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Alex Danco — Finding Mystery in the Margin | Episode 234
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As the saying goes, only three things in life are certain: death, taxes & Alex Danco. Armed with sizzling hot takes on the sad death of Twitter likes and a new secret weapon in the form of his catchphrase-turned-episode theme (“Without mystery, there is no margin”), Alex returns for his eighth episode. Despite our intentional lack of preparation, somehow this ended up as one our most cohesive conversations yet. As usual, we’ve included links and an episode transcript over on our Substack, where we’ve also made the foolhardy attempt to distil one overriding theme from eight episodes of fiercely unstructured, defiantly unplanned, proudly meandering conversation. Important Links: - Twitter: https://twitter.com/Alex_Danco - Website: https://alexdanco.com/ - Previous episode: https://www.infiniteloopspodcast.com/alex-danco-on-self-delusion-sancho-panza-safe-words-seinfeld-ep156/ Show Notes: 0:00:00 Intro 0:00:54 What the fuck is going on? & the sad death of Twitter likes 0:14:37 Where are the journalists? 0:25:30 Without mystery, there is no margin 0:44:05 Why aesthetics are underrated 0:51:06 Friction is good, actually 1:03:39 Empowering small firms to access the mysterious margin 1:10:36 Everything is positioning 1:16:43 How to learn effectively 1:24:45 Alex as emperor of the world 1:27:57 Addendum Books Mentioned: - The Fifth Science; by Exurb1a - What Works on Wall Street: A Guide to the Best-Performing Investment Strategies of All Time; by Jim O’Shaughnessy - The Gervais Principle, Or The Office According to “The Office” - https://www.ribbonfarm.com/2009/10/07/the-gervais-principle-or-the-office-according-to-the-office/; by Venkatesh Rao - The Genius of the Beast: A Radical Re-Vision of Capitalism; by Howard Bloom
Segments Timeline
The Mystery of Margin
Alex Danco introduces the concept that without mystery, there is no margin in sales and marketing. He discusses how successful salespeople create intrigue and aesthetic appeal, emphasizing the importance of understanding aesthetics in Silicon Valley. This segment sets the stage for exploring deeper themes of value and perception in business.
"the things that are illegible or the things you actually want because there's mystery in them if I can really surprise you about something by most of the way to selling you something like the mystery ..."
What the F*** is Going On?
In a candid conversation, Jim and Alex dive into the chaotic state of social media, particularly focusing on Twitter's decision to hide likes. They discuss the implications of this change on user interaction and narrative construction, questioning whether it enhances or diminishes the platform's discourse. This segment highlights the evolving nature of online communication.
"with yet another infinite loops I was uaing my potentially recurring guest before we began recording I'm not a potentially recurring guest I'm a kinetically recurring guest Alex Dano my friend and inh..."
The Impact of Hiding Likes
Alex and Jim debate the pros and cons of Twitter's decision to make likes private. They explore how this affects users' ability to gauge public sentiment and reconstruct narratives, emphasizing the importance of likes as a social signal. This segment reveals the complexities of user engagement in the digital age.
"it's am I what the [ __ ] is going on like what the [ __ ] I was rereading one of my favorite science fiction books called the fifth science and they've got a passage in there that I want to read to y..."
Narrative Collapse Explained
Alex elaborates on the concept of narrative collapse, discussing how the removal of visible likes disrupts the flow of discourse on Twitter. He argues that the platform's structure allows users to piece together narratives through social signals, which are now compromised. This segment underscores the significance of user-generated content in shaping online narratives.
"always worried and terrified what other people will think of them right to to stop falsifying their preferences and actually you know like get material that might uh put them in a class of citizenry u..."
Reconstructing the Joke
In this segment, Alex explains how Twitter's format encourages users to engage with content by reconstructing jokes and narratives through likes and interactions. He emphasizes the importance of this process in maintaining the integrity of real narratives, showcasing how social media reflects collective thought and humor.
"call it X because I don't know about you but like it's Twitter come on I always call it Twitter you take Twitter as sort of like this little microcosm of the world saying like listen like here is this..."
