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  • feedwordpress 13:56:53 on 2018/09/27 Permalink
    Tags: Business, infrastructure, , , leadership, ,   

    Cloudflare and the Art of Breaching Moats 

    Cloudflare founders Matthew Prince and Michelle Zatlyn (image)

    The company could seek rent. Instead, it finds false market barriers and merrily breaches them.

    (Cross posted from NewCo Shift)

    We don’t usually cover news here at NewCo Shift, this is more of a place for analysis and Thinking Out Loud. And it’s rare that one company appears more than once here in any given year. But today – again – Cloudflare has upended an important piece of Internet’s real estate, and it’s just too rich to not note the why of it.

    So first the news. To celebrate the company’s eight birthday, Cloudflare is announcing the launch of a domain registrar. And because the company operates at massive scale, and can afford to do things most companies simply can’t (or won’t – looking at you, Google, Amazon, Facebook) – the company is offering domains *at cost.* In other words, Cloudflare isn’t making one red cent when you register a domain with them. What they pay to register a domain (and yes, that number is fixed, and the same for all domain registrars), is what you pay to register a domain.

    Go ahead, go sell (or short) your GoDaddy stock. I’ll wait.

    OK, you back? Look, I’m not writing this post because I think the news is *that* exciting, though I’ll tell you, I’ve not found many folks who love their domain registrar. I certainly don’t. Most of them are experts at confusing you, at upcharging you, and at scaring you that you’re about to either lose your domain or miss some important feature you didn’t know you want or need. I pay an average of about 15-20 bucks for each of the domains I own each year. Cloudflare’s price is about eight dollars.

    I own close to 50 domains. That means I’ll save nearly $400 a year when I move all my domains to Cloudflare. That’s real cheddar.

    But the real reason I’m writing this post is to point out what a merry market discombobulator Cloudflare has become. This is a company that operates at Google scale, is independent (it’s on a path to an IPO and has raised hundreds of millions of dollars), has a core business model that drives profitable growth (it’s a content distribution network and secure infrastructure vendor), and most importantly, a philosophy which is utterly unique in today’s venal, steroidal capital markets (more on that in a second).

    Cloudflare’s scale and financial power (it’s privately valued at what I am told is well past $5 billion) allow it to do things most companies simply can’t. Things like…rolling out a Domain Name System that protects your data from prying ISP eyes, for free, because it can. Or leading an alliance of bandwidth providers dedicated to eliminate markups on peering (it’s complicated, but net net, it means less costs for everyone).  Or totally upending the sclerotic economics of Over the Top (OTT) streaming.

    With every one of these steps, Cloudflare is doing two things: First, it’s refusing to view the Internet as property to be cornered, as real estate where infrastructure owners can camp out and collect rent. That’s utterly unheard of in a world where Amazon has cornered commerce and hosting, Facebook has cornered social attention, Google has cornered search, and AT&T, Comcast and Verizon are competing to be as walled as a garden can possibly be. Secondly, Cloudflare is actively exercising a core philosophy which can be honestly described as embracing the best (and most earnest) values of Internet 1.0: The web should be open, freely accessible, and an equal playing field upon which anyone can frolic.

    Companies like this are very, very hard to find at scale. At some point, most firms with a “make the world a better place” philosophy succumb to the reality of Peter Theil’s maxim: Every world-beating company must be a rent-extracting monopoly.   Maybe I’m missing something, so please, name me one (in the tech space anyway) that isn’t operating under this assumption?

    Cloudflare is proof that great companies can also be forces for good, down to the molecules of their DNA. This is a company that defines what I mean when I use the word “NewCo.” I can’t wait to see what they do next. And, of course, they’re not perfect, and sure, this post might look naive in a few years.

    But gosh, I sure hope it won’t. The world needs more Cloudflares, if only to remind us that it’s possible to move past the exhaustingly brutalist architecture we’ve managed to build around ourselves. Perhaps in fact we can trust ourselves to do what’s right for more than just us, more than just our company, more than just our shareholders. Perhaps our industry can dream to reach just a bit further, and imagine we are agents of larger purpose; and that, if we practice enough, we might earn the right to become what we’ve always imagined we could be, over these so many years: A force for good.

    Lord knows it’s been a while since that’s been true. Right?

     
  • feedwordpress 13:43:08 on 2018/09/06 Permalink
    Tags: , Business, , , , , , , ,   

    Facebook, Twitter, and the Senate Hearings: It’s The Business Model, Period. 

    “We weren’t expecting any of this when we created Twitter over 12 years ago, and we acknowledge the real world negative consequences of what happened and we take the full responsibility to fix it.”

