Big Technology Podcast - The Platform Delusion — With Columbia Business Professor Jonathan Knee

Episode Date: September 2, 2021

Jonathan Knee is a professor at Columbia Business School and senior advisor at the investment bank Evercore. He joins Big Technology Podcast to discuss The Platform Delusion, his forthcoming book about how the term "platform" has become overused to the point that it has little meaning. Is Sweetgreen really a platform. Well, Sweetgreen thinks so (c'mon now). Listen for a discussion covering what should actually be called a platform, the fundamentals of the tech giants' businesses, and whether students should go to startups coming out of school.

Hello and welcome to the big technology podcast, a show for cool-headed, nuanced conversation of the tech world and beyond. Joining us today is Jonathan Me. He's a professor at Columbia Business School and a senior advisor at the Investment Bank, Evercourt, who just came out with a book with some interesting counterintuitive insight on the tech giants called the platform delusion that comes out on September 7th. Jonathan, welcome to the show. Thanks for having me, Alex. It's great to have you. The book is called Platform Delusion. There's been a lot of talk about platforms.

Clearly, we talk a lot about it here, especially with regard to the tech giants. So it's interesting to hear you right in the title say that there's a delusion going on. So I want to hear first, what's the delusion and who are the people that are, who are the people that are being deluded? Well, the basic delusion is that saying the word platform tells you a whole lot about whether a business is good or great or destined to take over the world or a fabulous investing opportunity or should be regulated to death by the government. it's a word that is so laden, has become so laden and has become sort of a effectively a trigger word, both for investors and frankly for regulators. And the reality is the fact that something is a platform by itself tells you

relatively little that matters about it. I'm sorry, it tells you relatively little that matters about the underlying business. That is, you know, what is the definition of a platform? A platform is a company that doesn't make stuff. It is a company whose fundamental value proposition comes from the connections that it makes. That is, the connections that it enables and enhances, whether that's a connection by being a platform to enable a transaction in a marketplace, whether it's a connection to let Alex meet his future wife on a as a platform for dating,

whether it's a connection between a software developer and users at platform to encourage and enhance innovation. It's the entire business model is about creating a space that enables... two entities, whether it's a person or a business or otherwise, to connect. And the value that they create comes from that. So that's what a platform is. Plenty of those. So Google is obviously a platform. It connects advertisers with searchers. Facebook is obviously a platform for connecting the various members of the Facebook community, as well as, frankly, developers.

So there are lots of different platform models, and many of them are great businesses, but even more of them are shitty businesses. So just saying that something is a platform, which everybody does, whether it is or it isn't, because they think if you say the magic word platform, you get three times more valuation. if you read if you read IPO filings I mean like every other every other sentence has the word platform whether appropriate or or not yeah I've always had a much narrower definition of a platform is I've always thought that a platform is something that a tech company builds that allows people to build on top of it hence the platform they build a platform and then people build on top

amazon web services is is one example but I do agree with you that it's completely completely an overused term and people just throw it around everywhere. Like, I think, you know, we've spoken in the past and you've mentioned that sweet green calls itself like a, which is a salad place calls itself like a salad platform or something like that. A food platform. Food platform, which is so unbelievably absurd. It has become like, you know, artificial intelligence where like people use this buzzword everywhere and they try to, you know, get technology style multiples on their, on their value.

which to me is totally insane. And even where something is a platform, the relentless pounding of the word to suggest that it somehow in itself is telling you something super important about the business is just silly. So take a business like Compass, which is basically a real estate brokerage. Compass is it just went public. It's sort of a tech-enabled, high-end, clever real estate brokerage. it's a brokerage. All middlemen businesses are effectively platforms. And, you know,

real estate brokerage and Compass is a platform. But when it goes public, does it really need to use the word platform 300 times in the prospectus? I mean, does that really let people know something super special about the business? Not so much. That's what we call in this world trying too hard. So I'm curious, okay, so, you know, you wrote a book about this. So writing a book is a pretty serious endeavor. It takes a lot of time. You have to basically pour your life into it. So why, I mean, why did you write a book about it?

