The Bill Simmons Podcast - Ep. 179: The Battle for Tech Supremacy With Ben Thompson

Episode Date: February 23, 2017

HBO and The Ringer's Bill Simmons is joined by Stratechery founder Ben Thompson to discuss the Apple–LeBron James comparison (6:00), Netflix's dominance (14:00), Hulu's handicap (21:00), Twitter's lack of evolution (27:00), Facebook and Google's advertising strategy (37:00), Slack's upside (43:00), and the perks of living in Taiwan (52:00). Learn more about your ad choices. Visit podcastchoices.com/adchoices

Today's episode of the Bill Simmons Podcast is brought to you by SeatGeek. That's our presenting sponsor since 1973. We have basketball and NHL in full swing, college basketball, concerts, wrestling, operas. My mom buys opera tickets. I keep telling you this. I'm not lying. She buys opera tickets. She really wanted me to mention this on the podcast.

She's convinced that I talk about my dad too much on the podcast and that she gets shortchanged. So now I have to talk about her opera habits. But yeah, SeatGeek, everything can be done on SeatGeek, on your phone, with just two taps. Everything is fully guaranteed. It is the easiest way to shop for the best tickets thanks to their revolutionary grading system that will literally steer you one way or the other with tickets. They have colors. It's so easy to understand. Try it out. Download the SeatGeek app today or go right to SeatGeek.com. We are also brought to you by the Ringer NBA show and the Ringer NFL show because I was on both of those this week. I co-hosted a Ringer NBA show with Chris Vernon on Monday.

We broke down the Boogie Cousins trade. Check that out if you missed it. And then on the Ringer NFL show, Mike Lombardi and I talked about some free agency and some trade subplots that are kind of on our radar because right now everyone is focused on basketball. So we thought, you know, there's some football stuff going on too. We put that on the Ringer NFL show. You can subscribe to both of those on iTunes, on Google Play, Stitcher,

SoundCloud, wherever you get that stuff. And we're also brought to you, obviously, by TheRinger.com. That's where you can find my column every Friday, give or take, almost all the time. Fridays, the ringer.com. Yeah, that's where I am. So one thing before we get to this podcast, we taped it last week. Um, I had some really fun podcasts lately. If you fell behind or if, uh, if you got swamped, I get it. My feelings aren't going to be hurt. But we're on a really good run right now.

And I think once football ended, I really wanted to double up my efforts to have fun conversations with all kinds of people. And this is somebody that qualifies. one of the better thinkers that I've ever read about the tech industry and just everything, tech business, where things are going, all that stuff. And I'd been dying to have him on, but he lives in Taiwan. So it was a little tough to pull off, but he was in town last week. And we just had a whole conversation about really where stuff's going and Facebook, Amazon, Snapchat, Google, all these places, how they're going to affect the next 15 years of my life. I think it's really worth listening to.

I think you'll enjoy it. And here it is. Here with Ben Thompson from Stratechery. Stratechery. Stratechery. I'm better at it. Stratechery. Stratechery. It's like the same problem I have with Croatian names,

where I don't know the itch or the ick. The name, the problem's with the name. Yeah, when you talked about how the months you spent to come up with the name The Ringer, I'm like, I probably should have done that. Stratechery. Stratechery. When did you start this site?

I started it in 2013, but it became a full-time job in 2014. So coming up on three years. Well, you became like you had no choice in the matter? No, the goal was always to be my own choice in the matter. No, the goal was always to be my own choice in the matter. I remember reading you way back when, I was at Grantland at the time, we're like, who's this guy? What's going on? Is this a fake name? Is this somebody who's living in

Silicon Valley who knows this stuff? What was the process that led to you knowing so much about this stuff when you're not in that world? Well, I've always been sort of, I was obsessed with technology from a very young age, basically like junior high on when I first found out the stuff. And I'd always been attracted to the sort of business side of things all along. But I kind of grew up, I mean, I grew up in small town Wisconsin, never, no one I knew worked in Silicon Valley or business or anything like that. So it never even really occurred to me to do it yeah and it wasn't until like well as well in my 20th i'm living in asia and my wife who i owe a ton of credit for she's like why don't you go work in technology i'm like yeah i should probably do that so i got an mba mainly because it was the

fastest fastest route to legitimacy in the u.s. job market. And from there, I went to Apple and then Microsoft. And then I started at Microsoft. But it's that 20 years of in the wilderness, just doing nothing but thinking about this stuff. And then I wrote for the college newspaper and stuff like that. So I had some sort of experience writing. But people ask me, how do you do what you do? Well, you've got to go back to junior high school and obsess over over this for a really long time and that's basically the how it happened when you started it how many times were you writing a week well i actually started it with a goal of because

right now i write four times a week and one's free and three or four pay and i always wanted the extra i always had i started with the goal of being a business and so many people like just write a ton and then they throw up a paywall. It's like, oh, sorry, now I've got to pay. And it's got this really nasty taste in people's mouth. So I always wanted it to be, if you wanted to pay, you could get more. So I actually purposely did about two times a week to start. And with the idea that eventually, if you wanted to pay, I would write for you every day.

And then when I'd have time to do it. Do you remember what you were writing that first year? Like what kind of, was it big picture stuff or was it little picture stuff? No, I've always been sort of like, so the thing I write about is like

basically the strategy and business of tech because tons of people write about products, right? There's all kinds of blogs writing about tech products. But to write about business and strategy was kind of an unfilled niche, mainly because all the people who know that stuff are either like executives at tech companies or the vcs or stuff like that

so ironically all of them subscribers to your to your thing well they're like who's this guy yeah so so i'm so i'm writing writing about this and the uh and so i was always running with that sort of big picture stuff the actually the guy i owe a ton to is Steve Ballmer, of all people. So I was at Microsoft, and I couldn't write about Microsoft because I was at Microsoft when I started. And a few months later, I quit Microsoft. And two days later after I quit, he reorganized the company, which I thought was a terrible idea. And all the reasons were dumb. So I got three great articles out of that that were pretty widely spread.

