Special Report: The Changes To Come

Note: I’ve opened this Special Report for the week. This is supported by the Executive Membership. You can be a part of it under 20 seconds by starting here.

Set aside partisanship for a moment. With each new administration, things change. With each election cycle, the anticipation of those changes can make the difference between success and failure.

Change isn’t always gradual. In 2019, we passed the centennial anniversary of the end of the Spanish Flu. All the while, we were preparing for our own ghastly pandemic. It was a tumultuous time, then and now.

So [President Woodrow Wilson] created the Committee on Public Information, which was inspired by an adviser who wrote, “Truth and falsehood are arbitrary terms….The force of an idea lies in its inspirational value. It matters very little if it is true or false.” At Wilson’s urging, Congress passed the Sedition Act. Government posters and advertisements urged people to report to the Justice Department anyone “who spreads pessimistic stories…cries for peace, or belittles our effort to win the war.” Against this background, while influenza bled into American life, public health officials, determined to keep morale up, began to lie. [1]

History books glossed over the 15-month pandemic that killed some 50 to 100 million citizens across the world. The timeline skipped from trench warfare to the Roaring 20s and the Great Depression that would require another war to bolster America’s economy. When the world’s deadliest pandemic gave way to an economic boom and cultural touchstone, there wasn’t yet a name for the sensation of traveling from one extreme to the next in a short amount of time. The word “whiplash” wouldn’t be used until 1928 [2]. But that’s what the sudden jolt felt like: a teleportation from despair to no sign of it at all. From trouble to joviality, from clutter and confusion to clarity, one decade became another.

History does not repeat. But if history rhymes, change will come again like a whiplash. When 22-year-old Amanda Gorman read her inauguration poetry in front of the nation, it felt like whiplash. Just one week before she spoke, the steps where she stood were grounds for riotous behavior.

And yet the dawn is ours
before we knew it [3]

What does it say about us that several days can separate agony and disappointment from joy and optimism? The daughter of a single mother, hypersensitive to sound, and with a speech impediment that made her second guess her chosen profession delivered the words she spoke to a nation in transition so immaculately that within hours, she gained millions of new fans on social platforms. The contrast of her sunny yellow overcoat and the gray smoke of the riots felt like whiplash. And when culture and norms change, there is an entire world that follows.

Despite a depression that temporarily hindered an economy in 1920, the following nine years saw an unprecedented period of prosperity in America. When the tragedy of political turmoil and pandemic ended, Americans welcomed change. And those who anticipated the change saw wild successes. Manufacturers pivoted away from wartime wares to market goods to a thriving upper-strata of an economic base that welcomed convenience and the novelty of consumerism. Social events thrived, both legally and illegally. And thanks to newer technologies like the automobile, travel reached its zenith. [4]

The desire to rebuild, consume, and socialize has similarly begun to embolden our modern economy. Amidst the macroeconomic changes to our politics, our culture, and how we do business, I’ve selected 10 projections: large and small, macroeconomic and microeconomic.With Parler in legal limbo and without American servers, content moderation is in the spotlight once again. Substack’s leadership is unlikely to tolerate the provocations found on platforms like Gab or Parler but there will be analysts and pundits who test Substack’s “hands-off” moderation policy as the midterms approach and jockeying for favor begins ahead of the 2024 election.

In most cases, we don’t think that censoring content is helpful, and in fact it often backfires. Heavy-handed censorship can draw more attention to content than it otherwise would have enjoyed, and at the same time it can give the content creators a martyr complex that they can trade off for future gain. We prefer a contest of ideas. We believe dissent and debate is important. We celebrate nonconformity. [5]

From eCommerce analysts to Bitcoin evangelists, Substack is gaining speed as the platform of choice for expression, but it is politics that will make Substack a household name. As the honeymoon period ends for America’s 46th president, Substack will fill the space between the center and the Fox News flavor of punditry – and perhaps even the space between Fox News and the OANN approach to covering America’s politics and policy changes. There will be many more over the next few years.

