[Music] every time you open your phone or computer you're walking onto a battleground for the most valuable resource of the 21st century your attention the term attention economy was coined by nobel laureate herbert simon who in 1971 wrote that a wealth of information would create a poverty of attention fundamental to the attention economy is the recognition of human attention as a scarce resource today we look at the positioning of companies within the attention economy through what we call our a2 matrix shorthand for attention times affluence the a2 matrix attempts to plot the attention and affluence
of a brand its product and or its users on the y-axis and the role of user revenue in the business model along the x-axis starting in the top right quadrant luxury the next quadrant mass market followed by menaces and in the top left quadrant the under achievers let's take a deeper look starting with luxury the luxury quadrant is for brands targeted toward consumers who are willing to pay a premium for products and the privacy and signaling that comes with those products these brands derive almost all their revenue directly from consumers apple is the dominant force
in this category and is joined by other primarily subscription premium products including netjets and peloton also in this category brands including lululemon sonos and beats which is apple owned the brand imperatives in the luxury category are simple and the decisions go something like this build or acquire more premium attention products or sacrifice your luxury positioning and arbitrage down for greater sales volume and transition to mass market so let's try to use our a2 matrix to predict apple's next big moves in the attention economy apple with 195 billion dollars in cash on hand is well positioned
to scan the total surface area of the luxury quadrant and look for beachfront real estate a likely opportunity connected fitness on average on average higher earners spend twice the amount of time exercising than their lower earning counterparts peloton recognized this when it launched a 2 000 stationary bike that has subscribers staring at a screen for 30 to 60 minutes 20 times a month on average or maybe once a week so i can justify getting the edibles and zacapa a wee bit early a wee bit early is peloton worth 40 billion dollars i don't know is
an additional two to four hours of attention in the context of fitness from the wealthiest and most influential people on the planet worth 40 billion to apple yes said captain obvious prediction expect apple or a deep pocketed platform to acquire peloton in 2021 as they try to elbow their way further into the lives of the wealthy attention economy another opportunity for apple electric vehicles tesla sits squarely in the luxury quadrant however tesla has promised its shareholders that it will become a mass market product leaving an opportunity for apple to sell some portion of the 34
million electric vehicles that goldman sachs expects will be in demand by 2035. in apple is getting into the car business as the car business is getting good prediction when apple launches its own electric vehicle expect it to be priced closer to a porsche than a prius and expect tesla to begin leaking market capitalization to apple next mass market this quadrant is for brands that do not have signaling power as they are consumed by almost everyone you went to high school with or realistically everyone that went to high school with me where i was no joke
six to 145 pounds with really bad acne anyways these brands also rely on revenues from users in this category we have netflix linkedin spotify meditation app.com dating app bumble a t and verizon stocks are typically about 70 to 80 numbers and 20 to 30 percent narrative it has flipped and now the majority of stocks in the tech space are largely driven by their narrative a t is a prime example of a firm that has been punished because of poor narrative it currently trades at roughly 2.5 times its revenue whereas spotify trades it roughly seven times
john stanky ceo of at t should start every earnings call by saying hello i'm john snanky ceo of the largest recurring revenue business in the world let's talk about the menaces menace brands are similar to mass market products in that they are focused on volume but differ from mass market brands and that these brands do not rely on revenues from users these are businesses that give the product away for free by the way if the product is free it means the product isn't the product you are in fact the product case in point the ogs
of the menace economy facebook and google specifically youtube whatsapp is a fallen angel a brand that was once mass market subscription offering that is now a menace under facebook's ownership for the menaces the brand imperative is simple overwhelm washington with lobbyists and pr professionals that smear lipstick over the cancer that are these menaces for years we've predicted the doj would bust up google and facebook and it looks like we are headed that way finally the under achievers this quadrant is for brands that occupy valuable real estate the attention of influential and wealthy people but are
yet to command the land they occupy the underachievers quadrant is the most transient underachiever brands are under pressure from shareholders users or both to change their business model the invisible hand of the market feels like an iron fist if you live in this quadrant case in point you guessed it twitter twitter has been in the underachievers dockhouse for years and in november when the stock was at 43 dollars we predicted they would move across the matrix to the luxury quadrant with a subscription offering pushing the stock to sixty dollars today the stock is roughly at
seventy dollars however however twitter needs to deliver on their promise if they hope to have a permanent home in the luxury quadrant the og example of an underachiever making the move across the quadrants the new york times once upon a time no joke i raised 600 million dollars and joined the board of the new york times to try and steward the company towards a premium position but i was too early which is sort of a way of saying i was ineffective by the way i have mastered i mean literally mastered the art of being infected
i can focus all of my thoughts and energies on something and then nothing happens i am the yoda the yoda of ineffectiveness nothing but starting in 2011 the new york times recognized its a2 potential and turned itself from an ad driven delinquent to a subscription honor student a decade later digital subscription represents the new york times largest revenue stream and the firm has quintupled its market capitalization oh that gray lady hola cnn who is still dependent on the advertising portion of its 1980s cable television model finds itself in a midlife crisis in our underachiever quadrant
promoting opioid-induced constipation medication adjacent to anderson cooper and farid zakaria for 99 cents an hour which is what cnn gets for pelting you with this is not the right way to monetize this creativity and this genius prediction cnn will be spun out of a t this year netflix will be a bitter as it looks to bring another howitzer to the streaming war specifically news by the way twitter should also consider buying cnn clubhouse is another influential platform that's worth one billion dollars or most recently raised money at a one billion dollar valuation with an estimated
six million users i hate clubhouse despite having never been on the platform i get text messages no joke from friends saying some weird angel or vc is trashing me in a room on clubhouse i don't even know what that means why would i leave my house go where people are angry and mean to me i have that at home it's called having a teenager anyways it is still early days for clubhouse however in contrast to twitter clubhouse appears to be the company that understands what it is and is already planning to embrace its fate as
either a premium or mass market product it appears there's actually someone who understands strategy at clubhouse looking at these firms through the lens of data and through different lenses doesn't get us to the right decision nor do predictions however however they likely get us to a better one asthmat sonathi whale said wisdom at the bottom of a well sees further than intelligence at the top get in the well get wet wait in data work through to a prediction and get to better decisions we'll see you next week you
