Big Technology Podcast - The Declining Half-Life Of Social Media — With Eugene Wei

Episode Date: July 19, 2023

Eugene Wei is a tech analyst and product veteran, with time spent inside Meta, Amazon, and Hulu. He joins Big Technology Podcast for a discussion of social media's longevity, considering how the decay of mainstay platforms changes the incentives to participate. Tune in for a in-depth discussion of social media's longterm trajectory, examining the TikTok algorithm, Threads, Twitter under Musk, and the puzzling persistence of Facebook. In the second half, listen to an engaging lightening round, where Wei comments on the state of his former employers and his longtime friendship with Amazon CEO Andy Jassy.

A veteran of Amazon, Hulu, and Oculus, who's one of tech's leading thinkers, joins us to discuss social media's transformation and where the technology world is heading next. All that coming up right after this. LinkedIn Presents. Welcome to Big Technology Podcast, a show for Cool-Headed, he wants conversation of the tech world and beyond. Eugene Way is our guest today. He's a tech product expert formerly the head.

head of video at Oculus and SVP of product and marketing at Hulu, who's also made a lengthy stop at Amazon. Eugene's loosely examined and explained the dynamics of tech consumer products in a way that fully reveals how they work. I've been reading his work for so long, and I'm so thrilled to speak with him today. Eugene, welcome to the show. Thanks for having me, Alex. It's a pleasure. Thanks for being here.

Let's just start off with the social media landscape right now. First question on my mind, why would any platform have anything other than a TikTok-style algorithm? And if there's no argument against, don't we just have everything merge into each other and just kind of look exactly the same? I think there's some nuance to it. Certainly, I think one of the big realizations for Western social media when TikTok came on the scene was that if you could dial in an algorithm to kind of manage the signal to noise in a feed, you could really scale that. And it might be something that's more efficient at doing that job than another approach. But I think the issue is that depending on the medium, depending on the interface, a TikTok style algorithm might work

well. It might not. And you really have to take it on a case-by-case basis. TikTok is a very particular style of media, these short, full-screen videos, often with music playing in the background, that interface is really well suited to forcing you to make a judgment on every video that you see. And really what TikTok is interested in is what really interests you. If you're not interested in a video or if you're negative on a video, it's kind of all the same to them. What really matters is positive signal. And they can measure that by looking at how long you watch a video, how many times you rewatch the video, whether you like it, whether you share it, whether you follow that person, they get very clean signal on all of that.

A lot of other social media services that I've tried to copy TikTok aren't short video based or they don't have full screen, you know, pieces of content. They have a scrolling interface where you can scroll past multiple pieces of content at once. So it's very hard to get the same type of clean signal. Like if you scroll past five tweets, you know, and you don't like any of them. Did you not like them? Did you not care about them? Or were they just like tweets that you were interested in, but you didn't care to like them? It's very hard to tell. And these algorithms are very, very dependent on getting a very clean signal in in order to make really good judgments. So I think, you know, it depends. It's kind

of like how if you look at music, I think if you look at algorithmic music recommendations, while they aren't perfect, they've gotten to a really good place. You know, if you go on Spotify and you click on a song and you say, go to the song radio and just make a playlist based on this single song, you'll get something that's pretty reasonable. Right, Discover Weekly also. Amazing. Right. Something like that. But on the other hand, if you take podcasts and you look at podcast recommendations, which are also, you know, an audio medium, it's much harder to dial in something. And it's the same. If you compare TikTok to all the big streaming media services like the Netflix, the Hulu, the Disney Plus, I find long form video recommendations to be

less dialed in than short video recommendations. I think there are reasons for all of these things. So my long answer is is really just, you know, it depends. Right. That makes sense. So let's talk a little bit about the positive versus negative signal. I mean, when you don't have all that positive signal in terms of like time that you hover on top of something, your theory here is that you need to collect some more negative signal where people say what they don't want or how does that play in? You want both. Because that's one of the things that you've said about Twitter is they're not collecting enough negative signal as they've moved to this like more TikTok style algorithm. Yeah, basically, if you think about what the net or what the

Twitter algorithm can see. They can see if you like a tweet. They can probably see if you bookmark it, if you share it. So there are some positive actions that they might see. But, you know, if you found it mildly annoying and you just scroll past it, they don't see that negative signal. If it was something that just like that just didn't interest you to scroll past, maybe, you know, were you interested? Were you not interested? it's just very hard.

