved in creating them. What are you
| selling?
| sacrosanct wrote:
| Amazon blends both worlds together. Invention coupled with
| stagnant business models which have worked for millennia.
| CrypticShift wrote:
| > You can make big, long-term bets on these things, because
| there's no chance people will stop caring about them in the
| future.
|
| I wish more VCs thought about investing in our sustainable future
| on earth, the way Morgan Housel thinks about investing in
| sustainable companies.
|
| The only assumption that keeps us from that step is that all
| people care about is their short-term rational self-interest.
|
| _of course, they do! what else would they care about? How can
| you even imagine a Market without that assumption?_
|
| Yeah... let's just continue to bet. I personally bet there are
| some "timeless" things that will definitely change soon.
| bilekas wrote:
| It's amazing how well it reads for something that really seems
| like just common sense.
| Swizec wrote:
| The best insights feel like obvious common sense _after_ you
| read them. But you didn't know it, or know how to verbalize it,
| beforehand.
| locallost wrote:
| > customers want low prices, and I know that's going to be true
| 10 years from now. They want fast delivery; they want vast
| selection. It's impossible to imagine a future 10 years from now
| where a customer comes up and says, "Jeff I love Amazon, I just
| wish the prices were a little higher."
|
| Actually there is one thing people are starting to desire -- less
| choice. I think some kind of curated content for anything has a
| lot of potential because mostly I do not care if I get the 100%
| perfect thing, I care about it being 80% right and not a
| headache. The time investment is not really worth the trouble to
| find the perfect thing.
| awillen wrote:
| I think that's true for fungible goods - it's a pain when you
| search for something generic like dish soap on Amazon and get
| 10000 kinds - but not for non-fungible goods. When it comes to
| books, I want Amazon to have as wide a selection as possible.
| locallost wrote:
| True, maybe that's the context of the original quote. I don't
| think about Amazon anymore as a book store so my mind went
| somewhere else.
| strix_varius wrote:
| I think this maps to some of the alternate "bets" at the bottom
| of the post:
|
| - Faster solutions to problems ("buy the best widget for me"
| button > two hours of amazon + google + reddit research)
|
| - Increased confidence/trust (trusting that "buy the best
| widget for me" really _is_ the best widget for me, not the one
| with the highest affiliate-link returns)
| Nemi wrote:
| Exactly why Costco is more and more popular. They essentially
| do curation of goods available on the market and they sell them
| at a good price. When I go to Costco I know I might not get the
| best item on the market, but I know I will get a decent product
| that fits my needs at a decent price. It is all about saving
| mental energy for other things.
| 0cf8612b2e1e wrote:
| Well said. I just ordered a 4k monitor for my home office
| from Costco - it was basically the only model they sell. My
| normal mode of operation is to spend hours trying to research
| the specs that matter, find a good price, etc. Instead, I
| assumed I was getting something reasonable and bought it
| without any research.
|
| Given that today's sellers make it nearly impossible for a
| consumer to compare items (store exclusive SKUs, component
| swaps in same SKUs, astroturfed reviews, and even inventory
| co-mingling), a curated marketplace is worth so much.
| themitigating wrote:
| That might be for you. I actually prefer options and
| customization and if it's taken away I'm more annoyed than if I
| never had it.
| pfdietz wrote:
| I prefer having the choices I want not being submerged in an
| ocean of crap.
| locallost wrote:
| People are definitely different and that people want choice
| has definitely been correct for a long time. But I'm noticing
| it not only in me, but with people around me -- they're just
| tired from dealing with choosing from 100 different things
| when they only need 3. Especially because most of them are
| the same. The internet has made this worse than ever.
| Companies like Apple have shown this is possible - they
| basically tell the user "this is what you need" and people
| accept it and it's worked.
| jahewson wrote:
| I don't think you mean 80% right. You mean 100% right on the
| things you care about. If I need a widget that fits some size,
| is child-safe, doesn't quickly break and costs less than $300 I
| can't accept 80% right. Sure I don't care about the color or
| brand but they weren't criteria of mine to begin with.
| [deleted]
| JauntyHatAngle wrote:
| There are already things that solve choice, e.g. brands and
| reviews.
|
| Perhaps I'd understand what you meant with an example? What
| products are you finding is too varied?
