How Discord Won

It has been a big year for realizing the limits of technology for interacting with people. Gamers have known this for a long time. Lag, disconnections, and coordination issues were problems in gaming since the start. There is a platform that has gone a long way in solving those problems: Discord.

Discord allows people to talk and chat online. Servers are created by anybody to talk about anything, usually, it is a friend group or a shared interest. They contain chat channels (kind of like Slack) and voice channels that are always on and allow people to join and leave whenever they want.

The competition between internet communication platforms is fierce. Discord wasn’t early to voice channels or group chats. They weren’t unique for targeting their offering to gamers. Other platforms have the same features as them. Yet they are a multi-billion dollar business. How? To borrow an idea from Sarah Tavel, they built a 10x better product AND capture more value from it.

10x Better

Voice chat sucked for a long time. Skype, which was long the most popular option, was a mess. It forced you to call people. Servers went down often. The application crashed. Chats were all over the place. There is a good reason people do not use Skype and it is because it sucks.

There were other competitors like IRC, TeamSpeak, Mumble, Ventrilo. All had basically the same features, voice calls, and chat. Each suffered from a combination of problems like:

  • Complicated setup process. Any new member must also go through a setup process.
  • Paid hosting. No one wanted to pay when there were free options. Especially true as servers grow.
  • Unclear benefits. Convincing one person was not enough, you needed to convince your whole group of the benefits of switching.
  • Weird ideological reasons. Your platform was your tribal affiliation, switching means abandoning your tribe. Everyone looked down on people who didn’t use the same platform as them (even if it was jokingly).

Discord launched in May 2015, long after the competitors listed above. They are now more successful than those same competitors. They did so by making the experience 10x better:

  • Discord requires nearly no setup. Starting a server on Discord takes two clicks. Creating channels is two clicks. It works instantly and all the time.
  • Discord is free.
  • It is easy to switch to Discord. Inviting people is two clicks and a paste. Joining a server (once you have an account) is two clicks. It is so simple you don’t even think about it.
  • Non-core features like emoji support, reactions, bots, integrations, video calls, and screen-sharing all work as well as you could ask.
  • Big community servers for games, fanbases, organizations, hobbies, and more.

Improvements in each of these areas add up to a 10x better experience than other platforms. I complain about Discord way less than I complain about Skype. There are benefits for everyone on Discord, which makes it a 10x experience both for groups and individuals.

On top of being 10x better, the core features are free. This causes an obvious business problem, how do you make money? There isn’t an obvious place to put ads. Competitors often charge by the member, but that incentivizes against growth. Discord figured out a way to incentivize growth while capturing value from large and small groups.

Sell Status to Capture Value

It took Discord a long time to figure out monetization (and they still are figuring it out). Venture capital allowed them to experiment with ideas such as selling games and membership. Neither worked perfectly, but they pointed in the right direction. Forbes estimated they are “on track to top $120 million in sales this year (2020)… up from around $70 million last year.”

To understand Discord’s monetization, look at their history. The founders previously started game companies and were inspired by free-to-play games like League of Legends. Games like League of Legends sell status. It is free-to-play but you can buy “skins” to make your character look different. If you have a cool or expensive skin, it means you care more about the game. It raises your status. Discord does the same.

Discord allows users to raise their status through a subscription called Nitro. It provides quality improvements (file size and video quality), special profile upgrades (more emojis, animated profile photos, custom tags), and most importantly, the ability to “boost” a server.

Boosts raise a user’s status in both small and large servers. They allow you to either improve your friend’s online hangout and your communities’ experience by unlocking custom emotes, cosmetic features, and quality improvements. For users, it puts an icon next to their name saying they contribute and gives them a special booster role on the server. In short, it is a way for someone to pay to stand out.

Server Boost Perks

You can buy boosts separately from Nitro at $5 per month or $50 per year. Perks come in uneven tiers: Level 1 is 2 boosts, Level 2 is 15 boosts, Level 3 is 30 boosts. It is unlikely “friend group sized” servers get past two boosts, but large servers often pass thirty. Some examples:

NameBoostsMRR (@ $5 per boost)
Minecraft165$825
Kanye75$375
Fortnite165$825
r/LeagueOfLegends201$1005
Animal Crossing: New Horizons412$2060
r/Overwatch85$425
Rocket League116$580
Fall Guys215$1075
Anime Soul Discord323$1615
Kenny Beats50$250
Musicians (Turkish)730$3650
English94$470
Python44$220
CallMeCarson Discord Cult1153$5765

Here are 14 popular servers accounting for nearly $250,000 in revenue per year. There are tons more, all with varying amounts of boosts. People are willing to pay to stand out, even when there is no obvious benefit. This is universal.

Every community needs a place to communicate online. Discord has the best offering, and it is free. Other platforms either force you to pay by the member or have a flat rate paid by the community host. Discord doesn’t require either. Servers can grow as large as they want for free, moderators and admins don’t have to pay, and Discord still makes money.