Update: Kara Swisher on Substack (1/25)

With digital platforms like FanDuel, Draft Kings, and Barstool Sports in pole position, the laws have begun to reflect the future of sports fandom: legalized gambling. And more will follow. Why? States will view legalized gambling as a new pathway for increased tax revenue.

Michigan recently launched 10 physical sports books throughout the state.

Michigan residents love sports and, judging by inquiries we’ve received, eagerly anticipate using mobile devices to place bets through the commercial and tribal casinos. Online gaming and sports betting will provide the casinos with new ways to engage with customers while the state and local communities will benefit from taxes and payments on wagering revenue.[6]

Barstool was one of the 10, in partnership with Penn Gaming’s Greektown Casino. The media company’s real estate evolution is right on time. In The Public / Private Linear Play, I explain:

As the legalization of sports betting continues to convert casual fans into gamblers, it will happen on a channel that Barstool is exceedingly better at than Penn Gaming’s competitors: the internet. [7]

The idea that a single creator can become a viable multinational corporation is not new. Martha Stewart successfully navigated that with her omnimedia company that was founded in 1997. It went public shortly after on October 19, 1999. But the private equity and venture capital industries have been slow to apply growth capital to a new generation of internet-made solo creators. That will change as America’s fixation on politics shifts to other forms of information and entertainment.

The stakes are high. While Ryan Kaji earned $29.5 million from Youtube, his own brand of toys are now being sold in over 75,000 stores. It’s been reported that the nine-year-old’s toy empire is valued well over $900 million.

Meanwhile, Jimmy “MrBeast” Donaldson has proven, along with Kaji, that online audiences can influence offline retail. According to a recent report by New Consumer, Donaldson’s burger project has exceeded expectations.

Is MrBeast Burger meeting expectations? “No, it’s about seven times our expectations,” says Robert Earl, co-founder of Virtual Dining Concepts, the company whose platform is running MrBeast Burger. [8]

Venture firms that once focused on direct-to-consumer brands will now spend their energy on audience-first companies with much larger earning potential.

There is a lot of noise on Clubhouse, but the platform has hosted extraordinary discussions ranging from topics like CPG to local politics. The utility of the site will give way to the entertainment it can provide its listeners. A group of voice actors and musicians recently performed “Lion King” on the app, resetting the potential for what the app could be for talented creators.

The voice actors used the app to reenact songs from the movie and the musical, and it became a huge event on the app. They put on the musical twice, and both times, the Clubhouse rooms hit their maximum capacity of 5,000 almost immediately. [9]

As business and thought leadership begin to flee to other voice apps, fine arts will become a central theme. Young performers (specifically comedic talent) who will find their stride. 

There is very little that exists between news platforms like Fox News and its counterparts CNN, MSNBC, and the New York Times. At least, this is the typical expression proffered by politicos. When platforms try to cater to multiple political agendas, they face backlash.

Politico faced a backlash from its staff on Thursday after it handed its Playbook newsletter, a popular morning read in Washington, to the right-wing commentator Ben Shapiro for a day. [10]

In corporate media, consumers are made to pick a side. But what if they didn’t have to? We will begin to see media brands aiming to pull both sides closer to the center, presenting data, news, and opinion that stirs debate rather than dissension.

The “Overton Window” of American politics will return as Americans who are diametrically opposed to one another will find common threads in stories that exist next to one another. It will be difficult, but at least one publisher will address this challenge over the next four years.

Boomers are dominating eCommerce as of late. The arbitrage opportunity for retailers will be in finding ways to appeal to them.

As baby boomers move online, retailers and consumer goods brands are scrambling to meet them there with round-the-clock customer service, detailed nutrition information and interactive videos aimed at simplifying e-commerce for the uninitiated. Instacart, the nation’s largest online grocery provider, has created a service that helps older consumers set up accounts, fill their carts and place their first orders. [11]

We’ve been focused on the traditional shopping carts in eCommerce. For older Americans who have decades of practice shopping the aisles of stores, a new approach could accelerate eCommerce adoption among that group. How? By helping consumers visually shop aisles of grocery stores, markets, and department stores. Companies like Obsess VR are already working on a visual approach and grocery.

