Chris Dixon
@cdixon.eth
“Death of the middle'' is a useful framework for predicting how new technologies will affect markets. The classic example is retail, once dominated by department stores like Sears and Kmart, until the internet drove consumers to two extremes: high-status premium brands and hyperscale internet retailers.
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Chris Dixon
@cdixon.eth
It’s no coincidence that the financial winners that emerged from this transition were LVMH, a roll up of high-status brands, and Amazon, the leader of tech-enabled logistics and efficiency.
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Chris Dixon
@cdixon.eth
The internet had a similar effect on media. Middling TV like sitcoms and game shows got replaced with short-form social media videos and long-form premium streaming content. Similarly, news tended toward either short format social posts or long formats like multi-hour podcasts.
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Chris Dixon
@cdixon.eth
Why is death of the middle a recurring pattern? Imagine a U-shaped “barbell” of consumer preferences, where maximum consumer utility lies at either end. In the case of retail one end might be “cost and convenience” and the other end might be “status and experience.”
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Chris Dixon
@cdixon.eth
Before the internet, real world constraints — the realities of shopping, logistics, etc. — forced retailers into a suboptimal midpoint of the U, which was neither hyper efficient nor premium status. The internet removed those constraints, freeing retailers to drift back up the edges of the U.
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Chris Dixon
@cdixon.eth
Business isn’t physics. There is no law that says death of the middle will predict the effects of blockchains or AI or any other emerging tech. But it’s often a good first-order approximation.
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