As communities continue to grow on Discord, the money Discord makes from those communities goes up as well. Flat rates and tiers limit this. Communities want to grow, Discord provides them with an easy and effective way to do that. Users want status, Discord gives them a shortcut. This aligns incentives better than advertising or paid memberships do.


Discord won by building 10x better spaces for communities. By selling status, they have also managed to capture more value from those communities than other platforms.

Discord won the competition for the gaming chat platform of choice, and now it wants to be the platform for all internet communities. This means they will be competing with the “big dogs” like Slack, Reddit, Twitter, Facebook, Microsoft, and Epic. Their free-to-play, pay-for-status monetization model is a competitive advantage.

Discord is a successful company. The question becomes how successful can they become? The key is the number of internet communities who choose Discord as their home. By creating a better product than competitors and being free for growth, Discord puts itself in an excellent position to continue to succeed moving forward.

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Build Above Ground

Everyone judges construction sites. We say “this is coming along quickly” or “this will never finish.” When judging construction, all we care about is what’s above ground. Only when we peer between the fence and look closely do we care about what’s below ground. Construction can seem endless because of all the time spent working below ground on the foundation. This is true of work in general.

People don’t care about your foundation, your accreditation, or how you are improving yourself unless it shows. These things are important, they are just below ground. They are the foundation of your work.

People care about what you build above ground: your accomplishments, your career, your results. It is not that these things matter more objectively, they are just what people see.

I often fall into the trap of caring too much about the foundation. I work too much below ground and don’t build enough above ground. I say to myself “if only I had the skills to do X, then I would be successful.” It’s a lie.

You can build a building with a weaker foundation. It is more likely to fail, but you can only get the knowledge of where it fails by building above ground. Your next building will benefit more from this than an improved foundation.

Building more foundation doesn’t mean that your building will never fail. Once you try, you could still fail. The only way to prevent failure is to never build above ground.

Instead of building a shaky building above ground that might fail, I continue to work on my foundation. Foundation is important, but if you never build, you never create something other people need and value. You build below ground for yourself, and above ground for other people.

Endless foundation building will get you nowhere. Build above ground.

The Readership Will Take Care of Itself

Nearly every day, I find myself thinking about ways to get people to read my writing. I tell myself to update the design, start a newsletter, tweet more, or optimize SEO. I say to myself, “If only I spent more time on those, then I would be successful.” Maybe I have to wait and get lucky.

It is easy to think about these things. I can read endlessly about workflows, tools, optimizations, and success stories. They distract me from thinking about the effort needed to write.

There is one solution to getting more people to read my writing: writing more.

The problems with my writing are solved by writing more. I pretend like I have published a large amount, but I am lying to myself. There are plenty of people who publish an article every day that is better than anything I have written.

I have a long list of excuses I have told myself:

  • My writing isn’t good. It will get better as long as a keep publishing.
  • People aren’t reading my writing. The more I write, the more likely someone will read it.
  • I don’t have a good niche to focus on. The focus will come over time.
  • I don’t want to waste my audience’s time. People who think it was a waste of time will forget instantly, and there is someone out there who doesn’t think it is a waste of time.

It is more fun to think about a new project than it is to grind one towards completion. Starting something new is the path of least resistance, it is cheating. I know that writing is a battle with my mind. If I don’t take the action to write and publish, I never will.

Trust the process. The readership will take care of itself.

The Opportunity for Internet Communities

Internet communities, spaces where people with similar identities and interests interact, are a massive opportunity. General internet spaces are becoming hostile. Societal shifts are forcing more people to rethink the communities they are apart of. Big companies in the space have stagnated. Trends are moving in the right direction. Here are some important ones:

Lack of Innovation

To start, communities exist on platforms. The platforms shape how communities interact with each other and develop. Many of the platforms were not build for the internet we have today.

Forums and Reddit are the most obvious ones, and both could be victims to disruption. They have been around forever, and have not changed. Neither is mobile-first. They work, I guess, but they aren’t super attractive. Discord, Slack, and others are creating alternative places for communities to exist online.

Voice and video have a massive role to play in internet communities but have taken a back seat to text until recently. Many people now spend all day on video conferencing for work and have a camera on them at all times. Voice apps are yet to take off but the popularity of podcasts and Airpods show promise.

TikTok showed a different way to create a community. When you focus on video and mobile-first, community looks different. Instead of you choosing your community, TikTok puts you into a community based on what you interact with. I expect to see more of this moving forward.

Political Tribalism

People looking for a way out of political tribalism. The fewer communities someone is a part of, the more likely they see a core community as a political group. Politics on the internet is a mind killer but is incentivized by public platforms. There are always other people who feel strongly with you. You don’t have to know much about the subject to gain status. You can “fight” people online. You can pretend you are doing something valuable. Politics is an easy community to be apart of, but people will grow tired of political tribalism. They will look for other options.

Dark Forest

Yancey Strickler has says the internet has become a dark forest.

In response to the ads, the tracking, the trolling, the hype, and other predatory behaviors, we’re retreating to our dark forests of the internet, and away from the mainstream.

