Attention is the New Oil Ep 461



In this in-depth discussion, Alex shares his entrepreneurial evolution from a focus solely on traditional advertising and outbound marketing to embracing the power of personal branding and organic content. Initially skeptical of content creation and personal branding, Alex's mindset shifted after witnessing the success of individuals like Kylie Jenner, Huda Kattan, Conor McGregor, and The Rock, who leveraged their fame to build billion-dollar brands. He credits reading Naval Ravikant's "Almanac" and understanding the concept of leverage—labor, capital, code, and media—as pivotal in changing his approach to business. Alex realized the compounding effect of building an audience through media, which led him to prioritize audience growth and content creation. He underscores the importance of attention as the new scarce resource, replacing oil as the key to wealth in the digital age. Alex advocates for providing immense value through content, minimizing asks to encourage audience sharing, and thus compounding reach and impact. He predicts that those who can effectively capture, hold, and multiply attention will become the future's ultra-wealthy, drawing parallels between historical tycoons built on oil and the emerging magnates of the attention economy.

Summary Notes

The New Oil: Attention

  • Attention is described as the new oil, replacing traditional energy sources as the key driver of business value.
  • The importance of selling more and building businesses worth owning is highlighted.
  • Alex expresses a desire to document his entrepreneurial journey, similar to famous figures like Bezos, Musk, and Buffett.

"Four out of the top five biggest companies in the world are not built on the old oil, but the new oil. And the oil of today is. Attention."

This quote emphasizes the shift from traditional resources like oil to attention as the main commodity for the world's largest companies.

Transition from Disregarding Organic to Embracing Media

  • Alex recounts his initial disdain for organic content and personal branding, preferring ads and outbound strategies for business growth.
  • He shares his journey from a focus on immediate revenue to recognizing the value of personal brand and media presence.
  • A clip from a past podcast with Ryan Fisher prompts Alex to discuss his evolution in business strategy.

"I was like, screw content. Organic is stupid. Just run ads and do outbound. Like, you don't need anything else."

Alex reflects on his previous mindset, which dismissed the value of content and organic growth in favor of direct advertising methods.

Realization Triggered by Influencers' Success

  • Kylie's Forbes feature as a billionaire at age 20 challenged Alex's beliefs about wealth and success.
  • Huda Beauty's valuation at over a billion dollars and Conor McGregor's and The Rock's successful brand deals further influenced Alex's perspective.
  • These examples demonstrated the power of personal branding and media in achieving significant financial success.

"And then Huda beauty sold a percentage of her thing for 600 million at the time, and it's worth over a billion today."

This quote highlights the massive financial success achieved by Huda through her personal brand, influencing Alex's understanding of the value of media and personal branding.

The Leverage Pyramid Explained by Naval Ravikant

  • Naval Ravikant's book introduced Alex to the concept of four types of leverage: labor, capital, code, and media.
  • Media and code are presented as the highest forms of leverage due to their scalability and potential for compounding returns.
  • Alex recognized the absence of a compounding vehicle in his businesses and the need to incorporate one for exponential growth.

"And so when I saw that, that was what made everything click for me as to why these people were getting these crazy numbers when they had, like, I had heard Kylie had a team of seven, and she was doing 200 million a year."

The quote explains the realization that a small team could generate immense revenue through media leverage, which is a scalable and compounding asset.

The Impact of Fame and Its Challenges

  • Alex's conversation with Dean Graciosi, who has experience with fame, addressed the inconveniences of being a public figure.
  • Dean's perspective on fame as a vehicle for impact rather than an inconvenience influenced Alex's attitude towards building a personal brand.
  • The trade-off between privacy and impact became a pivotal consideration for Alex in his decision to pursue media.

"Dude, if a couple of weird letters every day or every week is the price I have to pay for the impact I want to have, he's like, I pay that price any day of the week and twice on Sunday."

Dean Graciosi's acceptance of the downsides of fame for the sake of impact serves as a turning point for Alex, helping him overcome his reluctance towards public exposure.

Attention as the Scarce Resource

  • The shift from energy companies to media companies as the world's largest is discussed, with attention identified as the scarce resource driving business value.
  • Alex explains the importance of building a platform or business that taps into the attention economy.
  • He likens individual content creators to oil companies, drilling for the valuable resource of attention.

"The biggest four out of five companies 20 years ago were all energy companies. They were all power, oil, et cetera. And then if you shift today, four to the five biggest companies are what? They're media companies, and it's not even media. That's the output. The thing that is being pumped and drilled every day is the attention of the masses."

This quote illustrates the transformation of the global economy, where attention has become the most valuable commodity, much like oil in the past.

