AI Ate The Internet, Facebook is Guilty and Somehow Apple Wins Again...Distribution Is King

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Good morning everyone…

I am writing to you today with just 9 fingers so I finally have an excuse for all the typos and grammar mistakes.

If you follow the markets like me, this is one hell of a week coming up and I will do a detailed plan of what I am looking to do in tonight’s Momentum Monday which I will post early AM tomorrow. Follow me along anytime in real time on Stocktwits as well.

Onward…

I am fleshing out so many thoughts right now as AI proliferates and the internet gets eaten. Everything I thought I knew about investing is changing as well. The only thing that remains true to what I have long believed is that ‘distribution is king’. A few years back I did start writing that ‘marketing is the new engineering’ and that has shaped a lot of our seed investing since as we think about founders and valuations.

When it comes to distribution, my friend Michael Parekh, helped me stay long $GOOG ( ▼ 2.49% ) and $AAPL ( ▼ 1.62% ) because as he puts it, they are at the ‘edge’ of AI. For a year he was explaining this weekly on our ‘Trends With Friends’ podcast. Last week he explained how Apple is now flexing that distribution muscle through Siri. The geeks hate on Apple because ‘lack of innovation’. I say all the innovation in the world has not yet replaced the iPhone and more importantly for Apple the physical stores and genius bars.

As we further enter the AI era, it is obvious that the internet is being consumed very differently. Most young people live on one or two ‘social’ networks trusting the algorithms and a chat bot.

The internet went from a ‘stumble upon’ adventure to pure utility first slowly and now suddenly. Good luck trying to be discovered in a tidal wave of machines, bots, new products and algorithms run by Oligarchs.

I was watching this Kevin Rose podcast as he explained how his relaunch of ‘Digg’ the original Reddit was a disaster. Kevin is an original mad genius, marketing guru of the web with millions of fans and followers and he explained the mess of launching a consumer website into this new world (start at minute 4)…

I know what Kevin speaks of as CEO of Stocktwits. I have seen how traffic patterns are changing first hand. I am on the front lines of how AI and the machines have created bots and increased costs to running a network and community. As much as I would never start Stocktwits today, the human part of the Stocktwits large daily and monthly user network is more valuable than ever to me and our users. I talk to them all day.

Other thoughts…

I keep saying…’it is the best time in history to be 60, ‘healthy’ and wealthy. I am at the end of my career and so AI won’t cost me mine. Further, I have mobility (this war has definitely stunted that), all the benefits of AI productivity, endless longevity information and golf instruction (Instagram and YouTube).

While I struggle to implement AI into my workflow everyday (I do use Gemini for my search and Gmail), my partners and team around me have not. Ethan Berk, who started out as my chief of staff a few years back and now our single analyst at Social Leverage acts as my eyes and era and instructor of all things AI. He has built a bunch of products for our team using Claude Code and Loveable. We are a state of the art firm and I know this because Fred Wilson at Union Square outlined how they are using AI inside their firm, and we do much of the same.

Ethan also just built a ’news’ product I have wanted that scans all the prediction markets and pulls the top grossing predictions. It is called ‘By The Odds’. Now I can scan the news that matters to me based on price, NOT OPINIONS.

In a world that will continue to flood you with information overflow, you need filters.

For me, tracking prices and now news via price (odds driven macro headlines) are fantastic filters.

Of course, following the right people matters, but I love that part of my work. That is where much of the alpha lies.

At Stocktwits, While I remain the slowest adopter, the leadership team is AI first. Our CTO Leo, built an excellent portfolio tool in his spare time called ‘portfolio genius’. Mike, our long time head of product, just built ‘five star text’ with his son (under 10 years of age) to help companies drive better ratings.

Way back in 2004, Google allowed employees 20 percent of their time to work on projects that ‘benefitted the company’. That was a revolutionary idea and controversial. Because of AI, everyone today can be engineer, designer and product person and can build software products in their spare time. Even if they are not directly benefitting the business, the act of using the tools is in fact benefitting the business.

All this to say, as bad as software stocks are doing, we are in the ‘birth of software (software for dummies)’ era which I started writing about back in February.

This week, Logan at Redpoint Ventures released a great presentation on the state of the software and ai market. You can read the presentation here. You can also drop it into Gemini or Claude or Chat GPT for a summary. It explains why the incumbents are losing the window of opportunity and have been blowing it. Again, this is not so much the death of software but the birth of a different set of software leaders in a new era.

If you think you don’t know what you are doing, don’t beat yourself up…Mark Zuckerberg might not either. Sure he will be fine, but what a disaster of a week for him/them. You can read the inside details of how Mark blew the acquisition of Deepmind which went to Google and became Gemini.

Facebook also lost a Philip Morris like decision re 'addiction’ and liability so the stock lost $150 billion in value. As my friend and 13 year Facebooker and Punchup.live founder Danny says, the social media lawsuits got the problem right, but the solutions wrong. We the user, the sucker, pays for all these problems. I love this image Danny created…

A quick side note here - our portfolio company Beehiiv has an amazing advertising network for newsletter writers and I am testing out Sunday ads for products I use or subscribe to…

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Have a great Sunday.