Everyone’s favorite parlor game is “where will Amazon go?” Better to ask: Why does Amazon needs a second headquarters in the first place?
Why does Amazon want a new headquarters? Peruse the company’s RFP, and the company is frustratingly vague on the question. “Due to the successful growth of the Company,” Amazon says of itself in the royal third person, “it now requires a second corporate headquarters in North America.”
Is this a request for bulk discounts on toner ink? Did Jeff Bezos outsource this momentous and extremely public communication to his purchasing department? Is there really no more room in Seattle?
So…Why? Why is Amazon doing this? If I were one of the hundreds of Mayors and local civic boosters huddling in meeting rooms around North America, that would be my first — and pretty much my only question. After all, if you don’t know why Amazon is looking for a “second headquarters,” then your response to their RFP is going to end up pretty rudderless. If Amazon’s true reason for another HQ boils down to, say, Latin American expansion, then Chicago, Toronto, and Philly should pretty much pack in in, no?
While the RFP is comprehensive in requirements (transportation networks, nearby international airports, sustainable office space, etc.), it nevertheless demonstrates a stunning lack of vision — the very vision that once defined “startups” like Amazon. The current accepted mythology about our fabled tech companies, those lions of our present economic theatre, is that they are fonts of vision — driven not just by profit, but by outsized missions to change the world, and to make it better. So what mission, exactly, will this new headquarter actually be charged with? Can anyone answer that? Absent any serious data, the default becomes “to expand Amazon.” And what, exactly, might that mean?
Amazon’s lists of current and projected businesses include e-commerce (its core), entertainment, home automation, cloud services, white label products, logistics and delivery, and any number of adjacent businesses yet to be scaled. It also harbors serious international expansion plans (one would presume). Any and all of these businesses might inform the “why” of its Bachelor-like RFP. But nowhere in the RFP does the company deliver a clue as to whether these factors play into its decision.
I have a theory about why Amazon issued such a vision-free RFP — and why the world responded with a parlor game instead of a serious inquiry as to the motivations of “the most valuable company in the world.” And that theory comes down to this: Amazon needs a place to put workers that are secondary but necessary — back office service, lower level engineering talent, accounting, compliance, administrative support. It will move those support positions to the city that has the cheapest cost per seat, and consolidate its “high value” workers in Seattle, where such talent is already significantly concentrated.
Put another way, “HQ2” isn’t a headquarters at all. But calling it one insures a lot more attention, a lot more concessions, and a lot more positive PR. Maybe Amazon doesn’t have an answer to the question, and is hoping its call for proposals will deliver it a fresh new vision for the future. But I doubt it.
I’d love to be wrong, but absent any other vision the most likely reasoning behind this beauty pageant boils down to money. It may sound like the cynical logic of a rapacious capitalist — but more often than not, that’s what usually drives business in the first place.
Facebook and Google’s advertising infrastructure is one of humanity’s most marvelous creations. It’s also one of its most terrifying, because, in truth, pretty much no one really understands how it works. Not Mark Zuckerberg, not Larry Page, and certainly not Russian investigator Robert Mueller, although of the bunch, it seems Mueller is the most interested in that fact.
And that’s a massive problem for Facebook and Google, who have been dragged to the stocks over their algorithms’ inability to, well, act like a rational and dignified human being.
So how did the world’s most valuable and ubiquitous companies get here, and what can be done about it?
Well, let’s pull back and consider how these two tech giants execute their core business model, which of course is advertising. You might want to pour yourself an adult beverage and settle in, because by the end of this, the odds of you wanting the cold comfort of a bourbon on ice are pretty high.
In the beginning (OK, let’s just say before the year 2000), advertising was a pretty simple business. You chose your intended audience (the target), you chose your message (the creative), and then you chose your delivery vehicle (the media plan). That media plan involved identifying publications, television programs, and radio stations where your target audience was engaged.
Those media outlets lived in a world regulated by certain hard and fast rules around what constituted appropriate speech. The FCC made sure you couldn’t go full George Carlin in your creative execution, for example. The FTC made sure you couldn’t commit fraud. And the FEC — that’s the regulatory body responsible for insuring fairness and transparency in paid political speech — the FEC made sure that when audiences were targeted with creative that supports one candidate or another, those audiences could know who was behind same-said creative.
But that neat framework has been thoroughly and utterly upended on the Internet, which, as you might recall, has mostly viewed regulation as damage to be routed around.
After all, empowering three major Federal regulatory bodies dedicated to old media advertising practices seems like an awful lot of liberal overkill, n’est ce pas? What waste! And speaking of waste, honestly, if you want to “target” your audience, why bother with “media outlets” anyway?! Everyone knows that Wanamaker was right — in the offline world, half your advertising is wasted, and thanks to offline’s lack of precise targeting, no one has a clue which half that might be.
But as we consider tossing the offline baby out with the bathwater waste, it’s wise to remember a critical element of the offline model that may well save us as we begin to sort through the mess we’re currently in. That element can be understood via a single word: Context. But we’ll get to that in a minute. First, let’s go back to our story of how advertising has shifted in an online world, and the unintended consequences of that shift (if you want a even more thorough take, head over to Rick Webb’s NewCo Shift series: Which Half Is Wasted).
Google: Millions Flock to Self Service, Rise of the Algos
Back in the year 2000, Google rolled out AdWords, a fantastically precise targeting technology that allowed just about anyone to target their advertisements to…just about anyone, as long as that person was typing a search term into Google’s rapidly growing service. (Keep that “anyone” word in mind, it’ll come back to haunt us later.) AdWords worked best when you used it directly on Google’s site — because your ad came up as a search result right next to the “organic” results. If your ad was contextually relevant to a user’s search query, it had a good chance of “winning” — and the prize was a potential customer clicking over to your “landing page.” What you did with them then was your business, not Google’s.
As you can tell from my fetishistic italicization, in this early portion of the digital ad revolution, context still mattered. Google next rolled out “AdSense,” which placed AdWords on publishers’ pages around the Internet. AdSense didn’t work as well as AdWords on Google’s own site, but it still worked pretty well, because it was driven by context — the AdSense system scanned the web pages on which its ads were placed, and attempted to place relevant AdWordsin context there. Sometimes it did so clumsily, sometimes it did so with spectacular precision. Net net, it did it well enough to start a revolution.
Within a few years, AdWords and AdSense brought billions of dollars of revenue to Google, and it reshaped the habits of millions of advertisers large and small. In fact, AdWords brought an entirely new class of advertiser into the fold — small time business owners who could compete on a level playing field with massive brands. It also reshaped the efforts of thousands of publishers, many of whom dedicated small armies of humans to game AdWords’ algorithms and fraudulently drink the advertisers’ milk shakes. Google fought back, employing thousands of engineers to ward off spam, fraud, and bad actors.
AdWords didn’t let advertisers target individuals based on their deeply personal information, at least not in its first decade or so of existence. Instead, you targeted based on the expressed intention of individuals — either their search query (if on Google’s own site), or the context of what they were reading on sites all over the web. And over time, Google developed what seemed like insanely smart algorithms which helped advertisers find their audiences, deliver their messaging, and optimize their results.
The government mostly stayed out of Google’s way during this period.
