Hollywood vs. Silicon Valley
Music historian Ted Gioia explains the history of music innovation.
Thanks for subscribing to SatPost.
Today’s email is a round-up of notes from a conversation I had with music historian Ted Gioia including:
Hollywood vs. Silicon Valley
Where music innovation comes from
The powerful hormone released when listening to music
PLUS: Some smart links (why Harvard’s $53B endowment may lose its crown) and really dumb memes (the daily schedule for a product manager at TikTok).
Today’s SatPost is sponsored by Vint
A whole new meaning to liquid assets…introducing Vint.
Vint has made it possible to invest in fine wine & rare spirits.
Vint builds collections of the most sought and collected fine wines and rare spirit bottlings into investment vehicles through SEC qualification and Reg-A+.
That means you can invest in an asset that has poured up consistent returns (about 9% over the last 121 years*), is not correlated with traditional markets** (.12 correlation factor with the S&P), and is up 11.1% YTD (Liv-ex 1000.)
Join thousands of investors on Vint who are diversifying their portfolios for as little as $100.
For SatPost readers, you skip the wait and head to the front of the line using this link.
*The London International Vinters Exchange **The price of wine, Cambridge study
The history of music innovation
Ted Gioia is a music historian, prolific author (11 books) and writes one of my favourite Substacks — The Honest Broker.
His books include The History of Jazz, How to Listen to Jazz and Music: A Subversive History.
SatPost is primarily about business and tech, which is what makes Ted’s writing so interesting: he has an MBA from Stanford and has worked in consulting.
He’s a music expert that layers in business and tech analysis.
I had the opportunity to interview Ted last month. It was an amazing chat and the conversation briefly hit the top of Hacker News (shout out to the legend that posted it on the message board).
Here are some highlights from the convo:
Hollywood vs. Silicon Valley
A great example of Ted’s background at work is his explanation of how entertainment industries (Hollywood and music) helped to create Silicon Valley:
Hewlett-Packard (HP): The “birthplace of Silicon Valley” happened in a Palo Alto garage in 1939 when Bill Hewlett and David Packard formalized an entrepreneurial partnership. HP’s first product was an audio oscillator that measured sound. The first big contract that helped the nascent startup take off came from Walt Disney Studios, which needed audio measuring equipment for the making of Fantasia. Boom!
Semiconductors: In 1957, Sony released the TR-63 transistor radio and sold 7m units, which “validated the commercial prospects for transistors long before the rise of personal computers.”
RCA: Now defunct, RCA was the preeminent consumer electronics company from the 1920s to 1970s. It was a leader in radio technology, launched the first radio network (NBC), and pioneered television sets (black and white as well as color). RCA also managed incredible musical talents such as Louis Armstrong and Duke Ellington. Ted says RCA was the “Apple or Google” of its day but declined by “foolish diversification moves” (randomly, it went deep into frozen foods). GE bought RCA in 1986 for $6.2B and eventually liquidated most of the business lines.
Data storage: In 1947, famed singer Bing Crosby sent $50k to a company called Ampex. Why? Ampex was developing a tape recording technology that Crosby needed for his music. The cash infusion was crucial for Ampex, which is credited with laying the groundwork for hard drives, floppy discs and other recording devices.
Apple: Since the iPhone has become the greatest consumer product in history (2B+ sold, $1T+ sales), people forget how important the iPod was to Apple. In 2006 — one year before the iPhone’s launch — the portable music player was responsible for 40% of company sales.
Despite these contributions, the entertainment industry has had its lunch eaten by Big Tech over the past few decades.
What happened?
One big issue is what Ted calls the “Idiot Nephew Phenomenon”: instead of hiring the best talent, successful film studios and record labels put friends and family members — aka the “idiot nephew” — in positions of power. Meanwhile, Silicon Valley is much more of a meritocracy, which allowed the best to rise to the top (he says “Silicon Valley is just smarter than Hollywood”).
Where music innovation comes from
So much popular music is now mediated by algorithms (Spotify, TikTok), which leads to the creation of similar sounds and makes it hard for new ideas to break through.
A dominant mainstream mono-sound is particularly bad for creativity when you consider how many important — and innovative — musical acts have come from outsiders:
Elvis Presley came from Mississippi, one of the poorest states in America
The Beatles came from Liverpool, a working class British city which was very much not London
Hip-hop rose out of the poor neighbourhoods in New York (Bronx) and LA (South Central)
Jazz was invented in New Orleans, where French, Spanish, African and Caribbean cultures mixed in a trade hub city
The powerful hormone released when listening to music
Since launching in 2016, AirPods have sold 100m+ units (I’ve personally bought and lost over 11,000 pairs).
Ted thinks one effect of the AirPods revolution is that our ability to bond with others is weakened when we don’t share listening experiences.
In his book Music: A Subversive History, Ted explains how shared music releases the “love hormone”:
Back at the beginning of our history, we looked at that intriguing hormone oxytocin, which is released into the body’s bloodstream via a message from the hypothalamus in response to certain crucial stimuli, including music. When we sing, this hormone makes us feel emotional bonds with those in our group. That’s why countries all have national anthems, and sports fans sing their team songs.
Some people even call oxytocin the “love hormone” or the “cuddle hormone”. And not without reason: your parents probably went on their first date to some event that involved the performance of music, bonding at a concert, a dance or school prom or romantic movie with some sentimental song over the closing credits.
