Looking up, looking down #001
A regular collection of clues and hunches for innovation and strategy practitioners
Hello fellow 10002’er!
Welcome to newsletter number three, which almost makes this a habit, but still guarantees that you’re an early adopter, thanks for reading.
Looking up, looking down is a regular drop of recommendations for reading, watching, listening and doing. Think of them as clues and hunches that we’ve bumped into - they’re not yet joined up into a fully-formed narrative but they hint at a bigger story and feel useful and interesting enough to share.
They range from 10,000ft views of emergent change and how it affects our world, to down-at-two-inches hacks and smart reframes to learn from, to reference and to use as a way to keep your thinking fresh, refilling your wells of insight and creativity.
Like any good innovation practitioner, we’ll aim for to make it mostly relevant - though never too relevant. All opinions welcome in the comments.
Hate scrolling? Here’s the list…
How to Miss By a Mile: An Alternative Look at Uber’s Potential Market Size
Why Amazon is closing its terrible brick and mortar bookstores
…and here’s why we chose them
A Fintech Steps In Where Traditional Lenders Faltered
Read this excellent sharp analysis of Lendica on the Hustle blog. What I find worth stealing from the Lendica story are firstly how the proposition fits into an ecosystem and piggybacks off the enterprise SaaS space to augment their proposition. It is smart as you ride into the client with the blessing of a well known name, and you augment the SaaS business with a feature they don’t have, augmenting their conversion. It is a smart bit of understanding the ecosystem and channel while making the overall ecosystem for all players stronger.
Secondly I really like the smart segmentation, so knowing where their offer has traction and where their ability to bring value is most evident, so need meets best case ability to solve. The model also benefits the end user (the supply chain actors) as it also exploits the weaknesses in the traditional lending market, that particularly handicaps newer businesses. A bit like Shopify it focuses well on those businesses with the challenge of starting out, but also less targeted.
Finally I think the model of how they share value through the channel (SaaS partner), turning this into a stream of revenue for them, so reducing their likelihood to look at building their own service feels like a really smart way to build the ecosystem. - TR
‘I’m the Operator’: The Aftermath of a Self-Driving Tragedy
A story you could flippantly summarise as 'what happens when a thought experiment becomes a reality' - but which is in reality a deep, nuanced portrait of what technological change looks like from the vantage point of the people upon whom the unicorns depend, and yet who are seen as a cost to be coded out.
Required reading for anyone seduced by airbrushed visions of technological change and possibility, this is a the gig worker story of our time - where humans are the training partners for machines - in one person's story is the experience of moderating grisly social media posts for Facebook, creating mass content for Twitter and then this, sitting behind the wheel while an Autonomous System learns and fails. - TG
How to Miss By a Mile: An Alternative Look at Uber’s Potential Market Size
Anyone who knows me will know how much I bang on about this article by Bill Gurley, from way back in 2014 about the valuation of Uber. When I was at Fahrenheit 212 they had a great framing about the need for money and magic to understand and spot innovation opportunities. This is a brilliant article because it addresses such a common business problem, acceptance of the industry characteristics as your starting point. In this article Bill Gurley is spot on when he reframes Uber not as a taxi app, but a new category of mobility.
He uses data beautifully to highlight a key assumption, or bring one down. It’s great to have a cute story, but having the strength of reflection to then bust this open with detailed insight feels very sharp. In particular in showing this is not a taxi app he pulls out some great data about the size of Uber in San Francisco vs the assumed size of the taxi market (smaller). This is parsimonious (so not a data dump) and surgical in its precision to bring to life a key assumption.
The article also has great quality of strategic narrative. He explains a joined up view of a business by walking through a narrative that is rich and credible, as well as novel. He then substantiates with well chosen detail. Narrative is the way we make sense of an unknown future. It is also very strong in how he shifts the story through two points of flection – network effects and price meets use case.
Finally I love the spot on point about the weirdness of spurious accuracy because you have numbers. Businesses rush to numbers as some proof, when they just spring out of assumptions, that is where you look. - TR
Possibly the single most useful innovation tool can be summarised in one line: Fall in love with the problem, not the idea.
In a simple way, this is also the root scientific method - developing a theory to explain the world, then willingly breaking it, to advance our knowledge. There’s also a great connection to theories as storytelling - if the story doesn’t hang together, it probably needs revision.
(Ask Toby about it and he’ll refer you to his point above about narrative and numbers, then he’ll bang on about an obscure film and tell you to watch the Usual Suspects. But he’s got a point, he usually does.) - TG
The shifting sands of tech IPOs
This article is a super smart weaving together of a bunch of things, and brings out some really interesting themes worth exploring. There is a lot going on, a few things I particularly enjoyed in no particular order.
The analysis of changing role of VCs, from capital to networking, when capital is super abundant, and so the future source of value becomes increasingly the founders and their use of narrative. I have some doubts personally about the real role of VCs in value creation today.
The central role of narrative in driving capital access and valuation and how this puts the founders at the centre of the investment cycle, no longer beholden to outside sources is. To me this is part of the strength of Bill Gurley’s Uber story.
How narrative helps make sense, and is actually critical in an unpredictable world, by helping you figure out what to look at. And then how this helps understand the strategic requirements ahead of you.
A term I am bound to use in the future - the sweet expression in “endogenous compounding” – how to spot the points of leverage within the business, when anything exogenous gets arbitraged away. Again this feels like something a strong narrative does for you, it helps you spot the leading characters in your business movie. This is a really useful insight in how to think about business models and comparative advantage. - TR
Amazon is closing its terrible brick and mortar bookstores
Encouraging news for those worried about the Amazonification of everything. It seems that reports of the death of the high street (to misquote Mark Twain) have been greatly exaggerated. Even after a global pandemic, less than 30% of retail in the UK happens online.
But for sure the role of the bricks and mortar store is changing - as Ben Evans once said, rent is the new CAC - both in driving online sales, and in driving brand affinity and in turn price premium. So what the hell went wrong with Amazon when they tried to take online books retailing offline?
It strikes me that perhaps they did exactly what traditional retailers did when they tried to take offline retailing online - they used the paradigm that worked for them and tried to plug it into a new platform. I’m old enough to remember the mad, exciting, doomed web experience that was boo.com - where online retail tried to mimic offline, or the looky-likey skeuomorphic design of the original iPhone apps. It seems Amazon did the same in reverse. So, who really wants to browse a store featuring products recommended by an algorithm? Not many, apparently! - TG
That’s it for this edition, thanks for reading, if you know someone who you think would enjoy it, please do us a favour and forward it.
Toby and Tom
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