Sunday Snapshots (10/25/20) – The Dictator's Handbook, Why Restaurants Fail, and Zoom's Platform Dreams

In which we explore how bad leaders stay in power for decades

Oct 25, 2020

Hey everyone,
Greetings from Washington D.C.!

As COVID-19 cases surge back up again here in the US, I hope you and your family are safe. I love getting to know my readers so if you want to chat, please just reply to this email or send me a direct message on Twitter.

A shorter-than-usual issue of Snapshots coming into your inbox this weekend. I’ve had a busy week of reading, working on my upcoming book, and getting a new exciting project up and running. So this is less of a to read issue and more of a to browse issue.

In this issue of Snapshots, I want to explore:

How bad leaders stay in power for decades
Why Restaurants fail: the elements of success and failure
Zoom’s platform dreams
Lessons from Shopify, NYC Subway Map re-designs, and the thickness of napkins

Book of the week

When people in power don’t behave well, is it simply a lack of passion? Why do well-meaning politicians succumb to the “natural push-and-pull of people” but brutal dictators stay in power for decades? That’s the question that The Dictator’s Handbook by Bruce Mesquita and Alastair Smith tries to answer.

The basis premise of the book is that bad policies are typically good politics. Why? Because leaders don’t lead alone and they need a critical coalition of backers to support them. If those backers could potential gain more from someone else, they will choose that person instead.

This applies to political systems that span the authoritarianism spectrum. All that changes is the size of the critical coalition of backers. In a dictatorship, this is very small – typically 10-20 people who are the “real” power behind the throne. In a democracy, it’s the minimum number of votes needed to win in the right places. In the US, this means being efficient with your campaigning with respect to the electoral college. For example, in the 1860 presidential election:

Lincoln won the Electoral College with less than 40 percent of the popular vote nationwide by carrying states above the Mason–Dixon line and north of the Ohio River, plus the states of California and Oregon in the Far West. Unlike every preceding president-elect, Lincoln did not carry even one slave state.

Staying in power requires that you keep this critical coalition happy, no matter the cost to the broader population.

The Dictator’s Handbook is a really good read which abstracts away individual personalities, gives an insight into what the structure of systems look like, and the incentives that those structures elicit. I highly recommend you read it.

Long read of the week

Why Restaurants Fail by H.G. Parsa, John T. Self, David Njite, and Tiffany King

Perhaps in a way to make up for actual trips to restaurants in 2020, I’ve been reading a lot about them over the last couple of months. This paper examines the dynamics behind why this business is so hard to succeed in.

Here were the elements of successes and failures:

Business move of the week

Zoom’s platform dreams

Where do you go when your business gets the biggest tailwind it can possibly get, your addressable market becomes saturated overnight, and your valuation goes through the roof?

You try to go from being a product to a platform.

That’s exactly what Zoom is trying to do with its app marketplace. It’s a move that they have been cornered into making and absent COVID, a move that would have come much later in their lifecycle. I guess they are suffering from success.

Here’s the good:

Zoom gets to capture more of the upside that it has created in the last 6-8 months as companies and individuals have made it the default communications platform. An easy example is the proliferation of paid livestream platforms that were being hosted with Zoom as the rails.
It provides some justification to the frothy valuation (almost $150 billion as of today). If they can couple this with aggressive acquisitions that help them expand market share and increase revenue per customer, this valuation will look very good in retrospect.

Here’s the bad:

Serious security concerns still linger that keep large institutions from using the platform – institutions that would have 7 figure, multi-year contracts with the company.
Becoming a platform is tough and requires a different skillset that the “it just works” focus that the company has had until now. There’s serious execution risk here.
As primary uses cases saturate and the company looks for more complex customers, they are susceptible to complexity convection – something that Nathan Baschez and I wrote about earlier in the year.

I’m optimistic about how Eric Yuan handles this transition from product to platform, but it’ll certainly be a test of his leadership.

Odds and ends of the week

Two articles with a video in between to sign us off:

📦 Six lessons from six months at Shopify by Alex Danco: Alex is one of the best online writers and he succinctly summarizes what makes Shopify a fun place to work at and provides a blueprint for learning on a new job.

🗺️ The Map – Redesigning the New York City Subways Map: Who doesn’t look subway maps? This short video documents the process and thinking behind a new kind of map for the NYC Subway.

🍽️ The thickness of napkins: To wrap up the restaurant theme for this issue, here’s what the thickness of napkins can tell you about a restaurant:

Study after study shows a strong correlation between quality of napkin and customer satisfaction. That’s not to say you can hand out deliciously thick napkins in a shitty burger joint and immediately get five stars on Yelp. Correlation is not causation. The napkin represents a degree of care, preparation and devotion that goes above and beyond asking if they want fries with that.

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