It's kind of a murky, a read on how you feel. And so I really think getting a good sense of your sentiment is key to these types of systems. If you can get it, then it's great because the algorithm doesn't even need to be that sophisticated. Just the sheer volume of data will do something pretty good. Like I think people used to think TikTok's algorithm was something magical. it's not really. It's actually, if you ask anyone in machine learning, TikTok's algorithm's approach is actually just very intuitive. It's what anyone would do. But it was their ability to get that really clean read on positive and negative sentiment that made the algorithm work. So I think

you need both. You know, a lot of Chinese companies, the Chinese government, they're very influenced by this field of cybernetics. And cybernetic systems are all about this idea that, you know, in one of these systems, every output from one part of the system becomes an input for another part of the process. And so you can think of these social media services as cybernetic systems where you're trying to get like every user action to be this output that becomes an input into your algorithm to try to figure out, oh, okay, what is this person interested in? You know, we were talking about, you asked me about why not everybody moved to a TikTok-style algorithm.

And there definitely was a challenge for Western social media in that it was all social graph-based in the beginning. It's like, who do you follow, who do you friend? It turns out that who you follow and friend isn't a perfect approximation for what you're interested in. Like, you have a lot of friends that are just interested in different things than you are. And so we would see that in our, you know, Facebook feeds or, you know, our Instagram feeds. You're like, oh, okay, yes, I do know that person. They are a friend, but a lot of their content isn't, you know, match for your own interests. So TikTok's algorithm, you know, promised a way to solve for that, like correct for that mismatch.

But again, there's nuance in how you implement it. Exactly. But it does feel like everybody's tried to implement that TikTok style algorithm. And I'm like hearing you talk about it, I'm like, wow, like there is nuance and it's not really that suitable for some types of content, yet so many have. I mean, in your Facebook feed, for instance, you're starting to see, if you're still using it, right? You're still starting to see suggested content. In your Instagram feed, I mean, suggested content is all like throughout that. The Twitter feed is now fairly like, it doesn't really care anymore about who you follow.

It's all about what the algorithm thinks is interesting. It seems like there was a memo inside all these companies that said, do TikTok, do it now, doesn't matter the cost. I mean, were they that hasty and ignorant of what this, you know, about how their products were different and decided to implement it anyway? And does that mean we just kind of will eventually like all end up gravitating towards like short form videos and having those fill the feed? I mean, if you think about it, that's what Instagram looks like now. A lot of Facebook looks like that now. Even Twitter is starting to look like that now. Threads is definitely looking like that now for me.

What do you think? Well, I think the, my sense is that probably short video was just underutilized in the West. I don't think it's perfect for everything. Not everyone is good at creating short video. Not everything needs to be short video. But certainly if you look at China, which, you know, I used to go back to China every year, pre-pandemic, to talk to tech executives there, visit with different companies, see what was going on.

And it always felt like you were living further in the future in China, the way they use the internet and their smartphones. And, you know, they just had short video everywhere because their internet really took off in the era when everybody had a smartphone with a video camera on it. Whereas the Western Internet took off in an era when we had laptops and desktops and no cameras. attached to them. And so there's some amount of sort of like legacy, you know, inertia in the West. And now we're sort of catching up to, oh, okay, short video, you know, Snapchat, TikTok, maybe we've been underutilizing video in every sphere. So I do think, you know,

we'll continue to see short video gain market share just because of that. But I ultimately don't think everything needs to be short video. And it won't. end up that way. Right. Another thing I've been wondering is why people continue to post on social media at all. I mean, it seems like the half-life of a social network or a social media company is much shorter than it used to be or used to think it was, at least. I mean, look at all these that have gone by the wayside. There's Clubhouse and Vine. Facebook Blue seems to be, you know, at least for me, dormant, Twitter's teetering on the edge. You know, your theory here is that people go on to these networks to build status, but that status is so short-lived. So what do you think,

do you think people will eventually just get fatigued and stop moving to new social networks and this stuff just becomes a moment in time? I think some of that fatigue has already registered in the retreat to group chats for a lot of people, which is more a form of social networking than social media. I think when we made that transition from social networking and social media, we caused a huge shift in the way people used these services.

