Welcome back to Forests Over Trees, your weekly tech strategy newsletter. It’s time to zoom-out, connect dots, and (try to) predict the future.

Here’s the plan:

• Tech News Takes — super-short analysis and commentary

• Strategy Tools — strategy nuggets (for business and life)

• F/T Shoutouts — sharing launches, tech events, and other reads

Adobe is an Old Dog

Plus: YouTube vs. Deepfakes, and Perplexity vs. NYT

⚡ Tech News Takes ⚡

YouTube will label non-AI work

• What’s up: YouTube launched a label that says “captured with camera”. It relies on Content Credentials, a standard developed by an industry group called C2PA. So for any device that supports that standard, extra metadata gets encoded on the video, which YouTube can see to prove authenticity.

• So what: Labeling AI is proving pretty difficult, so this seems like a reasonable alternative – labeling non-AI. Just as with other creative works (art, fashion, etc.), we should expect authentic, human-created content to become more valuable relative to AI-generated content over time, so the labeling carries value. Plus, we need tech-driven ways to combat deep fakes, whether for brands, creators, or politicians.

Perplexity gets a cease and desist

• What’s up: The New York Times sent Perplexity a cease-and-desist at the beginning of October. Allegedly, the OpenAI competitor had previously assured NYT that they wouldn’t crawl the website, but NYT is still seeing its content in Perplexity results. In response, Perplexity told Reuters that they aren’t scraping data for building foundation models, but indexing it and citing it as a source in response to users.

• So what: For Perplexity, toeing this line is mission-critical. Their best competitive differentiator right now is the “we cite sources” approach. So even if they can find replacement sources as news keeps getting commoditized, letting NYT notch a win would set a bad precedent. For NYT, they want to fight that commoditization and avoid the potential future where everyone gets their news from a Perplexity search rather than a visit to the NYT website. Historically, indexing and citing sources has been OK (cough, Google), but I’m curious to see the legal debate play out.

ASML bookings down

• What’s up: ASML, the Dutch company with a near monopoly on the advanced lithography machines used during the semiconductor manufacturing process, reported Q3 bookings that were down 53%. Their stock dropped 16%.

• So what: This was incredibly surprising, and it briefly sent all chip-related stocks down. In the midst of an AI and chip boom, how could this happen to ASML? Essentially, it reverse-engineers to US action – we encouraged Japan and The Netherlands to join forces on export controls for chip-related trade with China (which I’ve covered here). And in recent quarters, China represented as much as 50% of ASML’s orders! So two things will be interesting here: 1/ How will ASML and Netherlands hold-up under this pressure? 2/ Will we see similar ripple effects hit Nvidia and OpenAI eventually? If we do see those ripples, I wouldn’t be surprised to see export controls get tweaked, to avoid choking off the massive AI-driven growth in the US.

Adobe is an old dog with new tricks (AI features)

• What’s up: Earlier this week, Adobe used their MAX conference to announce a slew of new AI features aimed at speeding-up workflows and simplifying its apps  (ex. Illustrator, Photoshop). CPO Scott Belsky highlighted that their AI vision is more than just using AI prompts to output creative – they want to let creators build bigger/better things alongside AI by iterating, tweaking, and being hands on.

  So what: Adobe is in a tricky spot. Their power users, the folks who spent years learning the tools and honing their craft – see AI as a threat. If anybody can use simplified, AI-powered versions of these tools, what’s the value of that earned experience? On the other hand, failing to embrace AI means miffed investors, and makes you a sitting duck for disruption (more on that in the strategy section).

🛠️ Strategy Tools 🛠️

AI is a New Trick

Today’s strategy tip is about old dogs learning new tricks.

Specifically, we’re going to unpack Adobe’s approach to AI, applying the theory of disruptive innovation to make sense of it.

First, a quick reminder on the theory.

Disruptive innovation is when a small company challenges an incumbent by launching a low quality, “good-enough” product to an overlooked group of customers. And they’ll often base their offering on new tech / new assumptions that weren’t true before (ex. smartphones in everyone’s pocket, lower cost of compute, etc.).

Then, after getting a foothold, the “disruption” happens when the small co expands upwards with a higher and higher quality product, picking off larger and larger swaths of the incumbent’s customer base.

For my fellow visual learners… ze visual!

Ok – back to Adobe. Fortunately (or unfortunately) for them, they are the incumbent. They have highly specialized tools, premium prices, and top-end customers.

For the purposes of this argument, let’s call Figma the disruptor. For now, they have a “good enough” tool, at lower prices, and serve a subset of Adobe’s customers (designers).

Then AI enters the picture. New tech creates a steeper innovation curve, which Figma jumped all over. Even with the distraction of the failed Adobe acquisition (which officially got called-off in November 2023), Figma released their first AI tools in October 2023. And then another set in June 2024, all designed to raise the quality bar (and steal marketshare).

So despite the risk of alienating power users like we talked about above, Adobe is (rightly) concerned about getting disrupted, and has no choice but to continue learning new tricks – creating a steeper innovation curve for themselves.

🌲 F/T Shoutouts 🌲

• Tiny Glade – I saw this beautiful diorama building game last week (thanks to Emily McCarthy) and had to share. It’s a no-combat, no-goal game, but you can immediately see the appeal in the demos. It’s almost meditative.

  

• Experiences make the trip – Couldn’t help but think of my last AirBnb post while reading this McKinsey report on the trillion-dollar opportunity they see in the travel experiences category.

Want to suggest a shoutout? Send it here.

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