Cassandra Complex

Why Being Right is Overrated

(A rare Friday Technopoptimism! With the holidays over we resume our regular Thursday morning posting next week)

There is nothing more overrated than being right. When I initially stole that saying, it was in respect to being a sports fan. A truth that is obvious the first time you hear it, particularly as a Philadelphian when being right is easy. Just predict pain. But over the years I’ve come to realize this is true about everything. There is nothing more overrated than being right.

Herman Melville was right that people would love an 800,000-page novel about whaling, but it didn’t help him much, he died penniless and unacclaimed. Georges Clemenceau was eerily right about the Treaty of Versailles being only a twenty-year armistice, but it didn’t do anyone any good. Even the great tragic figure of modern American literature, Mace Windu, lived exactly long enough to know he was right about Anakin Skywalker, and no farther.

Now, some of you may say “well, I’m a gambler or I work in finance – “what’s the difference, I cheekily ask and then chortle – “and being right is everything.” But is it? I have friends who are brilliant traders who have been wiped out. I’ve seen more poker hands where the guy who was right loses everything than I can count. The other day, I was complaining – bitterly – to a friend of mine, the best gambler I’ve ever known, about an unfortunate loss. He replied to me with just one word: variance. It doesn’t matter if you’re right, it only matters if you’re right at the right time. Any trade or wager you make is – unless you’re breaking some law – a matter of percentages. And percentages always depend on luck. Winning is everything, being right on its own is worthless. There is nothing more overrated than being right.

And yet, I, like most people, love speculating on the future. None of us can help it. Humans are narrative generating machines, and generating a future narrative is part of that. It’s why this first week of January practically ever writer makes predictions about the year. And, as a lover of fun, I want to join in. But as a denier of the value of being right, making exact predictions seems wrong. I could make this my magnum opus of analysis and yet, without the ability to peer into the multiverse, I’m essentially just guessing about random chance.

Instead, I’m going to split the baby. I’m going to lay out the three areas of tech that I think will have the most interesting stories to follow in 2023. I’m not going to predict what will happen, just why it’s worth looking to see if things may happen. And it’s not like any of you should be taking investment or business advice from me anyway (other than my movie pitches) so let’s take a shot at creating future narratives.

The Gig Economy

I’ve written my thoughts on the gig economy, and there would be nothing that better proved my earlier point than if I was just reiterating that. Even if the gig economy is structurally unprofitable and just surviving off VC cash, it’s irrelevant. You’d need to predict when the VC community would turn on them, and that seems foolhardy. It could be tomorrow, and it could be never. “Will the gig economy survive?” thus seems an uninteresting question, so let’s ask a better one. What happens to the gig economy in an economic downturn?

Uber was famously launched during the Great Recession, but a plucky startup in San Francisco is different than a global behemoth. Since then, the gig economy hasn’t had to deal with too much in the way of bad economic times. Yes, there was the brief Covid recession, but that certainly helped food delivery services as everyone was locked in flush with government cash. What happens if we have a run of the mill recession?

This is interesting because there is a huge tension here. The gig economy is essentially selling luxury services. Luxury is one of the first things to take a hit in a recession. There’s a reason that taxis and restaurants aren’t recession proof, to say nothing of “have someone buy my groceries for me.” The gig economy is almost wholly dependent on services that are the first to go when budgets tighten.

Conversely, because of their nature, they are well positioned to absorb an influx of newly unemployed workers. Most businesses do less hiring in a recession, but a surge of unemployed people is also a surge of potential Taskrabbits. Theoretically, this should allow them to lower labor costs, either extracting greater profit¹ out of what demand remains or lower costs and stimulate more demand. An economist would love this!

Except, could they? In the middle of a recession, could, for example, Doordash cut the amount they pay to drivers? Or would that be too much of a public relations nightmare in 2023? I genuinely don’t know, and I genuinely hope we don’t find out. But if a recession does occur, which everyone is predicting, we may finally learn whether the gig economy is recession proof or the first domino to fall.

Social Media

As much as I try and avoid writing a lot of “here’s what’s going on at big tech companies” – other people are better at that – when it comes to social media, we have to talk about what’s going on at big tech companies. With all due respect to Pinterest and LinkedIn, the social media people care about in this country are in three precarious sets of hands.

Whether or not the U.S. banning TikTok on government phones is the start of an offensive or just a skirmish, it’s proof of a basic truth. TikTok is, and shall remain, subject to the whims of Sino-American relations. And although I believe international relations should be predicted on the scale of decades, not months, it’s undeniable that that relationship has had a tough year. For as long as Americans think YouTube videos are just too damn long and need them bitesize, this is a ticking – or should I say tiktoking? No, I shouldn’t? Puns are bad? Sorry – timebomb worth watching.

