The Economist: Why right-wing Italians love hobbits‍

Now it all makes sense! I've never been into in fantasy, including The Lord of The Rings or Harry Potter, now I know why.

Right-wing ideologies and populism have gained increasing traction in the western world in recent years. But I would argue that there’s little ideology in their rhetoric.

Even Benito Mussolini, Italy's dictator in the 1920s and 1930s and a father figure of the Italian right-wing, didn't pursue any specific ideology. He began his political career as a socialist (left-wing), but seized an opportunity on the right and jumped on it. Despite coming from an anti-clerical background, he brokered deals with the church. He also adopted Hitler's anti-Semitism, even though he himself did not fit into the "Aryan" model.

What truly unites the global right-wing is not ideology, but rather a denial of reality and a common enemy.

They like to construct their own reality, filled with conspiracies, underlying narratives, villains and heroes. No wonder they love The Lord of The Rings!

Anyone capable of rationally explaining the current reality is considered an enemy.

They call them “radical-chic”, the number one villan in the right-wing’s narrative. Enemy number two is usually immigrants, especially those of non-christian backgrounds. Problem is, “radical-chic” economists and professors are able to explain why immigration is good!

Don’t get me wrong, I don’t approve the insane wave of left political correctness either, which is also far from reality and actually fuels the right-wing’s resentment.

Understanding reality as it truly is takes time, effort and, unfortunately, money. It may involve traveling and potentially learning new languages to fully comprehend different cultures. It may involve studying at expensive universities. It also requires self-questioning, not easy to accomplish in this society.

These are all things that supporters of Meloni and Trump would rather not do or simply cannot do. Instead, they find comfort in their fantasy worlds populated with dragons and orcs.

Now the question is... what impact will Ai and Virtual Reality have on this?

I don’t even want to think about it!

History repeats.

NVIDIA is leading the Ai boom of the 2020s, while Cisco was the champion of the internet infrastructure race in the late 1990s.

The fate of Cisco and its peers is well known. Will it happen the same to the Ai industry?‍

The Economist has compared the proliferation of Ai apps to the invention of tractors, while the Financial Times likens it to the early days of the internet.

Both tractors and the internet took a long time to replace their predecessors and establish themselves as labor and economic revolutions.

The Dot Com bubble didn't halt the internet; quite the contrary. However, it took at least another decade for today's tech giants to emerge, many of which didn't even exist in 2000.

Same could happen to the Ai industry and its champions.

Today, chips are king. But they quickly become commodities.

Modern chips, currently in high demand, will become cheaper and in large supply in maybe a couple of years, potentially threatening Nvidia's revenue.

The shortages experienced in 2021 and 2022 were promptly fixed, resulting in overcapacity.

Among others, Samsung Semiconductor had to decrease production last year due to a growing chip surplus, while its Japanese counterpart, KIOXIA Group, reported a record loss of $1.7 bn. Meanwhile, global silicon wafer shipments fell 14.3% last year.

Oversupply, fuelled by too much cash too soon, was also at hearth of the Telecom crush in 2000-2002.

High valuations and hype don’t always (almost never) reflect the reality of an industry!

Facebook turns 20 this year, but it’s a walking dead.

Or, is it?…

Facebook remains the most popular social media app worldwide, with over 3bn active users as of January 2024 (up ~2% YoY), ahead of YouTube and Instagram. Not bad for a walking dead. 🤔

However, the social network is dead.

I’ve written before about the switch between social networking and social media, but now something even deeper is happening.

We used to network with our friends and acquittances, then with strangers, eventually with fans. Then we stopped networking all together, spending time on social media mostly for entertainment, consuming content (mostly video) made by professional companies or individual creators, much like TV.

Now, we’re back to networking, but not with humans. We’re “networking” with an Ai algorithm.

When we open Facebook or TikTok, we’re talking to an Ai that chooses content for us. It is an Ai algorithm that really chooses how long we should spend on the app, what ads we should watch and what creators we should “network” with.