Then a few months later he he buys nokia which was a terrible deal that's the still the highest traffic day in the history of my site because i was in taiwan and it happened in european time so i was awake and knowing the u.s was so you had like the first piece so i had the first piece like the worst deal ever or something like that and was everywhere like crazy and then and then he got fired so i got another whole series what my shops do next going forward blah blah so he like carried the site for the first nine months so thanks steve i i appreciate it i would i have to say for the record i was thrown about the clippers it's like his destiny in life i think it's it's awesome i love watching the sidelines so i have no enmity with the guy

in a good way or a bad way no in a good way good way. I think it's great. I can't say it's been going great. Yeah. He did a lot for Microsoft. I think he gets a bit of a bad rap. Like a lot of Microsoft's problems were sort of, you know, were going to happen whoever was the CEO. I don't think he necessarily made it better. But he did a lot for Microsoft growing up to make Microsoft what it was. So he gets his reward.

Now he gets to be an MBA owner, which we would all love to be. So good for him so in the last so you start this four years ago and over those four years like so much shit has changed like think about it apple had the biggest lead you can have and just was on the all-time hot streak you had twitter which everybody was like oh when twitter goes public and what's it and twitter basically looks exactly the same as it did four years ago somehow yeah well it was the same as like eight years ago that's right eight years ago yeah 2008 you had a snapchat which was a baby which was interesting which was but nobody really knew where that was going and um so many days it's just so tumultuous

and it flips and it goes and it goes this way that way um why don't we start with apple um where do you see apple going these next few years they have not had a quote-unquote hit in a while and the problem for apple is that the iphone was basically the greatest product in the history of products and the reason was it was greatest or most successful i mean whatever you want to call it i give it all kinds of superlatives like it was the old model where you manufactured advice and you sold it for a profit but it was like differentiated by the future which is like software and services and the cloud and all that sort of stuff and i don't know that there will ever be a product like it again just because the world's changing right now we like rent cars like

or we get an uber or whatever we don't buy we don't buy stuff and i think that's going to be the case more and more in this to have this one device that sells like that is never going to happen again so the problem for apple is not apple per se it's the where's the market opportunity for apple in the long run beyond just kind of like bilking, you know, the iPhone and its associated stuff for, for as long as they can. I'm going the other way. I think Apple is totally fine. And I think they are judged almost like how we judge LeBron. Yeah, that's fair.

Where LeBron like just can't win. It's like, he's got to win the title and win the MVP every year. And everybody is so desperate to just be like, Oh, the next guy. Hey, it's Curry. Hey, it's the unicorns. And that's just the way it goes with some of these people. Brady had the same thing. Then Brady wins the Super Bowl.

Then it flips the other way. Oh, Brady the goat. And that's just the way it goes. With Apple, it's like they still dominate the app market. They still have a huge hold on podcasts and Apple tv and anyone who has kids probably has apple tv if they can afford it and the max the iphones they're able to release this phone that people buy even though they just bought the last one eight months ago of course yeah um ipads which i know hasn't been as maybe big as big as people thought but i read just about everything on my

ipad yeah well i know because i i get i I know because I get tons of emails from my iPad. I was just going to say, usually the emails I get, he says, sent from iPad. It's some crotchety old man complaining about something, and plus Bill Simmons. I mean, try your own conclusion. Beautiful four-paragraph emails. I can type really well on my iPad. I like the iPad. And I don't know.

I think Apple's fine. I think people keep expecting them to come up with the next unbelievable thing. And it's like, hey, how many times can you do that? Yeah. Well, I mean, you said you took the other side, but I agree. I mean, there's always been an Apple's doom narrative for as long as Apple's existed. And it's always been stupid. Well, no, it wasn't stupid back when they were doomed.

But for the last 15 years, it's always been stupid well no it wasn't stupid back when they were doomed but for the last 15 years it has it's been it's been stupid and actually you know the other i started right about apple a ton at the beginning because that was the last apple was doomed samsung was on the rise oh yeah remember that samsung had its little day in the sun there yeah well i mean that was one of my that was one of the articles that got me a lot of traction earlier was i wrote like samsung's in big trouble like they're they and that was right at the peak when they were high, and Apple's totally fine. And that's been the case, and they will continue to be fine. The iPhone's going to keep selling.

Especially the wireless charger thing. If that's real, that's a big innovation. I mean, but the other great thing about iPhones is you drop them, and they break, and they wear wear out and the batteries get old. It's so essential to your life and it's going to stay essential to your life for a very long time. They're going to stay tremendously profitable and powerful for a long

time. When I say that the market's not there, it's more like there's not going to be another iPhone. That's more the observation as opposed to they're going down the tubes like Twitter or something like that. I think they missed some opportunities. I also think it's a gigantic company that's more the, uh, the observation as opposed to their, like going down the tubes, you know, like, like, I think they missed some opportunities,

you know, but I also think it's a gigantic company that was up to a lot of different things. And sometimes you miss stuff. Like I think they could have owned podcasts two years ago. They just could have taken them off the market and just owned it and had everybody's and they chose not to. And I think it was a mistake. Yeah.

I don't, I don't know that anyone was even aware of that and i think they still have a chance just because the podcast market is like crying out for some someone that provides some sort of metrics around it you know to really enable advertising to to take root in a deeper way than it does all the afters now like you know like they're all long-term purchase or like either big purchases, like mattresses or something like that,

or stuff that you buy and you use again and again. So you get like a lot of lifetime value from it. To like the branding advertising, like, you know, that's much harder to sort of justify just because you don't know how many people are listening. Like, you know, downloads, maybe, it's always a little sketchy, like who's measuring and what,

but beyond that, you have zero visibility. Well, for the sponsors, they can tell us with the URLs and with the offer code, stuff like that. They have some somewhat of an in thing. But you're right. But that doesn't work for like Coca-Cola, right? That only works for like big purchase items. Well, the other thing is bigger companies are always four or five years behind of everything. So like in 2020, Coca-Cola's going to be like, hey, podcasts, what's going on here?

