Ads, AI and what else?

A little late sending this out today— blame Brian, Phillip and the team at Future Commerce for an outstanding “salon” event at Daniel Sunday night where the sommelier kept emerging with new sublime wines to try which made Monday a wash. If you’re in retail and ever get a chance to attend one of Future’s events, do it.

Back to the normal, evergreen format this week and making good on my promise for pithier takes.

The current macro environment around big tech is an utterly bizarre set of paradoxes. The S & P is ripping near all-time highs but large tech companies are operating far more out of fear than greed. SaaS stocks are flying high again yet Cloudflare’s CEO is shamelessly firing ramping salespeople with bizarre allusions to Chris Paul. Interest rates in the US remain stubbornly high but capital is still pretty cheap in China, empowering firms like Temu to attempt mass digital colonization efforts of US market share. And there are more and more layoffs.     

As reported by the Verge, Google’s quiet layoffs continue with another 1,000+ jobs shed this week. This follows Amazon cutting 35% of headcount at Twitch and a broad wave of early 2024 layoffs. 

Twitch CEO Dan Clancy recently confirmed that Twitch is still not yet profitable, despite garnering a reputation for stiffing top talent and having the most predatory revenue splits in the business. Amazon getting antsy isn’t entirely shocking given the company’s increasing prevalence of Day 2 vibes and overall impatience with the loss leading parts of its ecosystem. 

Best I can sort it out, the wind in big tech blows towards hyper austerity for everything but the following:  

1. The myopic thing that prints all the bottom line cash today…..which for Google, Facebook and Amazon is ads.  

2. The thing that tech CEOs believe will existentially determine their fate….which for every large tech company besides Apple is AI.  

Any job that falls outside of these two buckets in big tech is on the most precarious footing we’ve seen in the industry since the great financial crisis. But where things really get interesting is when AI starts getting applied to the ads money printer. There are whispers of Google massively reorganizing its 30,000 person sales team in a move that could see thousands more cuts. Color me skeptical. 

For all the well-deserved hype that Perplexity is generating as a bold, user-first reimagining of discovery, a bunch of blue links under a bar on a page is still the only viable business model for search today. Neeva did a lot of the same things Perplexity does well and burned through tens of millions of dollars in VC searching for users who would pay a baconeggandcheese per month for a better search experience. Google is smart and somewhat besieged by the innovator’s dilemma. The last thing they are gonna fuck with is the AdWords sales engine. 

On the one hand, it makes sense for big tech to be relentlessly focused. Here’s what a year of going back to basics look liked at Facebook: 

On the other hand, it largely sucks if the most powerful institutions on earth are reduced to only betting on ads and AI. Shareholders of the individual equities be damned–it’s better for our nation if large tech companies use the enormous profits they generate from being societally blessed monopolies to be as weird and experimental as possible across several vectors. I think of FAANG as having something of a social contract with America. We’ll overlook the externalities of them holding unprecedented corporate power if they build a dope future for us. Doing so requires a tolerance for risk and living in the experimentation layer that is no longer en vogue. 

As an employee in tech though, it’s never wise to fight the tide. In bull markets, I do “zero to one” business development. In bear markets, I do enterprise sales.  

Amazonia 

My quick take on the week’s top tactical story in the Amazon ecosystem

Walmart Introduces Brand-Term Targeting:  This is wild to me. A $4B search media operation just introduced one of the 101 capabilities of search engine marketing. Holy hell, retail media is so early. 

Let’s give Walmart the benefit of the doubt here. Conquesting competitor keywords is one of the lamest technologies in the ecosystem, a tax on small businesses and brands that benefits the large platforms. Maybe Walmart spent years debating the morality of introducing it to Connect but finally caved? Lol, probably not.

Dispatches from America

A potpurri of vibes from across the land

Cha”bad” Boys: Credit to the New York Post for an absolute clinic in headline writing here around the story that has captivated New York for more than a week. Ladies, if he lives within 200 miles of NYC, I can guarantee you that he is no longer thinking about the Roman Empire, the architectural marvel that is modern suspension bridges, or obscure baseball players from the mid 90s. He’s thinking about how he too can build an extensive labyrinth of tunnels with the boys just because.

Dr. (Short?) King: Today I learned that MLK was 5’6” and a half which makes him…….. Martin Luther SHORT King Jr.  Ok, gotta get these jokes out while this newsletter still only has a few hundred subs. In all seriousness though, I often wonder how much would be different if Letters From a Birmingham Jail was required reading in U.S. public schools. To reduce Dr. King’s legacy in so many Americans’ eyes to “I Have a Dream” and a few more comfortable soundbites is precisely what he wrote against.