zuckerberg

  • May 2, 2018
  • Adam Smith famously referred to “the invisible hand” of the free market in his landmark book “The Wealth of Nations” and with that made himself one of the very first political economists. Smith’s observation was so on point that today most of us assume markets run through the agency of individuals pursuing their enlightened self-interests. A lot of this drove the evolution of CRM as a tool for tracking customers.

    If you pay attention today you can notice a not-so-invisible hand functioning in multiple areas. For instance, if you’ve been following the aftermath of the school shooting in Florida, you know that an activated group of kids and adults nationwide has begun a movement to get something done about gun safety. The #MeToo movement in which women are banding together to change the workplace by eliminating sexual harassment is another, and so is the Black Lives Matter movement. But you can argue that all of them are free market responses in that they arose from the grass roots without much prompting from elite power centers.

    What each has in common is the initiative by engaged individuals to cause change in what are essentially marketplaces in the broadest conception of that term. Much closer to home, even in the technology world we’re seeing the stirrings of user dissatisfaction with social media and it’s not clear where this will go. Its impact on CRM could be big because social has become one of the key channels linking vendors and customers.

    A recent article in Wired, “Facebook Doesn’t Know How Many People Followed Russians on Instagram” by Issie Lapowsky, documents Facebook’s foot dragging on producing information for the various inquiries surrounding the 2016 American election. Jonathan Albright of Columbia University’s Tow Center for Digital Journalism, has been looking at the details and producing information that’s uncomfortable to Facebook. He’s been quoted in Wired, The New York Times and elsewhere.

    Albright’s work has uncovered many things concerning Facebook’s approach to the investigation which you might call passive aggressive. For instance, when asked why it had not produced information about how many people had seen Instagram information produced by Russian operated troll accounts, a spokesperson for Facebook, which owns Instagram, said, “We have not been asked to provide that information.” So little curiosity…

    It’s not necessary to repeat the article here; it’s worth reading but that’s your call. It documents how Facebook has so far assisted investigators but only if they ask the right questions. The final paragraph summarizes this point,

    Facebook has shown consistent reticence in detailing how these trolls infiltrated its platform and who that propaganda reached. They’ve repeatedly had to correct prior statements about the reach of these ads and accounts. By working with outside researchers like Albright, the company might be able to paint a more complete picture, but Facebook has been unwilling to open its data up to researchers.

    It’s not necessary to re-examine every time Facebook denied their involvement or disputed findings that upwards of 150 million people saw content from the Russians or that all the US intelligence services agree that the Russians did indeed hack the election. That’s all very interesting from another journalistic angle but not this one.

    The totality of Facebook’s unwitting involvement in the hack plus its efforts to downplay their importance brings up a bigger issue for Facebook, and by extension all social media: How useful are Facebook and social media generally considering the Russian hacks?

    A glib answer might be that it doesn’t have to be terribly useful because it’s free and users get whatever utility they can from using it. But that misses the point. If Facebook’s utility is small or especially if it’s disputable, its business model would be in serious trouble.

    Social media’s primary product has always been the user. It is valuable to each of us when we use it to gather information about our personal grafs and we knowingly pay an in-kind fee by letting social sites collect data about us, which they can then sell to advertisers. It’s a classic network effect—the greater the audience the more valuable the output of its data.

    But what happens if the veracity of information on social media is in doubt? Social media’s value is directly proportional to its veracity and if one can doubt that veracity it might be prudent to seek alternatives. People and corporations that invest heavily in using social media’s information might begin doubting if their investments deliver value.

    My thoughts

    So far Facebook’s approach to the hacking scandal has been to deny and ignore it only admitting something when there’s no other choice. This presents another problem associated with stonewalling—dissipating trust. However unpleasant the facts, the more a party tries to ignore or hide them the lower the market’s trust in that entity and the greater the opening for a disruptor.

    The truth value of what people put up on the networks and what they believe about the truthfulness of others’ posts makes social media’s world go around. That truth is what makes some people spend hours a day surfing the sites and it’s what makes advertisers purchase ads. Once that trust begins to erode, even a little, the business model can begin to unravel.

