Over the years I’ve found some of the best business partners by posting on this site. The overall audience for Searchblog has waxed and waned, but I’m deeply appreciative that there’s a core group of you who still watch this feed to see whatever it is I happen to be thinking about.
You may have noticed I’ve not been posting as much as I normally do, and there’s a reason for that. Back when I wrote about moving to New York, I promised to keep you updated on what I’m working on now that I’ve settled in. While I continue my work at Columbia and my engagement with NewCo (more on that soon), one my projects has become central, a new company I’m working on with several New York-based journalists and entrepreneurs. We’re keeping the focus of the company under wraps for now, but we’ve started hiring, and I’m looking for a business side partner who can handle any number of key functions as we build the company. I’m posting the role below. As the weeks progress, there’ll be any number of other roles we’ll be looking for, across technology, partnership/sales, and more. So stay tuned for that. But for now, I’m looking for what I’m calling Lead, Business Affairs. If you or someone you know is interested, please reach out. I’m jbat at battellemedia dot com. I look forward to hearing from you.
Every year I write predictions for the year ahead. And at the end of that year, I grade myself on how I did. I love writing this post, and thankfully you all love reading it as well. These “How I Did” posts are usually the most popular of the year, beating even the original predictions in readership and engagement.
What’s that about, anyway? Is it the spectacle of watching a guy admit he got things wrong? Cheering when I get it right? Perhaps it’s just a chance to pull back and review the year that was, all the while marveling at how much happened in twelve short months. And 2018 does not disappoint.
Here we go:
Prediction #1: Crypto/blockchain dies as a major story. Cast yourself back to late 2017 when Bitcoin was pushing $20,000 and the entire tech sector was obsessed with blockchain everything. ICOs were raising hundreds of millions of dollars, the press was hyping (or denigrating) it all, and the fools were truly rushing in. In my prediction post, I struck a more measured tone: “…there’s simply too much real-but-boring work to be done right now in the space. Does anyone remember 1994? Sure, it’s the year the Mozilla team decamped from Illinois to the Valley, but it’s not the year the Web broke out as a mainstream story. That came a few years later. 2018 is a year of hard work on the problems that have kept blockchain from becoming what most of us believe it can truly become. And that kind of work doesn’t keep the public engaged all year long.” I think I got that right. Bitcoin has crashed to earth, and those who remain in the space are deep in the real work – which I still believe to be fundamentally important to the future of not only tech, but society as well. Score: 10/10
Prediction #2: Donald Trump blows up. I don’t usually make political predictions, but by 2017, Trump was the story, bigger than politics, and bigger than tech. I wrote: “2018 is the year [Trump] goes down, and when [he] does, it will happen quickly (in terms of its inevitability) and painfully slowly (in terms of it actually resolving). This of course is a terrible thing to predict for our country, but we got ourselves into this mess, and we’ll have to get ourselves out of it. It will be the defining story of the year.” I think I also got this one right. Trump is done – nearly everyone I trust in politics agrees with that statement. I won’t recount all the reasons, but here are a few: No fewer than 17 ongoing investigations of the President and/or his organizations. A tanking stock market that has lost all faith in the President’s leadership. Nearly 40 actual indictments and several high profile guilty verdicts. A Democratic majority in the House preparing an endless barrage of subpoenas and investigations. And a Republican party finally ready to abandon its leader. Net net: Trump is toast. It’s just going to take a while for that final pat of butter. Score: 10/10
Prediction #3: Facts make a comeback. Here’s what I wrote in support of this assertion: “2018 is the year the Enlightenment makes a robust return to the national conversation. Liberals will finally figure out that it’s utterly stupid to blame the “other side” for our nation’s troubles. Several viral memes will break out throughout the year focused on a core narrative of truth and fact. The 2018 elections will prove that our public is not rotten or corrupt, but merely susceptible to the same fever dreams we’ve always been susceptible to, and the fever always breaks. A rising tide of technology-driven engagement will help drive all of this.” I’d like to claim I nailed this one, but I think the trend lines are supportive. Real journalism had a banner year, with subscriptions to high-integrity publications breaking records year on year. Most smart liberals have realized that the politics of blame is a losing game. And I was happily right about the 2018 elections, which was one of the most definitive rebukes of a sitting President in the history of our nation. As for those “viral memes” I predicted, I’m not sure how I might prove or disprove that assertion – none come to mind, but I may have missed something, given what a blur 2018 turned out to be. Alas, that “rising tide of technology-driven engagement” was a pretty useless statement. Everything these days is tech-driven…so I deserve to be dinged for that pablum. But overall? Not bad at all. Score: 7/10
Prediction #4: Tech stocks overall have a sideways year. It might be hard to give me credit for this one, given how the FANG names have tanked over the past few months, but cast your mind back to when I wrote this prediction, in late December: Tech stocks were doing nothing but going up. And where are they now? After continuing to climb for months, they’re….mostly where they started the year. Sideways. Apple started at around 170, and today is at … 156. Google started at 1048, and is now at…1037. Amazon and Netflix did better, rising double digit percentages, but plenty of other tech stocks are down significantly year on year. The tech-driven Nasdaq index started the year at around 7000, as of today, it’s down to 6600. So, some up, some down, and a whole lot of … sideways. As I wrote: “All the year-in-review stock pieces will note that tech didn’t drive the markets in the way they have over the past few years. This is because the Big Four have some troubles this coming year.” Ummm….yep, and see the next two predictions… Score: 9/10.