When Google went public in 2004, it was estimated that between 15 to 25 percent of advertising on its platform was fraudulent. But advertisers didn’t care — after all, that’s a lot less waste than over in Wanamaker land, right? Google’s IPO was, for a period of time, the most successful offering in the history of tech.
Facebook: People Based Marketing FTW
Then along came Facebook. Facebook was a social network where legions of users voluntarily offered personally identifying information in exchange for the right to poke each other, like each other, and share their baby pictures with each other.
Facebook’s founders knew their future lay in connecting that trove of user data to a massive ad platform. In 2008, they hired Sheryl Sandberg, who ran Google’s advertising operation, and within a few years, Facebook had built the foundation of what is now the most ruthlessly precise targeting engine on the planet.
Facebook took nearly all the world-beating characteristics of Google’s AdWords and added the crack cocaine of personal data. Its self service platform, which opened for business a year or so after Sandberg joined, was hailed as ‘ridiculously easy to use.’ Facebook began to grow by leaps and bounds. Not only did everyone in the industrialized world get a Facebook account, every advertiser in the industrialized world got themselves a Facebook advertising account. Google had already plowed the field, after all. All Facebook had to do was add the informational seed.
Both Google and Facebook’s systems were essentially open — as we established earlier, just about anyone could sign up and start buying algorithmically generated ads targeted to infinite numbers of “audiences.” By 2013 or so, Google had gotten into the personalization game, albeit most folks would admit it wasn’t nearly as good as Facebook’s, but still, way better than the offline world.
So how does Facebook’s ad system work? Well, just like Google, it’s accessed through a self-service platform that lets you target your audiences using Facebook data. And because Facebook knows an awful lot about its users, you can target those users with astounding precision. You want women, 30–34, with two kids who live in the suburbs? Piece of cake. Men, 18–21 with an interest in acid house music, cosplay, and scientology? Done! And just like Google, Facebook employed legions of algorithms which helped advertisers find their audiences, deliver their messaging, and optimize their results. A massive ecosystem of advertisers flocked to Facebook’s new platform, lured by what appeared to be the Holy Grail of their customer acquisition dreams: People Based Marketing!
The government mostly stayed out of Facebook’s way during this period.
When Facebook went public in 2012, it estimated that only 1.5% of its nearly one billion accounts were fraudulent. A handful of advertisers begged to differ, but they were probably just using the system wrong. Sad!
Facebook’s IPO quickly became the most successful IPO in the history of tech. (Till Alibaba, of course. But that’s another story).
Stunned by the rise of the Google/Facebook duopoly, the tech industry responded with an open web answer: Programmatic advertising. Using cookies, mobile IDs, and tons of related data gathered from users as they surfed the web, hundreds of startups built an open-source version of Facebook and Google’s walled gardens. Programmatic was driven almost entirely by the concept of “audience buying” — the purchase of a specific audience segment regardless of the context in which that audience resided. The programmatic industry quickly scaled to billions of dollars — advertisers loved its price tag (open web ads were far cheaper), and its seemingly amazing return on investment (driven in large part by fraud and bad KPIs, but that’s yet another post).
Facebook and Google were unfazed by the rise of programmatic. In fact, they bought the best companies in the field, and incorporated their technologies into their ever advancing platforms.
The Storm Clouds Gather
But a funny thing happened as Google, Facebook and the programmatic industry rewrote advertising history. Now that advertisers could precisely identify and target audiences on Facebook, Google and across the web, they no longer needed to use media outlets as a proxy for those audiences. Media companies began to fall out of favor with advertisers and subsequently fail in large numbers. Google and Facebook became advertisers’ primary audience acquisition machines. Marketers poured the majority of their budgets into the duopoly — 70–85% of all digital advertising dollars go to the one or the other of them, and nearly all growth in digital marketing spend is attributable to them as well.
By 2011, regulators began to wrap their heads around this burgeoning field. Up till then, Internet ads were exempt from political regulations governing television, print, and other non digital outlets. In fact, both Facebook and Google have both lobbied the FEC, at various times over the past decade or so, to exclude their platforms from the vagaries of regulatory oversight based on an exemption for, and I am not making this up, “bumper stickers, pins, buttons, pens and similar small items” where posting a disclaimer is impracticable (sky writing is also mentioned). AdWords and mobile feed ads were small, after all. And everyone knows the Internet has limited space for disclaimers, right?
Anyway, that was the state of play up until 2011, when Facebook submitted a request to the FEC to clear the issue up once and for all. With a huge election coming in 2012, it was both wise and proactive of Facebook to want to clarify the matter, lest they find themselves on the wrong end of a regulatory ruling with hundreds of millions of dollars on the line.
The FEC failed to clarify its position, but did request comment from industry and the public on the issue (PDF). In essence, things remained status quo, and nothing happened for several years.
That set the table for the election of 2016. In October of that year, perhaps realizing it had done nothing for half a decade while the most powerful advertising machine in the history of ever slowly marched toward its seemingly inevitable date with emergent super intelligence, the FEC re-opened its request for comments on the whether or not political advertising on the Internet should have some trace of transparency. But that was far too late for the 2016 election.
Most everyone I speak to tells me that last week’s revelations about Facebook, Russia, and political advertising is, in the words of Senator Mark Warner, “the tip of the iceberg.” Whether or not that’s true (and I for one am quite certain it is), it’s plenty enough to bring the issue directly to the forefront of our political and regulatory debate.
Now the news is coming fast and furious: At what was supposed to be a relatively quotidian regular meeting of the FEC this week, the commissioners voted unanimously to re-open (again) the comment period on Internet transparency. The Campaign Legal Center, launched in 2002 by a Republican ally of Senator John McCain (co-sponsor of the McCain Feingold Bipartisan Campaign Reform Act of 2002), this week issued a release calling for Facebook to disclose any and all ads purchased by foreign agents. (Would that it were that simple, but we’ll get to that in the next installment.) One of the six FEC commissioners, a Democrat, subsequently penned an impassioned Op Ed in the Washington Post, calling for a new regulatory framework that would protect American democracy from foreign meddling. The catch? The Republicans on the commission refuse to consider any regulations unless the commission receives “enough substantive written comments.”
Once the link for comments goes up in a week or two, I’m pretty sure they will.
But in the meantime, there’s plenty of chin stroking to be done over this issue. While this may seem like a dust up limited to the transparency of political advertising on the internet, the real story is vastly larger and more complicated. The wheels of western capitalism are greased by paid speech, and online, much of that speech is protected by the first amendment to our constitution, as well as established policies enshrined in contract law between Facebook, Google, and their clients. There are innumerable scenarios where a company or organization demands opacity around its advertising efforts. So many, in fact, that if I were to go into them now, I’d extend this piece by another 2,500 words.
And given I’m now close to 3,000 words in what was supposed to be a 600-word column, I’m going to leave exploring those scenarios, and their impact, to next week’s columns. In the meantime, I’ll be speaking with as many experts and policy folks from tech, Washington, and media as I can find. Suffice to say, big regulation is coming for big tech. Never in the history of the tech industry has the 1996 CDMA ruling granting tech platforms immunity from the consequences of speech on their own platforms been more germane. Whether it’s in jeopardy or not remains to be seen.
