Streaming Services: The New Gateway Drug to Piracy You want Kanye’s record first? Better sign up for Tidal. Need zero-day access to Drake’s upcoming album? Pony up for Apple Music. Wanna stream Adele’s latest? Don’t bother. Sometimes new business models are messy and end up provoking unintended consequences for the disrupters as well as the disrupted. All these conflicting exclusives, the features intended to differentiate the new music-streaming services, are muddying online music services and, according to The Verge’s Ashley Carman, may be driving music fans back to piracy. The need to subscribe to multiple services to get everything makes the proposition too expensive and complicated — and there’s never any question whether The Pirate Bay or Demonoid will have the latest by your favorite. It’s worth remembering that Napster rose not primarily because people like to steal but because the legal rights holders couldn’t get their collective act together. Is it happening again?
The Downside of Open In business, “open” has become one of those attributes that everyone wants. But the world at large can close down in ugly ways, as Quartz’s Kevin J. Delaney writes in this soulful look at what happens when closed becomes the default. Using the rising barriers in Europe as his prime example, Delaney is frank about the risks of open (it’s messy, it can skew competition) but still champions it. We all share the same world. Borders between countries are, to one degree or another, arbitrary.
GE Fires Back at Sanders, But It’s No Stranger to Government Help Now that the presidential campaign has reached New York, everyone is getting cranky. In their attempt to challenge the Republicans for name-calling, the Democratic candidates are taking turns calling each other unqualified. One of them, Bernie Sanders, has wandered into a back-and-forth with GE chairman and CEO Jeff Immelt. Bernie listed GE as one of the companies ruining the moral fiber of America via tax avoidance. In a Washington Post op-ed, Immelt fires back (“we’ve never been a big hit with socialists”), then gets down to a detailed overview of some of GE’s good works, including a big factory in Sanders’s home state of Vermont. In complicating but related news, it was revealed this week that GE recently got Boston and Massachusetts officials to double promised tax breaks in return for getting the conglomerate to move its headquarters there. Everyone hates government, till they don’t …
Atlas Obscura Celebrates Curiosity With the Weird and Wondrous In NewCo’s latest Video Spotlight, Atlas Obscura cofounder Dylan Thuras discusses how his company is creating an online compendium of “the world’s most curious and awe-inspiring places.” Next week is Obscura Day, celebrating weird and wonderful experiences all around the world. And see all our Spotlights here.
New Media, Old Habits Best way to fight Periscope? Cut a deal with Periscope. Especially if Periscope is paying. Periscope’s parent Twitter announced yesterday that it is paying $10 million for the global rights to stream Thursday night NFL games. It’s potentially good for both Twitter (much-needed audience) and the NFL (a step toward monetizing viewers who were otherwise watching for free), although it could also lead us to the bad old days of the monoculture (Verge), when we were all watching the same thing at the same time. That’s certainly what Twitter hopes will be the case.
I’ve spent the better part of three decades writing about tech, launching publications devoted to tech, and investing in or starting tech businesses. I devoted almost every waking and working hour of my life to the technology narrative. I did this because I believed society’s adaptation to technology was the most important story of our age, and for years that story was either willfully ignored, poorly told, or deeply misunderstood by the mainstream press.
As one of Wired’s founding editors a generation ago, I was seized with a missionary fervor — to us, the story of tech’s impact on society was painfully obvious, yet precious few leaders in politics, business, or culture were even paying attention. That ignorance fueled our zeal. We had to get the tech story out — the world’s future depended on it!
The Truth Beneath Our Cities If you want to understand a city, dig into its sewage. That’s what researchers at MIT’s Senseable City Lab do, turning sewage into data that reveals multitudes about a city’s health and more. The Senseable Lab is best-known for its work above ground, showing that NYC cab rides could go multipassenger and cumulative trip length would still go down. But the Lab thinks it can learn even more about how cities work by using robots to sift through human sewage. As The Guardian notes, “analyzing a city’s wastewater could allow outbreaks to be anticipated, antibiotic resistance to be mapped, and public health interventions to be monitored in almost real time.” The Lab started investigating the sewers of its hometown Cambridge, Mass.; it has a $4 million grant to go below Kuwait City later this year.
