Check your Pulse # 54

the business of understanding people

Hi, I’m Sari Azout and this is the the 54th edition of Check your Pulse, a tech and startups newsletter designed to make you feel human. I try to make this one of the best emails you get every two weeks(ish). 

Hello, friends.

I’ve been off here making stuff. I’m excited to drop some updates soon.

I spent a good chunk of yesterday going through dozens of decks. Across all of these, what stood out was the focus on technology as the disruptor — robotics is disrupting agriculture, AI will disrupt the legal field, AR will disrupt commerce.

But something I’ve been realizing for almost my entire career is becoming clearer now. Technology doesn’t disrupt industries. Unhappy customers do.

The best companies don’t have access to better technology. They have a better ability to understand people. 

In Alchemy, Rory Sutherland argues that the biggest progress in the next 50 years may come not from improvements in technology but in psychology and design thinking. 

The principles in his book are worth revisiting:  

The opposite of a good idea can be a good idea. 

For example, there are two great ways of welcoming people to a hotel. One of them is highly automated and impersonal, the other is highly elaborate and involves large degrees of obsequiousness. 

There are two ways to win in e-commerce. You can give people infinite choice (Amazon) or you can reduce the burden of choice. Bscly is a life essentials company that recently launched a label with just three unisex garments — a uniform, basically. 

We live in the age of extremes. People will pay for livestreamed virtual concerts. But a new startup is ditching video livestreaming and betting on a different experience. Oda is a set of wooden speakers designed to feel like performances are happening in your home. There is no video and no archive. The speaker is in your home, not on a phone or in a browser.

Paying to go to school, to then get a job makes sense. In her recent notes, Nadia Eghbal wonders if the opposite can work too: Going to school, but instead of paying tuition to someone to teach you, getting paid by your audience to learn in public and document your learnings. 

Logic requires that people find universal laws, but outside of scientific fields, it is perfectly possible for behavior to become contradictory. 

In his book, Rory cites the following examples:

  • A tax increase can cause you to work less because the returns of your labor are lower, or work harder to maintain your present level of wealth.

  • There are two ways to sell a product: “not many people own one of these, so it must be good”, and “lots of people already own one of these, so it must be good”.

A more recent example is David Dobrik’s new app, Dispo. Kodak went out of business with the rise of the iPhone camera —people wanted instant gratification. But Dispo is an app where people wait until the next morning for their photos to develop, digitally re-creating the same nostalgia of the past. The joke’s on us. 

Advertising adds value to a product by changing our perception of it.

For years, few people bought “death insurance.” Then some genius changed the name to life insurance and grew the industry by many billions of dollars.

Meditation went from a strange hippie practice to trendy to normal in a matter of years. The shift in perception — from something religious, eastern, and mythic, to a stylish practice rooted in hard western science — was a necessary condition for its mass adoption.

Marketing changes how we are perceived by others when we use a product. 

From Rory’s book is: “If you stand and stare out of the window on your own, you're an antisocial, friendless idiot. If you stand and stare out of the window on your own with a cigarette, you're a fucking philosopher.”

If you are at a bar drinking water you are a loser. But if you’re drinking Liquid Death — canned water branded as a heavy metal act — you’re cool. 

Again, the joke’s on us.

Making a train journey 20% faster might cost hundreds of millions, but making it 20% more enjoyable may cost almost nothing. 

Uber made it feel 25x better to order a taxi, but they didn't need to build a rocket taxi. What they understood was a human insight — people are much more bothered by the uncertainty of waiting than by the duration of a wait.

An estimated 50 billion garments go straight to a landfill every year. We can find a way to recycle them (a logistical nightmare), or we can recognize that the boundaries between the real world and the digital world are blurring, and transfer that value to the digital realm. Tribute is a digital fashion company where garments are photo-fitted to order and digitally delivered to the customer. It seems outlandish, but people are already paying up to $699 for clothes that only exist online.

What I’m coming around to is this:

These “psychological moonshots” as Rory calls them, don’t happen when you build what’s technically possible. They happen when you understand culture and see products not just as objects, but as symbols that communicate values, identities, and aspirations. They happen when we accept that the “quest for cool” shapes our world, and is a legitimate element of being human.