But all this is only half the story. Oxytocin also mobilizes people to fight against other groups. This hormone emerges in situations of stress, and can send people into riots or battles. That explains why military organizations also have their music — marches instead of sentimental songs. And it’s why those sports team melodies mentioned above are often called “fight songs”, or why protesters express their anger by singing or chanting."
Definitely check out the full podcast. We cover a lot more. (YouTube, Apple, Spotify)
If you’re not a subscriber, toss your email here for more glorious business and tech takes every Saturday:
Links and Memes
House of the Dragon: The Game of Thrones prequel debuted last Sunday. It set an HBO record for a premier with 10m viewers and was so popular it caused streaming disruptions.
Below is a cool video of a bunch of NY City apartments watching the show in unison. This is one argument for the benefits of monoculture. It’s nice to share appointment viewing (and also a safeguard against your significant other binge-ing an entire season while you sleep after she promised to “watch it together”).
Netflix dropping entire seasons at once definitely hurts its cultural cachet. There’s less excitement. People aren’t anticipating the next episode etc.
The world’s biggest endowments: As the old joke goes “Harvard is a hedge fund with a school attached”. For the uninitiated, the gag exists because Harvard has the world’s largest endowment fund: $53B.
But according to this Bloomberg article, that may not be the case for much longer. The University of Texas has the 2nd largest endowment ($43B) and is catching up fast. How? It owns property on the O&G-rich Permian Basin and is making $6m a day leasing land to Big Oil (some people are obviously not happy about the carbon footprint and UT addresses the criticism by saying the land can eventually transition to wind/solar).
Unlike Harvard and other large Ivy endowments which have illiquid assets tied up in VC/PE investments, UT is getting that $6m a day in straight cash. Here are some other interesting notes:
Use of funds:
Tailgate partiesThe endowment — run by The University of Texas/Texas A&M Investment Management Company (UTIMCO) — supports 13 institutions that educate more than 230k students (compared to 23k for Harvard).How UT got the land: “In the 1880s, the state of Texas set aside land to help fund public higher education. At first it seemed like a worthless gift: the dry rugged acres bestowed to the university were supposed to generate some money from grazing rights for cattle. But that changed when wildcatters struck oil in May 1923” (Translation: the land was not worthless).
Interesting source of funds for endowments: A big source of funding for Harvard is fundraising (~$1B a year). Meanwhile, Emory in Atlanta has a lot of Coca-Cola stock and Northwestern University gets a fat royalty from Lyrica (a blockbuster nerve drug).
Zuck Daddy on Rogan: Meta CEO Mark Zuckerberg went on the Joe Rogan podcast for 3 hours (side note: Rogan’s reach never ceases to amaze me). The best part was Zuck candidly breaking down his work day:
“Wake up in the morning and look at my phone, I get like a million messages. It’s usually not good. It’s almost like every day you wake up and you’re punched in the stomach. And it’s like, ok, ‘well f—k’.”
Here are three other takeaways re: VR and the Metaverse: 1) one of Zuck’s main goals is to create the feeling of presence (aka being in the same room); 2) a major pet peeve Zuck has with Zoom is that you don’t make direct eye contact on the screen (each person is looking at the camera), which detracts from the experience…and Meta really wants to fix this for VR; and 3) his theory on adoption is that games will be the first major apps but then communications will be the killer app (and Meta is seeing users shift more to communication apps on the Quest VR headset).
PS. The last time Zuck did so much audio, I made a meme:
Good reads: I gotta give a shoutout to the Design Lobster newsletter. It’s a quick read that drops every other Monday with great nuggets on design (less on lobsters, unfortunately). The newsletter is where I discovered the Timeshifter, an app that helps you battle jetlag by prescribing “a staggered sleep schedule as well as defined hours of light and darkness, so that you gradually (rather than abruptly) transition from one timezone to another”. Total life saver.
And here some memes:
Chris nails it with this next tweet. I’m seeing a lot of 30% tip options at coffee shops now. Listen, I happily tip a minimum of 20% for any sit-down restaurant…but a default 30% for a take-out coffee is wild.
Fun fact: 9 of the 10 cringiest things I’ve ever done involve writing a cover letter (the 10th thing is something that I later wrote about in a cover letter).
I recently wrote about how McDonald’s had to sell its Russia business and that the chain was renamed to “Tasty and That’s It”. Well, Starbucks just gave up its Russia business and the re-naming was a missed opportunity:
Last week, Twitter was overrun with TikTok videos showing the “day in the life” of tech employees at the offices for TikTok and Linkedin. The jobs looked rather…cushy.
As a person who has worked cushy corporate jobs, I’m not even hating…just saying it looks…cushy. On a related note, here’s a tweet which may or may not be a joke:
Oxytocin is powerful!
It's also the hormone that women generate to breastfeed their children.
Wanna know the impact of sound in humans?
Ask a women that is currently breastfeeding her newborn, what happens when she hears a baby cry.
To true about HP start in audio test equipment. Every broadcast station and recording studio had HP gear to analysis audio distortion, equipment frequency response and wow and flutter of tape machines. Great gear, rugged design, and a lot it is still in service (the analog audio chain is alive and well - thank you). Of course, audio dongles attached to your laptop does make life easier these days.