The Silicon Office

The Office is a TV series about a seemingly mundane workplace.

This mundane workplace, though, is counterbalanced by the anything-but-mundane situations that happen there — the situations that get us hooked on following it.

Beyond those situations, it’s the workers of the office that we truly fall in love with. Each character has their own distinct personality — lots of them extremely polarising, but we love them (almost) all.

Their workplace, the Scranton branch of a paper sales company becomes a set, the stage on which we follow each story as each episode unfolds. 

If you’re anything like me, you get super invested in each character in their own particular way. We can’t help but root for Jim or Pam, just as we can’t help but feel schadenfreude when DeAngelo leaves for the last time.

Right now Fanny and I are rewatching the series (for the 8th time). And as we watch, I’m noticing more and more parallels with the emotional investment we business/tech lovers feel as we follow the day to day developments of the biggest companies in the world.

We watch their ups and downs, we clap for each big unveiling and grab our popcorn at each scandal that ripples through the Silicon Valley and the tech world at large.

While we sat and cringed at Michael Scott’s constant social incompetence, an idea emerged and became this week’s newsletter: each different character of The Office brilliantly represents each different ‘character’ of Silicon Valley. 

The Silicon Office

In The Office, many of the characters don’t particularly like each other — often getting into petty feuds with each other. Others get on well, forming partnerships against other coworkers. Rivalries, cliques, alliances — this workplace has it all.

Each character is very different. A large part of reality TV is based on putting a bunch of incompatible personalities together and watching the inevitable mess that ensues. Through this lens, The Office follows the same format. 

From an outside perspective, though, so does Silicon Valley.

If there’s one location known for its rivalries and cliques, its polarising personalities and daily intriguing adventures, it’s the Bay Area. 

Today, then, we’re going lighter-hearted. Welcome to Silicon Valley, its top players, and personalities, as represented by characters in The Office.

Michael Scott – Tesla

Michael is as polarising a leader as it gets. Remind you of anyone?

He thrives on getting attention by any means necessary. Sometimes, though, his tactics are questionable, and it often gets him in hot water. 

When he’s not getting the attention he wants, Dunder Mifflin Scranton’s leader might yell incoherently, maybe tell you a relative of yours has died.

Tesla’s leader follows a similar playbook. When his Twitter feed is looking slow, Musk might commit a little securities fraud, or, if you’re a British diver, maybe accuse you of being a pedophile.

When they’re not doing that, they both begin to explore other projects. Just as Elon splits his time between leading Tesla, SpaceX, OpenAI, or tunneling under LA, Michael spreads his interests across his screenplay, working on new characters like Prison Mike, or Michael Klump. He even founded a company, in the form of the Michael Scott Paper Co.

Elon and Michael are both unique leaders.

Dwight Schrute – Facebook

Dwight is largely disliked throughout the workplace.

His social skills are seen as, well… lacking — with a very flexible moral code.

He tends to thrive in chaos. Always plotting new stratagems and sly ideas. Even in the rare times he thinks he’s doing something good for the others, he’s decried for it.

This one wasn’t difficult. Come on, they both even launched their own currency!

Kelly Kapoor – Basecamp / HEY!

Similar to Michael, outside of her actual job, Kelly’s mission statement is to get attention, however she possibly can.

DHH & Jason Fried are renowned through the tech world for their skill in beef-as-marketing. It’s even a staple of Fried’s book!

Just as Basecamp and HEY! are actually good products, Kelly’s seemingly actually good at her job. Beyond their work though, their real skill lies in being the loudest people in the room.

Jim Halpert – Dominos

Okay, in fairness this one isn’t even a Silicon Valley company, but the parallels were too solid to ignore. Just roll with it.

Jim is a consistently good performer. Everyone he comes into contact with loves him. Can you say any different for pizza?

Both Jim and Dominos rarely make the headlines for huge moves. They’re not much known for their drive for innovation or novel ideas. That said, they maintain solid numbers, deliver on time, and always keep us smiling.

Stanley Hudson – eBay

A top-in-class salesman all around.

Stanley isn’t the youngest or most creative of the salespeople in the office. The younger players run circles around him when it comes to innovation, experimentation, and new-school techniques — and yet, Stanley, just like eBay, has remained a solid player from the start.

He isn’t known for surfing on the latest trend, nor is he seen as the most ambitious of the salespeople, but he stays consistent, a known entity.

With that said, the rare times Stanley or eBay make headlines, they’re about as out of left field as they come. While Stanley’s scandals tend to take the form of his (multiple) affairs, eBay’s take the form of cyberstalking, harassment, and “psychological terrorism”.

They rarely make the news, but when they do…

Phyllis Lapin – Tinder

Right, hear me out on this one.

If there’s any one character in The Office who best personifies an app best known for its naughty reputation, it’s Phyllis.

Just as Tinder is known for being a place to find love in the 21st century, or at very least a place to help spend a night, Phyllis has alluded multiple times to her promiscuous reputation dating as far back as High School.

Phyllis, many years into her relationship with Bob Vance, has a burning passion for him — and had to fight to win him in the first place, waiting “naked in his office”.

She’s also been at least curious about one night stands…

Angela Martin – LinkedIn

Here we reach the opposite end of the spectrum, and I think this one needs little explanation.

Angela, just like LinkedIn, puts status at the core of her self-worth, never referring to her husband in any manner less formal than “The Senator”, and aggrandising her and the (state) senator’s positions when talking to well… pretty much anybody.

The LinkedIn parallels are clear. What initially was supposed to be a job description quickly became an open space to brag and flex when —quite literally— nobody asked.

Angela is a hyper-professional, no-nonsense, serious woman in the workplace. LinkedIn is about as vanilla as social networks get — devoid of any potentially sensitive humor. 

A match made in heaven.

Oscar Martinez – Netflix

Oscar is a wise man. While others fight over the latest heated debate of the day, Oscar remains (almost always) calm and collected.

