Dana Blankenhorn

Sell ESPN

For all you read about how great Walt Disney CEO Bob Iger may be, the stock has gone nowhere in 5 years. It was at $101/share at the start of May 1998. It’s $102 now.

Iger got thrown into the culture wars by Florida Republicans, and while many are applauding his strategy, he wants to get out soon and needs a big win.

Selling ESPN will be a big win.

What stock analysts will tell you is that cable is dying, and ESPN is more dependent on it than anyone. It now collects $9/month from everyone’s basic cable bill whether they watch its channels or not. That’s a big reason many are canceling cable.

But there are two bigger problems looming over the company.

The first is the cost of broadcasting rights. That’s rising fast, and ESPN is losing rights auctions. It now dominates only hockey and college football. It has one-fourth of the NFL, one-half of the NBA, one-third of baseball. It has lost cricket and soccer, two huge global games. Its ESPN+ streaming service is now the home of leftovers and depends on (often crappy) local broadcasters for its feeds.

This is going to get worse because of the second problem.

Beating Moore’s Law

I spent 20 years, off and on, researching Moore’s Law, its history, and how it worked. 

As I wrote my book, and rewrote it twice more, most industries succumbed to its charms, its promise of productivity. Journalism succumbed. Retailing succumbed. So did distribution and management.

Three industries have not yet succumbed, and I have a chapter in the book devoted to them.

These are health care, the law, and education.

It’s not that there aren’t solutions. Law libraries are obsolete. So, too, college libraries. Health care has finally surrendered to electronic records, lured by sweet, sweet stimulus cash.

But final costs, and prices, have gone up in all these areas.

It’s politics.

States refuse to define what graduates need, and unions insist teachers must give the lesson, not just test and tutor. Courts have used technology to pile more work on lawyers and judges. Time is money. Doctors have used their gatekeeping function to stop standardization of treatment, while drug companies have used regulatory capture to create pricing based on the value of your life.

Bezos Come Back

Since Jeff Bezos left his post as CEO of Amazon, in mid-2021, the stock is down 43%.

That’s 5 times worse than the average stock in the S&P 500. It’s more than twice as bad as Google. It’s as bad as the performance of Meta, the artists formerly known as Facebook.

Amazon is also shedding employees faster than Bed, Bath & Beyond. Some 27,000 have been let go this year alone. 

The job of running this company is simply too big for Andy Jassy.

The store is at war with itself, with third party sellers sabotaging Amazon’s own merchandising. The company’s physical retail effort has been a disaster. Walmart is beating it all to hell. The streaming unit is on an island. Jassy replaced himself with an outsider. Adam Selipsky had been at AWS 11 years but left to join Tableau Software and was recruited back by Jassy.

Morale at Amazon is at an all-time low. My own Amazon drivers used to be cheerful folks who looked forward to driving new electric vans. Now they’re in beat-up gas-powered garbage, they don’t say hello, sometimes they’re in personal cars, and one even blocked my driveway the other day. (I’m not going to report her. She was obviously overworked and under stress.)

Run on the Bank

The collapse of Silicon Valley Bank may prove to be a bigger story than it appears.

The reason goes back to a story I ran away from, the 1981 collapse of the Houston oil industry.

I didn’t intend to run away. I finally got a job at a daily in Birmingham, Alabama. It was a job I’d hold only 4 months before being fired. But I left Houston June 1, 1981. The collapse began soon after.

As in this case, the Fed had telegraphed what it was going to do. Paul Volcker was going to raise interest rates until inflation gave up, just as Jerome Powell is doing now. Inflation was much higher than, double digits in fact. Add to that the Reagan Administration jawboning the Saudis for lower oil prices and it was a perfect storm.

Fire Sundar Pichai

Recessions are good for markets.

They show us where the rot is, where the poor performers are.

This current one is no exception. It revealed that some of our Cloud Czars, the companies dominating the global economy with hyperscale datacenters paid for with cash flow, aren’t as clothed in gold as they seem. Some are downright naked.

Early this month, I identified one source of rot and urged Jeff Bezos to fire Amazon.Com CEO Andy Jassy. But it’s also time for two other founders to get back in the game. Larry Page and Sergey Brin need to push out Sundar Pichai.

Pichai is the kind of numbers-oriented manager Wall Street loves, but Silicon Valley should despise. He’s the kind of go along, get along guy who can make the trains run on time, but completely lacks vision. In technology this is a fatal flaw.

It’s obvious in how he dealt with artificial intelligence, the new hotness of 2023.