Sari

If you run an e-comm shop, this is a really good database of sustainable suppliers - packaging, tape, returns, the whole shebang. ♻️

A long, dense, but very thought provoking read on how online life breaks the old order. When facts are few, persuading the ignorant is relatively easy. But information abundance, already characteristic of early modern societies, engenders a degree of skepticism: The more there is to know, the more likely we feel that truth is elusive. Information super-abundance encourages the view that truth isn’t real: Whatever view you want to validate, you’ll find facts to support it. 🔮

A somewhat related read: Danny Meyer on the irrelevancy of being right. Being right can be used as the most dangerous shield in the world of hospitality — and in life. Think about life in general. Think about religion. How many wars have been fought in the name of religion? Name one religion that doesn’t think that its way is the right way. If that religion is the right way, someone’s wrong. 💭

A slide deck on the great business that is the NY Times. Plus a related read from Antonio-Garcia Martinez that argues the Times will triumph financially but fail as an intellectual institution. The customer always gets what they want: In the case of an ads-driven business model where the advertiser is the true customer, that’s balanced political news alongside frivolous lifestyle stories as a canvas for ads. In the case of subscribers, it’s being flattered by having their own worldviews echoed back themselves in more articulate form… 📰

Loved Oliver Burkeman's final Guardian column: the eight secrets to a (fairly) fulfilled life. There will always be too much to do – and this realization is liberating… The only viable solution is to make a shift: from a life spent trying not to neglect anything, to one spent proactively and consciously choosing what to neglect, in favor of what matters most.

This 💯👇🏽

So good👇🏽

I enjoyed Modest Proposal’s podcast interview on Invest Like the Best. An idea that stuck: The classic stereotype of the value investor is quantitatively focused on the past. This approach worked for a very long time, but not so much in recent times. Today, underwriting the future has shown to be more successful and it’s a skill that any investor should have. 🎙️

CYP friends Li Jin and David Sherry share their community software wishlist 👀

Great read on how the business of fame has evolved. A recurring theme as technology has changed celebrity is that content output goes up and production value goes down. The production value of a Kardashian social media post is orders of magnitude lower than the production value of an episode of The Oprah Winfrey Show… the Kardashians still needed a TV show to jumpstart their fame. Charli D’Amelio only needed a smartphone and the TikTok app. 🤳🏾

If you’re wondering who’s behind this newsletter:

My name is Sari Azout. I am a design-thinker, strategist, and early stage startup investor at Level Ventures. My mission is to bring more humanity and creativity to technology and business.

Want more?

Follow me on TwitterMedium, and Instagram.

Know a founder i should meet?

Drop me a note at sari@level.vc

If you're enjoying this newsletter, I'd love it if you shared it with a friend. You can send them here to sign up.

Thanks for being here!

Check your Pulse #53

the tools we shape and the tools that shape us

Hi, I’m Sari Azout and you’ve signed up for Check your Pulse, a tech and startups newsletter designed to make you feel human. I try to make this one of the best emails you get every two weeks(ish). If you’ve been sent this email and you’re not a subscriber, you can subscribe by clicking this big red button:

Happy Tuesday, friends.

When you start anything from scratch, you begin in a world of infinite possibilities. But most people don’t start from scratch, they begin with tools. Tools that make things easy — but only in a certain way. Tools that have a simple appearance, but can make us blind to the incentive structures and value systems they are built on.

If you want to start an online store, you go to Shopify. Not because there aren’t more imaginative ways to sell things online (there are), but because anyone with an internet connection and a bank account can set up an online store in minutes. 

If you are prototyping an app, you start with tools like Invision, which make it really easy to quickly illustrate an idea but also constrains what can be achieved — if there is no carousel widget then that interaction is obliviated.

In Issue #51, we addressed the trust shift away from institutions and towards individuals. The reasons for this are varied — but tools have a lot to do with it. We didn’t have easy to use tools to make an independent career possible before, we do now.

This same line of thinking applies to venture capital. It’s not that all startups should raise venture funding. In fact, most shouldn’t. But the dearth of alternatives have made even the most unsuitable companies cave in.

Because here’s the thing: when something is easy, people will do more of it. 

Which begs the question: How many things have not been put together into a UX that can generate the kinds of outcomes we want?

Imagine the following:

What if the LMS systems schools use embedded student-centered learning into the system’s logic, instead of the teacher-centric learning we’ve grown accustomed to?

What if word of mouth marketing could be programmed as easily and ubiquitously as Instagram ads? (Swaypay is an early stage startup working on this — a great memo on them here. By rerouting advertisement dollars retailers spend back into shoppers' pockets, they are converting social influence into a globally accepted currency, and unlocking a new distribution channel for brands.)

Imagine how your life and career choices would change if there was an easy way to pool 1% of your future income with your ten smartest friends?

What if every teacher was able to take a tiny percentage of their students' future earnings?

We have hundreds of tools for planning trips and sticking to a budget. What if we had better tools to help us answer life’s most important questions like: how can we raise better children?

