Quote of the week
You learn the most when it is thoughest.
– Clemens Bleimschein
What I learned this week
I want to start with some personal thoughts again this week. A few weeks ago I linked a piece from Morgan Housel, where he writes as one of his biggest learnings in his life: „Everyone belongs to a tribe and underestimates how influential that tribe is on their thinking.“
We all live in a globalized, digital tribe nowadays. We are influenced by marketers, trends, the global community and our friends. And we probably underestimate how those influence our own ideas and expectations about the world. It is increasingly hard to find direction in life, because of the overwhelming amount of opportunities.
We feel like we want to do one thing or the other thing, but we are not sure: What does everyone expect us to do? What do we really want to do? What brings us closer to our goals?
This time, I can not post some wise words how to solve this – I don‘t have enough experience myself. Probably no one has, we have to find our own path and it‘s different than anyone else‘ path.
The only thing that I can share as advice is: Let your curiousity run. With a little bit of discipline it will take you to places you never imagined before. Don‘t give up and don‘t let others decide what you should be doing (I did this far too often).
This time my weekly learnings are mainly business focussed. Enjoy:
Tesla and how it will disrupt driving
Currently there is a lot of buzz around Tesla: Elon Musk talking about taking it private, smoking week and getting sued by a rescue diver. What I find more fascinating than those news it how Tesla is actually going to change the world – or to be more precise the economics of driving.
A lot of people compare the current state of electric cars to the state of smartphones 15 years ago. The game was on between Apple (and later Google) vs the well established Nokia, Sony and Blackberry. Almost no one saw it coming that the iPhone would change the smartphone ecosystem forever. However, here is an interesting perspective to think about it:
Apple – a software company – was competing against hardware companies. So, why was it so hard for those hardware companies to succeed? Because it is not enough to hire some developers. It is crucial to have an integrated product understanding (both on hardware and software level), proper processes and leadership. And essentially, Apple understood that the underlying sofware would win them the race.
80% of sold phones actually run Android. But Apple captures 80% of the smartphone revenue.
How does that translate into the car industry nowadays? Well, it’s complex: The vendor model is different, usually there are many different component manufacturers (which operate more or less independently) and in parallel there is a race towards autonomous driving.
Tesla is trying to compete on all of those fronts: cutting out the middle man and selling to customers directly, which got them banned in some states. Relying on a very little pool of manufacturers and owning the crucial components themselves (batteries). And finally trying to gain an edge in a cheap implementation of vision based object detection.
And this is exactly what makes it so hard to estimate the success of Tesla: What is their real competitive edge? Is it hardware (probably not – batteries will become a commodity at some point), or software (will apps become a differentiator in cars as well, or will they stay a smartphone use case) or will it be the autonmous driving technology?
I guess it won’t be a single one of those. Either individual competition is extremely strong (eg. Google in autonomous driving) or the technology will become a commodity at some point (batteries).
Like Apple back in the day, Tesla will have the unique chance to build a truly integrated product that can provide a customized customer experience. However there are still many open and interesting questions.
European Privacy Regulations backfire in terms of hurting the big players
Almost everyone who runs a website or any other digital service painfully experienced the introduction of the General Data Protection Regulation. It’s been tough to implement: users have to give their consent to share their data, they have to have to right that their data is deleted entirely and they need to have the ability to have a look at their personal data at any time.
In the face to the Cambridge Analytics scandal, this law was mainly targeted at Facebook and Google, in order to give users more power over their data. However – and this is a pretty crucial point – the law actually strengthened their already powerful position. Small companies have a really hard time now to build up new services, that comply to GDPR entirely, while the big players have plenty of resources to build the necessary infrastructure.
So why did this backfire? To understand this situation, one has to understand that Facebook and Google don’t operate out of a classic business model. Consider this: Coca Cola produces and sells soda cans and one day – due to profit maximization – the product quality suffers a lot. So what could a lawmaker do? Require some minimum quality standards for all soda cans. Coca Cola would need to obey in order to not get banned entirely. Problem solved.
Google and Facebook are entirely different businesses: They don’t produce content themselves (just the platform) and they don’t sell you anything directly. Production and supply work the other way round; what Google and Facebook sell is essentially their user’s attention. And they are in such a strong position, that any privacy/data regulation change does not change any consumer behavior.
Example: Consider Google news. Axel Springer‘s CEO Mathias Döpfner once attempted to pull content from Google, so that Google wouldn‘t capture any of Axel Springer‘s value. A few months later he reverted his decision: Axel Springer‘s page views dropped so rapidly that the whole business got in danger.
Coming back to GDPR: As written above, those laws strengthened the competitive adavantage of Facebook and Google rather than hurting it. Ben Thomson proposes an interesting thought: Hold Facebook and Google accountable for their weak points in the privacy and data strategy and make them public. FB & Google‘s most valuable assets are their users, therefore this is the best strategy for policy makers to protect their citizens.
Cool thing of the week
Following up with my personal thought, I want to share where I get a lot of inspiration for things that interest me. The amount of amazing tutorial and explanation videos on Youtube is exceptional. Here are some of my favorite channels to get insights about different topics in life, science and philosophy:
- Kurzgesagt (aka. In-a-nutshell): Kurzgesagt Channel
- 3Blue1Brown (math focus): 3 Blue 1 Brown Channel
- A16Z (Technology): A16Z Channel
- TedED: TedEd Channel
- Talks at Google: Talks at Google Channel
- L2Inc (Scott Galloway, Business, Marketing and Comedy): L2Inc Channel
- NPR Music (Tiny Desk Concerts – okay not exactly about education, but still amazing musicians and concerts): NPR Music Channel