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November 10 - November 28, 2018
There are 3.5 billion search queries a day,
Con #1: Steal and Protect Great companies often rely on some sort of lie or IP theft to accrue value at a speed and scale previously unimaginable,
Secretary of the Treasury Alexander Hamilton issued a report calling for the procurement of European industrial technology through “proper provision and due pains”—even as it blithely acknowledged that British law prohibited such export.
The United States has the best consulting firms in the world—theft is in our DNA.
Con #2: Not Stealing, Just Borrowing Another way the Four cheat is by borrowing your information, only to sell it back to you.
IN THEIR BESTSELLING BOOKS, Ben Horowitz, Peter Thiel, Eric Schmidt, Salim Ismaiel, and others argue that extraordinary business success requires scaling at low cost, achieved by leveraging cloud computing, virtualization, and network effects to achieve a 10x productivity improvement over the competition.
all successful businesses appeal to one of three areas of the body—the brain, the heart, or the genitals.
The brain is a calculating, rational thing. To do its job, the brain weighs costs and benefits, balancing tradeoffs by the millisecond. In the marketplace, the brain compares prices and applies the brakes with blistering speed.
The heart is also powered by the greatest force in history: love.
Research from the Johns Hopkins University Center on Aging and Health found that caregivers had an 18 percent lower mortality rate than noncaregivers.
Amazon-branded batteries (a third of all batteries sold on the internet)
In 2015, 90 percent of CPG brands lost share, and two-thirds experienced revenue declines.
With appeals to the heart increasingly difficult, brands that appeal to the genitals are thriving. These organs drive desire and the relentless instinct to procreate. After survival, nothing rings louder in our ears than sex.
While history may not repeat itself, it does rhyme, as Mark Twain purportedly said.
these eight factors are prevalent: product differentiation, visionary capital, global reach, likability, vertical integration, AI, accelerant, and geography. These factors provide an algorithm, rules for what it takes to become a trillion-dollar company.
1. Product Differentiation
innovation that was a peace dividend from World War II.
Differentiation can occur where consumers discover the product, how they buy it, the product itself, how it’s delivered,
the majority of stakeholder value created over the last decade has been a function of removal.
it’s still infinitely easier to hit a couple keys on your computer to buy a book or a piece of furniture than it is to drive down to the local mall, find a parking place, walk a half mile, be overwhelmed by tons of irrelevant merchandise, and then lug your shit back to your car for the drive home. Amazon has removed all that friction and brings your purchases to your door for less than the cost of gas for your own car.
while it may seem that the value explosion brought by the technology revolution comes from the addition of new features and capabilities, its greater contribution comes from removing obstacles and time killers from our daily lives.
“Product” is experiencing a renaissance, and is the first factor in the T Algorithm. If you don’t have a product that is truly differentiated, you have to resort to an increasingly dull, yet expensive, tool called advertising.
2. Visionary Capital The second competitive factor among the Four is the ability to attract cheap capital by articulating a bold vision that is easy to understand.
Facebook is now worth more than Walmart, and surpassed $400 billion in market value.
over Thanksgiving weekend 2016, Amazon captured the largest overall share of organic results for top gift items.2 Amazon is Google’s biggest customer.
One in six people start their search for products using Google,
Fifty-five percent start on Amazon.
3. Global Reach The third factor in the T Algorithm is the ability to go global. To be a truly large, meaningful company, you need a product that leaps geographic boundaries and appeals to people on a global scale.
If you have a product that appears to have global reach, you’re accessing 7 billion consumers vs. 1.4 billion in China, or 300 million in the United States or the EU.
the first dollar earned outside the United States increased the value of the firm by billions.
4. Likability The world of commerce is regulated.
If you are perceived as a good actor, a good citizen, caring about the country, its citizens, your workers, the people in your supply chain that get you the product, you have created a barrier against bad publicity.
Tom Hayes, who did just that for Applied Materials, “When the news is negative, you want to be perceived as a good company to which a bad thing has happened.”
In March 2017 Amazon decided to pay sales tax in every state.
5. Vertical Integration The fifth factor in the T Algorithm is the ability to control the consumer experience, at purchase, through vertical integration.
All of the Four control their distribution.
Few brands have been able to maintain an aspirational positioning without controlling a large portion of their distribution.
6. AI The sixth factor in the T Algorithm is a company’s access to, and facility with, data.
Marketing historically can be parsed into three major shifts regarding how potential customers were targeted. The first era was demographic targeting.
social targeting,
behavioral targeting. And it works: nothing can predict your future purchases like your current activities.
7. Accelerant The seventh factor in the T Algorithm is a company’s ability to attract top talent. This requires being perceived by likely job candidates as a career accelerant.
one could argue that their brand equity among current and potential employees is more important than their consumer equity.
The team with the best players attracts cheap capital, innovates, and can spark the upward spiral that pulls away from the competition.
formidable accomplishments are the baseline for applicants.
8. Geography Geography matters. There are few, if any, firms that have added tens of billions of dollars in the last decade that aren’t a bike ride from a world-class technical or engineering teaching university.
To be an accelerant you must have the raw material. Just as you used to build the electricity plant near the coal mine, the raw material today is top engineering, business, and liberal arts graduates. Tech—software—is eating the world. You need builders, people who can program software, and who have a sense for the intersection of tech and something that adds value to the enterprise and/or the consumer.
two-thirds of the world’s GDP growth over the next fifty years will occur in cities. Cities will not only attract the best talent, but manufacture the best talent.
many countries, like the UK and France, one city is responsible for 50 percent of the nation’s GDP. Seventy-five percent of large firms are located in what could be called a global supercity.
firms now need to follow talented young people,
