Benedict Evans got his start as a side-sell equity analyst for investment banks before moving on to strategy and business development roles. Over the span of 20 years he analyzed mobile, digital media and technology as an equity analyst, strategy consultant and venture capitalist in firms ranging from Orange, Channel 4, NBC and Andreessen Horowitz.
Today he’s an independent analyst, “[trying] to work out what’s going on and what it means.” Evans is based in London, where he considers the strategic and operating issues around consumer technology, ecosystems and mobile platforms. He writes a weekly newsletter about tech and media, picking the 10 to 20 pieces of news that, according to him, “actually matter, and explaining what they mean with analysis and opinion to put things in context.” His newsletter, launched in 2013, has 150,000 subscribers, primarily senior professionals in technology, media and finance.
Evans is a keynote speaker at CMSWire’s DX Summit 2020, taking place virtually on Wednesday, Oct. 21. We spoke with Evans to get his take on the “forced experimentation” of technology applications and the importance of digital experience in the wake of the global COVID-19 pandemic — and how the digital experience landscape has shifted in its wake.
'So Many Habits Are Being Broken and Formed and Reformed'
CMSWire: Over the last few months, we’ve all experienced firsthand the importance of solid digital experiences. What are the major takeaways from this, as we all adjust to the 'new normal?'
Evans: Where we were in January was still in a place where tech was exciting and interesting. For the last 20 years, we’ve been creeping along slowly like this. Now, 4 billion people have a smartphone. Everyone’s online, doing everything online. One of the best illustrations of this was a Stanford study by [sociology professor] Michael Rosenfeld that found close to 40% of heterosexual couples now meet their partners online. And so tech was exciting and interesting, and we use it for a lot of reasons in our daily lives, but now we have a pandemic that necessitates a period of forced acceleration. Several years of progress gets shoved into several months; now tech has to be a central part of our lives. It’s a forced experimentation, too, with areas like school and medicine, where we weren’t there yet, or maybe some people were, but you could opt out if you wanted to stay with the traditional ways of doing those things. So now, where we are is, everyone has to try it — it’s the green eggs and ham effect! It may not stick, long-term, but you have to try it.
CMSWire: As technology embeds itself even further in our daily lives, it allows us — or, as you said, forces us — to do so many things with technology as an enabler. But it seems consumers increasingly demand high-touch, personalized, human-centric experiences and interaction. What are your thoughts on this dichotomy?
I think what we’re seeing is the existential angst of 7 billion people wanting to be unique and trying to express that through technology. Software ate the world, and so now everything — the good, the bad, the ugly — gets expressed through software. If we think of it in terms of Maslow’s hierarchy of needs, then digital services sit at the top of that. And there’s already solutions that technology has for many of these problems, if you even can call them that. Then it becomes about differentiation. Nobody needs to use SnapChat instead of Instagram. Or WhatsApp instead of Signal, for example; it becomes a differentiator, to some extent.
You can’t say, for example, that because Google has all the data that there’s no room for Facebook. Or that because Amazon also sells clothing that the high fashion industry is doomed — it’s about niches and finding out how to get in and be quite good at your particular niche and then expanding on that. This is not something that’s new, different or alien, either. This has been going on for humans through history. It’s a lot of people trying to solve things like, ‘What music do I listen to? What kind of styles should I wear? How do I do my hair?' You wouldn’t look at a pop music magazine in the '80s and say, well, this is the only source of information I’ll ever need. I will read only this magazine and never anything else on any other topic, because there can only be one magazine. That’s not how it works.
CMSWire: Obviously 2020 looks a lot different than you predicted back in January. So, which industries will go extinct and which will reemerge? Which will survive, but in a new form? And why?
Dickens had it right when he said of the French Revolution that it was the best of times and the worst of times, and I think that’s what we’re seeing. We’re seeing lots of habits completely breaking down, lots of traditional areas crumbling, physical retailers going out of business. That’s the worst; but I’d also say that if you’re building something that can take advantage of new needs and new opportunities; if you can create a business now — it could be great.
There’s a basic trend that happens when you go from channel to channel: you change everything about the experience. Take bookstores, for example — the customer experience at a small bookstore is completely different from that of a larger one, by virtue of the physical form. The experience necessarily has to change because of the simple fact that you can fit so many more books in the space; you can fit so much more on larger tables.
A lot of stores that grew up physical and then expanded to digital channels could talk for days about what their stores look like, what it’s like to shop there, what the experience is like, but if you ask them about shopping cart abandonment, they give you a blank look. I bought an Italian shirt the other day from a well-known retailer. They have a lovely shop; this in-store experience with the right, soft music and a glass of water for your shopping partner and it’s very personalized and special, but … their website crashes when you try to buy two of the same thing.