We went from thinking about social apps as ways to connect to people we knew to apps where we had to compete with other people to get distribution in these feeds. And that made us all into content creators and media figures. And that, you know, as you know, you're a media figure too. you know, anyone who gets into that business, the creation business, it's very exhausting.

And I think some of that retreating to group chats is just a sign that a lot of people got tired of that. As for new social apps, I think it's challenging partially because we have these powerful incumbents that all exist now. It's not like trying to build a social app back in the early 2000s when there were very few apps that were big and powerful. You didn't have these like massive incumbents that you had to compete with. And we know that users typically, you know, there's inertia to these things. They will stick with the service that they've already got followers on where they've already built out a

graph and they know how to use it. You know, for new service to come along and really displace that, they have to do more than just offer kind of one very narrow experience. And it's tricky because Because, you know, it's hard enough to get initial product market fit for any social app. But now the challenges, I think as soon as you get any amount of traction, you have to build out even more features just to keep pace with the incumbents. So the game has gotten harder. But, you know, in the end, I would always say that people, you know, humans are social creatures. We do want to connect with each other.

even with all these social apps now you see all these statistics about loneliness being on the rise in the West and so I think it's still a problem that we can do better on that we can solve in other ways and just because we haven't quite reached that point yet doesn't mean it's not a big problem so that's kind of how I view it and speaking about it as a solution to loneliness I mean, one of the thing that struck me in your writing is that you think there's real community on social media. I mean, here's just one of the lines from a recent piece that you wrote. The machine learning algorithms that have been crucial to scaling our largest social media feeds are among the most enormous social institutions in human history. I mean, for them to be enormous social institutions that you have to believe that this is like real and meaningful connection that's happening here.

Can you expand on that a bit? I mean, ultimately, when you think about what social institutions are, they are ones that kind of really determine how we relate to who, and there's no arguing that these algorithms that operate the feeds in social media today have a huge say in who we encounter on our phones every day and how we interact with them. That's just the structural nature of it. And so there's both good and bad. I think there are parts of social media that are very toxic and not healthy. But also, I'd have to say that through Twitter, I've met some of the best friends I have now, some people who have been really important to me, both personally and professionally.

And that probably wouldn't have happened as easily in a previous era. Just the fact that I'm talking to you is a function of probably the fact that I was able to write and put things out on the internet that other people shared and read and saw. And in a previous era, it's not clear that I would have had that opportunity. So it's always, uh, it's always a mix of the good and the bad. Social media isn't like purely black and white. But I do think we have to continue to look for ways to make it better for the people who use them, uh, for society, for all of that.

Uh, I feel like in Western. social media where we're maybe stuck at some local maximum right now, partially because the business models and everything have constrained everything and everybody's copying everybody else. But I don't think we're done building. Yep. You know, when I speak with you, Eugene, and when I read your writing, and this is kind of a surprising conclusion, because I, you know, I'm reporting on this stuff. I try all these apps, but it seems to me, and you know, maybe I'm going to read the same facts that you've presented and come to a different conclusion. But it does seem to me that we're going to have, you know, social networks where professional

content, you know, content creators performed will have group chats where like normal people talk to themselves. And it will be like the same exact eco, that's what I'm saying. Like maybe social media was a blip, right? And we fall back to the same ecosystem that we've always had, which is that like people talk about entertainment and then networks program entertainment, except instead of like, you know, the local watering hole talking about what was on TV, you are in the group chat talking about what you saw on TikTok. I mean, why, I guess, you know, why does social media something in the

middle where normal people are posting and stuff like that? Like, you know, why is it a historical necessity to exist? I don't know. I mean, I think they're, the internet by its very nature is this, is this two-way medium. So there's always some amount of user participation. It may just be that we have less of it moving forward, I don't think it fully goes away because now that it's possible, like some amount of people are going to be creators. And probably a lot of those people weren't going to be creators in a previous era where a previous era where a couple gatekeepers were going to determine who got distribution through mass media. So I think the share of social media relative to the previous area of mass media, it's going to be higher. But maybe relative