Meanwhile, Meta (owner of the mid Facebook and great Instagram) has been having a rough year too. From fines to lawsuits to layoffs to declining users to the horror show of Meta’s stock decline – the less said about me trying to catch a falling knife here the better – it’s safe to say Mark Zuckerberg has had better years. Leaving aside the macroeconomic issues, there’s the fact that Meta is hemorrhaging money on virtual reality. If those predicting 2023 to be a big year for VR are correct, this could look brilliant. But if it’s not, it may be time to greenlight The Social Network 2.

And finally, there is Twitter. The less I need to write about this the better. Primarily because I don’t have the foggiest clue of how this will turn out except for one thing: there will not be a Twitter replacement. There will be no Facebook to its Myspace. If Twitter really does decline, it shall be more like the fall of an empire, leaving many new kingdoms and perhaps a rump state in its wake. I can guarantee that we aren’t all going to be using Mastodon this time next year.

Considering how rarely this occurs, if both Noah Smith and I are saying the same thing about social media, it’s worth considering. I truly believe that the future of social media is fragmentation. We shattered the monoculture a quarter century ago and yet on our social media we still try and jam everyone into the same boat. Why? If 2023 sees a shake up in social media, it’ll be towards fragmentation, which I think would be a good thing.

Streaming: Back to the Future

I may have, once upon a time, written an article about streaming. Other than some hilarious AIM chats it’s probably the only good thing I’ve ever written, so I don’t wish to revisit it. But the potential changes to streaming in 2023 are so fascinating that I can’t help it. Because after years of running off a business model of incinerating money, streaming has finally realized it needs to be profitable. Netflix is leading this Pivot to Profit with Disney right behind them. The days of chasing subscriber growth is gone.

And this makes sense. You can’t corner the market and jack up prices when we’re discussing distributing entertainment through the internet. Unfortunately, it also means we’re probably going to watch streaming services get worse. For starters, the content pivot. The days of quality and quantity in scripted content are over, with massive cuts in new shows. Which, again, makes sense. Leaving aside the quality of it² there was never any scenario where spending $700 million on Rings of Power was going to make Amazon a profit. Unfortunately, the content boom was good for people who like television and movies. And it’s ending.

With scripted content being slashed, the new move is to chase the dragon of live sports rights. Although the famously penurious ESPN did quite well with sports rights, these are often better in theory than in practice. But at the same time, football is about the only thing in America that isn’t niche.³ And so you have Alphabet dropping $2 billion on rescuing NFL Sunday Ticket from the clutches of DirectTV, ending our long national nightmare. Or Apple paying even more hoping that a different type of football will be popular enough to help their streaming service.⁴ People were right for years in predicting the regional sports bubble would pop, and they’re finally right at the right time. Whether the live sports bubble is ready to burst is unclear. But the shift from scripted content to chasing sports rights seems familiar somehow.

But something even more familiar is rolling out: advertising. Our most important industry.⁵ We’ve already seen the rolling out of ad tiers on some of the services, but there’s an even bigger idea. It’s called FAST. And even if you don’t know what that acronym means, if you’re familiar with the arc of disruption, you’ll guess. Free Ad Supported Television. It’s live, it’s linear, and instead of paying for it you just watch advertisements. You may recall that by it’s more common name, television.

Could 2023 be the year that streaming just becomes television? Could the Streaming Wars end as a tale of sound and fury, told by an idiot, signifying nothing? I don’t know. No one does. Honestly, it’s more fun that way. If all our predictions ended up true, we’d be as miserable as Cassandra. Instead, I can make one prediction for 2023: Streaming, social media, the gig economy, all of tech, and all of the world will change. I know I’m right about that because the only thing that is permanent is that everything changes. So, I’ll be right, and nothing is more overrated than being right.

1. Just kidding. I obviously mean “less of a loss.”

2. I tried multiple times to watch it and fell asleep each time.

3. This is not an exaggeration. As a reminder, last year more Americans watched the Super Bowl than voted for Congress. And one of those involved the Bengals.

4. The most fun prediction for streaming 2023 is that Disney will finally turn ESPN into a streaming service which would be seismic.

5. Do you ever think about how we live in a world where all of our best and brightest work in advertising (like Google or Facebook), but smoking is outlawed, no one drinks in the office, people dress horribly, and workplace romance is forbidden? Was Don Draper real, and we just live in his purgatory?