Tagged: Book Related Toggle Comment Threads | Keyboard Shortcuts

  • feedwordpress 22:01:00 on 2020/04/19 Permalink
    Tags: Book Related, , , , , , , , , , , ,   

    New Research Shows Why and How Zoom Could Become an Advertising Driven Business 


    Warning: preg_match_all(): Compilation failed: invalid range in character class at offset 7 in /homepages/23/d339537987/htdocs/ec/wp-content/themes/p2/inc/mentions.php on line 77

    As the coronavirus crisis built to pandemic levels in early March, a relatively unknown tech company confronted a defining opportunity. Zoom Video Communications, a fast-growing enterprise videoconferencing platform with roots in both Silicon Valley and China, had already seen its market cap grow from under $10 billion to nearly double that. As the coronavirus began dominating news reports in the western press, Zoom announced its first full fiscal year results as a public company. The company logged $622.7 million in revenue, up 88% from the year before. Zoom’s high growth rate and “software as a service” business model guaranteed fantastic future profits, and investors rewarded the company by driving its stock up even further. On March 5th, the day after Zoom announced its earnings, the company’s stock jumped to $125, more than double its price on the day of its public offering eleven months before. Market analysts began issuing bullish guidance, and company executives noted that as the coronavirus spread, more and more customers were sampling Zoom’s easy-to-use video conferencing platform.

    But as anyone paying attention to business news for the past month knows, it’s been a tumultuous ride for Zoom ever since. As the virus forced the world inside, demand for Zoom’s services skyrocketed, and the company became a household name nearly overnight. Zoom’s “freemium” model – which offers a basic version of its platform for free, with more robust features available for a modest monthly subscription fee – allowed tens of millions of new users to sample the company’s wares. Initially, Zoom was a hit with its new user base – stories of Zoom seders, Zoom cocktail parties, and even Zoom weddings gave the company a consumer-friendly vibe. Here, again, was the story of a scrappy Valley startup with just the right product at just the right time. According to the company, Zoom’s monthly users  leapt from a high of 10 million to more than 200 million – an unimaginable increase of 2,000 percent in just one month.

    Just as quickly, however, Zoom became the subject of controversy. Like Google and Facebook before it, Zoom’s success as a product comes from an unwavering focus on convenience. Zoom makes it as easy as possible to use its platform. Employing invisible technical tricks, Zoom engineers made the platform easy to install, easy to share, and … easy to hack. Press reports about “Zoom bombing” began dominating the headlines, and as reporters dug in, so did reports of significant (and long ignored) security failings. Large corporations, state governments, and school districts banned the company’s products. Media outlets began to investigate the company’s Chinese roots – only to discover that the young firm had mistakenly routed user sessions through its servers in mainland China. Zoom responded quickly, freezing product development and focusing entirely on responding to critical security issues. The company then updated its privacy policies, in response to criticism that it might use user data in the same ways that Google and Facebook currently do (more on that below).

    But with China and the United States entering a third year of an increasingly heated trade war, and now blaming each other for the origin of the novel coronavirus, Zoom finds itself in an extraordinary position that no amount of crisis communications can overcome.  Zoom’s founder and CEO, Eric Yuan, is a Chinese ex-pat and naturalized American citizen. More than 700 of his 2,500+ employees live and work in China. Until March of this year, Yuan was held up as an example of the best that global capitalism can offer – an ingenious immigrant who bootstrapped his way to America and leveraged hard work, smarts, and venture financing into a multi-billion dollar fortune.

    Now Zoom’s brand – and its future – live under storm clouds of suspicion. In just four weeks, the company has inherited the full force of the American “techlash.” And the companies previously at the center of that storm – in particular the “Big Four” of Apple, Facebook, Google and Amazon – are  happy to pass along that unpleasant mantle. What might it do next?

    * * *

    As some readers know, I’ve been a student of the “Big Four” for more than two decades. For the past 18 months, that work has focused on the terms of service and privacy policies of the Big Four. Thanks to the work of researchers and faculty at Columbia’s School of International Public Affairs and Graduate School of Journalism, we’ve published a study of the underlying architecture of the Big Four’s core policies, a visualization we call “Mapping Data Flows.” This tool breaks down and compares each company’s core privacy and data use policies, with a goal of giving both ordinary consumers and academic researchers insight into the architecture of control currently dominating our economy’s relationship to data.

    Given its very recent and extraordinary rise as a consumer tool, we decided to apply this approach to Zoom’s terms of service and privacy policy as well. You can find our initial findings here.

    As with every research project, our study of Zoom’s policies began with a working hypothesis. One of the most interesting findings from our initial study of the Big Four was how similar their policies were – they all collect vast sums of data, and their terms of service allow them nearly unlimited usage of that data. And of course, all four granted themselves the right to collect, process, and employ user data for the purpose of pursuing advertising businesses – a multi-hundred billion dollar industry driving what Harvard scholar Shoshana Zuboff calls “surveillance capitalism.” We therefore asked ourselves two questions: First, would Zoom’s current terms of service and privacy policies allow them to join the Big Four in the pursuit of an advertising business? And second, given Zoom is (or was) an enterprise facing (focused on business users), as opposed to a consumer facing platform, would its privacy policies and terms of use be markedly different from the Big Four?

