...and we are back!
Thank you for your patience as I took some time off for the holidays. A couple of other housekeeping notes:
1- I am going to shift the date Startup Curated is sent. I send these briefings out to my Marketing BS list on Tuesday, which means you have been getting them 4 days later. For most of the briefing that does not matter, but being four days behind on the news is not ideal. You will receive these briefings on Tuesday going forward. I will monitor open rates to ensure that was not a terrible idea.
2- The next briefing comes on Tuesday (in three days). The following week I will be taking off again for Christmas (it's that time of year...). We will be back on January 5th.
Keep it simple,
- FTC and Facebook: Many pundits are cheering the complaint(s) filed last week which seeks to unwind Facebook’s acquisitions of Instagram (2012) and WhatsApp (2014). Generally it WAS more thoughtful than the Google complaint launched earlier this year. But in order to be successful the government will need to prove:
- Facebook is a monopoly (or almost a monopoly)
- Facebook acquired competitors in order to shut down competition
The FTC has emails Mark writing that his motivation was (partially) to shut down competition. For example:
“It’s a combination of (1) [i.e., neutralizing a potential competitor] and (3) [integrating acquired products into Facebook]. The basic plan would be to buy these companies and leave their products running while over time incorporating the social dynamics they’ve invented into our core products. One thing that may make [neutralizing a potential competitor] more reasonable here is that there are network effects around social products and a finite number of different social mechanics to invent.”
But while the emails may help on #2, they are not a slam dunk (every company talks about finding ways to beat the competition - that is what companies do) and they still need to prove #1. In order to do so the complaint defines Facebooks market extremely narrowly. Specifically they exclude “specialized social networks” and messaging apps as competitors. So things that are apparently NOT Facebook competitors are:
…And yet somehow Instagram (image-based specialty social network) and WhatsApp (messaging-only app when acquired) were/are competitors (but WhatsApp is NOT a competitor with iMessage…). So the FTC is left arguing those two apps would become competition even if there was no acquisition but the other companies - LinkedIn, Snapchat, TikTok would NOT... They have their work cut out for them.... Facebook has responded to the complaint arguing that to reverse an acquisition a decade after the fact would be to doom all future M&A from any company and threaten the rule of law. It seems that if Facebook loses it will be a political decision as much as anything else. And it’s unclear that splitting Instagram from Facebook will actual solve any of the issues people seem to be concerned with (privacy is likely to DECLINE as there becomes more competition for advertisers, but consumer lock-in remains the same). The real effect of all this may just be to distract the company from making future acquisitions for the next decade and make them take their eye off the ball (like Microsoft in the 1990s). Facebook stock dropped ~2% on the news which suggests investors may be a little worried, but not very worried.
- The Lincoln Project:The Lincoln Project is a group ex-Republicans that raised and spent a lot of money to attempt to create more ex-Republicans to vote for Joe Biden. Priorities USA is the top Democratic party Super PAC, and they recently released results that attempted to analysis on the relative impact of The Lincoln Projects ads compared to how well those same ads did on Twitter.They found a -0.3 correlation. According to their analysis the more viral the ads were, the less effective they were at sifting voters to Biden. There is something to that conclusion. Good creative is not necessarily effective creative. But in this case I think the logic is more subtle. Good advertising will raise awareness and drive consideration. It is less good at pushing consideration to purchase. But political advertising (at least at the presidential level) is all about pushing consideration to purchase. This is why study after study show advertising has limited on results (See: “Bloomberg and what advertising does”). For most of us getting your ad to go viral increases impressions, and impressions drive awareness of your brand (and to a lesser extent consideration) just by existing. There were lots of ways Biden could use help, but greater awareness of his brand name was not one of them. Now that has been quantified. Lincoln Party’s response:
“We were pretty clear from the get go about the lanes of our strategic outreach. The first one, which made the most noise, was for the audience of one. That was the stuff directed at Trump, the campaign, the White House, and the family. The stuff we knew would distract them, make them angry, make them fight internally, make him fire Brad Parscale, sue us, whatever it was so their attention was pointed elsewhere. The second one, is a lot of the stuff we did in Electoral College states, a lot of times we didn’t even release it on Twitter. But we understood, nobody better than us, that Twitter was a bullhorn that from our perspective drove what we did against Trump, sometimes into his head, and sometimes into the narrative that the press was observing and creating, and gave our 2.7 million people on Twitter the energy they craved.”
