Start Up No.1776: Twitter v Musk pt..3?, PC market stalls, Apple may face new EU music antitrust, get random on Substack, and more


the Pebble smartwatch was a great success.. until it wasn’t. Ten years after its crowdfunding, its CEO reflects on what went wrong. CC-licensed photo by Michael Sheehan on Flickr.

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A selection of 9 links for you. Is that the time? I’m @charlesarthur on Twitter. Observations and links welcome.


Success and failure at Pebble • Medium

Eric Migicovsky, who was the CEO:

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In 2012 we launched Pebble on Kickstarter and raised over $10m from 68,000 people around the world. This was our first breakthrough (a classic five-year overnight success!) Over the next few years, we sold 2 million watches and did over $230m in sales.

But in the end, we failed. We didn’t build a sustainable, profitable business. We sold parts of our business to Fitbit at the end of 2016.

What happened? Here’s my TL;DR of why we failed:
• Sales for our version 2.0 (Pebble Time) in 2015 didn’t hit forecasts and the oversupply in inventory put us into a major cash crunch (targeted ~$100m in sales, we did $82m)
• Pebble Time did not succeed because in a quest for huge growth we attempted to expand beyond our initial geeky/hacker user base and failed to reposition it — first as a productivity device, then as a fitness watch. In hindsight, this was stupid and obvious and 100% my fault. We didn’t know if there was actually a market for a more “productivity” smartwatch and we weren’t a fitness company at the core
• Another reason — the bezel on Pebble Time was too damn big! I knew this in my heart but the project was so behind at the time that I didn’t have the guts to change it
• In 2015, we also doubled our operating expenses in anticipation of future growth. This, combined with lower gross margins as we tried to cram more technology into our 2015 lineup, caused us to lose profitability (we did $9m in net profit in 2013 and broke even in 2014).

We spent 2016 desperately trying to cut costs, retain the team, build another product, raise money and, eventually, sell the company.

The underlying problem was that we shifted from making something we knew people wanted, to making an ill-defined product that we hoped people wanted.

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There was also the little thing of Apple launching its Watch in 2014, arriving in 2015, though as Migicovsky points out Apple didn’t get the positioning right either: it thought the smartwatch was a fashion item, instead of a fitness and messaging device. I had a Pebble, and while it was fine, it couldn’t compete with the Apple Watch. Though there was all the (bigger) Android market for Pebble to go after.
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Twitter grapples with an Elon Musk problem • The New York Times

Mike Isaac and Kate Conger:

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Inside Twitter on Monday, employees were dismayed and concerned by Mr. Musk’s antics, according to half a dozen current and former workers, who were not authorized to speak publicly. After the billionaire suggested over the weekend that Twitter convert its headquarters into a homeless shelter because “no one shows up anyway,” employees questioned how Mr. Musk would know that given that he hadn’t visited the building in some time. They also pointed out that Mr. Musk, whose net worth has been pegged at more than $270bn, could easily afford to help San Francisco’s homeless himself.

Others said they were upset at Mr. Musk’s tweets criticizing the company’s product and business model, noting that he didn’t appreciate the time and thought that went into updating Twitter’s services over the years and that he had no knowledge of the product road map. Some employees said they were relieved after reading that Mr. Musk would not join the board of directors, according to people who viewed internal communications at Twitter.

When it still appeared that Mr. Musk would join the board, Mr. Agrawal scheduled a question-and-answer session for Mr. Musk to respond to employee concerns. The session has been canceled, a person with knowledge of the decision said.

Mr. Musk’s push is the second time in two years that Twitter has dealt with an activist investor. In 2020, the investment firm Elliott Management accumulated a 4% stake and used its position to press for changes, including an ouster of Jack Dorsey as chief executive and more aggressive financial growth. Mr. Dorsey stepped down in November.

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But the latter was at least something comprehensible. Musk deleted a load of tweets over the weekend about “ideas” he was considering. I’d say unless you’re directly working for Musk, it’s simpler just to ignore him. If he has something he wants to say, he can write a letter like anyone else. (As a general rule, I don’t think it’s worth following anyone with more than 200,000 followers on Twitter. Does terrible things to their ego.)
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Worldwide PC revenue up by more than 15% even as shipments fall 3% in Q1 2022 • Canalys

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The PC market had a healthy start to 2022 as overall revenue grew by more than 15%, despite the first year-on-year shipment decline since Q1 2020. The latest Canalys data shows that worldwide shipments of desktops and notebooks fell 3% annually to 80.1m units against a backdrop of major geopolitical turmoil and softening consumer demand.