    The short answer to that first question is yes. And for the second? That’d be a no. As the first image below demonstrates, Zoom collects a ton of data, and its policies are quite similar to those of its Big Four cousins.

    Figure 1 – Zoom’s Data Collection visualized

    But exploring that first question – whether Zoom might become an advertising-driven business – yielded even more interesting insights:

    Figure 2 – Zoom’s data collection for purposes of Advertising.

    As the illustration from our new visualization above demonstrates, our research shows that nearly all data collected from Zoom user sessions may be used for the purpose of advertising. Despite the clarification of Zoom’s privacy policies posted on March 29th around usage of data from user sessions, nothing material changed in its actual policies. Indeed, the company writes that “We are not changing any of our practices. We are updating our privacy policy to be more clear, explicit, and transparent.”

    To be clear, Zoom does not currently run an advertising business along the lines of Facebook, Google, Apple, or Amazon’s (and yes, both Apple and Amazon have significant data-driven advertising businesses, they just don’t like to talk about them). So why, in their own policies, do they reserve the right to use all collected data for the purpose of “advertising”?

    As any lawyer will tell you, words are slippery things. Certainly in the context of Zoom’s current business, the word “advertising” covers the company’s role as an advertiser – as a brand that uses data to market to current and potential customers using platforms like Google or Facebook. But a careful reading of the company’s policies reveal how easily the same words could allow the company to pivot from advertiser to provider of advertising, should the company wish to. In other words, there’s nothing stopping the company from joining the Big Four as a major player in the provision of advertising services, should it wish.

    How might Zoom do such a thing? And  given its current privacy backlash, why would Zoom ever consider such a move?

    Let’s start with the How, then we’ll cover the Why.

    As I mentioned at the start of this piece, Zoom’s current business is based on what folks in the tech industry call a freemium SaaS (software as a service) model. The company makes a version of its platform available to anyone for free, and then “upsells” those free users to a paid version that has more bells and whistles, like the ability to record, larger numbers of participants on a videoconference, and so on. Pricing starts at $15/month, scaling up to thousands a month for large customers. This model is most often employed for enterprise customers (Slack is a good example), but it’s also found success in consumer-facing applications, where more often than not users pay to get rid of ads (think YouTube or Hulu). Regardless of whether the service is enterprise or consumer focused, free users always outnumber paying ones by an order of magnitude or more.

    One of the most difficult elements of a freemium SaaS model is luring those free users “down the funnel” into paying for a monthly subscription. So how might Zoom convince its bumper crop of roughly 190 million new consumers to start paying up?

    By now you’ve probably figured out where I’m going with all this. Zoom could implement a free service that’s supported by advertising, then encourage users to pay for a version that’s ad free. Doing so would be ridiculously simple: Just as with YouTube, Zoom could force its users to watch a “skippable” pre-roll video ad before the start of each videoconference (and it could use its data trove to make those ads extremely targeted).  Well aware that such an interruption would be an annoyance at best, Zoom could then offer to strip the ads out for customers who paid a small subscription service of, say, $5 a month. If just one quarter of its customer base decided to do so, Zoom’s revenues would jump by $250 million a month – adding a cool $3 billion a year to its top line revenue, nearly all of which would be pure profit. The resulting advertising business could easily add hundreds of millions, if not billions more. That’s five times more revenue than the company reported in its last fiscal year.

    Which brings us to the “Why” of this admittedly speculative (but nevertheless quite reasonable) exercise. And that why comes down to capitalism. Zoom is a public company with a massive valuation – more than $40 billion at the time of this writing. That gives it an unsustainable price to earnings ratio of roughly 1,750 – 76 times larger than the S&P average. The pressure to “grow into” those outsized expectations is enormous. Zoom is staring at a multi-billion dollar business model just begging to be implemented. For its shareholders, board, and senior executives, the question isn’t why it should be adopting the business model that made Facebook, Google, Apple, and Amazon the most valuable companies in the world. Instead, the question is simply this: Why shouldn’t it?

    In another post, we’ll explore answers to that question (and how Zoom, if it’s thoughtful, could help reimagine the core architecture of surveillance capitalism). For now, take a spin around our newest visualization, give us input in the comments below. Thanks for reading, and take care of yourself – and others – out there.

    ###

    The Mapping Data Flows project is seated at Columbia SIPA – we are grateful for the support of Dean Merit Janow, as well as the support of the Brown Institute at Columbia’s Graduate School of Journalism, the Omidyar Network, and faculty and staff including Mark Hansen, Juan Francisco Saldarriaga, Zoe Martin, Matthew Albasi, Natasha Bhuta, and Veronica Penney. Hat tip as well to Doc, who’s been focused on these issues for decades as well. 