Debate and disagreement cannot be public. It is not acceptable to change your mind. It is not acceptable to have an opposing opinion. Controversial opinions and topics moved out of view.

Ideas don’t cease to exist when they are uncomfortable, they move to places where they are spoken about. They move into the dark forest, hidden communities. Many of these communities already exist on the internet and will only continue to grow. As the size of these dark forest communities grows, so will their impact.

Internet Education

Community leads to education. To become a better member (or even a member at all) people must learn things. Ideas, jargon, people, and companies are all examples of information someone might need to learn. Communities often recommend ways of developing the knowledge needed to join. I expect these to expand.

Internet education is cool, but only when high-status members of a community create and deliver it. Many creators added private communities to their offerings. Students learn and interact with the content better within communities than on their own.

Internet communities will be part of the future of education. In-person communities are the only thing Universities do well. If University is over Zoom, are those communities still valuable? The increasing amount of people deferring think not. A large number of people will be looking at other options, and internet communities may provide a path forward.

Work from Anywhere

Office small talk that might have fulfilled the social and community aspects of people’s days disappeared. People are social animals, they need interaction and will look for it elsewhere. Internet communities are an obvious place to start. Many companies are realizing they need to create their own internet community to work virtually. It is not clear what good company internet communities look like.

Less commuting also means more time to spend pursuing things other than work. Does this mean more time playing video games and watching Netflix or more time as a member of a community?

Passion Economy

Internet communities enable sharing of content and products. If you create something good within a community it will be seen by many of its members. Li Jin of a16z says:

New digital platforms enable people to earn a livelihood in a way that highlights their individuality. These platforms give providers greater ability to build customer relationships, increased support in growing their businesses, and better tools for differentiating themselves from the competition. In the process, they’re fueling a new model of internet-powered entrepreneurship.

Lots of people are making a living creating for internet communities. Many more will continue to do this. Being able to understand and appeal to your community is critical to success in this area. As internet communities become more coordinated and understandable, their economic power grows. Lots of people will be competing for a piece in lots of communities.


The future of internet communities is bright, and there is still plenty of opportunities to pursue. It is something I will be looking into more. If you have any thoughts or suggestions, message me on Twitter or send me an email.

Don’t Forget The Goal

We forget that we forget. People and organizations forget all the time. We trick ourselves into believing we remember more than we do.

Do you remember what you had for dinner three days ago? Or who you had a meeting with last Thursday afternoon? What is an important fact of an article you read early this week? Can’t remember? Neither can I. Neither can anyone.

People forget even the most important aspects of our life. We get distracted often. We get lost and move in the wrong direction.

We get lost in the flood of information that overwhelms us every day. It is a full-time job to keep up with even niche subjects nowadays. Endless articles, newsletters, tweets, videos, and photos are posted daily. Society expects you to be an expert in all areas of the world. It isn’t possible.

You don’t have to remember everything. Focus on remembering what matters.

Remember What Matter

I read a book recently called “The Goal.” It is a fictional story about a manufacturing manager who turns a failing plant into a successful one.

Companies are in business to make money, as much as they tell you otherwise. If a business did not make money, they would not exist. Companies often hide this fact from everyone, even their employees. They hide their goals in projects, initiatives, efficiency, measures, and more.

Over a long enough time, this can lead people to forget that the goal of the company is to make money. In the case of “The Goal,” employees believed that increasing efficiency was the way to be successful. If all the employees and equipment were working as efficiently as possible, they would have a good plant. The problem was that even though the plant was efficient, it was losing money and at risk of being shut down. It turns out working for the sake of working doesn’t pursue the goal.

Productivity is the act of bringing a company closer to its goal. Every action that brings a company closer to its goal is productive. Every action that does not bring a company closer to its goal is not productive.

Eli Goldratt (Author of “The Goal”)

The company got back on track by refocusing on effectiveness rather than efficiency. They refocused on the goal. The goal of a company is to make money.

Many things we think of as goals such as cost-efficiency, employing good people, technology, production, and quality are means of achieving goals, not goals themselves.

Eli Goldratt

This is counter-intuitive. Wouldn’t increased efficiency lead to profits? Not always. People often do things to be busy. They do things to be efficient. Processes naturally have slack (“wasted time”). By filling up wasted time with other tasks, it distracts people from the goal. They proceed to forget the goal and focus on non-goals.

If companies struggle to focus on the goal of making money, how do you think people do? Our goals are often more abstract. There is no bottom-line figure to tell us we’re doing well. On top of that is a constant flood of information trying to distract you at every moment. If we don’t make an effort to keep goals in mind, we often forget them and move in the wrong direction.

Like companies, we often focus on the means of achieving a goal, rather than the goal itself. As a personal example, I am working on being a better writer. Writing is the input, but publishing is the output. I am writing a lot, but only publishing a small amount of what I have written. I am forcing myself to publish more. It is not about being efficient with inputs, it is about producing outputs.

