Thoughts on Things: Elon’s Era and Capital Vacuums
A brief introduction.
Over the course of the last few months, I’ve written tens of thousands of words regarding my Thoughts on the Things. These Things largely consist of media trends, economic news, labor trends, and marketing strategies.
However, there is an issue. None of these thoughts are formalized, and because of this, largely slip into the void of documented-thoughts-never-to-be-read-again. This doesn’t sit well with me. The point of writing stuff down is to use it for something; to find value somewhere; to take the actions; to remember. Keeping a record of thoughts helps me adjust my viewpoints and opinions about The State of the Things, hopefully making me less ignorant along the way.
How do media trends impact digital marketing strategies? How do economic cycles dance with labor trends to produce The Current Macro Financial Situation? These are the things I enjoy watching as I drift through the River of Existence.
This piece will be a first (and rough) attempt at providing some structure to everything I take notes on. There’s probably nothing ground breaking in here, but hopefully there’s something useful, somewhere. If nothing else, it’s just another A/B test I'm conducting on myself, in an effort to find some sort of coherent writing schedule. That’s (mostly) good enough for me.
What should you expect from this body of text? I’m not sure, to be honest. In my head, I hope to cover things like:
Social media Things over the past few months, and how you should navigate the field.
The current direction of the economy, and how this is reflected in things like J Pow’s strategy to combat inflation and the collapse of FTX.
Hopefully things come together as I mash my keyboard, but we’ll see.
Let’s start with social media.
For the past few months, we’ve all been on the edge of our seats as Elon Musk took on yet another massive project, with himself as CEO at the helm. Everyone’s favorite billionaire (ha ha ha…) has officially purchased and been calling the shots at Twitter for a few weeks now.
Social media has a way of polarizing people (generally) into two opposing sides. Naturally, this situation is no different. Some people think Elon is going to vaporize Twitter into digital bits, removing any sense of value and dignity the platform once had; others think he’s going to make it the end-all-be-all social app, leaving competing platforms in the dust fighting for scraps of attention.
Anyone with more than seven braincells knows the most likely outcome is somewhere in the middle. The platform will experience up-cycles and down-cycles as all systems do, but ultimately, things probably won’t be that bad.
That’s a boring take, though. Nobody clicks on content that says “this situation is kind of good, kind of bad, depending on how you look at the nuance and weigh the info”. Let’s take a dive into both possible outcomes and explore what it would mean for those interested in leveraging social media to network and grow their career.
The Bird Gets Blasted
On one side, we have the people who think that no matter what Elon does, Twitter is going to burn. Nothing he says is correct. Nothing he does is right. Everything he touches ends up a colossal failure and he’s a terrible person. So what does this mean for Twitter? Assuming you think it’s going down in flames, you’re probably asking yourself “should I move to a new platform? should I abandon ship while I still can?”. No, probably not. Jack Appleby had some good takes on how to navigate Twitter’s uncertain future. Per his newsletter, Future Social:
“If you’re gonna abandon ship on a social network, don’t do it for an unproven social platform that’s barely made it out of the gate. No one’s following your brand because you’re the first brand on a social network—no consumer’s ever thought that way. We [users] don’t anxiously await your arrival. Twitter’s at 450 million monthly active users. Instagram? 500 million daily. BeReal has 10 million daily active users. Mastodon just hit 1 million monthly active users. Hive Social just hit 1 million users.”
Jack is making an excellent point. Your audience isn’t pacing around their apartment or house (who am I kidding, nobody can afford a house right now…) anxiously waiting for their favorite brands to create a profile on the latest social platform. Nobody is looking for their favorite brand’s BeReal post; Mastodon is too confusing to hold the average person’s attention; I don’t even know what Hive Social is, so, there’s that. Sacrificing a guaranteed audience because something might fail is a bad play when the alternative option might succeed. Poor risk management.
In marketing, every campaign takes the same amount of effort whether it’s a banger or a buster. A lack of faith in Twitter’s stability and future doesn’t mean you should go all in on a new platform hosting a fraction of Twitter’s user-base. There’s plenty of valuable attention to be farmed on The Bird App (Twitter’s nickname, for those who frequently touch grass).