- KFC: The quick service restaurant has released a short film on Lifetime network about a young Colonel Sanders falling in love.Make no mistake, this is an advertisement in content form. It seems radical and new, but P&G was doing this 100 years ago with radio soap operas. There is a reason they were called soap operas - they were created to sell soap! Maybe someday we will call them “fried chicken comedies”.
- Apple: The app store manager has verified that emails cannot be used for targeting purposes without explicit opt-in permission. Unlike other trackers though Apple does not have control over the use of email tracking, which may make for some interesting stand-offs.
- Billboards: Some of the most creative advertising these days happens on billboards. Maybe because the cost of failure is so much lower? Whatever the reason, here is another great one. This ad for the BBC series Dracula uses three-dimensional stakes that reveal Dracula’s face as the sun goes down
- Negative prices: Ubisoft is paying users $10 to play their “free to play” games.The idea is that more players of the games increases the prestige of players who do well in the games, which increases the incentive to pay for game add-ons (performance or cosmetic). So the “right” price for a new gamer is negative, as it creates more value than it costs. Many products might have “negative” as the “right” price, but negative prices have the problem of creating adverse selection - those aren’t the users you want! And free money is obviously a magnet for fraud. In this case Ubisoft attempts to solve these issues by paying the free money in currency for their other games. The $10 is a discount on “non-free” games which is only interesting to people who like to play games, which are the type of people Ubisoft want to attract to their free-to-play platform.
- The State of Apps: AppAnnie has released their annual report.These reports are sometimes interesting in and of themselves (I wrote my take on Mary Meekers State of The Internet Reportlast year), but what is interesting from a marketing perspective is taking internal data, packaging it into an annual report and making it available for download. PayScale does this for “the state of compensation in America” which drives more than half their enterprise leads from those who download it. What is the annual report you can generate with your internal data? Related: Shopify has produced it’s annual “future of ecommerce report” which uses their proprietary data.
- DoorDash: DoorDash IPO’d last week to surprising success. Here is the video they submitted to join YCombinator. One of the co-founders left after 18-months, but last week he shared some stories from the early days about how they did “things that did not scale”: (H/T Byrne Hobart for this one)
We probably took “do things that don’t scale” too far. It was absurd. But there was a major upside to doing so many orders ourselves: we understand the details: The best alley parking spot for each restaurant, which expeditor at Orens Hummus forgets the hot sauce, how to deliver to large apartment complexes, what happens when you lose cell signal in Los Altos, how a hangry parent looks at you when her order is late … every detail. We knew the unit economics weren’t terrible because somehow as we were doing this, the bank account wasn’t going down. (It was still running out of my personal account. What an irony that while at Stanford b school we didn’t know the first thing about starting a business)
- The Value of Time: Lyft ran tests on customer price elasticity by varying prices and waiting time and measuring conversion rate. They found people, on average, put a value of $19/h on their time (+50% during peak times, when presumably they were less price sensitive due to their company paying?). These types of experiments are MUCH more valuable than asking people what their time is worth (which had been done in the past and it found people valued waiting time at ~$14). Moral: Never trust what people say, only what they do
- Younger Siblings:FiveThirtyEight details a study of elite (and non-elite) athletes in Canada and Australia. It finds that elite athletes more likely to be younger siblings. Elite athletes had 1.04 older siblings vs 0.61 for non-elite athletes. The study supports earlier findings like a 2010 study which showed younger brothers in Major League Baseball were 2.5x more likely to be better batters than their older siblings and and played 2.5 years longer. How could this be? In most things it is the oldest sibling that over-achieves. Older siblings tend to have more parental involvement at any given age, and the parents who give birth to them are by definition younger (which usually means healthier). But apparently the increase care that parents furnish on older siblings may be a negative when it comes to being an elite athlete. The study finds younger siblings are 40% more likely to be allowed to play dangerous contact sports than older siblings - which perhaps is just a signal for “being allowed to take more risks”.
