Hey people! Welcome back to Forests Over Trees, your weekly tech strategy newsletter. It’s time to zoom-out, connect dots, and (try to) predict the future. Let’s go!
This week, I’m like a teenager in charge of the music – I’ll be switching songs more quickly than usual.
I simply had too many things I wanted to weigh-in on, and only a single post to cover them in. So instead of one deep dive, you’ll get two mini-dives. Enjoy!
TikTok in Shock
On Tuesday, TikTok peaked.
They announced that their beta Creativity Program (which pays creators!) was graduating to the big stage. This is important.
Social media apps like TikTok are two-sided platforms. You need users, but users need content. To get content, you need creators.
And at a certain point, clout and going viral loses it’s luster… So you need to incentivize creators with something other than attention.
Enter, monetization.
I’ve written about this before in the context of Twitch (who did this well) and Clubhouse (who did not do this well). Here’s a blurb from that prior post:
Twitch put the creator at the center of their app. When early usage volume wasn’t large enough to support ad-based models, they built out subscription tools for creators instead, and they took a cut of those subscriptions. That way, creators could build a loyal, paying following directly inside the app, and Twitch could grow and invest back into the platform, generating revenue the entire time. As one Twitch employee put it:
“One of the reasons I wanted to work at Twitch was because of subscriptions. It’s one of the best business models on the internet… Subs are a huge part of Twitch’s monetization strategy and its DNA as a company.”
So helping creators monetize is great! It adds to the monetization moves they’ve made with TikTok shop, blah blah blah.
But then, on Wednesday, TikTok got some bad news.
Way later than planned… a US TikTok ban finally got momentum. Apparently, the White House supports the bi-partisan bill, which would require Chinese parent ByteDance to spin-off TikTok.
Now, as a reminder, I was very wrong in predicting that this would already be banned. So I’m a little gun-shy about predicting things one way or another. And there are reasons to think it could go either way:
On the one hand, it’s an election year… and people love TikTok (150M Americans use it)
On the other hand, it’s an election year… and being tough on China (as the administration is doing with chips, with trade, etc.) might be a vote-getting move
On the third hand (just go with it), tech regulation tends to fall short when lobbying pressure pushes back… can’t China just scramble the lobbying jets?
Because the White House is putting their reputation behind it, I lean in favor of this happening. Though I’m sure that China will try to slow roll this (again)… taking their time to contemplate a sale, lining up suitors, and buying roses to hand-out (bachelor style).
Google’s Silver Lining
In the last few weeks, Google has really shifted the narrative.
Whereas before, the narrative was:
“Google is behind on AI, but they might be making a comeback”
… they’ve been able to break out of that pattern.
Instead, the new narrative is:
“Google has completely lost the script. And they are doomed. And you are dumb if you disagree.”
If you don’t know what I’m talking about, they released an updated Gemini AI app a few weeks ago that had trouble generating images of white people. This was particularly noticeable when users were requesting historical images (purely hypothetical example: “show me the founding fathers – completely ripped – in a WWE-style fight”).
Here’s a Gizmodo piece that gives more details, but sadly does not have an image for my example.
People really got worked up about it.
In response, Google paused the app, their comms team issued a statement, and CEO Sundar Pichai did too, calling it unacceptable.
Now listen, I completely agree that Google should have had quality assurance processes in place to prevent issues like that from happening.
But I don’t think this is the end of Google.
In fact, it might just be the kick in the butt they needed to shift into higher gear.
When you have a search monopoly, and a really strong adtech moat, etc… it can be easy to rest on your laurels, to reject innovation, and to find ways to protect the status quo. When your innovation muscles atrophy like that, running full speed to catch the AI train is hard.
We should expect them to stumble a bit. But stumbling is not the same as falling.
Imagine how motivated they are to course correct now. Imagine how urgent things must feel inside the company.
The silver lining, and my contrarian take of the day – this Gemini mishap is ultimately a good thing for Google.
Bonus Bullets
Quote of the Week
“One of the things I told my team… is that you know more than the critics do. You know more than the analysts in the marketplace do. You know more than the media does… You know more about what’s real and substantial of value about our company than they do.
That doesn’t mean ignore them… You need to understand [their perspective]… I read the criticism… I invite all critique. But I also don’t accept the critique blindly.
– Andrew Bosworth, Meta CTO (from a great Lenny interview)
Quick News Reactions
Holy Bitcoin, Batman! – New all-time highs this week ($69K). It’s up 200% since October. I can’t help but to think that this is a much frothier “soft landing” than Fed Chair Powell was planning on.
Waymo? More like LAymo – Forgive me for the horrible joke. Their self-driving taxi service is coming to LA. I’m incredibly pumped. I’ll report back.
Ex-Twitter Execs Sue Elon – The old CEO, CFO, legal chief, and General Counsel sued Elon over unpaid severance. Reading that, I wondered if execs are just like us, calling lawyer friends when things go wrong… “should we sue this guy!?”
Overall Economy
This is the Weekly Economic Index published by the Dallas Fed. It’s made up of 10 different data sources from consumer to labor to production, and it’s designed to closely track US GDP.
Tech Equities & Bitcoin
The Nasdaq (blue) closely tracks tech equities, and I added the S&P 500 (green) and Bitcoin (orange) for comparison. Note: this is not investment advice, but it is interesting.
Tech Jobs Update
Layoffs from 2022-2024: (Source: Layoffs.FYI).
Questions for you
What am I missing re: TikTok ban? Anyone want to make a prediction!?
Would you ride in a Waymo taxi?
Is Google actually doomed?
[Note: Feel free to read and lurk and not respond! Just experimenting with opening the conversation a bit. Anyone can see comments… only I see replies to email]
Responses to last week’s post
Shout out to:
Friends who texted about the panic of square-dancing at school!
- for the “Virginia Reel” story… unnecessary dance lessons are universal
- for some insightful points about TSMC’s new investment in Japan