Supported by Greenhaven Road Capital, finding value off the beaten path.
Derek Thompson spoke (March 2017) with Barry Ritholtz about a stew of ideas from his book Hit Makers. I enjoyed the book and it will make further appearances here, but we’ll just focus on Thompson’s talk with Ritholtz.
Barry quotes the book, “Content may be king but distribution is the kingdom,” and asks Thompson to explain.
Content is king is, “so obviously not true. Some of the biggest hits in music and movie history depended overwhelmingly on distribution mechanisms to get out to the public.”
In the book, he cites the greatest show of all-time and brings up their run-up bump up.
We get dated graphics and a timeless lesson. It is both the sizzle and the steak that matter. For better and worse.
Jonah Goldberg lamented to Russ Roberts, “Part of the problem is the corruption of mass media where these politicians know they can keep their jobs with a good media campaign rather than writing legislation.”
Legislators do a better job selling us about their job than legislating for new jobs. This is part of all jobs, only the degree changes. Lee Child said that after a new Jack Reacher book comes out he’ll have dozens of fans come up to him and say I’m your biggest fan, when is the next book out? To which Child responds, Last week. “Eighty percent of marketing,” he told Andy Martin, “is just reminding people that the book is out.”
Josh Wolfe emphasized that selling and building are crucial elements for entrepreneurs. Bethany McLean noted, “This idea of storytelling in business is amazing because of the power that you can create something from nothing with a great story.”
In 2018 it’s the story of Elon Musk. How much of Tesla is sizzle? How much is steak? Jim Chanos isn’t biting:
“I think the Tesla stock might not be worth anything. To us, it is one of the bellwethers of this market. It is a hopes and dreams stock. Investors have pinned their hopes and dreams on this stock and on this CEO, who has done a very good job promoting that vision. The problem is that it is an automobile company.”
In his book, Thompson used novel stories and new studies. There were few socio-anthro-psycho-logical retreads on the tires that move his book.
In one study, Stanford professors looked at Reddit successes. They found images which were shared about seven times each, but who only ‘took off’ once or twice. What happened if you kept the pictures the same but changed the title?
Their finding is one of Thompson’s key points. Things need to be different but not too different. Or, things need to be the same, but not too similar. There is a goldilocks zone for what people want. For example:
Bad titles for this Civil War caricature were, “I’m not sure I quite understand this picture,” and “So I was looking for a picture of a bear…” Those titles are cold. They are bad fits for the community. The hit? Naturally, “‘Murica.”
Though that’s not the end of the story for laser-eyed-Abe. This picture’s score rocketed a second time with the title, “God bless whoever makes these..,” Good titles are like good jokes; not too short and not too long and landing with the audience.
How does something land? Ritholtz asked, “What do you do to make things people want to talk about?”
“When I write an article, for that article to go big, it can’t just be appealing to my first audience, my first level of readers. They can’t simply say, ‘Ok. Cool.’ Click out, and never talk about it again.’ I need a handful of them to want to pass it along because they think that passing along that article will make them – my readers – look smart, morally in touch, surprisingly counter-intuitive about what is true about economics.”
“To create something that your consumers feel will make them look good if they pass it along.”
Thompson wants his readers to signal something. Whether it’s explanations from Geoffrey Miller, Rory Sutherland or Robin Hanson, we all signal. Kayak founder Paul English wanted to create a purple Swatch that cost ten thousand dollars. The money would go to charity, but people could still signal.
Maybe hits are more important than ever. Thompson’s examples mostly come from what Brian Arthur called the two economies.
- The innovation economy which is defined by increasing returns, positive feedback, heavy on know-how and light on resources.
- The optimization economy which is defined by bulk processing, genteelism, and heavy on resources and light on know-how.
Arthur wants managers to be aware of their economy. Innovative economies require commando units who can move fast and break things. Optimization economies require hierarchy and baby steps. Thompson points out that Reed Hastings of Netflix is really a venture capitalist.
Maybe that’s why Marc Andreessen enjoyed their conversation so much. Can you tell who said what?
- “There’s this counterfactual universe where Netflix got disrupted by some other company that created streaming and made DVD rentals irrelevant.”
- “We don’t need to be associated with just one type of content/investment.”
- “As we grew we tried to have less rules, not more rules.”
What Marc and Reed are trying to do is be different. Everybody is a contrarian is one of Ritholtz’s favorite quotes. Life of Brian, one of his favorite moments.
Tweet and repeat, we are all individuals. Life of Brian uses comedy to define the absurdity. Being funny shows a deep understanding. Jason Zweig said about writing The Devil’s Financial Dictionary, “The ability to define a term in such a way to be cynical or funny is a measure of your own skepticism.” That is, you understand both sides. B.J. Novak said, “You really learn something when you parody it.”
Rory Sutherland takes it from entertainment to sales.
“Behavioral economics is to some extent, the study of differences between, how we think we choose and how we really choose. Comedy seems a close relative. Not all, but some is partly about context, it’s about the extraordinary effect of context on how we behave. In one context twenty dollars can feel like fun and in another a monstrous extravagance.”
“The comedian is a bit like the anthropologist, they have to be this kind of alien outsider who’s capable of observing things at a distance, with a degree of detachment.”
A final quote that struck Ritholtz from the book. “A reader both performs the book and attends the performance. She is conductor, orchestra, and audience.” Thompson replied that “…books are ours. They belong to us in a way that movies don’t.”
Blog posts are like that too. Thanks for reading. The three quotes went; Andreessen, Hastings, Hastings.