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The DL - Seattle is the New Center of Tech, Future of EdTech, Great Interview Quotes, and Data on the Travel Recovery

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Welcome to The DL, a weekly newsletter about tech, startups, and investing in the Pacific Northwest.
 
May 18 · Issue #48 · View online
The DL
Welcome to The DL, a weekly newsletter about tech, startups, and investing in the Pacific Northwest.

This week’s issue discusses whether the balance of power in tech is shifting to the PNW, what the future of education could look like, awesome interview quotes, and some BCG analysis on the travel recovery.

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Is Tech's Balance of Power Shifting?
Cool graphic showing how ~100 companies make up 50% of the stock market
Cool graphic showing how ~100 companies make up 50% of the stock market
Tech’s spiritual centre of gravity is moving from San Francisco to Seattle

Last week, The Economist published an article arguing that the pandemic is shifting the balance of tech power from SF to Seattle because of “a new era of subscriptions, e-commerce, and business infrastructure.”

The big tech companies have all done quite well over the last few months, but advertising revenue (Google and Facebook) is under pressure as companies pull back on marketing budgets, and hardware sales (Apple) are weak because of store closures and supply chain interruptions.

While the Bay Area tech companies are trying to quickly adapt by investing in new products and business lines (e.g., Facebook’s new video chat, Apple’s focus on services, Google’s cloud investments), Microsoft and Amazon have taken huge leads in…
  • Cloud: $40B+ of AWS revenue
  • Cloud + Productivity: $42B of MSFT “intelligent cloud” revenue, 200M Office365 MAUs, and 75M Teams DAUs
  • Ecommerce: $140B of AMZN marketplace revenue
  • Subscriptions: 150M Prime subscribers, 90M Xbox Live subscribers

Great to see The Economist recognizing the strength of the Seattle tech ecosystem!

The Future of EdTech
Scott Galloway wrote a great piece on the future of education in NY Mag, and instead of just naming startups building personalized education tech, he says:
The strongest brand in the world is not Apple or Mercedes-Benz or Coca-Cola. The strongest brands are MIT, Oxford, and Stanford.
…the ultimate vehicle for a luxury item is to massively and almost artificially constrain supply.
I’ll have 170 kids in my brand-strategy class in the fall. We charge them $7,000 per student. That’s $1.2 million that we get for 12 nights of me in a classroom. $100,000 a night. The gross margins on that offering are somewhere between 92 and 96 points.
There is no other product in the world that’s been able to sustain 90-plus points of margin for this long at this high of a price point. Ferrari can’t do it. Hermès can’t do it. Apple can’t do it.

He then predicts that elite universities will partner with tech companies to expand enrollment, and this will result in a lot of problems for second- and third-tier schools, which will be significantly less desirable.

Thoughts? I love the point on brand value, but if virtual classrooms could allow universities to double or triple enrollment without impacting the value of their brands, feels like they would have done that already.

Quibi Quotes
Do people REALLY care about rotatable video?
Do people REALLY care about rotatable video?
If you haven’t downloaded Quibi yet… don’t worry about it. No one else has either. Despite raising $1.8B and launching with content from JLo, Lebron, and Steven Spielberg, they only have 1.3M active users. (For comparison, Netflix signed up 16M new users in Q1)
Jeff Katzenberg, the founder of Quibi, did an interview with the NY Times last week with some quotes that I found pretty entertaining:

On COVID…
I attribute everything that has gone wrong to coronavirus. Everything.

On raising $1B+ and not testing your product…
There are a whole bunch of things we have now seen in the product that we thought we got mostly right, but now that there are hundreds of people on there using it, you go, ‘Uh-oh, we didn’t see that.’

On a big investment in news shows called The Daily Essentials from NBC, BBC, Telemundo, and ESPN…
The Daily Essentials are not that essential.

On the success of TikTok…
That’s like comparing apples to submarines. I don’t know what people are expecting from us. What did Netflix look like 30 days after it launched? To tell me about a company that has a billion users and is doing great in the past six weeks, I’m happy for them, but what the hell does it have to do with me?

Lesson Learned: Don’t take that NYT interview when you are significantly underperforming, and all of your competitors are thriving!

Other stuff Dan's talking about
📊 BCG Travel Insights - Holy crap, is this what slides look like now?! Check out this very thorough analysis from BCG on what the COVID recovery in travel looks like – make sure you switch the tabs at the top to go through all of the data (h/t to Sunil for sharing!)
🕰️ How Time Works Now - The product managers working on time wrote some great update notes on how it works differently now
😊 Advice from Happy People - Great Reddit thread asking… “People who are 40+ and happy with their life, what is your advice to people in their 20s?”
💰 Wealth, show to scale - Nope, the site’s not broken. Just keep scrolling to the right on this crazy data visualization

📣 PNW Tech Community Shoutout
If you’re ready to take the leap and leave your big company to start something new, check out the Venture Out program. Applications for the next batch of their 12 week Launch program just opened today!

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About me: I work as an investor at Madrona Venture Group, a Seattle-based venture capital firm that has been early partners with companies like Amazon, Smartsheet, Apptio, and Redfin.
If you have thoughts, questions, or comments, hit reply! If you’re new, check out some of the DL’s top articles from the last few months:

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