More Banking, But Fewer Bankers It’s a bit late for Citigroup to release a report called Digital Disruption (PDF), but its projections are significant: the U.S. financial industry, already down 300,000 jobs from its pre-crisis peak of 2.9 million, will lose another 800,000 by 2025. It’s even worse for European banks. If you look deeper in the report, though, it’s a loss but it’s also a shift: the report’s authors point to the rise of fintech startups as the primary driver. There will certainly be job losses, but plenty of people will still be working in the banking industry, just not as many for the incumbent banks. What the Citigroup report mourns is the shift of power more than the absolute numbers.
The best podcasts are based on personal, highly vulnerable stories, and Gimlet Media, a bellwether podcasting company, has taken that insight to an extreme. As its grown to 45 employees in less than two years, the company has been basically naked from the start. After all, the company’s first hit was the ongoing StartUp podcast, a self-referential show about Gimlet itself.
Gimlet wants listeners of their podcasts to feel like they stopped by a friend’s house, said co-founder Matt Lieber, so its tendency to overshare is not an accident. “We’re definitely an unreasonably transparent company,” Lieber told NewCo. “It’s how we got our start, and we found that being transparent and including the ugly parts helped us build our audience. It’s created a community of people who really care about what we’re doing and want to see the company succeed.”
Holding a Mirror to Silicon Valley There’s plenty wrong with Silicon Valley. Indeed, a small industry of pundits (prime current example) lives to poke holes in the Valley mentality. An essay making the rounds now, Silicon Valley’s Unchecked Arrogance, raises core questions about Valley assumptions, and has garnered more than 2,400 recommends at press time, which makes for a hit on Medium. The success of the piece reminds that there’s an audience worried about the same things. (And, frankly, they’re the sort of people who want to work at NewCos on a mission.) The essay asks how we build social fabric, ownership, and meaning into the companies and products we create. Authors Ross Baird and Lenny Mendonca don’t offer any answers, but for steps in that direction Baird has written a followup in response to (and pushing forward) a healthy debate questioning the underpinnings of Valley capitalism that’s happening on Medium now.
Matt Joseph’s Twitter Rant and Reaction In one of his responses to “Silicon Valley’s Unchecked Arrogance,” Baird references the Valley’s lack of diversity. Matt Joseph, an entrepreneur prepping for a Y Combinator demo day, is living it. This tough-minded wide-ranging, 30-installment Twitter rant shows what it’s like on the inside if you’re black, where “we had to overcome things that others in the exact same position didn’t have to.” It’s not easy to read if you’re white, male, and live in the Valley, and some people who fit that description have waded into the conversation, leading Joseph to respond “Moments like this give me hope. Proud of the VCs and others who had the courage to look in the mirror and start convo’s in their networks.” Let’s hope it’s not a one-day thing.
Government Promotes Open Source — Or Does It? At first, it looks like some legislators in New York State are trying to give the open source software community a chance to do well by doing good. Senate Bill S161 provides a tax credit “for taxpayer expenses associated with the development of open source and free software license programs.” Pretty good idea, right? At least it is until you discover that the maximum tax credit is $200, or less than the cost of one Microsoft Office license. As firms grapple with how to make open source pay, it’ll be fascinating to see what role government plays. One of the state senators behind the New York bill says its purpose is to encourage innovation. That’s great, but with a $200 cap, this bill seems more symbolic than real.