You know, we felt that I never really paid attention to this stuff that much until we launched Grantland. Because up until then, I was just writing about sports. But then Grantland, when we were working on it and trying, we knew podcasts was going to be part of it because the podcast was so essential to what I was doing. But started thinking about a podcast network and then it's they remember youtube was throwing around all that money yeah in 2000 late 2011 youtube's like hey we have 100 million dollars who wants it and we were grad grantland we were like we'd like some of that can we have and it was so complicated within espn because on youtube they run the ads at the beginning right espPN's used to controlling all

of those ads. So they're like, well, if we do that, what if we have a deal with Subway and they run an ad for Jack in the Box? And so by the time it played out, we got probably half as much money as we could have. But I was just so fascinated by the mechanics of all these different decisions that these big companies made. They just get behind something, they go. And YouTube, within a year, that was done, right? And when you're making content, you're just trying to figure out, all right, is this a short-term thing?

Should we grab it? Or is this a real initiative? And the ebbs and flows of that, watching that since 2011, it's really riveting. It's really like sports. I mean, Facebook is a big one now, right? Facebook's a big one. it's it's really like sports big one now right facebook's throwing money here and there and now they're not throwing money here and there

facebook a year ago live live we want live you want live you want in you want and now it's like now now they're not into the live as much and you know sometimes i'm sure it's trial and error but i think part of the problem with the live content is that a lot of it was just guys sitting on their couch. Like we are right now? Yeah. It's like, hey, we're live. We're live. All right, but what am I getting?

I'm not getting quality content. Facebook to me is, I just think, if you had to bet on anyone, I'd bet on Facebook and Netflix because they just have so much capital and so much money, and they're just throwing it at content. And I don't know.

It's going to be really hard to topple that. Amazon's the other one. And Amazon. Yeah, yeah. What's terrifying about Amazon. What's terrifying about Facebook is because Facebook has their audience is so overwhelming. Yeah. Like basically content producers have no choice but to do whatever Facebook wants.

So they just have like they don't even need to pay people half the time because people will just do whatever they want because they have no they have no choice but to do it yeah that's what they were offering with facebook live do facebook live well why because we'll promote it it's like okay but yeah you know but that's what they can do because they're facebook yeah the thing with amazon is what's so terrifying is because they're monetizing Prime Video with Amazon Prime, right? And they're like thinking, how much money can we make off this guy for the next 35 years, right? So their time scale is so extreme that they will spend all kinds of money to make the service more valuable. I mean, Netflix is already eating everyone's lunch because they have a longer timeframe than anyone else

because they're thinking about, this show will not just be attractive to our current customers, but will help us get new customers in three years, right? I mean, if I sign up for Netflix today, Orange is the New Black or whatever is like still compelling for me to watch. And now that the international markets,

they can reach way more people. So like, oh, we come into Hollywood, we got like a five-year, 10-year timeframe. can just outthink outbid all these guys amazon's like oh nice time frame we got a 50-year time frame like watch us watch us walk in here so i mean all the all the hollywood guys are kind of screwed right because they're they're so short term in their thinking yeah and in part because tv was a short-term medium you it's linear you only watch it you know you're all focused on that first first run and these guys are focused on like runs years down the road and it's just it's a timing mismatch it's almost impossible to sort of compete

against netflix also has the luxury of they added seven million subscribers in the last quarter right no exactly you know that's a shitload of money whereas you have vspn going the other way where they're losing subs yeah you know every quarter but um i where netflix goes with all the shit they're building like i almost feel like it doesn't have a ceiling yeah you're spending six billion dollars a year on content they're doing a thousand hours of content this year or something i was saying to somebody it's like the difference of of you know they can take like if this was football they're competing against other teams like in football you'd be like oh we have you get a first second third fourth fifth sixth seventh round pick right and netflix has

like a hundred third round picks right you talked the other day of your dream patriots trainer they go back from yeah they get the number two pick and then end up with the entire third round oh we have another third round pick and they're just throwing it at like hey jason bateman want to show them just throwing them around and they really only have to bat like two for a hundred yeah and if they have make it a murderer and they have Stranger Things, and that can carry their whole business. I mean, they've missed on so many shows and they've spent so much money. What's so cool about the shows they miss on is the shows that are hits drive new subscribers. They hear about it.

But the shows that miss, those new subscribers, like, I want to watch something. They flip on Netflix. There's something else to watch. Yes. Right? There's always stuff to watch on on netflix and yeah and the other thing that's that and when netflix figured out that then the whole on-demand thing it didn't really click for a long time but remember when netflix did that stars deal right that kind of got the streaming started so stars library was 11 000 movies right

yeah the effective library size for stars was actually only one it was whatever movie they were showing on the stars channel right the day netflix started streaming that catalog their effective catalog size was 11 000 because they could stream because you had it all in demand and it was such a mismatch and consumer like what people came to expect from tv and the way they could think about monetizing that that yeah again this is the tough thing in business when someone comes at you and their business model is just totally different than yours yeah like i mean you're you're screwed i mean it happened to microsoft google did it to them it with with when balmer was there you know it's happening here in

hollywood so remember what was the thing netflix did i'm gonna say 2008 or 2009 they spun off their service yeah the uh what was it called something flicks i can't remember like the dvd service it was a bad name i can't remember what it was and it was like a joke i mean they got annihilated for it and at that point you would have thought netflix was going to be in the toilet it's time to buy buy stock, man. It was way down. It was like, wow, these guys are just idiots. They don't know what the hell they're doing. And to me, it's like one of the most unbelievable business stories ever, where you had all these different networks who all should have been thinking, we should start our own streaming services ourselves. Instead, they just do the quick buck and they sell their libraries to Netflix.