to the peak of social media, a lot of people will just decide, you know what, wasn't healthy, wasn't great, and we'll opt out and, you know, we'll settle back to something, which is like higher than before, but not as high as it was at its peak. Because that's the thing, right? Like, you look at threads and it almost felt like we were back in the last decade when it first emerged. It was like a ready-built network and people were on there and you had your typical, right, people posting for status. But then, like, you see that, that the retention rates are terrible. And I think it's, I mean, my, my theory on that is that it's a combination of people

being like, I'm not freaking doing this again. Like, I already did this on your other networks. You're not going to fool me again. Because ultimately, like, I shared the best stuff with my, with my networks anyway. And then the people who, like, continue at it are, you know, are people who are professional creators, with some exceptions. But that is, I mean, did you read it any differently? No, I mean, it's interesting because,

Threads doesn't exist in a complete vacuum. Like a lot of people coming to threads came from Twitter. Some people were coming from Instagram. So they kind of, they're not a complete social media novices anymore. And the interface is familiar to anyone who's used Twitter. So it's this weird mishmash. You know, I always say that social media, like, creates these communities that are the intersection of, you know, what is the medium itself and the interface.

what are the features and then who are the people doing it like the community itself because they piggybacked off of the instagram graph and they drove so many people to threads in such a short period um it was always going to be a very challenging i think opening two weeks because you have a lot of people who weren't used to interacting with each other through this particular medium suddenly all trying to figure it out at the same time and it felt a little bit just chaotic And, you know, because we're such social media veterans now, our patience for waiting for a network to slowly turn into something is just less than it used to be. Yeah. We have things we can fall back on if we're not into threads. So I understand why threads went this direction. You know, they boosted a lot of famous people initially. They had the algorithm so you wouldn't get an empty feed. They piggybacked off of the Instagram graph because they didn't want the cold start problem. But they created a different problem for themselves, which is if you throw a bunch of people into a thing and they try it out and they don't understand what it is or what they're going to use it for, these days, they're going to, they're going to bail out pretty quickly.

And then it's not clear that it's easy to get them back anymore. It might have, you know, there's going to be a lot of Instagram notifications. Hey, you missed a thread. That's what we're looking at. Yeah. Right. And part of it is that I wonder sometimes if three. Like, I wonder how much the team actually has a very specific vision for what threads is going to be and how much it was more just like, well, Twitter's struggling. We might as well just throw a clone up and see if we can weaken them and steal some traffic.

I always tend to think that it's a little dangerous when you don't have an internal intuition or compass about like, okay, why are we doing this? what is it going to be? And if you can't articulate that cleanly, it probably means you're going to be a little bit lost. And, you know, with social media, you can't afford to be lost for too long because once people churn, it's very hard to get them back.

So, I don't know. And you see that with all the other services that are basically, they're all trying to be Twitter, just minus Elon. Yeah. That's fine, but... You know, the chances that you'll get everybody to migrate over from Twitter and create that sense of community again, it's just, it's very difficult.

It takes a while. And I just don't know if there's enough time for these apps. Like I think, like you said, with a half-life, part of it is just the fact that we aren't first-time social media users anymore. So you get a very narrow window in which to try to figure it out. And it's a complicated problem. Yeah, definitely. So where do you, I mean, I think that, well, let's, let me ask you some, where's, where's threads going?

I don't know. Like, from what they've said publicly, you know, it does seem like they're trying to be Twitter, but minus some of the, what they consider, I guess, toxic discourse around news and politics. They want to be kind of like Twitter, like public conversations for other areas that are more positive in their vibes. Does it have a chance of surviving? Well, I mean, you know, because they're attached to the Instagram graph and they have ability to like push people that way, they're certainly going to have a longer runway than some, you know, other startups.