This is not a simple issue, and resolving it will require a level of rational discourse and debate that’s been starkly absent from our national dialog these past few years. At stake is not only the fundamental advertising models that built our most valuable tech companies, but also the essential forces and presumptions driving our system of democratic capitalism*. Not to mention the nascent but utterly critical debate around the role of algorithms in civil society. And as we explore solutions to what increasingly feels like an intractable set of questions, we’d do well to keep one word in mind: Context.
*Ask yourselves this: Are the advertising platforms behind Alibaba and Tencent worried about transparency?
Let’s start with this: Google is not a perfect company. It’s easy to cast it as an omniscient and evil villain, the leader of a millennium-spanning illuminati hellbent on world subjugation. Google the oppressor. Google the silencer of debate. Google, satanic overlord predicted by the holy text!
But that narrative is bullshit, and all rational humans know it. Yes, we have to pay close attention — and keep our powder dry — when a company with the power and reach of Google (or Facebook, or Amazon, or Apple…) finds itself a leader in the dominant cultural conversation of our times.
But when a legitimate and fundamentally important debate breaks out, and the company’s employees try to come together to understand its nuances, to find a path forward …..To threaten those engaged in that conversation with physical violence? That’s fucking terrorism, period. And it’s damn well time we called it that.
Have we lost all deference to the hard won lessons of the past few hundred years? Are we done with enlightenment, with scientific discourse, with fucking manners? Do we now believe progress can only be imposed? Have we abandoned debate? Can we no longer engage in rational discourse, or move forward by attempting to understand each other’s point of view?
I’m so fucking angry that the asshat trolls managed to force Google’s CEO Sundar Pichai to cancel his planned all hands meeting today, one half hour before it started, I’m finding it hard to even write. Before I can continue, I just need to say this. To scream it, and then I’m sure I’ll come to my senses: FUCK YOU. FUCK YOU, asshats, for hijacking the conversation, for using physical threats, implied or otherwise, as a weapon to shut down legitimate rational discourse. FUCK YOU for paralyzing one of our society’s most admired, intelligent, and successful engines of capitalism, FUCK YOU for your bullying, FUCK YOU for your rage and your anger, FUCK YOU for making me feel just like I am sure you feel about me: I want to fucking kick your fucking ass.
But now I will take a breath. And I will remember this: The emotions of that last paragraph never move us forward. Ever.
Google was gathering today to have an honest, difficult, and most likely emotional conversation about the most important idea in our society at present: How to allow all of us to have the right to our points of view, while at the same time insuring the application of those views don’t endanger or injure others. For its entire history, this company has had an open and transparent dialog about difficult issues. This is the first time that I’ve ever heard of where that dialog has been cancelled because of threats of violence.
This idea Google was preparing to debate is difficult. This idea, and the conflict it engenders, is not a finished product. It is a work in progress. It is not unique to Google. Nor is it unique to Apple, or Facebook, Microsoft or Apple — it could have easily arisen and been leapt upon by social terrorists at any of those companies. That it happened at Google is not the point.
Because this idea is far bigger than any of those companies. This idea is at the center of our very understanding of reality. At the center of our American idea. Painstakingly, and not without failure, we have developed social institutions — governments, corporations, churches, universities, the press — to help us navigate this conflict. We have developed an approach to cultural dialog that honors respect, abjures violence, accepts truth. We don’t have figured it out entirely. But we can’t abandon the core principles that have allowed us to move so far forward. And that is exactly what the social terrorists want: For us to give up, for us to abandon rational discourse.
Google is a company comprised of tens of thousands of our finest minds. From conversations I’ve had tonight, many, if not most of those who work there are fearful for their safety and that of their loved ones. Two days ago, they were worried about their ability to speak freely and express their opinions. Today, because social terrorists have gone nuclear, those who disagree with those terrorists — the vast majority of Googlers, and by the way, the vast majority of the world — are fearful for their physical safety.
And because of that, open and transparent debate has been shut down.
What. The. Fuck.
If because of physical threat we can no longer discuss the nuanced points of a difficult issue, then America dies, and so does our democracy.
This cannot stand.
Google has promised to have its dialog, but now it will happen behind closed doors, in secrecy and cloaked in security that social terrorists will claim proves collusion. Well done, asshats. You’ve created your own reality.
It’s up to us to not let that reality become the world’s reality. It’s time to stand up to social terrorists. They cannot and must not win.
Upon finishing Yuval Harari’s Homo Deus, I found an unwelcome kink in my otherwise comfortably adjusted frame of reference. It brought with it the slight nausea of a hangover, a lingering whiff of jet exhaust from a hard night, possibly involving rough psychedelics.
I’m usually content with my (admittedly incomplete) understanding of the role humanity plays in the universe, and in particular, with the role that technology plays as that narrative builds. And lately that technology story is getting pretty damn interesting — I’d argue that our society’s creation of and reaction to digital technologies is pretty much the most important narrative in the world at present.
But as you consider that phrase “digital technologies,” are you conjuring images of computers and iPhones? Of “the cloud” and Google? Facebook, Snapchat, Twitter, Netflix, Slack, Uber? I’ve always felt that this group of artifacts — the “things” that we claim as digital — the companies and the devices, the pained metaphors (cloud?!) and the juvenile apps — these are only the most prominent geographic features of a vaster and more tectonic landscape, one we’ve only begun to explore.
Harari would ask us to explore that landscape with a new state of mind — to abandon our human-centered biases — our Humanism — and consider what our embrace of technology may augur for our species. Yet through most of the book, he failed to push me from my easy chair. It was comforting to nod along as Harari argued that the devices — the computers, the platforms and the networks — are nothing more than the transit layer in humanity’s inevitable evolution to a more god-like species. And cognizant of the inescapable baggage of the “digital technologies” tag, Harari has gifted his new state of mind with a name: Dataism. More on that in a minute.
Homo Deus is the possibly too-clever-by-half continuation of the author’s masterstroke bestseller Sapiens, which the New York Times, despite crowning it as a runaway hit, acidly derided as “tailor-made for the thought-leader industrial complex.” If that made you snort the literary milk out your erudite nose, just wait for the other whiteshoe to drop: The same Times review charitably credited Homo Deus with having “the easy charms of potted history.”
And look, the decidedly humanist Times is right to be offended by Harari’s assertions. For they are utterly unsettling, in particular to those most content in the warm embrace of Humanism, which Harari dismisses as a state of mind already past its prime. Dataism is its replacement — a reductive religion of algorithms, both biological and digital, driven by intelligence but decoupled from consciousness. It is therefore unconcerned with experience, the very bread which feeds humanist mythos. Net net: Let’s just say Dataism could really give a fuck about people in the long run. Harari’s money quote? “Homo sapiens is an obsolete algorithm.”
So yeah, the ideas prosecuted in the pages of these two works, which run collectively just under 900 pages, are unsettling. But unlike the Times reviewer, I’m not ready to dismiss them as so much armchair pottery. It’s not often a work of literary merit (and this is certainly that) forces our vaunted industry to consider itself.
Turns out, our industry has pretty much ignored Homo Deus. Ezra Klein did have a thing or two to say about it in a podcast, but…crickets from most everywhere else.