The Cost of Preference Falsification
Alex discusses the phenomenon of preference falsification and its implications for social media interactions. He argues that while hiding likes may reduce the pressure to conform, it also diminishes the richness of discourse and user experience. This segment highlights the trade-offs involved in managing online identities.
"because the narrative is built continuously by people it is not something that is made and then put out into the world and then commented on the act of commenting it is what makes it in the first plac..."
The Role of Moderation in Social Media
Jim and Alex explore the role of moderation in social media platforms, particularly in relation to user engagement and community building. They discuss how platforms like Instagram and Threads have successfully implemented moderation strategies to foster positive interactions, contrasting this with Twitter's current challenges.
"overall like a I'm not like a hater of like how elon's been running Twitter um I think that Community notes is one of the most successful products of the last decade it is unbelievably good holy [ __ ..."
The Future of Social Networks
In this segment, Alex reflects on the future of social networks and the potential for new platforms to integrate better moderation practices. He discusses the challenges of balancing openness with the need to suppress harmful behavior, suggesting that the next wave of social media may prioritize user safety and integrity.
"when I saw the first one which was Breaking Bad you know it was the the TV poster for the show Breaking Bad and it's got them on top and then it has her I just laughed immediately and I'm like I wonde..."
The State of Journalism Today
Jim and Alex critique the current state of journalism, questioning the role of traditional media in holding power accountable. They discuss the decline of investigative journalism and the rise of social media as a primary source of news, emphasizing the need for robust journalistic practices in today's landscape.
"going to get to that in a minute uh I I I really don't like the uh I I wish there was some way to verify a person's identity and yet coming from my previous background and asset management a a lot of ..."
The Spectacle of Twitter Drama
Alex Danco reflects on a memorable week on Twitter, highlighting the drama surrounding David Sachs and JD Vance. He discusses the reactions to Sachs' speech at the RNC and the humorous aftermath of his tweets, showcasing the chaotic energy reminiscent of Twitter's earlier days. This segment captures the essence of social media's unpredictable nature and the spectacle it creates.
"that have really D David saxs in particular man' do you remember that really good week on Twitter where it's like not only did we get um hey he about this guy JD Vance he gets home from work on the co..."
The Disappearance of Investigative Journalism
Danco raises concerns about the current state of investigative journalism, questioning where journalists are amidst the political chaos. He reminisces about the Watergate hearings and expresses frustration over the lack of genuine inquiry in today's media landscape, emphasizing the need for journalists who seek the truth beyond partisan narratives.
"like it it really feels like it's sort of back to the um that manic energy that was sort of like pulsing with like 2013 14 15 that period of time there are some flavors of that that are back yeah but ..."
Political Theater and Media Mockery
In this segment, Danco discusses the theatrical nature of modern politics, comparing the Democratic and Republican parties' approaches. He critiques the superficiality of political reporting and how it undermines the narrative, suggesting that both sides are failing to engage with deeper truths, leading to a mockery of conventional journalism.
"that like I I to to announce what a nerd I was as a child uh like during the summer of the Watergate earrings I was what 13 like dude that's all I did all I did was watch those earings because you kno..."
The Illusion of Control in Politics
Danco explores the illusion of control within political parties, referencing a past incident involving a Chinese political figure. He draws parallels to the current political climate in the U.S., suggesting that both parties are orchestrating their narratives while failing to address the underlying issues that concern the electorate.
"we're going to orchestrate the meetings such do you remember remember when that poor guy got like taken off uh in the National like in the in the Chinese the the I'm going to butcher exactly what this..."
The Collapse of Political Narratives
This segment delves into how the act of reporting on political events can collapse the narratives that politicians try to create. Danco discusses the frustration stemming from the lack of genuine surprises in politics and how this leads to a disengaged electorate, questioning whether the current political landscape needs fixing.
"this feeling of can Trump still successfully do stand up to a crowd or has he lost the Mojo right wherein it's like in either case this concept of conventional journalism is sort of uh made a mockery ..."
The Role of Surprise in Engagement
Danco emphasizes the importance of surprise in capturing public interest, referencing studies on viewer engagement with media. He argues that genuine surprises are essential for maintaining attention and interest in political discourse, contrasting this with the predictability of current political narratives.