To keep it simple, go about your business as usual.
If you absolutely cannot stand using Twitter anymore, LinkedIn and Instagram are viable alternatives.
LinkedIn hosts about 300 million monthly active users, and is gaining a lot of popularity lately.
Instagram hosts about about 2 billion monthly active users, and while plagued with ads, isn’t going anywhere anytime soon (IG is lindy; see the definition below).
That’s a lot of eyeballs, and while I don’t have the data immediately available, I’d be willing to bet there’s a reasonable amount of people who frequently use all three platforms. Lots of potential to cross-pollinate content and communities. It may take some time to find your audience and build a following if you aren’t active on LinkedIn and IG, but with the right amount of effort, those platforms can be great alternatives to Twitter.
The Bird Flies High
Now let’s take the other side. Let’s assume that Elon is going to make Twitter one of the best social media platforms available. What does this mean for your online presence? If you’re already active on the platform, it means business as usual (surprise, surprise). Simple as that; keep posting memes, keep writing threads, keep curating your feed.
Twitter’s fundamental value is based on the ability to communicate directly with brands, experts, creators, and business leaders you otherwise couldn't interact with. Some users find this digital closeness to be intimidating. Twitter is like one big conference room, and nobody wants to be stuck next to the guy spouting terrible ideas and getting side-eyed.
There’s a couple things Elon could do to mitigate this fear, and keep ( or hopefully grow) Twitter’s userbase.
Good recommendation algorithm and better search features (both within user’s profiles, and more broadly across the general platform).
Creator suite with easy monetization (or at least, better attention funneling).
A good recommendation algorithm will suffice as some nice reassurance that your content won’t end up next to the weirdos (whatever that means to you). A good recommendation algorithm, would, theoretically, keep similar content with similar content. YouTube is apparently really good at this.
“Oh, you enjoyed that video? Maybe check this one out.”
Twenty minutes later, and you’ve somehow spent two hours in a YouTube wormhole.
This reco-algo, combined with wide-ranging and powerful search features, would make Twitter an information powerhouse. It could be a one-stop-shop for the independent journalist market (could even be step towards adding some integrity to the field? maybe!).
A sturdy suite of creator-themed features will also help draw a bigger crowd, particularly those privy to, you know, creating content. Twitter, in it’s current form, is a great way to generate a community and get eyeballs on your work, but there’s no real way to monetize the platform itself. For professional writers, it’s just a starting point for building a community/voice, and funneling readers to a newsletter or a landing page. In other words, Twitter could easily be replaced if another platform had a similar UI, UX, and funneling capabilities. If Elon wants to avoid Twitter being replaced, he has to provide built-in incentives on the platform.
Another bright piece of silver lining:
Twitter is lindy in the world of social media. For those who don’t know, there’s a thing in math (I think?) called the Lindy Effect.
“The Lindy effect (also known as Lindy's Law) is a theorized phenomenon by which the future life expectancy of some non-perishable things, like a technology or an idea, is proportional to their current age. Thus, the Lindy Effect proposes the longer a period something has survived to exist or be used in the present, the longer its remaining life expectancy.”
What does this have to do with Twitter’s current situation? Twitter has been around for a while now, and because of that, it’s going to be around for a while longer. Even if you think the platform sucks, don’t jump ship and abandon your growth efforts just yet.
To summarize the social-themed portion of this piece: don’t panic, Twitter probably isn’t going anywhere. Worst case scenario, the platform tanks to a few hundred-thousand users, some other business mogul buys it, and tries to actualize their version of the platform. Best case scenario, Elon implements the necessary changes, and transforms Twitter into one of the most powerful information hubs on the internet.
What will the final form of Twitter look like? Probably whatever provides the most entertainment.
Now lets move on to some thoughts about The Economy.
🎵 Cash rules everything around me (CREAM!!), get the money, dolla-dolla bills, y’all 🎵
Unless you live under a rock and hunt-and-gather for sustenance, you buy things. Given the past few months of economic news, you probably have some concerns about the purchasing power of your money. Understandably so.
