Top of Mind
I’ve renamed Editor’s Note to Top of Mind because I realized that in this segment I was less so prefacing the issue to come than just riffing on whatever was top of mind when I sat down to write this newsletter.
What is on the top of my mind this morning? Recently I’ve been thinking about the concept of Category Design.
For the last few episodes of Robinson’s Friends I’ve been flirting with this concept when describing why, even as an NFT cynic, I have now come to see NFTs (the protocols) going mainstream as inevitable. A few weeks back I described this inevitability by referencing the work of Carlota Perez (Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages) and the story of how Clarence Birdseye created the category of frozen foods, but at that time I didn’t have a good phrase to describe the dynamics I was seeing.
And then, like an old television character resurfacing after being away from a few seasons, the term “category design” came back to me.
As far as I can find, the term “category design” originated with the marketing agency Play Bigger in a book with the same name. On their website, they define it as:
a discipline of creating and monetizing new markets in a noisy world. The journey starts first with understanding the problem that you desire to solve. The problem is the proxy for the category and is the strategic element you see missing in the world. That unsolved problem is what keeps you up at night, and drives you to build a product, company and category to solve it.
But I much prefer to think of “category design” as building out all the scaffolding around a new inflection point. Take Uber for example. The new inflection point was widespread access to GPS by way of smartphone ownership. The breakthrough insight was that GPS could reduce the uncertainty (and associated frustration) of knowing when your cab was going to arrive by allowing the user to track their driver through a blue dot on a map, but that breakthrough insight could be easily copied.
This is similar to Clarence Birdseye’s insight about flash-frozen vegetables. What could not be as easily copied was all of the scaffolding that Uber built around that insight. The lobbyists, the car financing, the Driver Operations & Logistics Managers, the public partnerships, the Trust & Safety teams, etc. Or in Birdseye’s time the refrigerated railroad cars, the packaging, the freezer aisles in the supermarket, etc.
In technology we often talk about innovation as a technological breakthrough - and that certainly is a catalyst - but more often than not the great innovations of our time only come to maturity when the accompanying scaffolding is built around them.
Airbnb is another great example of this. The idea of room sharing was not exactly novel when Brian Chesky and Joe Gebbia founded Airbnb in August 2008. CouchSurfing was founded 5 years before. The innovation of Airbnb wasn’t using the internet to rent out space in your home to strangers, the innovation of Airbnb was the scaffolding they built out - the professional photographs of apartments, the rating system, the Trust and Safety team, the unique listings.
Once the scaffolding for a new category is in place, the ability for incumbents to pivot to compete is nearly impossible. This dynamic can best be summarized by this excerpt from Clay Christensen’s The Innovator’s Solution included in yesterday’s weekly article from Stratechery on the disruptive possibilities of Cloudflare’s new R2 offering:
Although new-market disruptions initially compete against nonconsumption in their unique value network, as their performance improves they ultimately become good enough to pull customers out of the original value network into the new one, starting with the least-demanding tier. The disruptive innovation doesn’t invade the mainstream stream market; rather, it pulls customers out of the mainstream value network into the new one because these customers find it more convenient to use the new product.
This unique value network can best be thought of as category design. This is top of mind because I think it is an incredibly useful lens for evaluating whether an idea that is at first silly-sounding has merit or not.
Last night a friend pointed me to a 2x2 from Sam Lessin that analyzed investment opportunities by evaluating it along the axis of reasonable and unreasonable:
The sweet spot is to invest in reasonable teams building unreasonable ideas. The “irrationality” is often a strong signal that the category the team is going after currently does not exist (that there is no existing market is a common reason why the idea does not sound rational) and the reasonableness of the team is a good signal that they have what it takes to build out the scaffolding to bring that market to life.
This upper left quadrant is also where many of today’s Web3 investment dollars are being spent. The ideas sound unreasonable to us because a category for them currently does not exist, but the reasonableness of the teams building out the scaffolding for these categories is a good signal that eventually there will be a there-there.