Who were you writing for? What were you trying? What was the sense of urgency that caused you to write something like, what's the danger in having, you know, people be diluted about platforms? Where is the societal need for us to be able to read book length, you know, digging into something like this? So, well, you sound like my publisher. Who's going to read this? Who's your audience?

That's true. I know them well, so I guess I can handle them since we've written with the same publisher. Yep, but go ahead. So look, you know, the answer is it built up over time. I've been teaching a class called digital investing, which is not about how to open an e-trade account, but it's about digital business models and how to think about them. And over time, from two, I guess three different angles, I started to say, you know what, this is getting crazy and it's not good for the world, that people are just

confusing what the real source of strength of businesses are. The reality is what makes a business strong for the long term is a competitive or structural competitive advantages. That is things that allow you to do stuff that other people can't. And some platform businesses have it and some of them don't. And replacing that fundamental insight about what makes businesses is good with a bunch of random buzzwords is bad long term for a couple of reasons. One, you know, in good times like this, look, it's true. If you just bought a NASDAQ ETF for the last few years, you're a fucking genius. You're doing great, right?

And but the reality is things don't go up forever. And if you don't understand the distinctions and the nuances, things will get bad at some point. And it's just not healthy for the world, for people to sort of make up bases for their success on a post hoc basis that doesn't make any sense. Secondly, there's this notion that somehow these businesses have inevitable success built into them. And the place there that honestly disturbs me is the number of people who come out of business schools, where I am, but undergraduates as well, who are going to these businesses on the theory that, you know, they're going to get insanely rich and it's a sure thing. and it's going to, and life is going to be good. And the reality is going to early stage companies is not for everybody.

It's for a relatively few people. And when literally 50% of the graduating classes of top business schools are or either starting their own businesses or going to businesses that have, you know, a few dozen employees, something is, something is wrong. So the point of this really is to tell people to stop the music for a moment, stand back and actually take a look at these businesses, look at the distinctions between them,

both the very, very successful ones, which are successful for very, very different reasons, but also look underneath the, early stage ones, some of which are growing fast, but it isn't clear that they will ultimately have a sustainable business model. Yeah. So I guess part of this is for the students. And by the way, that's a good foreshadow. We'll get to that in the third segment. And then part of it is for investors. You know, Jonathan, you've worked in finance. I'll throw one. I'll throw one other thing too. Okay. Part of it is also for regulators. Yeah. Because again, it's stupid for an

investor to say, oh, it's a platform business. I'm throwing my money in there. It's also stupid for regulators to say, oh, it's a platform business. We need to regulate the hell out of it. That is, you know, market power is something that needs to be looked at closely to make sure that it is not abused. Yeah. And that is absolutely true. But again, saying, well, we're going to have a separate category of regulation that only applies to, quote, tech platforms. really kind of misses the point. Yeah, I mean, Sweet Green might be careful what it wishes for. If it actually wants to be a platform, then the FTC might not come into it.

No, I don't think that the FTC and DOJ are going to go after every business that calls itself a platform. And I think they're a little bit more precise than that. A little, but to me, the difference between, I mean, and there are bad things that these different big companies are doing, but some of them are just bad. behavior that should be punished for being bad, you know, if it's true that Amazon is stealing data from people and using it to build their own things, that's not an antitrust violation. That's like theft.

That's bad, right? And Amazon does that and does other things because it's relentless because it has to be because it's a tiny margin business. That's a very, very different thing from saying, well, in the case of Google or Apple, we need to put some guardrails on the nature of how open their platform is and how they interact with other people who interact with the platform, which makes sense. But again, very, very different situations. Man, I have so many questions for you about what you just said, but I want to put that aside for a second. We'll get to them. I'm not going to forget them.