    That’s the most important line from Twitter CEO Jack Dorsey’s testimony yesterday – and in many ways it’s also the most frustrating. But I agree with Ben Thompson, who this morning points out (sub required) that Dorsey’s philosophy on how to “fix it” was strikingly different from that of Facebook COO Sheryl Sandberg (or Google, which failed to send a C-level executive to the hearings). To quote Dorsey (emphasis mine): “Today we’re committing to the people and this committee to do that work and do it openly. We’re here to contribute to a healthy public square, not compete to have the only one. We know that’s the only way our business thrives and helps us all defend against these new threats.”

    Ben points out that during yesterday’s hearings, Dorsey was willing to tie the problems of public discourse on Twitter directly to the company’s core business model, that of advertising. Sandberg? She ducked the issue and failed to make the link.

    You may recall my piece back in January, Facebook Can’t Be Fixed. In it I argue that the only way to address Facebook’s failings as a public square would be to totally rethink its core advertising model, a golden goose which has driven the company’s stock on an six-year march to the stratosphere. From the post:

    “[Facebook’s ad model is] the honeypot which drives the economics of spambots and fake news, it’s the at-scale algorithmic enabler which attracts information warriors from competing nation states, and it’s the reason the platform has become a dopamine-driven engagement trap where time is often not well spent.

    To put it in Clintonese: It’s the advertising model, stupid.

    We love to think our corporate heroes are somehow super human, capable of understanding what’s otherwise incomprehensible to mere mortals like the rest of us. But Facebook is simply too large an ecosystem for one person to fix.”

    That one person, of course, is Mark Zuckerberg, but what I really meant was one company – Facebook. It’s heartening to see Sandberg acknowledge, as she did in her written testimony, the scope and the import of the challenges Facebook presents to our democracy (and to civil society around the world). But regardless of sops to “working closely with law enforcement and industry peers” and “everyone working together to stay ahead,” it’s clear Facebook’s approach to “fixing” itself remains one of going it alone. A robust, multi-stakeholder approach would quickly identify Facebook’s core business model as a major contributor to the problem, and that’s an existential threat.

    Sandberg’s most chilling statement came at the end of of her prepared remarks, in which she defined Facebook as engaged in an “arms race” against actors who co-opt the company’s platforms. Facebook is ready, Sandberg implied, to accept the challenge of lead arms producer in this race: “We are determined to meet this challenge,” she concludes.

    Well I’m sorry, I don’t want one private company in charge of protecting civil society. I prefer a more accountable social structure, thanks very much.

    I’ve heard this language of “arms races” before, in far less consequential framework: Advertising fraud, in particular on Google’s search platforms. To combat this fraud, Google locked arms with a robust network of independent companies, researchers, and industry associations, eventually developing a solution that tamed the issue (it’s never going to go away entirely).  That approach – an open and transparent process, subject to public checks and balances – is what is desperately needed now, and what Dorsey endorsed in his testimony. He’s right to do so. Unlike Google’s ad fraud issues of a decade ago, Facebook and Twitter’s problems extend to life or death, on-the-ground consequences – the rise of a dictator in the Philippines, genocide in Myanmar, hate crimes in Sri Lanka, and the loss of public trust (and possibly an entire presidential election) here in the United States. The list is terrifying, and it’s growing every week.

    These are not problems one company, or even a heterogenous blue ribbon committee, can or should “fix.” Facebook does not bear full responsibility for these problems – anymore than Trump is fully responsible for the economic, social, and cultural shifts which swept him into office last year.  But just as Trump has become the face of what’s broken in American discourse today, Facebook – and tech companies more broadly – have  become the face of what’s broken in capitalism. Despite its optimistic, purpose driven, and ultimately naive founding principles, the technology industry has unleashed a mutated version of steroidal capitalism upon the world, failing along the way to first consider the potential damage its business models might wreak.

    In an OpEd introducing the ideas in his new book “Farsighted”, author Steven Johnson details how good decisions are made, paying particular attention to how important it is to have diverse voices at the table capable of imagining many different potential scenarios for how a decision might play out. “Homogeneous groups — whether they are united by ethnic background, gender or some other commonality like politics — tend to come to decisions too quickly,” Johnson writes.  “They settle early on a most-likely scenario and don’t question their assumptions, since everyone at the table seems to agree with the broad outline of the interpretation.”

    Sounds like the entire tech industry over the past decade, no?

    Johnson goes on to quote the economist and Nobel laureate Thomas Schelling: “One thing a person cannot do, no matter how rigorous his analysis or heroic his imagination, is to draw up a list of things that would never occur to him.”

    It’s clear that the consequences of Facebook’s platforms never occurred to Zuckerberg, Sandberg, Dorsey, or other leaders in the tech industry. But now that the damage is clear, they must be brave enough to consider new approaches.

    To my mind, that will require objective study of tech’s business models, and an open mind toward changing them. It seems Jack Dorsey has realized that. Sheryl Sandberg and her colleagues at Facebook? Not so much.