Netflix grabs all the libraries from everybody. They use it to build this subscription business that allows them to make so much money that now they can produce content. So now they get rid of the libraries. So even if they pull it away, it doesn't matter because they have all their own stuff. So all these networks collectively,

it would almost be like if you had the 10 best NBA teams basically started a league that crushed the nba and didn't mean to you know like the g league this catering league they're doing yeah we'll fund this and and it just got out of control and now all of a sudden netflix is the biggest competitor no it you and you see this again and again though and now all the studios are stuck all the networks are stuck because netflix gives them so much money yeah they can't stop now like they're addicted they're crack addicts exactly exactly and the you yeah it's a it's one of the most classic stories of like uh you know this business term you feel all the time

like disruption or whatever but that actually is what it's like where netflix came in with a different business model serving people who weren't served by the current companies. People wanted to watch whatever they wanted at a certain time. And they come in and the companies are helpless. They're literally helpless because they cannot stop selling to Netflix. They cannot stop funding the company that is their imminent demise. I remember when I was at ESPN when we sold. We were just so delighted that 30 for 30 was profitable.

And it was this, we had created this thing that, you know, we're paying, I think it was like 500,000 per documentary. Right. So we do 30 of those cost 15 million. Yeah. Plus like you're throwing a couple extra million for the ones that went over promotion. The time on the network, maybe, maybe all in a couple extra million for the ones that went over. Promotion. The time on the network. Maybe all in, it's $25 million if you just add everything up. And then what we didn't realize at the time was that it was evergreen content for ESPN.

Exactly. That stuff's gold. Yeah. Which I wish I could say, like, I knew that. I told them. But we just didn't. We were just trying to do good documentaries. We didn't know the Fab Five would be on 240 times

and that anytime a playoff game ended early, a playoff series ended up early, they could put the Fab Five instead of game six and get a half-decent rating. It's just the evergreen content is really what's great about it. And that's why Netflix doesn't do sports, right? Because they want all evergreen content.

Right, right. about it and that's why netflix doesn't do sports right because they all they want all evergreen content right right so at some point um when netflix was starting to buy stuff i remember we sold 30 for 30 it was either netflix or hulu i think it was netflix and i can't remember what we got but it was like yeah they paid this and they have all the third and i was like that's great what a great and you don't think yeah, we're helping feed this beast. We're giving, we slaved over this series. And now Netflix just cherry picks it for this small price. And they're just cherry picking everything. Netflix was like, they had none of their own stuff.

Yep. House of Cards was the first show they actually made. Yeah. And even that, they didn't really own that many of the rights of it. Right. They only had US rights. And even some of the other stuff they're doing, they're english shows pretending it's a netflix show but it's really some show that was in england i think it's amazing i i can't believe they built a business out of what they did and meanwhile they're pumping all of it in the technology hulu also i think hulu's

really good too i mean the hulu's handicapped because they're owners and right are so worried about preserving their current businesses like hulu is i think like the the the salvation for like the networks right the hulu should be their big play against netflix but they just they they're incapable of committing to it you know what's interesting though hulu is has people think of it now as the tv place right where i watch my the tv shows i get to see s Night Live the next day, and I get to see the ABC show and all that. They actually have a ton of movies.

Netflix has scaled back on their movies. And Netflix is TV now. Yeah, Netflix is basically a lot of their own content. Hulu is the one that's investing in the movies. HBO, like if you go to HBO Now or HBO Go, their movie library is big. Starz has a big movie library. It's the on-demand culture.

When you have kids... You have small ones, right? Nine and five. The on-demand is when you have kids. It's huge. Yeah. But you think about it, the entire culture in all of Hollywood in general has shifted to prestige TV

in what is like the really dominant stuff so yes they have movies but in some respects that netflix's focus is basically on that sort of content you know in hbo is that's really their bread and butter as well is in many respects where where things are going and that lends itself to binge viewings like you know so so much it's like you just sit down and just watch you know 10 episodes at once what was that crown the netflix that the show about queen elizabeth i don't know i think it's called the crown 55 episodes and and it's like game of thrones level quality and they're just banging those out this would be you know hbo makes a couple big shows a year that they invest in whether it's game of thrones westworld or the same thing for

showtime like they have homeland and they have billions right they're making four or five bets netflix like in its spare time like oh oh and here's the crown and they're just cranking these things out i don't know where it's i don't know where it's going well i mean they're all because they're all spending against the future right so netflix takes on a lot of debt right their cash flow is way negative and so they're but but when they did that last year we're like oh we just flipped the switch and now we're in like 250 countries like that was such a power move because it's like we are creating content and now when we did the uh or not the oc um what am i thinking of was it called the oc what was the big hit last summer the 80s hit oh the strangers sorry why did i get

the oc from the oc you're mixing five shows the but that was the first one where they actually produced it from the very beginning because they've been buying shows until now. Right. But when they produce in the very beginning, they're keeping all the profits and all the rights for everything. And you're going to see them doing that more and more. It's more expensive. It's more risky. But now they're getting to the size and strength where that just means the long term payoff for them is going to be even higher than it is going forward.

The thing I was thinking about is, like, Silicon Valley, all these companies spent, like, 25 years eating each other. Yeah. And then the internet and mobile came along. And so, like, let's stop eating each other and let's, like, look at the rest of the world. And everyone's just, like, these helpless, like, little animals running around. These, like, lions and tigers that have honed, like, 25 years of evolution

just coming in and just, like, destroying everyone. I mean mean you said everyone here's like i just want to make some really good content and that was like okay you can make some good time that's nice and they're like we just devoured your entire business by the way yeah where do you see amazon fitting into this amazon is amazon's the biggest monster of them all like wow anyone so when you're in the Thompson Power Rankings, Amazon's number one. Amazon's number one. Really? Okay. And a clear lead. Clear lead? Amazon's goal is to basically take a skim off of all economic activity.

Okay. So the most obvious example is AWS. They have this monster where they have infrastructure in almost all new companies and lots of old companies. They run all their servers on Amazon's infrastructure. And they pay Amazon. Basically, they're paying Amazon a fee or a tax on everything that they do. So that's a very clear example of what they're doing. But e-commerce, Amazon started as a traditional retailer where they buy a bunch of crap and then they sell it to you, or good stuff too.

But now Amazon's shifting over time where they're just a platform. And basically what happens is third-party merchants pay Amazon to hold stuff in Amazon's warehouse. And so Amazon isn't even paying inventory costs. They're paying them for it. And then when they sell it, they pay Amazon like 15% to 20% commission.