Revenue, however, hit US$70bn as prices continued to rise in a supply-starved market and consumers’ appetite for costlier PCs kept increasing. Notebook shipments shrank 6% year on year to reach 63.2m units, while desktop numbers grew 13% to reach 16.8m units.

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Notebook/desktop divide stating steady at 80/20 there, as it has been for years. But now we’re probably going to start hitting all the effects of Shanghai, Shenzhen and Hong Kong shutdowns on the supply chain, plus shortages of chips, and the pandemic in retreat.

There’s only so many times you can kit out home offices, so we’re probably going to see the PC market go into retreat for the next year or so.
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Apple faces extra EU antitrust charge in music streaming probe – source • Reuters via Irish Times

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Apple faces an additional European Union antitrust charge in the coming weeks in an investigation triggered by a complaint from Spotify, a person familiar with the matter said, a sign that EU enforcers are strengthening their case against the US company.

The European Commission last year accused the iPhone maker of distorting competition in the music streaming market via restrictive rules for its App Store that force developers to use its own in-app payment system and prevent them from informing users of other purchasing options.

Such requirements have also come under scrutiny in countries including the United States and Britain.
Extra charges set out in a so-called supplementary statement of objections are usually issued to companies when the EU competition enforcer has gathered new evidence or has modified some elements to boost its case.

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It keeps on not going away, the Spotify case. This one could cost Apple a lot of money unless it does ease how it operates the App Store.
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The hot list: the rise and fall of the singles chart • Medium

Matt Locke, following up on my observation that all music charts get gamed, and have been pretty much from the start:

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the concepts we use to frame and organize attention are palimpsests, built through the same competitions, frustrations, and dead ends as culture itself. They are invented to solve an immediate problem but grow in value and importance until they end up an inextricable part of the culture they seek to measure.

This is how the singles chart started — not as an attempt to create the most influential concept in music of the past half-century, but as an attempt to sell more advertising in a fledgling music magazine. Its inventor, Percy Dickins, was a magazine advertising salesman, ex-merchant seaman, and keen amateur musician. Stuck at the Melody Maker, the stuffy trade magazine for professional musicians, Dickins jumped at the chance to join the team starting a new magazine — the New Musical Express. Looking to find ways to increase its advertising income, he saw an opportunity to run lists of the bestselling singles, a relatively new format that was gaining popularity with young music fans:

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We used to run a scheme for the PRS showing the best-selling sheet music. Looking through Variety they had all these records and I said to Ray [Sonin, the co-founder of the NME] “this would be a good idea, to have the best-selling records” and he said “good idea, you set it up.” I thought “If we’ve got all these records reviewed here, we can ask for ads to go with them. There are more records coming out now” and we gradually went that way. The paper was going well, we were being printed on a rotary press; it’s getting very popular and we are the paper. When we got the record chart going as well it was fantastic. We got more publicity from it.

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Thus, as Matt points out, the real intent of the singles chart wasn’t to find the most popular song. It was to sell advertising space.
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‘Black carbon’ threat to Arctic as sea routes open up with global heating • The Guardian

Karen McVeigh:

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In February last year, a Russian gas tanker, Christophe de Margerie, made history by navigating the icy waters of the northern sea route in mid-winter. The pioneering voyage, from Jiangsu in China to a remote Arctic port in Siberia, was heralded as the start of a new era that could reshape global shipping routes – cutting travel times between Europe and Asia by more than a third.

It has been made possible by the climate crisis. Shrinking polar ice has allowed shipping traffic in the Arctic to rise 25% between 2013 and 2019 and the growth is expected to continue.

But Arctic shipping is not only made possible by the climate crisis, it is adding to it too. More ships mean a rise in exhaust fumes, which is accelerating ice melt in this sensitive region due to a complex phenomenon involving “black carbon”, an air pollutant formed by the incomplete combustion of fossil fuels.

When black carbon, or soot, lands on snow and ice, it dramatically speeds up melting. Dark snow and ice, by absorbing more energy, melts far faster than heat-reflecting white snow, creating a vicious circle of faster warming.

Environmentalists warn that the Arctic, which is warming four times faster than the global average, has seen an 85% rise in black carbon from ships between 2015 and 2019, mainly because of the increase in oil tankers and bulk carriers.

The particles, which exacerbate respiratory and cardiovascular illness in towns, are short-term but potent climate agents: they represent more than 20% of carbon dioxide equivalent emissions from ships, according to one estimate.

…“We’re hitting this cascading tipping point for the climate,” said Dr Lucy Gilliam, senior shipping policy officer of Seas at Risk. “With the IPCC report, we are seeing again why we need to do something about black carbon urgently.”

Last Monday, scientists from the UN’s Intergovernmental Panel on Climate Change (IPCC) warned it was “now or never” for action to stave off climate breakdown.