Prediction #6: Google/Alphabet will have a terrible first half (reputation wise), but recover after that. Well, in my original post, I predicted a #MeToo shoe dropping around Google Chairman Eric Schmidt. That didn’t happen exactly, though the whisper-ma-phone was sure running hot for the first few months of the year, and a massive sexual misconduct scandal eventually broke out later in the year. But even if I was wrong on that one point, it’s true the company had a bad first half, and for the most part, a pretty terrible year overall. In March, it had a government AI contract blow up in its face, leading to employee protests and resignations. This trend only continued throughout the year, culminating in thousands of employees walking out in protest of the company’s payouts to alleged sexual harassers. Oh, and that empty chair at Congressional hearings sure didn’t help the company’s reputation. I also predicted more EU fines: Check! A record-breaking $5 billion fine, to be exact. Further, news the company was creating a censored version of its core search engine in China also tarnished big G. But I whiffed when I mulled how the company might get its mojo back: I predicted it would consider breaking itself up and taking the parts public. That didn’t happen (as far as we know). Instead, Google CEO Sundar Pichai finally relented, showing up to endure yet another act in DC’s endless string of political carnivals. Pichai acquitted himself well enough to support my assertion that Google began to recover by year’s end. But as recoveries go, it’s a fragile one. Score: 8/10.
Prediction #7: The Duopoly falls out of favor. This was my annual prediction around the digital advertising marketplace, focused on Facebook and (again) Google. In it, I wrote: “This doesn’t mean year-on-year declines in revenue, but it does mean a falloff in year-on-year growth, and by the end of 2018, a increasingly vocal contingent of influencers inside the advertising world will speak out against the companies (they’re already speaking to me privately about it). One or two of them will publicly cut their spending and move it to other places.” This absolutely occurred. I’ve already chronicled Google’s travails in 2018, and there’s simply not enough pixels to do the same for Facebook. This New York Times piece lays out how advertisers have responded: No Morals. In the piece, and many others like it, top advertisers, including the CEO of a major agency, went on the record decrying Facebook – giving me cause for a #humblebrag, if I do say so myself. Oh, and yes, both Facebook and Google posted lower revenue growth rates year on year. Score: 10/10.
Prediction #8: Pinterest breaks out. As I wrote in my original post: “This one might prove my biggest whiff, or my biggest “nailed it.” Well, near the end of 2018, a slew of reports predicted that Pinterest is about to file for a massive IPO. As if by magic, the world woke up to Pinterest. It seems I was right – but as of yet, the IPO has not been confirmed. So…I’ll not score myself a 10 on this one, but if Pinterest does have a successful IPO early next year, I reserve the right to go back and add a couple of points. Score: 8/10.
Prediction #9: Autonomous vehicles do not become mainstream. Driverless cars have been “just around the corner” for what feels like forever. By late 2017, everyone in the business was claiming they’d breakout within a year. But that didn’t happen, regardless of the hype around the first “commercial launch” by Waymo in Phoenix a few weeks ago. I’m sorry, but a “launch” limited to 400 pre-selected and highly vetted beta ain’t mainstream – it’s not even a service in any defensible way. We’re still a long, long way off from this utopian vision. Our cities can’t even figure out what to do with electric scooters, for goodness sake. It’ll be a coon’s age before they figure out driverless cars. Score: 9/10.
Prediction #10: Business leads. I think I need to avoid these spongy predictions, because it’s super hard to prove whether or not they came true. 2018 showed us plenty of examples of business leadership along the lines of what I predicted. Here’s what I wrote: “A crucial new norm in business poised to have a breakout year is the expectation that companies take their responsibilities to all stakeholders as seriously as they take their duty to shareholders. “All stakeholders” means more than customers and employees, it means actually adding value to society beyond just their product or service. 2018 will be the year of “positive externalities” in business.” Well, I could list all the companies that pushed this movement forward. Lots of great companies did great things – Salesforce, a leader in corporate responsibility, even hired a friend of mine to be Chief Ethics Officer. Imagine if every major company empowered such a position? And a powerful Senator – Elizabeth Warren, who likely will run for the presidency in 2019 – laid out her vision for a new approach to corporate responsibility in draft legislation called the Accountable Capitalism Act. But at the end of the day, I’ve got no way to prove that 2018 was “a break out year” for “a crucial new norm in business.” I wish I did, but…I don’t. Score: 5/10.
Overall, I have to say, this was one of the most successful reviews of my predictions ever – and that’s saying something, given I’ve been doing this for more than 15 years. Nine of ten were pretty much correct, with just one being a push. That sets a high bar for my predictions for 2019…coming, I hope, in the next week or so. Until then, thanks as always for being a fellow traveler. And happy new year – may 2019 bring you and yours happiness, health, and gratitude.
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.
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).
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?
“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.
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 arguedelsewhere, 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, one 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:
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).
Thanks to NewCo, I’ve gotten out of the Bay Area bubble and visited more than a dozen major cities across several continents in the past year. I’ve met with founders inside hundreds of mission-driven companies, in cities as diverse as Istanbul, Boulder, Cincinnati, and Mexico City. I’ve learned about the change these companies are making in the world, and I’ve compared notes with the leaders of large, established companies, many of which are the targets of that change.
As I reflect on my travels, a few consistent themes emerge: