Sunday Reads #114: Need for Speed
The Law of Shitty Clickthroughs, Doordash, and some speedy science.
|Jitha Thathachari||Dec 13, 2020||1||2|
Hope you and yours are keeping safe (and sane).
Welcome to the latest edition of Sunday Reads, where we'll look at a topic (or more) in business, strategy, or society, and use them to build our cognitive toolkits for business.
If you’re new here, don’t forget to check out the compilation of my best articles: The best of Jitha.me. I’m sure you’ll find something you like.
And here’s my newsletter from last week, in case you missed it: Sunday Reads #113: Drunkards and Streetlights.
This week, it’s all about speed.
First, we look at the Law of Shitty Clickthroughs. The effectiveness of any marketing channel tends to decay rapidly over time. What is a gold mine today will turn up empty tomorrow. How do we break free of this iron law?
Next, a tweetstorm on Doordash, which IPOed this week, just 7 years after its launch.
And last, dispatches from the frontiers of science.
Here's the deal - Dive as deep as you want. Read my thoughts first. If you find them intriguing, read the main articles. If you want to learn more, check out the related articles and books.
[PS. If you like what you see, do forward to your friends. They can sign up with the button below.]
1. The Law of Shitty Clickthroughs.
I first came across this Law in Andrew Chen's article of the same name.
Over time, all marketing strategies result in shitty clickthrough rates.
As he points out, the first banner ad ever, on HotWired in 1994, debuted with a clickthrough rate of 78%.
Facebook's CTR in 2011: 0.05%.
Over 17 years, click through rates of banner ads reduced to nearly zero!
Look at any marketing channel. Email marketing, cold calling from a phone book, sending physical mailers, you name it. The ROI of the channel inevitably decays.
For three reasons:
Customers respond to novelty, which fades over time.
First-to-market never lasts.
More scale means less qualified customers.
This continuous decay means, very often, that just as you double down on a channel, it stops working for you. Like Alice and the Red Queen, you're "running as hard as you can, to stay in the same place".
Is there a way to escape the gravitational pull of this iron law?
Yes, there is. Velocity of execution, as Taylor Pearson says in Speed of Implementation and the Law of Shitty Clickthroughs.
Benefits of a new channel overwhelmingly go to those who optimize for one thing: speed of implementation. People who move fast and break things win.
Speed of implementation alone often matters more than every other factor combined.
Why does speed matter so much?
Short answer: Compound interest.
The faster you are, the more likely you are to enter a channel when it's still new and ripe for growth. And as you repeat this over time, your own growth compounds.
This is also the "metagame" of advertising. Rather than learning to do Facebook ads well, it's more valuable to understand the life cycle of advertising channels, and when to jump on.
And as I mention in my article on speed, this dictum applies beyond marketing. Whether you talk about startups, product development at BigCos, or even your own career: speed IS a competitive advantage.
2. Startups = Growth. Doordash Edition.
Doordash went public earlier this week. Amazing that the business started only 7 years ago. Talk about speed!
I enjoyed reading its origin story on Twitter, from Evan Moore, one of the co-founders.
I loved how textbook "Lean startup" the company's growth has been.
Lesson 1: "Get out of the building and talk to customers".
The founders took Steve Blank's admonition to heart. They went and spoke to any business owner who would answer their questions!
Lesson 2: Do things that don't scale.
This time, a lesson from Paul Graham of Y Combinator.
Lesson 3: Startup = Growth.
Paul Graham wrote an article in 2012, called Startup = Growth. He said:
A startup is a company designed to grow fast.
Everything else we associate with startups follows from growth.
A good growth rate during YC is 5-7% a week. If you can hit 10% a week you're doing exceptionally well. If you can only manage 1%, it's a sign you haven't yet figured out what you're doing.
And taking his words to heart, the Doordash founders treated 10% weekly growth as their North Star.
And here they are, IPO-ing in 7 years.
Lesson 4: Test everything.
"Do all the things". If I ever have a list of personal commandments, this is going in.
3. Speedy Science.
During the Formula One Bahrain Grand Prix on Nov 29, Romain Grosjean had a horrific accident. And he walked away unscathed.
WIRED has a great article on the tech innovations that helped Grosjean survive the crash: A Race Car Crash From Hell—and the Science That Saved Its Driver.
Quoting from the article:
...The barrier did its job, it stopped the car. But from the harrowing speed of 137 miles per hour, the car was stopped almost too quickly. Its rear end, hefty with the weight of the engine, spun the car around nearly 180 degrees.
The car tore in half, clean open, rupturing the full gas tank and spraying gasoline everywhere. The terrifying orange-red plume was massive. It engulfed everything—the steel barrier, the front end of the car, and Grosjean himself.
After a 137-mph collision and 10 to 15 seconds in which he had to unbuckle his harness, grab blindly for support in the inferno, and pull himself out of the car, Grosjean emerged like a phoenix with nothing more than minor burns and injuries to his hands, feet, and ankles—and not one broken bone.
Not one broken bone. He walked away because of decades of work by unsung scientists and engineers.
Do check out the article. Amazing innovation, at the frontiers of speed.
Operation Warp Speed.
In a newsletter edition entirely about moving fast, I would be remiss to not talk about the COVID vaccine. And the unmatched speed of its development.
This tweet sums it up:
You don't need to read the whole table. Look at lines 2 and 3:
Jan 10: SARS-CoV-2 virus sequenced.
Jan 15: NIH designs mRNA vaccine with Moderna.
The vaccine was designed in just 5 days. 5 DAYS!
And now, last Tuesday, less than a year into the pandemic, the first person outside a trial was vaccinated in the UK.
The above is still West-centric of course. Remember, the Russian and the Chinese vaccines were operational much earlier. With less testing, sure. But as I mention in Probabilities, Vaccines, and Failed Fat Startup Experiments, the stakes are as high as they'll ever be. Releasing the vaccine was, and is, positive expected value.
GAVI has a great primer on the Vaccine Race - do check it out.
It has a map of the vaccines from different parts of the world, and what stage they're in. For instance, here's a map of all the vaccines in Stage 3.
Hayabusa (not the sports bike).
Another piece of news from last week: Japan retrieves asteroid samples in hunt for origins of planets.
Japan has retrieved a capsule of asteroid dust from Australia’s remote outback after a six-year mission that may help uncover more about the origins of the planets and water.
The spacecraft [Hayabusa2], launched in 2014 from Japan’s Tanegashima space centre, journeyed for four years to the asteroid Ryugu, where it gathered a sample and headed home in November 2019.
The probe landed on the asteroid twice, and the second time it created an artificial crater and collected some debris.
After Hayabusa2 dropped off the capsule [to Earth], it changed course and headed back into space.
Umm, why is this not a bigger deal!?
That's it for this week! Hope you liked the articles. Drop me a line (just hit reply or leave a comment through the button below) and let me know what you think.
See you next week!