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Ukraine and Russia gear up for war’s biggest battles • WSJ

Yaroslav Trofimov:

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The tactical situation is more advantageous for Russia on the Donbas front. Russian supply lines are shorter, and the more concentrated area of operations allows Russia to more effectively use air support, Ukrainian and Western military officials said.

This different type of warfare, with large formations facing each other instead of small-unit strikes, is a major reason why Kyiv says it urgently needs heavy weapons, such as artillery, tanks and antiaircraft batteries that most Western allies have been reluctant to supply so far.

“The battle for Donbas will remind you of the Second World War, with its large operations and maneuvers, the involvement of thousands of tanks, armored vehicles, planes and artillery. And this will not be a local operation, based on what we see in Russia’s preparations,” Ukraine Foreign Minister Dmytro Kuleba said after meeting NATO ministers this past week. “Either you help us now—and I’m speaking days, not weeks—or your help will come too late and many people will die.”

While Ukraine initially sought Soviet-designed heavy weapons systems that its troops are trained to use, the limited supply of this equipment and ammunition, combined with the prospect of a lengthy conflict, mean that Kyiv is now requesting purchases of NATO-standard heavy weapons, Ukraine Defense Minister Oleksii Reznikov said.

“The Soviet-made weapons that we have obtained can only strengthen Ukraine for a short time,” he said in a speech posted by the Ministry of Defense.

Ukraine managed to win the first round of the war because of close-contact infantry engagements, he said, but now Russia has changed its tactics and is relying more on long-range artillery, aviation and missile strikes—weapons that Ukraine has limited ability to counter.

“The war is entering the phase of competition for resources, which are almost unlimited in Russia in comparison to Ukraine,” Mr. Reznikov said. “To win in this war, we need a different kind of assistance from what we received before.”

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Five takeaways from the first round of France’s presidential election • POLITICO

Laura Kayali and Victor Jack offer some straightforward ones you’ll know (it’s Macron v Le Pen, Zemmour on the far right fizzled, Mélenchon on the last did well, and then this:

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4. Former ruling parties are dead

This presidential election has completed what Macron started in 2017: former ruling parties — the Socialist Party and conservative Les Républicains — are now damaged for good and it’s hard to see how they could recover. 

Valérie Pécresse, who represented Les Républicains, scored below 5 percent, according to projections. This is a double embarrassment: It is not only the lowest result for her party in its history, but it also means that Les Républicains potentially won’t get their campaign expenses reimbursed — as parties need to reach the 5% threshold to get their money back. 

Long-running divisions were also made clear shortly after the results, as Pécresse said she would vote for Macron while her right-wing internal rival Eric Ciotti said he wouldn’t. 

As for Socialist Paris Mayor Anne Hidalgo, she couldn’t even reach 2 percent. That’s one-third of 2017 Socialist candidate Benoît Hamon’s already historically low score.

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The effective dissolution of the main parties is amazing. Unclear whether that goes all the way down to local level. If it has, then it’s all En Marche and Front National. Centrist and far right. Quite the move of the Overton window.
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What Substack is hiding • Scrubstack

Elan Kiderman Ullendorff:

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You may have seen Wikipedia’s random article button. Click it and, as the name suggests, you’ll be taken to a random Wikipedia page.

Most websites don’t have a button like this. That’s because by definition, randomness entails relinquishing control. Platforms do not like to relinquish control — they want to design every aspect of what you see and when, to appear as a blank slate on which you can project all of your hopes and ideologies.

My experience of using Instagram, because of my social network, my behavior, and the data that has been gathered about me, is very different from your experience of using Instagram. It’s like we’re each trapped in a room and all of our content is quietly delivered through a slot in the door.

But imagine if we could walk down the halls and peek into the windows of each others’ rooms? What would we see?

In search of an answer to this question, I made a random Substack button called 🔀 Scrubstack.

You are reading a newsletter hosted on Substack right now. It is more likely than not that you are generally interested in what it has to say (I hope you are!), that there are relatively few degrees of separation between you and me, and that you’re reading this pretty soon after I wrote it.

Jumping through 🔀 Scrubstack is more akin to the experience of walking into a stranger’s home and taking a random book off of the shelf. What you read may not interest you, may not be meant for you, may be written for an imagined audience in the distant past.

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Randomness and serendipity are in sadly short supply. The latter in particular.
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• Why do social networks drive us a little mad?
• Why does angry content seem to dominate what we see?
• How much of a role do algorithms play in affecting what we see and do online?
• What can we do about it?
• Did Facebook have any inkling of what was coming in Myanmar in 2016?

Read Social Warming, my latest book, and find answers – and more.


Errata, corrigenda and ai no corrida: none notified

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