Fashion/Luxury triumphs + Apple's pivot to media
AI revives liberal arts and introduces 4-day workweek?
The Agenda:
Opinion
Fashion/Luxury triumphs [Fashion/Luxury]
Apple’s pivot to media [Tech]
Do startups reach profitability when they go public? [Tech]
AI makes liberal arts relevant again? [AI]
AI gives us a four-day workweek? [AI]
More players join the AI race [AI]
How exactly can AI replace creative writing and investigative journalism? [AI]
Is hybrid work forever? [B2C]
Amazon throws more money at IP [IP]
Dungeons & Dragons was excellent [IP, Hollywood]
Saudi Arabia and Sweden: IP challenges [IP]
Harry Potter, Stranger Things, GoT return [IP]
Commissioner Gordon goes after crypto [Crypto, Hollywood]
Crypto’s energy usage [Crypto]
Latin music goes to the top [Music]
Manga
Business Samurai #77: “Floor Hustle” [Coffee Distribution Arc #29]
Monday Motivation
“If you don’t like it, change it. If you can’t change it, change your attitude.” (Maya Angelou, writer, activist)
Surprises can come from right under your nose… or between your feet.
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Opinion
Fashion/Luxury
Fashion/Luxury triumphs [Fashion/Luxury]
In my argument that AI cannot replace art, I cited the fact that, at the time of writing, the Bernard Arnault, CEO of LVMH was the world’s richest man. Now, here’s more evidence to back it up.
Arnault’s fortune went past USD 200B for the first time, and if you want to know more and also compare unimaginably wealthy humans to each other, you can watch here. Perhaps some of M. Arnault’s bump in fortune is in part due to the return of Chinese luxury spending, and also Lunar New Year spending, and spending on leather and fashion goods. I wonder, however, if luxury companies can rely on the Chinese consumer in the further future, as there may be a consolidation of power in the country.
Before moving on, just one more thing: if you think LVMH’s financial results are based on idiosyncratic consumption patterns of the Chinese consumer, the two largest segments of the firm’s FY21 revenue were China and North America, both tied at 26%.
Anyway, LVMH’s outperformance is impressive (though I wonder if there’s a negative consequence to that). NYU Stern School of Business professor Scott Galloway recently pointed out that Arnault is currently worth more than Buffett and Zuckerberg combined. Moreover, Galloway’s excellent writeup discusses how Hermès currently has a larger market cap vs. Nike, despite revenues of the latter dwarfing the former. And, IMO very importantly, Galloway discusses the importance of scarcity in a world where everything is becoming affordable and accessible to more consumers, and everyone is fighting for attention, with a lot of “content” in social media being perceived as disposable. Going forward, that luxury/premiumization is going to be more important is further bolstered by the fact that Gen Z, a generation that has grown up immersed in our brave new world of TikTok on one hand and Substack on the other, is spending on luxury items at an earlier age.
All of the above drive home my opinion that humans care deeply about human-made Art with a capital “A” and social status, which are intertwined. In that sense, they are not “rational” cost-minimizing automatons.
The discussion above pertains to the global supply of white-collar goods and services, but I perceive a similar trend in the global supply of white-collar workers, the group to which I, you, and your children belong. As AI displaces more knowledge workers (see below), it’s worth thinking about how we and our children will differentiate and premiumize ourselves in the world.
[Premiumization; artisanship at scale.]
Tech
Apple’s pivot to media [Tech]
Maybe I’m trying too hard to read the tea leaves, but hear me out. It appears to me that Apple’s pivot to media is at least partially driven by a mix of shifting consumer behavior, competitive forces, and potential regulatory action. The company is thinking ahead.
Recall that, despite cutting costs in other areas, both Apple and Amazon are increasing investment in entertainment (Man, especially Amazon. See below). One reason, as Needham senior media analyst Laura Martin pointed out, is that, in addition to hardware and services, entertainment/IP is another consumer lock-in for tech firms.
If you’re a ginormous tech firm like Apple that already as so many consumers in your hardware/services ecosystem, why invest in this additional lock-in? Three reasons, in my view:
Shifting consumer behavior - It appears that consumers are less interested in upgrading their smartphones. But Apple doesn’t seem to be pushing new phones, either. It is still releasing software upgrades for 2017 models, and it has quite the second-hand market for its iPhones. It appears to be a shift from hardware revenue to higher-margin services revenue.
Potential regulatory action - But the story doesn’t end there. One source of service revenue is the app store, which may be facing regulatory risks. Moreover, there’s always potential regulation due to e-waste, potentially forcing Apple to rely less on hardware sales.
Competitive forces - As Apple vertically integrates across the value chain from chips to entertainment, it is facing more and more competitors. And I think some of these competitors are quite savvy, moving into areas where Apple doesn’t have a dominant market position. Amazon is doubling down on TV, while auto manufacturers are getting into - wait for it - data and subscriptions, becoming very tech-like.
In light of the three above, what does Apple seem to be doing? Media. It appears the firm is getting into both ad-supported media, and entertainment subscriptions. Of course, media isn’t the cure-all for everything, but it seems that Apple thinks it’s importance, based on the firm’s spending.
[Everything is moving toward entertainment.]
Do startups reach profitability when they go public? [Tech]
Saw this Twitter thread by VC Matthew Ball. Looks difficult. Also, the (infamous?) former hedge fund manager Martin Shkreli weighs in.
AI
AI makes liberal arts relevant again? [AI]
Jeff Maggioncalda, the CEO of Coursera, was on Yahoo Finance, and I thought his views on AI, white-collar education, and white-collar jobs were fair. Highly recommend you listen to the video, but I wanted to highlight a few things discussed:
Entry level jobs involved in media functions to be automated. This jives with my own view that the benefits of AI will accrue more toward business owners.
