Naked Brands are a new kind of brand — enabled by social media, powered by personality, and built for the digital age:
Naked Brands are transparent.
Naked Brands are founded by social media influencers.
Naked Brands prize on-going communication with fans and customers.
This book project requires an extensive research process. I plan to conduct many interviews with writers, influencers, and entrepreneurs. The interviews will all be public and will live right here on my website. We'll go on this journey together — you and me. Together, we'll cross industries, speak with experts around the world, and explore the past, present, and future of Naked Brands.
If you have ideas or feedback, please send them my way. You can find my contact information here. I look forward to hearing from you.
Taylor Pearson Background
My guest today is Taylor Pearson, an author, and an entrepreneur. I first met Taylor in 2016, when I interviewed him on the North Star Podcast. His book, The End of Jobs, gave me a new perspective on the future of work and influenced my career in countless ways.
You can connect with Taylor on Twitter here.
David: Who is your favorite Naked Brands and why do they stand out to you?
Taylor: Scrolling through my Twitter feed, here are the names that jump out:
Venkatesh Rao - refreshingly self-aware and willing to call himself out. Also very smart.
Jodi Ettenberg - You can really tell she cares about both her subject matter and her fans.
Brent Beshore - Has done a good job positioning himself as the anti-Private Equity, Private Equity guy.
Patrick McKenzie - Funny, smart and honest. Legitimately cares about helping people and that comes through.
Seth Godin - The OG of naked brands IMHO.
Patrick Collison - Manages to run a giant company but still spend a lot of time sharing his thinking. Smart.
Ben Thompson - Pioneering a new business model for media that relies on the tight interaction between publisher and reader.
David: How to Get Lucky: Focus on the Fat Tails was one of the first blog posts I ever read of yours. How can Naked Brands use the wisdom of Fat Tails to increase their upside?
Taylor: Two things stand out.
First, publish a lot! The costs to publishing are so low now that mostly what holds people back is being self-conscious and getting in their own heads. You never what shower thought is going to go viral so you might as well tweet nearly everything. There are lots of interesting debates we can have about what type of content does better or worse, this is almost never the issue. I like the way blogger Mark Manson puts in a Quora response:
“Until you've written hundreds of thousands of words, you have no clue what you will enjoy writing about or what other people will enjoy reading from you.”
Once you have a few hundred thousand words under your belt in any format, then you’ll have a much better idea of the particulars.
Second, I think for many online Naked Brands, in-person interaction is often one area of fat tail exposure that is very underappreciated. I've found that physical+digital is a 2+2=10 sort of situation where the whole is greater than the sum of its parts. One reaction to this might be “But in person doesn’t scale” which is only sort-of true. As YC founder Paul Graham has pointed out, some of today’s most successful companies started by doing things that don’t scale.
David: One of your most popular essays is called Blockchain Man. In it, you describe the shift from Peak Centralization in 1974 to a world without transaction costs where the equilibrium size of a corporation tilts towards one person. In that world, everybody is a “Naked Brand.” How should small, one-person corporations think about marketing?
Taylor: I guess the most obvious thing is that Naked Brands should think about marketing. Period. Most people don't think about marketing/selling themselves as employees, but that's exactly how you get better jobs or as a freelancer/Blockchain Man, that's how you get better gigs. Your Twitter/LinkedIn/Blog can be a huge lever for your career if you use it right.
For the Blockchain Man, her personal brand (AKA reputation) is paramount.
One of the paradoxes of a world defined by an abundant amount of data and information is that it becomes impossible to understand all of it.
If I asked you why you believe that the U.S. did land on the Moon in 1969 and that it wasn’t a conspiracy theory, what would you say? For pretty much everyone, the answer would boil down to the fact that you trust the experts who have looked at the evidence themselves and confirmed that it is indeed likely.
You have not spent days or weeks pouring over all the data presented by conspiracy theorists and addressed each of their points.
I trust that the thousands of scientists which have said that moon landings really did happen or that participated in them are telling the truth.
In a hyper-specialized system of knowledge, it doesn’t make sense to investigate everything on our own. Increasingly, our appraisals are not made of the content of information, but rather at the social network of relationships that have shaped the content.
If you hear something from five different friends from different social circles all of whom have a reputation for being reliable, then it makes to have a high confidence level in that information.
As you start to release your work, you will develop a reputation around that subject matter, which will make you a trusted source.
The advent of Twitter started to shift the focus in the media from publications to journalists. I follow very few publications, but I follow journalists whose work I trust regardless of who they write for.
