Here's to the crazy ones
Facebook’s stock took a nosedive last week, sending shockwaves through the stock market. Twitter also took a big hit. Time for perspective: the price is back to where it was in May. The stock price took a big jump in July, then came back down to earth.
Are we looking at end of days, an overdue correction, or time for Facebook et al to reexamine the business model?
The tech sector has no historic perspective. They have always felt that the rules of business don’t apply to them. Tech is a mere extension of utilities we’ve seen before. Facebook, in many respects, is the telco reimagined. Only, in this case, you can reach out and touch people globally, without incurring long distance charges. Or make a conference call, when it comes to posts.
Facebook raised ire last week when, in an interview with Recode’s Kara Swisher, Mark Zuckerberg volunteered, unsolicited, that the platform would not be banning holocaust deniers – an editorial decision, which would make Facebook a publisher. In fact, The Guardian recently asked, Is Facebook a publisher? In public it says no, but in court it says yes In its defense against a former app startup, Facebook is contradicting its long-held claim to be simply a neutral platform. Strengthening the argument – its business model: Facebook makes its money off advertising.
Zuckerberg did note that the company plans on adding 20,000 people to help police the platform and to watch Facebook Live videos and alert authorities when certain people may be about to harm themselves. The number hardly dents Facebook’s bottom line. As Techonomy notes, “(Facebook) is the most profitable large company that ever existed… Its 43% net margins, on revenues that this year will exceed $55 billion, are unprecedented for a company this size. That means it will have profits this year, after taxes, of roughly $23 billion.”
Esther Dyson spoke at a CapGemini event recently. If the name is unfamiliar, her LinkedIn profile is a start, but it’s not the half of it. Dyson was an early tech guru, impresario of the highly influential PC Forum conference and the Release 1.0 newsletter, and friendly with Steve Jobs, Bill Gates – and Yours Truly.
Esther is a long-term thinker in a short attention span world. Her current focus: Wellville, where she has gone into five communities to disrupt healthcare by stopping health problems before they become problems, through education. As she put it, not to teach people how to fish, but how to build fishing schools. Will her program, which she calls not a startup but rather, the beginnings of a restaurant chain, make a difference? Time will tell: she’s four years into a 10-year project. As for the difference between long and short term thinking: her team is educating people about healthy food and food preparation, rather than delivering meal kits or take-out with the results (potentially) being making a difference on long-term health, rather than achieving a quick billion-dollar valuation. And bringing down insurance payouts and by extension, health care costs. A potentially multi-billion dollar savings.
Some investors put a lot of stock in startups or founders who have subject matter expertise. Jeanne Sullivan, founder of Starvest, loves to hear from founders who are doing something totally new, in which case, how can you be a subject matter expert. After all, as she said, “the Wright Brothers didn’t have a pilot’s license.“
We host a breakfast every two weeks with one investor and a small group of entrepreneurs. We prefer this over filling the room with 100-400 people, as investors tend to say things in a smaller group and impart information that might not come out during the Q&A in a larger group. Since it’s summer and many of the investors are away – which means that we’re only hosting one breakfast in July and one in August – we felt that this might be a good time to share some of the information that they’ve share with us (and the attendees) with you:
It’s summer. People unplug. Investors, who happen to have families and personal lives as well as the ability to offer you feedback or write you a check, also unplug, which is why you don’t see them on as many panels come summer. It’s a frenzy until the end of June, then dead air until after Labor Day. You know the drill. Same one every year. Wash, rinse, spin, repeat.
As one investor friend of ours put it, “summer is reserved for families & personal pursuits = LIFE!”
Mark Zuckerberg testified before Congress last month, and there were a few points he needed to clarify. He promised to get back to the legislators, and so he did.
Notes Buzzfeed (“Here Are 18 Things You Might Not Have Realized Facebook Tracks About You Including: information about your online and offline actions and other devices on your Wi-Fi network), “Last week, Congress released a massive document with written answers to those questions. These responses were a good reminder that Facebook records a ton of information about you.”
Every year, Kleiner Perkins partner Mary Meeker gives us her look at the trends in technology. This year in 294 slides. Here are some of the points, along with follow on points that she might have conveniently neglected to mention. She is a Silicon Valley tech investor, after all:
The Gig Economy
The gig economy is growing fast, with nearly seven million people projected to be working in it in the US by the end of this year, up 26% from 2017, said Meeker. Seventy-one percent of US gig workers say they “always wanted to be their own boss,” according to a survey Intuit conducted in November 2017. As Quartz points out (People are joining the gig economy because of a powerful myth), it’s the algorithm that’s in charge, determining “where the driver will head next, who she’ll pick up, and how much she’ll be paid for that trip. In other words, many important features of the job are outside the driver’s control.”
Every now and then we like to flip the model – and the talking points. Seems that the model of tech is freemium. Everyone loves to get stuff for free – no one more than the tech cartel, particularly Facebook and Google. As the Wall Street Journal (Tech’s Titans Tiptoe Towards Monopoly) noted, Google and Facebook “benefit from something historically unprecedented: the ability to get users to subsidize them with enormous quantities of free labor. Their systems are fueled by personal information.”
Here’s a thought: since the cartel are such outspoken advocates of Universal Basic Income, let’s make it easy for them to literally put their money where their mouths are by having them pay users for providing information/content every time they post/share/search. These systems are built on algorithms: they can no doubt figure it out. There’s even a metric for payment to writers. On the lowest end (and far from our rate, fyi): two cents per word.
This past week was Blockchain Week in New York, in tandem with back peddling on the part of the tech cartel. As Quartz noted, “Facebook CEO Mark Zuckerberg, long under fire for “programming people’s brains,” will testify before the European parliament about his company’s use of data. Not long after, transformative new European privacy rules go into effect that will give EU consumers far more visibility into what companies know about them.
“Now, tech CEOs insist they want to be part of the solution. On Tuesday, Facebook-owned Instagram confirmed a feature that will let users track their time spent on the platform. A week earlier, Google CEO Sundar Pichai announced a Digital Wellbeing initiative geared at helping people moderate their use of Google’s products and services by suggesting breaks from YouTube or batching notifications.”