What LinkedIn Stories and Fleets can teach us about capitalism
Earlier this week, Twitter released “Fleets”, temporary tweets that are only up for a day. It’s supposed to be Twitter’s response to Stories on Snapchat and Instagram (and it only came 7 years late). It looks like every social media app is now trying to introduce the feature since just last month LinkedIn did it too.
People are understandably pretty annoyed by all this copying that’s going on and some people on Twitter are using it as an opportunity to attack capitalism. Here’s a Tweet that I saw earlier this week from a pretty left-wing account.
If you look up the phrase “capitalism breeds innovation” on Twitter, you’ll see a hundred other people make the same joke. So it looks like socialism doesn’t breed innovation either.
Let’s be real: It’s pretty ridiculous to see all these companies hop on the Stories bandwagon to try to boost engagement. Also, I don’t think anyone in the world was asking for LinkedIn Stories. But still, these random Twitter accounts are ignoring that really stupid ideas are actually part of what makes capitalism great.
So let’s talk about why even though it does produce incredibly stupid shit like LinkedIn Stories, capitalism is still a productive force that helps move the human race forward.
Most new business ideas are garbage
Let’s be real: Most new business ideas are really bad. I’m sure some of you have had the experience of listening to a friend talk about some new app they thought of. Meanwhile, you’re sitting quietly and not telling them how stupid it is just to be polite.
To be fair, bringing any type of creative idea to life is really hard. Even ideas that sound solid on paper might not actually work that well in the real world.
For example, think about a company like Quibi, which was supposed to provide premium content for your “in-between moments”. On paper, the idea’s not that bad. People love video content, and lots of people have random moments in their day like waiting in line at the grocery store where something like this theoretically could be helpful. But in the real world, nobody really wanted to pay a subscription when you can watch YouTube for free, Also, nobody considered Chance the Rapper doing a remake of Punk’d to be “premium content”.
Quibi had $1.75 billion in funding and still shut down within 6 months. But this kind of massive failure is a feature of capitalism. Studies show that 90% of new businesses end up failing. It’s just one step in the process of finding solutions that actually work.
How markets can help us find good ideas
Even though there are lots of stupid business ideas out there, almost every revolutionary innovation sounded pretty stupid when it first started. It might be hard to remember now, but people considered Airbnb to be insane at first. Having random people staying over at your house was a pretty radical idea, and it sounds like a great way to either have your house trashed by some local teenagers trying to party or get murdered by a serial killer.
But against all odds, Airbnb managed to build a global community of both guests and hosts. In the process, it’s made the world a better place. It’s now easier than ever for people to travel to destinations across the globe and it’s easier than ever for homeowners to make some extra money on the side.
How do we identify the actually revolutionary ideas like Airbnb over the ones that are actually just really stupid? The only method that works in the long-run is letting people try out their stupid ideas and see which ones actually end up working. That means having a decentralized marketplace where people can start new businesses and see what customers are willing to pay for. Because there are so many different people trying so many different things, you’ll see more innovation than you’ll see in centralized economies like what existed in the Soviet Union.
Of course, most of these businesses are going to end in humiliating public failure like Quibi. So to make sure that people keep trying to innovate, entrepreneurs that take the risk and somehow succeed need to be rewarded. That’s why Airbnb co-founder and CEO Brian Chesky is now worth $3.1 billion and will probably be worth more after the company goes public next month.
Why copying competitors’ features actually isn’t that bad
Let’s go back to the Stories example that we talked about at the beginning of the article. Like I said earlier, LinkedIn Stories are incredibly stupid. On the other hand, it’s not wrong for businesses to try creating their own version of their competitors’ successful products.
For example, let’s think about the most successful innovation of the last twenty years: the iPhone. It’s not like Apple was the first company to create a smartphone. But Apple made big improvements on what other companies were doing.
Most smartphones that came before 2007 had keyboards that made them inconvenient to use. The touchscreen on the iPhone was a big step forward. After all, using different apps means that you need flexibility. It’s nice to have the keyboard when you’re texting your friend, but you also want it to disappear when you’re watching YouTube videos. That’s why just two years later, every other smartphone company copied what Apple was doing and also started using the touchscreen.
I am definitely not trying to suggest that LinkedIn Stories or Fleets are going to be the next iPhone. But again, a decentralized market means there’s going to be a ton of failures. Most of the time, you’re just going to get really stupid copies of competitors’ products. But occasionally, you’ll see big improvements that make the whole ecosystem better.
In conclusion
Look, I’m not trying to suggest that we should have some crazy deregulated form of capitalism with no restrictions and no taxes. But despite what dudes on Twitter tell you, free markets have led to great innovations that have helped improve the lives of billions of people worldwide. If living with that means I also have to deal with LinkedIn Stories, that’s a trade I’m willing to make.
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Originally published at https://sundayspecial.substack.com.
