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We’re not always great at seeing or predicting the future, mainly because of our tendency to apply familiar (and often outdated) concepts to new ideas. We’re stuck in our well-worn business ruts, too focused on the day-to-day minutia to notice inflection points that create real opportunities for innovation. The streaming services we all know and love are ripe for just this kind of forward thinking.
I just love this music. I don’t know why I like it so much spirit. Welcome to the Copernican Shift. I’m Grad Conn, and I’m here to shift your Copernican. What’s that even mean? It’s been a weird week for me. I’m just gonna put that out there. So we’ll see where this goes. So what should I talk about first, Randy… which one do you want me to do first?
Let’s do the first one we said. We said Pampers. Pampers, let’s talk about diapers.
Diapers. What was the other one?
The tragedy of the commons.
Hmm, there was another one.
Tesla, oh, no, no Amazon Prime.
I kind of spoiled the punchline. I gave away the punchline.
Okay, you don’t have to listen to the rest of the show. It’s all been ruined by Randy. You haven’t ruined anything. Don’t worry, they have no idea what I’m gonna talk about.
Okay, I want to talk about streaming. That’s what I want to talk about first. So I’m gonna do that first, Randy. Okay, and then we’ll do another show on diapers, which is a different kind of streaming. Oh boy. I am just drinking coffee, just for clarity. There’s nothing in here except for cream and sugar. It must be the sugar.
So I have had this talk track I’ve been using for quite a while. And so I’m gonna use it again today. And it’s about humans inability to correctly see the future. We’re we’re notoriously bad at predicting the future. It’s actually quite amazing how bad we are at it. I’ll give you a couple of examples. Read any science fiction book, until Snow Crash in 1994. Any science fiction book predicting the future future, right? Now, 100 years from now, 200 years from now. And I’ll ask you a question. Do any of those books predict the internet? And keep in mind the ARPANET existed at the time that most of those books were being written. ARPANET is 50 years old? If your answer is no, Grad. No science fiction novel, published until 1994 predicted the internet you would be correct.
They have have one job. And they miss the most important evolution in humanity. It’s kind of amazing, actually, when you think about. I don’t know exactly what it is, but I do think that the way our brains work is that we iterate on other people’s ideas. That’s why the US Patent Bureau may be one of the most important creations in human history. People don’t think of it that way. And I don’t think a lot of Americans don’t appreciate the power of the patent Bureau, or the level of innovation that occurred there. And you know, Randy, make a note, let’s do a whole show on the patent bureau. We’ll deep research it a bit and hit the Wikipedia page and all that kind of stuff. But let me just reference it really quickly right now. So until the patent Bureau came along, people would basically invent things and keep it a secret. Because it was the only way to protect your invention. Secrecy was the only way to protect it. The result is that innovation was slower, because it took a long time to figure out the secrets. And there are still many secrets like this, like the Coca Cola formula. Open source by Open Cola by the way, 2001. You still find it online, Open Cola. And the Kentucky Fried Chicken secret herbs and spices. Look it up. There’s hundreds of people who think they figured it out. It’s never quite right. I don’t know what else is in there, but it’s not quite right. And you know, the list goes on maybe the Big Mac special sauce. Again, people think they’re close, but something to do with celery salt, maybe vinegar. People can’t quite get it right. So there are closed source examples out there.
But what the patent office did is it offered protection for your invention that no one would copy, in exchange for you publishing it. I don’t think people really understand the subtlety of this. So I’ll give you something of value protection in exchange for your value, which is your IP, and we’ll publish it. So what people would do is they would see a new invention get published. Well, that’s pretty cool. And they would either license it, or they would figure out how to do it better, and patent their own version that was even better. This is what stimulated a massive amount of innovation in the US economy. And in US inventors. And it really created the whole ethos of the invention culture in the United States, which again, Americans just take for granted. They don’t understand how hardwired it is into the country. But best innovation ever, US Patent Office. I’ll just put that out there. We’ll come back to that in another show.
So humans iterate on top of other ideas. That’s the beauty of the patent office is I can stand on the shoulders of giants to come up with my next thing. And so it’s hard to iterate in leaps. So when the first radio ads came out, they’re like, What are we going to do with this? We got a radio, the ads will be, I guess, plays. Because that spoken word, that’s what we know how to do. And so if you hear early radio ads, they sound weird. Because they’re little plays that people are reading. We learned how to do better radio ads. When the first TV ads came out, what they did is they’re like, well, we do advertising on radio. So now we have television, which has got pictures, so we’re gonna film the radio ads being read. Those are the early TV ads. It made total sense at the time because people didn’t understand what would we do with this new medium. Over time, obviously, a point of view evolved which is pretty sophisticated today.