But I want to get back to the premise here, which is the platform thing. I wonder, I mean, it must feel, so I was saying earlier, you've been in finance for many years, you know, of course, working alongside the, with your work at Columbia Business School. It must feel kind of lonely to be a man waving a flag out there being like, hey, maybe we should have rational valuations. Because, you know, I wonder how much of this is people saying, you know, traces back to the word platform and how much. of it is just, you know, money trying to find places to get a return and basically willing to take any signal that there might be more than standard returns. And then platform is, you know, perhaps one of them where people see platform and they invest

because, you know, zero interest rate policy just is making money cheap and it's going wherever it can go, going to NFT, is going to Bitcoin, going to any company that raises its hand and say, say, and says it's a platform. And so looking at the broader picture, how much of this is actually. just a story about our economy today and how frothy the markets are? You know, look, there's no question that this isn't the first time we've seen this movie, right? There was the first internet boom, and there were all, there were different crazy metrics that had nothing to do with anything that people hung their hat on.

And over the course of history, I mean, I wrote two books about, one about the media industry and one about people who invest in education, which again, each of them had their own mythology to entice people to put their money into things that really didn't make any sense. There is a natural tendency to want to find a simple, all-encompassing theory that will allow you to safely get rich. And unfortunately, there are a bunch of people who have an incentive to encourage those views, right? That is, if you're a venture capitalist who has a bunch of companies, some of which are good, and most of which turned out not to be good. You're interested in getting some,

if they're not that good, you're interested in getting the greater fool to take you out of, take you out of those. If you're the CEO of a public company that's trading at an insane valuation that you know on the intrinsically probably isn't, shouldn't be worth that. You want to keep the music going. So it's one of these things that takes on a,

life of its own and there's a huge sort of incentive to keep to keep the fly we the flywheel evaluation going once it started because the downside once it collapses in terms of you know in terms of employees in terms of not I mean in terms of obviously your own wealth is is not trivial and hearing you say that I love having finance people on the show I have to ask you the question are you with your personal savings and investments betting on the market? Are you playing it more safe with, you know, bonds and stuff like that? What does it look like inside Jonathan's portfolio? I'm really boring. I am, I am an, I am an ETF kind of guy because, look, the reality is there's only so many hours in a day.

And if I'm not going to do the work, I'm not trusting anybody else to be picking. stocks. And so it's a mix of ETFs in the broader public market, as well as some funds for around debt, sort of more senior up the capital, a mix of senior and more speculative up the capital stack. And then, you know, and then there's like a little slug that is the fund month, my fund money, which is people who I know, who I think are smart, who I trust, and I tell them, I'll make, if they're raising money, I say, I'd be happy to give you money under one condition, which is, I don't have to hear a fucking thing about it, excuse my French, until until it's over. I don't, I don't want the quarterly update. I'm betting on you. I know you.

And this is a little, if I lose it all, it's not enough that it's going to kill me. I trust you and we'll see how it goes. But let me know when it's over and not before. So that's my portfolio. Love that style. I'll send you an email when big technology raises. Just kidding. We're not going to race. Okay, let's go to break. I want to talk to you about the tech giant. She said some stuff about Amazon that I want to pick apart or dig into. We'll see if it stands. And we'll come back right after this on the Big Technology podcast with Jonathan Neat. Hey, everyone. Let me tell you about the Hustle Daily Show, a podcast filled with business, tech news, and original stories to keep you in the loop on what's trending. More than two million professionals read

the hustle's daily email for its irreverent and informative takes on business and tech news. Now, they have a daily podcast called The Hustle Daily Show, where their team of writers break down the biggest business headlines in 15 minutes or less and explain why you should care about them. So, search for The Hustle Daily Show and your favorite podcast app, like the one you're using right now. And we're back here on the big technology podcast with Jonathan Neh. He's the author of a new book, Platform Delusion, we've been talking about it, also professor at the Columbia Business School. Let's get right back into the tech giant discussion now that we've talked about the premise of the book. So I'm kind of curious to hear your perspective. So you don't think that

Congress should regulate Amazon for taking data from third party merchants and using that to improve its own products. Data would only get if these third party merchants had to use it in order to get to customers. But you are open to some rules and regulation around Google and Apple, maybe because of their mobile operating system, which I think is like a mobile operating system is the definition of a platform, you know, it's an operating system where you build apps on top of it.