| larrik wrote:
| Do those solve it? I don't really trust either. When
| everything is made in China anyway, sometimes those garbage-
| looking Chinese brands are just as good as or better than the
| name brand stuff, and sometimes they aren't.
|
| Some brands build a lot of reputation on quality, and then
| cash it in for higher profits by suddenly switching to low
| quality (American appliance brands were notorious for this,
| with a sort of round robin selection on which brand had
| actual quality behind it for any given year).
| mbesto wrote:
| > There are already things that solve choice, e.g. brands and
| reviews.
|
| Agreed with this, which is essentially why Amazon's
| e-commerce is probably doomed. Reviews have become unreliable
| and brands lack consistency on their site (is it fake? is
| this an officially branded product? who is actually selling
| me this?)
|
| This is why I've got my bet on Shopify.
|
| > What products are you finding is too varied?
|
| I would argue virtually every category suffers from too much
| choice: https://en.wikipedia.org/wiki/The_Paradox_of_Choice
| loudmax wrote:
| "Doomed" seems a strong take, but I totally agree that
| Amazon is leaving e-commerce ripe for disruption if they
| don't address the trustworthiness of their reviews.
|
| The paradox of choice would be mitigated by better trust,
| and better user interface. These aren't necessarily easy
| problems to solve, but Amazon should have the resources to
| solve them, if it only had the will.
| andyjohnson0 wrote:
| I'm not the person that you replied to, but have you tried
| searching for e.g. usb memory sticks on Amazon?
| locallost wrote:
| Exactly this.
| diffxx wrote:
| > Or, "I love Amazon, I just wish you'd deliver a little
| slower." Impossible.
|
| Given the externalities involved in Amazon style delivery, I
| personally wish they would optimize more for throughput than
| latency.
| adamsmith143 wrote:
| >Actually there is one thing people are starting to desire --
| less choice.
|
| Maybe not less but easier choices. It's hard to tell which
| frying pan is the best when there's 100 nearly identical
| listings all with 5000+ 5 star ratings which may or may not
| have been gamed. There's not a great way to tell the objective
| quality of a product before you buy it.
| llbeansandrice wrote:
| This is why I've begun prioritizing returns and exchanges and
| good customer service. Even with a high-quality product it's
| possible to get a lemon. Doesn't matter if I can just return
| or exchange within a reasonable time-frame.
| fataliss wrote:
| I think it's partially true and I definitely fall under the
| category that hates to sink hours into searching for the best
| YYY where YYY is a random $30 item. But I don't necessarily
| want less choice, I just want something/someone I can trust. If
| I could just believe that the "amazon choice" was actually
| tested thoroughly and matched a quality standard I can get
| behind, then I'd happily get the "amazon choice" of most
| things.
| barbazoo wrote:
| > It's impossible to imagine a future 10 years from now where a
| customer comes up and says, "Jeff I love Amazon, I just wish the
| prices were a little higher."
|
| Except that many consumers these days do look for business that
| are more socially responsible and pay their fair share
| downstream.
|
| Personally I _am_ seeking out business that pay good wages and
| are responsible to the environment. Obviously that 'll lead to
| higher prices so in some way I am wishing for higher prices.
| tabtab wrote:
| This reminds me of Oracle Forms: It was by today's standards
| simple, cheap (overall), facilitated compact code that mirrored
| close to biz logic, and easy to deploy. It used a kind of "GUI
| browser" so you didn't have to install executables to use and
| update apps, just one "browser". But Oracle rewrote the client
| into Java, and Java's deployment flaws dogged it, so co's had to
| gradually abandon it. They should have kept it in C. (The
| developer's side stayed mostly the same, it was deployment's side
| that got the headaches.)
|
| It wasn't esthetic, but got most CRUD jobs done quick and simple.
| I've never coded in it myself for production, but observed
| amazing productivity at multiple orgs. There's something magic
| about it.
|
| Oracle originally had to cater to many OS's, so were parsimonious
| with GUI features. Thus, it has just enough to do typical CRUD
| jobs but not enough to distract, confuse, and over-complicate the
| tool. They didn't get feature-happy over time. Once you learned
| how to milk existing features, you realized you really didn't
| need boatloads of pluggins.
