What would Napoleon do against GAFAs?
Ephemeral Reviews, Essays and Opinions s°02.ep12 - 2020.06.16
We are not grown equal. Can you guess who not only beat revenues by 10% in Q1 2020, but also guided next quarter’s revenues over 7% above estimates, demonstrated 53% year-on-year growth, and had over 130% net revenue retention? Welcome to the wonderful land of top decile SaaS companies. Link (S)
With its blockbuster Fortnite (3.2B hours of playtime in April), its major game engine Unreal and may other services it’s building on top of them, Epic Games sounds like the most underrated of the big unicorns of the moment. Because it’s confidently aiming for no less than laying the foundations of the Metaverse. Link (T)
Porn is often the harbinger of massive trends to come, so when that industry’s performers are starting to undercut the dominant platforms to go straight to the fans, we should all pay attention. Link (T)
Exploitation or preservation, mass or elite, openness or isolationism, past or future - no place is more symbolic of these great dilemmas than Venice. The city is at a fascinating crossroads. Link (S)
I have a very clear memory of my “GAFA epiphany”. It was July 2014. I was driving to the Cerisy Seminar in Western France, an old place of retreat and wisdom Tom was to discover a few years later. Movement is key for introspection and ideation - something we have all experienced while walking, running, swimming, biking... Grasping the steering wheel I just wanted to reach the destination and make this calculation: how do the total market capitalizations of the French top corporations index, CAC 40, compare? And the Fabulous Four? Subsidiary question: what would their respective average age be?
At that time, we in Continental Europe were the first to consider Google, Apple, Facebook and Amazon as a consistent group of companies. With a bitter mix of distance (and thus, clear sightedness) and powerlessness.
Back then the CAC 40 was a few hundreds of billions (euros or dollars) above the GAFA.Microsoft has since joined the crew to form the GAFAM and Apple or Microsoft alone weigh as much as the whole CAC 40. Maybe “that’s just the French economy, stupid”? It is true, we have recently had little to boast about and poor reason to express our supposed arrogance, but that is not the point. Or the scale. To measure the scope and hold of the Big 5 you need to understand this: Google (Alphabet) + Apple + Facebook + Amazon + Microsoft now represent a $5.000 billion total market cap, 20% of the total S&P 500, 50% of the NASDAQ 100.
The die is cast.
It is way too late to lament this crushing defeat: Europe is the number one digital market in the world and holds less than 5% of the global digital market, with only two corporations in the top 50 tech companies in the world (SAP and Spotify).
The die is really cast.
My first boss ever was a 5-star general and former military chief of staff to the French Prime Minister. I called him last week to share these observations and ask him if at any moment in the history of warfare such a situation happened and how a weaker fighter opposed to several stronger enemies could avoid surrendering and succeed.
He immediately thought of the Horatii and Curriatii brothers.
Please Wikipedia, come to my rescue: Livy recounts this tale in the first book of his History of Rome. During the Roman king Tullus Hostilius' war with the neighboring city of Alba Longa, it was agreed that fighting a costly war between their armies would leave the door open for an Etruscan invasion. Sabine dictator Mettius Fufetius appealed to Tullus Hostilius that the conflict should be settled by a fight to the death between the Roman Horatii triplets and their Alban counterparts, known as the Curiatii. They met on the battlefield between the lines as the two armies and their countrymen looked on.
With so much at stake, both sides fought bravely. The Horatii had wounded all three Curiatii, but two of the Romans were killed in the process. That left their brother Publius alone and surrounded by the three Albans. Though he was uninjured, Publius realized he stood no chance against all three of his enemies together. So he began to run across the battlefield instead. The Albans pursued him, each as fast as their individual injuries permitted. This was exactly what he had hoped they would do, and after they had gone far enough, he saw that the Curiatii had become staggered and were separated from each another. His plan had worked perfectly. He turned and launched a furious attack on the first, least-injured Curiatius and slew him.
The Roman spectators, who, moments before, had been sure of defeat, began cheering wildly as the Albans began shouting at the Curiatii to regroup in the face of Publius' onslaught. But before they could, the Horatius caught up to the second Curiatius and killed him as his brother, helpless, looked on. The final Curiatius was physically spent from his wounds and the chase. His hope had been crushed by watching both of his brothers die. He managed to unsteadily stand his ground and faced the Horatius, who was heartened by his wildly successful strategy and confident of his imminent victory. Publius declared that he had killed the first two Curiatii for his fallen brothers. He would kill this last one for the Roman cause and their rule over the Albans. He thrust his sword down the Alban's throat and took the armor of his slain enemies as the spoils of his victory.
Afterwards, the Alban dictator Mettius honored the treaty and Alba Longa briefly accepted Roman rule.