CMSWire: In psychology, it’s said that human beings need something like three weeks to form new habits. Do you think that will extrapolate to these new opportunities after we’re no longer in 'forced experimentation' mode? Will industries and consumers adapt to the digital-first mindset now that we’ve had a crash course?
We’re not yet at a point of equilibrium with this, especially with the major wrench thrown in this year of the pandemic. You thought you’d never buy makeup online, but now you have to. You never thought you’d buy cheese online, and now you have to. Who’d have thought buying eyeglasses online would have been a successful venture? And so on. So many habits are being broken and formed and reformed. Again, this isn’t necessarily new — we go through waves of this type of innovation; all the way back to the Victorian era when it was indecent for department stores to sell hats and gloves in the same store. Late last year, there was a lot of talk about video being used by sellers to influence buyers and how that would impact retail and the customer experience.
Part of this is breaking down and reevaluating established market processes. A lot of companies are questioning what, exactly, is their relationship with their customers and finding that they’re not, in fact, B2C companies after all. You can’t have engagement with every brand. With books, for instance; book publishers don’t sell books. They sell boxes of books. You can’t walk into Random House and say, “I’d like a copy of …” No. It's actually a B2B business. It's not a customer-engagement business. It sells ink and paper and binding.
Lululemon, for example, realized it doesn’t have an ongoing relationship with you. It's a clothing company that sells workout clothing, but then it bought [in-home fitness company] Mirror for $500 million. It wants to try to get closer to customers who buy its clothes and build that relationship.
'What Are You Bundling or Unbundling'
CMSWire: What’s the role of regulation in all of this transformation? How can regulatory agencies, governments, etc. keep up with the pace of technological change?
Tech is central, but it’s not necessarily deserving of unique regulations. What that means is there are still the same problems, and that there are also new problems, but also that the citizenry is more informed about where to lay blame.
Let’s take the financial industry as an example here. If you think about what it means to regulate banks, we don’t regulate banks. We regulate insider trading, and credit cards and mortgages, and all the ways that people interact with and exchange and transfer and hold onto money. You can’t regulate money itself, you regulate the things that you can do with money.
More specifically, look at younger people doing day trading using RobinHood. Is that a tech problem or a financial regulation problem? Is the problem with the software, or is that the securities markets’ problem? It’s not the tech itself, it’s a question of, 'should they be allowed to sell these complicated financial products to 19-year-olds?’ It’s along the same lines as the conversation around, 'Are Uber drivers employees?’ You wouldn’t say that is an automotive industry problem that needs regulation because the business uses cars. Nor is it a technology problem. It’s a labor law concern.
CMSWire: What differentiates successful organizations from those that are struggling? And how can digital-focused leadership alter that?
Technology has to be a central part of your business rather than being set to the side. You also have to understand how your business is shaped by the channel, and how changes to that channel might completely change your business. If you go back to the 1990s, magazine publishers were so excited about the internet because they assumed the move online was a windfall. They’d spent so much on buildings and paper and distribution and all of that, and all they could see was how this was going to lower their overhead. All they saw was 'Now we’ll make huge profits.' But as we know now, it turned out that what they thought was an obstacle for them was a barrier to entry. And the only thing keeping out that competition was the fleet of trucks.
The most important question in business success is what are you bundling or unbundling? Those are the only two questions that you need to answer. For example, TransferWise is a company that unbundled expensive currency exchange in the EU. It saw an opportunity to unbundle something, and did it successfully.
And CountingUp in the UK. It’s a bank, yes, but it’s also — if you’re running a business — your accounting software and your tax filing software bundled together. So, instead of having the separate bank and the tax software and then your accountant, it’s all one. Another small area of opportunity. Before, these opportunities depended on where the roads were, and how far from the town center people lived, and how far and for how long they were willing to travel; all these physical concerns. But if people can drive, how does that change? If they can access services from anywhere, what changes? Retail sits on a spectrum from logistics to experience; customers range from 'I know exactly what I want, and I know where to get it,' and the other extreme is a vague idea that requires guidance, and it doesn’t matter too much how you arrive at that completion. So, if you say, 'I need a cushion,' you can’t just go to Amazon and search for 'cushion.' That’s too broad. So then that end of the spectrum becomes about the experience, and how you determine, create and then curate that discovery experience.
Register for DX Summit 2020 today.
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