|
| Current web stacks are bloated nightmares and business money
| sinks in comparison. I'm not saying bring back Oracle Forms as-
| is, but at least borrow its best lessons. We'd have more
| practical GUI web standards by now. (Most CRUD productivity don't
| need mobile UI's. Also, it may not do well for big "enterprise"
| apps, but for small and niche it groves.)
| PaulHoule wrote:
| Like a stopped clock?
|
| I'd grant that Amazon has a large selection and that's an
| advantage over competitors.
|
| As for pricing, I wouldn't say Amazon is expensive but it is not
| consistently low cost and it is not unusual to see something on
| the shelves at Target for $50 that is selling for $70 on AMZN. I
| think after all these years, and particularly with Prime, AMZN
| has gotten people in the habit of looking to AMZN first and you'd
| expect them to cash in on it.
|
| The better selection than other retailers is a durable advantage.
| I'd call out Best Buy for having a poor selection in comparison,
| particularly being overly wide (they sell washing machines,
| grilles, and mirrorless cameras and parts to build PCs) but not
| sufficiently deep (no selection of lenses for those cameras, no
| quality tripods, a very limited supply of PC parts.) It begs the
| question of "Why am I going to drive to Best Buy where they might
| have some of the things I need when I can order them all online
| from Amazon or a specialist retailer?"
|
| The flip side is that the marketplace puts a lot of junk products
| in the AMZN catalog. I'd never buy anything that is likely to be
| counterfeit on AMZN (Nike only from the Nike store) and I learned
| the hard way not to buy a thermal printer that is marketed with a
| size in mm instead of inches.
| [deleted]
| iamwpj wrote:
| Amazon has never paid dividends to investors. Its only value is
| to invest against interest rates or inflation. In fact, if
| investors wanted dividends it might upset the ability of Amazon
| to provide its objective. It's stable, but only philosophical.
| This isn't a land investment or something. It's an extension of a
| long term trend of consumerism.
| ChadNauseam wrote:
| Amazon did a $10B buyback in march
| quickthrower2 wrote:
| A good article but feels more table stakes than secret sauce
| stuff. The advise crosses to non startups too. It is a why you
| have a bunch of different X targeting market segments for all X.
| For example Pizza, flights, cars.
| a_c wrote:
| I thought the article is about change is the only constant yada
| yada hence we should embrace change. How wrong was I.
|
| > which is that an insurance company selling directly would have
| a cost and convenience advantage over those paying brokers.
|
| Put it into software, to me it is about eliminating
| abstraction/boundary/communication. Frontend and backend is an
| invented boundary. Product and Dev is an invented boundary,
| CS/QA/Documentation and dev is also an invented boundary. Whoever
| break the most of the imaginary boundaries is going to make
| software building so much faster
| findalex wrote:
| - Everyone wants affordable housing (lets find ways to bet on it)
|
| - NINJA loans, swaps, CDOs, etc.
|
| - housing markets collapses
| yellow_lead wrote:
| (2017)
| hallqv wrote:
| Basically what YC has been touting for years, focus on problems
| not solutions.
| itissid wrote:
| Ad infinitum: Fire, or equivalently burning something, is an
| unchanging idea which is the only way humans have and used over
| and over to get where we are.
| ttul wrote:
| What rings true for me in this article is the notion that, as a
| founder, it's better to pick a problem space than it is to pick a
| solution. Amazon chose to live in the problem space of how to
| bring consumers more products, more conveniently, at a lower
| price. Geico chose a similar goal but in insurance.
|
| Technical founders often focus on a particular cool way of
| solving a problem and burn lots of capital building that thing.
| Sometimes the thing is the right thing and everyone makes money.
| But sometimes it's not. Yet if you stick with the same problem
| space for long enough, and aren't too connected to your
| particular solution, I think you have a greater chance of
| succeeding.
|
| Okay, go ahead and poke at my pontifications now. I'm ready.
| nathias wrote:
| this is a great strategy if you already have near infinite
| resources
| [deleted]
| cpeterso wrote:
| Sometimes quoted as "Fall in love with a problem, not a
| solution."
| lazide wrote:
| Well, except what you're describing fundamentally leaves the
| hardest problem unsolved.
|
| Where to start (concretely) and what _you're actually going to
| do_ , and _if it will work for customers in a way they will pay
| you more for it than it costs to do_.
|
| Discovering that, and if it is going to work, is what a startup
| does.