The two largest traps I’ve found that cause me to forget the goal is having an unclear goal and getting distracted. Luckily, “The Goal” helps us find solutions to both problems.

How To Not Forget The Goal

First, understand what the goal is. Create a goal that you cannot forget. It should be clear to both yourself and the people around you. You cannot get somewhere if you don’t know where it is.

In “The Goal,” the company did not understand why they were losing money. Once they were forced to challenge their assumption of what their goal was (efficiency vs making money), they started to get back on track.

The challenging of basic assumptions is essential to breakthrough.

Eli Goldratt

Second, remind yourself about what the goal is. Set reminders and reflect on progress. A good way to understand the path forward is to look backwards. Reflection helps make sure you are aiming in the right direction.

Keep your goal top of mind. We often get distracted by other information. Think about your goal, not the goals of the people around you. The goal of social media is to get you to spend more time on it, does that help you with your goal? Probably not. Cut information and effort towards things that don’t matter.

Third, create outputs that pursue the goal. In “The Goal,” they first moved away from productivity as the goal and refocused making money. They then found selling more products wasn’t the only way to make more money. Wasting fewer inputs and increasing the value of the outputs were also effective ways of pursuing the goal.

Everyone has the same amount of time in the day. Time is an input, spend it in a way that pursues the goal. Be aware of your awareness. The goal does not have to be work, it just has to be something that you want.

Finally, repeat. Great achievements come from repeating things for long periods. Most successful people have taken a long time to get to where they are. Nothing happens overnight. Processes grow and improve over time. Habits are processes that move you towards the goal. Habits will prevent you from forgetting.

Sometimes, magic is just someone spending more time on something than anyone else might reasonably expect.

Teller

Writing this post is a reminder to myself. As I’m writing, I think about what is important to me, what my inputs and outputs are, and ask myself “am I pursuing the goal?” I hope as you read it, you did the same.

TikTok Succeeds by Making Copying Easy

What you notice on social media is that people copy each other a lot. We do this in all aspects of life, but within the constraints of social media, it is especially noticeable. Most social media gives you a format to do what you want with. We naturally copy each other.

Social networks want you to create content and stay on the platform. You want social networks to entertain you and raise your status. These incentives are connected. The more content you create, the more likely you create entertaining content. The more entertaining content you create (or watch), the more likely you will stick around. TikTok has succeeded here. They designed a platform that creates massive amounts of entertaining content. How have they done it?

Unlike other platforms, the entire content creation process happens within TikTok. More importantly, they have built copying into the platform itself. By combining these two features, TikTok created a dominant position in mobile video.

Making it Easy to Create Content

If you want to build a new user-generated content platform or social network then the content has to be extremely light. The content creation AND consumption need to happen within seconds, not minutes.

Alex Zhu (Former Head of TikTok)

It must be easy to create content for it to be easy to copy content.

All the tools needed to create content are within the camera.

Video has long been a medium with two sides of production. On one side, you have unedited video for social media such as Twitter, Facebook, or Instagram. On the other, you have edited and produced as you see on YouTube and Twitch.

TikTok found a middle ground. It allows users to create lightly edited videos within the app. Much of the “editing” happens in reshooting. Videos are short enough that they can be reshot until it is right. Other features like timers, trimming, and effects (like green screen) are all built-in as well.

You don’t need anything except your phone to make content. No computer, no editing software, no fancy camera gear. Most content is shot with the front-facing camera.

Anyone can create content on TikTok without much effort. What you do or say is much more valuable than what your video looks like. The level of entertainment in your video isn’t driven by the quality of your editing or gear, it is driven by the quality of your content.

The built-in features make content creation easy, leading to large amounts of content being created, but content also has to be entertaining. Here is where TikTok innovates: they build copying into the platform itself.

Building Copying into the Creation Process

Creating entertaining content is hard. When you can film anything, what is entertaining? TikTok solves this by giving users templates to create entertaining content through the memes, trends, and sound on their platform.

Six million videos have been made with this one sound.

Video is a powerful medium because it is information-dense. You can copy a dance or meme just by watching it. It is obvious that shorter videos are easier to copy, there are fewer variables. When on TikTok, you see memes repeated and understand the format. Future memes in that format will gain from your familiarity.

The creation process is tied to the viewing process. When you watch something entertaining and think “I have an idea,” it is two clicks to start filming your idea. No platform makes it easier.

One of the largest drivers of building familiarity is music and audio tracks. The audio provides a repeatable format for content. Similar to how memes on Reddit or Instagram use visual formats, TikTok uses audio. The difference is that Instagram and Reddit do not make making memes easy. You have to know the format, find a site to create the meme (or Photoshop it) then come back to the site and upload. When you click a sound on TikTok it shows all the videos created with that sound and provides a big button promoting creation.

Musical.ly (the predecessor to TikTok) uses music as a raw material. Music is not the end product. It’s a raw material. In contrast, the end product on Spotify, Pandora, etc. is music.

