Welcome back to the 5th edition of the Roundtable Weekly 👋
This week we cover:
Tiktok, Emergent Creativity, The Limits of Social Graphs, and whatever else Eugene talked about (E1) 📺
📙🎧 Four Myths of Bundling
Shishir Mehrotra (@shishirmehrotra) | 30 min
You can also listen to his episode on Invest Like the Best: Spotify or Apple Podcasts
This is one of my all-time favorites from Shishir Mehrotra, founder of Coda. He describes the transformation in his attitudes toward bundling (selling different products or services together) during his time at YouTube, and presents a compelling view of the value of bundling across industries by refuting the “four myths of bundling”:
Bundling is bad for consumers (as well as providers)
Revenue from bundles should be allocated based on underlying usage of each product/service in the bundle
Bundles will always feel like a rip-off to consumers since they represent a lack of choice
The best bundles are narrow and have very similar products so they make sense to consumers
His entire argument is packed with counter-intuitive insight, but his response to Myth 3 is my personal favorite:
In response to Myth 3 about bundles feeling like a rip-off: For a consumer to properly value a bundle, there must be a transparent (and reasonable) a-la-carte price for each product in the bundle. This is why McDonald’s value meals (a bundle with clear underlying pricing) seem obviously consumer-friendly, while traditional cable is seen as a rip-off. If the sports-obsessed cable consumer could see that ESPN would and should cost $50/month when separated from the cable bundle (an argument Mehrotra makes), their cable bill starts to look a lot more like paying for ESPN with hundreds of “free channels” vs. paying for hundreds of channels when they only want ESPN.
Mehrotra also makes a compelling argument for viewing all kinds of products as bundles of individual features or assets. I found myself thinking throughout about Amazon Prime, whose hodgepodge of shopping perks, music, TV shows, movies, books and games makes a lot more sense through Mehrotra’s lens.
—Mike
🎧 Wix: The Internet Storefront
Business Breakdowns—May 26 | 49 mins
Listen on Spotify or Apple Podcasts
Colossus’ new-ish podcast, Business Breakdowns, has been outstanding through 11 episodes thus far, and this one on Wix has been my favorite to-date. Seed-stage software investor Dave Ambrose drives, and while Ambrose is best known for an increasing number of investments in big-name creator economy startups, I found his breakdown of the way that Wix has continued to bring non-technical small & medium businesses (SMBs) online most interesting.
Conversations in tech often focus on the leading edge, with major 2000s and 2010s secular trends like cloud computing and the digitization of all businesses taken for granted. But cloud computing still makes up less than half of IT spend largely due to massive enterprises only slowly transitioning off of on-premise architecture, and there are still millions of SMBs with no or limited web presences. It may not be the sexiest space, but just as Amazon, Google and Microsoft will reinvest steady cloud migration cash flows into the more innovative parts of their businesses, Wix’s steady stream of revenue from local small businesses transitioning online is ultimately funding its efforts to also win with sophisticated developers.
—Mike
📺 Tiktok, Emergent Creativity, The Limits of Social Graphs, and whatever else Eugene talked about (E1)
Closing the Loop—May 21 | 85 min
If you don't already follow Eugene Wei (@eugenewei) and Kevin Kwok (@kevinakwok), they're two staples in the valley who happen to write some great analysis on tech companies and strategies in general. Eugene Wei has worked across a number of household names like Amazon, Hulu, Flipboard, and most recently Oculus, while Kevin used to be a VC at Greylock Ventures and is a thought leader on startup growth. They don't release content as frequently as you might wish, but when they do, they tend to be super long and in-depth, and you don't want to miss them.
Excitingly, they just started a new YouTube video series called Closing the Loop, where they'll be experimenting with the medium and chatting about the topics they’ll typically write about. In their inaugural episode, the conversation focuses primarily on social networks, covering Tiktok and why it feels more alive than other social platforms, social vs. interest graphs, and the future of social networks in general.
Below are Eugene's epic essays on TikTok from this blog Remains of the Day that are referenced in the video:
Extra: Here’s a bonus analysis from fellow Away alum, Eben Timko (@ebentimko), who writes his own newsletter Tradeoffs, on the video and more broadly the trends he’s seeing in social.
—Thomas
📙 Chris Paik’s Theories
Chris Paik (@cpaik) | 5 min
Chris Paik is a general partner at Pace Capital (previously at Thrive), where he focuses on early stage venture. Instead of writing a newsletter or blog like everyone else these days, Chris shares his thoughts in public google docs and continuously adds to them over time. This one is a list of his wide-ranging business theories, of which I pulled out a few I found interesting:
The traditional relationship between wholesalers (production risk) and retailers (inventory risk and customer acquisition) is shifting to one between dropship producers (production and inventory risk) and influencers (customer acquisition).
User behaviors tend to exist in the wild in some primitive form and at sub-scale due to friction. By removing friction and streamlining the behavior, companies can catalyze the conversion of potential energy to kinetic energy.
Every B2B company can be distilled down into a “productivity tool,” where it offers an attractive net-present value exchange of money for current or future time savings.
Extra: He has another doc on Frameworks, which you can also find in the theories doc and is a much longer read.
—Thomas
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See you next Sunday.