The Great Realignment
When populism, platforms and power collide.
ON THE POD: Episode 121
We examine the Great Realignment as tech and government unite to assert US tech dominance over ideas of digital sovereignty. Meanwhile, BuzzFeed plans its own social platform, despite toothpaste rarely going back into the tube. Plus: assessing OpenAI’s grandiose Super Bowl ad.
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Out Friday AM.
THE PVA CONVERSATION
Populism and platforms
TROY: I watched JD Vance’s scolding “America First” speech at the big AI event in Paris this week. In sharp contrast to the more cautious tone of the previous administration, Vance proclaimed bluntly that America will lead in AI; “I’m not here this morning to talk about A.I. safety,” he said. “I’m here to talk about A.I. opportunities.” Stop handcuffing our tech companies with burdensome regulations, like your pesky Digital Services Act and GDPR (yes, moronic indeed… thank you for mentioning). America will not suffocate AI innovation with undue regulation and neither should you. Naturally, he warned of the perils of AI ideological bias, censorship and the need to protect free speech. Tech is politics now.
Of interest was his emphasis on the seemingly counter intuitive idea of AI's potential to create jobs; “The Trump administration will maintain a pro-worker growth path for AI so that it can be a potent tool for job creation in the United States.” An optimistic but pragmatic threading of the needle. On one side, protect the populist forces that elected you. On the other, get behind the moneyed global tech giants that anchor America’s technological pole position. Ever aware, these populist media platforms created the media precondition for Trump’s reelection. These are the communication platform mechanics you excel at. They got you elected.
A GREAT REALIGNMENT was the notion that popped into my head as Vance spoke. In US politics, international relations, the Middle East, in work, and of course media… Everything is in play. And if I was going to put my finger on the two key forces underneath the Realignment it is the reinforcing and contradictory power centers of POPULISM and PLATFORMS. PLATFORMS channel the POPULIST energy. PLATFORMS turn politicians into influencers. PLATFORMS dull the critical and opinion shaping power of traditional media. Paradoxically, they also concentrate power with a few. Seems to me, AI also has the potential to be a devilish power concentrator.
Trump, Vance and their crew seem to be navigating a fine line between the people and the power. Vance’s AI speech reflected this tightrope walk.
How do you see the Great Realignment? Seems like a good theme for our episode.
BRIAN: As a history buff, I like the theme. It’s very American.
Realignments are pivotal periods where great change happens in a short period of time. This country’s history is replete with them, with the first being the realignment of the Federalists vs the Jeffersonians. More recently, the big realignment was pretty much the conservative revolution that started with Goldwater and crested with Reagan.
There are signs we are in a period of realignment now as the GOP has transformed itself and is now a weird fusion of populism and techno libertarianism. Every political coalition is going to have its inconsistencies and contradictions. This one is no different.
The tech platforms have a lot of short-term upside in having the US government include “trade barriers” like privacy regulations in negotiations. Trump is always trying to see what he can get, so Vance’s brief was to take a maximalist position of urging capitulation to whatever the US wants. The EU will get the brunt of this because they have been most aggressive in using regulation as its main tool for asserting digital sovereignty.
Another realignment I’m tracking is how publishers are realigning their businesses to try, as best they can, assert their own sovereignty. Silicon Valley loves lauding high agency, but publishers I talk to resent the perceived loss of agency they have. Google can take a manual action and wreck a business.
BuzzFeed’s longshot plan to create its own social platform — I admittedly do not understand what shape this will take since it does not exist — is an outgrowth of this. I’d like to see publishers get more aggressive in taking some measure of control over their businesses, even if that means smaller businesses. The highest agency publishers are the smallest.
ALEX: It’s hard to tell how much of this stuff is in fact happening. Ezra Klein is telling us not to believe him while it also feels like Bannon’s playbook of flooding the zone with so much stuff you can’t see the big stuff happening. I just don’t know how long this lasts or how the brittle alliance of populism and billionaire worship continues to make sense to the people who voted against the “elite”. New media players emerge in times like this. New technology, new people in power, and a set of new problems to galvanize an audience around. My money would be on the people turning away from culture war and towards class war. The wealth gap is the biggest most clearly definable problem of the moment and parading billionaires and their power is fuel on that fire.