Content as Investment in Audience

  • Alex shares his initial aversion to creating content that doesn't have long-term value, comparing it to making fleeting decisions like choosing lunch.
  • He comes to understand that the true value of media is not in the content itself but in the audience it builds, which is a lasting asset.
  • The realization that building an audience is akin to acquiring land for drilling oil changes Alex's perspective on content creation.

"The output is the audience. And the audience is what compounds the audience is what sticks."

This quote encapsulates the insight that the audience, not the content, is the compounding asset, reinforcing the value of investing time and effort into media to build a lasting and scalable resource.

Value of Media and Audience Over Time

  • Media and advertising costs will only increase over time.
  • Audience attention becomes more valuable over time.
  • The best time to start building an audience is now due to the increasing value of media and audience attention.
  • There is a sense of urgency to begin due to the cost curve and value of resources both increasing.

"Media will only become more expensive over time. It literally only goes one way, which is up on a long enough time horizon." This quote emphasizes the inevitable rise in media costs, making the present the most cost-effective time to invest in audience building.

"Audiences and their attention becomes more valuable over time." The quote highlights the growing importance and value of an audience's attention in the media landscape.

Media Business Dynamics

  • Media businesses have a unique model where marketing and delivery are the same.
  • In media, audience expansion through marketing directly correlates to increased revenue from sponsors and endorsements.
  • Media creates leverage by combining marketing and delivery, which is unique compared to other business models.

"Media is the only business where marketing and delivery are the same." This quote explains the unique aspect of media businesses where the product being marketed is also the method of delivery, creating efficiency and leverage.

Audience Growth Strategy

  • The strategy of "give, give, ask" or "give, give, give, give, get" is effective in audience growth.
  • New platforms initially focus on content delivery without ads to quickly expand their audience.
  • Mature platforms shift to monetizing through ads, which can slow growth.
  • A long-term approach without immediate monetization can lead to larger growth and potential in the future.

"The longer you can wait, the bigger the ask can be at the end." This quote suggests that patience in monetizing an audience can lead to greater rewards and growth over time.

Evolution of Media Monetization

  • Traditional media like newspapers and cable TV monetized through both content access fees and advertising.
  • Digital media changed the monetization model by offering free access and relying on advertising.
  • The reach and impact of digital media are unprecedented, changing the game for brand growth and monetization.

"Digital media eroded that first sale to the customer, which is when Facebook came in and said, it's free and it always will be." This quote points out the shift in media strategy with digital platforms like Facebook, which grew their audience by offering free access, relying on advertising for revenue.

Future of Wealth in Media

  • Attention is the new currency, and those who control it will become the new generation of ultra-wealthy.
  • Creators with large audiences have immense power to monetize in various ways.
  • Mastery of media is a significant form of leverage for business growth.

"If the Rockefellers were built on oil, the new generation of ultra wealthy people [will be] built on attention." This quote draws a parallel between historical wealth built on tangible resources and future wealth built on intangible assets like media attention.

Personal Impact Through Media

  • Creating content and building an audience aligns with the goal of making a meaningful impact.
  • The willingness to accept the personal costs of fame reflects a commitment to spreading knowledge and influence.
  • The desire to leave a legacy of knowledge rather than anonymity drives content creation and audience engagement.

"I'd rather have that knowledge not vanish with me at all, be completely spread, have a whole horde of entrepreneurs who are younger, better, faster, sharper than I was." This quote expresses the speaker's motivation to share their knowledge widely, impacting future generations of entrepreneurs.

Internal Shift and Content Creation

  • Alex expresses a personal transformation that led to increased content production.
  • The goal is to make an impact and pass knowledge to future generations.
  • Alex hopes the current generation will continue this legacy of knowledge sharing.

"I had an internal shift of realizing that if I wanted to make the impact I want to have, then I was willing to do it."

This quote highlights Alex's realization that impactful work requires a willingness to take action, which for him meant producing more content.

The New Oil: Attention

  • The top companies today are built on attention, not traditional resources like oil.
  • Attention is described as the scarcest resource, with companies vying for people's senses and time.
  • The battle for attention is likened to a war, with companies using analytics and real-time data to win over traditional media.

"The oil of today is attention, because attention is the scarcest resource on the planet right now, even scarcer than oil, because people are willing to pay even more for it."

This quote emphasizes the value of attention in the modern economy, where it is considered more valuable and scarce than traditional resources like oil.

Monetizing Fame and Attention

  • Celebrities like The Rock, Conor McGregor, and Kylie Jenner have translated attention into financial success.
  • They invested time in building their brands before monetizing their fame.
  • New creators often expect quick fame without putting in the effort required.