In the same way, just as the streaming war continues to rage, Netflix can hold its crown high above the heads of its challengers with a deserved air of superiority, watching from the sidelines.

Netflix and Oscar are serious, composed workers. Nonetheless, when it comes to the casual break room chats, their inner drama addict comes out.

For Netflix, this takes the form of their Twitter account, regularly engaging in random discussions that, at first view, seem unexpected from a Fortune 500 media company, but quickly become totally on-brand.

Kevin Malone – Robinhood

Kevin doesn’t much resemble the company itself, but rather its userbase, and the comparisons are clear.

Kevin and the average Robinhood user are huge gamblers.

Constantly confused as to what’s going on is a description fitting our favourite fictional accountant just as much as the average Robinhood user? Kevin thinks he’s playing in the same league as the other office workers. To anyone else, though, he looks to be living in a world of his own.

His tendency to gamble dangerously, not really understanding what’s happening, fits quite perfectly in line with the stereotypical Robinhood user.

Somehow, against all odds, Kevin manages to snatch a big win when you least expect it. Unfortunately, on these rare occasions, he seems to stumble ass-backward into luck more often than purposely setting himself up for a win.

Creed Bratton – Roam Research

Nobody is entirely quite sure what Creed… is?

The guy has 100% been in a cult — in fact, we’re not certain he wasn’t the leader of it.

Creed seems ready at any moment to lead a strange Creed-style revolution. @Conaw too is growing his cult with each passing day — though seemingly with less criminal undertones.

Meredith Palmer – WeWork

Meredith’s character, to put it bluntly, is a mess.

With questionable morals, a (until recently) seemingly perpetual loop of bad news and worse decisions, Meredith is surprisingly in-line with the WeWork / SoftBank global strategy.

Pam Halpert – Adobe

Pam is an artist at heart.

Similar to Jim and his pizza counterpart, Pam rarely makes groundbreaking news and announcements, but performs consistently well.

She’s ambitious nonetheless. Just as Pam began as a receptionist and worked her way to being a saleswoman, then office administrator, Adobe’s talents have grown from graphics software to being top players in the VR & technical graphics innovation space.

Competitors come and go, but we’ll always have a soft spot for Pam and her creations, just as we do Adobe and its iconic creative cloud.

Andy Bernard – Uber

Andy never quite shook the reputation of being prone to anger outbursts, scandals, and questionable decisions. The former proved enough to send Andy away for a few months on anger management training.

It’s these same anger outbursts that marked the end of Uber CEO, Travis Kalanick’s reign at the helm of the company.

Despite the turbulent ups and downs that have plagued the company, just as they have Andy, both quickly became staples of the community — either to get us around or to entertain.

Toby Flenderson – GoPro

Toby is actually good at his job.

Over the years though, never quite seemed to get the respect or attention he felt he deserved. 

He’s not much known for being a huge innovator, rather staying in his lane, and struggling to break out of it. For GoPro, this took the form of a subscription services revenue model, for Toby, his crime thriller Chad Flenderman novels.

Ryan Howard – Theranos

Ryan was a young, quickly rising star in his sector. Theranos was being hailed as a revolution in healthcare, led by a strong, young leader.

Ryan climbed the ranks quickly within Dunder Mifflin, going from a temp job at the office, to an executive corporate role in New York within a year.

In his words, a “wunderkind”.

Theranos was being talked about as an era-defining breakthrough in blood analysis, with seemingly nowhere to go but up.

Unfortunately, they went kind of… down.

Both were indicted for lying about their innovations and revenue, defrauding investors. Ryan did a stint in jail, and Elizabeth Holmes is facing similar charges.

Honorable mention has to be given to Wirecard on that front!

And finally…

Nellie Bertram – Nikola

Nobody really knows where Nellie came from.

She has no discernable talents, particular management skills, or past results to lean on, and yet this seemed to do little to hinder her progress.

Somehow, her boss decided to take a gamble, and run with her, as she weaselled her way into the role of manager at Dunder Mifflin Scranton.

Similarly, the market decided to take a gamble, and run with Nikola, pretending it’s a company worth even close to its valuation.

This, kids, is what we call “healthy market activity”.

What do you mean a company with… 0 revenue likely isn’t really worth $30B — more than the entire Ford Motor company?

Just as Nellie somehow won the heart and mind of Robert California and got the job, Nikola somehow won the heart and mind (read: disposable income) of the Nasdaq.

Final Thoughts

Let’s bring this all back around to our story of the characters we follow in Silicon Valley.

We watch from the sidelines as each player carves their tale into the Bay Area and world stage history books.

All the major players, the main characters in the Silicon Valley story coexist in a home they all share. Sometimes they’re at each other’s throats, sometimes they win, sometimes they lose. They gang up on each other to form the tech company clique of the week, just as our favorite characters do in Scranton.

Day after day, just as the Dunder Mifflin team shows up to the office, fueled with new stories, new ideas, and new pranks against each other, the players in the tech world, day after day, plot, make moves and surprise us in a quest for growth.

We watch in earnest as our favorite company makes strides forward, and take to Twitter to voice our schadenfreude as others face new hurdles. 

Regardless of who we root for, the characters keep us on the edge of our seat, eagerly awaiting what tomorrow’s episode will bring.

Get smarter about business and technology strategy, straight in your inbox.

Join the audience of This Too Shall Pass readers who receive this newsletter each week.

TikTok, Aristotle, and Power Vacuums

July’s been a rough month for ByteDance, the China-owned parent company behind TikTok.

At the start of the month, the Indian government announced a nationwide ban on 59 Chinese mobile apps, with TikTok at the top of the list. The full pretense for the removal has been murky, but the core of the reasoning lies in “national security risks” to India. 

This past week, as of writing this, the US has announced an investigation potentially leading to a similar outcome for TikTok.

This week though, we’re largely going to avoid the geopolitics of the situation.

Instead, we’re going to take this opportunity for an exploration into a thought experiment that’s been on my mind as the headlines around this news have appeared these last weeks. 

It begins with an important premise.

