Having the 'Prime' of our lives - an exposition

“Price is a crazy and incalculable thing, while Value is an intrinsic and indestructible thing” - G.K. Chesterton

 Think we’ve been getting the Prime energy drinks hype bubble all wrong. Not surprising, considering that most have looked in the direction of marketing and PR a.k.a. experts for explanation. Perhaps if you want an answer don’t ask someone whose income depends on the answer. To be more precise it was Upton Sinclair who said, “It is difficult to get a man to understand something when his salary depends upon his not understanding it”. To be fair that’s only partly true as well as partly unfair. You hardly want a mechanic giving you his perspective on open heart surgery.

 Most attribute the phenomenon in broad terms to the allure of KSI and Logan Paul. Broadly speaking then, to influencers and celebrity. Secondarily, or in tandem to this infinite sweep of technology and indeed public square known as social media. Lastly, impressionable kids with deep pockets and yet deeper desires for status and signaling credentials. Don’t know that you can exactly rank order them, so let’s call it a trifecta of exposition and those are all great setups for a phenomenon. Except there is a subtle but very real difference between a phenomenon and an epiphenomenon. Epiphenomenon speaks to a secondary phenomenon that occurs alongside or in parallel to a primary phenomenon. The difference is often hard to cleave apart. Hypocrisy, by way of example, is a phenomenon but chances are it is mostly epiphenomenon i.e. derivative of deception and deceit as the first cause. The difference is as meaningless as describing whether the water is boiling because you want a cup of tea (utility) or whether the water is boiling because the water molecules have been agitated (science); or indeed as important as ascribing life to Darwinian/ natural evolution or ascribing life to Creationism i.e. divine intervention.

 What is factual is that supply followed demand, leading to scarcity which in turn turned water and chemical elements into an elixir of sorts, by all accounts. Therein a hint as to the first move i.e. of economics and human behaviour as opposed crass marketing. I don’t exactly know what an elixir tastes like, so won’t make commentary regarding any taste equivalence. Except to say that the taste of Prime is underwhelming. Typical of the category, that of gym/ fitness supplements and to be merchandised next to whey and creatine powders in the adult queue, furthest out from the front door. Prime is after all the official drink of the UFC. For the uninitiated that’s the Ultimate Fighting Championship - that’s full combat fighting and some rules e.g. weight classification and the restriction of eye-gouging. It is otherwise the closest you’re going to get to a street fight, outside of your PS4 ‘SIM’. Hardly an association aimed at kids. Furthermore, both KSI and Logan Paul between them have had 13 pro/ semi-pro fights. Sounds to me like Prime was an attempt at leaning into their ‘fighting’ credentials more than their otherwise ‘celebrity’. And those are not the same market. There’s the pre-combat KSI and Logan Paul - typical social media players appealing most ordinately to kids - and then there’s the adult, reinvented KSI and Logan Paul - qua-boxers who are attempting to take this combat persona mainstream and so require a different go-to-market than their pre-stack personas. Kids themselves, at one point, who have grown-up and are now looking for legitimate cred, as boxers and businessmen, as opposed the mere virtual and frivolous hype of their younger and unearned selves.

 To my mind the hype is a function of millions of kids (many pseudonymous I suggest) and adults equally – parents included that are at the vanguard of ‘sharenting’ - that are facile with social media but more importantly plugged into the commercial upside - simple money making. It is the kids and these adults, using the kids as cover, that have hijacked and arbitraged the moment. The kids and those simply (a.k.a. adults) plugged into the commercialization aspect to social media and so actually rentiering off, extorting and appropriating KSI and Logan Paul themselves. Rentiering is a form of economic rent-seeking where rentiers seek to extract wealth from an existing asset. Leading, in this instance to a contained ‘Dutch Disease’, where inflation is generally inevitable. The GameStop (a bricks and mortar retailer of games) movement/ saga or ‘short-squeeze’ comes to mind, where ‘people’ (mostly gamers and amateur investment speculators) were encouraged to buy stocks such that the share price would rise and work against the institutional investors - in this case, short sellers - who were due to cash in on a business on the brink of bankruptcy in the face of the (GameStop) value proposition being supplanted by streaming and digital. Starting with a Reddit public message the share price was eventually drummed up, as gamers and day traders climbed aboard to stick it to the man. What started out as a moral fightback, a revolt and uprising against crass wall street speculation eventually devolved into precisely the same game. This as the GameStop stock went on a tear. This became a game of spectacular gain on the one hand and momentous loss on the other as the fake ‘juicing’ could hardly have been maintained absent business fundamentals. Eventually this became a game of monetization and greed – the rebel movement infiltrated and animated by amateur traders and perhaps even one or two of the more institutional variant. Undermined, at bottom, by microwave capitalists all the same in a specular blowup of speculation and greed. The Prime moment was for me eventually only a trade opportunity - put simply an opportunity to make money. And that is the best explanation that I have for the genesis of the phenomenon. The allure of celebrity and influencers and social media, in tandem important, but only to the degree of amplifying the hype cycle. A butterfly effect i.e. a dependence upon sensitive initial conditions.