"The reason, Huda, the rock, Conor McGregor, Kylie, were able to translate their fame, their attention, into money, is that one. They spent a long time building it, right?"

The quote explains that the successful monetization of fame by these celebrities is due to the considerable time they spent building their brands and attention.

Brand Consistency in Monetization

  • Celebrities choose to monetize things that are consistent with their brand.
  • The Rock's partnerships with Under Armour and Zoa are examples of on-brand endorsements.
  • Celebrity endorsements allow consumers to associate with the status of the celebrity through products.

"It was on brand in that this is something that their audience already dug."

This quote underlines the importance of celebrities choosing to monetize products or services that align with their established brand and audience interests.

Multidimensional Appeal of Megastars

  • Megastars like Joe Rogan and The Rock have multiple interests that attract diverse audiences.
  • They wait to monetize until they can appeal to a broad segment of their audience without detracting from their brand.
  • The product itself can further expand the brand if it is exceptional.

"These megastars go deep on many things and in so doing, capture bigger and bigger audiences that compound on themselves."

The quote describes how megastars' diverse interests allow them to capture and grow their audience over time, leading to greater opportunities for monetization.

Leverage and Compounding in Entrepreneurship

  • Leverage is the ratio of input to output and can be increased through hiring and capital investment.
  • Compounding is when an action's effects multiply over time, enhancing leverage.
  • Modern leverage is achieved through software, media, and code, rather than labor or capital alone.

"Leverage is the difference between what you put in and what you get out."

This quote defines leverage in an entrepreneurial context, emphasizing the efficiency and scale that can be achieved through strategic use of resources.

Compounding and Leverage

  • Compounding is a process where the baseline growth is never lost; it only grows unto itself.
  • Leverage is the difference between input and output; it's about getting the most back for time invested.
  • Compounding is considered a form of leverage because an initial investment continues to grow over time.
  • Facebook and Amazon are examples of companies that utilize multiple forms of leverage and compounding.
  • Alex predicts a fragmentation of media channels over time, similar to the transition from a few TV channels to many.
  • The ability to adapt and package content across multiple media channels will be key to maintaining relevance.

"And so if you want something that's going to become huge, you need something that compounds. And ideally even multiple forms of leverage, right? That compound unto themselves."

This quote emphasizes the importance of compounding growth and leveraging multiple assets to achieve significant long-term success.

Attention as a Scarce Resource

  • Attention is a finite resource, akin to other limited resources like oil or land.
  • Currently, attention is under-monetized, and there's a "land grab" for collective attention.
  • Companies like Facebook make substantial profits by selling attention with virtually zero cost basis.
  • The cost of media to these companies is negligible compared to the revenue they generate from selling user attention.

"Attention is scarce resource because there is a fixed amount of it. You only have so many hours per day and so many senses, ears and eyes that are turned on."

This quote highlights the scarcity of attention and why it's so valuable, drawing a parallel to other finite resources.

Virality and Audience Growth

  • Virality is driven by the audience's compounding growth and their willingness to share content.
  • Content should be valuable enough that sharing it increases the sharer's relational capital.
  • A creator's goal should be to provide content that is so valuable it's surprising it's free.
  • Alex's strategy is to offer high-value content without monetization to gain market share.

"It's not actually your media that compounds, it's the people telling other people. That's the compounding vehicle behind media."

This quote explains that the true compounding factor in media is the audience's propensity to share content with others, thereby increasing reach organically.

Monetization Strategy

  • The balance between giving content freely and the necessity to monetize is achieved by public promotion and private sales.
  • A small percentage of a growing audience can be monetized each year without hindering the compounding growth of the audience.
  • Outbound strategies should aim to replicate the organic experience of discovering a brand.
  • Personal branding is about selling values and ideals, which is more challenging to convey in outbound efforts.

"So I think of it like this, is that you promote publicly, you give publicly, you sell, you ask privately."

This quote provides a monetization strategy that separates public content distribution from private sales efforts, allowing for growth without compromising audience trust.

Future Predictions for Wealth and Influence

  • The future ultra-wealthy will be those who can capture, hold, and multiply attention.
  • Capturing attention means initially drawing interest; holding it requires being interesting over time.
  • Multiplying attention involves getting your audience to spread the word, thereby growing your reach.
  • These abilities will be essential for significant wealth accumulation in the future.

"My prediction for the people who will become the new sensibillionaires, et cetera, is going to be people who can do three things. They have to be able to capture, they have to be able to hold, they have to be able to multiply attention."

This quote predicts the qualities that will be necessary for achieving extreme wealth in the future, focusing on the ability to manage and expand one's attention.

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