Anyways, that quadrant is what was top of mind for me this morning. The rest of the episode recommends a jazz album I just can’t stop listening to, a business book that actually looks at the mechanics of the industry rather than just the stories of the founders who dominate it, some articles that are very much Worth Your Time and the spoken-word poetry of Jack Kerouac. Hope you enjoy it!
What I’m Listening To
A few weeks back the debut album from Nala Sinephro came across my radar. It was good. I shared it with a few friends who thought I’d appreciate it, but I paid it no particular heed. And then, without even really recognizing it, I found myself reaching back for it time and time again.
In this world of Spotify, Apple Music, Bandcamp, Worldwide FM, NTS Radio, YouTube, and more, the average number of listens for even the most brilliant albums of the year (Little Simz, Black Midi, Tyler the Creator, Dave, Squid) is around 7 or 8. By contrast, I’ve listened to Spaces 1.8 by Nala Sinephro 7 or 8 times this week!
What Nala Sinephro has been able to construct is “a loose fusion of jazz balladry, beat music, and the sort of beatless, synthesizer-centric whorls for which there’s no better word than ambient”. In each “space” (the album’s songs are titled “Space 1” - “Space 8”), the listener will hear influences of spiritual jazz elders such as Alice Coltrane, Jon Hassel, Pharoah Sanders, and Dorothy Ashby’s Afro-Harping, but Nala and her collaborators “seem less concerned with precedent than with possibility”.
Nala’s list of collaborators on Spaces 1.8 is certainly impressive. Performed and recorded at Pink Bird Recordings in Wanstead and in the comfort of Sinephro's bedroom, Nala recruited - Nuba Garcia’s, James Mollison, of the Ezra Collective, and Ahnansé saxophones, Son’s of Kemet’s Eddie Hick’s drums and Lyle Barton’s piano - to name just a few, but it really is Nala’s composition and harp that makes this album stand-out. Sometimes she processes her harp so that it sounds like steel drums. Other times she overdubs synths upon synths upon synths, and sometimes she’s barely there at all, but her presence is always felt.
One of the reasons I think I find myself returning so frequently to this work of art is the impressive way in which each “space” fits together. There is a momentum from “space” to “space” that carries the album forward, despite the fact that each track is decidedly able to stand on its own. In his review for Pitchfork, Phillip Shelbourne lays it out brilliantly, “each track sketches out a different space: different dimensions, different light, different air. But these are rarely static spheres.”
Throughout its meditative 45 minutes, Space 1.8 is stirring and emotional in ways that are subtle and hard to identify, like sitting on the beach and watching waves rise and fall. In this way, the cosmic jazz of Nala Sinephro has the power to make you completely fearless and Space 1.8 is a dazzling introduction to her talent.
Give it a listen here.
What I’m Reading
Often times when we only have a surface-level understanding of a subject, we understand it by a few well-known stories. The clearest examples of this are in our high school understanding of history. Too often we explain events through the “great man theory” - the idea that history can be largely explained by the impact of great men, or heroes; highly influential and unique individuals who, due to their natural attributes, such as superior intellect, heroic courage, extraordinary leadership abilities or divine inspiration, have a decisive historical effect - when it is almost always the case that structural forces have a greater role to play than the actions of any individual.
Often times we make the same mistake when analyzing a business, ascribing credit to visionary leaders and the organizations they have created when much of the credit should just go to plain old luck. Due to the role that structural forces play in business outcomes, being at “the right place at the right time” is actually probably one of the more sound business strategies, but it doesn’t get much more instructive than “being early is the same as being wrong”.
It is also due to the role that timing plays in the business success that so many business books are, to put it mildly, rubbish. Survivorship bias is the logical error of concentrating on the people or things that made it past some selection process and overlooking those that did not, typically because of their lack of visibility and it impacts most of what we read about business strategy.
For example, was Facebook’s success due to the visionary leadership of Mark Zuckerberg? The growth tactics pursued by Chamath Palihapitiya and later Javier Olivan? Or network effects born out of the structural shift from the internet supplementing the phone as the dominant mode of communication and the need for “white pages” for this new form of communication?