     
  • feedwordpress 22:01:00 on 2020/04/19 Permalink
    Tags: Book Related, , , , , , , , , , , ,   

    New Research Shows Why and How Zoom Could Become an Advertising Driven Business 


    Warning: preg_match_all(): Compilation failed: invalid range in character class at offset 7 in /homepages/23/d339537987/htdocs/ec/wp-content/themes/p2/inc/mentions.php on line 77

    As the coronavirus crisis built to pandemic levels in early March, a relatively unknown tech company confronted a defining opportunity. Zoom Video Communications, a fast-growing enterprise videoconferencing platform with roots in both Silicon Valley and China, had already seen its market cap grow from under $10 billion to nearly double that. As the coronavirus began dominating news reports in the western press, Zoom announced its first full fiscal year results as a public company. The company logged $622.7 million in revenue, up 88% from the year before. Zoom’s high growth rate and “software as a service” business model guaranteed fantastic future profits, and investors rewarded the company by driving its stock up even further. On March 5th, the day after Zoom announced its earnings, the company’s stock jumped to $125, more than double its price on the day of its public offering eleven months before. Market analysts began issuing bullish guidance, and company executives noted that as the coronavirus spread, more and more customers were sampling Zoom’s easy-to-use video conferencing platform.

    But as anyone paying attention to business news for the past month knows, it’s been a tumultuous ride for Zoom ever since. As the virus forced the world inside, demand for Zoom’s services skyrocketed, and the company became a household name nearly overnight. Zoom’s “freemium” model – which offers a basic version of its platform for free, with more robust features available for a modest monthly subscription fee – allowed tens of millions of new users to sample the company’s wares. Initially, Zoom was a hit with its new user base – stories of Zoom seders, Zoom cocktail parties, and even Zoom weddings gave the company a consumer-friendly vibe. Here, again, was the story of a scrappy Valley startup with just the right product at just the right time. According to the company, Zoom’s monthly users  leapt from a high of 10 million to more than 200 million – an unimaginable increase of 2,000 percent in just one month.

    Just as quickly, however, Zoom became the subject of controversy. Like Google and Facebook before it, Zoom’s success as a product comes from an unwavering focus on convenience. Zoom makes it as easy as possible to use its platform. Employing invisible technical tricks, Zoom engineers made the platform easy to install, easy to share, and … easy to hack. Press reports about “Zoom bombing” began dominating the headlines, and as reporters dug in, so did reports of significant (and long ignored) security failings. Large corporations, state governments, and school districts banned the company’s products. Media outlets began to investigate the company’s Chinese roots – only to discover that the young firm had mistakenly routed user sessions through its servers in mainland China. Zoom responded quickly, freezing product development and focusing entirely on responding to critical security issues. The company then updated its privacy policies, in response to criticism that it might use user data in the same ways that Google and Facebook currently do (more on that below).

    But with China and the United States entering a third year of an increasingly heated trade war, and now blaming each other for the origin of the novel coronavirus, Zoom finds itself in an extraordinary position that no amount of crisis communications can overcome.  Zoom’s founder and CEO, Eric Yuan, is a Chinese ex-pat and naturalized American citizen. More than 700 of his 2,500+ employees live and work in China. Until March of this year, Yuan was held up as an example of the best that global capitalism can offer – an ingenious immigrant who bootstrapped his way to America and leveraged hard work, smarts, and venture financing into a multi-billion dollar fortune.

    Now Zoom’s brand – and its future – live under storm clouds of suspicion. In just four weeks, the company has inherited the full force of the American “techlash.” And the companies previously at the center of that storm – in particular the “Big Four” of Apple, Facebook, Google and Amazon – are  happy to pass along that unpleasant mantle. What might it do next?

    * * *

    As some readers know, I’ve been a student of the “Big Four” for more than two decades. For the past 18 months, that work has focused on the terms of service and privacy policies of the Big Four. Thanks to the work of researchers and faculty at Columbia’s School of International Public Affairs and Graduate School of Journalism, we’ve published a study of the underlying architecture of the Big Four’s core policies, a visualization we call “Mapping Data Flows.” This tool breaks down and compares each company’s core privacy and data use policies, with a goal of giving both ordinary consumers and academic researchers insight into the architecture of control currently dominating our economy’s relationship to data.

    Given its very recent and extraordinary rise as a consumer tool, we decided to apply this approach to Zoom’s terms of service and privacy policy as well. You can find our initial findings here.

    As with every research project, our study of Zoom’s policies began with a working hypothesis. One of the most interesting findings from our initial study of the Big Four was how similar their policies were – they all collect vast sums of data, and their terms of service allow them nearly unlimited usage of that data. And of course, all four granted themselves the right to collect, process, and employ user data for the purpose of pursuing advertising businesses – a multi-hundred billion dollar industry driving what Harvard scholar Shoshana Zuboff calls “surveillance capitalism.” We therefore asked ourselves two questions: First, would Zoom’s current terms of service and privacy policies allow them to join the Big Four in the pursuit of an advertising business? And second, given Zoom is (or was) an enterprise facing (focused on business users), as opposed to a consumer facing platform, would its privacy policies and terms of use be markedly different from the Big Four?

    The short answer to that first question is yes. And for the second? That’d be a no. As the first image below demonstrates, Zoom collects a ton of data, and its policies are quite similar to those of its Big Four cousins.

    Figure 1 – Zoom’s Data Collection visualized

    But exploring that first question – whether Zoom might become an advertising-driven business – yielded even more interesting insights:

    Figure 2 – Zoom’s data collection for purposes of Advertising.

