s3e31: Not Actually A Law 

by danhon

0.0 Station Ident

12:18pm and I only have a few minutes before I’ve got to go jet off and run an errand, so I’ll try and make this a fast one.

1.0 Not Actually A Law

So, the New York Times bought The Wirecutter.

Background: The New York Times is a really old organization that is trying, like many other organizations, to figure out how to do this transition from a non-networked society to a networked society in a way in which they end up surviving and continuing to be relevant. It’s really hard to do this! It’s also really hard to do this when you’re an organization of size > x and age > y, where x is, I dunno, above a Dunbar? And y is, unfortunately, > 2 years, maybe?

The Wirecutter is what excited media people might call a Native New Media Business, which is to say that it satisfied a user need (if I need to buy thing x, what is the best one to buy) *and* it satisfies that user need in a profitable, sustainable way from a business point of view (so far as we know, and I’m pretty confident that The Wirecutter makes money). How does The Wirecutter make money? Affiliate links! When you buy a thing that they recommend, the seller (in most cases, Amazon) gets a cut when you click on the link that The Wirecutter provides.

Observations: the need is not a new one! People have always wanted recommendations for things! Consumer Reports exists in the US and Which? exists in the UK! People leave reviews for things! When you want to buy something, you ask your friends! This latter one was the basis for an entire somewhat misguided strategy around social media marketing on Facebook!

Observation the second: affiliate/referral marketing is not new either! Me getting a cut when I send some business to another business’s door is not new. But! Maybe in this case the precise nature of the affiliate/referral marketing is different? There are no sales targets from Amazon going toward The Wirecutter. Amazon is not, saying: we’ll give you y dollars in return for x traffic.

Item: Matthew Bischoff and Brian Capps, both of the New York Times pitched a remarkably similar product based on generating revenue through affiliate links when they were at the New York Times and “got laughed at”[0]. There are historically understandable reasons for this! Organizations like the New York Times have culture around the editorial and sales/revenue divide. It’s weird to recommend a thing and then get paid when people buy the thing you recommend. How can you be sure that you’re not just getting kickbacks and recommending things *for the money* instead of *because they’re good*. With distance though, maybe that’s not so hard?

Summary observation based on personal anecdata that *may not actually be true*:

It’s easier for an organization to buy innovation rather than to support it.

(Caveat to that observation! a) it’s not cheaper, and b) there’s hardly any better guarantee of success of that bought innovation succeeding, thriving and effectively transforming the purchaser)

Note: Venkatesh Rao says the observation/rule isn’t true and that optimal build/by decisions in innovation are business-cycle and sector dependent (ie a) are you at the bottom of the s-curve or are you at the top, and b) what are you doing in the first place).

Anyway. I just thought that was interesting and it felt like a bunch of people had the same experience: that it’s easier to buy a new approach that has been validated (duh, it’s been validated) than it is to support attempting that *exact same approach* when it hasn’t been validated *in that exact way*. This is especially galling to the kind of people who internally come up with exactly (more or less) the pitches that management decide are fine to pay a risk-tax for (I’d rather some else took the risk and validated the concept rather than manage that risk ourselves) because… I don’t know, it’s just a lot of stress and hassle to deal with risk? Like, I can afford to pay $30 million for something because something has been *proven* to work versus *investing* $5 million in something (or less! And being revenue-generating sooner!) because I cannot stomach and justify the risk (in hindsight, one that may be very low) and uncertainty involved in supporting that innovation.

I am not an economist, so I have no idea what I’m talking about in terms of risk-tax, but I bet a bunch of people smarter and more knowledgable than me have a whole academic discipline’s worth of papers to throw at me with regards to when and how people (rationally?) decide to throw money at managing innovation risk.

[0] Matthew Bischoff on Twitter: “The funniest part of NYT buying The Wirecutter is that @bcapps and I pitched affiliate links as a revenue strategy there and got laughed at.”
[1] Dan Hon on Twitter: “The general rule is that it’s always easier for an established organization to buy innovation rather than to support it (not cheaper tho!) https://t.co/3xGCc0foZZ”
[2] Venkatesh Rao on Twitter: “@hondanhon @atduskgreg More seriously, it isn’t true. Optimal build/buy decisions in innovation are business-cycle and sector dependent.”

2.0 Tiny bits

Two tiny bits:

a) If you have Amazon Prime or Amazon Cloud Drive (I can’t remember the bundling), then if you throw photos into it (and you can throw “unlimited” photos at it, then it will automatically do face recognition for you. Someone discovered this when they backed up a bunch of manuscript images[0]. This is stupendously easy facial recognition organization. Your starter for ten: buy a webcam, *don’t* pay for the cloud archive service but instead tell it to send an image every, I dunno, 1 second? To Amazon Cloud Drive Photos and wait for Amazon Cloud Drive Photos to *automatically* organize your webcam footage by face. For “Free”

b) Are you an editor? Do you know a good editor? I am finally thinking about collecting my newsletter pieces into a small Kindle eBook. Would you like to help me do this? Do you know someone who might be good at helping me do that?

[0] Dan Hon on Twitter: “Hmmmmmm https://t.co/2IhThsGj2W”

OK, it’s 12:36. Love to you all, hugs and kisses, send me notes because everyone likes to talk.

Best,

Dan