Alex Zhu

The most popular sounds have tens of thousands of videos. TikTok has made music the template. It turns out it is a very good one. We get music stuck in our head all the time, how often does a meme or image get stuck in your head? Not very often. TikTok songs have dominated the top music charts for the last 2 years (and you may have not even realized that).

TikTok adjusts its algorithm for you based on what you enjoy. Videos in familiar formats will show up over and over. This is possible because popular formats have lots of content in each. The combination of easy creation and copied formats leads to large amounts of personally entertaining content for you.

Culture of Copying

Copying people on other platforms is often looked down upon. You lose status if you copy too much. On TikTok, it is promoted, everyone does it. It is a natural assumption that you copy everyone and everyone copies you.

A chain of duets featuring the most popular TikTok creators

Other platforms focus on following people or accounts. TikTok focuses much more on trends and memes. If you like a video with a certain trend, you will likely see more videos from that trend in the future. Everyone’s TikTok experience consists of different videos grouped into trends and memes. That is only possible because copying creates lots of content in each trend.

Other platforms have accepted the idea of sharing. When you want to share someone else’s tweet, you retweet it. When you want to share someone else’s Facebook post, you share it. TikTok doesn’t allow this, which is intentional. Content on TikTok can be shared, but new content must be added on top to do it.

For example, TikTok has a feature called a duet which allows users to show their video next to a video already posted. Another feature allows creators to reply to comments as a standalone TikTok. You even see TikToks on top of other TikToks using the green screen feature.

Every feature on TikTok drives towards making more content, this turns users from passive consumers to active creators. Everyone copies, so you should too. Users that create content are always more valuable than users that only consume. TikTok does a better job at this than any other platform.

The Future of TikTok and Copying Content

TikTok focuses on creation rather than engagement. Other platforms assume experts and professionals create the best content. TikTok assumes that entertaining content can come from anywhere.

If content can come from anywhere, then everyone must have the ability to create. Expect to see platforms controlling more of the creation process and making it easier for everyone to create content. Stories is an example of this. Posts are polished, stories less so; therefore, people will post more stories.

TikTok makes it okay to hop on the bandwagon. They built a platform that acknowledges that new content is built from old content. Users want to copy each other, so let them. Anyone can be successful on TikTok by copying the people around them.

The structure of other platforms makes it difficult for them to compete. They depend on the idea that content deserves to be reshared rather than copied. Resharing isn’t copying, it isn’t creating something new. It is boosting someone else’s work. TikTok forces users to create new content whenever they want to interact with other content (trends, duets, comment replies).

TikTok has aligned incentives. It creates a massive amount of entertaining content in a way that no existing platform can copy. I expect it to have a dominant position in social media for many years to come.


Let me know what you think on Twitter (@ianvanagas).

Can’t get enough TikTok-related content? Read my post on TikTok’s Viral Growth Machine.

Many of the insights and both the Alex Zhu quotes came from Blake Robbins’ notes on an interview Zhu did.

Another related piece is the seminal “Status as a Service (StaaS)” by Eugene Wei.

Be Irreplaceable

Do you ever think about what would happen if a team replaced their star player with an average one? The team would obviously be worse off, but how much worse? In baseball, they created a stat for this. It is called WAR, wins above replacement. It measures a player’s contribution to their team in wins.

WAR offers an estimate to answer the question, “If this player got injured and their team had to replace them with a freely available minor leaguer or a AAAA player from their bench, how much value would the team be losing?”

Baseball has obvious good and bad measures. Scoring is good, getting out is bad. It is also individual; one person pitches, and one person bats at a time. This makes it simpler to understand one player’s contribution to their team’s performance. Score more runs and you will help your team win more games.

An MVP caliber player contributes 6+ wins to their team per season. Mike Trout, last year’s AL MVP, had a WAR of 8.2. This means if he was replaced with a bench player, his team would have lost 8.2 more games over the year.

WAR is a measure of replaceability. The higher the WAR, the harder it is to replace a player. The players with the highest WAR are irreplaceable, teams will pay anything to acquire and keep them (sometimes that isn’t enough).

Not every task has as well defined measures as baseball. What about your life and career? WAR can still be a useful concept because it forces us to think about replaceability. We don’t just want to be above replacement, we want to be irreplaceable.

For nearly every job in the world, you could be replaced. Your company could hire someone else. You could spend your time doing something else. You can tell yourself the person they hire cannot be as good as you, but do you believe that? What makes you think it is true?

I’m sure you know people who couldn’t be replaced. They are core to an organization. Without them, nothing would work. The gap between them and the next best person is massive. They have made themselves irreplaceable.

To protect yourself from being replaced, you have to make yourself irreplaceable. Compare yourself to the replacement version of you. Aim to beat them as bad as possible.

Think about what makes someone irreplaceable. It comes from specific knowledge. Work only you could do. Business relationships only you have. Being irreplaceable means being unique.

If you can’t find something that makes you unique, find something you can do much better than other people. Know things other people don’t know. Create a valuable mix of skills. Know more about an organization. Be able to navigate the bureaucracy. Have a better network. There is always something you can do to make yourself more irreplaceable.