    Whoever is advising Facebook on its strategy should reconsider. It’s human nature to not enjoy dealing with criticism and serious accusations. But impinging the free flow of information won’t solve the problem. Free markets depend on transparency and Facebook is a free market of ideas. If it stops being that, or even if people stop believing it, there’s no reason for them to continue using it.

    Published: 3 months ago


    Ok, this is kind of long. Go get a cup of coffee.

    Amid the anxiety and revelations of the Russia scandal including the Cambridge Analytica story that showed how easy it was to steal 50 million Facebook user profiles, it’s easy to mix up cause and effect. Importantly, Facebook wasn’t hacked or broken into but it was used as it was designed.

    This has led some to question whether Facebook as such can exist at all in our pluralistic society while others believe the problem of surreptitious psychographic profiling will blow over once everyone plays by the same rules. After all, others have argued, other entities do the same thing. They point to Google, Amazon and even the traditional print industry as culprits for gathering personal data for analysis and, it should be said, weaponization.

    Of course, the issue is manipulating and weaponizing the data. If we can’t trust the data, then we are disassembling one of the pillars of democracy, the acceptance of scientific rationalism. Boiled down, it means facts are facts even if you don’t like them.

    If you remember a time before social media when identities were not so readily stolen and you think that reality was good, you might also recoil at the thought that those were the good old days, that things are now permanently different. There is a third option though and there are probably many that seek to balance the benefits of new technology with the protections we’ve grown accustomed to.

    This article can’t be all things to all those people but it attempts to find safe harbor in a storm and therefore makes accommodations. If we can’t live with the compromises, perhaps it can at least point out some of the major obstacles to be over come.

    Business model

    It is an article of faith that Facebook’s business model, as well as those of other social networks and search engines, is selling advertising. But it is my contention that this model has run its course. It was effective when the companies were smaller, when their consumers were more innocent to the ways technology can be used for both good and ill purposes. The advertising model was even necessary in a time when the Internet was new and finding people and things was strange.

    The advertising business model was a default that data aggregators took on the way to phenomenal profits and who could blame them. The tech sector has a habit of minting money and the founders of social media and search engines were merely the latest in a long line of prolific brainiacs who struck gold. It is hard to believe that any human in a similar situation would act much differently.

    The latest dustup that dragged social media into the political spotlight now presents two choices to these businesses. They can hobble their products, which could reduce the amount of data they collect making them less interesting to advertisers, or they can change their business models slightly to prevent unethical use of their networks.

    Disruptive innovation

    Anytime a new technology reaches market, it has the possibility that it will disrupt the existing order of things. Disruptive innovations have coexisted with Capitalism since its origins in the Industrial Revolution. Disruptive innovation means making thread and then cloth with high-speed mechanical means, making a steam engine powerful and small enough to be mobile, or making a computer that could fit on a sliver of silicon about the size of your thumbnail.

    The world changed with each of these disruptive innovations and others, because they immediately made an old order irrelevant and they organized whole economies and even civilizations around new driving forces. The Internet and its children are the latest innovations that have rocked the world. In each, humanity has had to grapple with both the benefits and the deficits of the innovations.

    So far, we’ve benefitted enormously from these innovations but recently we discovered their less sanguine side. If history is a guide then regulation in some form is a likely next step. Some leaders in congress have already broached the idea on several occasions but it’s important to get the idea right before pulling the trigger, which is why we need to discuss business models.

    Regulation?

    Regulation could happen in social media and search but there’s much that the technology companies can do to either avert it or ensure that its mandate is as light and congruent with company interests as possible starting with the prevailing business model.

    Although the advertising business model has served many companies well, they’ve morphed into data companies with big responsibilities for safeguarding the data they collect and that’s not something they’re eager for.

    The big data gathering companies like Facebook, Amazon, and Google and their competitors, have become data companies first and advertising vendors second and if this understanding had been realized sooner, many data breeches would in all likelihood have been thwarted. Rule One of business is never give away your product, it’s what you charge for because it pays the bills. Applying the rule should be as obvious as encrypting user data in this case. Additionally, no expectant user of the data should be able to access it in its unencrypted form without, of course paying, but more importantly presenting valid credentials and stating a beneficial and productive purpose of the use.

    I’ve written before about credentialing and how it’s actually harder to pull permits to remodel your kitchen than it is to advertise any message you want on social media so I won’t perseverate. So let’s turn to encryption.