What Open Really Means It’s hard to find someone in business who won’t argue that open is good but lately “open” has progressed from buzzword to a club companies use on their competitors: we’re more open than they are. That’s left longtime industry observers like Re/code’s Walt Mossberg apoplectic. But let’s stop talking about open in religious terms and focus instead on what open can do. You want to talk open? Consider the original IBM PC, running Microsoft’s MS-DOS. Microsoft’s success was built on proprietary software, but it was also built on a platform that others could build on with minimal pain. Anyone who wanted to develop a program for MS-DOS (or its successor Windows) didn’t have to ask permission or pay a royalty for the privilege. That’s open. While such platforms certainly met the definition of proprietary, there was still plenty of room for independent developers to innovate and profit. The balancing trick remains the same: create a platform you can control but others can thrive on, too. Open means open for business.
A Brand New General Electric We delight when we see OldCos turn into NewCos and Businessweek has a doozy of a cover story: How GE Exorcised the Ghost of Jack Welch to Become a 124-Year-Old Startup. Surveying current CEO Jeff Immelt’s work a decade in, you can see a legacy company getting more agile (and far less dependent on its financial services business, an angle Businessweek should have leaned into more). It also shed its home appliance division and is betting big on electric power generators, jet engines, locomotives, oil-refining gear, and the software that connects these Things to the Internet. More important, Immelt’s team has remade GE’s management approach: the company now seems like a place people might want to work at, a place that has a mission beyond market domination. It’s a terrific reminder that almost no business is too old, too entrenched, or has too bad a reputation to change — or make change.
The Next Smartphone Revolution The smartphone wars are supposed to be in the last round, down to a limited number of platforms globally and carriers in each market. Nope. An Andreessen Horowitz chart we saw via a Benedict Evans tweet predicts that the market for smartphones worldwide will double by 2020. Commenting on it, Fred Wilson opines that this second mobile revolution “may be an opportunity for US-based VCs like me. But more likely it will be an opportunity for VCs and early stage investors who have had the courage and foresight to set up shop in these emerging locations.” We’ve previously identified this as “the biggest business opportunity on the planet.” Local and regional players are uniquely positioned to understand the next generation of services worth building — yet another proof point to our thesis that Silicon Valley won’t always be the epicenter of entrepreneurship.
Turns Out Airline Passengers Don’t Want To be Treated Like Cattle What happens when companies stop treating their customers poorly? You’re finding out if you fly Ryanair, the European discount carrier with a CEO notorious for calling his customers “stupid” and treating them accordingly. A dramatic turnaround in the company’s fortunes (WSJ) is being attributed to cutting fees, easing restrictions, and “telling staff to be less confrontational.” The company still has a long way to go in treating its employees better (the company chose to leave its Copenhagen base rather than follow local labor laws), but passengers, at least, are responding positively to the changes.
Got $338 Billion Burning a Hole in Your Pocket? China does. According to ZeroIPO Group (Bloomberg), investment in Chinese government-backed venture funds tripled to $338 billion last year, which is five times the sum raised by all other venture firms on the planet in 2015. It’s an amazing experiment, one that also includes 1,600 high-tech incubators for startups. One of the reasons for all this: “The government wants to attract money to riskier startups shunned by private investors who chase quicker and surer returns in late-stage bets.” This loosening is happening at such a scale that one (private) VC in China predicts inexperienced or corrupt managers will shepherd “catastrophic losses.” In the end, it’s an experiment about how innovation scales in a country that limits the open sharing of information. Are deep pockets enough? Perhaps China should study the climate in San Francisco circa 1999 to find out.
Amazon Flies Away From Its Partners We buy everything on Amazon. We store everything on Amazon. Maybe not too long from now we’ll ship everything via Amazon. And not just via the company’s fanciful fleet of drones. Amazon has purchased 20 Boeing 767s, creating a shipping business that strengthens and extends the value chain it’s been building for more than two decades. This should worry UPS, which has benefited tremendously from Amazon’s rise. Yet what Amazon appears to be doing to UPS is nothing new. It’s what Microsoft did to independent software developers during the height of its Windows hegemony; it’s what we suspect Uber will do to its drivers once self-driving vehicles reach maturity.