Roam, the note-taking tool that recently announced a $10m Series A is allocating 10% of their equity raise to their biggest fans and building out a Reg-D crowdfunding portal to achieve this. What if this was accessible to every company, without hefty legal fees and complicated paperwork? Carta simplified equity and stock options, but no one has done the same for distributed ownership infrastructure.

In the U.S. we purchase books just like we purchase any other good. In China, readers can access up to ⅔ of a book for free and only pay to unlock the ending. Imagine how many more books we’d read in the U.S. if that were the case.

Bottom line is this: the tools we use constrain and expand our thinking, and consequently shape outcomes. 

Another way to foreground this relationship between tools and outcomes is to point out how the possibilities available to us determine the boundaries of what we do and who we become.

My son’s closet is full of organic, linen-y, ochre colored clothes and minimalist sweatshirts that say things like “Good Human”.  If he was aware of the possibilities, he’d be wearing loud, rainbow-colored everything with superheroes plastered all over. But he can only pick from options that exist.

He doesn’t see — let alone understand — that behind the scenes is a mom clinging to a wholly unrealistic aesthetic.

Patrick Collison said:End-user computing is becoming less a bicycle and more a monorail for the mind.”

What he meant is that end-user software increasingly operates behind bulletproof glass and it is getting harder for people to manipulate the application’s logic.

Does this mean we should build fully programmable applications? I don’t think so.  

I am a happy customer of Hey, the very opinionated email client. You can get most of the benefits of Hey using advanced features in Gmail. But I pay for Hey because it’s easy, I’m lazy, and I’ve bought into their point of view.

People that suggest Twitter and Facebook should be fully programmable for the end user underestimate that the vast majority of people want something ready for them.

We went from simple technology with complicated UX to complicated technology with simple UX.

The solution isn’t going back to complicated UX.

Personally, I’m more excited to see domain-specific, opinionated software products that stand for something, are non-neutral, proudly espouse their values and champion transparency. Transparency would imply doing things like disclosing in plain English how algorithms work, how they’re used, and giving their customers a voice in how the product works.

Sixteen years since the launch of Facebook, we can better understand the far-reaching impact of small design choices. We can also internalize the aphorism — We shape our tools and afterwards our tools shape us.”

So many of the tools we use today were a result of random historical accidents or the personal agenda of a select few.

If you’re still with me, the silver lining in all of this is that if we believe the tools we shape shape us, it follows that a different toolkit can alter the incentive landscape and ultimately shape culture.

Sari

If you missed it, I shared lessons learned writing this newsletter in this fun little tap essay. Wonderful readers like Josh Spector (who writes the most actionable newsletter I’m subscribed to) and Tom Critchlow (an indie consultant creating a very Internet-y career) commented. 📩

If you invested $100 in Apples IPO, that investment would be worth $100,000 today. You will have also endured 23 declines of 20% or more. 📈

Otis (the fractional art investing app) partnered with MSCHF (the hard to describe Internet culture brand) to drop Medical Bill, paintings of real medical bills that are sold to erase medical debt. What a commentary on the U.S. healthcare system! 🏥🖼️

I Know a Spot, a newsletter about architecturally interesting homes for sale, is fulfilling all of my escapist fantasies. 🏠

Love this advice via Lisa Feldman Barrett: Want to help someone when they’re anxious? Ask them if they want empathy or they want a solution.

We are living in two economies: Americans saved a stunning $3.2 trillion in July, the same month that more than 1 in 7 households with children told the U.S. Census Bureau they sometimes or often didn’t have enough food. More than a quarter of adults surveyed have reported paying down debt faster than usual, while the same proportion said they have been unable to make rent or mortgage payments or pay a bill. 💔

Sophia Amoruso (founder of Nastygal and Girlboss) launched Business Class and I’m feeling the vibe. 🔥

Marriott and other hotel chains are seeing much lower spending than at this time last year, while at Airbnb, spending is hitting all-time highs. 😮

A great report on what a post social-media era looks like by CYP reader Severin Matusek TL;DR: 👇🏽

A solid guide to building a membership business. Journalism is facing both a trust crisis and a sustainability crisis. Membership answers to both. 💯

Mario Gabriele predicts a forthcoming wave of embedded finance in Disappearing Banks. "Banking is necessary," Bill Gates once said, "banks are not." Embedded finance frees the former from the latter. Perhaps we will swipe the Joe Rogan card to receive cashback on podcast hosting, collect an Addison Rae loan to finance film school, cover our psychiatric appointment with a Goop mental health insurance policy, or store our savings in a Jon Favreau/PSA account. 🏦

Startups on my radar 🚀:

  • Collab.Land: A pre-launch community management system that helps you add an incentive layer to your chat groups. Sounds like Slack for the Participatory Economy and I’m intrigued.