When the web first came out, this is a hilarious one. People were using words like information superhighway, which is just the silliest I think, ever. But people would say, well, we’re gonna put ads in there, we’ll make them like, billboards. Got it. And so they would put a billboard on the web page. And the billboard would be a billboard, you wouldn’t be able to click on it. It wasn’t interactive, wasn’t responsive, nothing, it just sat there. Because that’s how we do advertising. Of course, today, web ads are interactive, you can click on them and click through and stuff you wouldn’t even… like if you clicked on a site now that you couldn’t click on, it’d be what is that? That is just strange, and doesn’t make any sense to me. Right? So we’ve learned how to use that medium. I think this inability of humans to leap is at the core of many of the mindset challenges at organizations.
We have this structure, I like to talk about where a lot of companies think about what tools am I going to buy to make my company more effective. And my guidance is, think about it in a slightly different model. As opposed to a tool-first model, why not do a mindset first model, then think about the skill sets involved in that mindset, then come up with the tool set. So mindset, skill set, tool set. And so there’s this concept called skeuomorphs. I don’t know if you’ve ever heard of it. It’s an example of how humans have tended to even keep the elements from the past in the future. So a couple of good examples would be the Save icon in all the Office products from Microsoft. It’s a floppy disk. I mean, I’m not even sure if you’ll even know what that symbol is anymore. It’s the symbol for save, but it is a floppy disk. My daughters are in their mid 20s. They’ve never seen a floppy disk. So we’re talking a generation, generation and a half behind us. But that’s the Save icon. I think that’s very funny.
You’ve got light bulbs that flicker like candles, because we still like the sense of candlelight. I think that’s really funny. The first cars that came out, they actually had horses heads on the front, because the cars were sharing the roads with horses. And so they didn’t want to scare the horses. So they had a stuffed horse’s head on the front of the car. I will say, if I was a horse, I may come back as one. If you know anything about Arrow shirts, Joe comes back as a horse. Classic ad. If I was Joe and I came back as a horse, and I looked to my left, and I saw my cousin stuffed and nailed to the front of a car, I’m not sure that would make me feel better. Yeah, no, it made me feel worse. But that’s what we do, we tend to define things… if you think about even word processors, or electric typewriters, we are always using that old terminology.
So what’s the latest example? It’s actually a pretty good one. I heard this the other day. I was in a conversation with a brilliant young man. And he was telling me about something he was doing. And he said, if you look at streaming, and the way that streaming services deliver content, it’s almost like taking a text file and posting it to a website. It’s crude, it’s simple. We’re essentially just taking the broadcast feed that we used to have going over the airwaves or going over cable, and we’re just plugging it into an internet feed. And that’s it. But when you think about the possibilities of what you can do, it’s actually pretty extraordinary. I mean, you’re in a network that is interactive, it’s two way, right? So I could interact with the show, I could do different things, the network knows what I’m watching and how I’m watching. It probably knows my habits and can probably predict what I’m doing based on my pause behavior, etc. The list is nearly endless. And you starting to see some. You’ll see, here’s what Randy was afraid he was giving away. But of course, you know, he missed all the other ramblings. But Amazon Prime, when you pause the show, or mouse over, a thing called X-ray comes up and you can see who the actors in the scene are. And you’re always doing that, right? Oh, where do I know that actor from. Then you can actually find that with Amazon, it’s pretty helpful. But that’s the limit of it.
On Hulu, now, when you pause a show, they’ll bring up an ad on the screen. So there’s an ad, that’s not a video ad, but just almost like a branding moment will come up on the screen. I’ve seen a lot of Charmin ads with the bears. A lot of bears doing bum wipes, because I think what they’re figuring is that when people pause the show while it’s streaming, they’re likely to be going to the bathroom. So that’s a good time to give them a bathroom tissue message. You know, crazier things have worked. Although I think at that point, it’s probably too late to be buying bathroom tissue. But we’ll just go from there. Wouldn’t it be better to put the bathroom tissue ads synonymous with like the cooking shows? Just saying, one leads to the other. So, that’s what’s happening a little bit right now. But there’s so much more that’s going to happen. And there are not that many companies out there who are doing this. This is quite interesting, because we’re so early in this technology. It’s primarily vertically integrated.