Technology is having a crisis of self reflection. It’s understandable — we’re not the types to think too hard about the impact of our actions, because we’ve already anticipated them, after all. Creating new behaviors is the business we’re in, so we’re not surprised when they actually happen. We’ve developed a super-fast creative process on top of digital technologies — we come up with new plans as quickly as the old ones fail, and the act of doing this just proves our world view correct: We have a thesis, we prosecute it, and as we collect more data — including and especially data about our failure — we stare at it all, we rethink our approach, and we deftly devise a new algorithm to navigate around the damn problem. The better the acuity of our data, the more responsive our tools, the better the outcomes. Even when most of us lose, we’re always winning! Failure is just more data to fuel an eventual, inevitable victory.
This approach to life and business doesn’t reward deep reflection. And we know it. That’s why we’re so damn obsessed with meditation, with yoga (guilty), with flying to South America and doing strange psychedelic drugs. But so far all those reflections center on the me, and not on the us, on the society we are building. How often do we — the Royal Technology We — consider the butterfly effects of our work? And don’t tell me Zuck did it for us with that manifesto. That thing could have used a touch more psilocybin, amiright?
Perhaps Harari strikes us as a lecturing harridan — we know we have more homework to do. We understand we now rule the world, but we are reluctant leaders, because our industry has forever been in opposition, forever carrying a torch for a future state of humankind that the noobs and the squares and the company men didn’t get.
Well, that gets us to purpose. Why are we here? Why are you here? Why am I here? What are we here for?
Remember when you were a kid, in that kid-like state of mind, when you whispered to a friend, a confidante — “Where’s the wall at the end of universe?” And if they bit, if they acknowledged there might be an end to it all, a place where the universe ebbs to finality, you ask them this: “Well, then, what’s on the other side of the wall!?”
Remember that little pre-adolescent mind hack? Yeah, we’re about at that point now, Technology Industry. It’s time for us to come up with a better answer.
My favorite response to this paradox is: “The unimaginable.” That’s what’s on the other side of the wall. The only boundary in the universe, for Homo sapiens anyway, is the fact that we need a boundary in the first place. We understand so much, but at the end of that understanding we face the unimaginable. In that dark gravity we first populated gods, then God Himself, then Science and its attendant Humanism, and now….well, Harari makes the case that our digital technologies have hastened our transition us to a new era — one in which we “dissolve within the data torrent like a clump of earth within a gushing river.”
OK, I’m out of my armchair now. If all biology is algorithms, and science certainly believes this is so, then our fate is to join the church of pure information processing, driven by the inescapable end game of evolution.
Checkmate! Humanity exists because algorithms exist, algorithms that predate us, algorithms that will outlive us, and algorithms that exist for one reason: to solve problems. If we embrace this, then perhaps we stand at the cusp of solving our biggest problem ever: ourselves.
I”m not sure I buy all this — and even Harari, at the very end of his book, admits he’s not sure either (that felt like quite a hedge, to be honest). But the issues he raises are worthy of deeper debate — in particular inside our own industry, where self-reflection is far too absent.
I honestly didn’t want to say this, but. I did have other things to do tonight than write about advertising. Again. But g’damn, folks. Can we get our shit together?
I know Google thinks it is doing something about it. But that Chrome feature you call ad blocking? Well, OK, there’s some good in it — it even addresses the issue I’m on about right now, sort of*. But come on. It has no power unless you block ads in Facebook’s feed, amiright?!!! (Wink!)
Anyway, just now, five minutes ago, I was grokking Sam Harris’ latest podcast, featuring a very controversial intellectual by the name of Charles Murray (long, looooong fucking story). Yeah, I’m late to the podcast game. It’s been NetFlix, music, sports and Stern during Normal Podcast Times, so I kind of side-stepped that resurgence for the past few years till recently.
And Harris’ interview with Charles Murray this week was, well, a revelation in a couple ways. First….two hours? On an intellectual tempest that underpins a fair amount of the shit going on in our country today? What a … novelty, right? And second…damn! I knew the Bell Curve was a major thing, but…Harris *really* put his reputation on the line here, and, that makes for some good baseball, no matter your point of view.
Anyway, I’ve spent enough time around ideas and the folks who create them to know there’s always more to the story, so after listening, I googled around (yes Google, I did that on purpose, sorry, but it’s lower case usage for you from now on, please block Facebook ads in your Chrome extension that would be such a cool dust up to watch okthanksbye) to find out who might disagree with the cautious but still high-on-camaraderie conversation I had just ingested.
That’s when I found this extremely contrarian post on a site I’d never heard of (which is quite normal for me. The independent web is huge and growing. Don’t believe the hype that says the platforms have won — it’s plain wrong). I still haven’t grokked *the site itself*, though I did read the post. And that’s not because I didn’t want to (I do, I always do), but because midway through my focused read of the post itself, the site did something that will forever place it on my shit list: It forced a pop-under ad into (well, under) my browser, which then autoplayed, quite loudly, commercial audio that interrupted a particularly wonderful passage in “Dawned on Me” from Wilco’s The Whole Love, the album I had chosen as my companion for my minor but heretofore pleasant intellectual journey.
And that is some Serious Bullshit. Some serious, serious bullshit. As I immediately said on Twitter (because, really, the best and first use of Twitter is to mutter like an old man to the sympathetic person you imagine is in the room with you, right?):
What I learned was that the ads (and by extension, the site) had exactly zero interest in my current state of mind, despite the fact that the content I was consuming was entirely about influencing my state of mind. Nope, the site said, all we care about is that you’re *paying attention.* That can be arbitraged for a twelve-dollar CPM! So fuck you, reader. I’ll take the cash.
These asshats crashed my Wilco-enhanced journey of intellectual advancement. That kind of pisses me off. Maybe I’m wrong to assume I have a right to that journey. I understand. (But honestly, fuck you.)
I think we can do better.
So, sorry, site, I’m done with you, despite your best efforts to change my mind about Sam Harris and Charles Murray, or to inform what may or may not be a rational point of view about the critical issues I am attempting to consider (and damn, they are pretty damn critical right about now).
So. Here’s my conclusion. We need a place to discuss ideas that is absent the dark gravity associated with this kind of advertising.
Here are the caveats for the rant I am about to write.
The fact that I am writing this on Medium will cause many of you to dismiss me for hypocrisy. Don’t. Read to the end.
I will be saying the word “F*CK” a lot. If that bothers you, time to depart for calmer waters.
This post will be subject to dismissal due to charges of high nostalgia — I will be accused of living in the past, failing to get the future, not getting with the times, being the old man yelling “get off my lawn,” etc. These characterizations will be all entirely right. And totally irrelevant.
This post will be compared, most likely unfavorably, to the many, many, many, many wonderful (and better) posts that have already been written on this subject. That’s fine. I just want to add my voice to the conversation.
This post will piss off friends of mine at Facebook, Medium, LinkedIn, and probably Google. Sorry in advance. Kinda.
Ok, now that we’ve got that out of the way, it’s time to say something out loud.
WE GOT IT FUCKING RIGHT THE FIRST TIME.
We were lucky, we were visionary, we were idiots, we were savants. But we got Internet publishing right the first time — and then we (sometimes actively, sometimes by inaction) fucked it up. Moreover, we KNEW it was on a path to peril, and we slouched towards Bethlehem, expecting that at some point the problem would correct itself.