    Security as a business model

    Social and search’s business model must turn from advertising to data management, curation, and selling access to it and we live at precisely the moment when these activities are possible on a very large level. This includes encryption and the same form of certification that applies to other professionals from doctors to beauticians and plumbers.

    Encryption and its reverse take time and require compute and storage resources which have often cut short discussions involving them because of cost considerations. But new, shall we say disruptive, innovations in computer hardware and software are reigniting the discussion.

    In hardware data storage was long accomplished with the hard drives of most computer systems. Data enters and leaves storage on millisecond time scales, which is very fast. However, computer CPUs and memory operate one million times faster at nanosecond speeds. CPU chips spend a lot of time waiting for data to become available even when, as most modern computer systems do, there is memory caching for frequently used data.

    Innovative hardware designs now offer solid-state memory devices that replace disks. This memory operates at nanosecond intervals and eliminates the lag time of older mechanical systems. What should we do with all of this newfound speed? One possibility might be to dedicate a small portion of it to encryption. Typical encryption modes on the market right now could be broken but that would take so many years that the resulting data, when finally available, would be useless and encryption is getting better.

    Encryption would be a good thing but it wouldn’t solve all problems and securing our information infrastructure so that it operates more at utility grade, requires other changes. Bad software, malware, viruses, Trojan Horses, and the like may still get into systems.

    Mark meet Larry

    As luck would have it free markets generate inventions faster than they can be adopted. Often a disruptive innovation exists at the nexus of several disruptions that just need one more critical piece. That’s the case with many of the system level inventions that Oracle has brought to market over the last several years. They’ve pioneered important developments in solid state storage, encryption, chip sets that weed out intrusive malware, and a self-patching autonomous database that just hit the market.

    All of these things turn out to be essential to safeguarding data which will enable the information revolution to continue burrowing its way into our lives and enriching society. They are also the underpinnings of a new business model that turns big data companies into ethical data providers. They might also continue being social media companies but the data tail would now be wagging the dog.

    My two cents

    What do I know? I just read and write a lot. But what I see is an industry about to be regulated and, in my mind, the smart play is for the social media companies to lead the charge to ensure they arrive at something they can live with instead of remaining aloof and having some regulations imposed on them.

    There’s a wild west mentality in Silicon Valley in which what isn’t proscribed is encouraged. But we should keep in mind that the west only remained wild until the pioneers arrived and established towns with roads, schools, and churches. The wild bunch might have disliked the idea of settlement, they might have opposed it, but they were quickly in the minority and civilization won. That’s what’s happening in tech today and we all need to seize the moment.

     

     

     

     

     

     

    Published: 4 months ago


    Denis-PombriantI swear I was getting through this and trying to move on. She wasn’t my favorite candidate but when you consider the alternative she looked like George Washington in a pantsuit. Like many people I had moved on from denial and anger to Elizabeth Kubler-Ross’ next stage in the grief pyramid called bargaining. He can’t be that bad…they can tame him…I’m going back to work, he can’t chase me there…I’ll be okay.

    But noooo! A brief story in the New York Times today says Donald Trump, incipient POTUS is planning to hold a technology conference next week. It’s right here under this headline, “Trump Plans Technology Conference With Silicon Valley Executives.” The article by David Streitfeld, Maggie Haberman, and Michael D. Shear covers a lot of ground what with Trump also seeming to have cancelled the next generation of Air Force One today, which is also in the piece.

    Says the article, “The list of those being invited was not immediately clear, but they could include Mark Zuckerberg of Facebook, Timothy D. Cook of Apple and Sundar Pichai of Google.” Sure, that’s right, Silicon Valley CEOs have nothing scheduled that far out so of course they’ll all trudge over to Trump Tower. Whatever it is, when a president asks for your time, he’s doing it in the name of all the American people so you more or less have to attend.

    The one saving grace in all this might be (and we really don’t know all the details yet) the fact that these are all consumer technology mavens so far. Maybe Trump has a punch list of social media enhancements to go over or maybe he intends to build a wall between our electrons and the rest of the world. Or maybe Trump just wanted to call a fly-in for rich guys to compare private aircraft. His is bigger, you know.