So what's your perspective in terms of the way that we should handle these companies? So to be clear, I'm not saying that shouldn't be regulated. I just, it's a different kind of regulation. That's bad behavior. Yeah. That's bad behavior. that should, and bad behavior, you know, gets punished if that, if they did that.

Now, we have a point is there's no rules about it right now, though, especially that stuff. That's, okay, that's right. But those rules should not be antitrust rules. Those should be laws. Laws and data protection rules. And in fact, look, and unfortunately, you know, Congress is a spineless beast. And, you know, they love to complain about regulators. but the reason why regulators don't know what they're doing is that Congress refuses to pass

very specific laws. Even, I mean, even the antitrust laws, if you actually read them, are so broad and vague. It's really just court cases that have defined them over time. And the only way things get passed is by making them vague. So what Congress does uniformly is pass a bunch of vague thing and then bitch about it later because they didn't have the spine to do it in the first place. Not only that, they don't fund the regulators at all. So it's like they pass these laws that regulators don't.

But on consumer protection, exactly. And on consumer protection, interestingly, people don't realize this. There is no consumer data protection law. It doesn't exist. The FTC kind of uses its sort of generic authority to try to regulate this topic. But it needs much more real and specific. authority. And in fact, I would say one category of regulation that I'm quite sympathetic to to deal with certain platforms whose advantage does come from having such a unique walled garden

of data that gives it an advantage over others. And that that does limit the ability of others to innovate and create exciting, interest in competing products, one category of potential regulation, which I think John Battell has suggested, is that people individually actually own their own data that they create in the context of interacting with these, and that they can port it and share it with other platforms, right? So that is, so something like that I think is interesting. My point, again, about Amazon is not that Amazon should be free to go around and steal shit from people. It's that it's not an antitrust issue. It's a bad behavior issue. And that should be regulated that way, whereas something like, you know,

search where it appears to be something close to a natural monopoly, you want to put some constraints on the abuse of that monopoly position. You know, it's interesting. The U.S. law, as I said, if you read the antitrust laws, if you just read them straight, cold, you'd say, well, either everything is illegal or nothing's illegal. It doesn't make any sense. You know, in the European context, they have a notion that what is illegal is the abuse of a monopoly position. That is not illegal in the U.S. Right. And to me, that is the concept that makes sense. The maintenance of monopoly is the way you got it. But once you get a monopoly, you're allowed to be a monopolist. It's really interesting stuff. Yes, that's right. There is one bill in Congress right now, one of the six antitrust bills that does.

have that data portability aspect. Yeah, I don't know. I think that's interesting. It's interesting, but I also sort of have felt that, like, the individual data is not what makes these platforms valuable. It's the combined aggregate data. So, yeah, maybe you could, like, take your Facebook data, but where do you put it? Like, do you put it in Twitter?

Well, they don't really have, like, a lot of the things. I have a, I think that's the first step. I mean, there are a bunch of really interesting businesses out there that do try to create complete, for instance, in the advertising space, you know, like the trade desk or live ramp, where they try to aggregate platforms where you can buy ads, yep, where they and, you know, I am confident that if data was portable in that way, there would be entrepreneurs and products that created by people who were, who aggregated all of that. And, and created an important counterweight to what the big platforms have.

Yeah, but I guess that would also require, like, a consumer or person, if you don't want to use the jargon, deciding to take their Facebook data and, like, hand it over to a company, like the Trade Desk, which is built entirely to target ads to them. And that's a heck of a burden on the person themselves that I don't think people would generally be thrilled to do. although I've been surprised in this world before, so maybe it will happen again. And I think smart entrepreneurs would say, hey, we'll pay you something, we'll give you some benefit from this, and we will promise to only use this on a,

you know, you might have different options for, you know, at different value propositions in terms of how the data is used. Yeah, that is anonymized or not in all of that. Yeah. Totally. I just think, but the point is it wouldn't be just stuck behind the World Garden. It would create a marketplace for people to figure out how to use this stuff. It would be in play.

