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xRM on the SPOT

It is 5:20am on April 3rd, 2018.  Spotify; a music, podcast, and video streaming service, will begin trading shares on the New York Stock Exchange today.

At 9:30am, the opening bell will mark another day to go down in history for the bullish, or the bearish. I only have 4 hours to make up my mind. Am I SPOT-bullish today? Or am I SPOT-bearish today?

More importantly, what does xRM think?

xRM or x(anything) Relationship Management is an umbrella term for a wide variety of business applications and processes, that overtime evolved into Dynamics 365.  I imagine a tiny, annoyingly noisy bot (that may manifest itself as either a physical object or virtual pop-up in all the screens I am using), uttering an immense flow of commentary.  S-bot-ty, as I call my little bot, has already aggregated the 8 million pages returned by a search for “SPOT stock price”.

My Opinion

In my daily job, I often have to advise on and architect business problems (I am aware that the word problem has different connotations and could be perceived as negative in some cultures that prefer the use of the word issue. I am using problem on purpose, to accentuate a different level of magnitude and bigger business impact a problem could have). When a business problem presents itself, understanding its root causes often requires a deeper investigation, asking the right questions and decomposing the business processes that may be creating the problem.

Here are three xRM techniques that I cherry-picked from my toolbox to help me solve the SPOT enigma: do I buy SPOT stock immediately?

Spotify has many options to evolve in its new public life. I selected three options to focus on and sieve them through my infallible xRM techniques and answer the SPOT enigma. Read on or cheat and skip right through to the end.

Content vs. Content

The real name of this technique is “adjective” content vs “opposing adjective” content, where one can replace the two adjectives with any pair, good – bad, pretty – ugly, efficient – wasteful, expensive – inexpensive, expensive - cheap, expensive – cost-effective, on target – off target, on the spot – much later, relevant – not applicable, etc. From a content point of view, the Spotify content is coming from the content creators and one of the Spotify’s value-add comes from the fact that it consolidates many different content sources into one spot for the music consumer. In the media there have been a lot of comparisons and parallels drawn between Netflix and Spotify, as they both provide fee-based access to other people’s creations.

One of the options for Spotify to evolve in its new public life is to become a content creator similar to Netflix producing new movies. Another option would be for Spotify to start charging creators for the privilege to be featured on the Spotify platform. There are several other options where Spotify could use machine learning algorithms to understand the audience preferences and listening patterns and coordinating creators’ acquisition and onboarding to optimize the content-to-audience path of least resistance.

Hmm, do I like a future where this is done for me? I get a lot of joy and intellectual reward from discovering new talent or new music styles that I had no idea existed. Will I want a machine to tell me what I like, no matter how sophisticated and mathematically beautiful the algorithm behind it is?

As a human, I am gifted to appreciate both the math behind and the music, however the learning journey, the trial and error, the pleasant surprises vs the horrendous sounds are all part of my travel plan.

Enigma vote: do not buy

Man vs the Machine

If you followed along and conscientiously read through the paragraph above, there is no other way.

There has been a lot of talking about industrial revolutions and it seems that humans are having a blast counting which ones have we been through and which one are we in right now. 

From a technological evolutionary theory perspective, creating and optimizing original content is what we humans so proudly define ourselves as, with and by.

Would a machine ever be capable of creating original art or intellectual product, without us feeding it the necessary ingredients? Yes. Maybe. Not really.

Would a machine have feelings and emotions without us triggering the parameters that we previously modelled and defined as “feelings” and “emotions”? Yes. Maybe. Not really. 

Would a machine attest that it should have legal family rights, to have children, or voting rights in society? Yes. Maybe. Not really.

Even if the answers to all the machine-related questions will be Yes in the future, I imagine that I will still have the ability to enjoy the musical creations of a machine, while I am doing my research and venture into new music styles. Welcome to the machine! (Pink Floyd, 1977).

Enigma vote: buy

Education vs Process

Another task I perform quite often in both my professional and personal life is to educate people around me. Webster’s definition of education is:

  • to train by formal instruction and supervised practice especially in a skill, trade, or profession.
  • to persuade or condition to feel, believe, or act in a desired way.

I borrow and bend Webster’s definition of education into my own:

  • to provide pertinent and objective information to solving a given problem by distilling it into a topic, showing how to apply logic to infer conclusions and identify a solution to the problem.
  • Use existing historical information to jump ahead of the predictable near future in a creative way.

In business applications, before solving a specific problem, we need to understand its context and educate ourselves about the subtleties of the process and the human interactions that still occur in the areas that are not automated. There are a lot of emotions that happen when humans perform different processes and educating people is the most reliable way to deal with these emotions.

Spotify is currently offering “the process”, meaning that as an Spotify user, I have to go through specific steps to search for the artists I already know of or rely on other people’s opinion to select music. I have not yet discovered a way in which Spotify could become a gentle, considerate “educator”, in the sense of “provide pertinent and objective information to solving a given problem”.

The problem that Spotify is solving stems from people’s desire to fill their ears with music. “Why do we listen to music?” is the real problem that Spotify needs to solve in order to become the conduit into a brave new world. 

Enigma vote: buy later. 

Conclusion

Let’s tally now the enigma votes to the Spotify enigma question “do I buy SPOT stock immediately?”. The answers are: buy = 1, do not buy = 1, buy later = 1

Hmmmm, “buy later” is not one of the expected, approved answers.   In this case, machine learning kicks in, finds the word “buy”, does not find the word “no” or similar negations, and strips off the word “later” as it does not understand it is closely related to the word “immediately” appearing in the question.

Final Vote: buy = 2, do not buy = 1.

Questrade, here I come!

Disclaimer

While this article covers the different facets of the Spotify IPO, I have no formal qualifications in the investing or banking industries. My only scientific foray in the theoretical understanding of these industries happened 20 years ago at the University of Toronto, when I tried (unsuccessfully) to use a combination of stochastic and quantum mechanics models to predict movements in the stock market.

Adriana Nedelcu received no compensation to write about any specific stock, sector, or theme. The above references an opinion and is for information purposes only.  It is not intended to be investment advice.

 

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