The reputations these journalists are able to build up also gives them much broader career options. A journalist with a hundred thousand twitter followers can more easily move to a new job and take their reputation with them.
This will be the case for The Blockchain Man. If you constantly release your work and build up a reputation around it, you will have many more career options. This ties in nicely with my point above: publish a lot!
David: Many startups believe that advertising is proof of weakness in the product or distribution strategy. But Naked Brands are essentially marketing companies first and product companies second. What gives?
Taylor: For one, marketing vs. product is a false dichotomy. I've been experimenting a lot more with tweetstorms in the last year because they are super helpful to both marketing and product. The marketing part is obvious, but I get super real-time feedback on business decisions as well which is incredibly valuable.
However, there is a clear trend towards marketing in the economy. At a very high level, in the early 20th century the bottleneck was producing stuff. And so the industrialists and factory owners were the fastest growing segment. There was a huge latent demand for relatively inexpensive, high quality manufactured goods.
Over time that latent demand got quenched and we went into the Mad Men era where you needed to stimulate demand. There was an abundance of products and not enough time to notify people about all of them. Advertising shifted from informational - “hey, we make this thing” to aspirational/persuasion driven - “many companies make something like this but ours is better because it will let you be like James Dean.”
That trend has continued with it getting easier and easier to manufacture products. Software and AWS is one recent instance of this, but it's also true for physical products. Over the last ten years, manufacturing in China has become remarkably easier. I worked with a company that did a $50k order in China in 2008 which was unheard of. In the early 2000’s minimum order quantities were half a million and in the 90s, they were multi-million. Lots of people do $5,000 in orders from China now and Chinese factories are much more connected and savvy then they were in 2008.
David: What is the fundamental difference between marketing in the internet age and marketing in the pre-internet era?
Taylor: Zero marginal cost. You can start marketing before a product exists. You can start a blog/Twitter/newsletter/Youtube about something interesting to you and figure out the product after. Historically, that was impossible because marketing/advertising was expensive.
David: You’ve written about the idea of legibility and illegibility. How can Naked Brands take advantage of necessary ingredients that are hard to measure?
Taylor: Legibility is a concept from James Scott’s seminal work, Seeing Like a State. It’s not a book that lends itself well to one-sentence summaries, but my attempt is “we assume that only what we can measure is real and everything that is real can be measured.”
The book is titled Seeing Like a State because the idea of legibility as I’m using it here arose with the modern nation-state in the 17th and 18th centuries, the first gatherers of “big data,” aka the census record. The advent of this “big data” led to the emergence of a group Scott calls “high modernists.”
High modernists think the rational way to organize something is with a geometric aesthetic. That is, they want to make it legible. They lay out their cities on grids, which if you’re like me, you’ve probably always thought was a pretty smart idea.
A map of downtown San Diego is much more legible than a map of London. If I asked you how to get from point A to point B in San Diego, it’s pretty easy to figure out, not so much in London.
Let’s look at an example that’s a bit different than cities, but illustrates the concept well: early modern German forestry.
The arrival of scientific forestry in the late 1700’s was part of a larger movement called cameral science, which sought “to reduce the fiscal management of a kingdom to scientific principles that would allow systematic planning.”
This seems on the surface an altogether reasonable thing to do. The German government wanted to be able to forecast and plan how much timber could be harvested each year to be able to provide enough firewood to their citizens and ships to their sailors.
And in the short run, making the forests legible was a resounding success: The new forests produced more timber which Germany needed and that timber was more uniform, and thus usable by manufacturers.
However, the exact step which created all these benefits, the simplification of the forest into a timber machine, ignored everything which did not lead directly to timber yields. Yet, those aspects of reality remained: the unseen but important processes, the need for elm leaves to treat cattle.
The negative consequences of forcing the forests to become legible to their planners didn’t become obvious until after second rotation of trees to be planted, about a century later. This is important to note: the first-order effects, what happens right away, are often beneficial; it’s the second and third-order effects of forcing legibility onto an illegible system that cause problems.
It turns out there was a complex process going on in the illegible forests involving soil building, nutrient uptake, and symbiotic relationships between fungi, insects, mammals and flora, which were not fully understood. Forestry reminds us that we systematically under-value what cannot be measured. When we over-estimate our understanding of interdependent systems, there’s likely to be major “blowback.”
The result was Waldersterben, AKA forest death. If your goal is to “deliver the greatest possible constant volume of wood,” forest death is, speaking technically, no bueno. Muy no bueno.
David: What aspect of marketing is under-explored and intriguing to you?
Taylor: Narratives and memes. I think one of the downsides of digital marketing has been its "legibilization" and quantification.
