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

Airbnb’s Supply Problem

Plus: AI-publisher deals, and China fights back

⚡ Tech News Takes ⚡

Microsoft and OpenAI will give AI to local media

• What’s up: The two companies will give several media outlets (Minnesota Star Tribune, Seattle Times, etc.) $10M each to develop and implement AI tools. Ideas for the tools include: conversational archive search, transcriptions, and summaries.

• So what: For the news co’s, this is smart. These are all smaller publications, and by being contrarian and embracing the AI that competitors are fighting, they might turn the tables on those competitors. For the AI co’s, it’s essentially negotiating leverage against the incumbent media outlets suing them. The unspoken threat is, “if you don’t partner with us, others will… and we’ll arm them with AI to make them better than you.”

China’s firmer grip on chip supplies

• What’s up: China is continuing to consolidate control over rare earth minerals, the materials mined and refined for use is semiconductors and other electronics. And in parallel, they’re ramping-up tracking of the supply chains that consume those materials, blocking exports to chains that end in the west.

• So what: This shouldn’t be a surprise! As we’ve covered before, the US and western allies are blocking chip exports to China, so this is China’s way of fighting back. Plus, it’s economically smart for China to recognize the leverage they have over downstream players, and to attempt to wield it! (Note: closely relates to the 5 Forces Framework we reviewed last month).

Japan’s VC ecosystem is struggling

• What’s up: Japan set a goal in 2022 to hit 100 unicorns by 2027, and today (per Statista) they’re at 7. Also, their total startup funding has shrunk 15% per year since 2022. The Financial Times and others paint a bearish picture of their chances of establishing a healthy startup ecosystem.

• So what: A few threads here. First, it seems reasonable to expect growth towards the 100 unicorn goal will be exponential, not linear (so there’s still time for Japan to ramp up here). This is because early successes generate capital to invest in later successes (successful founders become investors, successful investing attracts other investors, etc.). Second, this is the hard thing about a more globalized economy… regions/pockets of specialization develop. Global investors will choose a proven VC market (i.e. the US) over others, and the inertia of that status quo takes a lot of investment to overcome.

AirBnb’s Winter Release

• What’s up: This week, AirBnb shipped their final set of new features for 2024. One key update is the introduction of the “Co-Host Network”, so new hosts can partner with experienced hosts that will handle some or all of the logistics. The second primary update is the introduction of 50+ improvements to search features within AirBnb (filters, suggestions, etc.).

• So what: The Co-Host Network is a great idea. It’s essentially a way to 1/ give your best hosts more upside on the platform, 2/ have new hosts learn from (and grow with) those best hosts, and 3/ bring more supply online for customers.

🛠️ Strategy Tools 🛠️

Supply Boost Activated

This week’s strategy toolkit is all about supply...

Specifically, I want to dive deeper on the AirBnb updates from earlier, using supply and demand curves to break down how they might have picked these features for the Winter Release.

But first, let’s refresh our memories about the key launches for the last few seasonal releases.

Do you see a theme?

Summer 2023:

1. “Rooms” – a private room with shared common spaces

2. Price transparency – no more hiding cleaning fees, etc.

Winter 2023:

1. “Guest Favorites” – a new badge to drive attention to 2M+ popular homes

2. Revamped ratings – “to help guests understand the quality of every home”

3. Listings tab – to help hosts “showcase the details guests care most about”

Summer 2024:

1. Icons – extra special experiences (i.e. sleep in the balloon house from “Up”)

2. Group Trips – new features like shared wishlists, messaging, and invitations

Winter 2024:

1. “Co-Host Network” – letting experienced hosts handle logistics so new, time-strapped hosts will list their homes.

2. Search – 50+ improvements for search within AirBnb (filters, suggestions, etc.).

There are outliers (cough, Icons!?... I’ve already ranted about that)…

… but I’m seeing a theme.

Boost supply! They want to give guests have more options (ex. “Rooms”, “Co-Host Network”). And then reduce price.

As for how boosted supply affects price, it’s time to dust off our econ skills and look at some supply and demand curves.