Sunday Snapshots (10/18/20) – Setting the Table, Coming into Focus, and Podcasting with Spotify
In which Spotify aims to reign in the wild west of podcasting
Hey everyone,
Greetings from Washington D.C.!
Shoo away the Sunday Scaries by grabbing a cup of tea (too late for coffee on the east coast at least) and reading this week’s issue of Sunday Snapshots so that you have something interesting to talk about with your co-workers on your 46th Zoom call of the day tomorrow. Then, tell them you about this newsletter:
In this week’s issue, I want to explore:
Book: Lessons from Danny Meyer’s Setting the Table
Long read: Howard Marks’ Coming into Focus memo about economic recovery
Business: Spotify’s attempt to reign in the wild west of podcasting through music
Odds and ends: The fake rich and social status, Ayn Rand and Sears, and how the NBA Bubble ate
Book of the week
Last week, I wrote about what hospitality means to me. As I finished Danny Meyer’s Setting the Table this week, I’m left with a question that is rare after reading a book – how can I make every interaction I have with another person a memorable one for them? Not what I expected coming into a book about building some of the world’s best restaurants.
But Danny Meyer expertly weaves a story about how a boy from St. Louis went to New York to make a mark, found himself tasting food around Europe, and starting one of the most iconic restaurant brands in the world.
Three lessons particularly stand out to:
Meyer’s ABCD – Always Be Connecting Dots – maxim has now found a permanent home next to my desk. Always be looking for how one part of your life connects to another part of your life. Introduce people you met through two different life experiences. Pay attention to what someone says and bring it up later in a conversation. Read this newsletter and share it with your co-workers. You know, the usual.
It’s clear that Meyer has developed numerous rules of thumb as metrics for success. For example, when determining at whether or not a new restaurant is successful, his “goal is to earn regular, repeat patronage from a large number of people – 40% of our lunch business and 25% percent of our dinner business – who will dine at our restaurants six to twelve times.”
The most fun parts of the book were those where Danny shares personal anecdotes about his interactions with his guests. Whether it’s cooking “eggs daffodil” for an all-star group of friends from the media world or calling a couple celebrating their 20th wedding anniversary at one of his restaurants to say hello.
But easily my favorite quote of the book is this:
The most successful people in any business that depends on human relationships are the ones who know about that invisible sign [the one that says “make me feel important”] and have the vision to see how brightly it is flashing. And the true champions know best how to embrace the human being wearing the sign.
There are not too many books for which I can say that they have made me a better person. Danny Meyer’s Setting the Table is one of those rare books. I highly recommend you read it.
Long read of the week
Howard Marks’ Coming into Focus Memo
How is it that reading a well-written memo about the specifics of the economy under the coronavirus taught me more than my numerous economics classes in college? While I reminisce about potentially wasting four years of my life, consider this must-read memo for anyone even remotely in the economy.
Howard Marks has a mental Mexican standoff on these pages and weighs how this economy is different from any other, why rescue programs are important but at the same time have significant downsides, and the deepening of inequality.
The upshot?
In my view, when uncertainty is high, asset prices should be low, creating high prospective returns that are compensatory. But because the Fed has set rates so low, returns are just the opposite. The odds aren’t on the investor’s side, and the market is vulnerable to negative surprises. This is how I described the prior years, and I’m back to saying it again.
Business move of the week
Spotify will let its podcast hosts include full songs in their shows
The wild west of podcasting is something I’ve written about here and here. It seems like there are about 745 different apps for listening to podcasts and equally as many for creating them. I suspect that this is because if look at the time spent on the medium vs. the current monetization ratios compared to more developed mediums, it’s clear that there’s an arbitrage opportunity.
And on this wild west frontier, Spotify wants to be the cowboy #1.
To that end, it made some significant moves this week that uniquely leverage its existing capabilities and provide a differentiated experience to the end user – making it more likely that you will listen to podcasts on its app.
Last year, Spotify acquired the podcast creation and publishing tool Anchor for $340M (along with Gimlet Media). This week, it announced that you can add entire songs to a podcast episode if the following conditions are met:
Create the podcast on Anchor
Listen to the podcast on Spotify
This is an amazing move. In general, it’s not entirely clear why you would choose one podcast player over another. No one app has dominance – I’ve used Overcast (what I currently use), Apple Podcasts, and Pocket Casts interchangeably over the last couple of the years. Now, if I’m listening to a podcast that is discussing music, movies, or TV shows, I will use Spotify for the superior listening experience with music tracks.
How would I tighten the loop on this? Couple of quick ideas:
When shows with licensed music are played on other platforms, add a “to listen to this song here, use the Spotify app” by default. Podcast creators can choose to edit this out, but defaults can be powerful.
Have an option to add a template clip at the beginning of the podcast that goes “To have the best listening experience, use the Spotify app.”
What’s great about this move is that it’s not trivially easy for its competitors to copy it. No other podcast creation platform has music licensing with record labels. Even Apple – the behemoth that Spotify has repeatedly called out for unfair platform practices – can’t copy it because even though they do have royalty deals with record labels because they don’t own a podcast creation platform (although they could if they wanted to).
It’s a great lesson in sequencing and path-dependence of business strategy. Spotify couldn’t have done this without its Anchor acquisition last year. Building end-to-end control over a medium allows you do creative things like this.
Ultimately, this is not the move that’s going to make Spotify cowboy #1 when it comes to the wild west of podcasting. But it does tighten the reins by just that much more.
Odds and ends of the week
Two articles, one video. Let’s go.
🇨🇳 The ‘Fake Rich’ of Shanghai: h/t to long time Snapshots reader Jerry Lu for this insane story. A bunch of social media influencers flaunting the fake rich lifestyle pool together resources to become better at being social media influencers with fake rich lifestyles. I’m reminded of Eugene Wei’s maxim of social capital – people seek out the most efficient path to maximizing social capital. In this case, that most efficient path happens to be photoshoots on shared assets.
🛍️ How Ayn Rand Destroyed Sears: The rest is history something, something:
Lampert intended to use Sears as a grand free market experiment to show that the invisible hand would outperform the central planning typical of any firm.
He radically restructured operations, splitting the company into thirty, and later forty, different units that were to compete against each other. Instead of cooperating, as in a normal firm, divisions such as apparel, tools, appliances, human resources, IT and branding were now in essence to operate as autonomous businesses, each with their own president, board of directors, chief marketing officer and statement of profit or loss. An eye-popping 2013 series of interviews by Bloomberg Businessweek investigative journalist Mina Kimes with some forty former executives described Lampert’s Randian calculus: “If the company’s leaders were told to act selfishly, he argued, they would run their divisions in a rational manner, boosting overall performance.”
👩🍳 Chefs in the NBA Bubble: What an impressive performance by the team over at the NBA to accomplish the bubble without any outbreaks. This video shares a small slice of what went into making it possible.
That wraps up this week’s newsletter. You can check out the previous issues here.
If you want to discuss any of the ideas mentioned above or have any books/papers/links you think would be interesting to share on a future edition of Sunday Snapshots, please reach out to me by replying to this email or sending me a direct message on Twitter at @sidharthajha.
Until next Sunday,
Sid