"man uh but and and then you hit on it right like in earlier eras the eyebrows would have all been you know permanently like what the [ __ ] well and they were like I I remember like in the 48 hours af..."
Salesmanship in Politics
In this segment, Danco likens political campaigns to sales processes, where candidates must balance relatability with an element of mystery. He discusses how successful candidates create compelling narratives that engage voters, highlighting the duality of being relatable yet distinct in the political arena.
"OCTA account like I just love this idea of like I forget somebody posted this idea where it's like hi Verizon I I lost my phone I need a new SIM card please my name is Joe Biden yep I'll hold please g..."
Mystery as Margin in Sales
Danco introduces the concept that 'without mystery, there is no margin,' discussing how mystery can enhance the sales process in various contexts, including politics. He reflects on how candidates can leverage mystery to create intrigue and engagement, drawing parallels to successful sales strategies.
"is like let's not just keep picking on Biden I mean this is everywhere in politics doesn't matter what side of the aisle you happen to be on it's everywhere happening the same way and and I'm just won..."
The Power of Surprise in Elections
This segment focuses on how surprise can be a powerful tool in elections, with Danco analyzing past political campaigns. He discusses how candidates who can evoke surprise and intrigue are more likely to capture voter attention, contrasting this with the current lack of excitement in political campaigns.
"where where where their eyes were focused and where their focus change over time as the screens on the movie changes and you can do all of this sort of signal analysis on each pixel of the movie frame..."
The Duality of Sales in Politics
Danco elaborates on the paradox of sales in politics, where candidates must simultaneously present themselves as relatable while also offering something unique. He discusses how this duality is essential for effective campaigning and how it relates to the broader theme of mystery and margin.
"uh is what is where signal is um this idea like surprise as being inherently how you sell things is something that I've been really interested in um because again like if you like what are elections e..."
The Importance of Mystery in Business
In this segment, Danco shares insights from his experiences in asset management, discussing how mystery can enhance client engagement. He reflects on a consultant's advice to create a 'black box' approach to business, emphasizing the value of mystery in attracting clients and maintaining interest.
"impose both of these things at the same time it's like we're just like you except for I also have this mysterious reservoir of things from the Far East or whatever that contain mystery and therefore c..."
Opacity vs. Transparency in Business
Danco concludes with a discussion on the balance between transparency and opacity in business practices. He reflects on the implications of making processes transparent versus maintaining an element of mystery, questioning whether the latter can lead to greater success in client relationships.
"if you take this all sort of back to elections right the sort of question that you're asking is like this is a large sales process that takes many months to complete right the way that you get people ..."
The Value of Mystery in Business
Alex Danco shares a story from his asset management days, highlighting how a consultant advised him to create a 'black box' around his investment strategies to attract clients. He discusses the paradox of opacity in business, where mystery can enhance perceived value, contrasting it with the need for transparency in certain client relationships.
"like you lots of the how lots of software people be like this sounds like a really low margin shitty stupid business that's done on pen and paper why do you think there's any money in this he's like b..."
Social Dynamics and Ranking
Danco explores the social dynamics of high school friendships, illustrating how ranking friends by 'coolness' would harm group cohesion. He emphasizes the importance of maintaining some mystery among peers, suggesting that knowing the extremes (the alpha and the jester) is sufficient for social balance.
"portfolio that was literally fire this is like the late 90s so you can guess what kind of portfolio it was it was pure Momo pure momentum yeah and it was up triple digits going in to the end of 1999 a..."
Investment Premiums and Market Mystique
In this segment, Danco discusses how certain investment funds trade at premiums due to the allure of owning shares in desirable companies like SpaceX. He critiques the market's tendency to value mystery over performance, illustrating how perceptions can drive investment decisions more than actual company success.
"mystery um yeah and where were yeah is it's really interesting it's like Wall Street gives you so many very literal examples where you can actually put numbers on the degree to which this is true like..."