    As the illustration from our new visualization above demonstrates, our research shows that nearly all data collected from Zoom user sessions may be used for the purpose of advertising. Despite the clarification of Zoom’s privacy policies posted on March 29th around usage of data from user sessions, nothing material changed in its actual policies. Indeed, the company writes that “We are not changing any of our practices. We are updating our privacy policy to be more clear, explicit, and transparent.”

    To be clear, Zoom does not currently run an advertising business along the lines of Facebook, Google, Apple, or Amazon’s (and yes, both Apple and Amazon have significant data-driven advertising businesses, they just don’t like to talk about them). So why, in their own policies, do they reserve the right to use all collected data for the purpose of “advertising”?

    As any lawyer will tell you, words are slippery things. Certainly in the context of Zoom’s current business, the word “advertising” covers the company’s role as an advertiser – as a brand that uses data to market to current and potential customers using platforms like Google or Facebook. But a careful reading of the company’s policies reveal how easily the same words could allow the company to pivot from advertiser to provider of advertising, should the company wish to. In other words, there’s nothing stopping the company from joining the Big Four as a major player in the provision of advertising services, should it wish.

    How might Zoom do such a thing? And  given its current privacy backlash, why would Zoom ever consider such a move?

    Let’s start with the How, then we’ll cover the Why.

    As I mentioned at the start of this piece, Zoom’s current business is based on what folks in the tech industry call a freemium SaaS (software as a service) model. The company makes a version of its platform available to anyone for free, and then “upsells” those free users to a paid version that has more bells and whistles, like the ability to record, larger numbers of participants on a videoconference, and so on. Pricing starts at $15/month, scaling up to thousands a month for large customers. This model is most often employed for enterprise customers (Slack is a good example), but it’s also found success in consumer-facing applications, where more often than not users pay to get rid of ads (think YouTube or Hulu). Regardless of whether the service is enterprise or consumer focused, free users always outnumber paying ones by an order of magnitude or more.

    One of the most difficult elements of a freemium SaaS model is luring those free users “down the funnel” into paying for a monthly subscription. So how might Zoom convince its bumper crop of roughly 190 million new consumers to start paying up?

    By now you’ve probably figured out where I’m going with all this. Zoom could implement a free service that’s supported by advertising, then encourage users to pay for a version that’s ad free. Doing so would be ridiculously simple: Just as with YouTube, Zoom could force its users to watch a “skippable” pre-roll video ad before the start of each videoconference (and it could use its data trove to make those ads extremely targeted).  Well aware that such an interruption would be an annoyance at best, Zoom could then offer to strip the ads out for customers who paid a small subscription service of, say, $5 a month. If just one quarter of its customer base decided to do so, Zoom’s revenues would jump by $250 million a month – adding a cool $3 billion a year to its top line revenue, nearly all of which would be pure profit. The resulting advertising business could easily add hundreds of millions, if not billions more. That’s five times more revenue than the company reported in its last fiscal year.

    Which brings us to the “Why” of this admittedly speculative (but nevertheless quite reasonable) exercise. And that why comes down to capitalism. Zoom is a public company with a massive valuation – more than $40 billion at the time of this writing. That gives it an unsustainable price to earnings ratio of roughly 1,750 – 76 times larger than the S&P average. The pressure to “grow into” those outsized expectations is enormous. Zoom is staring at a multi-billion dollar business model just begging to be implemented. For its shareholders, board, and senior executives, the question isn’t why it should be adopting the business model that made Facebook, Google, Apple, and Amazon the most valuable companies in the world. Instead, the question is simply this: Why shouldn’t it?

    In another post, we’ll explore answers to that question (and how Zoom, if it’s thoughtful, could help reimagine the core architecture of surveillance capitalism). For now, take a spin around our newest visualization, give us input in the comments below. Thanks for reading, and take care of yourself – and others – out there.

    ###

    The Mapping Data Flows project is seated at Columbia SIPA – we are grateful for the support of Dean Merit Janow, as well as the support of the Brown Institute at Columbia’s Graduate School of Journalism, the Omidyar Network, and faculty and staff including Mark Hansen, Juan Francisco Saldarriaga, Zoe Martin, Matthew Albasi, Natasha Bhuta, and Veronica Penney. Hat tip as well to Doc, who’s been focused on these issues for decades as well. 

     
  • feedwordpress 19:23:50 on 2018/12/26 Permalink
    Tags: , , Book Related, , faecbook, , , , , , ,   

    It’s Not Facebook’s Fault: Our Shadow Internet Constitution 


    Warning: preg_match_all(): Compilation failed: invalid range in character class at offset 7 in /homepages/23/d339537987/htdocs/ec/wp-content/themes/p2/inc/mentions.php on line 77

    Those of us fortunate enough to have lived through the birth of the web have a habit of stewing in our own nostalgia. We’ll recall some cool site from ten or more years back, then think to ourselves (or sometimes out loud on Twitter): “Well damn, things were way better back then.”

    Then we shut up. After all, we’re likely out of touch, given most of us have never hung out on Twitch. But I’m seeing more and more of this kind of oldster wistfulness, what with Facebook’s current unraveling and the overall implosion of the tech-as-savior narrative in our society.

