Software Ate The World. Now What?

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Naqdaw

Seven or so years ago, a famous VC penned a manifesto of sorts. Writing at a time the world was still skeptical of the dominance to which his industry has now ascended (to think, such a time existed, and so few years ago!), Marc Andreessen had a message for the doubters, the naysayers, and the Wall St. analysts who were (credibly!) claiming that his investments amounted to not much more than a bubble:

Software, he claimed, was eating the world.

Seven years later, no one can dispute Andreessen’s prescience. The man was right: If you had purchased a basket of his favorite stocks back then – he name-checked Apple, Amazon, and Facebook directly – you’d be up at least 10X, if not more. Software, it seems, has indeed eaten the world, and those smart (and rich) enough to put money into technology, as Andreessen has been, have done very, very well for themselves.

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The Prize for Nike’s Calculated Fall from Grace.

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Why would a god descend from the heavens to participate in the turmoil of politics? It wasn’t to ‘stand for something’ as a brand, it’s because large scale attention can no longer be bought.

Technology has made our attention discretionary and the world skippable. Brands can no longer just buy the massive amounts of cheap, forced attention they are used to. The effectiveness of controversy in gaining attention has changed the outcome of elections and it’s starting to change the nature of marketing too.

This is not how brands behave.

The Kaepernick campaign has been hailed as brave and a smart bet. The scale of their wager should not be underestimated. Doubling down on a growing customer segment while openly turning your back on less appealing one — is not just brave, it goes against the nature of brand building.

Brand building has its moments of bravery but much to the frustration of ad agencies everywhere, it’s largely about risk aversion and playing the long game. It’s Roger Federer not Colin Kaepernick.

Brands constantly have to balance growth and remaining relevant with protecting the $28 billion value of their brand. Brand managers lean to Warren Buffet’s advice, “It takes 20 years to build a reputation and five minutes to ruin it.” They are careful and calculated.

Nike has done such a great job of this over the decades that they have what most other brands can only dream of. They transcend politics and petty factions. They are for everyone. To be for everyone while managing to be cool is the unicorn status of brands.

Perhaps backing Kaepernick’s bold protest could have slid by in the past, but by taking a side in today’s toxic political climate, they have done what mega brands don’t do — they have said “we’re not for you” to a large portion of society. More people identify as conservative in the USA than any other political view. Nike has chosen to distance themselves to some degree from 100 million of the most valuable consumers in the world, Americans, and wagered their ‘for everyone’ status.

Nike’s own mission statement declares that they are for everyone: “to bring inspiration and innovation to every athlete in the world.”

What could be worth taking such a risk? Attention is the lifeblood of brands, and the traditional ways of getting it are in decline.

Earned attention is becoming the only attention and everything else is becoming wallpaper, thanks to a number of compounding factors.

The gearing of sharing

Social media loves to magnify what’s being magnified. This leaves less room for things that are not viral or at least topical. Winners win big and losers don’t even exist. Attention has transitioned from a sliding scale to being virtually binary.

The power of sharing is twofold. Firstly, it increases reach. This is the quantitative side of the equation. Secondly, it’s an endorsement. This is the qualitative and vastly overlooked side of the equation.

Sharing something online is often more about signaling than anything else. It means I approve of this and I think you should see it. It gives messages instant credibility within social networks, opposed receiving something cold. It’s especially true of controversial subject matter. Donald Trump’s election victory is less confounding when you consider the qualitative side of the massive media he earned.

The stopping power of controversy

What stops people from scrolling past? Mild issues aren’t particularly arresting. Traditional ads with memorable mnemonics and polite payoff lines are too easy to skip. They don’t work at scale on skippable media and the environment where they do work, linear tv, is losing its potency and cost effectiveness.

Two days ago the world marathon record was not just broken but smashed by Eliud Kipchoge. He’s a Nike sponsored Athlete and they are all over this.

Screen Shot 2018-09-18 at 9.53.09 AM

 

Nike should take some of the credit for the record time too. Their Breaking2project set out to break the sub 2 hour marathon barrier, that many said is beyond what’s physically possible.

The huge margin Eliud shaved off the world record (1m17s) makes one feel that it is only a matter of time until the 2 hour barrier is broken. What could be more aligned to the essence of Nike than this belief? They developed a shoe specifically to achieve this feat. They have assembled the best experts to plan and coach the athletes. This is the perfect intersection of innovation and athletic performance. This is the god of victory.

On the other hand Colin Kaepernick is a good athlete but not the best. He’s definitely got an iron will but this is the muddy water of politics, not the god of victory.

Kipchoge’s world record is a feat so great, it deserves the world’s attention and should echo for years to come, yet it is overshadowed by the tail end of Nike’s Kaepernick campaign:

Similarly, Serena Williams’ controversy at the US open final will likely be a bigger media event than when she finally gets that 24th grand slam victory:

The interconnectedness and immediacy of technology has magnified our collective attention. It’s not just controversy that has become more captivating though.

Strong emotions, by definition, trump mild ones but the gearing of technology has exacerbated this to the point that mild emotions don’t get their fair share of attention, even if you pay for it.

This is why, through the lens of social media, the world appears to be constantly melting down and why issues are becoming so polarized.

Perhaps it’s because fear and anger are such visceral emotions that social media is better suited to politics than selling boxes of cereal.

Brands are slowly being suffocating by the new economics of media

The long term outlook for brands that rely on mild manners and traditional advertising is grim.

Firstly, attention is a zero sum game. People only have 24 hours a day. The three-plus hours of attention people give to their phones comes with a withdrawal from other areas where brands have traditionally bought media.