    Regardless, I’ll withhold judgment on Trump’s tech chops until I know if this is just show and tell for social media or if he really wants the skinny on what to expect in areas like machine learning, AI, the IoT, and a half dozen other techno-wizbangs that will rock his world soon. I’ll begin to worry when Ellison, Benioff, and Gates get summoned.

    Published: 2 years ago


    In Cambridge, Massachusetts, my home turf, there is a good-natured intramural rivalry between Harvard and MIT.  Each may be a bastion of higher learning but they are very different places with different cultures.  The rival taunts go something like this: Harvard people are good with letters but not so much with numbers.  The engineers down the road only use letters but, then, only in equations.

    I thought about this the other day when I learned that Harvard wizkid Eduardo Saverin, a Brazilian native, had cashed in his U.S. citizenship in an attempt to out wit the taxman.  You might recall that Saverin was the kid who co-founded Facebook, according to his successful lawsuit against his former friend Mark Zuckerberg.

    The wonders never cease.  Severin was naturalized when he moved to this country as a kid because his wealthy parents were afraid that he could have been kidnapped and held for ransom in his native Brazil.

    In context for this story, Severin has an estimated four percent of the company and what’s really mind numbing is that he’s moving his mailbox to Singapore just to avoid paying tax on the stock when he sells it.  One must wonder if international kidnapping has been quelled over the years making it safe for the ultra rich to consider such strategies.

    Many people have already commented on the shallowness of stiffing his adopted homeland and about the absurd luck this kid had in landing as a room mate one Mark Zuckerberg.  But no one, to my recollection, has mentioned the fact that life gets a tiny bit harder than that once you leave Cambridge.

    No one has remarked on the stupidity of this logic either.  Life is a game of base hits.  Very often you strike out, rarely you hit a home run but to win games you manufacture runs, one at a time with base hits, stealing a base and getting walked.  I feel bad for someone who thinks his life’s ambition was met in college.  There is something inversely Gatsbyesque about this story.  Severin’s move should have been to take some money off the table, pay some taxes and move on to the next big idea, assuming he had one.

    This failure to appreciate the logic of the base hit and the impetuousness of cashing in his citizenship, are what reminds me of the Harvard-MIT rivalry.  I can’t imagine an MIT person doing this.  Maybe I am naïve but my reading of the culture at MIT is that they truly like making things and finding solutions and most of the people I have met from MIT would do what they do regardless of the pay simply for the thrill of it.  Money matters but beyond a certain point, meh?

    So let’s recap the Facebook founding mythology.  Facebook was founded in a dorm room at Harvard by some of the most privileged kids on the planet.  Zuckerberg turned out to be not exactly a boy scout, then the Winklevoss twins asserted their rights to Facebook, in court, repeatedly, and now Severin can’t stick around to do the honorable thing.

    If the engineers at MIT like making things, I wonder what motivates the kids at Harvard other than whining.  Is it just the art of the deal, going in for the kill?  Is it addictive?  Does it take more and more to keep you sane?

    These are things I will likely never know.  But  in the age of the 99 percent, I have a new sense of where the .01 percent come from.

    Published: 6 years ago


    “Day-to-day adult supervision is no longer needed.” So wrote Eric Schmidt CEO of Google, one of the most successful digital economy companies ever, in a Tweet today.  When he was brought in by the founders, Larry Page and Sergey Brin to run things in 2001, Schmidt acquired that moniker in part because the founders were so young.

    As has been typical in Internet related industries youth and a new way of looking at things has often been enough to launch iconic brands and mind-boggling wealth.  Google may have been the poster child for youthful innovation but the industry is full of people from Bill Gates to Mark Zuckerberg who fit the mold.

    So now what?  Co-founder Page becomes CEO as well as president of products while co-founder Brin remains president of technology.  The company is clobbering its numbers and despite a challenge from Facebook and continues to print money for its shareholders.

    I do not understand why the shakeup occurred.  According to Google this change will make communication channels cleaner but it’s hard to see how from outside.  The trio appears to still be friends but perhaps a decade at the helm has sated Schmidt.  Or possibly the two still youthful co-founders have a second act.  But if that were the case, it is hard to believe they could not have acted from their previous positions as mere presidents.  We may just have to watch as this company continues to evolve.

     

    Published: 8 years ago