In my essay yesterday I took the contrarian stand that advertising can sometimes be GOOD for consumers of media. Check out “In Praise of Advertising” (freely available). On to this week’s briefing!

Edward, Startup Curated

Today’s briefing is sponsored by Pulsar

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Edward, Startup Curated


  • Instacart: Forbes has a profile on Instacart. Most interesting (And related to yesterdays essay) is the app’s use of paid placements. Grocery is VERY small margin, and so incremental vendor spend (with the goal of shifting share) is a very important profitability lever. Instacart is already charging the consumer and the retailer. Ads let them get access to dollars from the brands - and bring better discovery to their consumers.


  • Facebook lawsuit: Facebook is preparing an anti-trust lawsuit against Apple. Meanwhile Mark Zuckerberg called out Apple during his company’s earnings report, saying the two companies are competitors and that, with respect to Apple’s recent ios changes “Apple may say they’re doing this to help people, but the moves clearly track their competitive interests”. Meanwhile Tim Cook at Apple lambasted Facebook (without actually saying the company’s name). Cook took aim at “apps that collect too much personal information and prioritize conspiracy theories and violent incitement simply because of their high rates of engagement”. In criticizing tech companies the media and regulators have jumped on two tracks: (1) Privacy, and (2) Monopoly power. Facebook and Apple are each positioning themselves as champions on either side of one of those two “concerns”. There is a real three-way trade-off between privacy, moderation and platform control. Each of the big tech companies have different natural strengths. Apple has long used rhetoric to advance its own interests, now Facebook is fighting back with the same techniques (expect Facebook to talk about China when they think they can best leverage Apple’s weakness there). Related: Amazon, who already pays their workforce a minimum of $15 ran a full page ad in the NYTs pushing for a $15 national minimum wage for everyone else (including their competitors). There is a lot of debate among economists of the impact of raising the minimum wage, but some things are clear (1) It hurts small companies more than big companies, (2) It hurts lower GDP/capital places more than high GDP/capita places. The law is generally supported by Democrats (who represent higher GDP/capital places) and companies like Amazon… Just as Apple stands up for privacy that just happens to hurt their main competition from Google and Facebook…


  • Disclaimer: I expect by this point every one of my readers falls into two groups (1) Interested in the event and heard every element of the story they care to hear, or (2) not interested in what happened. But most of what I am reading on Facebook (and a lot of Twitter) is just WRONG. So I feel free should at least mention it. I won’t feel bad if you skip this section.
  • Shorting Stock: If you want to bet against a stock, the mechanics of it are not as simple as betting for a stock. In order to short a stock you borrow the stock from someone with a promise to return it (with interest) at a specified time in the future. Once you have the stock you sell it. When the time comes to return the stock you buy it and give it back to the original contract holder. If you hold stock, many brokers will lend your stock out (making $s for themselves). Vanguard index funds will even lend out the stock for you and add in interest payments to your earnings.
  • Short Squeeze: Imagine if there were only ten stock unit in existence and I want to short the stock. I borrow the stock from an owner, and then sell it to someone else. Now there are ELEVEN outstanding stock units in the company totaling 110% ownership (plus me. I own -10% of the company. The math always adds up). In theory people could keep borrowing stock and then selling it back to new owners. If there is a lot of shorting demand the same stock unit could be borrowed and sold again and again. Eventually you could get to the GameStop situation where short sellers have borrowed more than the full value of the company (i.e., as a group they own -120% of the company). When that happens the owners of the stock can just refuse to sell to the short sellers at any price. The short sellers are contractually required to return stock at a specific date, but if the owners stand together (or there is a single owner) they could demand infinite dollars per stock unit.
  • Volkswagen: In 2008 Volkswagen went through a short squeeze and was (briefly) the most valuable car company in the world. A single owner owned more stock than the short sellers needed to repay. By standing firm they forced the price up to infinity(ish).
  • Call Options: Instead of buying the actual stock one can buy a “option” to buy the stock at a specific price. When someone buys a call option, the financial institution that sells that option will buy the underlying stock (so that they will not take any risk if the price of the stock goes up and the investor activates their option). Short dated (i.e., the option only lasts a day or two) call options that are “out of the money” (i.e,. the option is to buy it at a much higher price than the stock is currently valued) are (usually) relatively cheap. If Apple is trading at $100 today (and has been up and down by 1% over the last few weeks), what would you pay for the option to buy Apple at $150 tomorrow? Pretty close to zero I would expect. But if you do buy that option, it “forces” the bank you buy it from to buy a share of Apple to protect itself “just in case”.
  • GameStop: The GameStop situation is very similar to Volkswagen, only instead of a single owner, there is a large group of Redditors who have decided to stand firm and not sell at any price. Instead of buying stock, they have bought out-of-the-money call options which allows them to create inflated demand for the stock. Banks “need” to buy the stock to cover their risk on the options, and short sellers are required to buy the stock to cover their positions. The result is a massive inflated demand for the stock driving up the price.
  • Volatility: Unlike the Volkswagen event, there is not a single owner who is refusing to sell. The distributed nature means that individual stock holders ARE selling (and buying). The result is massive volatility. Since the squeeze started about a week ago the price of a stock unit has swung from just over $100 to just under $500 ($314 at the start of trading yesterday and $225 at end).
  • Sale Blockage: On Friday RobinHood (the free trading app that many retail investors were using to buy call options on GameStop) blocked all new purchases of the company (as well as some others like AMC who were going through similar squeezes). Many thought this was a conspiracy to protect the hedge funds caught in the short squeeze, but it became clear it was a regulatory requirement. RobinHood pays a third party to handle the actual purchases, but the combination of the huge volatility and the delays between when a stock (or option) is purchased and when it changes hands meant the third party was requiring more and more collateral from RobinHood to make any trades on GameStop. RobinHood did not have the capital to make thee transactions happen (They raised another $2.4B on Monday, which should allow them to handle these trades going forward)
  • Marketing Lesson: WallStreetBets (the Reddit forum where this was organized) in theory exists to help its members make money. But in deals like this they face a prisoners dilemma. There will always be an incentive for individual investors to cash out when the price gets high, and whoever sticks around will be left “holding the bag”. So how do you solve a coordination problem like that? The answer was to change the story from one of “making money” to a “take down the hedge fund”. For many participants it stopped being about making money and became about being part of a community trying to achieve an objective.
  • Broader Marketing Lessons: Alex Danco believes that the process used to make the GameStop short happen could work in other domains - like politics. He gives an example:

