Tippets by Taps - Issue #135
New week, new issue! A Happy Memorial Day weekend for those of you in the US. This week we look at the three sides of risk, the opportunity for consumer startups during COVID, the rise of TikTok and its parent ByteDance, inside the world’s craving for baking, some COVID-19 silver lining and more. Enjoy!
The Three Sides of Risk
A deeply personal and incredibly moving piece by Morgan Housel, investor at Collaborative Fund and incredible writer. I won’t give away the story, but through it he discusses the “three distinct sides of risk”.
The odds you will get hit
The average consequences of getting hit.
The tail-end consequences of getting hit.
The first two are easy to grasp. It’s the third that’s hardest to learn, and can often only be learned through experience.
In investing, the average consequences of risk make up most of the daily news headlines. But the tail-end consequences of risk – like pandemics, and depressions – are what make the pages of history books. They’re all that matter. They’re all you should focus on. We spent the last decade debating whether economic risk meant the Federal Reserve set interest rates at 0.25% or 0.5%. Then 36 million people lost their jobs in two months because of a virus. It’s absurd. Tail-end events are all that matter. Once you experience it, you’ll never think otherwise.
The Opportunity and Risks for Consumer Startups in a Social Distancing World — A Framework for Consumer Attention
I found this articulation of how people fill time and how different types of experiences fit into the jar that is our day to day by Benchmark partner Sarah Tavel to be spot on.
I imagine consumers as dividing their attention in a given day across three different types of “events” or modes: Events that span bigger blocks of contiguous time (“Rocks”), micro events that take advantage of attention gaps between or during those blocks (“Sand”), and things that can overlay over the other two (“Water”).
While text, photos, videos, and games live in the world of rocks and sand, Audio is what I think of as water. Water is different than rocks and sand. Water doesn’t require dominant attention and can permeate some rocks and all sand time.
It is intended for consumer startups to think through the opportunities available during COVID-19 (“Try taking a “rock” activity and think through how to make it a “sand” activity. e.g., Books → Blogging → Microblogging, Movies/TV → short videos, etc.”) but it served a slightly different purpose for me. It reminded me of the philosophy professor story about use of time, prompting me to think about where I am spending my days during the current state of WFH / shelter-in-place.
The Rise of TikTok and Understanding Its Parent Company, ByteDance
We’ve talked about TikTok quite a bit here, from turning teens into celebrities and the growth of its user base, to its co-opting of competitor Dubsmash’s user base. Turner Novak has been following the rise of TikTok for almost two years. Now he’s pulled together a mega-post digging in on the numbers, the parent company, and where it can go from here. It’s a comprehensive read, full of fascinating nuggets and data on “the largest social media company that has little reliance on a social graph.” For anyone interested in media, social media, and apps in general, this is a must read.
TikTok’s key feature is a video-first interface, the “For You Page”, that takes up the entire screen and starts playing immediately, sucking users into the app. There’s a one-screen onboarding at the very first open, with no login required as it creates shadow profiles based on device ID. Many users don’t actually have accounts. Every video loops by default, and users swipe up and down to navigate the endless stream of videos, sideways to jump into a creator’s profile for more content, or tap one of multiple small buttons around the edge of the screen.
TikTok used a very deliberate expansion strategy in each new market:
it created the best tool to edit short-videos on mobile
it made creators first-class citizens,
It went after each market’s biggest social influencers, and quickly built them social capital on the app.
TikTok also localized the content and creation tools for each market
TikTok also aggressively promoted sharing of content.
Finally, ByteDance flooded the world with marketing. It reportedly spent $3M/day on user acquisition and PR throughout 2018 and 2019, beating short-video competitors in each market by simply outspending them
Inside King Arthur Flour, the Company Supplying America's Sudden Baking Obsession
COVID-19 has led to a global baking frenzy. Around the world flour stocks are depleted as flour mills are working overtime to satisfy the seemingly insatiable desire for bread, cake, pie, and scones. No story better encapsulates our craving for carbs than that of King Arthur Flour, the 230 premium flour company.
They showed a 600% increase in grocery-store sales almost literally overnight.
Flour was flying off grocery-store shelves, propelled by a sudden and seemingly insatiable demand that was carrying into King Arthur’s much smaller online business, too. It was as if half of America had decided all at once that they needed to bake. A lot.
Cakes, cookies, and most of all, fresh-baked bread would serve as balms for the anxiety, boredom, and alienation sure to follow on the pandemic’s heels. In a sense, baking was the first treatment to emerge for the coronavirus.
In the late 20th century the company expanded nationally, and its 2019 sales topped $150 million.
The magnitude of the swell was especially clear through the number of visitors to the website, most hoping to buy flour online. “Our all-time record for traffic was last year, on the day before Thanksgiving,” says Tine. “We broke that record on March 15, and we’ve surpassed it every single day since then.” On some days the site now sees nearly a million visitors.
It’s a long one, but well worth a read!
Photos: Stephanie Gonot
The Unexpected Joys of the Coronavirus Lockdown
I’ve talked before about my admiration for Kara Swisher, most famous as a hard hitting tech journalist. This week she penned a particularly touching column in the NYT that surprisingly had very little to do with technology at all. COVID-19 has presented some silver linings, and she articulates them masterfully.
As I have written, tech and the nonphysical world it has built have never been more necessary and more powerful in our lives. And, growing ever richer, tech is on track to occupy even more of our mindspace in the post-Covid era.
And yet I have come to realize that the real power still does, and perhaps always will, remain with the analog, which has flexed its mortal muscle these days in ways that have surprised me.
But we all share in life’s fragility. We’re all being reminded again that life is capricious, for every one of us, and that it can change and be done whenever it chooses and without warning.
These days, time has lengthened and also gotten more intense. No matter where you are in the world, the what-if has always loomed in the background — and now it’s in the foreground.
Quote I’m thinking about: “People are really good at responding to the crisis that just happened, as they naturally imagine that whatever just happened is most likely to happen again. They are less good at imagining a crisis before it happens—and taking action to prevent it.” - Michael Lewis