Internet based publishing is so fucked up that the people most responsible for some of its loveliest platforms — Ev Williams of Blogger, Twitter and Medium, Matt Mullenweg of WordPress — these guys positively, absolutely HATE the Internet’s chosen business model. Always have. Probably always will.
Ev hates advertising so much, he damn near killed his own company last week trying to get away from the practice. Matt, well anyone who knows Matt will tell you, the guy would rather wear a tutu than woo an advertiser. Both feel there’s something utterly corrupt about the whole affair. And they’re not entirely wrong.
But they’re not entirely right, either. More on than in a minute.
But first, for those of you reading this and wondering “What the F is this guy talking about?” well, first of all, welcome to History 101, and secondly, thanks for sticking around. We can’t fix this without your help. I certainly don’t want to go back to using early versions of WordPress or Moveable Type.
But when I was, I’ll tell you one thing.
I KNEW WHO THE FUCK WAS READING ME. I KNEW WHY. I KNEW WHO SENT THEM TO ME, AND I WAS GRATEFUL TO THOSE PEOPLE/SITES/PLATFORMS THAT SENT ME THOSE READERS.
Now, I have no idea. Again, for emphasis: despite all the whizzy bang-y social media we’ve invented these past ten years, I HAVE NOT ONE CLUE WHO IS READING ME ON A REGULAR BASIS, NOR DO I KNOW WHO TO THANK FOR SENDING THEM TO ME.
Sure, I have a general idea. I can look at my analytics in all those aforementioned platforms, and I could, if I have either earned or hired a double PhD in Big Data and Theology, I might be able to divine some patterns as to how my readers ended up reading my stuff. But given they’re scattered across four, five or six platforms, all with different algorithms, business models, presentation layers, analytics (or lack thereof), and permissions, well, good fucking luck making sense of your audience as an actual community that cares about what you’re saying.
And we wonder why publishing is so fucked.
This is the single most immutable rule of media, folks. PUBLISHING IS COMMUNITY. And if you don’t know who your community is, you’re screwed.
Kudos to Jessica, to Ben, to Sarah, who’ve realized this and demanded readers become paying subscribers, and not on anyone else’s platform, but out there on the messy, attenuating Open Web. But let’s call their success what it is: Proof by exception. These are small communities of thousands, or tens of thousands of readers, all willing to pay in the tens or hundreds of dollars for inside access to a valuable industry. Would each of those readers pay similarly for a dozen or two dozen other services, so as to be both well read and members of diverse communities? NO FUCKING WAY. And therein lies the problem.
It’s a big problem, folks. It’s a mighty big problem. Sure, we might see the “pay for a few important sources” model play out across all manner of “industries” — lots of small, focused publications paid for by a subscriber base that has a vested, commercial interest in the information they receive. But how is that possibly encouraging the open, democratic access to information upon which our Republic depends?
If you’ve read your Hamilton (the book, damnit), you know America is built on the back of brilliant pamphleteers, but damn it, it’s also built on capitalism. And capitalists need a place to speak to the people! Rivington’s newspaper (where Hamilton first published) was called the New York Gazetteer, sure, but it’s second name was the fucking Weekly Advertiser.
So I’m tired of all this nonsense about how the Internet’s business model is broken because advertising sucks. I call bullshit. Advertising is a greatbusiness model. But it has become completely divorced from the creators and conveners of community — authors and publishers. It’s been channeled into a few oligarchic platforms which have, through no obvious, direct, or apparently malicious intent of their own, drunk our fucking milkshakes. The rest of us (and there are MILLIONS of us, and we are MIGHTY, if we decide to be), well the rest of us are left fighting over a shrinking pie, building extraordinary technology which we have increasingly bent toward the gray.
I know, I know, it’s fashionable to blame Google, Facebook*, and their ilk for siphoning off all the advertising dollars publishers used to get, but I’m not going to. They simply did what conditions allowed them to do, which is create a welcoming place for advertisers who were feeling a bit unloved by the vast, bleached coral reef that is the open web. They identified a need, and they filled it. They built impressive, scaled, data-driven advertising machines. They won.
But what they failed to win was the Gazetteer portion of the equation. The CONTENT. Thanks in large part to Safe Harbor syndrome (I just made that up, please hashtag that shit and make it a thing), these platforms disavowed any responsibility for the content that pulsed through their systems, the very content written by us millions, the very lifeblood of our Republic. They were never publishers, after all, nor were they media companies. No no, they were platforms, neutral to the core, bloodless algorithms matching a reader’s intent to a publisher’s content, nothing to see here, move along, just providing a service and taking our small tax along the way…
And that was kind of true, in the beginning, anyway. Back when Google was young, blogging was a thing, and the web shone brightly in its Golden Age. The great Search Engine That Won ruled as a benign monarch, impassively distributing intent like oxygenated water across the kelp beds of web publishing. For a brief, wonderful moment, it all Worked.
I won’t go into why it broke down (that’s another essay), but I do want to take a look at why it worked. Because perhaps there are some lessons to be learned as we look to the future of Internet publishing. (And yes, I do think publishing has a future on the Internet — we must tell stories. We must converse, we must because that is who we are, at such a deep level I can’t even fathom an argument about it.)
So what worked? Here’s my list, add to it as you will (that’s why there are comments, after all):
Open Links. An open economy of links allows authors and publishers to create a gift economy that sends attention and influence from one place to another. Of course, the open link economy is subject to fraud, abuse, rent extraction, and corruption.
Trackbacks. Built on open links, trackbacks allow publishers to know who’s gifting who. They’re a critical social proof in an attention economy. In another essay, I called them “meaningful handshakes from one mind to another.” Knowing who was linking to your stuff was deeply important to trace-route the social fabric of your community. Of course, trackbacks failed because spam (see above).
Analytics. Early web publishers had access to meaningful signals of how readers engaged with their content. Of course, once you’re publishing on someone else’s platform, the meaningful signals are reserved for the platform, not for the content creator.
Comments. I know, I know. But before comment spam and the rise of troll culture, comments Really Fucking Mattered. Medium has brought comments back in a meaningful way through Responses. Thank you.
Advertising. I’m sorry, but advertising really does matter, in that it encourages small publications with ardent and meaningful audiences to continue doing what they were doing, which is inform, connect, and inspire communities of people. What broke with advertising was its disconnection from community, just as with publishers. Sure, you can buy audience all day long. But without context? C’mon.
And and and… There are more, but I want to get to my conclusion.
Here’s my point: One by one, we lost what was Good about the early web, and ceded it all to the platforms. What held promise ten years ago — that the web would spawn an ecosystem of millions of robust, connected voices — was lost to an oligarchy of Facebook, Google, and to a lessor extend LinkedIn, Twitter, and Snapchat. But I deeply believe we can bring it back. And yes, I believe advertising has a role to play. And Big Data. And subscription, but not if it’s of the micro-payment, subscribe-to-just-this-site variety.
We can get there, but not without all of us getting together and figuring out what our next steps should be.