  • Outfit: DIY renovations in a box — materials, tool rentals, and instructions delivered to your door.

  • Otherside: Generate full-length emails by simply typing the key points you want to get across.

  • With: A unique business model that helps small businesses become property owners.


If you’re wondering who’s behind this newsletter:

My name is Sari Azout. I am a design-thinker, strategist, and early stage startup investor at Level Ventures and Rokk3r. My mission is to bring more humanity and creativity to technology and business.

Want more?

Follow me on TwitterMedium, and Instagram.

Know a founder i should meet?

Drop me a note at sari@level.vc

If you're enjoying this newsletter, I'd love it if you shared it with a friend. You can send them here to sign up.

And if you come across anything interesting this week, send it my way! I love finding new things to read through members of this newsletter.

Thanks for being here!

Check your Pulse #52

on newsletters and why I won't go paid

Hi, I’m Sari Azout and you’ve signed up for Check your Pulse, a tech and startups newsletter designed to make you feel human. I try to make this one of the best emails you get every two weeks(ish). If you’ve been sent this email and you’re not a subscriber, you can join by clicking this big red button:

Happy Wednesday from Colorado, where I’ll be hiding out through the end of the year.

A little over a year ago, I decided to start this newsletter. I had few expectations, and my motivations were simple —I had a nagging feeling I was really good at my job, but when you’re consulting, your ideas are constrained to the people in the room. Writing can reach anyone.

I wasn’t sure what this newsletter would be, but I craved a place that made me feel alive, excited, human. A place that acknowledges the world is messy and complicated but also embodies an ethos of: “we don’t have a problem, we have a solution we’re not happy with”.

For the past six months, I’ve dragged myself through the shit show that is pandemic-parenting to bring this newsletter to your inbox. 

Now, 52 issues and 6,578 subscribers later, I’m so glad I made that decision. 

Interesting things happen when you do interesting things, like Alison Roman sharing my newsletter (in her newsletter) last week! If you’re reading this Alison, thank you. (You should know #thestew is on my permanent rotation, though I still have to Google how to hard boil an egg).

I had a hard time getting myself to do the usual writing this week, but I did experiment with something new. Click to see what I’ve learned writing this newsletter, why I won’t go paid, and why I think consistency is overrated.

Stay real ✨

Sari

The first digital ad was displayed in 1994 on hotwired.com — the ad had a click-through rate of 44%, compared to an average of 0.46% for online display ads last year. 💻

I went down a SlateStarCodex rabbit hole last week and found this incredible graduation speech. I understand this is complicated and unsatisfying. Welcome to the real world. 🎓

This song has been soothing me while I write this issue. And while we’re talking music, the Poolside.fm iOS app is my definition of vibe/market fit. 🎶

Warren Buffet’s net worth is $84.5 billion, of which $81.5 billion came after he qualified for Social Security, in his mid 60s. His skill is investing, but his secret is time.

Marketing is about making soulful bets. If you’re not purchasing cosmic lottery tickets somewhere you’ll never rise above the noise. 🌙

My friend Rachel runs a startup law firm I highly recommend and also recently launched Ahmi, which makes it easy for busy people to stay healthy. They have a two week Fall Refresh and she sponsored my newsletter this week so go check it out 🍂.

An old poster from the New American movement 👇🏽

A fantastic piece on the right psychology founders should have during fundraising meetings, along with great Qs founders should ask VCs. My favorites: 💬

  • What is the one thing you think I’m underestimating or being naive about?

  • What are the main barriers you see to our success? What are the main concerns you have that could cause you not to invest?

  • After what I’ve described, are there patterns you’ve seen in the past (positive or negative) that would apply to this business? E.g. ad tech is dead, hospitals are a horrible customer, sales teams are great customers, etc.

Note-taking apps are having a moment + I love the concept behind a Meta-Layer for Notes. In a perfect world, your notes should live within your existing workflows and work across all your apps at the OS-level. 📝

Cool startups on my radar 🚀

  • Base: Affordable, at-home lab testing

  • Dorian: Interactive storytelling platform for writers to turn their stories into a game without code.

  • Here: Another take on video chats that feels more expressive and fun.

  • OK Play: A children’s play app designed to spark connection between parents and their kids.

  • Lucy, nicotine chewing gum started by the founder of Soylent.

