System players

This week, I have some thoughts on building systems, as well as why The Washington Post should embrace its local, BuzzFeed’s narrowed options, Web3’s pit of despair, the perils of rollups in a post-ZIRP era and Silicon Valley’s dog-eared playbook of asking for permission after the fact. First, a message from The Rebooting supporter Omeda.

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System players

Watching James Harden play basketball has long been a frustrating experience, even more so at the tail end to his career. When James was mercifully traded to the Clippers, his introductory press conference featured a classic line: “I’m not a system player. I am the system.”

James isn’t wrong if he changed the tense. He was a system, a unique talent whose game transcended being pigeonholed into a coach’s schemes. He’s not that player anymore – he needs to be a system player at this point, which is why the end of his career will be a series of brief stints – but they exist in sports, music, fashion and other creative industries. It’s not like Pharrell joined Louis Vuitton to slot into a system. He’s a system.

I spend a lot of time talking to people taking an independent path. Most of these people recognize the opportunities that exist today to dispense with being system players and embrace James’s approach, hopefully with better results than dribbling out the shot clock before a step-back jumper with less left and separation than he could muster in his prime days. But I find a common thread in struggling to put in place a system because otherwise you end up trying to do everything yourself and end up doing a mediocre job by spreading yourself too thin, an individual version of the Peanut Butter Manifesto.

That means covering up for weaknesses – nobody’s good at everything – and finding ways to compete with far larger, more resourced organizations that have ingrained systems for production, distribution and monetization. People often fall back to the cliche of “scaling yourself.”

I wrote last week about sales from my experience over the last three years. Part of building a system is understanding what you’ll do yourself and what you’ll outsource. Every company I’ve been part of struggles with understanding what is core to what they do and what can better be done by others. This becomes acute when on at nano–publishing scale. Functions where the individual can’t add much VORP get outsourced or even ignored. As Troy writes, better to sit at the intersection of product and revenue.

For instance, I stayed on Substack for the simple reason that I couldn’t track it hurting the ability to make money and worked enough that the time to replatform would better be spent on the core areas, content and sales. Same goes for the growth hacks many newsletter “operators” spend an inordinate amount of time and energy on. I understand the approach, only I don’t have much expertise in getting a low enough CAC on subscribers and crunching the payback period.

My biggest expenditures as a business is in client service and account management. The thinking there is that the wrinkle of the more-with-less era is you’ll always be competing with people with more resources. And your clients will expect the same level of service and professionalism – there’s a grace period here, thankfully, but it doesn’t last forever – no matter the size of the company. If they’re paying money, they expect the same level of service. As someone who preferred working in the hot kitchen to the air-conditioned front of the house, that’s an obvious area to invest in.

In any of my conversations with individuals figuring out the independent path, I advise them to build a system around yourself because, unlike James, you are a system. That means having self-awareness around where you create value and where you create none or even negative value.

Recommendations

New Washington Post CEO Will Lewis is he’s entering a turnaround situation, with the Post on track to lose a staggering $100 million this year. He’d be wise to put to bed the “democracy dies in darkness” hubris of the Trump sugar high. The Post has long been a strange creature, a local newspaper in a company town whose business just happens to be sprawling federal government. The pretensions of challenging the New York Times as a premier national, even international, news brand were an anomaly. The Post’s influence has sprung from its location. Ben Smith has it right when he says that the obvious approach is to look around and see that the most vibrant part of digital publishing is located all around the Post in the narrow niche players  – Politico, Axios, Punchbowl, et al - that have emerged with solid business models built around the gusher of money that goes into influencing national policy. There’s no reason the PostThat will inevitably mean pulling back from some non-core areas. Despite the gnashing of teeth, there was no reason for the Post to be so into eSports. “While “Ag Insights Daily” doesn’t have the same ring as “Democracy Dies in Darkness,” that’s where the money is.” (Semafor)

The picture isn’t much better at BuzzFeed, which is in danger of entering a doom loop, as its engagement and ad revenue keep dropping. Its latest pivots – long-form video, creators, AI of course – might be the right lanes, but are likely to take too long to get going. BuzzFeed’s unloading Complex – I don’t see how it will fetch $140 million for Complex when the entire company, with Complex, is currently valued at $47.5 million – will only buy so much time. Betting on homepage traffic to HuffPost is… not inspiring. What’s more, areas that were perky are fizzling. Commerce only grew 3% in the third quarter, which isn’t going to make up for 35% declines in ad revenue and 32% in content studio revenue. Content-desperate streamers have made a U-turn on their ZIRP-era spending spree to embrace austerity. (AdExchanger)

The good news is BuzzFeed isn’t banking on Web3. The price of Bitcoin has more than doubled this year so far, and the crypto crowd is popping back up, hopefully not without the “gm,” '“iykyk” and “wagmi” stuff this time around. Web3 continues to be a disappointment. I only half-joked with Blockworks CEO Jason Yanowitz that the term NFT simply needs to be discarded and never heard from again. There’s too much baggage from the monkey pictures. The Bored Apes people are apparently still believers. (Sunk costs suck.) Even Elon Musk is mocking the entire enterprise, pointing out the photos aren’t actually even on the blockchain. A recent Bored Apes gathering in Hong Kong temporarily blinded some attendees. A metaphor. No wonder OpenSea is cutting another 50% of its staff. That $13.3 billion valuation in early 2022 will go into the ZIRP time capsule. (The Information)

The PE rollup model is harder post-ZIRP. Blackstone-backed Recurrent is onto its third CEO in three years, with two in the past year alone. Getting very different pieces to work together is hard in the best of times — synergies are better on paper — but harder in tough ad climate and structural challenges like the erosion of search and social traffic. (Adweek)

The Silicon Valley playbook is to ask for permission after the fact. Time and again, “disruption” has come by ignoring regulations and laws in the name of innovation (and coincidentally massive amounts of wealth). That will be tested with the new computing paradigm of artificial intelligence intelligence, as genAI runs ramshod over copyright. Forget about fooling me once or twice, this is about the 15,000th time. Not all that funding is going to compute; lots of it will make its way to AI-fluent lawyers. (The Verge)

Something interesting: Romance novel covers have completely changed. “Bodice ripping” didn’t age well. (The Pudding)

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