The Role of Mystery in Asset Allocation
Danco reflects on the concept of mystery in asset allocation, suggesting that a balanced approach involves both transparent and opaque investments. He argues that while some investments should be straightforward, others thrive on the intrigue they create in the market.
"um the converse to that would be like the you know the the bill akman uh uh uh story of like we're going to do ping Square us say it's going to trade to a premium everybody I'm going to raise 10 billi..."
Pension Funds and Direct Investments
This segment delves into the unique approach of Canadian pension funds that directly invest in assets, bypassing traditional financial intermediaries. Danco discusses the implications of this strategy, including public sentiment and the political ramifications of foreign ownership of local assets.
"the money but you know not the first time in history that that mechanic has played out so is it almost like a barbell like when people uh ask me you know what should for asset allocation advice right ..."
Mystery and Surprise in Marketing
Danco and his co-host discuss the importance of mystery and surprise in marketing strategies. They analyze a failed AI wearable product and how it could have benefited from a more intriguing marketing approach that emphasizes emotional engagement rather than just features.
"allocation like from a funds point of view it's like yeah I'm sure there's all this [ __ ] around like oh there's this much withdrawal commitments per year and this and that and you have to do all I d..."
Emotional Engagement Over Features
In this concluding segment, Danco emphasizes the shift in marketing from a focus on features to addressing emotional connections with consumers. He references insights from Howard Bloom and Rory Sutherland, advocating for a marketing strategy that resonates with feelings rather than just presenting product benefits.
"terms of like when the tough choices are made to how to do things in the either public or quasi public uh um obligation pool right I.E like hey are we actually doing right by all of our our engineers ..."
Feelings Over Features
Danco explores the shift in advertising from a focus on product features to addressing consumer feelings. He cites Howard Bloom and Rory Sutherland, who advocate for emotional engagement as the key to successful marketing. This segment challenges traditional advertising norms, suggesting that understanding and tapping into consumer emotions can significantly enhance product appeal.
"capitalism and I'm thinking about my friend Rory Southerland uh and and they kind of have the same message which is if you really want to supercharge anything right that you're trying to sell if you'r..."
The Value of Friction
In this thought-provoking segment, Danco discusses the importance of friction in user experiences, particularly in gaming. He contrasts the simplistic approach of removing friction with the idea that challenges and learning curves enhance user satisfaction. By using video games as a metaphor, he illustrates how overcoming obstacles can lead to a more rewarding experience, ultimately questioning the conventional wisdom that friction is inherently negative.
"well okay so there is this really there's this really great Summit talk this is Cha's annual conference that Toby did several years ago where he says like hey like what is it that people in the video ..."
Joy in the Journey
Danco emphasizes that the process of learning and overcoming challenges is often more valuable than the end result. He reflects on how early, glitchy versions of products can foster user loyalty due to the sense of accomplishment they provide. This segment highlights the paradox of product development, where optimizing for ease can strip away the joy of engagement and discovery.
"it's like no actually like there's something really important in the F like if the purpose of the product is just to deliver you some result then it's like yeah that approach can works fine but if the..."
Creating Meaningful Engagement
In this segment, Danco discusses the need for educational systems to evolve, advocating for engaging and entertaining methods of teaching. He critiques traditional approaches that prioritize rote learning and suggests that fostering creativity and agency in learners is essential. By emphasizing the importance of making and creating, Danco argues for a shift towards more interactive and enjoyable learning experiences.
"right they're going to move on to something else right they were never actually out for the thing that you thought the thing was solving they were out for like a certain kind of like entertainment and..."
The Art of Making
Danco reflects on the transformative power of creation, sharing personal anecdotes from his experiences in music. He argues that the act of making something—whether art or a product—provides deep satisfaction and personal growth. This segment underscores the significance of engaging in creative processes and the emotional investment that comes with crafting something meaningful.
"quite intrigued by um and and they involve like teaching kids things in a new way and and the thing that I continued to come back to which is the reason for this other idea that we're working on is li..."
Agency Through Challenge
In this insightful discussion, Danco and his co-host explore how to cultivate high agency individuals through challenges and creative tasks. They differentiate between mere puzzles and the deeper engagement that comes from making something. This segment emphasizes the importance of providing opportunities for individuals to tackle real challenges, fostering a sense of accomplishment and agency.