Let’s imagine a world in which the US has announced an all-out ban of TikTok in the US. Google and Apple have honored the request. The app no longer runs on your device, it’s disappeared from the App Store, and any TikTok-recorded content not already saved onto your device is now unavailable.

As of this moment, in the US at least, TikTok is no more.

As a result of this, there’s now a TikTok-shaped hole in the American social media market, with massive existing demand (to the tune of around 40M users) in the country, and no obvious alternative to take its place.

Gather round, everybody — we have ourselves a power vacuum!

Horror Vacui

To understand what happened here, we have to take a quick look at exactly what a TikTok’less world means.

TikTok (or Musical.ly, before its TikTok merger) exploded into the mainstream social media world for its outsized creative community.

TikTok made it possible for anyone to be creative.

While plenty of apps have come and gone over the 2010s, each with a different approach in “empowering creators”, it’s difficult to argue that pretty much any of them have achieved their goal at any scale even remotely comparable to TikTok.

The one exception to this, arguably, was Vine.

Vine, in many respects, was a sort of spiritual predecessor to TikTok, all the way back in 2013.

At its peak reaching the position of #1 video sharing app on the App Store, Vine largely came out of nowhere and made quite the splash in the social media world. 

With its minimal camera interface, the ability to record multiple scenes within a single workflow, and a 6-second video limit, Vine was, by all means, a much simpler service than TikTok, but both serve(d) their core mission faithfully: make it easy for non-creators to create.

Vine’s subsequent disappearance left a massive hole in the extra-short-form content market, which established players raced to fill.

Today, TikTok is faced with the same position.


Horror vacui” refers to a concept attributed to Aristotle — “nature abhors a vacuum“.

In fairness, ‘multinational technology conglomerates building short-form content apps primarily aimed at the < 18-year-old market in middle/upper-class households‘ does somewhat push the definition of “nature” as Aristotle likely saw it.

The humans at the helm of these companies, though, pretty well fit the bill of being “natural” beings, so let’s run with it.

Aristotle’s concept, in market terms, then, can be interpreted with a function straight out of economics 101: supply shifts to meet demand. 

In this world in which TikTok has been banned, demand takes the form of ~40,000,000 newly single fans of short-form, creative video content.

When demand has that many zeros in it, supply tends to shift quite hastily.

The question then is not “will someone replace TikTok?”, but rather “who will replace TikTok?”. 

To answer that, though, we need to answer what it means to be a “TikTok replacement”.

To Have What it Takes

It’s tempting to look at Vine in search of clues on what a post-TikTok world looks like. After all, it did birth the first extra-short form video power vacuum.

In a similar fashion to TikTok, demand for the platform was at an all-time high, when it suddenly came crashing down.

The context, though, was very different.

When creators left Vine in a mass exodus, it was already more than 2 years into its massive hype cycle in the US market. By this point, many creators, and almost all of the largest creators, had already begun diversifying, namely to YouTube.

Sure enough, when the day came to jump ship to a new home, YouTube was the perfect destination for many creators.

YouTube had a focus on longer-form content than Vine. Beyond just being relieved of the time constraint, this served creators immensely in brand-building, all while building new revenue channels.

For top-performing Vine creators, the newfound ability to build relationships and depth with the audience proved invaluable to creating a number of the YouTube superstars of today.

These 2 years deep into Vine’s hype cycle, the app had already far surpassed the average lifespan of most new social platforms.

The widespread shift to longer-form content was part of a larger trend, as Vine shut its doors.

Social platforms rarely see a sudden exodus from one to another, dethroning the old guard, without the new platform offering an entirely different core format to its content.

Communities & culture are to thank for this. Once a critical mass of users establishes a platform as their go-to, they have very little incentive to up and move their entire community, their ‘local’ culture to a new service.

With that in mind, Vine’s downfall happened relatively late into its life-cycle. For a new social app to survive (and grow significantly) for over 2 years is a rare feat.

Unless a platform continually expands its offering, giving creators new tools and techniques to explore, its moat is almost entirely defined by its user culture and community — both elements that are (mostly) out of the platform’s control.

Through this lens, the shift from Vine to greener pastures was a fate rapidly approaching anyway, given a relative lack of innovation by the Vine team in offering new ways to create and share on the app.

The 6-second video limitation birthed an entirely new style of content at the time.

While every social platform was increasing capacity for longer videos, more complex content, etc, Vine took the opposite route — using constraints as a creative driver.

Over 2 years though, you can only be so inspired by constraints. Fatigue began to sink in, as it got progressively harder to create a regular flow of innovative content with such harsh limitations. 

TikTok, though, is a different story altogether.

Where Vine’s creativity was born out of scarcity, TikTok’s is born out of overwhelming abundance.

Offering a wide-spanning range of content formats and production tools, TikTok has made itself into a home to some of the most creative content on social media today.

In the long run (geopolitical concerns aside), abundance will always win, when faced with the opposite philosophy.

Beyond the technical capabilities available, the core driver to TikTok’s success, as we touched on earlier, is its community and platform culture.

The types of content on TikTok are wildly varied. In a 15 minute session, I was met with comedy routines, dancing, lip-syncing to movie dialogue, self-deprecating mockery, cute animals, and so much more.

Despite what appear like largely siloed verticals, TikTok’s platform culture is wildly powerful. If there’s one idea that sums up the spirit of the platform, it’s this:

Just. Be. Creative.

This strong community, this shared feeling of belonging to an in-group is no accident by TikTok. The trending music/challenges features are the cornerstone of inspiring platform-wide trends and cultural waves — and it works.

Just as Vine birthed a tight-knit feeling of community through a new content format, TikTok builds it through relentless effort in community empowerment.

Culture has never been an afterthought for TikTok. It’s never been the mere byproduct of a large user base — it’s a moat that TikTok works day and night to dig.

In turn, a constant flow of new features and production capabilities are the water with which the moat is filled.

As we saw last week in the case of Mixer, creator communities thrive when users are given both the tools they need to express themselves creatively and the culture they need to foster that same expression.

