Layering, commoditizing your compliment, the necessity of weakness, and the path to power
If you control both ends, you’ve won. It’s game over. You’re the alpha and the omega.
Are religions, governments, and companies unwittingly playing the same game?
First, let’s look at how layering happens in business. Let’s say that a government is a business in the limit (a definition that Elon Musk likes to use). You could say Arabic oil mining countries are just big company towns, where everyone works for big oil. If you’re the government of such a country, you always do what’s best for the oil companies, small businesses be damned.
You could look at green energy as a grass-roots movement to save the environment. In cold logical terms, alternative energy is a national security issue, as I’ve written about in the past. So, you’re the United States. You rely on oil for your transportation, and you’re a big country of with a wide network of interstate highways. It’s smart for you to commoditize your compliment: energy. Hell, even the human body does this. We use both sugar and fat for energy. And interestingly, we store fat on our bodies, and grains in food vaults.
An over-reliance on oil is bad for America and its freedoms. Nuclear is “scary”, but electricity and batteries are already accepted unconditionally. Our phones have batteries, and we keep them in our pockets right next to our family jewels. It’s not as if phones never catch fire (I’m looking at you, Samsung). When a nuclear plant fails, the entire world watches in horror, and refreshes for up-to-the-minute updates. When a battery catches fire, nobody bats an eye. Electricity doesn’t fail so catastrophically. Unlike oil, electricity can be produced at the location it’s used. It’s a decentralized energy source. This is great for American national security for the same reason that the internet was designed to be decentralized.
So, let’s look at the business world. Apple would prefer that display technology be a commodity, and it’s impressive how willing they are to be behind other tech companies in hardware to ensure this to be the case. It’s not that Apple is “slow” or “behind” so much as they’re playing a strategy that makes sense for them. It’s not that they’re “good” at UI. It’s that they almost have no other choice since their strategy uniquely locks them into having to use hardware that may not always be the most advanced tech available. So, instead, they get creative. If they appear “ahead”, it’s only because they’re able to make better use of more mundane innovations in display tech, encryption, finger scanning, etc more creatively than competitors that have access to the same hardware.
Apple’s strategy is to commoditize hardware. This sounds insane. How could this be; aren’t they a hardware company? Their revenue is driven by hardware sales. Apple, like any other company, has suppliers, and it depends on the possibility for exit when it comes to them. Speaking of exit, check out Exit, Voice, and Loyalty by Albert Hirschman. Apple doesn’t just source their displays from one company, but two. Whenever Apple has a part that can only be supplied by one manufacturer, this irreplaceability can become a thorn in their side. When Apple moved off of Intel, and onto their own chips, their performance and battery life improved drastically. They’re not doing anything magical that nobody else has the possibility to do. It’s just that owning the hardware on one end, and the software on the other, allows them to integrate the two in ways that other companies can only imagine.
Samsung can also innovate on UI and tighten integration between hardware and software, but there’s a difference. If Apple fails to continue innovating in integration and UI, then the company dies. If Samsung falls short in UI, they just copy what Apple did last quarter. If you want to figure out who will win in a given area, it’s not enough to just look at who’s best at X or Y, but who can’t live without X or Y.
Again, what does all this gushing about Apple have to do with layered cakes? Companies, in their attempt to undercut one another, try to control the start and the end. If you control the beginning and end, it doesn’t matter who controls the middle — and this is where we get to government. If you control the raw materials, you can play favorites with who gets access to them at the best price. To you, it’s advantageous to increase the number of your dependents. You want multiple different companies competing for your materials.
Suppose you produce Cadmium. Now suppose this is a time before modern batteries and your primary customers use the material for alloys and pigments. Say these are commodity products with many interchangeable producers. Congrats, you have cornered the market. You’re a hot product. You’re irreplaceable. You’re unique.
Now suppose a battery manufacturer increasingly becomes your biggest customer, and say it’s some company like Tesla. At first, you’re overjoyed. You thought life was good before, but now there’s even more demand that gives you a new revenue source. This joy doesn’t last long before dread sets in. Say Tesla’s products sell like hotcakes, and they have no effective competition. Say you become their biggest supplier of Cadmium. If you can keep up with their demand, great, but Tesla is big, hungry, and they’d prefer if their entire business didn’t lean it’s entire manufacturing edifice on a matchstick-sized company. No, instead they put serious dollars behind materials research to find alternatives to Cadmium, and/or fund and invest in other companies and mines that could supply Cadmium to them. Your Cadmium mines may be doing fine now, but your days of being a hot shot are numbered.
Telecoms and media companies try to wrap themselves around the entire tech ecosystem. Without telecoms, computers are almost useless. Media companies define the narrative around tech. Telecoms either own or have deep financial interests in many news sites.