And so Amazon's not even- They're like a loan shark. They're just a middleman. And then when they sell it, they pay Amazon like 15% to 20% commission. And so Amazon's not even – They're like a loan shark. They're just a middleman. They do all the fulfillment. They do the same logistics, right? They just announced this $1.5 billion air hub like next door to UPS. And they're buying planes. Like, oh, we're just going to help our partners, right?

They're not going to help their partners. They're going to build like baseline capacity and spikes like what the other guys take care of, which is a terrible business. And they're going to own all the logistics, and it's it's not just the business though it's that amazon itself the way it's constituted as a company and the way they they're just they're a systematic company that is systematically build systems if that makes sense like and the way that they generate these new companies is repeatable in a way that all these Silicon Valley companies are all product companies, right? They make a great product. They make the iPhone.

They make Google Search. They make Facebook. And those can be great businesses, but those aren't trillion-dollar businesses. Trillion-dollar businesses are ones where you build platforms and people just build entire companies on top of you and you just take a skim, take a skim. That's what microsoft did for a long time amazon's doing it but like 10x and twitter oh no wait twitter's not doing that at all twitter twitter is a twitter is a product company that doesn't know how to build a good product why what is yeah i mean i've heard a million theories on this why is twitter so

incompetent i think the root cause for twitter's incompetence is the unbelievable sort of managerial turmoil at the very beginning of the company they just they never recovered they never the initial idea was so good yeah and it almost like handicapped them it was so good that they never had to figure out like most companies they kind of have an idea but they have tested and they get like what's called product market fit they figure out oh this is the right product for the market and then they go and they build it right Twitter's initial version Had like almost perfect product market fit from day one

So they were free to on the side they could bicker with each other and fight about stuff and basically the product has Barely evolved in its entire life. Barely is like a compliment. Everyone's like, oh, Twitter, Twitter, Twitter. They're young. They're growing. Twitter's an 11-year-old company. Like, this is an old product. It looks effectively the same as it did in 2007.

Yeah, and they had a – like, Twitter could have been a monster. It should have been this sort of platform where all kinds of apps run across it they're like a they're basically like a protocol right and then they should they should be the ad network inside every other app they don't necessarily need to monetize also they could have monetized it i mean there's why couldn't it be the data the data is so valuable they five tweets a day and then every tweet after that you got to be a twitter premium and you got to pay 10.99 a month they won't even do that the problem is you're limiting your audience right people don't like to pay for that but they don't have to if they if they got five tweets a day if you want to do more than

that pay if you want to have more than 140 characters for a tweet it's a nickel per character like there's a million things they could have well just look at the world where tweets move markets right yeah and twitter earned barely earns anything on on their data like they just sell off like data streams like they give it to give away to google i remember i was like oh google should acquire twitter twitter did this deal with google like a year ago where they gave google all their tweets and it's like so google they google basically bought the company without having to pay a dime for it. Right. I mean, it's, yeah. Everyone sees the downsides now, but those seeds were all planted, you know, eight, nine years ago.

When your attitude is, hey, man, if it's not broke, you don't fix it. That's never worked in the history of mankind. No, it hasn't. And that's also led to a lot of- And look at Facebook, right? Facebook's like, Snapchat's coming along. We're going to take Instagram, one of our most valuable properties, and we're going to potentially fuck it up.

Oh, that's right. We're not in East Panic and Square. That's right. Yeah, it's totally square. And we're going to put stories in there. And it's a total ripoff. But you know what? Like, look at the scoreboard, right?

Yeah. I mean, at the end of the day, it matters. Like, you don't get brownie points for all these companies. Like, they get so hung up on being quote-unquote innovative. The fact of the matter is to come up with an innovative product is when the hardest that resonates is impossibly hard. Startups do it because they have no choice. It's the only way to succeed.

Once you're Facebook and you have a shit ton of money, why wouldn't you go buy people? Why wouldn't you rip off stories? You have the audience. You have the trump card. No pun intended. I Like, you have the audience. You have the trump card. No pun intended. I mean, you can do... Yeah, we need a new phrase that's better than trump card.

He's ruining everything. If it ain't broke, don't fix it has led to a lot of sports disasters. With teams and leagues and just everything, you got to keep moving. Facebook's done a pretty good job of moving. Twitter has done... I mean, there'll be books and documentaries about it at some point i mean you you know you've heard the zuckerberg quote about twitter right i don't remember twitter is like what is it twitter is

like if a clown car backed into a gold pit or something like that or a bit of gold or something like that his quote is actually much better i just totally butchered it but it's the perfect encapsulation of the company so many smart people behind the scenes of it maybe they had too many smart people that could have been part of the problem yeah look at all the people who were involved behind the scenes and it's a who's who's list of successful people and yet they couldn't figure it out i think that's part of the problem there was a lot of conflict there's also a part of the a lot of the you know they caught lightning in a bottle and was that because they were really smart or were they really fortunate and now everyone thinks they're really smart

because they got really fortunate yeah well if they get rid of the if they handle the troll problem and they figure out a couple different ways to innovate over these next year and a half they change their behavior from the last 11 years that's the thing it's the same thing like if you're talking about a terrible sports team. Well, if the Browns get a quarterback and they get the red coach, and it's like, well, they're the Browns. That's exactly it. Because it's cultural.

It goes to the very core of the company. Yeah. And it's the same thing with sports teams, right? They're just screwed up. I'm a Milwaukee Bucks fan. I know this very, very well, right? For us, the white thing on the tunnel is always a train. Right. I think that's this very, very well, right? For us, the way at the end of the tunnel is always a train. I think that's the same thing with companies, right?

It's just you are who you are, for better or worse. That's interesting. That has to be the first Milwaukee Bucks Twitter comparison. It feels apt. That's ever happened. I'm trying to think who that's more insulting to. I think it's better for the Bucks. It's probably the best thing that's happened to the Bucs

since the 2001 Eastern Conference Finals. Or 2000, what was it? So who are the refs in this scenario? 01. Have you gone on internet deep dive about that? Bucs Sixers? Oh, we were doing deep dives the day it happened. There's a long footnote in my book about it.