The shift is also very much biased around gender. If only women voted we wouldn’t be here and the same playbook that was used time and time again to influence young men in search of meaning and dominance has worked yet again but can it hold long term? I can’t expect all of this won’t end up with a pretty massive pendulum swing. Everything is lined up for it.
YouTube wins
TROY: I have to give it to Google. Over the past few years, the two best things that have happened to my TV experience have been YouTubeTV and YouTube. YouTubeTV bested the cable box in a million ways and made NFL Sunday Ticket a good product. And YouTube is just a better way to indulge our niche interests. It makes me feel productive vs. wasting time with streamer junk food. Buying YouTube Premium for 10 bucks to get the ad free product is the best TV investment I’ve made hands down. It comes as no surprise that YouTube on the TV tops the streaming charts and has overtaken mobile consumption in volume.
Maybe this seems obvious now, but I have to say this surprises me. Video has trounced text as the leading populist medium. Independent creators have built a massive craft industry, self producing really good medium and long form content that competes with the pros. YouTube has benefited mightily from long-tail economics and the most sophisticated revenue sharing ecosystem. Their tools for creators and consumers that are fundamentally changing the nature of video creation and entertainment (Community, Hype, phone/TV pairing, AI creator tools like Dream Screen, Dream Track). Media is so powerful when viewers participate, when creation morphs into community.
Meanwhile, podcasts have morphed into ambient video entertainment taking share from all the talk formats on old school TV. Rogan’s Trump interview has 55 million views on YouTube right now. The world's most important conversations are happening here. And, content owners are increasingly willing to dump marginal catalog onto the service.
The proposition keeps getting stronger. You want to be YouTube right now.
BRIAN: Check out Neal Mohan’s annual letter. He declares YouTube is the new TV. One of the oddities of the Great Realignment is how there is so much garbage in the Information Space, only there is so much amazing content that’s readily accessible. YouTube has done the best job of creating positive incentives for creators to build real businesses.
ALEX: Youtube Premium is by far the most valuable subscription I have. No ads, just tons of great content. They’ve achieved something astonishing which is everything from 10 second clips to 3 hour movies existing in the same interface. Every competitor is very much bound by the formats they support, either short form (Tiktok) or traditional linear episodes or movies (Netflix). This means that it’s got a really wide mandate and their algorithm seems good enough at building something coherent from that.
ANONYMOUS BANKER
Creator Economy Booming
The creator space continues to see meaningful deal activity. This week, Slow Ventures announced that it raised a $60 million seed fund for creators, branding it as the ‘first’ creator-focused fund—though other funds have already been investing in this space.
As part of this initiative, Slow Ventures recently added prominent Substack writer Jack Raines to the team. I’m surprised more funds haven’t added writers, as they tend to have strong networks and access to valuable deal flow.
Among funds investing in the creator economy, The Chernin Group is among the most active. Notable creator-led companies in its portfolio include Cars & Bids, Epic Gardening, and Night.
A broader question in the creator economy is how to best align incentives between creators and investors for long-term value creation. Significant creator-led exits have yet to materialize, but investors are exploring multiple strategies to gain exposure to the space.
In other creator news…
ShopMy, an influencer network, just raised $77.5mm to expand its platform and reach more creators. ShopMy is similar to Mavely, which was acquired earlier this year at a strong revenue multiple.
Yahoo is now partnering with creators for content syndication and ad revenue sharing. Yahoo has long been a monetization partner for major news sites, and its move to support independent creators is a positive development.
24 good links from our group chat
Buzzfeed has a new manifesto and mission. Build a SNARF free social network.
Jonah noted to Peter Kafka that BuzzFeed is well positioned to pull this off because it is now smaller and by necessity scrappier after the bet on a SPAC-fueled consolidation fizzled.I love a tidy new brand system.