1) Make a big splash of some kind, either with or without a presidential candidate’s support, in a way that associates you with the candidate and makes it “campaign newsworthy.”2) Congratulations, you’re now a character in the campaign story. Use it! Go say something controversial: “Post Malone, who dropped a new streaming track in support of the John Delaney campaign last week, has now come out in favour of legalized dogfighting.” (Instagram Story: 2 million likes.)3) Look at that, you just permanently saddled the campaign with this association, and have a permanent invitation to reopen discourse whenever you want: next streaming track, add a bunch of lines about dogs and then bait the campaign to respond. (Next day’s Washington Post A2: “Delaney Campaign dogged by controversial endorsement”. Streaming track: chart topping.)

Edward, Startup Curated


Edward, Startup Curated


  • Exxon/Chevron: The two oil companies are discussion a merger. Their argument is favor is mostly cost savings. The argument against these things is industry consolidation, which could allow for increase pricing power. But if we think that oil use has a negative externality and we are not able (for political reasons) to fully tax that externality, then allowing monopoly-like profits is one way to decrease usage. Expect this argument to be used by practically no one (which does not make it less true)

AI, GPT-3 and Machine Learning

Edward, Startup Curated



  • High Agency: George Mack shares a really important concept that I have add to my understanding of the world. There is a character trait called “high agency”. He quotes the definition from Eric Weinstein, "When you’re told that something is impossible, is that the end of the conversation, or does that start a second dialogue in your mind, how to get around whoever it is that’s just told you that you can’t do something?”. The less charitable characteristic of the trait is perhaps “disagreeableness”. Refusing to take no for an answer is such an important skill/trait for so much of life. I used it (without calling it that) for everything from working with doctors during the pregnancy of our first child, to traveling through Africa, to launching Expedia VIP hotel program. I expect it is a frustrating trait to have in your child when you are a parent, but maybe more important than IQ in predicting success in life…
  • Wombats: As all of my children can tell you, wombats are the only animal to have square-shaped poo (Olaf mentioned it in Frozen 2 as a “fact” he knows). Until last week we did not know WHY they had square shaped poo. Now we do.
  • Eagle Travels: A GPS found on a dead eagle was used to track 20-years of its travels. These birds get around!
Edward, Startup Curated

Keep it simple,


Edward, Startup Curated