Hacker News Reader

There is a fantastic book on this topic called "By Design : Why There Are No Locks on the Bathroom Doors in the Hotel Louis XIV" that cover the inception of modern brands. It's a very similar story to what happened to watches. The industrial revolution made quality clothing accesible for everyone, so the cloth appearance no longer was a clear indicative of status, so brands started placing their emblems on the outside of the fabric inside of the inside. At the time it was seen as gross, obvious and bad taste. Guess we had a century to normalize it.

Looks great. I just ordered it. Thanks for the recommendation.

I also got the recommendation from here, happy to see I'm giving it back!

> At the time it was seen as gross, obvious and bad taste.

It's still gross, obvious, and in bad taste.

    > Nike couldn't be the global brand it was today if it directly managed all its factories.

This is a weird statement to me. Replace "Nike" with "Intel". Intel manages all of its factories and is a global brand. (Yes, I know they recently outsourced some chip manuf to TSMC, but Intel was surely a global brand in the 1990s.) I don't get it. What am I missing?

Intel is definitely the exception. For most companies, like Nike or Apple to take two, they in-house design work, but then contract out manufacturing to external companies, who often themselves subcontract out work further.

I'm speculating now, but it seems really likely if that type of distributed supply chain didn't exist, we'd see a closer coupling of design and manufacturing (at an extreme end factories designing and producing their own product).

That outsourcing of manufacturing has let US companies like Nike and Apple stay dominant in the design field, despite almost all their manufacturing being carried out by Asian companies.

Ultimately the global economy is very complicated, but a lot of it is predicated on that design/manufacturing split, which is only enabled by distributed manufacturing contracted out by brands.

I'm not trying to argue any of this is good/bad, but just that the concept of a 'brand' plays a huge function in determining what the world economy looks like, and isn't an empty concept.

I'm not sure I agree with your analysis.

It's true that branding gains importance as a differentiator when the product moves towards being a commodity or if its innovation has reached its peak . But I disagree that it's always the driving factor for how a company is structured.

There are some industries where the franchise model is most dominant (eg fast food chains) and some others where tight control over the value chain is the norm (eg apple). And funnily enough, one of the distinctive differentiators those luxury swiss watchmakers have, is: "We make every part ourselves. Everything is manufactured in Switzerland.". Then you have the OG multinational companies like P&G or Unilever, where branding definitely plays an important role but a lot of their brands are regional so it's yet another structure.

I really think it's mainly the specific industry and geopolitics that shape supply chains and not the branding.

> I'm speculating now, but it seems really likely if that type of distributed supply chain didn't exist, we'd see a closer coupling of design and manufacturing (at an extreme end factories designing and producing their own product).

It's an interesting question. I think it's safe to say that the main driver to outsource manufacturing was cost. But nowadays companies also benefit from things like reduced accountability. Even if we assume every part of the supply chain could be done within the US, wouldn't companies like Apple still eventually outsource the ugly parts of the supply chain to some third party within the US? Simply for the appearances.

Aren’t we talking about a company being “virtually integrated”.

> Brands at least start out as a designation of quality, but in modern society, they're an important part in companies avoiding legal liability, and having more distributed supply chains.

This isn't brand; this is legal company structure. Brand is "what people think of when they hear the word Nike".

I suppose we're just disagreeing on definition here - but I'd at least try to make the case that if people having a single thing they think of when they hear the word Nike, is necessary for a company to be able to structure itself that way legally.

Otherwise, individual manufacturing companies, don't have the financial incentive to give companies like Nike as big a portion of the profits as they do. Currently that system works, because the brand association of "Nike" gives people some kind of status/quality-assurance/whatever that they are happy to pay for.

I think you have a different understanding of what exactly a brand is than do most people. Every profession has the right to develop its own jargon that subtly redefines common words in its own way so I'm not going to say that you're wrong about what "brand" means in any absolute way, just that you're wrong to say that pg is wrong.

Fair enough - although I'd add in my defense that my take wasn't "Paul Graham is wrong", in fact I really liked the essay and agreed with a lot of it. It was more that I think there's a lot more going on with brands than the essay makes out (although you might disagree with this take too)

Exactly I am just disagreeing with your definition of brand, which I think is what were doing with the original essay as well.

Of course a company can structure itself fully aligned with its brand: I start Philip's Tyre Repair and the brand is 1:1 with the company and the premises. I don't see why being able to do that is important to enforce.

The point is, particularly with somewhere like Nike, that they have all sorts of things they need to do (advertise shoes; design shoes; make shoes; move shoes; sell shoes to retailers) that not all of it needs to be branded as Nike particularly. Only really the advertise shoes is the "brand".

It's like how Red Bull outsource basically everything except advertising. Someone else makes the drinks; someone else moves them; someone else sells them. They just maintain a really good brand with advertising, including innovative stuff like X-games.

> Which is, great writing and really intelligent thinking on an interesting subject, but without really being aware of ther stuff people have previously said/thought on the topic.

This seems likely accurate; but you know, I enjoy reading intelligent people work things out from first principles in their own voice.

> I think, for better and worse, brands are a lot more than that.

There is a great quote about this:

"For things that are visible to other people when you use them, there are many brands. e.g clothes, cars, watches, skis, furniture etc

For things that are not visible, there are much fewer brands e.g. underwear.

This might be social stigma, we will be stigmatized by society if we dont have appropriate clothes for right situations as such, we buy so many clothes that are visible depending on the number of occasions and everything because we have to look appropriate for that and this is where number of brands can stem up from too and this brand has brand value, because oh, you got that X company shirt nice.

Nobody cares what brand your underwear is because its hidden.

Such products are usually fewer brands because what matters is a huge chain supply. You most likely buy it if its available retail or not, you don't go look at an ad and say, wow I want that brand but the idea is to make familiar with it.

But even if you aren't. There are just so few brands with supply chain directly to retails that such things usually end up getting centralized and convenience of buying is the largest factor. You want to drive less to get this stuff whereas you might go far away just to get a nice pair of shirt and jeans for example something which, again has to do with the visibility of the product/social stigma

Technically, the supply chain thing also directs itself to products like cole drinks for example. You are probably drinking coke/pepsi because its available everywhere and usually the choice that you see in different drinks is just some permutation of a drink/brand which is owned by the parent company (coke/pepsi). The amounts of brands owned by pepsi/coca cola are quite a lot to be honest.

Ask a woman if she agrees that "Nobody cares what brand your underwear is because its(sic) hidden."

does it apply to restaurants?

I thought lots of restaurants behind-the-scenes either got food from external suppliers either in part or all the way to ghost kitchens.

> For things that are not visible, there are much fewer brands e.g. underwear.

Personal care products - shampoos, soaps, lotions

Nutritional supplements

are counterexamples

PG’s idea here is that when substantive differences disappear between products, brand is what’s left, not that brand is defined by the absence of these differences.