|
| You can't do it without deciding on something concrete
| eventually to deliver, and pursuing it with enough vigor to get
| a workable product in someone's hands.
|
| Tech startups that build an entire product without
| understanding the space are leaning too heavily in one
| direction.
|
| Sales led startups that get a customer base and start
| collecting money without a concrete product plan are leaning
| too hard in the other (and even more, add big red flags for
| scams and fraud).
|
| Doing all the things and integrating it into a workable
| collection of customer needs they'll pay to solve, along with
| an actual solution that works to solve it, while not going
| bankrupt in the process _is why startups are hard_.
|
| Not being a scammer or committing fraud in the process? Harder
| still!
|
| It's the unknown unknowns and navigating all the bullshit on
| the way that also make the risk very high. Fundamentally, it's
| impossible to know everything until you've already done it, and
| by then, it's already changed under you.
| [deleted]
| barumrho wrote:
| I generally agree with your statement, but it depends on what
| your goal is. Ultimately, do you want to build a successful
| business or bring a (specific) new technology into the world? I
| suspect the former is true more often and it can lead to
| innovations along the way, but there is nothing wrong with the
| latter.
| jbaczuk wrote:
| Great observations!
| aquafox wrote:
| > Technical founders often focus on a particular cool way of
| solving a problem and burn lots of capital building that thing.
|
| This nicely summarizes the current hype in Bitcoin or deep
| learning.
| noobker wrote:
| I was once at a talk with several medical technology founders.
| One of them namechecked specific legislation that enabled their
| solution to come to market. And so I asked, "How do you survive
| if only 1 law is prying open the opportunity for your
| business?"
|
| They replied that their business exists to solve a need -- a
| need that exists regardless of the specific regulations. Should
| the regulations shift, a company motivated beyond a specific
| solution will adapt to keep meeting its customers' needs.
| Moodles wrote:
| Totally agree. For a negative example see all the companies
| desperately trying to find sone problem for blockchain to
| solve.
| [deleted]
| yobbo wrote:
| Depends on perspective. What is _one thing_ and what is a
| _problem space_.
|
| Is a microprocessor or a mobile phone one thing in many
| different problem spaces?
| TuringTest wrote:
| Businesses are not built on things they sell, they are built
| on the customer problems they help solve.
|
| If you build microprocessors, you better understand how your
| clients are using them to create electronic devices, and
| provide all the services and documentation they may need. A
| less potent microprocessor paired with a website that
| perfectly explains how to use it and what use cases it
| supports will win any day over a more powerful chip that no
| one understands.
| yobbo wrote:
| Yes, but the investment in things can be so great that it
| becomes impossible to change according to customer
| preferences. The business then has to find new problem
| spaces for their things.
| kmonsen wrote:
| Isn't Amazon's cash cow AWS which is not in that problem space?
| SatvikBeri wrote:
| AWS is Amazon's _most_ successful business, but they were
| wildly successful even without it. AWS only launched in 2006,
| 12 years into the company.
|
| Today, most estimates I could find put AWS at 25%-50% of
| Amazon's worth.
| choxi wrote:
| I think maybe the fundamental hard thing about startups is that
| you can't ignore the problem space or the solution space. It's
| not like Bezos was passionate about selling cheap books for
| years before Amazon, he saw that this new Internet thing was
| going mainstream and building on top of this new tech was the
| premise of the business more than selling books cheaply and
| quickly was.
|
| Most of the startup opportunities in the last couple decades
| were built off the back of several deeper tech breakthroughs
| like mass mobile phone adoption and virtualization. I think
| more founders have been successful just riding these tech waves
| than sticking to a problem space. Brian Chesky didn't work in
| hotel management and Travis Kalanack didn't work in
| transportation. They were just familiar with cutting edge
| consumer tech and applied it to problems they had no familiar
| with before they started.
| bmitc wrote:
| I think this also points out the timing aspect. The big
| "breakthrough" companies (breakthrough in terms of
| capitalistic successes) happened since people were in the
| proverbial right place and time with the right idea.
| pyinstallwoes wrote:
| Bezos built Amazon to solve the traveling salesman problem.
| doitLP wrote:
| But that spawned the traveling delivery truck problem.
| xcambar wrote:
| Then to be shadowed by the traveling delivery drone
| problem.