However, the need for online social networking remains. According to a Morning Consult study, only 30% of people interviewed said they would share a movie recommendation on social media, behind the 43% who chose text or email and the 35% who opted for group chats. Same happens for news and politics.

This explains the increasing popularity of chat apps. WhatsApp is the third most popular social media app worldwide, Facebook Messenger and Telegram the 7th and 8th respectively, ahead of Snap Inc. and X.

This has massive implication for digital marketing.

On the one hand, marketers need to realise that they’re not marketing to people anymore, but rather to Ai algorithms, who in turn will talk to real people. Even though some platforms claim they prioritise quality content vs Ai-optimised one (Google search, for example), currently it doesn’t seem to be happening much.

On the other hand, marketers need to find other ways to talk to real people. WhatsApp and Instagram channels are good candidates. You won’t get rid of Meta platforms easily!

Many have declared the premature death of Facebook before, even as early as 2009 when The New York Times titled "Facebook Exodus".

Reality is, long live The Facebook!

Social media are more popular than ever and advertising revenue is flowing in. 🤑

Meta Ads revenue grew by 16% in 2023 YoY, representing a whopping 98% of total revenue! Net income (after tax) increased by 69% in 2023, at a margin of 29%. 😱

Facebook couldn't have entered its 20s in a better way!

Six Ai tools I use on a daily basis:

1. ChatGPT-4, premium version ($20/month)
   This is a must. Virtually any Ai task can be performed with ChatGPT, especially since the launch of custom GPTs.
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2. Custom GPTs (part of ChatGPT premium).
   I created two custom GPTs that I use on a daily basis:
   >> Improve Text (public)
   >> Thumbnail Generator (private, for now)
   
   With Improve Text I simply paste a paragraph in the chat and without any prompting it automatically proofreads and improves my text. It generally uses a better grammar and vocabulary. I'm still blown away by the quality of its writing. Nowadays, anything I write goes through that first.
   
   Thumbnail Generator creates two thumbnails for my blog posts. I gave it specific instructions to create images always in a certain size and style. If you check my blog you'll realise that all my thumbnails look similar, as if they were made by the same artist.
   It doesn't require complex prompting. A few words are usually enough to obtain a great result. For example, "Netflix wins the streaming war" was the prompt for my latest blog image.
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3. ‍Perplexity Ai (free)
   Lately, I find myself searching on Perplexity Ai more than on Google. I use it especially for researching the topics I write about on Linkedin and on my blog.
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4. Stable Diffusion (free)
   I use its image-to-video generator. It's free, it's quick and generally good quality. Usually, I create images with the Thumbnail Generator, then use Stable Diffusion to create a short animation out of it. Then, I create a GIF that I sometimes post here on Linkedin.
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5. ‍HeyGen ($29/month + add-ons)
   I used it to create my own avatar for some work-related videos. I am now exploring also library avatars for more impersonal videos. Excellent quality, easy to use.
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6. ‍Midjourney ($10/month)
   This is by far the best image-generation tool (in my opinion), but since I've created my custom GPT, I stopped using it to save money 😄.
   However, we use it at SMG Swiss Marketplace Group for marketing work.
   
   That's it! Ai doesn't need to be complicated.

When will Ai replace human labour? Probably later than you think.

The Economist compares the introduction of ChatGPT and other Ai applications to the invention of the tractor at the end of the 19th century.

The tractor revolutionised agriculture, allowing farmers to be more productive and efficient. Such improvements contributed to raise American GDP by 8% by the mid-50s.

Yet, it was not an explosive revolution, but rather a slow incremental change.

The chart shows how the tractor took over 50 years to establish itself as a better substitute for horses and mules.

Why?

Essentially, for several decades human and animal labour remained cheaper and more reliable than the tractor.

Early tractors were extremely expensive and still not capable of most farming tasks. On the other hand, labour was cheap and plenty available.

Plus, farms were still not organised to accomodate the tractor in an efficient way. For example, early tractors were most suited to some specific terrains and crops. For all the rest humans and animals were better.