     

     

     

     
  • feedwordpress 14:20:01 on 2018/08/27 Permalink
    Tags: , Business, , , , , ,   

    The Accountable Capitalism Act: It’ll Never Happen, But At Least Now the Conversation Will 

    The past week or so has seen a surge in commentary on the role of corporations in society, a theme familiar to readers of this site. While it might be convenient to peg the trend to Senator Elizabeth Warren’s newly minted Accountable Capitalism Act (more on that in a second), I think it’s more likely that – finally – our collective will is turning to our most logical and obvious instrument of social change, namely, the instrument of business.

    We humans like to organize ourselves into social units. They range from the informal (pickup basketball games) to the elaborately structured (Senate hearings). Our ability to harness collective will is unsurpassed in the animal kingdom, it’s one of our key evolutionary adaptations, driving the success of our species across the globe.

    As I’ve argued elsewhere, one of our most sophisticated social structures is the corporation, which has co-evolved with our various systems of government over the past half millennium or so. The very first corporations were in fact formed (or chartered) by governments – the Dutch East India Company is the most common example of this. In the past century, however, corporations have largely sought to shake the yoke of government regulation – and nowhere have corporations won more freedoms than in the United States, where firms are now considered legal persons with an unrestrained right to “free speech” (IE, the ability to fund political positions).

    So this is where we are today: Large corporations have the legal right to exercise unlimited influence over our political sphere, and the commercial imperative to control (and profit from) nearly all our society’s data. That kind of power will necessarily produce a backlash, on that’s found an articulate, but highly unlikely, argument in Senator Warren’s proposed legislation. From the release announcing the Accountable Capitalism Act:

    For most of our country’s history, American corporations balanced their responsibilities to all of their stakeholders – employees, shareholders, communities – in corporate decisions. It worked: profits went up, productivity went up, wages went up, and America built a thriving middle class.

    But in the 1980s a new idea quickly took hold: American corporations should focus only on maximizing returns to their shareholders. That had a seismic impact on the American economy. In the early 1980s, America’s biggest companies dedicated less than half of their profits to shareholders and reinvested the rest in the company. But over the last decade, big American companies have dedicated 93% of earnings to shareholders – redirecting trillions of dollars that could have gone to workers or long-term investments. The result is that booming corporate profits and rising worker productivity have not led to rising wages.

    Additionally, because the wealthiest top 10% of American households own 84% of all American – held shares-while more than 50% of American households own no stock at all – the dedication to “maximizing shareholder value” means that the multi-trillion dollar American corporate system is focused explicitly on making the richest Americans even richer. 

    Here are a few of the act’s key proposals:

    • Companies with more than $1 billion in revenues must register with, and agree to be regulated by, a new Federal oversight body known as the Office of United States Corporations.  By registering, firms are obliged to “consider the interests of all corporate stakeholders – including employees, customers, shareholders, and the communities in which the company operates.” This enshrines what is often called a “multi-stakeholder philosophy,” the underpinning of B Corps like Patagonia and Kickstarter, into federal law.
    • A corporations’ workers would be empowered to elect at least forty percent of their firms’ board of directors.
    • Long term restrictions on the sale of stock by board directors and corporate officers – three years for stock buy backs, and five years for everything else. This is to insure that a large firms’ managers plan for the long term.
    • A prohibition on political spending of any kind without approval from 75 percent of both directors and shareholders.

    There’s more, but I think you’ve got the point – this is a sweeping and presently impossible piece of legislation that radically rethinks the governance of our most powerful corporations. It guts corporate political spending, upends business’s current compensation structure (often based on stock grants), radically reshapes board governance (giving a near majority control to workers), and creates a massive conservative bogeyman in the form of yet another Federal government oversight entity. In today’s political environment, Warren’s legislation is DOA.

    But in tomorrow’s? Quite possibly not. Senator Warren is widely considered a front-runner for the Democratic nomination in 2020, and her initial opponent won’t be Trump – it’ll be Bernie Sanders, whose supporters likely will find plenty to love in Warren’s new plan.

    Regardless of whether the act has any chance of passing without a strong Democratic majority in both houses of Congress, Warren has smartly identified a central issue in our country’s political conversation, and declared it to be fundamental to the Democrats’ platform for 2020. It’s about time someone did.

    More recent reading on the role of capitalism in our society: 

    Louis Hyman: It’s Not Technology That’s Disrupting Our Jobs

    L.M. Sacasas: Technopoly and Anti-Humanism

    Tom Wheeler: Time to Fix It: Developing Rules for Internet Capitalism

    Neil Irwin: Are Superstar Firms and Amazon Effects Reshaping the Economy? 