We just don't have the resources to drive that much awareness. but I think it's an open question as to whether micro blogging is even the right interface for those types of conversations that they envision. Like, you know, my Instagram, there's a lot of travel and food and sports. You know, it's like whatever like communities you're interested in, there's architecture, there's arts and a whole bunch of things. And actually, I just find Instagram to be a better medium for that. Like, I'm not sure micro blogging is the right interface for a lot of that.

And I'm not sure that really famous people, you know, one of the complaints that I think Adam, who runs Instagram had said was, well, the interface of Instagram isn't good for conversation, you know, because it's so dominated by the piece of media that's being posted. And so they went with a thread style interface, which puts the conversation at the forefront. But, you know, if you're J-Lo or Ariana Grande or, you know, whoever, I mean, they're not really going to converse with their fans. It's just, like, impossible. They're broadcast celebrities. And a lot of them, you see them trying the little prompts in threads like, hey, you know, what's your morning, you know, routine to get yourself into the day or something like that.

And that does drive a lot of responses because they're famous. But they're not going to go in and talk to all the people. who respond and so I wonder if threads isn't going after a market that doesn't really exist at scale yeah I mean I think that's probably what's happening so what do you think this leaves Twitter I mean I think you and I both agree that it's been the product changes really that have been the trouble at Twitter maybe that's layoff of all the salespeople has been the revenue problem but the product changes has kind of have opened the door more than like Elon's tweets although some of those

are just really regrettable but like it really has been the fact that the home feed is no longer what it used to be and I mean we had a debate about this last week but I personally think

the re-verification process has been a debacle as well what's your perspective? Yeah I don't think Twitter is going anywhere I just think it'll be like my sense is that there still isn't a real replacement

for Twitter And especially if threads doesn't want to do politics and news and that type of stuff, I mean, that's, that's Twitter's sweet spot, it feels like. And I don't think the other Twitter alternatives, they're all so small. I don't think any of those subscale clones will really get any traction. And so I think Twitter will continue to exist, but, you know, a lot of long-time Twitter users have bailed. And I don't think most of them are coming back.

It'll be fine. it'll continue to be this kind of like medium-sized social network that can't really grow much larger than it is. And so, you know, I think it'll be hard to recoup the purchase price. Right. And I think you just have to write that off. You're just like, that's not going to happen. You can, you can bring some of the advertisers back. It's a very attractive demographic of, you know, people to advertise to. But it's always been challenging for Twitter because they don't have as much personal information about you, you know, it's kind of a pseudonymous network. And so the targeting isn't going to be quite as good as it as on Instagram or Facebook or something like that. And I've

also found the ads really just random in my Twitter feed. I don't know like all they choose these ads for me. Yeah. And so, but I don't think it'll go away partially just because, you know, it took so many years to build that community. And we're seeing just how hard it is to port that community somewhere else and you know for all of us to find each other again on some other clone it's so interesting because like as like we've hit these like late social media era you've like written so much about groups and you've studied a lot about groups dynamic you have this guy olson i think it's a guy olson it talks about yeah yeah the organizations um you know when they take collective action at least for large groups um that they often take a long time

to emerge but once established they usually survive on until there is a social upheaval or some other form of violence or instability. And I'm just like, wait, the guy that I read, help me make sense of what's going on with social media. Like, he's talking about end times for groups. Like, we've really reached sort of like the kind of dark period of what's happening with social networks where they're like, we're at the fall apart stage. Well, yeah, yeah, there's some extent, but also that inertia works in both directions.

So, you know, I find a lot of sort of. that I use on the internet now to be worse than they were at their peak, you know, like Google search results or Amazon search results or, you know, my Twitter home feed. But, you know, they still persist. And so sometimes we underestimate how long things can stick around even after they've started degrading a little bit. Right. There's a little sense of like, well, they've reached a peak. There's no more innovation to come for whatever structural reasons or bureaucratic reasons. or internal incentives. And yet, there isn't like a clear alternative that we can all leave for. And some of that is just network effects and what a competitive mode that is. Some of that is economies of scale, as in the case of Amazon and the difficulty of competing with those. So, I don't know, I would love to see more innovation unleashed in tech.

But honestly, if you look at like, if you look at returns over the past 10 years, you know, if you just put money into all the tech incumbents, you wouldn't have made a killing. So if you had done that, good for you, but also that maybe says something about kind of how static it's become. Right. That the dinosaurs are just sort of like winning.