Something very similar is happening with Ai.

Although we’ve already been blown away by the capabilities of GPT-4, its real-life applications are still to be proved.

Real wages have hardly risen in the past years, so hiring humans instead of machines will still be more efficient for another while.

It might take decades for Ai to establish itself as a labour revolution. But rest assured, it will happen! Same as with the tractor.

In a conversation with The Economist in Davos, Sam Altman stated that “when we’ll reach AGI (artificial general intelligence), people will freak out for a couple of weeks and then they’ll go back to their normal lives”.

In the end, in over one year since the launch of ChatGPT, our lives haven’t changed much.

Probably, there won’t be any “boom” or explosion moment, but rather a gradual yet irreversible change over decades.

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Have you seen the Ferrari movie?

It was released at a perfect timing, right at the close of a record year for the sports car company.

The movie is excellent and provides an accurate portrayal of Emilia, the Italian region where Ferrari is based, and its people. There's even a scene in a restaurant where Enzo Ferrari is served the boiled meat tray, a peculiar speciality of the Emilia region. As an "Emilian" myself, I can confirm its accuracy!

Unfortunately, the movie mainly focuses on racing and a specific episode in Enzo's life, without addressing Ferrari as a luxury car manufacturer.

2023 was a record year at Ferrari. Some facts:

• Car sales were up 3% YoY to 13’663 units.
• Revenue were up 17% to almost 6bn. Ferrari sold higher-priced cars and more personalised features.
• Sales were mostly driven by the new SUV-like Purosangue.
• The average price of a Ferrari car in 2023 was €397’000, a new record!
• Net profit climbed 34% surpassing 1bn for the fist time in its history.
• 10% of revenue came from sponsorship and merchandise. store.ferrari.com sells Ferrari-branded clothing and accessories, from $200 baseball hats to $5000 leather suits. Ferrari is a luxury brand, not just a car maker.
• It is the first luxury group to have eliminated the pay gap between men and women at a global level.
• Lewis Hamilton, one of the most successful F1 drivers in history, will join Ferrari in 2025.
  
  Not bad for a company out of the small town of Maranello, Italy 🇮🇹

Is Netflix the winner of the streaming war?

In recent years, traditional studios like Disney with Display+ and Warner Bros. Discovery with HBO Max have entered the streaming industry, significantly intensifying the competition in the space.

The streaming business requires huge investments to produce high-quality original content, which is key to "stealing" users from competitors. But with monthly subscriptions starting from as little as $5, streamers need an exceptionally large user base to turn a profit.

Profit hasn’t happened at Disney yet, whose streaming unit lost $420 million in FY23 (down from a loss of 1.4bn the year before). Warner Bros. Discovery does better, finally scoring a profit of $111 million in 2023, up from a loss of $634 million in 2022.

But Netflix does significantly better!

In 2023, it increased users by 13% to 260 million, against a worrying drop the year before. It’s been consistently profitable for over 15 years, delivering almost 5.5bn net profit (after tax) in 2023 at a net margin of 16%.

On top of successfully cracking down on password sharing and launching an ad-supported subscription tier, Netflix has a secret weapon: content licensing.

Competitors, under pressure to deliver profit, are (re)starting to license their original content to third-parties, including and especially to Netflix. While this generates easy money for the likes of Disney, it also enriches the Netflix’s catalogue, for the delight of its users.

Netflix is so good at servicing its subscribers that when NBCUniversal licensed “Suits” in June 2023, the show went straight to the number-one most watched, despite being relatively old (originally aired on cable TV in 2011). In fact, according to Nielsen, in November 2023, nine of the ten most streamed programs were licensed content.

With around $17bn spent on content in 2023, Netflix might reduce this expense while still expanding its catalogue with premium, although old, content.

Beware, this is not reciprocal! According to Netflix’s executives, there’s more value in acquiring licensed content, than to sell it. So don’t expect “Ozark” to stream anywhere else.