Whether it’s The Math (yes), or just The Vibes (also, yes), dollars feel like they’re worth less today than a year ago (hell, even six months ago). Food, gas, and rent are all delivering gut-punch after gut-punch to the average consumer. Shareholders are screaming about their tanking portfolios. Across the board, The Vibes are not great!
As it turns out, inflation wasn’t transitory, and is actually a much bigger deal than The Fed initially thought. Because of this, we’ve had to deal with month after month of some serious interest rate hikes; usually somewhere around 50bps-75bps (.50%-.75%). That’s pretty high. Like, Wiz Khalifa high compared to the previous few years.
During the pandemic, interest rates were low (real low) hanging out somewhere below 1% but above 0%. These low interest rates, at least in part, fueled the insane levels of economic growth we saw, particularly in Tech and Venture Capital, during the pandemic. It seemed like every other week, someone raised tens of millions of dollars for a food delivery app, or invested in ridiculous assets like jpegs and digital real-estate (like, really??? ever heard of utility???).
As we know, however, all Things work in cycles. During the pandemic, industries fueled by unique demands (more content consumption, more online shopping, more home delivery) should’ve known those demands would plateau and stabilize sooner rather than later (admittedly, hindsight is always 20-20).
This brings us to where we are now. The Fed aggressively hiking interest rates to quell the inflation they arguably created. Big Tech in particular is feeling the pain, with different businesses announcing layoffs weekly. Per ABC News, the following companies have recently reduced their headcounts:
Meta (13%)
Twitter (50%)
Amazon (1%)
Lyft (13%)
Stripe (14%)
Redfin (13%)
Salesforce (100+ employees)
Microsoft (1,000+ employees)
Robinhood (23%)
Coinbase (18%)
There’s plenty of other companies I could add to the list, but for now, those serve as a nice way to highlight the current economic sentiments of some big players. CEOs across the board are skeptical of growth in 2023 (I question the wisdom of those who aren’t skeptical, but idk, maybe they know something I don’t). Layoffs and hiring freezes are seemingly announced daily, with no end in sight.
All this is cool, I guess, but what does this mean for The Economy? Who cares about Tech Layoffs and less ad-spending?
Glad you asked. An economy is a complicated web of capital flow. A capital vacuum some might say. When something big happens in the Economy, it’s like throwing a pebble in a pond. The initial splash is felt by things with immediate exposure to the event (in this case, a rock being thrown), with ripples subsequently bouncing around the pond causing various levels of disturbance. The point here, is that things do not happen in vacuum, and the lack of revenue and stability in one sector will no doubt reverberate through the rest of the economy (to varying degrees, of course).
The recent collapse of the Crypto market is another good example of a capital vacuum. FTX basically positioned themselves as Enron 2.0 (I won’t go into all the details here, but just know they did some astronomically stupid things with BILLIONS of dollars in capital). If you want the full details, check out some work from Matt Levine. He has good takes, and explains finance in a way that even an idiot like myself can understand.
What I will get into, is how the collapse of FTX sent ripples through the crypto community. Since FTX’s collapse, BlockFi, a predominant crypto lending platform, has filed for Chapter 11 bankruptcy. Genesis, another big player in crypto lending is asking around for emergency capital investments so it can keep operating.
I feel confident in saying that we’re still seeing the tip of the Impact Iceberg created by FTX. In the coming months that constitute Q1 2023, I’m sure we’ll see the full complexities behind FTX’s web of capital. For now, here’s a [list of companies with exposure to FTX](https://www.investopedia.com/companies-exposed-to-ftx-6830069#:~:text=A growing number of crypto,%2C Coinbase%2C and many others.).
Binance
BlockFi
Genesis Trading
Galois Capital
Multicoin Capital
Voyager Digital
CoinShares
Coinbase
Pantera Capital
Celsius Network
(this doesn’t include major VC firms that invested, as well as public personalities like Kevin O’Leary and Anthony Pompliano!! Many more dominos to fall!!!!)