Yeah, I read it. About how that was, everyone always focuses on Kings Lakers because Shaq in my book about it. Yeah, I read it. About how that was, everyone always focuses on Kings-Lakers. No, that one was way worse. Buck Sixers was worse and really could be a 30 for 30. There were just utterly, utterly indefensible calls. Even the Lakers-Kings ones, there was some bad calls, but a lot of them were like- It was really confined to two games. Right, exactly.

But even some of them, they're like, you could at least concoct a story where that was the right call. There were fouls in that Buck Sixers series that were... Well, what was the free throw advantage? I think it was like 180 to 115 or something. And Philly really was an outside shooting team that just had Iverson go to the basket once in a while. Compared to their season averages for free throw attempts, it was wildly out of whack. Then Scott Williams got suspended before game seven, like an hour before. Oh, that was another one.

Yeah, it was bad. I mean, it was bad in the moment. And people were talking about it in the moment, like, this is really fucked up. What is going on here? It's that 1999 to 03 stretch in the NBA. There's a lot of chicanery. It was pre-internet. You can't do that stuff anymore on the internet.

You have to be much more... Oh's i mean it's incredible it's so like i loved it when when lebron just destroyed barkley like last week yeah because i not just because he was right but also the way barkley talks about like today's mba yeah when like from any objective measure it's it's such a vastly better product than it was particularly that different it's different but but stuff like that right you can't get like it's so much of like a cleaner league oh you know yeah that's just the quality of play but everything about it is so much better than it was and the always had super shady shit kind of going on like in the 80s and 90s right like yeah i'm not sure about that yeah i think every league did yeah i think it's a lot easier to or it's a lot more risky to do stuff now like in 2017 if you were just gonna

suspend somebody's quarterback for four games oh wait that just happened bad example um no i i do think for the most part you have to be more careful it's like facebook versus twitter like as far as like like one's like bumbling around what was he doing and the other one is just like just executing and that's another where i don't know who got insulted more there goodell or twitter i think goodell is twitter that was probably more better and more successful yeah i mean it makes 44 million a year this is the point i was making about people are thought of as being smart because they are fortunate. Right.

That's, I think, a good, apt example of that. So is Twitter salvageable? I don't think so. You don't think so? I love Twitter. I love it probably more than any product that I use. I love the iPhone. I would rather have Android and Twitter than an iPhone and not Twitter.

I feel, especially the last few few months it's gotten so toxic like it's getting toxic to the point where people if you have any degree and you weren't this you don't even look at your replies anymore right if you have any degree of visibility yeah on twitter it's it's awful it's just and i i don't know i maybe i'm it might be just that i've become more visible so i'm more aware of this and so i think the product's gotten even worse or the atmosphere has gotten even worse but it feels like it's it's kind of crossed a line in the last last few months fix some of that though i think that stuff's fixable at least some of the troll stuff i still feel like the problem is there's tons of stuff that are super obvious and they haven't done them yet.

I mean, the problem is I think they won't do them because I think there's only like... I think the actual number of real users of Twitter is much, much lower than the number that they report. Oh, and especially like the... I think I have like 5.4 million. I don't even know how many followers I have. And I guarantee I don't have whatever the number is. I bet it's half. Maybe less than half.

Not just that, but even I myself, I control like five active Twitter accounts. One for my website, one for my podcast. What does that mean? Right. They're all calling us active users. You're one person, right? Right, exactly. And then you have all the spam and stuff like that.

This spam is not hard to kill. This is a solved problem. And they don't kill it. Why? Well, active users is like the most important metric that they have kind of you'll draw your own conclusions and as long as they're they need to be bought out they have to be private whether they're bought by i don't but i don't who's going to acquire them like no one it's who wants to deal with this who wants

to have protesters because trolls and all that stuff makes it a very scary thing for somebody like Disney. Right, exactly. They're like, oh, Bob Baggar has to deal with trolls. What about Snapchat? I mean, Snapchat's like the cute, everybody thinks they're just adorable right now. Oh, those wacky Snapchat. Believe me, they're going to get starting to heat now, especially once their results are out. I like Snapchat.

I like the way they think. I'm pro Snapchat. So I am pro Snapchat because I think Evan Spiegel is a product visionary of the sort. Like we haven't seen in years. I mean, he is the best consumer guy, I think, in techs and Steve Jobs.

Like I think he's that good. The problem is that Snapchat doesn't have a good business. And well, the problem is, one, Facebook and Google are so dominant when it comes to advertising. They need to figure out how to break into that. Two, the fact that Instagram could basically rip off stories. Why did you say basically? Okay, directly.

That was a flat out jay leno ripoff but what what actually matters is that instagram has 500 million users and snapchat has 150 million 200 million whatever it is and what actually matters for social networks how many users you have and snapchat's growth slowdown has slowed down significantly and it's perfectly correlated with that happening yeah and that's that's not a good that's not a good sign and they have other stuff like they're the you're going into technical details like they're how much it costs to serve one of their users keeps going up so they have like a cost problem and basically you bet on snapchat because you believe in evan spiegel and i actually think that's a valid reason to bet on them. But it is a pure bet. Like, they look like a real company, but they're not a real company yet from a business perspective.

So I have an 11 and a half year old daughter, Snapchat Instagram user, on Instagram more. But I've been told about a year and a half from now, it'll really shit to Snapchat. Right now, she's snapchat filters and likes changing the pictures stuff like that but really loves instagram and just going through the photos and i say man it's instagram's just a good product yeah it's like here's some photos just scroll through it couldn't be easier it's you turn your brain off and you rip through them yeah and it's not going away i love the believable acquisition like one of the all-time greatest and i love the fact that twitter is still like like twitter is even in the ballgame with this anymore.