"right because you've put in all the loving care into the details that people will never see and because you know like you have all this emotional attachment into this particular process that you did i..."
E-Commerce and the Mystery Margin
Danco ties the conversation back to the overarching theme of mystery in e-commerce. He discusses how merchants can optimize their strategies by understanding consumer behavior and the importance of creating a compelling shopping experience. This segment highlights the nuances of e-commerce, where the mystery of discovery can significantly impact sales and customer loyalty.
"through the hard work B um burn Hobart the you know of newsletter of Fame had a has a good observation about this uh and I actually observed this as well with my newsletter back in the day which is th..."
The Role of Advertising in E-Commerce
Danco elaborates on the various strategies merchants can employ to allocate their advertising budgets effectively. He discusses the balance between spending on ads, affiliate sales, and building a mailing list to engage customers. This segment underscores the significance of understanding customer behavior and the impact of marketing strategies on a business's sustainability.
"this thing which we always do in every episode of infinite Loops which is to bring it back to the original topic of uh margin is Mystery right so again in in in e-commerce e e-commerce sort of a e-com..."
The Power of Scarcity and Flash Sales
In this insightful discussion, Danco explains how scarcity can drive consumer behavior, particularly through flash sales. He argues that creating a sense of urgency and mystery around product availability can enhance sales, contrary to the belief that friction in commerce is detrimental. This segment highlights the psychological aspects of consumerism and the effectiveness of strategic marketing.
"lot of um ways that you can think about doing this you can say like I'm GNA fling all of it at Facebook to do Instagram ads you can say Okay I want to do affiliate sales right where I can say like a b..."
Understanding the Mysterious World of Ticketing
Danco dives into the complexities of the ticketing industry, using Live Nation as a case study. He discusses the opaque nature of ticket sales and the various stakeholders involved, emphasizing how this mystery can lead to consumer frustration. This segment illustrates the broader implications of transparency in business practices and the importance of understanding the value chain.
"like remarkable discovery of like again like you think you think flash sales are getting the friction out of Commerce no like you're making it harder for people to buy the sneakers that's why they buy..."
Navigating the Dark Caverns of Business
In this segment, Danco highlights the role of companies like Single Music in helping businesses navigate the complexities of the market. He discusses the importance of understanding the 'dark caverns' of business operations and how providing clarity can empower smaller firms. This segment emphasizes the need for innovative solutions to bridge gaps in understanding within various industries.
"mystery of like rights agreements between like just in the case of a concert it's like you have the record label you have the artist you have the like separate company that is contracted with selling ..."
The Evolution of Asset Management
Danco reflects on the changes in the asset management industry over the years, particularly regarding the mystery surrounding investment strategies. He discusses how new asset classes and personalized investing approaches have emerged, allowing for greater consumer engagement. This segment underscores the importance of adapting to market changes and the role of innovation in finance.
"like the work right the really great work is for small teams of creative motivated people to have access to mysterious margin right as opposed to the only people who can capture it being big companies..."
The Value of Personalized Investing
In this engaging discussion, Danco explores the concept of personalized investing and how it can cater to individual preferences. He contrasts traditional ESG funds with customizable options, emphasizing the importance of personal values in investment decisions. This segment highlights the growing trend of tailored financial products and their appeal to consumers.
"it in its different forms you know from that that's a that's a great fund payment for order flow whatever that whatever you yeah all those words that people throw around yeah yeah it's really interest..."
The Importance of Non-Judgmental Learning
Danco discusses the role of AI in education and its potential to serve as a non-judgmental teacher. He emphasizes the value of having a supportive learning environment where individuals can explore and make mistakes without fear of judgment. This segment highlights the transformative power of technology in enhancing the learning experience.
"wrong and for whatever reason you you people were initially interested but it wasn't going to perpetuate so for example if you can invest if you can invest or invent an asset class or what seems to be..."
The Future of Learning with AI
In this thought-provoking segment, Danco envisions a future where AI plays a crucial role in education, providing personalized support to learners. He discusses the potential for AI to enhance engagement and retention in learning processes. This segment underscores the importance of innovation in education and the need for tools that foster genuine interest and understanding.