Also, ad revenue is increasing and projected to represent up to 22% of total revenue in 2027. With this, Netflix won’t have to fight for new subscribers, but rather will extract more value from existing users.

If we add to the mix the recent $5bn deal to livestream WWE, we get the perfect recipe to declare Netflix as the winner of the streaming war.

However, streaming remains a costly and hit-driven business. When compared to YouTube, which spends virtually nothing on content, streaming looks way less appealing.

Stay tuned!

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The search war is on!

A recent study by Adobe reveals that 2 in 5 Americans now use TikTok not only for entertainment but also as a search engine. While Gen Z leads this trend, Millennials and Gen X are also on board.

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This marks a historical shift in Google's dominance in the search engine market.

In fact, TikTok isn't the only emerging competitor. The study indicates that over 1 in 10 consumers used ChatGPT to search for information they would typically find on Google.

Ai chatbots, especially those capable of web searching like Perplexity or Microsoft Copilot, are becoming extraordinary competitors to traditional search engines.

Even Bing itself is likely to increase its relevance since ChatGPT often refers to it.

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Although Google remains the clear leader, its market share is visibly declining in Europe, particularly on Desktop. At the same time, Bing's market share on Desktop rose from 8.5% in January 2022 to 11% in December 2023.

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Keep in mind that in the huge search engine market, every percentage point is a big deal!

This shift represents an incredible challenge, but also an opportunity for marketers quick enough to adapt to the new changes. SEM will inevitably evolve, but how exactly it’s still too early to tell.

Sunday reads: "Office politics is not optional: learn to play the game or you’ll be its victim" by the Financial Times.

There are two types of office politics, as explained in this video by Harvard Business Review.

👍 Positive office politics.
This happens when managers and employees engage in politics to enhance their reputation and build long-term partnerships. This way, they know who to ask when they need something, and vice versa.
In this context, a positive can-do attitude may be more important than actual competence. I would better describe this as "office life" rather than "office politics", as office work inherently requires teamwork and partnerships.

👎 Negative office politics.
This is typically what people think of when they mention office politics.
Negative office politics involve individuals who are solely interested in their personal gain, often disregarding the company, its vision, its people, and even their actual work. This is obviously not exclusive to offices, but it's common also in normal politics and life in general.

Both forms of office politics require hard work and lead to career advancement. However, while the first type can be learnt, the second is exclusive to certain individuals.

I'm definitely not part of the second group, but I do acknowledge that pursuing "negative politics" can lead to rapid career progression.

For people like me, there are two options:
We can either continue to complain and live in frustration, or accept that certain skills cannot be learned, because contradict our personal values and attitudes.

Like many things in life, we must accept reality and set rhetoric aside. Quoting a friend, "sure, it's possible to skip the queue, but are you really that kind of person? just stay in line and wait for your turn."

AXA Switzerland removes hierarchy. This is a landmark move!

While some level of hierarchy will remain, many intermediate titles such as vice-president will be eliminated, marking the shift from a "status hierarchy" to a "hierarchy of responsibility”. The goal is to enable employees at all levels to make critical decisions about their work, instead of only adhering to top-down directives.

As Daniela Fischer, Head of HR, told NZZ recently, "Bosses don't always know everything best.”

Historically, money and status have been the primary motivators for employees. However, this concept is becoming outdated.

In today's job market, companies not only compete against each other, but they also compete with a wide range of self-employment opportunities. For example, working as a content creator, which is becoming easier to get into and more profitable, also thanks to Ai.

AXA has recognised that especially younger generations are not necessarily motivated by status and money, but rather by long-term purpose and the actual nature of their day-to-day work. If it were solely about money, they could easily work online probably making more than in any regular job. Instead, they’re looking for their skills to be valued and to be respected, no matter of their job title. Being taken seriously is what truly matters for them I believe.

We will see if AXA will be successful in this massive cultural change. Regardless, I hope more companies will test similar structures to adapt to a job market that has undoubtedly changed.