It would be in play. And I think that would be an interesting way to move the needle. But, you know, some of those bills have crazy, just straight up crazy stuff. like you know i know i agree with you i've written about i mean you know oh you can't you can't let a consumer compare my marketplace product with with another product on the same screen well i mean that's called transparency and innovation and that's right you know well i don't consumers yeah i don't know if the laws go that far but there are definitely some that really made me scratch my head essentially especially the one that like ended uh or would end the tech giant's ability effectively to

acquire companies, which to me was just so beyond ridiculous. Like you can't cut off the exit path to startups just because you're not happy with that. That is something, sometimes the unintended consequences you can't see, but that one, it's pretty obvious. Pretty obvious. That if you can't, if you can't exit, nobody's going to put money in the first instance. Yeah.

Okay. So we've touched on Facebook a little bit. You know, the platform book is interesting because Facebook. is one of those platforms. And I view it as the most vulnerable of the tech giants. It doesn't have an operating system. You don't need to go to Facebook. You do need to go to Apple or Google.

If you're going to use a phone, you need to go to Microsoft. Most often, if you work in a company, Amazon, if you want stuff delivered, I mean, you could get around Amazon, but it's tough. You're definitely using websites that have AWS on the back end. Facebook you don't need to use. So what is your view on the health of Facebook as a platform and where it's going to you. Look, you know, when you read the emails, the internal Facebook emails that were revealed in those congressional hearings, as much as Facebook likes to strut around, they're

obviously scared shitless. They are, they are, those are the emails not of a master of the universe who's confident that they control everything. They are people who are, uh, deeply sensitive to their inherent vulnerabilities. Social networks, the phrase that Zuckerberg used in those emails is, you know, there's a finite number of what he called social mechanics that is different ways that human beings would interact through some different kinds of networks. And it's very difficult, you know, we chat notwithstanding, which is a kind of weird, incredible's Uber app, but it's in the Chinese context. It's not clear. It's not clear that, you know, that a Facebook could have effectively

built a something as powerful as the companies that they ended up buying rather than just ending up buying them from from within one social mechanic to build another social mechanic so um you know that said what they have done and if you look at the the building of facebook relentlessly is figuring out how to keep people engaged how to make it sticky how to make it uh it make the experience integrated into your day-to-day life in ways that you don't even realize, whether it is it's how you sign into things, it's how you contact certain people, it's how you make certain day-to-day decisions. They've done a fabulous job of that.

And if you kind of look at the product roadmap over time, they've done a fabulous job. That doesn't mean it's not incredibly vulnerable in its way. That is, you know, whether you look at TikTok or, you know, one of the, one of the fights that is being had in the litigation right now is, you know, is YouTube a social network? Because if it is, it looks like it might be bigger than, and it is clearly in some ways that it might be from a market definition. definition, that's actually quite an important question. Yeah. So look, it is, so what I would say is it is definitely vulnerable. The demographics that its core proposition has is not, putting aside Instagram, but for the core Facebook, you know, is very, does not, you know, my daughter is 17, she, I don't know,

anybody in her world beyond very narrow use cases that that is on that is on Facebook that said they've run the company smartly and well and it's and if you look at you know people always focus on the absolute R&D budgets of businesses and so you always there's so every year there's an article that says Amazon has the biggest, more R&D than anybody in the world. But if you look at R&D, the big fixed cost as a percentage of revenue, Facebook crushes all of these. So they know about their vulnerability and they are investing to keep these people there. So there's something of like a business miracle actually if you think about it because social media, social networking especially is like

the most fickle of all spaces when it comes to the people using them. There have been so many networks that have come and gone. You know, the thing about obviously the ones that we talk about, Myspace and Tumblr, but even the upstarts that had a moment, Peach, they were gone in a moment.

People got bored and they left. And Facebook just finds this way to, you know, keep reinventing itself and build new products that are sticky, whether it's, you know, copying directly, something like stories or, you know, I've personally just moved to New York from San Francisco

and I furnished the entire, apartment from Facebook Marketplace. And I'm plenty of right about this at some point. And it is amazing. I mean, it just embarrasses Craigslist how good it is because it has that integration with Facebook Messenger that you can just connect with people real quick, but you're interested in stuff. And of course, it has the machine learning algorithms working behind the scenes.