Yeah. And yeah. On the dinosaur front, can you explain to me one thing that I'm wondering, like it seems like Facebook blue, like the old Facebook app. It feels like it goes town to me in my network, but it continues to grow. It's multiple billions of people that are using it.

It remains a huge source of revenue for Facebook. What the heck is happening there? Yeah, you know, I don't know because I don't use Facebook much anymore. You can always tell when an app has kind of reached the end of innovation because they just start sending you a lot of notifications. Yes. like I occasionally open Facebook just I have so many notifications like what what are all these notifications and it seems like they send a notification if anyone that I'm friends with does

anything like they've reached the point where it's like every event gets a notification and that's a clear sign that organic traffic is is suffering as an ad platform of course because of the number of people on all of Facebook's like family of apps and the amount of information they have on all of them. It's still like an unbelievably great ad targeting platform. So if you're a small business or, you know, whatever and you need to reach a specific audience,

it's still great. So I'm not surprised that the monetization is amazing. But I can't explain the stickiness of the app. You know, like it may just be that we underestimate how much, you know, like a lot of people who stayed kind of found a good use for Facebook. And it's just like posting random life stuff, like family, friends, and that type of thing.

Yeah, groups. So there's still some amount of that. But it may also just be that we haven't had a great and compelling alternative for all those people. That also seems to be part of it. Eugene Wei is here with us. He is a great writer. You could find his writing at Eugeneway.com. I got that right, yes?

Yes. Okay. It's a great website. So many great essays. Definitely go check them out. We'll be back right after this. Hey, everyone. Let me tell you about The Hustle Daily Show,

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And we're back here with Eugene Wei. He's a veteran of Amazon, Hulu, and Oculus. Let's talk a little bit about some of those companies and also do a little bit of a lightning round here. So first question for you is, why do you think the U.S. hasn't built a super app. It seems to be like where all Chinese social media goes, we haven't done it. There are a couple reasons. One is, I mean, there's path dependence to all of these things.

So China obviously benefited from a leapfrog effect. But if you look at a bunch of things that people consider to be part of super apps, like payments or all sorts of transactions and things, China just didn't have digital competition in any of the, those spaces. So WeChat could come in. We chat could be the single social graph. And it could be the digital wallet. And it could enable a bunch of things that, you know, you just didn't, the only alternatives were analog. So I think that context is important. And I think it's easy to underrate just how built out the U.S. is on a number of fronts.

Like, we were very used to using credit cards. We were used to, you know, buying all sorts of things in different ways online. And so by the time social media came around in the West, we just had all these habits for how to do a lot of things. And, you know, like, as we've said with inertia, it's just very hard to change people's habits. Like, look at how hard it is for us to get off of credit cards in the U.S. addicted we still are to that. And you go to China and you can pay for everything with a phone.

It's contactless. It seems like the future. And we come out of the pandemic in the U.S. And what do we get? It's QR codes that open PDF scans of menus and you can't pay and you can't order. And it's just like we got the worst parts of that whole system. So I don't know, that inertia is really, really tough. The other thing is, look, the mobile platforms.

in the West, we also have kind of duopoly there across Android and iOS. And so for things like payments and other things, you know, the take rate of those platforms is so large that it's just like a very different dynamic than it would be in China. And I think that's super underrated here. And that's not going to change anytime soon. You've mentioned, you know, government action. You've mentioned duopoly a few times, both was. in regards to Facebook and Google and now Apple and Android.

Why is that important in terms of holding back innovation here? Yeah, I mean, it just constrains the number of options that startups or other companies have in those spaces. You know, you can look at the take rate of a payment network like a Visa or MasterCard, and then you can compare it to the take rate of the Android and iOS stores. And it's a huge magnitude of difference now, you know, three versus 30%. You know, yeah, reasonable people can debate how much of that value is earned or not, but there's no doubt that that fundamentally changes the economics of a lot of things. Like certain things just aren't profitable if you have to give that amount up.