The answer likely lies in the bubble that rests alongside “all of the above” - a product company needs to first be able to go from “zero to one”, to find product-market fit, and then after finding product-market fit needs to act like Mark Watney in The Martian and use science and experimentation to expand the market beyond the initial fit - but is often only narrativized as the outcome of the actions of a great man, such as what we saw in The Social Network.
This narrativization does a disservice to so much of our understanding of how business works, but it does make for a good read. On the other hand, other business books are chock-full of figures and charts but are generally unreadable. So it makes sense that we turn to the inaccurate stories of founder grandeur when the alternative isn’t really an alternative for the majority of us who aren’t forced to read it because we are in business school.
It is also due to the outcomes implicit in this trade-off (good story ←—→ good analysis) that I found Joost Van Dreunen’s pioneering empirical analysis of innovation and strategy in the video game industry so compelling. In One Up: Creativity, Competition and the Global Business of Video Games, Joost van Dreunen, a teacher at New York University’s Stern School of Business and widely recognized industry expert, analyzes how game makers, publishers, and platform holders have tackled strategic challenges to make the video game industry what it is today.
Using more than three decades of rigorously compiled industry data, Joost van Dreunen illustrates how business and strategy decisions can make or break the success of a game or platform. Covering key historical topics such as the rise of console games, the business model of free to play games, the role of Gamestop in the video game ecosystem, and many other key trends in the gaming industry, One Up provides a strong basis for understanding where it is today and where it is going tomorrow.
Being able to read analyses like One Up is essential to aspiring category designers working in complex adaptive systems. It demonstrates the type of scaffolding that needs to be built, the structural forces that need to be recognized, and the incentive structures of different actors in the system. This is a great book for not only better understanding the dynamics of the video game industry, but for understanding the dynamics that need to be made legible in any field of business.
Find it here.
Worth your Time
The Maintenance Race (Audible) - Stewart Brand, the visionary behind The Trips Festival, The Whole Earth Catalog, The WELL, and The Long Now Foundation pioneers another concept with The Maintenance Race - an audiobook released in chapters similar to a podcast episode. The Maintenance Race is the story of how nine competitors set out in a race that had never before been attempted: to sail around the world, alone, without stopping.
Worn Out (Real Life) - Tech elites’ supposed indifference to fashion is a contempt for the commons.
Height of Glamour (New Yorker) - How the designer Harris Reed helps Harry Styles and Solange play with masculinity and femininity.
The Frustration with Productivity Culture (New Yorker) - Cal Newport explores why we’re so tired of optimizing our work lives, and what we should do about it.
When the Climate Crisis Becomes Unignorable (The Atlantic) - This summer’s weather has forced a kind of continuous awareness of climate change.
Electric Cars Have Hit an Inflection Point (The Atlantic) - A few days ago Ford and a South Korean battery manufacturer (SK Innovation) announced they were spending $11.4 billion to build two new multi-factory centers in Tennessee and Kentucky that are scheduled to begin production in 2025. The facilities, which will hire a combined 11,000 employees, will manufacture lithium-ion vehicle batteries and assemble electric F-series pickup trucks. It’s easy to tune out climate-friendly announcements as so much corporate greenwashing, but Ford’s two new factories represent real money. And if you look around you’ll see Ford isn’t alone - electric cars have hit an inflection point.
The Poetry of Jack Kerouac
Though best known for his novels, Jack Kerouac is also associated with the spoken word poetry of the Beat movement. Kerouac wrote that he wanted "to be considered as a jazz poet blowing a long blues in an afternoon jazz session on Sunday."
I recently came to Kerouac’s poetry by way of a link in the footer of a completely unrelated article. From that link, I found Poetry for the Beat Generation (with Steve Allen) and On the Beat Generation - an album that includes the poem “San Francisco Blues”.
Since this discovery, I’ve been putting on these poems from time to time and have really been enjoying listening to them on my walks, as the leaves on the trees change with the season. Looking up, pondering, listening.
Since Substack is a visual medium, I’ve accompanied this week’s culture corner with Beat Memories photographs by Allen Ginsberg and The Beat Scene - a collection of unseen photographs of the Beat Generation.