Secondly, even the media you buy now guarantees little. Skippable videos only work if they hook users from the outset. Fewer eyeballs are watching linear TV as viewing behavior shifts toward platforms like Netflix. The quality of attention TV ads get is also declining as viewers reach for their phones during ad breaks. While the quality of TV viewing is decreasing the price of TV ad real estate is increasing as desperate media owners try make their numbers with fewer buyers… in a kind of death roll.

The world has become skippable but most brands were brought up to be polite, and still make traditional ads that assume captive audiences. The entire advertising industry is wrestling with this change.

Nike wins this race.

To be swept up in the shared media psyche is to captivate the world’s imagination. While Nike is basking in a torrent of global attention, we have forgotten their competitors.

What prize could be worth a god’s fall from grace? When Nike tied themselves to the controversy surrounding Colin Kaepernick they got the biggest hit of attention they have had since Google has been recording (2004), by a huge margin and possibly the biggest spotlight they have ever had:

There can be no bigger prize.

Nike are boldly blazing a trail that others will follow. Just as Donald Trump has shown how the momentum of controversy can steamroll the mildness of logic in politics today, Nike has shown how controversy can fuel brands.

The recent spike in online sales and the sneaker burning protests will probably cool off but a shift to bolder, more controversial brands and advertising is just beginning.

Why Facebook Calls It An Arms Race

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DorseySandbergSenate

It’s the business model, folks. If we’re going to “fix” anything, we have to start there.

“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.

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Memo To Tech Leaders: It’s Time to Stand Up To The Bully In Chief.

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Trump Fake news?Next week Sheryl Sandberg, COO of Facebook, and Jack Dorsey, CEO of Twitter, will testify in front of Congress. They must take this opportunity to directly and vigorously defend the role that real journalism plays not only on their platforms, but also in our society at large. They must declare that truth exists, that facts matter, and that while reasonable people can and certainly should disagree about how to respond to those facts, civil society depends on rational discourse driven by an informed electorate.

Why am I on about this? I do my very best to ignore our current president’s daily doses of Twitriol, but I couldn’t whistle past today’s rant about how tech platforms are pushing an anti-Trump agenda.

The Accountable Capitalism Act Will Never Happen. But Now the Conversation Will.

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Elizabeth_Warren_CFPB
Senator Elizabeth Warren

(Cross posted from Searchblog)

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.

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Google’s Tortured Relationship with China Continues

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A new report reveals the company’s plans to enter the Chinese search market. We’ve seen this movie before. But Android has changed the game, forcing profits over corporate values.

Google’s Beijing offices in 2010, the year the company exited the Chinese market.

(Cross posted from Searchblog)

I’ve been covering Google’s rather tortured relationship with China for more than 15 years now. The company’s off again, on again approach to the Internet’s largest “untapped” market has proven vexing, but as today’s Intercept scoop informs us, it looks like Google has yielded to its own growth imperative, and will once again stand up its search services for the Chinese market. To wit:

GOOGLE IS PLANNING to launch a censored version of its search engine in China that will blacklist websites and search terms about human rights, democracy, religion, and peaceful protest, The Intercept can reveal.

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Experiments in Alternate Democracies

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Photo by Anthony Garand on Unsplash

‘[I]t is not enough for democracy to be radical; it must be revolutionary’ argues Wayne Price

One of Winston Churchill’s most notable lines was:

No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.

At the turn of the 20th century, there were fewer than ten democracies in the world. By the turn of the 21st, that number had reached 80, with half of humanity governed by some form of democracy. Yet, we’ve grown astutely aware of the flaws in the system in the past two years, with some calling for an end to democracy.

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Note to Self: Remember to Answer the Senators’ Followup Questions.

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Following my Senate testimony last month, several Senators reached out with additional questions and clarification requests. As I understand it this is pretty standard. Given I published my testimony here earlier, I asked if I could do the same for my written followup. The committee agreed, the questions and my answers are below.

Questions for the Record from Sen. Cortez Masto (D. Nevada)

Facebook Audits

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The Dawn of Digital Switzerlands

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Photo by Derek Thomson on Unsplash

The tech behemoths’ role in nation-states is evolving

The biggest US tech companies now have powers which challenge the primacy of governments in many domains. In many cases they also have capabilities not available to nation states. We touched on these issues, and the notion of “corporate foreign policy” in one of the previous issues of my weekly newsletter Exponential View.

Last year, Microsoft’s Brad Smith argued that — at least in the realm of cybersecurity — “the global tech sector needs to operate as a neutral Digital Switzerland. We will assist and protect customers everywhere.”

Now in the Pennsylvania Law Review, Kristen Eichensehr looks at the issue of Digital Switzerlands in greater depth, 66 pages of it to be precise. We’ve summarized parts of it here. One key distinction between large corporations and nation states is that they lack territory, control of state-violence, and have very different governance mechanisms to nation-states. But that is as true for many supranational bodies as well.

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Whose Data, Which Commons, What Tragedy?

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Facebook may dominate the news, but it’s only a symptom of a far larger trend.

Before, and after?

(originally posted at Searchblog)

A theme of my writing over the past ten or so years has been the role of data in society. I tend to frame that role anthropologically: How have we adapted to this new element in our society? What tools and social structures have we created in response to its emergence as a currency in our world? How have power structures shifted as a result?

Increasingly, I’ve been worrying a hypothesis: Like a city built over generations without central planning or consideration for much more than fundamental capitalistic values, we’ve architected an ecosystem around data that is not only dysfunctional, it’s possibly antithetical to the core values of democratic society. Houston, it seems, we really do have a problem.

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