    Hence the chuckle many of us had when we saw this trending piece  suggesting that perhaps it was time for us to finally unhook from Facebook and – wait for it -get our own personal webpage, one we updated for any and all to peruse. You know, like a blog, only for now. I don’t know the author – the editor of the tech-site Motherboard – but it’s kind of fun to watch someone join the Old Timers Web Club in real time. Hey Facebook, get off my lawn!!!

    That Golden Age

    So as to not bury the lead, let me state something upfront: Of course the architecture of our current Internet is borked. It’s dumb. It’s a goddamn desert. It’s soil where seed don’t sprout. Innovation? On the web, that dog stopped hunting years ago.

    And who or what’s to blame? No, no. It’s not Facebook. Facebook is merely a symptom. A convenient and easy stand in  – an artifact of a larger failure of our cultural commons. Somewhere in the past decade we got something wrong, we lost our narrative – we allowed Facebook and its kin to run away with our culture.

    Instead of focusing on Facebook, which is structurally borked and hurtling toward Yahoo-like irrelevance, it’s time to focus on that mistake we made, and how we might address it.

    Just 10-15 years ago, things weren’t heading toward the our currently crippled version of the Internet. Back in the heady days of 2004 to 2010 – not very long ago – a riot of innovation had overtaken the technology and Internet world. We called this era “Web 2.0” – the Internet was becoming an open, distributed platform, in every meaning of the word. It was generative, it was Gates Line-compliant, and its increasingly muscular technical infrastructure promised wonder and magic and endless buckets of new. Bandwidth, responsive design, data storage, processing on demand, generously instrumented APIs; it was all coming together. Thousands of new projects and companies and ideas and hacks and services bloomed.

    Sure, back then the giants were still giants – but they seemed genuinely friendly and aligned with an open, distributed philosophy. Google united the Internet, codifying (and sharing) a data structure that everyone could build upon. Amazon Web Services launched in 2006, and with the problem of storage and processing solved, tens of thousands of new services were launched in a matter of just a few years. Hell, even Facebook launched an open platform, though it quickly realized it had no business doing so. AJAX broke out, allowing for multi-state data-driven user interfaces, and just like that, the web broke out of flatland. Anyone with passable scripting skills could make interesting shit! The promise of Internet 1.0 – that open, connected, intelligence-at-the-node vision we all bought into back before any of it was really possible – by 2008 or so, that promise was damn near realized. Remember LivePlasma? Yeah, that was an amazing mashup. Too bad it’s been dormant for over a decade.

    After 2010 or so, things went sideways. And then they got worse. I think in the end, our failure wasn’t that we let Facebook, Google, Apple and Amazon get too big, or too powerful. No, I think instead we failed to consider the impact of the technologies and the companies we were building. We failed to play our hand forward, we failed to realize that these nascent technologies were fragile and ungoverned and liable to be exploited by people less idealistic than we were.

    Our Shadow Constitution

    Our lack of consideration deliberately aided and abetted the creation of a unratified shadow Constitution for the Internet – a governance architecture built on assumptions we have accepted, but are actively ignoring. All those Terms of Service that we clicked past, the EULAs we mocked but failed to challenge, those policies have built walls around our data and how it may be used. Massive platform companies have used those walls to create impenetrable business models. Their IPO filings explain in full how the monopolization and exploitation of data were central to their success – but we bought the stock  anyway.

    We failed to imagine that these new companies – these Facebooks, Ubers, Amazons and Googles – might one day become exactly what they were destined to become, should we leave them ungoverned and in the thrall of unbridled capitalism.  We never imagined that should they win, the vision we had of a democratic Internet would end up losing.

    It’s not that, at the very start at least, that tech companies were run by evil people in any larger sense. These were smart kids, almost always male, testing the limits of adolescence in their first years after high school or college. Timing mattered most: In the mid to late oughts, with the winds of Web 2 at their back, these companies had the right ideas at the right time, with an eager nexus of opportunistic capital urging them forward.

    They built extraordinary companies. But again, they built a new architecture of governance over our economy and our culture – a brutalist ecosystem that repels innovation. Not on purpose – not at first. But protected by the walls of the Internet’s newly established shadow constitution and in the thrall of a new kind of technology-fused capitalism, they certainly got good at exploiting their data-driven leverage.

    So here we are, at the end of 2018, with all our darlings, the leaders not only of the tech sector, but of our entire economy, bloodied by doubt, staggering from the weight of unconsidered externalities. What comes next?

    2019: The Year of Internet Policy

    Whether we like it or not, Policy with a capital P is coming to the Internet world next year. Our newly emboldened Congress is scrambling to introduce multiple pieces of legislation, from an Internet Bill of Rights  to a federal privacy law modeled on – shudder – the EU’s GDPR. In the past month, I’ve read draft policy papers suggesting we tax the Internet’s advertising model, that we break up Google, Facebook, and Amazon, or that we back off and just let the market “do its work.”