- Prisoners:From Brian France on Twitter- “If you word the poll question "should prisoners be allowed to take classes" most people are against it. If you change "allowed" with "required" or "forced" most people are for it.” - never trust survey results without skin in the game…
- Click Through Rate: Netflix got in trouble earlier this year for a show called “Cuties”. The film was French-language, award winning exploration of the exploitation of young girls. But Netflix’s thumbnail advertising for the art film made it look like soft-porn. When algorithms measure the success of creative you sometimes get unintended consequences. Last week Netflix displayed an ad for “Peaky Blinders”. The thumbnail showed an image of Anya Taylor-Joy - the star of their hit show, “The Queens Gambit”. Taylor-Joy appears in just 6 of 30 episodes of Peaky Blinders, but her image on the ad drove clicks, so now she is features like she is the leading actress…
- Regulation: NYC considering a law that would create a $3 tax per delivery if the package does not contain food or pharma. Most companies will be left forcing customers to eat the cost (pun intended) which will reduce the relative value of delivery vs pick-up. But Amazon sells many food products for less than $3 and it would be relatively seamless for the eCommerce giant to include a can of beans in every order ($0.69 retail), which would eliminate the tax.
- Acquisitions:The other FTC news last week was their decision to block P&G’s acquisition of Billie Razors(a fast growing DTC razor company that competes with P&G’s Gillette brand). The idea is that while Billie is not a significant competitor NOW, it has the potential to become one (parallels to Facebook and Instagram). While this seems forward thinking, it is not forward thinking enough. The decision ignores the second order "kidnapping incentive" effect. Kidnappers want to be paid, so they will kidnap people who have the willingness and ability to pay ransoms (like employees of big companies). This is why the US bans the ability to pay ransoms. The ban hurts the CURRENT kidnap victim, but it reduces the incentive for the NEXT kidnap victim. Kidnappers won't go to the trouble of kidnapping someone when they know no ransom will be paid (they may still steal from them and murder them, but that is a different problem). The FTC is blocking P&G’s acquisition of Billie to prevent a reduction in competition in razors. But Billie’s success is far from guaranteed. If investors cannot choose to exit when they have the chance this reduces the incentive of investors in general to invest in the NEXT packaged-goods competitor. Most DTC companies won't become Casper. Most that succeed at all will prove out their product with DTC methods and then need to sell to a traditional CPG firm or retailer to drive their distribution to the next level (i.e., Bonobos). If the FTC blocks that route, the kidnappers (i.e., VCs) will move on to kidnapping different people that will pay the ransom (i.e., different types of companies)
- Hospitals: If hospitals have too many safety incidents they receive clawbacks on their medicare payments. This seems like a good idea, except that hospitals themselves are the ones that track the safety incidents. The result?"Hospitals that do the best job testing for infections and other threats to patients appear to be among the worst based on statistics, while their more lackadaisical peers look better than they might be." Now the hospitals that are best at tracking incidents are getting their funding pulled…
COVID and the New World Order
- Waitrose: The UK grocery chain has produced a report on how food shopping and easting patterns have changed in the last nine months.Some highlights: (1) “Cooking is the new commute”, (2) Online grocery shopping way up with ~70% expected to continue post-vaccine, (3) Cooking project work has held up - things like “Preserving, potting and pickling” interest is up more than 3x since February
- Domaining:A good friend of mine has build a multi-million dollar domain collection as a side hobby. Last week he explained how he did it in a detailed Medium post. The best hobbies are hobbies that make you money instead of costing you money (i.e., domaining >> sailing). Adam has also been on the Marketing BS podcast to talk about his careerand his current business, Fresh Chalk (if you missed it his stories about Steve Jobs alone are worth listening to the whole thing)
- Toyota: The car company has announced a solid state battery for their electric cars that will take a car 500km between charges, and re-charge within 10 minutes.The company expects they will be on sale in the “early 2020s”. Game changing.
Keep it simple,