So I don't know. It's not an easy thing to get off of. and yeah, consumer inertia and habits breaking those is very, very hard. So I think, yeah, I haven't given up on the idea of a super app, but just pulling something like that off in the U.S. versus China is a completely different problem. Right. It is interesting because there's so many companies that seem to want to do it, right? Elon Musk's Twitter and Facebook wanted to do it and Uber, I think, wanted to do it.

It just hasn't quite happened. Right. Let's quickly just go through some of the companies that you used to work at. And I got like some questions on all of them. So first, you were a product manager at Amazon for a while. Very interesting that they've shifted from Bezos to Jassy there. Where they are on AI is kind of interesting to me. I'm not sure how deep you can go into this. But I just thought I would ask you. Like, you know, you have the consumer applications. Right? Like you have a chat GPT and a Bing, but Amazon doesn't have one of those. Then you have the chips. I mean, you have Nvidia. Amazon does do some work within chips. You know, you have designing the models, open AI. Where does Amazon fit there? I'm going to be at their event. And actually next week. And just kind of trying to figure out exactly where they should play, where they do play there. Like what I should poke them on. What do you think? Yeah, I don't know. I mean, it's a good question as to what their strategy is. And I can't say that I've studied it deeply or really know. It has been a little bit fuzzy. Like, I don't sense that they've communicated cleanly what their AI strategy is.

Obviously, with AWS, you could argue that they will pursue a similar playbook, that they just want to be infrastructure that people train AI models on. And maybe they'll build that out, that capacity. and they'll really just be trying to sell bullets in a war and not get into the battle of, oh, having to have their own model or something like that. But I'm not sure. I'm not sure if that's something they want to pursue or have articulated. So I don't know.

That's a good question. You should ask them. Oh, yeah. Well, definitely we'll be doing that. What do you think about Jassy in terms of his performance as CEO? Yeah. Yeah, I'm friends with Jassie from Wei. back. I haven't followed Amazon as much in recent years, but we both joined Amazon in 97. And I think,

well, Jassy was one of Jeff's first shadows. Maybe he was the first shadow. I can't remember the exact timeline now. But, you know, that is for those listening, just the person that would like take every meeting with Bezos. And he went and did at EWS right after that. But yeah, go ahead. Yeah. So I really think that it's been amazing. to watch his career and his ascent to CEO. And I really do think being Jeff's shadow for a long time was an amazing opportunity for him. And he got a ton out of that.

Like even, you know, I would only occasionally be in meetings with Jeff and just being in meetings with him. It was amazing how much you could pick up from him, just the way he thought and everything. Yeah, yeah. Yeah. And so I definitely think, you know, Andy has a good mental, a model of, how Jeff would think about things. Obviously, with Amazon being just like such a large company and in a bunch of mature

spaces, it's just like a different, it's a different set of challenges than maybe Jeff face running Amazon because it was a different era of the internet. And as you know, in every business, when you reach like a different phase, the problem changes fundamentally. If you're at the shoulder of the S curve versus when you're at the heel, the things you have to do are different. And so, yeah, I don't know. I can't honestly even say, you know, I'm not sure what what they will be trying to do going forward. And I'm just as curious as anyone else to see what happens. Yeah. So when you had first-hand exposure to Jesse, what was what was that like?

I mean, I guess you're friends. Tell us a little bit about the guy as, you know, a person and operator. Well, it's really funny. He's, um, he used to have this, uh, once a month, uh, chicken wing eating thing. He was really into chicken wings. And, and, uh, I also remember about that about him. He's right into sports and like fantasy football and things. So it's not saying like he's exactly like Jeff.

Obviously, there are other things that he's interested in. that Jeff wasn't and, you know, see some of that. Like, I don't know if Jeff would have done the big NFL deals, but, and he's really into NFL. And so he understands the attraction of that type of content, and maybe he's going to lean harder into things like that. You know, I think when you inherit a company from someone who's as, like, well-known as a Bezos, there's always some period of figuring out how you can keep the magic

going but then also putting your own personal imprint on the company and you know where does he you know i'm not even sure where he differs from jeff on you know how to run different things but you know at some point we'll see that more and more clearly as he has more time to you know work with different parts of the company and assert as well you're also at hulu what do you think about the state of the streaming wars right now i mean it was money money money land grab and then all of a sudden like end of covid rates go up everyone has to you know, improve their balance sheet and it's cuts all over the place. Obviously, they're in the middle of the really intense labor action right now,