"embedded in our cognitive awareness indexing and when we came up with canvas was about as popular as it could ever get then take the word custom and put it in front of its indexing just for Alex well ..."
Learning Through Investment
In this segment, Alex Danco discusses how actively following stock performance can enhance one's understanding of companies and the market. He emphasizes that this engagement not only improves knowledge but also elevates personal growth, suggesting that the process of learning is as valuable as the outcomes. The conversation highlights the importance of curiosity and the role of non-judgmental support in the learning process.
"you might learn something right by really following it and seeing the thing go up or down and like like more more more things about the company surface in your like Google feed and it's like you it li..."
The Power of Non-Judgmental Learning
Alex shares insights on the effectiveness of non-judgmental teaching methods, particularly in educational settings for children. He notes that patience and a supportive environment can lead to remarkable learning outcomes. This segment underscores the significance of making learning enjoyable and authentic, which fosters deeper engagement and retention of knowledge.
"just described many of the things that we are working on here at our little oy Adventures excellent sign me up when when it's available in Canada let me know and uh as you know we also invest in outsi..."
The Importance of Realness in Learning
In this discussion, Alex and his co-host explore the concept of 'realness' in learning experiences. They argue that for learning to be effective, it must feel genuine and engaging, rather than gamified or superficial. This segment emphasizes the need for educational approaches that resonate with learners on a deeper level, ensuring that they truly absorb and understand the material.
"absolutely love using these programs yeah and and and you're also hitting a bit on one of my passions which is if you want to help people learn things it's got to be fun and it also has to be or maybe..."
Breaking Down Barriers in Financial Literacy
Alex reflects on his experiences as an asset manager, highlighting the gender dynamics in financial discussions. He points out that men often hesitate to admit their lack of understanding of financial jargon, while women are more likely to seek clarification. This segment addresses the importance of creating an open dialogue in financial literacy, where questions are welcomed, and knowledge can be shared without judgment.
"that person literally is like man I just learned a [ __ ] tun about and fill in the blank Alex it doesn't have to be about investing it can be about any any other thing and your key element here that ..."
The Misunderstanding of Life Insurance
In this segment, Alex shares a personal anecdote about the complexities of purchasing life insurance. He critiques the industry's communication strategies, noting the disconnect between the product's value and how it is presented to consumers. This discussion sheds light on the broader issue of how financial products are marketed and the need for clearer, more relatable explanations.
"yeah you have a massive massive thing on your hands oh um I I think I texted you while this was happening but several months back we were in the process of buying life insurance which is like you know..."
The Role of Storytelling in Business
Alex and his co-host delve into the significance of storytelling in maintaining social capital within organizations. They discuss how founders can leverage their narratives to inspire and motivate teams, emphasizing that storytelling is crucial for fostering a culture of innovation and risk-taking. This segment highlights the interplay between narrative and business growth.
"there's I I love that and you know we didn't get him sorry on on that note I I I ignored the first uh uh C pull from my producer but I'm going to have to pay attention to the current one Alex as alway..."
Curiosity in Energy Transition
In this thought-provoking segment, Alex proposes that those advocating for green energy should cultivate a sense of curiosity and appreciation for the historical role of oil and gas. He argues that recognizing the achievements of past energy systems can inform a more effective transition to sustainable practices. This perspective encourages a balanced dialogue about energy sources and their evolution.
"you can't kill anyone you can't put them in re-education camps you can't do any of that but you can speak into the magic microphone two things everyone's gonna wake up the next morning and say I just ..."
The Dangers of Startups
Alex discusses the inherent risks associated with startups, highlighting their ability to make quick decisions without fully understanding the consequences. He contrasts this with larger organizations, where decision-making often requires consensus and can stifle innovation. This segment explores the dynamics of risk-taking in business and the importance of maintaining a culture that embraces experimentation.
"of like genuine curiosity of like the fact that we pulled off within three generation a production and distribution system that result in you know this like thick oil from Venezuela being tiny explosi..."