They're so petty that if you do an Instagram link on your Twitter feed, it stays the link. It doesn't translate it to the picture. It's like, come on, Twitter. So Twitter gets a lot of grief for that. But the reality is that Instagram is the one that screwed Twitter. Because Instagram got started by basically you could import your entire Twitter contacts into Instagram. You'd have an instant network. So Instagram built their network off of Twitter's back.

And by the time Twitter rose, it was going on. It was already too late. Like Instagram had already done it. I mean, the real. So Instagram's just shameless. Basically. Instagram will take your wife or husband in five seconds. They have great engineering.

They build a really nice product and combine with shamelessness. That's a powerful combination. Yeah, seriously. You have great skills in shamelessness. You can go far. Jeez. Any up and comers you see? Anyone in the conversation

that potentially three years from now? I mean, the consumer space is, it's like the sexy space. Everyone knows about these companies, but it's by far the most difficult space to compete in. I mean, and especially now, because Snapchat, all these consumer companies

monetize through advertisements, but Facebook and Google are so utterly dominant. Like in all, Facebook and Google took like more than 100% of growth in advertising last year because other people were shrinking. And it's just almost impossible to, not necessarily to get a breakthrough product, but like Snapchat showing Snapchat has a huge number of daily active users. They have the super attractive demographic.

Right. And so they have a chance. If even them with their massive audience and their great demographics, if it's still a real question, they can build a viable business going forward. Like it's it's hard to see what you know what works there in the future. I mean, what you can hope Facebook acquires you. So well, so it's 2017 now. We only have technically three more years left in this decade the 2010s and you and you think about it that way we're more than two-thirds of the way through the decade what have been the great innovations slash companies that we're going to remember when we think back to the 2010s like

if you look back at the 2000s it's like facebook twitter netflix yeah we have all the obviously you point to what is it for this decade well i think it's it is the companies like uber and airbnb and and things like that where so you'd say uber airbnb snapchat those are probably the big three from a sort of consumer perspective um premium yeah slack has slack has the potential to be in here too oh yeah slack i mean that see slack is my favorite of the last couple years yeah i'm drinking the slack kool-aid we use it at the ringer we have a hundred slack channels within our little slack what's fascinating about slack is it's kind of like a consume it's a very much a consumer product like it it feels like a consumer product and it spreads like a consumer

product with an enterprise business model where, you know, you pay per seat on a license sort of thing. Yeah. So it's very compelling. I'm pretty bullish on them as well. But what's represented by this Uber and Airbnb thing kind of goes back to my iPhone thing at the beginning where we're moving to this world where you rent stuff and everything is as a service, right? If you think about it, there's so many things we use in our life that we buy just because we don't use it very often.

But now that we have a phone with us all the time, internet connection all the time, it's so much more viable to just use stuff as you need it. I'm renting tape right now. I rented him for two hours. The app was really surprising, a little more suggestive than I thought it would be. Yeah, I agree with you on the renting thing.

We're going to reach a world where you almost don't need to own anything or have any long-lasting relationships. You could just be in your house, and you could just order VR sex and order food and Uber wherever you want. You just have no attachment. You're like Robert De Niro in Heat. You can get away from everything in your life in 30 seconds. Brave new future.

Yeah, that's where we're going uh so what do you what do you see for the future of what you're doing i mean right now the best thing is just keep keep doing what i do i make money from subscriptions and the great thing is is like i just do the same amount of work i do now but my income keeps going up because you know sending emails sending emails free yeah so it's funny because i read a lot about media as well as well as tech and i read about all the problems that this new world order has for traditional media companies like zero distribution costs like all the stuff that makes like netflix possible right yeah meanwhile all those bad things for old companies are all to my personal benefit so i'm probably not a completely biased observer about that stuff

do you when was the first time you had somebody in a real position of power reach out to you, either to sway you or scold you or both? Twitter got really mad at me a couple years ago. I wrote something pointing out an anomaly in some of their financials. They're like, that's not true. Well, six months later, they come out. That is true. Yeah, it was true. Probably the funniest one, though,

is I have a service that handles memberships. And they emailed me and said, oh, these three people, we accidentally double charged them. We already fixed it, but you might want to let them know. And one of them was the CEO of a top five company. Oh, my God.

I don't think he's gonna know but like that was probably the wrong person to screw up his payment so um that was that was pretty cool because i like i give all this advice companies and you should you know understand your customer blah blah blah but like i have actually structured it so i don't need to know who my customers are like i my price is relatively low 10 you know 10 a month and i i like it i can do whatever i want and if someone gets mad and can 10 a month and i i like it i can do whatever i want and if someone gets mad and cancels description like i i don't even notice right and so like i almost feel like the more i know who's reading it it's almost it's almost a bad thing i'd rather

just be like you know sitting in taiwan and you know being as true to what i think is possible and not worry about people think and that gets harder the bigger you get i'm sure you experienced this right when you were writing for AOL back in Boston, you can just fire off whatever you want once you're... I'd like to think I kept doing that at ESPN much to their chagrin. For better or worse, yeah. I think there was definitely at ESPN the first few years when I wrote for them, the internet was still kind of down there.

You know, I'm pointing down. Right, right. You were down in the basement. Yeah, it's just like, ah, well, he's on the internet. And then gradually that shifted. I think 04 was a big moment for my column on the website because when the Red Sox let that whole run and I was leading ESPN every day and it was like a national column that's basically, which hadn't really, that hadn't really happened before. Um, so there's these little victories

that the website had. And then at some point in the mid two thousands, all of a sudden it became like the establishment, but I don't feel like that was the case the first few years I was there. And then I started noticing like around Oh seven Oh eight, that's when coaches and GMs and commissioners and assistant commissioners and all of a sudden it was like oh shit like people everybody's reading our website yeah you know i never what you mean yeah yeah you could just kind of feel you feel very gratified that they're reading it but like oh yeah you feel the responsibility and like pressure like totally skyrockets because it's like you really can't screw it up now well and that and also i think it makes you