So if you start searching for stuff, it says, well, how about this? And it's very easy to find what you want. So I think that's going to be a massive, massive product for them. And by the way, just one last thing about Marketplace, it kept me on Facebook more than I'd ever been on Facebook before in years. Interesting. And I was like, I had never spent this much time, but I'm back. You know, and on the antitrust front, you know, when you read those emails, you can

interpret them, and depending which way you interpret them, it had big, big implications. for antitrust. So, I mean, when you look at them talking about, you know, they spent $20 billion on WhatsApp, which at the time had like a couple of dozen employees. I mean, it was growing very fast. And he was obviously afraid that this alternative social mechanic would become huge and they wouldn't have any way to compete with it. But it's one thing if somebody says, oh, I see an alternative social mechanic.

I'm going to buy it and kill it. that it doesn't take over. That's not what they did. They basically said, look, I'm in the social business. I can't be in that part of it. So I'm not going to be able to compete with that. I want to, but I'm really good at managing social networks. So I want to buy as many of these alternative social mechanics and then optimize them. So he bought this business for $20 billion that lost money and by the way still loses money or still I mean I forget with the latest numbers but it's basically irrelevant they don't really have a revenue model for the amount of users it has it's not a giant business that and they but they then invested billions making it a far better

product on you know the shareholders dime it still doesn't make any still doesn't have a revenue model. It's huge now. It's more robust. It's still largely, they've started to integrate a bit. It's still largely on a different tech stack, still largely a completely separate business. And honestly, ask yourself the question, you know, if it had been on its own, what, you know, the idea that they let them buy it for $20 billion. They in invest in it made it an incredible product, which it is, who is hurt by that? It's not like they, it'd be one thing if they bought it to, you know, there are companies that, uh, that are vulnerable and they think a good strategy is to do whack-a-mole, just buy a bunch of competitors or people

who they think are smarter or better than them doing exactly what they do and then fucking killing them, right? That's something antitrust authority should stop. Yeah. But here, if you look at it carefully, what he's saying, he's saying is, look, there are these alternative social mechanics. We could run, you know, I would like that to be part of our overall company. We're good at managing different social mechanics. Let's buy it and be the person who blows it out and optimizes it. It'd be one thing if you thought, if you saw anything that they did that suggested that they were making it less good. You know, sure, you would have a concern.

Now, the argument could be that, oh, there were afraid somebody, you know, if Twitter had bought them, you know, Twitter, you know, Twitter would become a much broader competitive Facebook. But the reality is, we chat, notwithstanding, that's just not how these products tend to work. people go to different things for different purposes. This is a narrative violation, Jonathan. I've got to be careful. No, I'm kidding. I'm glad that you're bringing this up. It's good to have this alternate perspective here,

and I don't think it's one that gets aired enough. Facebook does have its problems. I'm not saying it doesn't, but I've definitely kind of laughed at the idea that it's a monopoly. Let's go to one more break. You mentioned earlier that you're seeing students go to startups and not to other jobs, and that's something of concern to you.

I'm personally curious to unpack that a bit. Let's do that in our final segment here on the Big Technology Podcast. We'll be back right after this. And we're back here for one final segment on the Big Technology podcast with Jonathan Neat. He's the author of The Platform Delusion, a book that comes out next week, Tuesday, September 7th. Also, professor at Columbia Business School. He also works with Evercore and Investment Bank. Jonathan, let's go to this last point, which is where students should be going after school.

It used to be, I think, you know, from prior interviews, I've listened that you've given that a large chunk of people were going into finance. Now it seems like a majority of students or the plurality of them are going to work in tech as their first job. You used, you know, express some concern about this in the beginning of our conversation. And so let me just propose this to you. Isn't it a good thing that kids are, you know, leaving school and trying to build stuff as opposed to working in financial services? And I know it's sort of going to be sacrilege to, you know, someone who's worked in investing for a long time.