    And that’s a good thing, to my mind – it seems we’re finally coming to terms with the power of the companies we’ve created, and we’re ready to have a national dialog about a path forward. To that end, a spot of personal news: I’ve joined the School of International and Public Affairs at Columbia University, and I’m working on a research project studying how data flows in US markets, with an emphasis on the major tech platforms. I’m also teaching a course on Internet business models and policy. In short, I’m leaning into this conversation, and you’ll likely be seeing a lot more writing on these topics here over the course of the next year or so.

    Oh, and yeah, I’m also working on a new company, which remains in stealth for the time being. Yep, it’s a media company, but with a new focus, for me anyway: Politics. More on that later in the year.

    I know I’ve been a bit quiet this past month, but starting up new things requires a lot of work, and my writing has suffered as a result. But I’ve got quite a few pieces in the queue, starting with my annual roundup of how I did in my predictions for the year, and then of course my predictions for 2019. But I’ll spoil at least one of them now and just summarize the point of this post from the start: It’s time we figure out how to build a better Internet, and 2019 will be the year policymakers get deeply  involved in this overdue and essential conversation.

     
  • feedwordpress 23:02:06 on 2018/11/12 Permalink
    Tags: , Book Related, , , , ideas, , , ,   

    When Tech Loves Its Fiercest Critics, Buyer Beware 


    Warning: preg_match_all(): Compilation failed: invalid range in character class at offset 7 in /homepages/23/d339537987/htdocs/ec/wp-content/themes/p2/inc/mentions.php on line 77
    Detail from the cover of Harari’s lastest work, 21 Lessons for the 21st Century.

    A year and a half ago I reviewed Yuval Noah Harari’s Homo Deus, recommending it to the entire industry with this subhead: “No one in tech is talking about Homo Deus. We most certainly should be.”

    Eighteen months later, Harari is finally having his technology industry moment. The author of a trio of increasingly disturbing books – Sapiens, for which made his name as a popular historian philosopher, the aforementioned Homo Deus, which introduced a dark strain of tech futurism to his work, and the recent 21 Lessons for the 21st Century – Harari has cemented his place in the Valley as tech’s favorite self-flagellant. So it’s only fitting that this weekend Harari was the subject of New York Times profile featuring this provocative title: Tech C.E.O.s Are in Love With Their Principal Doomsayer. The subhead continues: “The futurist philosopher Yuval Noah Harari thinks Silicon Valley is an engine of dystopian ruin. So why do the digital elite adore him so?”

    Well, I’m not sure if I qualify as one of those elites, but I have a theory, one that wasn’t quite raised in the Times’ otherwise compelling profile. I’ve been a student of Harari’s work, and if there’s one clear message, it’s this: We’re running headlong into a world controlled by a tiny elite of superhumans, masters of new technologies that the “useless class” will never understand. “Homo sapiens is an obsolete algorithm,” Harari writes in Homo Deus. A new religion of Dataism will transcend our current obsession with ourselves, and we will “dissolve within the data torrent like a clump of earth within a gushing river.” In other words, we humans are f*cked, save for a few of the lucky ones who manage to transcend their fate and become masters of the machines. “Silicon Valley is creating a tiny ruling class,” the Times writes, paraphrasing Harari’s work, “and a teeming, furious “useless class.””

    So here’s why I think the Valley loves Harari: We all believe we’ll be members of that tiny ruling class. It’s an indefensible, mathematically impossible belief, but as Harari reminds us in 21 Lessons, “never underestimate human stupidity.” Put another way, we are  fooling ourselves, content to imagine we’ll somehow all earn a ticket into (or onto) whatever apocalypse-dodging exit plan Musk, Page or Bezos might dream up (they’re all obsessed with leaving the planet, after all). Believing that impossible fiction is certainly a lot easier than doing the quotidian work of actually fixing the problems which lay before us. Better to be one of the winners than to risk losing along with the rest of the useless class, no?

    But we can’t all be winners in the future Harari lays out, and he seems to understand this fact. “If you make people start thinking far more deeply and seriously about these issues,” he said to the Times, “some of the things they will think about might not be what you want them to think about.”

    Exactly, Professor. Now that I’ve departed the Valley, where I spent nearly three decades of my life, I’m starting to gain a bit of perspective on my own complicated relationship with the power structure of the place. I grew up with the (mostly) men who lead companies like Amazon, Google, Facebook and Apple, and early in the industry’s rise, it was heady to share the same stage with legends like Bezos, Jobs, or Page. But as the technology industry becomes the driving force of social rupture, I’m far more skeptical of its leaders’ abilities to, well, lead.

    Witness this nearly idea-free interview with Google CEO Sundar Pichai, also in the Times, where the meticulously media-prepped executive opines on whether his industry has a role to play in society’s ills: “Every generation is worried about the new technology, and feels like this time it’s different. Our parents worried about Elvis Presley’s influence on kids. So, I’m always asking the question, “Why would it be any different this time?” Having said that, I do realize the change that’s happening now is much faster than ever before. My son still doesn’t have a phone.”

    Pichai’s son not have a phone, but he is earning money mining Ethereum (really, you can’t make this shit up). I’m not sure the son of a centi-millionaire needs to earn money – but it certainly is useful to master the algorithms that will soon control nearly every aspect of human life. So – no, son, no addictive phone for you (even though my company makes them, and makes their operating systems, and makes the apps which ensure their addictive qualities).