     

     

     

     
  • feedwordpress 15:04:38 on 2017/04/07 Permalink
    Tags: advice, Business, communications, ,   

    Pick Up the Phone and Call. 

    The post Pick Up the Phone and Call. appeared first on John Battelle's Search Blog.

    phone

    (cross posted from NewCo Shift)

    People in business who like to Get Shit Done fall in love with each version of The New. When I was a kid, new was the the Apple II. Then the IBM PC, digital phones and voice mail, the Mac — oh God, the Mac! — word processing, email, the cell phone, the Internet — mmmmm, the Internet! — and then the iPhone — oh…the iPhone!
    Well damn the iPhone, because I lay at its feet the death of the most efficient technology ever created for the speedy disposition of Getting Shit Done — the plain old telephone. But not just any old-school telephone. The high tech, multi-line, digitally switched telephone of the late 1980s — the kind of phone upon which you could conduct, merge, and manage multiple direct conversations with your peers, colleagues, partners and adversaries — a direct line of human expression brain to brain — the kind of shit it’ll take us decades to replicate (if we ever do).

    Why was that phone so perfect? It certainly wasn’t the technology, though it was pretty darn boss at the time. It was how our society adapted to it, optimizing direct, one-to-one communications in real time between a network of engaged colleagues. As a young reporter, and later as an editor and a CEO, my call list was my life. I’d spend hours a day calling sources, collaborators, even employees down the hall — and as a result, we’d Get Shit Done.*

    Because to Get Shit Done, you have to engage real time with the people who help define what it is You Are Actually Doing. And nothing, nothing at all, beats a conversation to move that ball along.

    For reasons I am sure will merit multiple PhD defenses some day, we’ve evolved to an almost apologetic relationship to the humble telephone. Through email or social media (ick!), we ask each other for a “quick call” — then we offload the rest to calendar apps with their annoying reminders — shitty simulacrums of our intent which pervert our goal: to connect and exchange, to respond and to act.

    But first, always to connect.

    At some point in the last ten years we replaced direct connection with technology-intermediated obsequity. And when we do “get on a call,” it’s fraught with a Moderator and an Agenda and Follow Up Action Items and … well, wait what the f*ck are we talking about?

    No more. It’s time to pick up the phone and start calling each other again.

    Hey — It’s John. You have a few minutes to bounce something around? Cool!…

    *Some industries continue to work this way — I’d love your input on which one you think still do.

    The post Pick Up the Phone and Call. appeared first on John Battelle's Search Blog.

     
  • feedwordpress 19:15:49 on 2017/03/15 Permalink
    Tags: Business   

    SXSW 2017: Should Age Diversity Matter? 

    Solis_carlos
    This was my tenth consecutive year attending SXSW. This means I started attending in my mid thirties during a very different time in tech, marketing and culture. There's no need to go into how different these things were or bask in the memories of those early years. What's still special about SXSW is that many of the people who were pioneers during that time still attend joined by a new generation in a now mature market where the Googles, Facebooks, Snapchats and Sprinkler's of the world operate. 

    BUT, outside of the informal conversations in the convention hallways, the restaurants and bars I noticed an interesting trend. There was almost a theme in terms of the panels that addressed inclusion in tech—mainly defining that inclusion through diversity in gender, ethnicity, or sexual orientation. This is obviously a good thing as many organizations are dedicating time and resources to address gaps and divides in these areas especially in specific industries. Diversity in these areas should be challenged. How women are treated in tech should be discussed. What hurdles minorities face should be issues we speak about out in the open... 

    Screen Shot 2017-03-14 at 3.44.17 PMVisa's Everywhere Initiative supports and encourages female led startups

    What About Age Diversity?
    What was absent from debate and discussion is an increasing reality that in the start-up, tech, and even marketing worlds (to name a few), there's increasingly less diversity in age especially at the 50 plus range. This dynamic affects all people regardless of background and it begs the question if people in this age range have a fair shot at applying their years of wide experience to compliment the energy and distinct skills of younger colleagues. As a forty something GenXer, this is something I am thinking about a good deal—what happens when I cross that threshold of 50? Will my experience be valued or viewed as antiquated? Tech and marketing especially are fast moving spaces and even if you adapt your skills and stay ahead of the curve—age may be held against you. They are also industries where you are expected to look and act the part, especially if engaging with millennial audiences is a part of the job. 

    Being The Change
    Despite the lack of age diversity or inclusion for that matter in these industries being a topic—it's something that's worth talking about. Mixed generations who work together, Boomers Xers and Millenials reflect the same generations we create both digital experiences and build brands for. This goes well beyond these two industries. We have much to learn from each other, and should band together ensure employers both know and see the value in it. I'll be thinking much more on this topic and have some ideas. If you'd like to be a part of it—let me know in the comments or shoot me a note

     
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