Yes, yes, YES, I saw the fucking news from Facebook today. Great! You know the best way to change this formula? Tilt the revenue gains to the publishers, and make sure they have kickass analytics (and real data!) about their readers. You know, get them paid, for reals, and connect them to their audiences, for reals (IE stop preferencing your platform over theirs). I’ve not spoken to a single publisher who feels they are getting reliable, understandable, reasonable, or meaningful revenue or data from chasing Facebook traffic. Fix that, be a hero. I doubt it’ll be more than a rounding error in overall Facebook revenue or growth.
A couple of weeks ago my wife and I were heading across the San Rafael bridge to downtown Oakland for a show at the Fox Theatre. As all Bay area drivers know, there’s a historically awful stretch of Interstate 80 along that route – a permanent traffic sh*t show. I considered taking San Pablo road, a major thoroughfare which parallels the freeway. But my wife fired up Waze instead, and we proceeded to follow an intricate set of instructions which took us onto frontage roads, side streets, and counter-intuitive detours. Despite our shared unease (unfamiliar streets through some blighted neighborhoods), we trusted the Waze algorithms – and we weren’t alone. In fact, a continuous stream of automobiles snaked along the very same improbable route – and inside the cars ahead and behind me, I saw glowing blue screens delivering similar instructions to the drivers within.
About a year or so ago I started regularly using the Waze app – which is to say, I started using it on familiar routes: to and from work, going to the ballpark, maneuvering across San Francisco for a meeting. Prior to that I only used the navigation app as an occasional replacement for Google Maps – when I wasn’t sure how to get from point A to point B.
Of course, Waze is a revelation for the uninitiated. It essentially turns your car into an autonomous vehicle, with you as a simple robot executing the commands of an extraordinarily sophisticated and crowd-sourced AI.
But as I’m sure you’ve noticed if you’re a regular “Wazer,” the app is driving a tangible “flocking” behavior in a significant percentage of drivers on the road. In essence, Waze has built a real time layer of data and commands over our current traffic infrastructure. This new layer is owned and operated by a for-profit company (Google, which owns Waze), its algorithms necessarily protected as intellectual property. And because it’s so much better than what we had before, nearly everyone is thrilled with the deal (there are some upset homeowners tired of those new traffic flows, for instance).
Since the rise of the automobile, we’ve managed traffic flows through a public commons – a slow moving but accountable ecosystem of local and national ordinances (speed limits, stop signs, traffic lights, etc) that were more or less consistent across all publicly owned road ways.
Information-first tech platforms like Waze, Uber, and Airbnb are delivering innovative solutions to real world problems that were simply impossible for governments to address (or even imagine). At what point will Waze or something like it integrate with the traffic grid, and start to control the lights?
I’ve written before about how we’re slowly replacing our public commons with corporate, for-profit solutions – but I sense a quickening afoot. There’s an inevitable collision between the public’s right to know, and a corporation’s need for profit (predicated on establishing competitive moats and protecting core intellectual property). How exactly do these algorithms choose how best to guide us around? Is it fair to route traffic past people’s homes and/or away from roadside businesses? Should we just throw up our hands and “trust the tech?”
We’ve already been practicing solutions to these questions, first with the Web, then with Google search and the Facebook Newsfeed, and now with Waze. But absent a more robust dialog addressing these issues, we run a real risk of creating a new kind of regulatory capture – not in the classic sense, where corrupt public officials preference one company over another, but rather a more private kind, where a for-profit corporation literally becomes the regulatory framework itself – not through malicious intent or greed, but simply by offering a better way.
This post is a book review, but it starts with a story from my past.
Way, way back, before San Francisco begat hip startups with nonsensical names, I found myself on the second floor of a near-abandoned warehouse on South Park, now one of the priciest areas of SF, but then, one of the cheapest. I surveyed the place: well lit in the front, but a shithole in the back. Detritus from years of shifting usage littered the ground – abandoned construction materials lurked in the poorly lit rear recesses, toward the front, where a wall of dusty industrial windows overlooked Second Street, a couch faced outward, and it was in this space I first met Louis Rossetto, founder of Wired and for all I could surmise, Willy Wonka’s twin brother from another mother.
The floorspace around the couch was tidy and inviting, and soon Louis and I were joined by Kevin Kelly, founding executive editor – Yoda without the articulated ears. We bonded that day, and so began an extraordinary journey for me, all of 26 years old: A chance to work, play, and most importantly, engage deeply with all manners of extraordinary characters, all of whom were drawn by Wired’s early message of digital revolution.
One of the most luminescent of these was Steven Overman, who joined Wired as Louis’ right hand. Steven brought a patina of order to our merry enterprise, but in those early days, as with so many of the band mates we called colleagues, I had no idea how fortunate we were to work with him.
Steven is now the President of the Consumer and Film Division and CMO of Kodak, responsible for guiding a brand that once enjoyed near-infinite permissions on the difficult journey back to its birthright. Prior to Kodak, Steven held senior roles at Nokia, first during its remarkable ascendance, and then through its capitulation and ultimate defeat through combination with Microsoft. But in between, Steven’s also been a company creator – in the 20 or so years since we worked together, he’s launched multiple consulting, social impact, and services businesses – all focused on the core DNA that bound us together at Wired: The transformation of our world through a potent brew of business, technology, and culture.
In 2014, Steven wrote a book that I now recommend to you all: The Conscience Economy: How a Mass Movement for Good is Great for Business. That I initially missed the book’s publication, with its clear resonance with the work we’re doing at NewCo, is both a personal misgiving and a joyful revelation. That Louis wrote the foreword, in full and impossibly messianic voice, was pitch perfect – what a joy it was to once again hear his distinct tone, and then to experience Steven’s energy in the pages that followed.
So yes, this “review” is flawed in its subjectivity, and if you’ve no patience for deep and abiding optimism, you best stop reading now. Because Steven hits the optimism pipe hard. He argues for nothing less than a global awakening to a more spiritual and conscious approach to business – a movement based on the arguably careworn idea of “doing well by doing good.”
This idea is not new – in fact, I’d argue the phrase has already run its initial course through business culture and been canonized – and therefore defanged – as “CSR” in Fortune 500 parlance. But Steven readily skewers mainstream approaches to “corporate social responsibility” as toothless bolt-ons to a dying business culture. CSR isn’t a sideshow, he argues, it’s the whole show. And I believe sweeping trends in society – many of which Steven details in his book – will prove him right.
First and foremost is technology. Yes, cue the eye roll, but stay with me: As I’ve said for 15 years, technology is no longer a vertical industry, it’s a horizontal force enabling all manner of new value creation. Second is demographics: the two largest generations in our workforce are in legacy assessment phase: The purpose-driven, entrepreneurial millennials now dominate our economy, and the wealthy “joiners” we call Boomers are retiring, facing mortality, and wondering if they’ve left the world a better place. Third is social geography: in three generations, two thirds of humanity has moved into cities, now the engines of our global culture and economy. And fourth – and most importantly – is the simple fact that all of humanity is now on a shot clock of our own creation: Climate change is the animating force uniting every person on this planet.
These four forces are the heart of what I call the NewCo narrative, and they inform Steven’s book from start to finish. “The global wave of young entrepreneurship is an indicator not only of an increase in personal self-belief and empowerment,” he writes. “The once quaintly idealistic motivation to make a positive impact on the world has thrown off its unbleached, woven-hemp cloak of hippie self-righteousness.”