Being irreplaceable creates job security. No one gets rid of an MVP. If suddenly you are out of a job, you are competing against replacement-level performers. Show how you are better than the rest, and you’ll quickly find work. If you are irreplaceable in one organization, there is a good chance a competing organization would also want you.

Think about the measures that are important for you and compare them against replacement. Work towards what makes you more irreplaceable. Think about what an irreplaceable version of someone in your role and strive to be that person.

Remember: everyone can be replaced. You want the gap between you and a replacement to be as large as possible. Only you can make it happen.


Let me know what you think on Twitter and LinkedIn.

How To Fix The Future: Make More Values Legible

This Could Be Our Future is a book about what we value. The author, Yancey Strickler, argues that society values the idea that every action should aim to maximize financial wealth. What he calls financial maximization. Financial considerations dominate the world, and we don’t know what the other options are.

Strickler gives many examples of financial maximization and how it impacts society. Arguments that you have heard before: healthcare, stock buybacks, CEO pay, movie sequels, and more. The critical area he doesn’t spend enough time on is why financial maximization exists. Financial maximization is exists because it is a legible measure of success.

Legibility is the idea that we can control and understand what is orderly. People in power want to bring order a naturally complex society. A legible system is able to be managed “efficiently” (used loosely) but, it is also more fragile.

From Venkatesh Rao’s excellent “A Big Little Idea Called Legibility:”

“The state is not actually interested in the rich functional structure and complex behavior of the very organic entities that it governs (and indeed, is part of, rather than “above”). It merely views them as resources that must be organized in order to yield optimal returns according to a centralized, narrow, and strictly utilitarian logic.”

Money is the most legible way to tell if you are succeeding. People want your stuff, they give you money. You don’t have to understand why someone bought your product, only that they did. We know who is successful based on the amount of money they make. Other ways of understanding success are illegible. People who care about success are going to pursue money over everything else.

Strickler’s insights come from his success. Before writing the book, he was the CEO of Kickstarter. Kickstarter relies on creating things people didn’t know they wanted. Art from artists they liked but never had the chance to financially support. Innovative gadgets that traditional investors don’t see the potential in. Kickstarter helps makes illegible projects legible. It provides a structure for understanding illegible projects, and this is what Strickler believes our values need.

Strickler’s solution is called bentoism. The idea that we should not only focus on our “now me” values (like financial maximization), but our “now us,” “future me,” and “future us.” By thinking more about these categories we will create a better society.

 

bento

Bentoism helps us understand less legible values. It makes our illegible values more legible. Doing this is as simple as writing down values in each of the categories and making decisions based off those values.

“We ‘measure what matters.’ Therefore, if we don’t measure it or can’t measure it, it must not matter. And values are not something we know how to consistently measure right now.”

It is difficult to understand values, but we know they exist. Almost no one can explain their full values if you asked, but they are revealed in actions, priorities, and interests. By creating structure, people are better able to understand their values and act on them.

With bentoism, more people focus on values other than financial maximization. They make different decisions when they take into account values such as community, tradition, mastery, sustainability, and knowledge. Organizations will follow. Many, like Patagonia and Tesla, already do.

There is a lot of value waiting to be understood and created apart from financial maximization. It starts with the realization of the hidden default of financial maximization many currently stuck on. We can then help people make their other values more legible.

It takes a long time to change the values of the world. Strickler cites that one generation (30 years) is about the fastest we can go. We don’t know where we are along the process of change.

Now seems like a time where values are especially in flux. Many people are realizing they value things other than commuting, spending all day in offices, and buying the latest gadget. Coronavirus is having a massive impact on small businesses who often have values other than financial maximization. It is unclear if financial maximization grows or shrinks as we make our way back to “normal.”

It is also difficult to get people to think about the future. Bentoism makes the future more legible. Right now, we care deeply about the “now me.” Strickler hopes that we will move up and to the right in the graph.

We are in a societal shift away from financial maximization. What values will replace it is something we have thirty(ish) years to figure out. It is an ongoing process without a right answer, but I recommend that you think about your values and the values you wish to see in the world moving forward.


You can learn more about bentoism and “build a bento” here. Let me know what you think on Twitter.

Read “This Could Be Our Future: A Manifesto for a More Generous World,” and “A Big Little Idea Called Legibility.

Curation and Creation

Life is better when you think of yourself as a curator. You are always curating. You curate your life, experiences, and knowledge. Being conscious of this opens the possibilities of creation and refinement.

Curation starts with taste. You know what you like and dislike. You know what you find interesting and what you pay attention to. Seeking things that suit your taste is natural. Taste  is hard to explain, but guides your life without you realizing it.

By seeking things out, you curate. Curation, in its simplest form, is organizing and collecting based on taste. Your taste creates curated collections of memories, experiences, and knowledge. Some people are conscious of this, others are not. Exceptional people all share an exceptional ability to curate in their specialty.