| pjdesno wrote:
| Note that choice of starter product is important. Amazon
| started with books - you know exactly what you're getting,
| they always fit, they're hard to damage, they have pretty
| high markups and low shipping costs. People were willing to
| risk buying books online, back when online e-commerce
| basically consisted of the USENET misc.forsale groups.
|
| Tesla and many other EV companies started with low-volume
| expensive sports cars, with high margins so they could be
| basically hand-crafted. (Tesla actually bought the
| chassis/body/interior from Lotus) If they had started with
| the Model 3, they'd have gone bankrupt long before they sold
| any.
| koonsolo wrote:
| I think Bezos also mentioned that he started with books
| because no single physical shop could have all the books,
| but Amazon could. It is a product with so many variations
| that Amazon had a clear competitive advantage.
| bsder wrote:
| Amazon's competitive advantage was _not paying any tax_.
| Amazon 's selection in technical books was quite poor for
| quite a while.
|
| However, the tax discount drove _ALL_ the small, local
| technical booksellers out of business. It might have
| happened anyway since local sellers had to pay retail
| rent and so Amazon had a structural advantage. However,
| Amazon also gained a straight 8% advantage for not having
| to pay tax.
| galdosdi wrote:
| Another now-classic example of solving this chicken and egg
| problem, I think: Facebook starting with just Harvard, then
| ivy league colleges, then colleges, then colleges and high
| schools, and only finally the general public. At each stage
| the arena was small enough it was realistic to take the
| whole segment over, and then that became the seed for the
| next phase.
| SatvikBeri wrote:
| And their second product was CDs/DVDs, which have a lot of
| the same properties. Then they opened Amazon Marketplace,
| allowing other stores to sell through their site, and used
| the data of what was popular there to expand into other
| products - they were consistently very deliberate about
| what to sell next.
| m0llusk wrote:
| Amazon is mostly driven by AWS which is a very new paradigm for
| building business services. Insurance has been revolutionized by
| new methods for collecting and analyzing data in order to
| estimate risk. Monsanto's latest growth play is farmland and crop
| insurance. The examples used in this piece appear to demonstrate
| the opposite of what was intended.
| melenaboija wrote:
| Yup, that is similar to what my grandma used to say and that will
| always work: "buy cheap and try to sell as expensive as you can"
| and sometimes adding "it does not matter if clients need it as
| long as you can convince them they do".
|
| She was an entrepreneur of 1950's that started a small retail
| business.
| ismail wrote:
| I like to think about it this way.
|
| The "what" is often timeless and stays the same.
|
| The "how" the what is achieved changes.
|
| I need to get from point a to point b (the what)
|
| V1: walk/run/horse
|
| V2: carriage
|
| V3: train
|
| V4: cars
|
| Etc etc
|
| There is another dimension to this as well.
|
| Sometimes the what has to completely be re-architected since
| society has fundamentally changed.
|
| As an example:
|
| Consider education (what) this will always be required in
| society.
|
| A naive version of innovation in this space would be to keep
| things the same and just change the delivery mechanism (online)
|
| A better innovation would be to re-imagine what it means to be
| educated/schooled.
|
| The best place to start is identifying the assumptions inherent
| in the current system. , and asking are they still relevant?
| [deleted]
| cs702 wrote:
| As usual, I find myself nodding in agreement whenever I read
| anything written by Morgan Housel on this blog. It is evident he
| has thought deeply about the topic of each post, and wants to
| share his hard-earned insights with the rest of the world.
|
| Long-term compounding of wealth indeed comes from betting on
| things that won't change over the course of a lifetime.
| hardware2win wrote:
| So seems like I should invest in semiconductors
| CPLX wrote:
| The irony of comparing Andreeson and Buffet and claiming they
| have completely opposing investment theses is pretty hilarious.
|
| They both have the exact same approach, which is to seek
| companies that have or will create monopoly effects in their
| markets, using dominance of a market segment to raise prices and
| extract rents.
|
| Same investment strategy that's made basically every vast fortune
| since we invented the cotton gin.
| TimPC wrote:
| So they have the same strategy in the sense that absolutely
| everyone who ever made money had one strategy and they have a
| different strategy in a way that is useful and informative? I'd
| label that different rather than same.
| CPLX wrote:
| Most people have a different strategy, which involves
| producing a product or service of value.