There’s a great book called My Years With General Motors by Alfred P. Sloan, of Sloan Kettering, and Sloan School of Business. That Sloan. The one who was the CEO of GM, from the 1920s to the early- mid-1960s. Created the world’s largest corporate organization in the process of doing that. Brilliant manager. And in that book, he talks about vertical and horizontal integration waves. In the early days of the car when cars were new, and no one really made them, it was very important to be vertically integrated. So Ford went all the way from having their own rubber trees, and their own lumber mills so they could make wood for the cars, and everything else, fully integrated all the way to steel. Over time, as the car industry evolved, lots of people can start to make those pieces. And so where GM really broke through is that GM was a horizontally managed company, which pulled in parts from many suppliers, created a common platform, created levels of cars in terms of pricing. And off they went to glory. Plus a major innovation in Chevrolet. Chevrolet was the first closed car. So funny to think about that, right? All cars up to the point where the Chevrolet came out, we’re open. And so the Chevrolet was first car, you could close the door and roll up the window and be protected from the elements. People not surprisingly, really liked it. So read that book.
So he talks about these different waves. And in the computer industry, same thing. Apple was vertically integrated at the early stage of the industry. In the PC industry, Microsoft came out and did a horizontal motion. And that was the winning motion and Microsoft created a massive amount of value by doing that. When digital hubs in the home came out, Apple had never really wandered from its vertical strategy, but with almost a non-existent company, because in the PC industry it didn’t make any sense anymore. But in the digital industry, in the hub industry, the complexity of connecting stored music on your PC to a device, and to be able to cast it to other devices was so complex, you really needed a closed system again. Suddenly, Apple’s vertical strategy became relevant again. Microsoft stayed with the horizontal strategy and it was a disaster. And today Microsoft’s not in that business.
So this vertical, horizontal strategic inflection points, very, very interesting. Take a look at that in history and take a look at it, even in your own business, try to understand where you are. If you look at where we are in streaming today, streaming is pretty complicated and pretty hard. And so companies like Netflix, to a large extent, because it’s probably about half of all streaming instances right now, Amazon, which is pretty big, not the biggest, but pretty big… Apple+, they’re all in a vertical strategic inflection point. Which is not surprising in the early days of a new industry. But there’s probably going to be a horizontal inflection. Because the fact of matter is, there’s probably about a thousand channels and publishers out there in the broadcast world. And the ones I mentioned have scale to build an engineering team to manage it. But Cartoon Network doesn’t. Nickelodeon doesn’t. I’m probably giving away some stuff I tend to watch on a normal basis. VH1 doesn’t. Roku doesn’t. Hulu doesn’t. They’re not going to be able to build 10,000 member engineering teams to run this stuff. So what are they going to do? They’re going to look to somebody to do it for them. And this is where there is a really amazing opportunity for a player to come in, and a horizontal inflection, and disintermediate, Netflix and the others and empower the whole industry. I think that company exists today. It’s called Amagi. It’s an Indian company. It just closed the C Series round with Accel. And they are doing exactly what I’m talking about. It’s very, very interesting. Take a look at it.
So that’s a whole bunch of fun stuff about strategic inflection points, and about streaming. And let’s talk about the future of streaming for a second. So you know, where could we go? While I’m watching a show, shouldn’t I be able to socially interact? While I’m watching a show shouldn’t I be able to buy the things that characters are wearing? While I’m watching a show shouldn’t I know who plays the characters? That’s X ray. While I’m watching the show, shouldn’t I be able to invite friends to watch a show with me, while I’m watching the show? Shouldn’t the show maybe show me different things based on who I am, maybe I see a different ending. Maybe I see different kinds of characters, maybe the characters look more like me, maybe they look less like me, depending on what the content of the show is. Maybe the show cuts out certain scenes, because they know that kids are watching or they know that I don’t like those kinds of scenes, I tend to skip over them. For example, I know somebody who is deathly afraid of needles. In fact, this was an experience we had recently at a play. And there was a character on stage pretending to put a needle in their arm, they didn’t have a needle, it was literally completely pretend. And she flinched. So I mean, really doesn’t like needles. So maybe needles get cut out, for example.
I can only imagine. Feel free to comment on all the different things that we could be doing in streaming. Given that we’re plugged into a to a network, it’s kind of mind blowing. And that’s where we gotta get going. And that’s where the whole point about not being able to know the future is that we have tended to use streaming today as just another way of watching broadcast TV that was dumbly sent over the airwaves. But now we have a hyper personalized network that’s two way. Shouldn’t we be doing different things? And what I am excited about, and this is maybe one of my favorite things about being a human today, is that the things that I mentioned a minute ago? Sure, probably, there’s going to be some other stuff that’s going to happen, that we have no idea. We have no idea, and is going to burst on the scene, kind of like TikTok burst on the scene. And next thing you know, we’re all gonna be talking about it. And we’re all gotta be doing it. This is an amazing time to be alive. For the Copernican Shift, I’m Grad Conn, and thanks for listening.
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