For example, let’s take The Verge, a popular tech news site. It’s under Vox Media, which is owned by Comcast, NBC, and equity firms. The Verge has increasingly become more hostile and critical of tech companies, and should we find this surprising? The traditional tech companies exist in between the wires of the internet. If you want to know anything about what tech companies release, you either go to a company blog directly, or you find out through a news site. Or you find out through a new aggregator like Apple New, Google News, or Twitter. It’s Apple devices that go into customer hands. People love Apple, are they equally loyal to sites like the The Verge? If The Verge releases a negative piece about Apple, is it more likely that Apple will be hurt by the bad press, or more likely that the news site will hurt its own reputation for being unfair to a company that people have real loyalty to? It depends. News sites ask little of you, and it’s easy to stick to one site for decades. It’s much harder to switch between operating systems.
The Verge cannot succeed in being unfairly critical of Apple’s products, but they can critique the diversity metrics of said company. Can Apple respond by pointing to its own research on Vox’s diversity? No, because Apple is not a news company (for now). They are creating their own media arm with Apple TV. They’re starting with entertainment, but let’s imaging they come out with their own news program. Would this be surprising? Suppose they create their own news program and then hire the employees that make up the ranks of their critics, and offer them better salaries. News companies can and do own their own means of manufacturing and distribution. The New York Times was started by two publishers.
So what’s the pattern here? Apple tries get ahead of the telecoms and media. The media and telecoms try to get ahead of Apple. The media tries to undermine Apple’s reputation by critiquing their hiring practices, and Apple realizes it will pay the cost of this smearing until either the media stops the shakedown (impossible), the media goes away (again, impossible), or Apple creates their own media arm (possible, but very hard). Apple’s margins are thick. News margins are slim. The standard way to look at Apple TV is to see it as a sideshow that distracts Apple from its core business. I think it’s more than a sideshow. News orgs controlled more of the means in which their content got to their customers.
The media criticized Musk’s attempt to buy Twitter not because it was wrong or evil for him to buy it, but because it undermined a major point of leverage for them. If the site is made private, Musk is able to bring back all the people the media worked so hard to get booted. They’re forced to contend with fundamental laws that sit at the base of the US government: the right to freedom of speech.
For Media to force Twitter to ban people, some fundamental laws would have to be changed. Another possibility is what counts as “free speech” would change. But what if the path of least resistance is for the media/telecoms to use their vested interests to take Twitter off the internet entirely? If private companies have the right to choose who gets a voice, then this stick has two ends. If Elon Musk is legally allowed to bring back Donald Trump and Alex Jones, then by the same token the telecoms have the right to unplug Twitter from the internet for spreading hate speech and misinformation. After all, telecoms are private companies, and as such, they don’t owe Twitter a platform.
Would the telecoms actually take Twitter offline? After all, their own employees spend much of their day on Twitter, and source their news from it. If Musk’s buyout succeeds, he forces his business opponents (and the opponents of many other tech companies) into a tough position: by taking Twitter offline they end up disgruntling their own employees (who use the app for work and entertainment). This move effectively catches the telecoms in the middle of Musk’s sandwich.
You look at religion and politics and it’s the same story. Religion tries to undercut government by providing to the poor, etc. Government tries to undercut religion by taxing people, and using that money to provide to the poor. People are willing to die for their country, and the same goes for their religion (in some cases). Churches want to be the first at the scene when there’s a disaster by organizing volunteers. Government wants to be the first to respond in a disaster. The Catholic Church offers confession. The secular government offers therapy. It’s clear to me that government is winning over religion.
When the game is to undercut your competition, and if the game is big enough to wrap everything from business strategy to government and religion, then all we’re essentially doing is looking for gaps and filing them. What Steve Jobs and Woz did in their garage isn’t that different from a small-time entrepreneur noticing an opportunity to build a Mexican restaurant by noticing demographics + lack of an existing restaurant. Starting a tech company is zero-to-one on a deeper level, but there’s a sense in which what they’re doing isn’t qualitatively different. It’s possible Martin Luther was not just a visionary, but also an essential innovator behind the existing welfare state established across the West.
Individual relationships are also dominated by constant undercutting, commoditizing your compliment, resource acquisition, etc. Instead of a service industry, you get acts of service. Instead of a company brand, you have a personal reputation. You want people to chase you rather than you chasing others. Instead of news, you have social media posts and rumors. Men try to control the frame. Women respond by undermining their assumptions at one end, or reject completely and simply decide not to sleep with certain men. Men control much of the income into the house, but women control much of the spending.
Let’s look zoom out so we can better see the layers in this cake. At the base of the cake you’ve got mining operations, land, resources. Countries and companies want these resources. You can watch a guy renovate an old mining town on YouTube. At the other end is direct access to customers, individuals, citizens, etc. The best access you can get is write access to someone’s mind. If you control the memes, you control the world. Religion, politics, and pickup artists are all trying to get you to see the world through their eyes. If you control both ends, you’ve won. It’s game over. You’re the alpha and the omega.