Some of this exposure is big (BlockFi was bailed out by FTX over the summer), whereas as some exposure is small (Coinbase and Crypto.com were only exposed by ~$10M, give or take a few milly). The point here isn’t to grind through these company’s finances. Again, it’s to highlight how shocks to economic systems don’t happen in a vacuum. These companies had part of their revenue tied up in FTX, which means other companies and individuals with their money invested in, say, Coinbase or Crypto.com, also had (varying) degrees of (indirect) exposure to FTX. What happens if you were invested in a company overexposed to FTX? Congrats! You now own some risk!
Being financially literate isn’t just about watching lines on a screen, or doing some basic math. You have to observe the economic system at a variety of scales. This Thing over here may seem completely unrelated to that other Thing over there, but when you peel back the layers of capital allocation, you may discover they have more connections than previously assumed. Like natural ecosystems, economic ecosystems too have a complicated network of energy and resource distribution. Low water levels in a river suddenly mean delayed shipments. A heatwave on the other side of the world could impact the price of bread at your local supermarket. In a sense, watching macro trends unfold is like watching the Butterfly Effect in real time (albeit, macro trends are usually somewhat traceable, so not a perfect analogy, but you get the point).
As Kyla Scanlon said in her recent newsletter “things just keep happening”. A succinct and accurate analysis (no sarcasm). Things do in fact just keep happening, and almost certainly never at random. I’m sure I’ll have more Thoughts on Things as they continue to develop, but for now, I’ll tie this piece off with some thoughts about risk.
Whether you work in media or analyze macro trends, it’s All fundamentally about risk management. I wrote a thread recently for the Fade Media Collective Twitter account about risk and media strategy. I’ll spare you the details. The main point was that when you post something, you have to be careful about what and how you word your idea. A well-structured message captures your audience and leaves them curious to learn more; contrarily, a poorly structured message will leave readers angry, and socially bankrupt your brand. Building in public is inherently risky. You’re betting future success on your ability to curate a good reputation. Consumer trust is fragile; hard to earn, incredibly easy to destroy.
Economic activity also comes with a plethora of inherent risks. Finding stable assets in increasingly volatile world is hard work. As we become more digitized, and information is transmitted farther and faster than ever, consumer sentiment can change overnight. Contrary to popular belief, the green line doesn’t always go up, and in large part is tied to The Vibes. Even when relatively stable, crypto markets saw wild swings in prices. Stocks were no different (see: GME, AMC, and all the other meme stocks from the past two years). While they often get labeled as jUsT nUmBeRs oN a ScReEn, these rapid changes in value can have real world consequences if left unchecked. One could argue that Meta is a victim of this volatility. NFTs and The Metaverse were all anyone could talk about last winter. Now, OpenSea’s trading volume is down 90%+ from all-time-highs. Meta took a hard pivot and dove head-first into the Metaverse. Hard to imagine that not being (at least partially) responsible for their sharp downturn in market cap and subsequent layoffs. Again, the point here isn’t to grill people about finances, it’s to highlight how risk is ever-present, often closer than we think, and how swings in consumer sentiment can cause volatile changes overnight. Economists and Business Leaders can price everything in except for randomness.
If there’s one lesson you take from reading this piece, I guess it’s this: Things keep happening. They always have, and they always will. Your best hedge against suffering is to acknowledge and navigate the inherent risks in a given situation. You can’t control everything, obviously, but you should have a vice grip on things you can control. Charlie Munger said the world runs on greed and envy. I think this may be a reflection of Munger’s internal world rather than our shared external world. This reflection-of-one’s-internal-state idea is also the reason why I disagree with him, and think the world instead runs on a complicated web of agenda pushing focused on reducing tribal risks. In other words, people are trying to go through life while mitigating damage to their own identity. I feel confident in saying individual’s economic decisions are tied to this strain of behavior, but I’ll save that for another piece. For now, I’ll leave you with this source.
Some advice, for what it’s worth: if you’re wary about the Current State of the Things, don’t focus on trying to get ahead; focus on identifying risks and mitigating damage; play defense.
Remember: the best strategies aren’t about risk capitalization, they’re about loss mitigation. Success is largely a factor of who’s wrong the least, not who’s right the most.
If you’ve made it this far, thanks for reading (and wow, nice attention span).
Cheers.