 What I saw were kids who had no particular want of the content proper but were simply wanting to juice the price - to lay down secondary market, upon secondary market, upon secondary market. A reminder that it is not coffee proper that kids mostly love at Starbucks, but the diversified and extended range avec cream and ice and vanilla and caramel sauce. So, what we ended up with is an infinite double markup effect - on steroids. A double marginalization problem, it may be called. Only this time with no end to the potential number of on-sellers (rentiers and microwave capitalists at bottom) where supply was not only suppressed initially, but subsequently agitated by inflationary dynamics. This both using DTC methods as well as 3rd party marketplaces. My guess is that most drinks were not opened. They will be drunk now that prices have normalized, and the competition mounts an offensive, in the biggest and most concentrated sugar (‘not added’ of course) and BCAA rush the world has ever known.

 The microwave capitalist - kids or otherwise - certainly needed the supply side problem to extort the moment. All those involved were speculators, so I don’t see any victimization of gullible kids and sharenting parents, neither of those na?ve unsuspecting parents. The celebrity/ influencer or content creator role, for lack of perspicuity on the subject, of Logan Paul and KSI is a nothing burger. Not to this supposed segment of the market that led the charge at least – and not for this product type. I suspect only a small portion of the markup out of secondary markets - which they would have had no control over anyway - actually flowing to the two of them plus the majority Prime owner, Congo Brands, at end. Their ownership stake individually of the Prime ‘business’ is 20%. In a tweet last year, KSI indicated that the product was being sold on the ‘black market’. In response to bottles being sold for 15 (British Pounds) on eBay he said: “This annoys me so much. We’re trying so hard to increase the supply as much as possible to try and combat the black-market selling. Which is to say, pull the market back into the formal market i.e. away from the speculators. He went on: “Me and Logan ain’t made any money from Prime. It’s all going back into the business to increase supply. We’re trying people”. Which is not to say that influencer marketing does not work. I know that it in fact does. I just don’t think that it’s the correct joining of the dots; that it is the most correct explanation – there is too much discontinuity in the product and the market proper for there to be alignment. And I just don’t like confabulations and lazy thinking. This was a fabricated market, within the larger play that of a free market economy. Economics is the study of how individuals and resources choose to allocate scarce resources. And price is eventually where demand will meet supply. If there is something to be learnt, it is that the markets are less structured and more distributed i.e. with increased peer to peer capabilities. And the internet and digital tools have certainly enabled and amplified ‘tradability’, but that is not wholly a new idea. And it is such trading that is the core idea here. The greed factor only amplified by the tools available to us.