For many Americans, this will be a period of optimism and healing. A poet stole the show at the inauguration. That says many things about us. We wanted depth over “pop” production value, we wanted education over entertainment, we wanted to watch somebody new become, we wanted to agree on the merits of anything, and we wanted to listen to brilliance. But there is a greater theme at play.

Optimism and healing will be new buzzwords as Americans (left, right, and center) look to move beyond the politics that dominated the last several years. Certain companies are primed to benefit. Calm famously advertised on CNN on Election Day, but it’s a brand that few have heard of that may become a household label. Seed funded by LVMH and worn by NBA athletes and Hollywood actors, Madhappy has climbed the DTC Power List. The brand’s instagram following has grown 141% over the last 12 months and their site traffic has jumped 28%.

On the airwaves and in your Instagram advertising, unity will be the theme and “Buy American” will be the call to action. According to Glossy, the new Administration has prioritized domestic manufacturing and American-made goods.

The Biden plan, as proposed in July, would set aside $400 billion for government purchases of American-made goods, and invest $300 billion into the technology and manufacturing practices of American companies. For several American brands, the latter component has them feeling optimistic. [12]

In the Roaring 20s, patriotism was closely aligned to a nativism expressed through consumer behavior. This call to action mirrors that period of prosperity. As major brands call for calm, unity, and a more inclusive America – it will come at a cost to foreign manufacturers and brands looking for advantages in the United States. Some are already preparing for that change. Samsung is considering a $10 billion investment in a Texas factory.

Let’s face it: digital agglomeration has its limits. As America looks to stave off a recession while raising new tax revenues, a national emphasis on vaccinations and social distancing will give way to an emphasis on the physical retailers that were most disrupted over the previous year.

As the immunization rollout continues and rapid testing becomes commonplace in a new administration, mask-free dining, shopping, and flying will be early symbols of progress and status. Our physical retail industry is in peril and we will see a third-quarter call to action that will lead to wide support of these institutions after a strict mask mandate that lasts through the second quarter.

In a 2017 academic article by Yale’s Lina M. Kahn, she wrote:

[My] analysis reveals that the current framework in antitrust—specifically its equating competition with “consumer welfare,” typically measured through short-term effects on price and output—fails to capture the architecture of market power in the twenty-first century marketplace. In other words, the potential harms to competition posed by Amazon’s dominance are not cognizable if we assess competition primarily through price and output. Focusing on these metrics instead blinds us to the potential hazards. [13]

In a now three-year-old essay, I cited Kahn’s work to explain the stakes. The 45th administration would not upend precedent set by the Reagan White House, but a Democrat likely would. I went on to say:

Antitrust law is overdue for change. The language no longer matches the time. And while Amazon may not be the most deserving of this scrutiny, they are the most likely target.The laws will change to address the modern day concerns of retailers, logistics networks, newspaper publishers, ad firms, shipping companies, grocers, auction houses, book publishers, movie studios, software companies, hardware manufacturers, credit lenders, payment services, and internet service providers. [2PM, 14]

Lina Khan is now a front runner for President Biden’s FTC commissioner. The recent efforts by Amazon to supply solutions for vaccine distribution surely comes from a place of altruism. But it’s also a preemptive push to avoid an administration that is capable of pursuing wide antitrust litigation.

Like a whiplash, drastic changes in America’s politics and social fabric has consequences. Each election experiences these sudden shifts in incentive and priority. Rather than observing them, foresight provides the ability to participate alongside these changes, to build for them, to grow with them.

The period that followed the Great Pandemic of 1917-1919 was instrumental to America’s standing as a world power. The Roaring 20s erased much of the damage done by war, poverty, and disease. Women won the right to vote, the Harlem Renaissance changed America, sliced bread landed in grocery carts, Mickey Mouse won hearts, Jay Gatsby told the stories of his time, and Babe Ruth won records. One decade overshadowed the one that preceded it. History doesn’t repeat, it rhymes. And this time, the poet wore yellow.

By Web Smith | Editor: Hilary Milnes | Art: Alex Remy | About 2PM

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