The Diff - Longreads + Open Thread
This is The Diff’s weekly roundup of longreads, books, and open questions. Feel free to drop in links and comments of interest to fellow readers. You’re on the free list for the newsletter. For full access—and to read the back catalog—subscribe today! The Diff is a reader-supported publication. To receive new posts and support my work, consider becoming a paid subscriber. Longreads
And also: I was on Will Jarvis' podcast, talking about bubbles, efficient markets, reflexivity, and more. Books
Open Thread
Reader FeedbackLast week's post asked about which companies benefit from network effects in multiple, non-overlapping networks. From Philo:
This is indeed not the answer I was looking for, but it's a very interesting one! Maybe there's some transferable talent in managing non-scalable network effects, leading to conglomerates that are in "media" broadly and don't get a lot of direct synergies between their various holdings. Capital Cities was a great example of this, with TV and radio stations, local newspapers, trade magazines, and cable—all of which have network effects, but which largely don't interact. A Word From Our SponsorsThere's a set of white collar tasks which are highly repetitive, time consuming, and still difficult to automate because there isn't a standard format. Onboarding your customer's data is one such task. Each customer has their own, slightly different processes for managing information about their business, and so each time you onboard a new customer, you've got to adapt their dataset to your system. Flatfile is the product that takes this complexity away. They have an embeddable drag and drop tool, so you can jump seamlessly from closing a deal to a clean dataset. 1 A partial exception is any system where you're looking at deliberate interactions between two forces that push in opposite directions. In that case, you can have two powerful forces that push in opposite directions and cancel out, and then a bunch of smaller ones that collectively make more of a difference specifically because they don't cancel. Political coalitions look like this sometimes; Joe Manchin is so influential because the main parties' votes roughly cancel each other out, for example. This also applies to diet: if your weight is stable for a long period and you decide to start drinking a can of coke every day at lunch without changing any other aspect of your behavior, that ~6% of daily calorie intake can explain ~100% of your ensuing weight change. And the meta-footnote here is that yes, I know I'm undercomplicating things, but these are exactly the kinds of domains where there is in fact a lot of complexity, and where a decent working model is to assume an equilibrium first and then focus on what disturbs it. Which raises the further fun point that explaining changes can usually be simplistic, while explaining equilibria is complicated. 2 "Writers have an agenda in mind when they start writing" applies to this newsletter as well, of course, though we do our best to mitigate it. The best hedges against this are 1) to deliberately increase the surface area of raw information—economic datapoints, company financials—relative to summary writeups and pitches, and 2) to try to start with questions ("Why is X happening?") rather than conclusions ("X is happening, and that's terrible/awesome"). Of course, that's not a cure for biases, but it helps. You’re a free subscriber to The Diff. For the full experience, become a paying subscriber. |
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Inventing Demand
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Plus! BNPL; Coopetition; Marketplaces and Ads; Last Mile, Last Users; Value and Rates; Diff Jobs
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Saturday, August 13, 2022
Style, Subcultures, Derivatives, Microsoft, Media, Square, Alexander
Moderna's Bets: Moonshots and Platforms
Monday, August 8, 2022
Plus! The China AI Stack; Closing the Loop; Ads and Addiction; The Second-Order Costs of Inflation; Fraud and Transaction Costs
Longreads + Open Thread
Saturday, August 6, 2022
Retail, Sybil Attacks, Discoveries, Roditi, Chongqing, Moderna
Understanding Jane Street
Monday, August 1, 2022
Plus! Pensions; Customer-Facing; Use Cases; Making a Market; Reflexive Energy Politics; Diff Jobs
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