like the strike is going on. But what do you think the state of the field is among these players? I think that the biggest mistake may be that collectively all the streaming players made was over-promising how quickly they could get to scale and profitability. you know there's no doubt that moving to a streaming model and you know the end of the DVD era the end of syndication there was also going to be some amount of revenue that's lost and gone forever it's just not coming back we can't compare monetization of content to that previous era at the same time it's not as if making that content got any cheaper you know the cost

per minute of a Hollywood film is not easy to drive down because, you know, actors and the talent and location, like all that stuff still kind of cost the same amount. And so I always knew that the margins and everything we're going to go down. And the question was, well, you maybe make up for it just by pure scale. Like as a streaming service, you could go global. You have like a lot of people paying you on an annuity basis, essentially. And you hope that that scale makes up for things. But as you know, with all economies of scale businesses, you know, it's very hard to get to that super scale. Once you do, it's fine because, you know, you're like, okay, there's some amount of fixed costs in our business, which is, you know, largely comes down to

creating a certain content library and the cost of making that. But after that, every incremental subscriber costs you very little to serve. And so, I think when Netflix came along, they were the first to start to get that super scale. And I think there was always the sense that they thought it would take, I don't know, five years, 10 years, like, you know, some period to reach profitability. And look, it just turned out to be, it took a lot longer to do that.

And now I think Netflix is in a good position because their main competitors kind of gave up on getting to that scale. They're all trying to be profitable. And I worry that the HBO Maxes, the Disney's and everything will end up in a little bit of a no man's land where they're cutting back on their content library and everything. But they don't have the scale yet necessary to flip that to cash flow positive. Like I think, you know, when you commit to scale businesses, like early days of Amazon, we knew that our retail business was the pure economies of scale business. And so we had an entire year that was, the internal theme was get big fast baby because we knew it was a race. Like we had to spread those fixed costs across the largest base of revenue possible.

And I don't know, like when you give up on reaching that scale too early, you get stuck in a terrible position of having to just cost cut, cost cut and take things out of your streaming service. And that makes your streaming service less appealing to a bunch of people. We then end up, you know, like subscribing for a little while, then churning and subscribing and churning. And I think Netflix isn't a good spot because they have reached a state where they can turn a profit. And they have enough content where most subscribers are like, well, all right, all sense to just keep my Netflix subscription going. It's like it's not worth the bother of just like canceling and resubscribing and canceling and resubscribing. So yeah, that's what I think about the state of. streaming. Okay, that's great. Okay, we're really coming up on time. Can you give us like your

take on the Vision Pro in like a minute or less? I don't know. I'm, I'm hesitant to comment in something that I haven't personally tried myself. I'm glad, like, I think the good thing is that Apple is taking a different approach from Facebook. You know, they're taking the approach of VR headset as like a monitor, like a second monitor, which is interesting. And they're probably one of the only companies that can conceivably pull that off. And it's very different from Facebook's approach of the headset as like a separate thing entirely, a gaming console or, or, you know, something to explore some metaverse. So at least we'll get a take on whether there's demand for that and whether that's a viable

alternative approach in the whole AR, VR space. Yeah. But yeah, I'm anxious to like actually try it out at some point myself to see. I think, I do think VR and AR, you know, my sense of it was always that it will change the world someday, but it's going to take a long time and a lot of money. And the open question is how much money are what companies willing to spend to get there as quickly as possible? Like, do they have the patience to do 10 years, 15 years, 20 years? Because if either of the Giants turns off the investment, then you probably see those fields go into another winter. Yeah. Eugene Way, thank you so much for joining us. Absolutely. Thanks for having me. All right, everybody. Thank you so much to Eugene. Thank you, Nate Gwattany for handling the audio. Thank you, LinkedIn, for having me as part of your podcast network. Thanks to all of you, the listeners. If it's your first time here, please hit subscribe. We do these twice a week, flagship interview on Wednesday, news on Friday.

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