this is gonna sound bad but it really makes you think about what you're writing about people yeah and i realized the first especially at my old side i was just too mean but the first couple years at espn you're writing and you're thinking like well they'll never read it or that's not really they're like these people that aren't people. And then when you start crossing paths with someone, it makes you think like, oh, shit. Put some thought into this. If I'm going to really eviscerate this team and they're going to read it, I want to make sure I'm fair. And I think that's one of the reasons I like your stuff is in the wrong hands, your could be you know a real menace to that to the you could

really use some of your some of your sway that you have at this point in a really negative way and you don't you try to be fair it's still hard though because i honestly think one of the advantages of living in taiwan yeah is that you're not going to run into these people no it's true i mean san francisco is so like incestuous right you think hollywood's bad i mean like yeah well it's actually probably very similar right you go to a coffee shop talk about tech you go to a restaurant talk about tech like it's a tech tech tech tech tech and not just that but everyone switches jobs you know every two years so you the person you're thinking about criticizing you might be working with or in wanting to invest with or whatever and so not being there i think is a little liberating and but even now now that i know

more and more people like you feel it i mean there was um probably the most direct calm i've written is i wrote that uh the former ceo of twitter should be fired and like he had like he he'd reached out to me previously about something i wrote and it was very complimentary and like when i was writing that like that that note was like in the back of my head I felt bad right it's like he was so nice to me like I felt it needed to be written yeah and I stand by it I think it was correct but it's true once you start actually building any sort of connection it becomes way harder and and it kind of keeps me out of san francisco honestly yeah i had it in boston because i was always writing that doc rivers should get fired right and i was writing as a

fan and just like this guy sucks as a coach we got you rid of him i don't know the media is protecting him and i was wrong because i was overrating you know he was better than i was giving him credit for i don't think he did a good job until KG showed up, but that was the first time I really realized like I should be, I should be framing this differently. Like I'm writing this, like it's 1999 on the internet and I should, I should be a lot more fair than I'm being. And I think, you know, I, I think when people use their platforms in a, it can be dangerous. And by the way,

we've seen that at the highest level of our office right now. You could have a high platform and it could be dangerous. Yeah, absolutely. You know, you should have called your website Made in Taiwan. If you had to do it over again,

over strategery. Strategery. Well, the only problem is what if I move? You're still getting it wrong. I like the Vucevic analogy. I think that's a good one. Maybe Taiwan's a good name for a website.

Yeah, but is that... I guess it wouldn't explain what your thing is. I think it would be taken in multiple directions. I'll put it that way. Give me one thing that i'd be shocked to know about taiwan in a good way because i know nothing about taiwan i literally know nothing other than that their little league teams have been really good uh taiwan is the like 14th richest country in the world like a lot of people think about it like it's a developing country but

no it's super modern it's it's like um i the way i say about taiwan is asia is like incredible right there's all these amazing places to visit you ask me where to visit i wouldn't know where to start almost but if you're looking for a place to live it's a phenomenal place to live like people are great it's pretty english-friendly it's easy to get around you're in taipei 30 minutes from the mountains 30 minutes from the beach it's um so no i'm a big fan. I mean, the big reason I'm there, my wife from there. I met her after school. And so we're close to family. And the other great thing is because I write a daily newsletter, right?

So I work in Taiwan, and I press publish at like 6 p.m., and 70% of my readers are in the U.S. They wake up, it's in their inboxes. Oh, yeah. Time zone advantage. Yeah, it's a huge advantage actually when i i come back to the states every summer with my kids to bring them to wisconsin to my parents and it's it's hard man it's hard to be on u.s time to write for a u.s audience like that so um it's a great taiwanese food oh that's that's different than than like chinese food japanese yes taiwanese

what is it it's its own so there's a um oh so their most famous thing is like they have like these night markets and lots of like interesting concoctions and stuff but just to show chinese food like there's a rural font is a very famous one it's like this slow stewed pork that's cooked for like because it you know street food right so it's like rice no it's like rice with like pork on top and stuff like that then there's uh there fried chicken. There's all kinds of noodles and rice dishes. It's well known for the cuisine. In my life, nobody's ever said to me, hey, I found this new Taiwanese restaurant.

We got to go tonight. No. I mean, have you been to Din Tai Fung? Like the dumpling place? Okay. So that qualifies. That's Taiwanese. Yeah.

I think they need better PR. They probably do. In Asia i think taiwan's pretty well known for being a food destination like people go there it's like it's not great for like food from other other countries necessarily but taiwanese food itself oh beef noodle soup is like it's taiwan's super famous for that some incredible places um but yeah the food's a good thing if you ever come over i can this is leading to a text from joe House about the beef noodle soup. Hey, he's not going to care about anything else we talked about. Hey, so Ben talked about beef noodle soup. Where do I get that? That does sound really good. It is good.

All right. So Stratechery. Stratechery. S-T-R-A-T-E-C-H-E-R-Y. And what's your Twitter account? At Ben Thompson. Anything else we need to plug? I have podcast, Exponent, Exponent.fm. Talking about, basically talking about what I wrote about Sertakari a lot of the time. But my co-host is an Australian guy.

And we get along pretty well. So it's pretty popular as well. All right. Nice to finally meet you. Thanks for coming to the podcast. Happy to be here. All right. All right.

Thanks so much to Ben Thompson. Remember, we have one more Bill Simmons podcast coming up this week, as well as a column that I'll be writing for TheRinger.com. And don't forget to check out The Ringer NBA Show and The Ringer NFL Show. I talked to Mike Lombardi on The Ringer NFL Show and talked about the Boogie Cousins trade on The Ringer NBA Show. Oh, I forgot. On Channel 33, I went on Bachelor Party with Juliette Lipman and Mallory Rubin.

Yeah, lively. Almost a little raunchy at times. Gotta say, they bring out a little bit of a raunchy side that I usually don't unleash on the podcast. But we had a fantasy suite conversation that, you know, it wasn't quite NC-17, but I think it might have been rated R. Anyway, check that out. Check

out the old podcast that we've done the last couple weeks if you missed any. And come back soon on the Bill Simmons Podcast. Thanks to SeatGeek. Don't forget to go to SeatGeek. Download their free app. Go to SeatGeek.com. See you Friday.