Out of curation comes creation. You create information and experiences that suit your taste. You pattern match to your curation. In the beginning, everyone’s creations aren’t very good. People with taste know they aren’t very good, they’ve seen what good looks like. Creating something is the first step to creating something good.

Once you have created something, you refine it. You continue to improve all parts of the process. Refinement closes the gap between your creation and your taste. With enough attempts, you create something that matches your taste. Something that you can be proud of.

What you curate impacts your whole life. You are what you curate. The internet has unlimited content and can flood you with it if you aren’t careful. Take some time to think about the things you curate in your life. Do they match your taste? Could they improve?

It is important to know whether you are curating for yourself or someone else. If you are curating for someone else, your taste is lost. You can never know what other people’s tastes are. As soon as you guess, you lose your taste. The only way to be genuine to yourself is to curate for yourself, and only share when you are ready. When you are ready, share as much as possible to refine and narrow the gap between your creations and your taste.

You are always curating. This article is a curation of ideas I have found. By reading it, you have curated it in your mind. I hope you realized what you are consciously curating and how it is impacting what you create. Hopefully, it helps makes your curation and next creation a little better.


I want to know what you are curating and what you have created out of it. A career? A habit? A hobby? Let me know on Twitter or LinkedIn.

This video about Ira Glass on Taste is a big part of this piece.

Unbundling YouTube

YouTube has been the undisputed home of video on the internet for a long time, but that title is eroding. YouTube is a successful bundle of internet video services and categories that are being unbundled by new entrants. Understanding YouTube’s bundle, where it has been unbundled, and further opportunities for unbundling provide insights into the current state of internet media and future trends.

The YouTube Bundle

YouTube is the default place to upload an edited video on the internet. New and interesting videos are being created 15+ years after launch. YouTube continues to grow revenue year after year.

YouTube’s competitive advantage is the audience, long tail of content, and search. Content that benefits the most from these advantages is safe on YouTube.

Medium length content for general audiences

Talk show clips, music videos, how-to, “lifestyle,” trailers, cooking, and sports highlights all belong to a category of “general” content that is safe on YouTube. Videos are generally medium length (between two and twenty minutes). Longer than videos on social platforms, shorter than shows on subscription streaming sites. They have a general audience and benefit from recommendations. These are the type of videos you see on YouTube’s homepage without personalization.

 

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An average YouTube homepage selection.

Youtube, like Craigslist, is the catch-all. Whenever it is not obvious where to post a video, it goes on Youtube. YouTube allows creators and companies to host and share any video they want. This value proposition is safe.

Search

Any video that benefits from search will remain on YouTube. YouTube has a monopoly on video search. How-to videos benefit the most from search followed by travel and sports. I do not foresee anyone beating YouTube at the quality of video search, because no one will beat Google at search.

YouTube has a long tail of content. Whatever you search will lead to results. If there is a video about something on the internet, it exists on YouTube. This long tail is costly, many videos don’t make back their hosting costs, but the long tail is also a key competitive advantage. No other platform can create a long tail of content as YouTube has; therefore, no other platform can have as good of search as YouTube has.

Low value-per-viewer content

YouTube is safe in places where the creator cannot make a large amount of money off an individual. Most content on YouTube is not content audiences would pay for. An audience’s attention is still valuable. People making YouTube videos for attention will always exist. Attention will always be valuable, and YouTube has a lot of attention.

YouTube will remain the best platform for monetizing videos with ads. They developed the technology and relationships with companies to create a large enough ad library. Creators who fall within strict ad guidelines will make money on their videos. Few other platforms allow creators to monetize with ads.


The value proposition in danger is “YouTube is the best place for posting all videos.”  Different types of videos perform better on different platforms.

Already Unbundled

The big change that allowed other companies to compete with YouTube is that video hosting is not as difficult a problem anymore. It is more difficult to build an audience that wants to watch video than it is to host video.

YouTube, like all platforms, faces constraints. It handles short, mobile videos poorly because of its lack of a “feed.” Livestreaming is an add-on, not a core feature. Ways of monetizing other than ads are not supported, causing creators to look elsewhere to drive revenue.

Short-form viral videos

Viral videos go viral on Twitter, Instagram, or TikTok and later get transferred in compilations to YouTube. You rarely see a non-professional go “viral” on YouTube anymore. If Charlie Bit My Finger was in 2020, it would go viral on Twitter first.

If you are trying to gain attention (go viral), lowering the friction of sharing is critical. Many viral videos are posted on every platform. YouTube has high friction to share, making it worse at creating viral videos than its competitors.

A long time ago, hosting videos was hard and platforms didn’t do it. Facebook, Twitter, websites all had to rely on YouTube to host their video. Now, it is easier to upload to social platforms (Facebook, Snapchat, Twitter, TikTok) than it is to upload on YouTube. This caused a major unbundling.

Livestreaming

Another area of unbundling is in video games. Gameplay videos were massive. The YouTube channel Machinma seemed to have a monopoly on gaming videos (back in 2008-2013). Creators were uploading Lets Plays, walkthroughs, and other gameplay videos. Streaming didn’t exist.