The “new TikTok” can never, and will never, be just a platform for creating creative videos — it must be a home for creators to feel safe and encouraged to try, experiment, learn, and try again.

The New Guard

So, in our proposed TikTok’less world, who takes the throne?

In his book Historical Mechanisms, Andreas Boldt described power vacuums brilliantly, succinctly, in the context of political structures:

New power centers develop around former peripheral vassals […] which take the power of failing centers

Put into the context of TikTok, the “peripheral vassals” Boldt suggests take the form of corporations, apps already well established in the social media and short video space.

More concretely, that primarily means Facebook (Instagram), Snapchat, and curveball, Byte.

Instagram and Snapchat have already long been circling TikTok, but so far have been woefully unable to compete with the platform’s meteoric numbers.

Just as Instagram and Snapchat were the sharks circling Vine, already smelling the blood in the water long before the day Vine ended operations, both platforms, among others, have been getting into position to strike once again.

Both platforms though, as they stand today, are swimming up-current in the quest to be the lighthouse that attracts TikTok’s best and brightest.

And this is where the answer to who is best placed to take over from TikTok gets blurry.

Opportunity

As we discussed, TikTok’s leading benefit stems from its culture. From the outset, even in its Musical.ly days in the US, creativity was the leading priority beyond all else. 

The “for you” curated discovery system serves to massively reduce hierarchy and size imbalances between creators. The organic reach for small creators is unrivaled.

Let’s look at Instagram as a counterexample.

On Instagram, and most social media platforms, content discovery is largely tied to user discovery.

Let’s break that down.

On Instagram, a new user looking to discover content is initially onboarded with recommendations to follow top accounts across their various categories of interest.

Until very recently, browsing to find new content was largely focused around finding new profiles to follow. You come across an account, and if you like what they do, you’d be recommended more of their back-catalog.

At the heart of the Instagram experience, until recently, profiles were the core of the platform. You followed individual profiles, not themes, individual creators, not a type of content.

This is changing with Reels, Instagram’s TikTok ~clone~ and its new recommendation engines, but has been fueled almost exclusively by the TikTok model.

This model, where the rich get richer, and organic discovery for smaller creators is difficult was turned on its head with TikTok — and it’s this model that fuels the root of the platform-wide culture.

TikTok rewards you for your creativity, in some sort of creative meritocracy, in a way that no other platform can.

Reels, then, in its current stage, perfectly ticks the box of offering creators new formats and tools, but it falls short on culture. Reels will always be engrained into a platform built on rewarding follower growth, over unfiltered creative ideas.

This doesn’t mean Reels can’t work, though. Just as TikTok has encouraged trends and community collaboration, a more hands-on culture management approach by Instagram puts the platform in a very strong position to take over from TikTok, should this day come.

Instagram’s Stories platform is already fueling a steady flow of creator tools. Half the equation is already solved, only culture remains.

Phoenix Tales

As I mentioned above, there is a less obvious, but non-negligible “peripheral vassal” in the form of Byte.

Created by an initial founder of Vine and launched in early 2020, Byte is being marketed as a sort of enhanced evolution of Vine. Given Vine’s massive success at the time, not a terrible pitch.

Visiting Byte’s website deepens the story. Where solving for community and platform culture appears to be the key to longstanding growth, Byte is about as on-target in its messaging as humanly possible.

On the news that the White House was flirting with the idea of banning TikTok in the US, Byte shot to the top of the App Store’s free app section.

In the same manner as TikTok, Byte understands the importance of balancing being a creative platform with being a social platform. Both go hand-in-hand, but it’s a necessary distinction to view TikTok competitors.

The platform has seen some strong initial traction, but has been relatively little discussed on other social media. Nonetheless, I’m definitely keeping an eye on Byte going forward. The leadership behind it has strong experience in the space, and the TikTok situation couldn’t be better timing for Byte.

As a sidenote, Byte wasn’t the only winner in the White House news. Snapchat’s parent company, Snap’s stock price saw gains of 8% on the day the information dropped.

Overall, Snap’s had a pretty solid year.

In my opinion, Snapchat’s a strong contender for the TikTok throne in a similar way to Instagram.

Their creative tools are next-level. The camera technology innovation, the augmented reality capabilities coming out of Snap these last years have been groundbreaking for the mobile camera market. They check the “creative tools” box perfectly.

Their discovery platform is slowly expanding too. While they’ve recently put a bigger focus on content production, they’re well poised to make a deeper push in organic content discovery, as their Discover feed has already begun to do.

Speed, though, will be a large decider in the new king.

TikTok’s culture, as we’ve discussed, fosters a home for ideas to spread like wildfire.

A recent example of this was fyp.rip — a service to download your entire TikTok library locally. On the potential ban news, and an (unrelated) glitch which led many users to believe the end of TikTok was upon them, word of the service spread quickly, and suddenly was managing numerous requests every second.

Just as TikTok’s memes, in-jokes, and trends move fast, concerted efforts to move the wider community en-masse to a new platform could gain traction extremely quickly.

This is contingent, though, on the value proposition of the destination platform being strongly aligned enough with the two core pillars of social creation apps: creative tools and community. 

As such, this is why Snapchat, Instagram, and Byte each fit the bill pretty strongly, each in their own way.


Regardless of which of the short-form apps take the crown, there’s one undeniable winner in the social video world — YouTube.

YouTube benefits over Byte, Snap, Instagram, or any of the numerous TikTok clones already on the market by virtue, in large part, of simply being stable.

While new fad apps come and go, YouTube remains the market leader for video. Almost everyone using any of the other platforms already uses YouTube.

While YouTube won’t be the destination for the short-form content itself, if (recent) history with Vine is any indication, it will gain a large fraction of secondary usage, thanks to creators expanding/diversifying their content offering.

YouTube is arguably the strongest platform for long-term brand building in the social media video space. It’ll gain from the influx of creators bringing young, engaged audiences to the platform. The platform’s renowned straightforward ad-based monetization also serves as a key selling point for many creators undecided where to take their brand.