Overman reminds us that it takes forty years for a Big Idea to move from the fringes to the mainstream, and argues that the core values of the Boomers in their youth are being embraced by their descendants, the millennials. Over those forty years, the rise of technology and the quickening of our global sustainability crisis have forged a new consciousness around how we do business. “An emergent global conscience is merely a practical prerogative for human continuity in a world facing the consequences of unchecked population growth and limited natural resources,” he writes. “We’ve reached a moment full of evidence from which we can’t turn away any longer.”
If I have any criticism of the book, it’s that a fair portion of it offers advice to corporate executives interested in applying Overman’s ideas to practical, day to day work. While I understand the intent, it takes away from the work’s mainfesto-like qualities. Then again, I’m clearly not the core audience, and if you are laboring away in the marketing department of a large corporation, you’ll most likely find his suggestions and check lists quite useful.
I’ll leave you with a few more quotes that I found particularly resonant, and encourage you all to read Steven’s book. It’s a keeper.
“Businesses that engender a deeply felt sense of shared mission will be poised to attract and keep the most talented and committed employees.”
‘“Responsible” is patronizing and out of sync with the new culture. The next generation wasn’t introduced to environmentalism as a fringe movement; they grew up with it as a given.”
“In this era, business innovation begins with a mission of social impact that’s as mission-critical to the enterprise as profit is today.”
“Adam Smith’s “invisible hand” is no longer invisible. It has revealed itself. The invisible hand is us, the connected citizens of the world, held out metaphorically and digitally—thumbs up, thumbs down. We like, or we don’t like, and we let everyone else know. We vote for the outcomes in which we most believe, not only with our voices but with our wallets.”
Robert Reich’s Saving Capitalism: For the Many, Not the Few is a readable rant that – should you disagree with Reich’s central premise – will elicit eye-rolls and summary dismissal. But while his well-known political ideology (he served as Secretary of Labor under Clinton) is on constant display, I found Reich’s book both timely and important.
I am drawn to any work that posits a better way forward, and as you might expect, I agree with Reich far more often than not. You have to be willfully ignorant to pretend our current economic system is equitable (Reich argues we’re in the “second Gilded Age“) or capable of creating long-term increasing returns. And while many in our industry cling to libertarian fantasies in which technologic silver bullets solve our every social need, back here on earth we need to do better than pine for the singularity. Fixing income inequality and the loss of the middle class requires hard policy choices and a re-framing of the problems at hand.
Reich’s compact book lays out a strong prescription for what he feels is ailing our capitalist system. Anyone in tech should pay attention: Reich lumps the tech elite right alongside bankers, big pharma, and agribusiness as the new monopolists, and argues that if our capitalist society is to truly prosper, some pretty fundamental changes have to occur in both our economic policy as well as the structure, practices, and purpose of the companies we build.
Most of Reich’s argument turns on this simple premise: The debate between “free markets” and “government intrusion” is a false choice. “The central choice is not between the “free market” and government;” Reich argues, “it is between a market organized for broadly based prosperity and one designed to deliver almost all the gains to a few at the top.”
Reich goes on to deliver example after example of how the rules governing our current capitalist system are rigged to deliver “pre-distributions” of wealth to those in power. From banking to broadband, pharma to agriculture, Reich details subtle market mechanisms that concentrate power and capital into the hands of the “new oligarchs.” Government doesn’t intrude on markets,Reich argues, in fact government creates markets. Citing regulatory and enforcement frameworks for property, monopoly, contract, and bankruptcy law, Reich argues that opposition to government regulation “hides a larger reality: the necessary role of government in designing, organizing, and enforcing the market to begin with.”
The proper role of government, Reich argues, is to insure fairness to all – and today’s capitalist system is anything but fair. Reich traces the role of money in politics, for example, and the disastrous roll back of regulations limiting corporate giving to political campaigns. He shows how corporate lobbying has effectively hamstrung food safety legislation and stifled innovation in our nation’s infrastructure. He details how corporations have successfully lobbied for tax loopholes that allow for massive increases in executive pay.
Reich takes on several sacred American myths along the way. One is the idea that corporations must be run to maximize profit – the almighty “shareholder return.” “The idea that shareholders are a corporation’s only owners, and therefore that the sole purpose of the corporation is to maximize the value of their investments, appears nowhere in the law,” Reich writes. Instead, Reich argues, corporations should balance many constituents – employees, customers, communities impacted by their operations and their products. And in fact, this idea was once quite commonplace in American capitalism, Reich reminds us. Back in the 1950s, Fortune magazine exhorted its readers to act like “industrials statesman” who “regard business management as a stewardship, and … operate the economy as a public trust for the benefit of all the people.”
Reich also skewers the American myth of meritocracy – that we are paid what we are worth. “The notion that you’re paid what you’re “worth” is by now so deeply ingrained in the public consciousness that many who earn very little assume it’s their own fault,” Reich writes. “They feel ashamed of what they see as a personal failure—a lack of brains or a deficiency of character. [But] those who are rich and becoming ever more so are neither smarter nor morally superior to anyone else.”
I have a feeling there are more than a few folks in the Valley who’d disagree with that last statement.
Here are a few more of Reich’s tidbits:
– The $26.7 billion distributed to (recently bailed out) Wall Street bankers in 2013 bonuses would have been enough to more than double the pay of every one of America’s 1,007,000 full-time minimum-wage workers.
– In 2001, the top ten websites accounted for 31 percent of all page views in America, by 2010 the top ten accounted for 75 percent.
– Google and Apple have been spending more money acquiring and litigating over patents than on doing research and development.
– The richest four hundred Americans have more wealth than the bottom 50 percent of Americans put together.
– Fast food and low-wage service jobs are subsidized by public benefits, driving significant profits for large corporations.
Capitalism must be “saved from its own excess,” Reich concludes. “There is simply no way the American economy can be sustained if the richest 10 percent continue to reap all the economic gains while the poorest 90 percent grow poorer; there is no way American democracy can be maintained if the voices of the vast majority continue to be ignored.”
Reich’s prescription includes overturning Citizens United, considering a basic universal income, rethinking our intellectual property, patent, and copyright laws to insure wealth created by innovation ultimately returns to the public domain, and nothing less than the “reinvention of the corporation.”
It’s that last thought that was the true “aha!” for me – it echoed my own thinking about what I’ve come to call the “NewCo narrative” – the story of a new kind of corporation, one driven as much by purpose as profit. I didn’t read “Saving Capitalism” expecting to find affirmation for our nascent movement, but I’ll admit it was satisfying to hear Reich calling for a new approach to corporate philosophy. “We’re likely to see a reversion to a time when many jobs were considered “callings,” expressing a deeply personal commitment rather than simply a means of acquiring money,” Reich writes, arguing that in the end, workers and consumers will be the most effective agents of change in our economy, be it through the ballot box (Reich does raise the specter of a populist third party separate from either Democrats or Republicans), or, more likely, through the formation of new kinds of companies which see themselves as responsible citizens of the world. Hear Hear!