It turns out, this is not the natural format for these types of videos. The natural and popular format is streaming. Much of the talent in gaming is now dedicated to streaming. It provides a larger and more consistent revenue stream. Creating gameplay videos for YouTube is now an afterthought, many streamers edit stream highlights for upload.

YouTube was slow to react to streaming. It does offer the ability to stream but is rarely used. The only time I watch a YouTube livestream is when an important announcement is being made.

In early 2020, YouTube signed exclusive streaming deals with three popular Twitch streamers as well as the Overwatch League. These deals have been popular over the last year, with Mixer (Microsoft) signing exclusive deals with Ninja and Shroud, two of the largest Twitch streamers.

YouTube is competing in livestreaming, but they are not winning. They face competition not only from Twitch but Mixer, Caffeine, and Facebook.gg.

Long-form, high value-per-viewer content

High-production value shows don’t get the return on investment on YouTube as they do on subscription streaming sites. YouTube does have a subscription service called YouTube Premium, but based on the amount of content they release, it is not successful. They pivoted YouTube Premium to focus on the ad-free experience, rather than the original content.

No TV production company has made a dent on YouTube as their primary source of revenue. Internet media companies like Buzzfeed and Bon Appetit do well on YouTube but their content wouldn’t work with the structure of subscription streaming sites (high-production value, seasons).

Premium educational content has found a better fit elsewhere. High-quality educational content is worth more to a small number of people than ads are. It is specific and requires more work than a traditional YouTube video. The required return on investment for courses is higher, but so is the viewer’s willingness to pay.

I always see MasterClass ads on Youtube, and it makes sense why. Big celebrities are not going to go out of their way for some unknown and indirect payment through ads. People pay for information from the best. Giving it away for free and monetizing with ads doesn’t work well.

Potential To Be Unbundled

YouTube is vulnerable in medium length, high value-per-viewer content. These are areas where creators could make money focusing on top fans (spenders) rather than ads. Two places where this exists are subscriptions and valuable products.

Subscriptions

YouTube does not do a good job of monetizing individual audience members. As proven by Patreon, Twitch, Substack, and others, people are willing to pay more for content they find valuable.

YouTube does have a feature that allows channels to offer paid subscriptions but it is rarely used by creators (they have to enable it). For channels that do, it is unclear to viewers what the benefits of subscribing are.

Subscriptions and paid content have never been a focus for YouTube. As I mentioned earlier, YouTube Premium focuses on removing ads rather than high-quality content. There is no way (that I know of) to create paid exclusive or by-donation content on YouTube.

Opportunities remain for high-quality, medium length (two to twenty minutes long) content. This content requires more investment from creators and would be supported by viewers paying directly.

A group of YouTubers created Nebula, a creator-driven video streaming service. For $3 per month, viewers can support these creators directly and gain access to exclusive content. Nebula features some of YouTube’s highest quality creators, but is yet to truly compete with YouTube. It is added evidence of interest and opportunity for high-quality, medium length content.

A big competitor here will be Quibi, the medium length subscription video platform with shows from top talent and billions of dollars in venture backing. Quibi will compete for time currently spent watching YouTube and is a direct competitor taking advantage of this opportunity. I plan to write more about Quibi soon.

Valuable Products

Any videos related to big dollar products such as travel, cooking, beauty, fashion, and toys all could be disrupted. YouTube does a bad job of selling products in videos. I have never bought something from a YouTube video. Everyone knows the links are in the description and everyone ignores them. I assume top viewers would buy more than $20 per year’s worth of products in these categories.

Video commerce is an area that could be unbundled from YouTube. There are videos where a referral/affiliate commission could make more than the ads if the products were promoted better. YouTube added the ability to add a featured products bar; it is rarely used. Selling products through videos is an afterthought for YouTube.

Many people make money selling products on Facebook, Instagram, Twitter, and blogs. It is a serious feature of the platforms. For YouTube, this isn’t true. Ads are still the most important feature.

There is opportunities for other platforms or an entirely new platform to figure out online video selling. There is commission revenue waiting to be capitalized on by the right idea. Many platforms have minor features (TikTok, Instagram, Facebook Ads) but no platform exists for the primary purpose of selling items through video.

YouTube’s Downfall?

YouTube faces an innovator’s dilemma. They have not innovated their product in key ways, and are not able to. YouTube’s competitive advantages remain free hosting, search, and a long tail of recommendations. They will continue to focus on monetizing videos with ads. This leaves opportunities for YouTube’s unbundling by new entrants.

Social video on sites like Instagram and TikTok as well as streaming sites like Twitch and education subscriptions like MasterClass are already taking advantage of opportunities. These sites continue to grow their watch time and revenue.

There is an opportunity for more unbundling. A subscription platform for medium length videos like Quibi could be a major competitor. The continued growth of ecommerce could also create opportunities for a video platform more connected with selling stuff.

I will continue to use YouTube. It will remain a core internet site and a key piece of Google’s business. It will not have as dominate a position in internet video as it once had.