In a world where TikTok disappears, then, it’s hard to argue for one single, overarching winner.

In the short term, its death in the US market would most likely fragment a 40M+ strong audience across several established platforms.

Just as Vine was a lesson for creators in not putting all their eggs in one basket, a TikTok disappearance would serve as a similar warning — and one I think many top creators are already wary of.

The creator landscape is very different from the 2013~2015 of Vine. Monetization opportunities and wider usage of brand sponsorship models have forced creators to explore more cohesive, cross-platform brand building in recent times.

Perhaps, then, the fall of one king doesn’t —at least in the short term— signal the coronation of another, but rather a cohesive spread of power across those “peripheral vassals”.

Nature abhors a vacuum, but that same nature is entirely agnostic to the who will rush to fill it.

Get smarter about business and technology strategy, straight in your inbox.

Join the audience of This Too Shall Pass readers who receive this newsletter each week.

When You Come at the King

Everyone loves an underdog story.

When Mixer, a new video game streaming platform was launched in 2016 (initially under the name Beam), the gaming community was excited to see a new competitor enter the streaming arena.

The market, for anyone that isn’t familiar with the space, is far and away dominated by the streaming giant Twitch

Platform Market Share by Hours Watched

Mixer was created to disrupt Twitch’s market leadership, and bring some meaningful technical innovation to the industry.

What happened this week, though, is that the underdog, well… died.

Last Monday, news broke on the company’s blog, and quickly spread across social media and news outlets, that the platform was shutting down. 

What the announcement also included, though, ended up being a far more interesting story: upon shutting down, Mixer is partnering with Facebook Gaming.

The partnership basically means that Mixer will drive all their website traffic to Facebook Gaming, and many existing Mixer partnered channels will be grandfathered into the Facebook Gaming partner program. This allows them to keep the main partnership benefits, like subscription revenue, extra channel features, etc.

Today, we’re going to explore what this new partnership means for both Facebook and Microsoft (Mixer’s owner) going forward.

Before that though, we’re going to dig into what led to the underdog’s demise — and a deep dive into what it means to build a community, beyond building a platform.

Mixer is dead. Long live Mixer.

So what killed Mixer? 

These last days I’ve seen plenty of analysis of the concrete numbers around Mixer.

In fairness, they weren’t looking great.

Peaking in Q2 2018, Mixer’s total watch hours per quarter have only dropped.

For comparison, let’s look at similar figures across the industry:

Twitch clearly stands out as a behemoth in their stream numbers over this period. Though, as the EntertainmentStrategyGuy points out in his insightful piece, from Dec. 2018 to Dec. 2019, Twitch saw total watch hours grow by a relatively minor 1.7%. Not great, not terrible.

Nonetheless, though, Twitch singlehandedly dominates the entire video game livestreaming space. Meanwhile, Mixer’s numbers show growth that could quite easily be lost to a rounding error.

But the numbers are just the result of several actions and decisions that put them in this spot. It’s these decisions that we’re going to be exploring today.

Competitive Advantages

The leading issue underlying these figures is this: Mixer played to no competitive advantage.

A bold statement, sure. Let’s break that down, and look at Mixer’s competition to see what it really represents.

Twitch

Twitch is the oldest major player in the industry. Born as justin.tv, Twitch has a long legacy in internet streaming history, and even more so in video game streaming history.

By virtue of this, they have by far the most entrenched community. The audience on Twitch is very loyal. For many, they don’t just watch a streamer, first and foremost, they watch Twitch.

This is a huge competitive advantage, and one Twitch plays to. Their community, their audience of passionate gamers and viewers is what makes up the large majority of the platform’s value today.

Amazon (Twitch’s parent company) doesn’t share figures for the company in their financial statements, but if they did, I imagine Twitch’s balance sheet would look something like this:

So, Twitch plays to its first-mover advantage and entrenched community.

YouTube

Let’s look at YouTube.

YouTube has a massive advantage in the smooth transition from live content to video/VOD. Immediately upon finishing a stream, that however-many-hour-long piece of content can be instantly turned into a ‘normal’ YouTube video.

A great feature of this is the ability to display a recording of the stream’s live chat alongside the video, to follow the audience’s reaction in real-time, even after the fact.

This is a massive attraction for existing YouTube video creators looking to develop long-form content, without the headaches involved in repurposing content from a separate platform.

YouTube creators looking to expand to live content also benefit from already having their audience natively on the platform.

No need to try to drag your viewers away from the site, they can watch you directly where they’re used to watching you. Only this time, it’s live.

Facebook Gaming

Facebook Gaming plays to the website’s culture of sharing content and being a true ‘social’ platform at its core.

Similar to YouTube, an audience (to the tune of about 1.8B) is already using Facebook daily. The challenge remains to expand that audience to the gaming division of the platform, but the audience is already in the Facebook garden, and are used to sharing content there.

Facebook is well positioned to play to its existing social culture.

Mixer

And now we reach Mixer. This is where it gets tricky.

Mixer played to no huge advantage.

In fairness, they did offer some differentiation in the form of their technical innovations. They were the first streaming platform to use “FTL” (“Faster than Light”), a streaming protocol which served to reduce the delay between the action and the viewers to under 1 second.

Typically this delay was around 20ish seconds on most sites, so the real-time interactions between the chat and the streamer were massively enhanced.

They also integrated a handful of interactive features, such as in-stream voting, which were nice-to-haves, but never a leading attraction for most viewers.

While these technical innovations were definitely game-changing (pardon the pun) at the time, they weren’t really enough to differentiate the platform against Twitch and YouTube, the two leading players in the space.

More than anything, Mixer was sold as a “Twitch with some cooler features”.

As the saying goes, though, it’s not enough to be against something, you need to be for something else.

And in the case of Mixer, there never really was much of a “something else”.

You may have noticed a common theme between the advantages of Twitch, YouTube and Facebook Gaming. In some form, they each draw power from access to a huge userbase. 