But I personally think, you know, isn't it, it's more creative. It's where the future is going to be. It's not, you know, just trying to make money off of other people's money. Why aren't we going to celebrate this type of stuff? So you will be shocked to know that I'm not interested in shilling for the financial services industry. It is true that when I went to business school in the 80s and I think through the 90s, about half of the top business school students went to banking or consulting. What those two things have in common is those are service businesses.

They're basically sales businesses. and the chances that 50% of the people who graduated from those schools should be in sales and should be in those industries was low. People did that for the same reason, frankly, that they're going to startups now, which is it's the hot, sexy thing, and they've spent their whole lives outperforming and telling everybody that they are the winners of their generation. and in that era going to Goldman Sachs from McKinsey were the things that said, I'm a winner.

And in this generation, going to, you know, being entrepreneurial and going to either starting your own company or going to an early stage company is the thing that sort of screams out, I'm a winner. But in both, what, those decisions have a couple of things in common. One is that it's not done, be it's not done often not always but there's just no way that that percentage of people either wanted to grew up wanting to be bankers or consultants uh or grew up wanting to be you know

entrepreneurs uh it's it's a social construct and making decisions based on that is is foolish so that that's just something that it has in common unfortunately one thing that they don't have in common is that at least with banking and consulting, you'll learn something. You have systematic training. You have exposure to a wide range of industries and functions. So even if you fooled yourself into thinking that you wanted to be a consulting or a banker, after two or three years when you realize that it's miserable and that you're not a salesman or a saleswoman and you want to do something else, you actually will have developed

skills that allow you to pivot, okay? However, if you go to an early stage company and you realize probably around the same time that that early stage company collapses, because by definition, most of them do, that that's really not what you want to do. The trouble is you're standing there with your pants down and know where to go because you didn't learn anything. And you realized that that's not actually what you want to do. I also think from a social point of view, that's what you were suggesting, you know, going and create this nonsense about, oh, you know, the early stage companies or the lifeblood of our economy. Well, you know, this reminds me of my work in media.

In media, everybody is a winner. If you only count the hits, every producer is a friggin' genius. And similarly, if you only count the early stage companies that grow up into become Google and you don't net out the 99% of them that close down, well, yes, it's a winner. But in terms of incremental value to society, having really smart people go to established companies and make them better and fill them with innovation and creativity, the incremental value to society of that. is better than the incremental value of just throwing them against the wall

on random startup number 6,400. Now, if you, if you, there are people who love to do it. There are people who love to do it. They should do it. Don't get me wrong. There is value for, there are real entrepreneurs out there. There are people who really, you know them, you met them. But there are also a bunch of people who you also know.

They're just faking it. And it's a mistake. Okay. I just want to bring up the counterpoint here because I feel like it should be addressed and have you respond to that. The counterpoint would be a few things. First of all, the idea that you don't learn in a startup, I think that there's a fair argument to say you learn a ton because you're crossing all these different

business functions and you're largely taking more responsibility than you would at a larger company, you're going to be in much better shape no matter what happens. That's one. And two is that like, you know, when it comes to starting a company, you can go, you know, work in a job or you can, you know, try to actually, you know, get control of the means of production yourself. I mean, it is called capitalism, not laborism. So there seems to be, you know, an argument out there. When I think I definitely, I mean, I'm biased here. I started my own company, although I did it after working in the, you know, for other people. for 10 years. Exactly. You did, which is what enabled you to do it. If you had done it like when you came out. I couldn't have done it out the gate. No. Exactly. But look, and on your first show, that's my answer to your second point. And to your first point, are there examples of people who went to startups and it happened just like you described? And they learned a lot because they were doing multidisciplinary things and what have you. And they learned a lot really quickly. sure it happens but more often what happens is there a bunch of people who don't know what the hell they're doing running around with a chicken they have no direction there's nobody there to explain how it's done it's not going to it's not going to actually get enough traction for you to actually