A request for startup I can get behind: Tech-enabled lending platform against creator subscription income. Financing could help creators fund the time required to build a subscription base large enough to replace their income. 💰

A thought provoking piece on how we can apply lessons of old cooperatively owned companies to the online economy. For now, it reads more like a thought experiment than a practical plan, but I keep watching this space. 👀


If you’re wondering who’s behind this newsletter:

My name is Sari Azout. I am a design-thinker, strategist, and early stage startup investor at Level Ventures and Rokk3r. My mission is to bring more humanity and creativity to technology and business.

Want more?

Follow me on TwitterMedium, and Instagram.

Know a founder i should meet?

Drop me a note at sari@level.vc

If you're enjoying this newsletter, I'd love it if you shared it with a friend. You can send them here to sign up.

And if you come across anything interesting this week, send it my way! I love finding new things to read through members of this newsletter.

Thanks for being here!

Check your Pulse #51

thoughts on trust, presubscribe, why curators are the new creators

Welcome to the 256 subscribers since the last issue. I’m Sari Azout and this is the the 51st edition of Check your Pulse, a tech and startups newsletter designed to make you feel human. I try to make this one of the best emails you get each week. If you’ve been sent this email and you’re not a subscriber, you can join here.

Happy Sunday friends,

I’ve been trying to reconcile this idea that we’re losing trust in our institutions with the notion that we seem to be trusting people more than ever.

The loss of institutional trust is something I arrive at from surveying my own experience (I’d hire a freelancer over an agency any day, I much prefer to read a newsletter from a writer I love than rummage through pages of The Economist), but the data suggests I’m right

There’s a lot at play here, but I suppose many of us feel that old guard leaders are saddled by outdated value propositions and infrastructure, fighting complexity convection, all as consumers have evolved and set a new bar for trust, service, and access. 

The combination of declining trust in established actors and a redefinition of how people gain status is driving momentum toward a new world order.

In short, we are moving away from a top-down relationship with established institutions and toward a new, trust-based relationship with people.

Earlier this week, I posed this question on Twitter and Instagram. I realize there’s a lot of nuance that I’m omitting, but the combined 500 responses paint a picture for how LinkedIn is no longer serving the way we live, work, and think today:

In the Industrial Age, our brand, as economic actors at least, was derived from where we studied and the institutions we spent time in. “She went to Harvard.” “He worked directly under John Rockefeller.” LinkedIn ushered in an era of traditional employment, where today, for a growing segment of knowledge workers, creative expression and online influence are your defacto CV. Already, companies like Tesla, Google, and Netflix have announced you don’t need a BA to apply for a job.

What seems to unite the strands of discourse here is a feeling that the boundaries we used to define people are not reflective of the quality of their ideas, their ability to build an audience, and other signals that matter in conditions of trust scarcity. 

You can argue that this is relevant for a tiny sliver of the population, and you’re right, maybe it is. But it’s also true that times are changing.

People becoming brands is as old as time. But this isn’t about Michael Jordan creating a sneaker line or Lady Gaga launching Haus Labs.

What’s new is that the world is becoming a better place for intellectuals. As information becomes more abundant, the people who are into processing it, synthesizing it, and making sense of it are becoming more powerful, and growing less dependent on the bloated empires that birthed them.

What we’re seeing play out in venture capital, media, and education, gives us a glimpse of this new trust order.

Media has a big problem.

When you read the The New Yorker because it arrives in your doorstep every month, a writer can’t go independent. But when you read an article because it makes it to your Twitter feed, you end up following the writer directly. As writers get more powerful, they realize they’ve been left in the dark, they don’t own their email list, etc… and so Substack is born. Newsletters are not new. What’s new is the power social media has bestowed journalists and the growing dissatisfaction with the prevailing content delivery mechanisms - everyone’s an algorithm change away from obsolescence.

It’s no surprise, then, that we’re seeing tools like Presubscribe, which allow you to pledge your support to a creator before they’re independent.

Chris Dixon is famous for his line “the next big thing will start looking like a toy”.

It’s an appropriate reference here. 

It’s hard to tell if Presubscribe is mocking Substack or if something like it has the potential to legitimately decimate a media organization. 

Education has a big problem. 

As Scott Galloway put it:

Schools charging $50,000/year or more (Brown, NYU) have value propositions that have been rendered untenable overnight. The elimination of the university experience is similar to SeaWorld without killer whales. Yeah, we get it … free Willy, but I’m not paying $450 to see otters and penguins. Also, we’re not paying $54,000 for Zoom classes.