OpenAI’s SuperBowl ad made good use of it to frame the company as a history-making innovator.Upload your copy and presto… Descript will make you a video.
Start at ChatGPT. Upload your copy. Or just have it make the copy for you. It will send it to Descript and pop out a narrated video. Results are uneven and weird but worth a tinker.Gary does economics.
Gary made millions of pounds working in The City, betting inequality was going to destroy our economy. On this channel you get Gary’s view on what is really going on.Bill Gates Isn’t Like Those Other Tech Billionaires.
“I always thought of Silicon Valley as being left of center,” Mr. Gates said. “The fact that now there is a significant right-of-center group is a surprise to me.”Our old ideas of media quality don’t matter.
“It is clear today that consumers are redefining quality in media. Creator content usually has none of the traditional markers of quality, but it keeps taking share. You can see this empirically, especially in video and gaming. Consumers must be drawn by something else.”How Obama built an omnipotent thought machine and how it was destroyed.
”At the end of the day, Elon Musk may take ketamine all day long while wandering the halls of his own mind in a purple silk caftan. Donald Trump may be an agent of chaos who destroys more than he saves. Benjamin Netanyahu may or may not make peace with the crown prince of Saudi Arabia, who may or may not turn out to be a good guy. Regardless of their faults, all three men shared a common trait at a critical moment in history—they trusted their own stubbornness against the mirror world of digitally based conformity. The human future rests on individuals in all walks of life and representing all parties and all currents of opinion being brave and independent-minded enough to make that same choice.”What makes an AI application defensible?
”I’ll argue that it’s in this environment of a massive war between “GPT wrappers” that the traditional defensibility strategies — particularly sustained advantages in distribution and network effects — will return to the forefront. They won’t manifest in exactly the same ways, but instead, hybridize with AI features to create something new. In that way, the next gen of AI products will ride some of the forces that have driven the last few waves of computing, whether in Web 2.0 or crypto or the on-demand economy.”Go Emily!
Emily Sundberg’s business newsletter, Feed Me, has made her a rising Substack star.Pick your tribe: tech or finance.
Finance has more — don’t laugh too hard now — humility. Precisely because banking in particular has a bad name, at least post-Lehman, at least outside America, its practitioners have to tread gingerly these days. People whom the world is disposed to hate tend to learn a sort of pre-emptive charm.Why does Trump need a sovereign wealth fund?
America already is a sovereign wealth fund. What came out is what America is today.A great interview with Google DeepMind CEO Demis Hassabis.
AGI is overhyped in the short term. But give it five years.Alarmed, Employers Ask: What Is ‘Illegal D.E.I.’?
”They are retreating, or clamming up, as they brace for lawsuits encouraged by President Trump’s war against D.E.I. Employers are walking a narrow path: They are trying to keep enough of their diversity efforts in place to remain protected from future discrimination lawsuits, while also avoiding Mr. Trump’s ire, federal investigations and lawsuits from anti-D.E.I. conservatives.”Fox Red Seat Ventures acquisition hedges against platform shift.
‘Almost like surrender’: Steve Bannon on the media in Trump’s ‘Days of Thunder’.
”Bannon watches more MSNBC than your average Upper West Side retiree — really, more than anyone else I know — on a giant screen in the front room adjoining the studio where he films War Room every afternoon. That’s where he’s been watching what he sees as the collapse in the power of the mainstream media, as big stories slide quickly out of view, replaced by the next outrage, then the next and then the next.”Sam Altman fires back. At Elon: ‘I don’t think he’s a happy person. I feel for him.’
Tracking Trump’s economic, market and constitutional milestones.
Always useful perspective from Michael Cembalist at J.P. Morgan.
GOOD PRODUCT
Merlin just identified the Northern Cardinal in my yard.
Many see cardinals as symbols of loved ones who have passed away, believing that spotting one is a sign of their presence. Hi Pop!