Of course, a startup platform like Mixer can’t compete on that front, straight out of the box.

The commonality, across all these platforms though, is that a userbase alone isn’t enough. The key lies in turning that userbase into a community.

It’s here that Mixer, or Microsoft, had a fundamental misunderstanding of what a Twitch competitor has to be.

A streaming service is not just a distribution platform.

First and foremost, it’s a community.

Misunderstandings

In one view, Mixer (or Microsoft) tried to spur platform growth by following the playbook of TV/movie streaming platforms.

If you’re Netflix or HBO, you want to bring content or talent to your platform which won’t be available anywhere else. Ideally, this will attract new users to your ecosystem, who hopefully will use your service as their main streaming service in the future.

Whether it’s winning the license to the entire Seinfeld catalog, or producing an exclusive special with its star comedian. These platforms benefit hugely from making their service the exclusive location to see that content.

Video game streaming sites have followed the same playbook, and Mixer didn’t half-ass it.

Less than a year ago, Mixer signed an exclusive deal with Ninja, the Halo pro player turned Fortnite streaming superstar. At the time of the move, Ninja was by far the largest streamer on Twitch.

A couple of months later, Mixer doubled down on talent acquisition with the announcement that Shroud, another top Twitch streamer, was moving to the platform. 

Both moves sent huge waves through the gaming world. Particularly with the Ninja announcement, the question was whether these moves would hurt Twitch enough to make a significant dent in their numbers — and if it did, did this signal that Twitch was now at the mercy of the highest bidder poaching any and all of their top talent?

As it turns out, the dynamics of growing a livestreaming platform aren’t quite the same as those of growing a content streaming platform.

If you’re a Netflix subscriber, and one of your favorite shows moves to Prime Video, you’re very likely going to follow it to the new platform. The switching costs are pretty minimal.

Even if you now have two subscriptions, the experience is mostly unchanged. You hop over to Prime Video to watch that show you love, maybe discover another series or two there, and use Netflix for the rest.

Maybe, even, you love the Prime Video library so much you decide to make the switch entirely. In any case, the experience of watching that content is pretty singular. Whichever platform you happen to be watching, once you hit play, the experience is about the same.

Mixer, as others have learned in the past, learned that for interactive communities such as livestreaming sites, this couldn’t be further from the case.

For inherently interactive communities, the switching costs are far from minimal. Stream watchers don’t want to move to another site (even though it’s free), just to follow one streamer they love, among the many they watch on Twitch.

When you leave Twitch to follow someone to their new streaming home, you’re not just leaving behind the other streamers on Twitch, you’re leaving behind an entire community.

Culture, Communities, and Curious Memes

Any social network has an engrained culture. A set of rites, rituals, and common understandings that make its users, otherwise a random group of people, into a real community.

When a new challenger enters the social network/platform space, they’re not just competing against the platform, they’re competing against an entire culture.

To say that Twitch has a strong culture would be a bit of an understatement. Any community has its own set of in-jokes, references and shared history, but Twitch has all of that x100.

And it gets weird.

At some point, I’d love to do a deep dive into gaming culture. Having been a ‘gamer’ well-engrained in the gaming community, and having built an audience of a few thousand in the space, I’ve long been fascinated at the strange world that is the gaming ‘community’.

The number of strange memes, references to a seemingly innocuous moment from a Twitch stream 8 years ago, and peculiar jokes in the community are astounding. Every other day I find myself trying to explain a seemingly nonsensical online community in-joke to my girlfriend. Usually, I get about halfway through before realizing that even I can’t quite figure out why it’s funny, but it still is.

She usually responds with some variant of “Uh-huh…”

While the gaming community isn’t the only online community with a long history of shared experiences and esoteric ideas, it might be the community where it’s the most noticeable.

Twitch in particular does a great job of maintaining this history and in-jokes through ’emotes’ — little custom-made emojis that can be used in the text chat alongside a stream.

There’s a long list of site-wide emojis, often birthed by moments or people that remain iconic across the entire gaming community. Many streamer channels also have their own list of emotes they can create, usable only in their chat, or by their paying subscribers.

Most of these emotes have a specific meaning or context, non-obvious on the surface, but one a seasoned Twitch ‘veteran’ understands.

If you’ve never watched a Twitch chat 20,000 viewers deep suddenly explode with a TTours spam, it’s not all that obvious what this emote could mean, beyond… a photography tour?

To try to explain just why and when this emote is used wouldn’t quite paint the whole picture.

It’s a perfect example of what Luc Benoist would call “objective esoterism“: I can tell you all about the context of that emote, but words alone can’t tell the whole story.

These references, this shared knowledge strengthens the invisible bond between the platform and its users.

By leaving Twitch for Mixer, you’re leaving behind an entire community of people who understand the ideas you do and know all the in-jokes you do.

You’re leaving behind your tribe.

Beyond being a ‘local’ in a particular streamer’s channel, this sense of community makes Twitch regulars feel like a ‘local’ to the entire platform, to the tribe.

Bijan Stephen offered an interesting view of communities on Twitch. In this view, there are three parts to the community interactions on the site:

  • Streamer to their livestream — this provides content to the platform
  • Livestream to its audience — this builds a localized community
  • Streamer to other streamer — this acts as some form of networking and helps cross-pollinate audiences to and from other creators

I’d like to offer a fourth part to this vision, though:

  • Audience to other audience

In the same way that a company’s best customer is one that freely acts as an ambassador for the brand, a leading advocate for the product or service the brand offers, a streamer’s audience can serve as an ambassador for a streamer, even in foreign lands (ie. a different Twitch stream).

Pictured: Ambassador diplomatic relations

Moving any stage of these community interactions out of the ecosystem in which they were born — ie. trying to woo an audience away from Twitch to Mixer — is an impressively hard task.

The Audience Equation

In the livestreaming world, then, buying talent doesn’t have the same swaying power that it does in the content streaming world.