|
| Megalomaniacal monopolists such as these two seek to extract
| monopoly rents by cornering markets.
|
| Their differences with each other are trivial, and the
| contrast between them and nearly everyone else in the normal
| business world is stark.
|
| They are robber barons, it's not some new and exciting story,
| it's a tiny class of humans, there's only a few dozen at any
| given time.
|
| > the term was typically applied to businessmen who
| purportedly used exploitative practices to amass their
| wealth.[2] These practices included exerting control over
| natural resources, influencing high levels of government,
| paying subsistence wages, squashing competition by acquiring
| their competitors to create monopolies and raise prices, and
| schemes to sell stock at inflated prices to unsuspecting
| investors.
|
| Sound familiar?
|
| https://en.wikipedia.org/wiki/Robber_baron_(industrialist)
| elefantastisch wrote:
| This article seems like a good reminder to know what your
| fundamentals are and to be deliberate about picking them.
|
| But I'm not convinced that this advice can be used to _pick_ your
| fundamentals, your core business model.
|
| Amazon opted for more choices and lower prices.
|
| Barnes & Noble stuck with faster solutions to problems (get your
| book today not after a week of shipping as was common when Amazon
| started), deeper human interactions (you can go into the store
| and ask someone for recommendations, meet authors, etc.), and
| increased confidence/trust (you know what you're getting because
| you can hold it in your hand and read it before you buy it).
|
| Low-cost carriers have moved in on traditional airlines because
| while it's true that people will never stop caring about added
| comfort, it turns out they care about lower prices much more.
|
| But Apple built a staggering market cap relying on the assumption
| that while people care about lower price, they care about great
| control of your time (just works) and higher social status more.
|
| So it seems like this article provides a good framework for
| thinking about your business, but doesn't give any answers as to
| the actual strategy you should use.
|
| Or am I missing something?
| unity1001 wrote:
| Common theme seems to be making things easier and cheaper.
| eric-hu wrote:
| Pretty solid point.
|
| I read TFA's take on fundamentals as neutral on the examples
| given. There was mention that Amazon survived where Beenz did
| not because they picked the right mix of changing and
| unchanging. On the other hand, the juxtaposition of Andreeson
| and Buffett says that you can find business success with
| seemingly opposite fundamentals.
| bippingchip wrote:
| For me this is a good example of the old adage that you should
| not confuse vision with strategy.
|
| The vision is you realize the universal truth (in Amazon's case
| people want things cheap and fast).
|
| The strategy is how you deliver on making that visions reality.
| This is what you call (rightly so) your core business model.
|
| Only experience people tend to get all caught up in the big
| ideas of the vision (especially middle managers) but spend far
| to little time on making the hard choices that come with
| deciding in strategy: it's as much, if not more, about deciding
| what _not_ to do as it is commitment to what you will do to
| realize your vision.
| bovermyer wrote:
| Something that we often forget is this:
|
| Do boring things well.
|
| It's easy to chase the newest technology, the newest features,
| the newest markets. But unless you pay attention to the boring
| things too, you've set your feet on sand instead of stone.
| tomrod wrote:
| Reminds me of: https://boringtechnology.club/
| dpatru wrote:
| It seems to me that at the implementation stage, the things that
| never change and the things that do change are the same. For
| example, customers will always want low prices and fast delivery.
| Internet ordering and robots in warehouses are things that
| change. But the changes are better ways to fulfill the unchanging
| needs. So Bezos sees investments in internet ordering and robots
| as investments in what does not change. Whereas Andreessen sees
| the same investments as betting on change. So what difference
| does their point of view make if both entrepreneurs end up making
| the same investments?
| breck wrote:
| "If you want to invent something that will still be used in 30
| years, invent something that would have been used 30 years ago."
| - [taleb i think]
| highfrequency wrote:
| > I very frequently get the question: "What's going to change in
| the next 10 years?" That's a very interesting question. I almost
| never get the question: "What's not going to change in the next
| 10 years?" And I submit to you that that second question is
| actually the more important of the two. You can build a business
| strategy around the things that are stable in time. In our retail
| business, we know that customers want low prices, and I know
| that's going to be true 10 years from now. They want fast
| delivery; they want vast selection.
|
| Also Bezos (paraphrased): "While working at D.E. Shaw, I heard
| that the internet was growing at 2,300% per year. And I asked
| myself: 'what kind of business makes sense to start in the
| context of that kind of growth?'"