With the forced adoption of online learning, professors are realizing they can build online learning communities, broadcast their classes online to more people, make more money, and make students happier.  

It’s a matter of time before professors become unbundled from universities (Nat Eliason wrote a great post on what the role of universities might be in this scenario). The biggest hurdle will be the signaling strength of old institutions, but I’d argue that Y Combinator is a case study in how a new organization can build strong, alternative credentialing. And I suspect Write of Passage, OnDeck, etc… are on their way to do the same.

Incumbents can subsist for years on a business model that no longer makes sense. But there’s a reason to be hopeful, and I’m going to quote Morgan Housel here:

Innovations rarely occur when everyone’s happy and safe, or when the future looks bright. They happen when people are a little panicked, worried, and when the consequences of not acting quickly are too painful to bear.

Without Covid, it would have taken the higher education industry decades to correct. With Covid, the correction is happening now.

Harvard won’t let everyone access their courses online, just as the WSJ won’t let their top journalists start a newsletter and share equity and IP. These changes will come from the outside in.

That’s why, for all the talk of subscription fatigue, I believe the creator breakout is only just beginning.

Consider this:

The soundtrack to the last six months of pandemic parenting in my home has been the Hamilton album. The entire thing is stuck in our heads, and at odd hours my son will burst into singing Look around, look around at how lucky we are to be alive right now

Seems strangely fitting for 2020. It’s true that the disruptions of the past six months have been frightening. But it’s also true that history is happening right now and has opened a rare window of opportunity to create better alternatives.

Stay curious 🙏🏽

Sari

It took Apple 42 years to reach a $1 trillion valuation, but only two years after that to break $2 trillion.  😧

Seth Godin on a Zoom agreement The purpose of a meeting is not to fill the allocated slot on the Google calendar invite. The purpose is to communicate an idea and the emotions that go with it, and to find out what’s missing via engaged conversation. If we can’t do that, let’s not meet.  💻

I’ve been drinking MagicMind (a combo of matcha, adaptogens, nootropics) daily to help me focus and the energy lift has been incredible. The team there is hooking my readers up with a 20% discount - use SARIMAGIC at checkout. 🥤

A toolkit for responsible design of digital communities. 💭

You can get a custom puzzle made with the New York Times Front Page date of your choice. I love this! 📰

Samuel Arbesman, auhthor of The Half Life of Facts, had a fascinating interview on the Knowledge Project podcast. The key takeaway is that information has a predictable half-life (the time taken for half of it to be replaced or disproved) but we rarely consider that. Many people assume that whatever they learned in school remains true decades later. That’s why living without cars, or defunding the police, is unimaginable to so many. 🤯

My friends at TheVentureCity are running Product-Led Growth Week, a free program to help early stage companies build a repeatable playbook to acquire, retain, & grow customers. The team running the program is outstanding. Applications due Sep 4. (sponsored) 🚀

Alex Kantrowitz interviewed Casey Newton about the tech press and whether Facebook is good or bad. I love how nuanced the interview is, we need more media that acknowledges the world is gray and complicated 💯👇🏽

  • Facebook is so big that it is always going to be a thousand different things at the same time. There’s 500 places where it’s doing something really cool and interesting, and there’s 500 places where it’s doing something really scary and in need of intervention.

  • There’s a discrepancy between the internal and the external conversation around Facebook right now, because the external conversation is a lot of “Are these people good or evil?” And the internal questions at Facebook that Zuckerberg is getting during his weekly Q&As are all about remote work, how long is it going to last, who’s going to have to go back to the office, who’s going to get their pay cut, how much is my pay going to be cut if I move to Omaha or whatever.

Gaby Goldberg wrote a great essay on how curators are the new creators. 💯

A really good presentation on the move from search-driven to interactive commerce, and how new companies should focus on the recreational and emotional aspect of commerce. 🛒

A complete list of startups that are public about their metrics 🔍

Cool startups on my radar:

  • Behave: low sugar candy with all natural ingredients - my kids loved them! 🍭

  • Kumospace: An alternative to video calls that uses spatial audio to make it fun 💻

  • Virtually: Software to build and scale your virtual school 🎒

  • Carbon Chain: Accurate accounting for a company’s carbon footprint 🌳

If you’re wondering who’s behind this newsletter:

My name is Sari Azout. I am a design-thinker, strategist, and early stage startup investor at Level Ventures and Rokk3r. My mission is to bring more humanity and creativity to technology and business.

Want more?

Follow me on TwitterMedium, and Instagram.

Know a founder i should meet?

Drop me a note at sari@level.vc

If you're enjoying this newsletter, I'd love it if you shared it with a friend or two. You can send them here to sign up.