In the context of livestreaming, we can formulate it like this:

Audience + $$$ = ability to attract talent, which can supercharge growth.

$$$ can bring talent on its own, but is not enough to attract an audience. This approach can only work when its supplemented by heavy investment in brand-building.

In putting the pieces in place to build a real community alongside the newly acquired talent, there is a stronger possibility of attracting a lasting audience. This doesn’t make it easy, because until achieving strong traction, that tribe is still in another castle, but it makes it possible at very least.

Microsoft never took this aspect of the platform seriously enough with Mixer.

The moment they signed Ninja marked the moment Microsoft told the world they felt that organic community growth takes too much time or too much money.

Rather than help supercharge growth, they expected their acquired talent to birth it entirely.

In the VC-backed, Silicon Valley startup world, this hypergrowth is very often necessary. These types of gambles, throwing cash at the problem, often can pay off. They also tend to be make-or-break situations.

If Airbnb hadn’t looked to expand overnight to new markets worldwide, burning money along the way, it likely would never have been able to compete with each local competitor quickly popping up around the globe, upon seeing Airbnb’s success. They had to move big, and fast, to kill that risk.

Microsoft, though, isn’t in that position.

They’re not a venture-backed startup in a do-or-die situation. Hypergrowth isn’t a pre-requisite when you have the time, talent, and money to build a long-term challenger.

Mixer died because money can’t buy an audience.

Winners and Losers

As we explore the business strategies behind the companies here, talking about them as we would players on our fantasy football team, it’s easy to lose sight of the human impact behind these decisions.

Other than the likely upcoming layoffs at Microsoft in the Mixer department, the group hardest hit by the news is undoubtedly the army of creators, until recently, livestreaming on Mixer.

On a side note, judging by reports of creators learning that Mixer was shutting down via their audience in their stream chat, it looks like the move blindsided streamers.

Of course, Microsoft wasn’t going to email creators before the information went public, but the announcement came out of nowhere. Although the Mixer founders left the company last year, leading up to the day, not a word had been leaked or rumored of any potential shutdown.

Another party losing out in the deal is every other smaller streaming platform. While the industry was already widely consolidated in the hands of Twitch and YouTube, Mixer’s death (ahem, “partnership”) will do little to make the lives of smaller players such as DLive any easier.

On the other side of the equation were the Mixer golden boys.

If anyone won big out of this deal it’s Ninja and Shroud. Getting signed by Mixer on an 8 figure deal, being limited to streaming there for not even a year, then reportedly forcing Microsoft to buy them out of their contracts, it’s been not too bad a year for both streamers.

Better yet, they now get to decide to either return home to Twitch or shop around for a new exclusivity deal with another platform.

The leverage in play for both creators is an interesting case study though, as they decide on their new homes.

On one hand, there’s an argument to be made that they lost some significant negotiating power by Mixer going under. Until now, top creators had been able to throw their weight around pretty heavily with the shared understanding that their name pull was enough to make ripples in the streaming world, whichever platform they chose to stream on.

Mixer upended this view. It was the first time a major player in the space publicly failed, and relatively quickly at that, showing the fragility of building a platform’s appeal around one or two creators.

On the other hand, you can argue that the whole ordeal has proven that only the top platforms can most effectively benefit from buying the top talent. 

With this in mind, they gain leverage in the discussions likely underway with Twitch and YouTube. Both platforms recognize the immense value the other will gain by signing (or regaining) this top talent.

Both platforms are at the stage where their talent acquisitions need only supercharge growth, rather than spur it from nothing. They’re already in the “$$$ + audience” position we talked about previously.

A move home to Twitch would regain a large portion of the audience they left behind last year when they migrated to greener (read: better paid) pastures, all while bringing back however many new fans they accrued on Mixer.

A shift to YouTube, though, is arguably more beneficial for both YouTube and the creators. Both streamers already have massive audiences on the site, and fans they left on Twitch who never made the jump to Mixer might be far more likely to make the hop to YouTube, where they’ll be greeted by an existing community on a site they almost all already use.

In line with the explosive growth of the passion economy in the last few years, so has the growth of the take that “power is shifting from platforms to creators“, and that remains true. 

That said, whatever the negotiations lead to, both YouTube and Twitch recognize the benefits either creator would receive on either platform.

In both cases, they’re returning to home turf, where their audience is already watching their content. What remains to be seen now though, is whether they return to their old streaming audience or their video audience.

Better yet, regardless of the outcome of the Ninja and Shroud deals, Twitch knows it stands as the presumptive new home for the majority of Mixer creators and existing audience.

As the go-to platform in the industry, it makes sense for most streamers to go to known ground, rather than venture afield to Facebook Gaming. The Mixer homepage as I write this is only further proof of this.

Each red block is a channel announcing a move to Twitch, rather than Facebook Gaming.

The Facebook Question

So where does Facebook Gaming fit into all of this?

Overall, Facebook comes out very, very well from this partnership. It will sign a number of existing Mixer partners to exclusive contracts on the platform, helping boost numbers, all while benefiting from the (albeit small) wave of Mixer streamers opting to move to Facebook Gaming rather than Twitch.

Moreover, though, Facebook wins on the advertising front.

As Mixer shuts its doors, it’ll take to Facebook a Rolodex of advertisers shifting their dollars from Mixer, to (hopefully) Facebook Gaming.

Moving to a known home with huge platform growth in recent months (don’t forget that +250% YoY growth), and best-in-the-business advertising tools, advertisers are likely excited to make the move to Facebook Gaming.

For Facebook, the deal is a perfect continuation of their ongoing growth efforts in both the advertising and gaming space.

As Facebook continues its gradual shift to becoming a media company beyond a social network, bringing new talent, new advertisers, and new viewers onto the platform is a win-win-win situation.

This deal helps Facebook Gaming further cement itself as a strong contender in the games livestreaming war.

Facebook’s entire business model is built on advertising and consumed media. Microsoft’s is built on neither.