    But mining crypto currency? Absolutely!

    Should Harari be proven right and humanity becomes irrelevant, I’m pretty sure Pichai’s son will have a first class ticket out of whatever mess is left behind. But the rest of us? We should probably focus on making sure that kid never needs to use it.

    Cross posted from NewCo Shift. 


    By the way, the other current obsession of Valley folks is author Anand Giridharadas’ Winners Take All – The Elite Charade of Changing the World. Read them together for a one-two punch, if you dare…

     
  • feedwordpress 20:07:01 on 2018/10/31 Permalink
    Tags: Book Related, , , , , food, , , , , , small business   

    After the Token Act: A New Data Economy Driven By Small Business Entrepreneurship 


    Warning: preg_match_all(): Compilation failed: invalid range in character class at offset 7 in /homepages/23/d339537987/htdocs/ec/wp-content/themes/p2/inc/mentions.php on line 77
    Gramercy Tavern in New York City

    If Walmart can leverage data tokens to lure Amazon’s best customers away, what else is possible in a world of enabled by my fictional Token Act?

    Well, Walmart vs. Amazon is all about big business – a platform giant (Amazon) disrupting an OldBigCo (Walmart and its kin). Over the past two decades, Amazon bumped Walmart out of the race to a trillion-dollar market cap, and the OldCo from Bentonville had to reset and play the role of the upstart. The Token Act levels the playing field, forcing both to win where it really matters: In service to the customer.

    But while BigCos are sexy and well known, it’s the small and medium-sized business ecosystem that determines whether or not we have an economy of mass flourishing.  So let’s explore the Token Act from the point of view of a small business startup, in this case, a new neighborhood restaurant. I briefly touched upon this idea in my set up post, Don’t Break Up The Tech Oligarchs. Force Them To Share Instead.  (If you haven’t already, you might want to read that post before this one, as I lay out the framework in which this scenario would play out.) What I envision below assumes the Token Act has passed, and we’re at least a year or two into its adoption by most major data players. Here we go…

    ***

    Fresh off her $2,700 win from Walmart, Michelle decides she’s ready to lean into a lifelong dream: Starting a restaurant in her newly adopted neighborhood of Chelsea in New York City. Since moving to the area from California, she’s noticed two puzzling trends: First, a dearth of interesting mid- to high-end dinner spots walking distance from her new place, and second, what appears to be higher-than-average vacancy rates for the retail storefronts in the same general area. It appears to be a buyer’s market for retail restaurant space in Chelsea. So why aren’t new places launching? She read the Times’ piece on vacancies a few years ago (before the Token Act passed) and was left just as puzzled as before – seems like there’s no rhyme or reason to the market.

    Michelle wants to start a high end American gastro pub – the kind of place she loved back when she lived in Northern California (she’s fond of Danny Meyers’ Gramercy Tavern, pictured above, but it’s a bit too far away from her new place). She has a strong hunch that such a place would be a hit in her new neighborhood, but she’s not sure her new neighbors will agree.

    Now starting a restaurant requires a certain breed of insanity – they say the best way to make a small fortune in the business is to start with a large one. The truth is, launching restaurants has historically been a crap shoot – you might find the best talent, the best designer, and the best location – but if for some reason you don’t bring the je ne sai quois, the place will fail within months, leaving you and your partners millions of dollar poorer.

    It’s that  je ne sai quois that Michelle is determined to reveal.  The tools she will leverage? The newly liberated resources of data tokens.

    Before we continue, allow me to draw your attention back to the rise of search, indeed, the very era which begat Searchblog in the early 2000s. Google Adwords launched in 2000, and within a few years, the media world had been turned upside down by what I termed The Database of Intentions.  As if by magic, people everywhere could suddenly ask new kinds of questions, finding themselves both surprised and delighted by the answers they received.

    Gates-Line compliant ecosystem quickly developed on top of this new platform, driven by an emerging industry of search engine marketing and optimization. SEO/SEM sprung into existence to help small and medium sized businesses take advantage of the Google platform – by 2006 the industry stood at nearly $10 billion in spend, growing more than 60 percent year on year. Adwords grew from zero to millions of advertisers by connecting to a long tail of small businesses that took advantage of an entirely new class of revealed information: The intents, desires, and needs of tens of millions of consumers, who relentlessly poured their queries into Google’s placid and unblinking search box.

    Were you a limo service in the Bronx looking for new customers? It paid huge dividends to purchase Adwords like “car service bronx” and “best limo manhattan.” Were you a dry cleaner in West LA hoping to expand? Best be first in line when customers typed in “best cleaners Beverly Hills.” Selling heavy machinery to construction services in the midwest? If you don’t own keywords like “caterpillar dealer des moines” you’d lose, and quick, to whoever did optimize to phrases like that.

    My point is simply this: Adwords was a freaking revolution, but it ain’t nothing compared to what will happen if we unleash data tokens on the world.