A nice and inspiring story, but they were three on each side, of equal force and the rules of the battle were kind of artificial...
A few days later my general friend got back to me: “If I get it right, you are looking for examples and precepts in strategic history related to the position where you are confronting or depending on plentiful and powerful enemies?”. “A good example is the French campaign in 1814. To specialists, it is the most brilliant of Napoleon’s campaigns as he achieved to resist 3 armies and even more nations with vastly inferior forces: Austria, Prussia, Russia, and other German armies of the Sixth Coalition which had invaded France”.
The first principle here is the division and separation in space and time to fight against each enemy one after the other. Here, by the way, the GAFA or GAFAM approach which tries (and succeeds) to make their companies look and act as a consistent block is a strategic nonsense aimed at blocking outside attacks.
The second principle is “the enemy of my enemy is my friend”. You have to build alliances, even short-lived, with one or the other to try to defeat one of the others. Shall we take some of our Google budget to Amazon? Shall we try to talk to Huawei or Tencent to find more options?
The third principle is to foster division and discord within the enemy camp. And the former fighter pilot was kind enough to dig into the Chinese Thirty-Six Stratagems. He told me “you can mix many tricks” like:
1) “Striking a blow inside (Yin) and not outside (Yang)”, in other words, dividing instead of fostering cohesion,
2) Even more devious, you can think of “Letting the enemy's own spy sow discord in the enemy camp”, here regulation could be a weapon of course but also datasets as lures or Trojan Horses, just like this artist did to fake a Google Maps traffic jam,
3) “Hiding a knife behind a smile”, as great power is always hidden behind an air of weakness, hmm, Mark Zuckerberg is a master here,
4) “Luring the tiger off its mountain lair”, never directly attack an opponent whose advantage is derived from his position. Instead, lure him away from it… especially as the tiger can’t bite when you are behind its back. Offering a totally different perception on the current Microsoft / Health Data Hub controversy…
The reading of these Chinese stratagems was instructive. If the situation gets even worse, I remember there are at least 3 more stratagems that could be helpful:
5) “Feigning madness but keeping your balance”, I believe we have already tried the first part of this one many times… or was it all a sham?
6) “Sacrificing the plum tree to preserve the peach tree”, … but which exactly are our peach trees? German cars? Luxury goods? Lifestyle?
7) “Inflicting injury on oneself to win the enemy's trust”...
But this last one echoes our sense of reality. Just like when you pinch yourself. Just out of the lockdown, and even if all seven of these tactics make sense, what would we have been without Google, Facebook, Amazon, Apple, Microsoft (and Netflix, Zoom, Slack, etc.)? They were our allies for sure to fight COVID-19. We love them - probably even more than we love to hate them. That’s the thing with imperialism: 150 years after the Napoleonic Wars, Europe invented the Stockholm syndrome. But, love it or hate it, our fate is now very clear to me. Mine, at any rate, is to arbitrate these platforms to take the best from them and get ready for other substitutes if they appear...
The crisis is everywhere! You’d better take care of your old computer and bet on better algorithms. (S)
Kickstarter’s employees managed to achieve something previously considered impossible in startupland: unionizing. Not so much for better perks but to call for a greater voice in decision-making. Could this mark the resurgence of unions - but this time for white-collar jobs? Link (T)
Inspired by Alphabet and acknowledging antitrust scrutiny on big acquisitions, Facebook is launching a new venture fund aimed at startups. Link (S)
Elon Musk isn’t kidding about Mars. Now that SpaceX has proven it can safely bring astronauts to the International Space Station, its CEO asked employees to redirect their efforts to Starship - the usable rocket that could carry 100 persons to the Moon or to the Red Planet. Link (T)
Linux is making it to infinity and beyond. Link (S)
Creators rising against all-powerful distributors: before the rise of the GAFAs, it happened in the 1990s and 2000s in the video game industry. And it kind of worked. Link (T)
In China, Tencent is the Internet. In the rest of the world, Tencent is leading the gaming industry. Its masterstroke: growing its amazing soft power under the radar of the US-China trade war. Link (S)
An amazing series on Apple’s success in China, from product-zeitgeist fit to lessons learned through relationships with Tencent and local authorities. Link (S)
A little bit of organizational thinking to diversify our insights: 5 types of social networks that you should provide to newcomers - and probably to everyone else. Advice, development, social support, friendship, and organizational information networks should be on your mind. Link (T)
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Edited by Stéphane Distinguin (S), Founder and CEO of Fabernovel, and Tom Morisse (T), Fabernovel alum and Knowledge Manager at Spendesk, Stéréo is a digital-oriented newsletter highlighting the main developments and weak signals affecting the world’s societies and economies.
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