In the last 10 years, Microsoft’s consumer media ambitions have faced some serious headwinds, and they’ve been quick to cut ties with projects that appeared to be sinking.

The Xbox One was initially marketed as more than ‘just’ a gaming console. It was supposed to be the media hub for the entire living room. A large focus point in the marketing of the Xbox One was its TV integration — the ability to route your cable box through your Xbox One, and benefit from all the extra features it could offer.

Until 2017, Microsoft had been pushing their own Groove Music, a music streaming platform, before ending it due to struggling figures, partnering with Spotify instead.

In the view of consumed media, Mixer’s demise seems somewhat in line with Microsoft’s previous attempts at expansions into the space.

Increasingly, it’s apparent that Microsoft is not interested in sinking the large costs in non-core operations when traction doesn’t come easily.

That sounds like armchair critique, but it’s not. Outside of Xbox, media isn’t a core focus for Microsoft. Shuttering underperforming non-core projects keeps more attention focused on their primary business.

Partnering with Facebook Gaming, though, does bring up the interesting question of xCloud, Microsoft’s unreleased cloud-to-mobile video game streaming (as in playing, not watching) project. 

This partnership allows Facebook to get front row seats and a powerful hand in controlling the integration of xCloud within their livestreaming platform.

Facebook is planning for the very near future, where you need only tap on a button as you watch a Facebook Gaming livestream, and you’re taken straight into the game you were watching, ready to be played on your device.

The advertising opportunities around this functionality will be powerful. The ability for in-stream ad spots driving directly to a playable demo of a game, with little to no time lag, will be a massive development for the platform.

For Microsoft, the deeper integration and reduced friction, putting their games and cloud gaming service in front of Facebook’s audience in the billions serve to go into end 2020 on a strong foot with the Xbox Series X launch — in fierce competition against Sony’s PlayStation 5.

With over 700M of the 2.5B monthly Facebook users having already engaged with gaming content, the move puts Microsoft front and center in accessing a massive addressable market.

The move helps Microsoft offload a large part of its operations, and therefore risk, in the consumer media space. This will help keep a more narrow focus on hardware and the gaming platform itself as xCloud gets closer to launch.

Microsoft is now free to focus on their core competencies, letting Facebook handle the rest.

Predictions

So far, we’re 4,000+ words deep into exploring the past and present. It’s now time to look at the future for Facebook Gaming.

Until recently, Facebook’s gaming ambitions have been somewhat in line with those of other major gaming and media companies.

From their acquisition of Oculus in 2014, through the launch and expansion of gaming-oriented livestreams and a fully-fledged Facebook Gaming platform, Facebook has been playing the long game, slowly working its way into the ranks of the gaming top dogs, namely by having the immense pockets to bankroll each move.

More recently, Facebook has been rolling out its new Facebook Gaming standalone app. This, though, hasn’t been smooth sailing, with at least 5 rejections from Apple’s App Store — but that’s a story for another day, let’s focus on what Facebook is trying to do.

From the standalone app, Facebook Gaming allows users to “Go Live” with gaming content directly from their phones. Usually, streaming games requires a solid PC setup, bulky software, and hours of technical preparation.

By making game streaming more accessible to anyone, Facebook is slowly leaning towards the ‘casual’ gamer market — a much more accessible audience, and one already actively engaged with its platforms.

This opens the opportunities for Facebook to integrate the hyper-casual audience on even, say, Instagram, with deeper access to gaming services via xCloud, with near native integration between the platforms.

Mobile gaming has long been seen as the ugly duckling of gaming platforms, looked down on by ‘real‘ gamers (strong emphasis there) as not being a real game system. Twitch and YouTube Gaming do very little to cater to this non-PC and non-console audience. Facebook, then, is perfectly positioned to fill that void.

Twitch-style, ‘hardcore gamers’ aren’t the target market for xCloud, either. While it allows you to play games otherwise limited to consoles/PC on your phone with a controller, for most console and PC gamers, the appeal likely isn’t there for any intensive gaming sessions.

On the other hand, more casual gamers will be thrilled by the ability to play graphics-intensive, triple-A titles on their mobile device, without having to invest in a powerful PC, or a gaming console, both of which sacrifice portability.

This innovation would open the mobile gaming market to a new world of games previously reserved for the console/PC gamers, without many of the pricey purchases that go into it.

In integrating xCloud natively with the Facebook Gaming platform, obvious parallels appear with a 2015 internal memo by Mark Zuckerberg re: Facebook’s AR/VR strategy.

Gaming is critical but is more hits driven and ephemeral [than social communication and media consumption], so owning the key games seems less important than simply making sure they exist on our platform. I expect everyone will use social communication and media consumption tools, and that we’ll build a large business if we are successful in these spaces.

The exact focus, here, is different to the one Mark lays out in the document, here screen-based games rather than an AR/VR platform, but the strategy remains the same.

Rather than developing and owning the key games in the gaming space, Facebook is more interested in making sure they’re accessible via Facebook. In the AR/VR world, this means they’re playable on Facebook’s platform, but in our case, Facebook is at least getting close to this by making them easily accessible via Facebook Gaming, through Microsoft’s xCloud.

With this memo in mind, each step Facebook makes deeper into the gaming world can be seen in the context of their long-term augmented/virtual reality platform ambitions.

Time has shown us that Facebook is more than happy to play the long game, waiting for opportunities to present themselves to dominate their market.

Rather than throw money at a problem and cross their fingers hoping for overnight success, Facebook has a history of moving slowly but surely toward their goals, and Facebook Gaming is no exception.

Plenty of platforms are gunning for Twitch’s crown, but have so far fallen short. 

What if Facebook, though, isn’t going after Twitch at all?

Facebook has decided that it’s much easier to rule a world —here, the casual gaming world— that they themselves have created, rather than try to dethrone the beloved leader of another.

After all, as the saying goes, when you come at the king, you best not miss.

Get smarter about business and technology strategy, straight in your inbox.

Join the audience of This Too Shall Pass readers who receive this newsletter each week.