Since we are now able to measure so many parts of marketing with such precision, it's easy to lose sight of the bigger picture. Really good marketers certainly use and leverage data, but they see it as a piece inside a broader narrative framework. In an interview, Clay Collins explained how his company, Leadpages, was able to do this.
One thing they did was that they used their own software, which lets you easily set up highly converting landing pages, to set-up highly converting landing pages for their own incoming leads. This sort of “meta-marketing” can be very powerful but hard to quantify.
Clay shifted to a model where he released features every 1-2 weeks. Then, he wrote a blog post about each feature. This created a narrative around constant progress and product improvement that you don’t get if you just do two big software updates each year.
David: One of the things that excites me about the cryptocurrency world is that I see Naked Brands everywhere, from a16z, to Union Square Ventures, to Blockstack, to Blocktower Capital. Why are Naked Brands so common in the cryptocurrency world? What does the crypto-sphere have to say about marketing in the internet age?
Taylor: To your first question, I think it's a trust thing. The cryptocurrency scene grew out of the cypherpunk and open source software movements both of which had a deep distrust of big institutions so it's important to be "open source" in the space.
One big shift that crypto will bring to marketing is that it will invert sales and marketing. Sales and marketing arose after we left the feudal era where everything was made locally and you personally knew everyone that made things you needed.
We centralized production and so advertising and sales arose to get inform people outside your social reach that your product existed.
Today the asset tries to find the business. On the blockchain, the business will try to find the asset. Sales and marketing will become more like vendor asset management. This started on the internet already with what is called “inbound marketing.” Because it was possible for everyone to start a publishing business (e.g. blog, Twitter, Youtube), it was possible to post things relevant to your audience and they would ask to business with you. Historically, all marketing was “outbound,” you had to pay publishing companies (e.g. TV, radio, newspaper) to “interrupt” readers with an ad for your business. The blockchain will extend the inbound paradigm but with even better discovery, transparency, and visibility.
You post what product, service or “job to be done” you need on the blockchain what you need and others will offer it to you. You'll still need experts to explain how the pieces fit together but overall efficiency increases because you dramatically reduce the investment in failed sales and marketing efforts.
For example, let’s say you’re driving on the interstate and need to get gas in the next fifty miles. You could post how much gas you are going to buy and how far away from the interstate you are willing to drive and all the gas stations along the interstate would bid for your business.
In the shorter term, I think there is a big move from more "command and control" marketing to community marketing. If you think about the most successful crypto projects, the people marketing them aren't doing the marketing themselves so much as creating the right environment and incentives for others to do the marketing for them in a way that is also self-interested. This is a nearly complete inversion from the Mad Men days.
David: Of all the things you've ever written, this might be my favorite sentence: "There were more college graduates during the period from 2000-2010 than all graduates combined from the beginning of history to 2000. Paradoxically, students are paying more and more for formal education as academic degrees become commoditized. College graduates have become less and less scarce.” If college degrees are becoming less scarce, how should people think about marketing and differentiating themselves?
Taylor: As it relates to degrees, I think it's a simple supply and demand function. Historically, degrees were valuable because demand was high and supply was low.
By historical standards, the supply of college degrees today is high and getting higher. Demand is low and getting lower. That's how anything becomes a commodity. There is a strong cultural narrative behind why college is worth it at any price so that even as it becomes more commoditized and less valuable, the cost continues to climb.
So you have to figure out how to get "credentials" - launching projects, sharing your ideas and having a portfolio - which are in high demand but in low supply.
Naval Ravikant had a great bit on this phenomenon: “Specific knowledge is knowledge that formal training won't give you. If society can train you, it can train someone else, and replace you. Specific knowledge is found by pursuing your genuine curiosity and passion rather than whatever is hot right now... Building specific knowledge will feel like play to you but will look like work to others. When specific knowledge is taught, it’s through apprenticeships, not schools. Specific knowledge is often highly technical or creative. It cannot be outsourced or automated.”
For example, if instead of going to college for a year, you taught yourself python and launched a functioning web app and got a few customers for it, that would be super impressive. It would be pretty easy to get a job because there aren't that many people that have the intelligence and self-starter-ness to do something like that.
David: Great, thanks for all these ideas, Taylor.
Taylor: Yep, thank you. This was fun.
There's also a certain level of short-termism that many digital marketers are thrown into. Too many are maximizing easily measurable short term-results and not thinking enough about building leverage, creating content that lasts and maximizing serendipity. Patrick O'Shaughnessy's podcast is a much, much better marketing strategy than your average D2C brand but Patrick's strategy is much less legible.