And if you come across anything interesting this week, send it my way! I love finding new things to read through members of this newsletter.

Thanks for being here!

Check your Pulse #50

Users as people and the participatory economy

Welcome to the 131 subscribers since the last issue. I’m Sari Azout and this is the the 50th edition of Check your Pulse, a tech and startups newsletter designed to make you feel human. I try to make this one of the best emails you get each week. If you’ve been sent this email and you’re not a subscriber, you can join by clicking on this big red button below.

Happy Sunday friends,

Last week, I was a guest on the Unseen Unknown podcast, where I spoke to Jasmine about customer happiness, how brands need to rethink how they create/extract value, and the forthcoming participatory economy. It was a great conversation, and was the inspiration for today’s issue. Give it a listen!

Issue #48 on the participatory economy seemed to strike a chord with readers. It was the most popular issue to date, with over 25,000 views:

The problem with the subscription economy is there is no opportunity for fans to own assets, and further, subscription models don’t take into account the value that fans bring to their communities. While it’s still a nascent space, there are a few companies building in what I call “the participatory economy” — where fans participate in a creator’s success.

Zooming out, the participatory economy is a useful framework to understand how many industries are evolving.

Before the Internet, information and power were controlled by gatekeepers that chose what to publish, produce, and distribute. The creator and the consumer were passive, and existed primarily to serve the industrial machine.

Tech-enabled Internet platforms removed many gatekeepers, but introduced new ones. Almost as quickly as social media emerged, influencers were born. With the advent of social media, brands were able to connect directly with their customers, spawning a direct-to-consumer retail movement. But being able to talk to your customer is very different than being able to talk with them. Instagram, YouTube, and Facebook have helped brands build a unidirectional relationship with their customers, but for all the talk of customer empowerment, the resulting relationship is still top down.

👆🏽The Participatory economy can be understood as filling empowerment gaps and evolving our thinking from consumers as users to customers as people. 

In the participatory economy, the creator is bidirectional because the customer is also a creator. The participation can happen in several ways:

  1. The customer participates in the creation of the product

  2. The company’s core product enables more people to participate, thereby democratizing the nodes of influence

  3. The customer is aligned with the network’s upside and participates in the financial rewards

1. The customer participates in the creation of the product

Brands are increasingly empowering customers by making them partners in the brand-building process and letting them inform the product roadmap.

Emily Weiss, the founder of Glossier, credits the company’s success to their belief that every single person is an influencer. Arfa, founded by the former COO of Glossier, rewards a collective of customers co-piloting the development of the brand with 5% of profits. Nide, a French beauty brand, goes a step further — customers submit ideas and receive 500 euros if they have potential. If it gets enough community votes, customers earn 1,500 euros. And if the product is co-created, the customer receives 10% of sales.

2. The company’s core product enables more people to participate, thereby democratizing the nodes of influence

Storr is a marketplace where people buy from people instead of retailers. Public is a social investing app that lets you follow friends and domain experts, letting anyone share what they are investing in and their investing strategies. Startups upending traditional education can also be understood through the lens of the participatory economy. Schools have historically been about top-down instruction. But models like Prenda, Primer, and Pioneer empower learners and put them at the center. Everyone can participate in Pioneer, as long as they have a project and an internet connection:

A new wave of social networks is eschewing one-way broadcast in favor of two-way dialogue, with companies like Circle, Geneva, Mighty Networks, and Commsor increasingly powering the infrastructure for digital micro-communities. Ohana builds a community around your podcast, taking your podcast from a monologue to a dialogue. ForgeFiction allows fiction fans to create new original stories and fictional worlds. Ficto gives viewers the power to make narrative decisions. Souffle is a new Q&A app featuring debates on tech where all answers are temporarily anonymous, incentivizing people to vote for the best answer because of the merit of the argument, not because of who the author is. 

In many ways TikTok is the best example of a participatory network. As noted by Eugene Wei, “The TikTok algorithm acts as a rapid, efficient market maker, connecting videos with the audiences they’re destined to delight. The algorithm allows this to happen without an explicit follower graph.” The removal of a follower graph prioritizes creativity and talent over reach, democraitizing and unlocking participation.

3. The customer is aligned with the network’s upside and participates in the financial rewards

Networks are slowly evolving from being intermediaries that take a commission on each transaction, causing participants to resent them, to being collectively owned platforms that reward contributors, making users more committed. 

With more aligned incentives, networks that give their contributors economic incentives will grow faster.