learn anything that is then transferable to any other context that's useful and you know you have the you know the experience of running around like a chicken without its head on doing a whole bunch of things badly without anybody without any oversight or anybody to even tell you how to do it right or how to do it better or any way to benchmark and then it's over and then you go and sell yourself based on the fact that you did that and that you're somebody who's happy to run around uselessly without learning anything right yeah I guess that happens it must happen in all jobs where it depends a lot on, you know, the project you're on, the manager you have, the company you're working for, how it's doing at the particular moment,

there are so many different variables. But has there been this myopia where people view tech as, you know, it can't miss, you know, get rich, quick type of industry where you position yourself perfectly for the future? yes and it is good to you know to pour a little bit of reality into that and again it's not just it's not just tech it's it's early stage tech so i mean going to an established tech place to to to to learn some basic things before you cast out well to learn two basic things one some basic business things and two whether you really are an entrepreneur that is whether that's what you want to do.

Yep. And then if both of those things are the case and you figure that out, then blow out of there and start something. That's great. Totally. All right. Last question for you. You come into contact with students all the time.

How are they doing? Are you optimistic about the current crop that you're teaching? And how has COVID impacted with them? Is this going to be something that sets this generation back? Or do you think they'll get over it pretty quick and be resilient? Wow. It's a good question that I don't really know the answer to because I haven't seen them back yet. We start teaching next week. I've dealt with them from afar for a year now. I would say they've handled it better than I thought. So I'll give you my answer, but it's a answer, but it's. It's more driven, honestly, by watching my 17-year-old deal with this than, because that I see up close. Yeah.

And it's been very painful. Yeah. But I think, like with all things in life, I think people who are resilient, it will make better. because it will show them certain obstacles and how to get around them and also show them certain opportunities that they wouldn't have seen before and they will get over it and they will figure out how to use it to actually make them stronger and better. But I forget what the analogy is that there's two different. different kinds of flowers and psychologists always, and you often see this in the same

family who are brought up in the same environment where one thrives and the other just completely collapses. And they call that the something and the something. There's two different kinds of flowers. Yes, exactly. Yes. But my point is, my point is that I don't think it will be a one way thing. I think some people will, will, um, will not fully recover or ever catch up. Uh, and I think it is all of our collective obligations to focus on those people, uh, and do everything we can, uh, to make sure that they come back to life as all of us come back to life. Because, you know, it's, people are built different, different ways. So I, I do think what you're going to see a bunch of incredible innovations and incredible upside opportunities that come out of this darkness

from folks in category A, but I also think there are going to be some lingering, very serious issues. And I also think there are some dangers about people taking the wrong lessons from, you know, for instance, the fact that, geez, I didn't realize you could do all of this without actually seeing another human being. So let's just everybody be virtual. I think there are many contexts in which that is the wrong answer in terms of optimizing businesses and optimizing society. So I think it'll take us a while to figure out what the right lessons are

and what the right mixes. Absolutely. Yeah, it's going to be, it'll be fascinating to see, you know, how this turns out. And I do really wonder, especially with the young people, how this impacts them, changes the way that they socialize, the way they think about business and really impacts the way they learn. And I think it's fascinating to hear and almost certainly true that it'll be great, a great outcome for some people who are, you know, pretty supposed to handle it well. And it'll probably crush others. We'll see the impacts of society for years to come. So, okay, the book is called Platform Delusion. You can pre-order it now and get it next week. The author is Jonathan, Jonathan. Thank you for joining. Thank you, Alex. And welcome to Brooklyn.

Yeah, it's good to be back in New York. I missed it. And I'm looking forward to spending the next little bit of time here. And yeah, and on we go. So thank you to Nate Gwattany for doing the editing and mixing this on a short timeline. Thank you to Red Circle for hosting. and selling the ads. We have some new advertisers this week.

We're excited about that. And thanks once again for you all for listening. There wouldn't be a show without you. And I appreciate you being here. We will see you next Wednesday with a tech insider or outside agitator. Once again, this is the Big Technology podcast. Thank you all for listening. See you next time.