Apprenticeships and training programs for entry-level employees. I wonder, if entry-level work can be automated, will there instead be some kind of fast-track to a management position for entry-level employees?
McKinsey report regarding valued skills in the future job market: critical thinking, teamwork, collaboration, adaptability, dealing with uncertainty, storytelling (yay!), and influencing. In other words, human skills.
…
Wait a minute.
Are you telling me..?
Are you telling me that a liberal arts education is relevant again?! Who would have thought! Are we coming full circle, after maybe some put an emphasis on learning coding over the liberal arts, if AI takes over a significant amount of coding, human skills become relevant again? Will the future goal of universities be to produce philosopher-monarchs, just like in the pre-industrial days, who excel at human skills and can be fast-tracked to managerial roles? Also, according to at least one study, it appears most people don’t like AI-generated text. Maybe they want that human touch?
AI gives us a four-day workweek? [AI]
In about ten years, according to economist Christopher Pissarides (Nobel Prize-winner, LSE).
More players join the gen AI race [AI]
Amazon here, LinkedIn there. I’m sure there’s more.
How exactly can AI replace creative writing and investigative journalism? [AI]
Last week, I experienced the rarified luxury of filing my taxes. Half-awake and fueled on coffee, my brain encountered a random thought: Is creative writing by AI actually “creative”? I sometimes see “creative writing” categorized as a job highly exposed to AI.
Let’s be philosophical for a bit. If a machine strings words together based on patterns found in data of pre-existing writing, is that actually “creative”? Anyway, storytelling is supposed to be a “human skill” in the future (see writeup above on AI and the liberal arts).
For that matter, how can investigative journalism be replaced by AI? I can see a journalist using gen AI to autocomplete its articles, but what about the “investigative” part of investigative journalism? How is an AI machine going to sneak around and use its wits to deploy underhanded tactics and sleight of hand to elicit confounding information from humans? Unless the AI is implanted into a robot body, and we dress the robot up in a fedora and trench coat like Inspector Gadget, but we are so far from that in the field of robotics.
B2C
Is hybrid work forever? [B2C]
Watch video here. I wonder if the future for us white-collar elites is to be liberal arts grads with an understanding of programming and data science, working four-hour weeks - sometimes in co-working spaces located in entertainment centers that used to be malls - spending money on luxury, art, and experiences, all the while avoiding people who look like Inspector Gadget (read above to understand what I’m talking about - I used the gen AI in my brain to string together the previous text to create this output. But it’s creative because it’s context-dependent!).
IP
Amazon throws more money at IP [IP]
Per Deadline, Amazon is mining the IP of MGM, which it acquired for USD 8.5B. More Legally Blonde, Stargate,… Robocop? Execution is key.
[No one has a monopoly on good art.]
Dungeons & Dragons was excellent [IP, Hollywood]
It was fantastic! Everything I wanted in a popcorn movie - great action, great characters, great (funny) script, great pacing. It even subverted tropes, with the main character (played by Chris Pine) not being an action hero but instead… a bard. And a fantasy heist movie? Interesting take.
But I think the distribution strategy kneecapped the film’s financial performance. I will talk about D&D more once I’ve watched Super Mario, to compare and contrast. I really have a lot to say.
[No one has a monopoly on good art.]
Saudi Arabia and Sweden: IP challenges [IP]
Saudi Arabia, via its sovereign wealth fund, and a Swedish company, Embracer, have made quite a number of IP acquisitions, which I’ve talked about previously. There are challenges to these models, as detailed in the Superjoost newsletter. Interesting that Saudi Arabia has an effective stake in Embracer as well.
Harry Potter, Stranger Things, GoT return [IP]
The IP wars seem to be far from over. HBO Max, which has rebranded to Max, will be doing a new Harry Potter TV series and a Game of Thrones prequel. Also Netflix is doing an animated Stranger Things show.
Crypto
Commissioner Gordon goes after crypto [Crypto, Hollywood]
Actor, activist and writer Ben McKenzie, who played Commissioner Gordon in Gotham and was also in The OC, has launched a book called Easy Money, which is critical of the crypto industry. Watch his interview on Real Time with Bill Maher to learn more.
Crypto’s energy usage [Crypto]
It’s a lot, and it goes deeper than that, per NYT Deputy Investigations Editor Gabriel Dance.
Music
Latin music goes to the top [Music]
USD 1.1B in US revenues, up 24% YOY. Also looks like the fanbase is diversifying: “With such striking stats, it’s clear major labels and Latin artists have begun to engage with fans — despite language barriers — across markets to make the music more easily accessible.”
[Cultural globalization.]
Manga
Business Samurai: Business Strategy Manga
Latest episode of webcomic about businesses selling to consumers. Cross Platform’s own IP and multimedia franchise. You can read the complete story so far here.
The plot: The MASTER (マスター) corporation has hired a team of young and talented businesspeople from diverse backgrounds to guide its business strategy as it enters new industries. But is everything is as it seems? Hijinks and drama ensue as team CLARITY (明快さ) launches new businesses, while each member tries to make her and his way in the world!
The current story arc: Claurette, Lixue, Jiae, and Ryota are working to distribute Cafe Honesty's cold brew based on coffee beans... digested by a house cat. But now they've bumped up against competition with the Toriyaki company!
Episode #77: “Floor Hustle” [Coffee Distribution Arc #29]
Monday Motivation
“If you don’t like it, change it. If you can’t change it, change your attitude.” (Maya Angelou, writer, activist)
Some things you have control over, so you if you want to change something and have the ability do so, do it. Some things you don’t have control over, in which case the only thing you can control is your attitude, which in turn informs your actions. Work through the rough patches as best you can. People are rooting for you!
GO FOR IT! REACH YOUR GOAL!