This is not about firing an ethicist. It’s a more basic failure to see where things were going, and deploy the necessary resources to get there. 

ChatGPT

Hate to rain on y’all’s parade but…ChatGPT is not the best thing since sliced bread. It’s not the Macintosh. It’s not the iPhone.

It’s software that translates search requests and results into what seems like plain English. Whether it’s useful depends on the input it gets. Garbage in, garbage out.

That doesn’t mean ChatGPT is Bitcoin or blockchain. It makes search accessible again. But it also makes search messy again. It creates imprecision in a world of 1s and 0s. Not that there’s anything wrong with that. Humans are imprecise. We’re messy. And it is fun to see computer output seem as imprecise and messy as we are.

It’s very easy to get a lie out of ChatGPT. Ask it about a subject where there are lots of lies on the Internet. They will appear in your answer. ChatGPT doesn’t have a filter. Yet.

Where Computing Happens

I met my first computer in 1976, in the basement of Herman Brown Hall, on the campus of Rice University in Houston.

The computing happened in a big room, separated from me by a window. I passed a stack of punch cards, tied with a rubber band, through the window. They came back along with my output. Which usually said the program had died on Line 3.

By the time I got out of journalism school, two years later, computing was moving to desktops. A neighbor bought a $20,000 Cromemco machine that could run 3 terminals. She hired friends to work at the terminals, transcribing court records. I think they got 50 cents a page. Computing had come home.

Jassy’s Gotta Go

I’ve seen enough. Amazon.Com CEO Andy Jassy’s gotta go.

Jassy became CEO 18 months ago, after spending most of two decades at the Amazon Web Services (AWS) unit.

Jassy was fine at AWS. He’s out of his depth now.

The problem is he has no vision. He’s a numbers guy. He runs the company for Wall Street, which is precisely the wrong way to run it. It needs to be run for the customer.

The problem with Amazon’s store is familiar to anyone with a working knowledge of business history. The store, which is by far the biggest part of the business, is fighting with itself. It’s a battle between Amazon’s own procurement and its third party sellers. Jassy blindly follows the sellers because they’re bringing in most of the sales.

But they’re taking the store down. The user experience sucks. The third parties are gaming Amazon’s algorithm, against one another, against the customer, against the store itself.

Tech and its Workers

One of the biggest mistakes I made in my journalism career lay in assuming tech companies would have the back of their workers, because they depend on human talent rather than muscle. (The picture is from a book on computer coding.)

The tech oligarchs who made their piles in the last decade have become just like other oligarchs. No worse, but certainly no better.

The latest round of layoffs is especially egregious. It’s not how many were let go. They were mostly the pandemic overhang, an adjustment as life returns to “normal.” It’s how they were done, and who was targeted. Firing via e-mail? No warning for families or teams? It sends the message that people don’t matter.

To the oligarchs they don’t. Elon Musk, Marc Andreessen, Peter Thiel – they’re one-way guys. They care about themselves, no one else. They don’t really care about technology, or what it can do. All they care about is how much money it is making for them right now.

There was, once, a difference between Wall Street and Silicon Valley. The wealth creation of the last decade eliminated the difference. Wall Street doesn’t care about the long-term, about the need to keep investing in the new across the chasm of a recession, or the talent that is tech’s raw material. It cares about this quarter, about today’s trade.

What’s funny is that the horrors now being visited on the Valley are 10 times worse on Wall Street. Layer after layer of management has been eliminated, as the industry has gone online. More and more of its wealth is in fewer and fewer hands, and those hands care nothing about the people who made the wealth. Just as they don’t care about the technologists of the Valley.

Wintel (1990-2023): Death of a Monopoly

An era ended this week, as the control over technology Microsoft and Intel held with Microsoft Windows and Intel x86 chips crashed and burned.

From the launch of Windows 3.0 in 1990 to this last week, there was an assumption that Wintel, as the two were called, were where computing happened. No more. OEM sales of Windows fell by a third, and so did Intel’s x86 chip sales.

Client computing has moved from your desktop to the palm of your hand. An iPhone or high-end Android device can cost over $1,000 but you don’t need a manual to use them. They’re intuitive. When they fail, you get another, and all your software follows you from the cloud.

Microsoft was ready for this. They became a Cloud Czar during the 2010s, building a huge network of scaled data centers using open source software and cheap hardware. Intel supplied the cloud, and its data center business beat expectations last quarter, but it was not ready for the change. Its stock fell another 10%, and the company is now worth barely one-fourth the new chip leader, Nvidia.