Twetch is a Twitter alternative where you earn money for your content. Braintrust is the first user-controlled talent network that connects organizations with highly skilled tech talent. Delphia helps users monetize their data by turning it into an investment advantage

As participatory models emerge and evolve, they will drive growth in another area: tools that support them. 

Some ideas:

  • Proof of Discovery for Fans: Media is still in search of a business model. Disappointment with ad-based models spawned the rise of subscription media. But it’s all but clear that charging $10 a month to give your audience more content is the right model. Almost nobody wants “more” — even of a newsletter they love. As Josh Spector said, “If your most valuable stuff doesn’t go in your paid product, then you’re essentially charging people for a product that’s worse than your free offering which isn’t a recipe to make people want to pay. And on the flip side, if your best stuff goes in your paid newsletter then your free version may struggle to attract the new people you need in order to keep growing.” But what if content was available for everyone to read and consume, but not for everyone to participate? What if subscribing to a creator on Substack didn’t unlock exclusive posts but instead generated a sense of membership and identity that you could brag about? When you support someone, what you really want to signal is “I found this creator”. In that case, creating systems that honor the labor of discovery and fandom seem like an area worth exploring. (This was inspired by Julian’s post, Proof of X, which is worth your time.)

  • Collaborative governance tools: As more companies look to involve customers in decision-making, they need better tooling. Tools like Canny and Upvoty enable roadmap sharing, but they are feedback, not co-creation tools. There is an opportunity to introduce better tooling with features such as built-in polling, voting, and rewards.

  • Carta for cooperative mechanics: What does a company like Carta or Pulley look like when you are distributing value across tens of thousands of people, and reacting in real-time to contributions and other variables? There are token-based apps, like Props and Roll, but I continue to think the UX is suboptimal.

A paradoxical truth in business is that most companies spend little time focused on their customers. The beauty of the participatory economy is that it’s not only about what makes sense for publishers, advertisers, creators, teachers, etc… but also listening to the people on the other side (students, fans, readers, shoppers) and honoring them as people, not users.

🙏🏽

Sari

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Michael Jordan once turned down $100 million for just two hours of his time: “I brought [Michael Jordan] a deal three years ago for $100 million,” Falk said. “And all he had to do was, other than giving his name and likeness, make one two-hour appearance to announce the deal and he turned it down. And God bless him. He’s been so successful, it gives him an opportunity to do whatever the hell he wants or not to do things he doesn’t want. And I really admire that. He’s very, very selective in the things that he wants to be involved in.”

I enjoyed Jack Dorsey’s interview on The Daily, where he acknowledges some of Twitter’s early mistakes: “The disciplines that we were lacking in the company in the early days, that I wish we would have understood and hired for were a game theorist to just really understand the ramifications of tiny decisions that we make, such as what happens with retweet versus retweet with comment and what happens when you put a count next to a like button? Without this expertise, Twitter built incentives into the app that encouraged users and media outlets to write tweets and headlines that appealed to sensationalism instead of accuracy.” 🎙️

I know the bar is low but Levain cookies coming to groceries is the best thing to happen in 2020. 🍪

An incredible breakdown of the fashion industry. In April, clothing sales fell 79 percent in the United States, the largest dive on record. Purchases of sweatpants, though, were up 80 percent. 🤸🏾‍♂️

A chart worth pondering👇🏽

A curated list of websites that spark joy. 🎊

This, via Byrne Hobart 👇🏽💯

In Shopify and the Hard Thing About Easy Things, Packy asks why, if e-commerce is blowing up, there are so few big DTC exits. The answer: If everyone can do something, there’s no advantage to doing it, but you still have to do it anyway just to keep up. By making Direct-to-Consumer (“DTC”) easier, software like Shopify increases entropy and lowers the probability that any specific company will generate sustained profits. 🛒

Airport is a directory of pre-launch, test-flight stage consumer apps. ✈️

Marie Dolle writes an extensive piece on newsletter monetization strategies, with some commentary by yours truly. 📩

A thought-provoking post by Adam Keesling on Intangible Assets and how we have shifted from an industrial economy to an information economy, yet the investments in information assets aren’t recognized in financial statements.  How much is Lululemon’s brand worth? How much are Facebook’s network effects worth? How much is Costco’s customer loyalty (earned through investing in lower prices) worth? None of these appear on the financial statements, but they are core value drivers for these businesses. 💭

If you’re wondering who’s behind this newsletter:

My name is Sari Azout. I am a design-thinker, strategist, and early stage startup investor at Level Ventures and Rokk3r. My mission is to bring more humanity and creativity to technology and business.

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Drop me a note at sari@level.vc

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