It’s been so long since I’ve written here, and I’ve missed it terribly. As startups tend to do, NewCo has taken over most of my waking hours. So I thought I’d just sit and write for a spell, even if what comes out isn’t fully baked. I’m on vacation in Bolinas, an intentionally scruffy sidebar of a town 25 miles north of San Francisco. Legend has it the locals regularly take down signs pointing the way to this place, hoping to keep folks like me away.
Truth is, I came here hoping for a bit of down time so I could write again. I can’t decide if my lapse in writing is due entirely to my focus on NewCo, or perhaps because the medium of blogging just doesn’t call to me the way it once did. So I wanted to get up early each morning this week and get at least one thing down – like Fred does so regularly. However, I’ve clearly built up quite a sleep debt over the past six months, and this week my body won’t let me get up before 9. But I’ve been at it now for two days, and the result is below.
This particular post – on information transparency and the true cost of things – has been rolling around in my head since February, when I attended Walmart’s annual sustainability meeting. Walmart has made some very deep commitments to changing its impact on both the environment and society – its three stated, measured, and Wall Street-reported goals are to be 100% driven by renewable energy, to create zero waste, and to “sell products that sustain people and the environment.” These are not small goals, and when a company as large as Walmart leans into achieving them (and reporting its progress to Wall St. each year), it’s worth finding out more. Turns out, there’s a lot going on, and potential for a lot more.
During my trip to Walmart’s Silicon Valley outpost this past February, I met Doug McMillon, Walmart’s CEO. I also learned about the “long term capitalism” movement, a nascent but important idea championed by McMillon, among others. At its core, long term capitalism is attempting to center the value creation role of business from “shareholder profit” to “societal benefit.” As with anything worthy, it’s complex, fraught, and difficult to unpack.
Just what is “societal benefit”? How do we measure it? Who decides? These questions are mostly open at this point. However, one thing is clear: Business as usual has created a mess of things. Most scientists believe our economic activity has produced an unsustainable tax on our global climate. We have to tune our economic engines toward sustainability. But how? I believe our industry – steeped in collecting, creating, and understanding data, can help. But more on that later.
First, it turns out that Walmart – and many other large companies – are already working to find answers. Walmart is a massive platform, and when it tells its vast network of suppliers that it wants renewable energy, sustainable products, and zero waste in its supply chain, entire economic sectors are effected. I had no idea this was happening, and found it both laudable and worth celebrating – we all need to encourage more of this kind of behavior.
In his letter opening Walmart’s 2015 Sustainability Report, McMillion introduces the idea of “True Cost,” and states:
Traditional costs include expenses like supplies, energy and packaging. But the net true cost considers issues such as waste-to-landfill, greenhouse gas emissions, economic mobility, worker safety and food safety. These are all examples of the effects production may have on the environment, in local communities, or on the people who grow and make what we sell. We believe a business should strive for not just the lowest prices, but the lowest true cost for all. Low prices benefit customers, but low true costs benefit everyone. To do this, we can’t sit on the sidelines until after a product is made. Walmart’s role is unique. We have a large presence in the world, and with that presence comes great opportunity to change how business is done. In addition to tackling social and environmental issues in our own operations, we need to actively engage in and reshape the systems in which we work.
By doing the right thing, a business is setting itself up for a solid and successful future. And by focusing not just on price – but on “cost” as well – a business is tackling social and environmental sustainability at the root. That’s what you’ll see us lean into further this year and in the years ahead.
At the February meeting, Brian Monahan, a friend, co-founder of NewCo, and leader in Walmart’s e-commerce division announced a new Walmart initiative. Called the Sustainability Leaders Shop, it’s a special area of the Walmart.com site featuring suppliers who had earned a badge which helps shoppers identify the vendor as a leader in sustainable practices in their given industry. The idea is simple but powerful: Walmart is helping shoppers identify and reward vendors with industry leading sustainability practices.
Of course, this made me wonder if such a badge is truly valuable for anything more than bragging rights. I mean, won’t shoppers – especially Walmart shoppers, who come there to save money – simply purchase the cheapest brand, regardless of sustainability badges? That certainly seems likely. Until a market truly values sustainability over price, the lowest price will win.
Walmart’s mission of “saving money, living better” has been a driver of the company’s culture for more than sixty years. Its DNA is all about price: The lowest price anywhere, all the time. Over the decades Walmart has earned a reputation as a cost extraction machine – and that reputation is in full conflict with the sustainability goals the company now espouses.
But what would we have Walmart do? Nothing? It strikes me that Walmart has put a very large stake in the ground, and it’s up to the market to both celebrate that stake, and push to make it even more impactful. That’s at the heart of what NewCo is about – in particular our media arm, which will be launching over the next six months. The story of a giant company trying to change for the better is not only fascinating, it’s also urgent. As goes Walmart, it turns out, so goes most of the world’s grocery and retail businesses. And those businesses in turn drive a significant amount of our world’s economic practices.
You’re used to reading about Google, Amazon, and Facebook on this site, and those of you who’ve made it this far must be wondering how on earth Walmart’s challenges relate to the things I usually cover. Well, it strikes me we’ve got a massive, and massively interesting, information problem on our hands.
In short: What if we could engineer a platform that reported True Cost for everything Walmart sells? Put another way, what if every single product had not just a monetary price and possibly a Sustainability Leader badge, but also an inherent score based on “net true cost”? Wouldn’t that be cool?
Creating such a platform would have been impossible ten years ago, which is when I first started thinking about this idea (The Search, p. 178). But with smartphones, computer vision, and ubiquitous connectivity, it’s not hard to imagine an information service that becomes a nexus for understanding a given product beyond its price tag. It could work a lot like Delectable does for wine – take a picture of the product, and up comes a profile of the product’s impact across the environment, society, and so on. From The Search:
What might be the effects of such a system coming to fruition? For one, markets would have to compete far more on…factors unrelated to price. And vendors of products that have been made in third-world sweatshops, or in factories that over pollute, or vendors that support causes some consumers do not wish to support, would be called out in a far more transparent fashion. Refusal to participate in such a system would mean that vendors or merchants had something to hide, and so the system could be a major force for good in the global economy, forcing transparency and accountability into a system that has habitually hidden the process of how products are made, transported, marketed, and sold from the consumer.
The world needs information transparency in consumer goods. There are many startups doing what might be considered point solutions in the space – The Honest Company in baby goods, Bos Creek for meats, Zero Footprint in HR, Conscious Box in subscription commerce. But there’s not liquidity of good information in the marketplace – and liquidity drives innovation and value creation (Google was built on the liquidity of link information around the web). If it was as easy to understand a product’s overall impact on the world as it is to understand its price in dollars, consumers would be moved to consider more than price when they made a purchase. Millennials, in particular, have shown a deep desire to support brands that have a net positive impact on the world.
I often write speculatively here – and I suppose that’s what I’m doing right now. I don’t know how such a system might tip into existence, but I sense when large companies like Walmart start to talk about “net true cost” and set ambitious goals that can move markets, we’re close to such a tip. I’d love to hear from you about how we might get such a system implemented. I’m guessing any number of startups, academics, and BigCos are already working on the problem. The world needs a True Cost calculator – and gathering, cleansing, and delivering the data to power such a calculator is the kind of massive problem/opportunity that creates companies like Google and Facebook. It’s time to get this done.