|
| The Holy Grail is when a big change allows you to get a foothold
| in solving a fundamental, unchanging problem better than it has
| been solved before - and then leveraging that foothold with rapid
| iteration and growth.
| makestuff wrote:
| I wonder if back in 1990s people were as skeptical of the
| internet as they are of the metaverse/web3/crypto/autonomous
| driving today. All of the big money bets seem to be in these
| areas, and I wonder if there were a similar group of 4-5
| industries that all of the money was going to in the 90s only
| for the internet to win out in the end as the best returns for
| investors.
| tabtab wrote:
| "It's tough to make predictions, especially about the
| future." -- Yogi Berra
|
| For every ten IT trends/fads, roughly only one has staying
| power in my observation. The others often move into niches or
| fade.
|
| If anyone was that good at predicting the diamonds from the
| duds, they'd be golfing with Warren Buffett instead of poking
| around Hacker News.
|
| Note that I thought the internet had big potential in the
| late 90's, as I was getting hooked on Compuserve (a precursor
| to webbish things). I just didn't think it would ruin biz
| CRUD/GUI's, rather staying in the consumer lane.
| galdosdi wrote:
| I remember that time, and no, it was nothing like crypto. A
| better analogy would be electric vehicles today.
|
| Yes, a loose analogy can be made in that there was a hyped
| technology that some people thought might become huge, others
| thought might merely become large or medium sized, and most
| others were pretty unaware or didn't care.
|
| Unlike with crypto, during the late 90s internet/PC/web usage
| explosion, though, there were decades of successful smaller
| scale use (BBSes, academic use of the internet, etc). It was
| just a matter of scaling it up. The future was already here,
| just unevenly distributed.
|
| Unlike crypto, a lot of the usages were not just emotionally
| exciting, but actually practical. You could look up a stock
| quote right away instead of looking at an outdated quote in
| the paper, or calling a broker on the phone, or having a
| dedicated fancy service just for that. You could email a
| friend half way around the world. You could read the full
| text of a book for free, if it was from before 1923. In
| general, you could transmit information freely and cheaply
| across the world -- as long as both recipient and sender were
| on the internet somehow.
|
| All of those things previously were not possible that easily.
| There were faxes and landline phones already, but they had
| their obvious limitations.
|
| Crypto is totally different. It's been hyped for two decades
| and, except for illegal activities, still hasn't enabled
| anything that could not be done more efficiently with SQL
| database to track who owns what, and a system of courts and
| law enforcement to enforce property rights and enforce
| contracts.
|
| If you think they are similar you probably don't remember
| just how different it was to not have a single simple easy
| way to get and receive information. You had to actually go
| specific places or talk to specific people. You would do
| stuff like check movie times in the newspaper, and make
| specific plans to meet people at specific times.
|
| I still remember when Tell Me came out. It was a phone number
| interface to some basic internet applications like weather,
| news, sports, movie times. You called 1-800-TELL-ME and
| followed the prompts. It was massively popular.
|
| Where is crypto's TellMe moment? Nowhere. The only useful
| thing I've ever been able to do with crypto is accidentally
| profit $8000 because I forgot I had owned some I had bought
| as a joke... which came directly out of someone else's pocket
| later when it crashed.
|
| If you're looking for a historical analogy, tulipmania is a
| good one. So is the boom in joint stock companies in the
| 1600s. So is the plank road boom of the late 1800s.
|
| Nobody had as strong opinions about the internet being a
| horrifying scam, like many do about crypto. Because it
| wasn't, and there was no reason to think it was. The main
| "issue" was, would it catch on? Was it too nerdy? I mean,
| it's not like now, where the internet is almost slightly cool
| to some young people. Buying a modem was extremely uncool.
| And it cost a lot of money. So it was more of a question of
| "Is it really ready for prime time yet or does it need to
| become easier to use and cheaper?" much like EVs today. And,
| again, like EVs today, the problem was solved gradually but
| exponentially... each succeessive cost decrease or simplicity
| increase lead to another wave of converts, which made the
| whole thing more useful, solving the chicken and egg problem
| gradually
| l8nite wrote:
| I'm replying only because I worked at Tellme, and I'm happy
| other people remember it still! :)
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