 For another reference, let’s discuss ‘Tulipmania’ that took place in the Netherlands during the 17th century. A period of extreme speculation and inflated prices for tulip bulbs. During the height of the mania (let’s call it in retrospect) the prices of tulip bulbs skyrocketed, with some bulbs selling for the price of a house or even more. People from all walks of life including merchants, craftsmen and even lowly farmers began to invest in tulip bulbs, hoping to make a fortune. In this instance the kids and adult traders are akin to the farmers - not institutional, untypical but mere dabblers and prospectors leaning in to the hint of a windfall gain. ‘Tulipmania’ became a cautionary tale of irrational exuberance and unchecked speculation. And this happened absent social media. As for the social media (writ large) as the driver, that for me is a secondary story. An epiphenomenon. And again, I am not saying that social media does not work on the marketing front - whether paid or organic. I know that it does. I just don’t like confabulations and lazy thinking. Confabulations in this regard are going to do only one thing - keep the price of social media marketing and search superficially higher than otherwise. What social media certainly did was to supercharge the trajectory up on the one hand but then equally lead to an even more acute and precipitous freefall on the other. I would suggest an asymmetry upwards versus downwards - a skew in decline at orders of magnitude larger than the ascent. In simple analogue, blowing up a balloon is that much more labored than bursting the balloon. Social media makes this an interesting case study, but versus ‘Tulipmania’ a mere blip or ripple in time.

 So, social media and the larger internet did enable millions of independent distributors, but only because such distributors were switched onto the money-making opportunity first i.e. first-cause. It’s this arbitrage or microwave capitalism that eventually caused the runaway pricing, which superficially drove or amplified demand, exacerbating the size of the supply problem. And there was a supply problem. The product and the influencers had absolutely nothing to do with it, in my view, except to the extent they may have had a hand in constraining initial supply in order to arbitrage media attention for the establishment of brand. Did they personally gain from the hype? Some I guess. In the long term, whether any constructed hype apparatus will add to brand value or detract therefrom once the intrinsic qualities of the product are laid bare is yet to be seen. And the properties of the product have been laid bare. Social media and perhaps exuberant marketing is a double-edged sword and handsome is what handsome eventually does. You can fake it, but you won’t necessarily make it. You are either celebrated or exposed in the long-run. And sometimes those things are two days apart. Social Media does have a transparency to it that is all too real and ironically honest. And in the epoch - that of social media discourse - things will just happen faster than things did in the time of ‘Tulipmania’. Both in ascendency and more so in decline. If the product does what it says on the can then you may get a longer, more sustained tail-off, off of the heights of the hype apogee. For that you would still require harmony in terms of product: market fit, including at a price commensurate with intrinsic product value. Prime is still a real-world product, not simply an NFT. So think hard and good as a brand owner of the extent to which you want to juice your ‘stock’ naturally or unnaturally. Whether you have a product or a house of cards - social media will amplify both sides and whether the story-stock approach can eventually deliver. And once an opportunity is determined in the open market know that you will lose control of the narrative. This where peer-to-peer and marketplaces can be configured absent formal guardrails. And in this instance the premise was commerce - by extension greed. And that’s not a great formula for success.  So, this is not about grandstanding on the marketing front in order to fuel more media buying, this is a story foremost bout greed. The guardrails, ala social media merely being exploited (yet conversely an upside to the big players) as a tool in the service of pecuniary ends. The medium becoming the message. The social media players can do no wrong. However you see it - we need the medium and therein the message is always amplified albeit you try and speak truth to power.

 You’ll contest that it’s all the same thing. That I am splitting hairs. That social media is no different than commercialising social media. I think the exegesis matters; as does the genesis of the phenomenon. Specificity matters. To make this only a media play is to give too much credit to influencers and celebrity as well as to social media; to misplace our judgement. And the order of things does matter. Price to the market is a function of sentiment in the free market economy and value is the value we choose to imbue in something. Right ordering that ‘choice’ is vital. It’s wrong thinking that will maintain Facebook and Google as beneficiaries in the long-term. And wrong thinking that will in turn maintain their margins. This is a story about people. This is a story about how we’ve sold-out and see things increasingly only through a money-making lens. It’s about a pathology of greed. That greed and so commerce accounts for the genesis matters - as opposed the simplicity of social media and influencers as the whole story.

 At end, the social media and celebrity machine are going to lead to a trillion bubble’s and a trillion busts. Hype is a great growth hacking mechanism. It does not displace the quality of product, packaging and form factor issues re customer service and size etc. Unless of course, time in the market, does not matter and a day of value is sufficient to maintain a lifetime. Perhaps that’s the world we’re increasingly living in - compressed organization and product life-cycles with compressed and outsized rewards. Compressed cycles of boom and bust. And if the returns outweigh the cost of capital/ investment, then why not. In the Prime scenario I don’t suggest that is the case.