    ***

    Ok, back to Michelle and her new restaurant. Of course Michelle will leverage Adwords, and Facebook, and any other advertising service to help her new business grow. But none of those services can help her figure out her je ne sai quois – for that, she needs something entirely novel. She needs a new question machine. And the ecosystem that develops around data tokens will offer it.

    Thanks to her Walmart experience, Michelle has become aware of the power of personal data. She’s also read up on the Token Act, the new law requiring all data players at scale to allow individuals to create machine-readable data tokens that can be exchanged for value as directed by the consumer. After doing a bit of research, she stumbles across a startup called OfferExchange, which manages “Token Offers” on behalf of anyone who might want to query TokenLand. OfferExchange is a spinout from ProtocolLabs, a pioneer in secure blockchain software platforms like Filecoin. It’s still early in TokenLand, so an at-scale Google of the space hasn’t emerged. OfferExchange works more like a bespoke yet platform-based research outfit – the firm has a sophisticated website and impressive client list. It uses Facebook, Twitter, LiveRamp, and Instagram to identify potential token-creating consumers, then solicits those individuals with offers of cash or other value in exchange for said tokens.

    Michelle does a Crunchbase search for OfferExchange and sees it’s backed by Union Square Ventures and Benchmark, which gives her some comfort – those firms don’t fund fly-by-night hucksters. And OfferExchange site is impressive – in less than five minutes, it guides her through the construction of an elegant query. Here’s how the process works:

    First, the site asks Michelle what her goal is. “Starting a restaurant in New York City,” she responds. The site reconstructs around her answer, showing suggested data repositories she might mine. “Restaurants, New York City,” reads the top layer of a directory-like page. Underneath are several categories, each populated with familiar company names:

    • Restaurant Reservation and Review Services
      • OpenTable Google Resy Yelp Eat24 Facebook (more)
    • Food Delivery Services
      • GrubHub Uber Eats PostMates InstaCart (more)
    • Transportation Services
      • Uber Lyft Juno Via (more)
    • Real Estate Services (Commercial)
      •  LoopNet DocuSign CompStak (more)
    • Location Services 
      • Foursquare Uber Lyft Google NinthDecimal (more)
    • Financial Services
      • American Express Visa Mastercard Apple Pay Diners Club (more)

    And so on – if she wished, Michelle could dig into dozens of categories related to her initial “restaurant New York City” search.

    Michelle’s imagination sparks – the kinds of queries she could ask of these services is mind blowing. She could  limit her query to people who live within walking distance of her neighborhood, asking her *actual neighbors* for tokens that tell her what restaurants they eat at, when they eat there, the size of their checks, related reviews, abandoned reservations, the works. She might discover that folks like Indian takeout on Mondays, that they rarely spend more than $100 on a meal on Tuesdays, but that they splurge on the weekends. She could discover the percentage of diners in Chelsea who travel more than two miles by car service to eat out at a place similar to the one she has in mind, and what the size of the check might be when they do. She can also check historical average rents for restaurants in her zip code, over time, which will certainly help with negotiating her lease. The possibilities are endless.

    Put another way, with OfferExchange’s services, Michelle can litigate the merde out of her je ne sai quois.

    *** 

    This post is getting long, so I’ll stop here and pull back for a spot of Thinking Out Loud. I could continue the story, imagining the process of the token offer Michelle would put out through OfferExchange’s platform, but suffice to say, she’d be willing to pay upwards of $5-20 per potential customer for their data. The marketing benefit alone – alerting potential customers in the neighborhood that she’s exploring a new restaurant in the area – is worth tens of thousands already. And of course, OfferExchange can connect anyone who offers their tokens to Michelle’s new project a discount on their first meal at the restaurant, should it actually launch. Cool!

    But let’s stop there and consider what happens when local entrepreneurs have access to the information currently silo’d across thousands of walled garden services like Uber, LoopNet, Resy, and of course Facebook and Google. While better data won’t insure that Michelle’s restaurant will succeed, it certainly increases the odds that it won’t fail. And it will give both Michelle and her investors – local banks, savvy friends and family members – much more conviction that her new enterprise is viable. Take this local restaurant example and apply it to all manner of small business – dry cleaners, hardware stores, bike shops – and this newly liberated class of information enables an explosion of efficiency, investment, and, well, flourishing in what has become, over the past four decades, a stagnant SMB environment.

    Is this Money Ball for SMB? Perhaps. And yes, I can imagine any number of downsides to this new data economy. But I also believe the benefits would far outweigh the downsides. Under the Token Act as I envision it, co-creators of the data – the services like Uber, OpenTable, or Facebook – have the right to charge a vig for the data being monetized. Sure, it’d be possible for an entrepreneur to steal customers via tokens, but I’m going to guess the economic value of allowing your customers to discover new use cases for their data will dwarf the downside of possibly losing those customers to a new competitor. Plus, this new competitive force will drive everyone to play at a higher level, focusing not on moats built on data silos, but instead on what really matters: A highly satisfied customer. That’s certainly Michelle’s goal, and the goal of every successful local business. Why shouldn’t it also be the goal of the data giants?

     
c
compose new post
j
next post/next comment
k
previous post/previous comment
r
reply
e
edit
o
show/hide comments
t
go to top
l
go to login
h
show/hide help
esc
cancel