This is the weekly free edition of Marketing BS / Start-up curated. Yesterday subscribers received my essay on Jeff Bezos and the power of Friction. This week’s interview is with Sunil Bhatt, CEO of Genuine Hospitality Group. Subscribers will receive both parts of the interview.
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- Uber/Drizly: Uber is acquiring Drizly - the alcohol delivery company. It is becoming more and more obvious that consumer-delivery is a single business model that companies can scale into in different ways. Eventually there will be a handful companies that own all the consumer-delivery space. The obvious leaders now are Uber (ride sharing and UberEats restaurants). DoorDash (restaurants - particularly in the suburbs) and Instacart (grocery).
- Apple VR: The Information has details on Apple’s new VR-device. It will have swappable lens and eye tracking. But it will NOT be an AR device. At least not yet. VR is a niche business, but AR, while not proven, has the potential to be as ubiquitous as the smart phone. But it seems like good AR is a really hard problem and companies are building into it very slowly.
- Parler: The CEO was apparently fired for not being conservative enough.
- Hubspot: Hubspot has acquired The Hustle (a newsletter). Yet another example of a product company merging with a content company. Content is really valuable to companies with something to sell, but not so valuable on its own. Related: In December (~1 month ago) Sam Parr, the founder of The Hustle, asked his Twitter followers to share their compensation because he “loves transpaency around money which is very hard to come by”. Then last week after the Hubspot acquisition he changed his tune, “Early in my career I was transparent about money. But I didn’t like the result of sharing that stuff. So we’re not disclosing the price and Hubspot has agreed. I am taking it to the grave!”. I guess “earlier in his career” meant December 2020?
Marketing to Employees
- McKinsey: The consulting firm settled with the attorneys general of 47 states over their role in the opioid crisis. McKinsey agreed to pay $573 million as a settlement. Since McKinsey is a partnership that shares out revenue every year based on how well the firm does this will mean each of the ~3000 partners will see their 2021 pay cut by roughly $200K. That is significant for "McKinsey principals” (junior partners) and “Associate Principles” (pre-partners who get a half share of the earnings), but not so for Directors (senior partners) who make ~$4MM or more. I don’t expect it will hurt McKinsey’s brand with future customers. The bigger issue is how it will affect the brand with current and future employees. To that end the managing director put out a letter to the employee base (that was also shared with alumni). McKinsey is being forced to “discover its purpose”.
- Pillows: The CEO of MyPillow has been a leading Trump supporter. What is a liberal to do if they want a pillow (other than buy one of the millions of other pillows on the market?). Enter David Hogg who is launching a “progressive” pillow brand. I expect he will at least be able to get employees at below market rates.
- Tickets: Superbowl ticket prices were high this year, but they did not sell out and tickets were available at the last minute for significant discounts
- Industry Advertisers: The Economist looks at which industries have been the big advertisers in the Super Bowl and how that changed this year. Up: Computers and streaming services. Down: Telecom and Beer.
- Stock tickers: It is not uncommon for smaller companies sharing similar names or stock tickers of big retail stocks to get a boost when their similarly named twin does well (see Zoom Communications - stock ticker “ZOOM” - the manufacturer of mobile phone components, not to be confused with Zoom Video Communications, “ZM”, the video conferencing company we have all learned to love). Last week Clubhouse (the live audio social media app) raised $100MM on a rumored $1B valuation. This caused stock in the publicly traded “Clubhouse Media Group” (CMGR) to spike from ~$5 to ~$13. What is most ironic about this is that Clubhouse Media Group is a holding company for TikTok influencers. TikTok is the OTHER social media audio (and video) app - which presumably is in a slightly WORSE position now that Clubhouse has $100MM in its war chest. An example of why one needs to be careful having a similar name to a competitor…
- Airline Loyalty Programs: Skift has a good piece on how airlines are handing loyalty customers when they stop serving a market. In some ways this is a pure profit opportunity for the airline (banked points are more likely to expire or go unused), but there is real value in a base of customers who care about a loyalty point currency. There is value in finding a way to keep their future lifetime value in the currency.
- Walmart Ad Tech: Walmart has acquired an ad tech company to improve its ability to offer self-service ad buying on their new network. Building a good ad network requires good targeting (using purchase data), good ad units, and the ability to buy ads in a low friction way. Walmart is slowly putting together all the pieces.
- College Professors: The latest debate is “who owns the recording of a lecture?” Many professors refused to have themselves recorded for fear that the school would just re-play those lectures without needing the professor anymore. The fact that this is a concern tells you where the future lies. Now that most classes have moved to Zoom, the recordings have happened. So the question has moved on to who owns the recordings and what comes next? (For many lectures there is very little student interaction. What interaction there is could likely be handled by inexpensive teaching assistants. So why pay to have the professor say the same words over and over every year?)
- Facebook Groups: Facebook had a focus on Groups largely as a way to counter the extremism that they saw in their newsfeeds. But the solution was worse than the disease and groups became the focus of extremism on Facebook. Oops.
- Australia Search: Australia demanded Google pay the large local news organizations (i.e, Rupert Murdoch) for the privilege of linking to them and also provide those same news organizations access Google’s search algorithm changes 30-days in advance of any changes. Google said that was untenable and has threatened to leave the Australia market. Now Microsoft has taken the opportunity to take share and has told the country that they are willing to abide by the law. Since Bing’s algorithm is generally NOT gamed by most websites they have less fear in sharing it widely. I guess one can call this “opportunistic”.
- Student Debt: Often the people who argue that we should ban gig work (or make it more like traditional employment) are the same people who are concerned about student debt. This study looks at what happens to student debt holders when ride sharing gig work becomes available in their market - student debt levels are dramatically reduced. Narrative violation…
- Amazon Cameras: Amazon is adding more cameras to their delivery vehicles. This should help in both improving efficiency and in improving safety. But it is one more place where privacy will be invaded (Amazon has a LOT of vehicles on the road). Consumers will not care, but the drivers might. A bigger issue is the media attacking the company for the potential concern. The issue is that it is difficult to fight back. No one cares about privacy, but no one really cares about efficiency or safety either.
- Storming the Capitol: The NYTs has an incredible animation showing smartphone users moving as a group from Trump’s rally to the Capitol Hill invasion. The fact smartphones - including Apple smartphones - can be tracked this way, and no one is complaining about it, shows how little we really care about privacy. Related: The NYTs tells customer that they will not fulfill a his request to have an account removed because “the laws of his country [America] do not afford [him] data subject rights”
- Snitching: Senators have introduced a new bill, “See something, say something” which would require tech companies to report any user activity deemed “suspicious” or lose Section 230 protections. From the article: “"Suspicious" content is defined as _any_post, private message, comment, tag, transaction, or "any other user-generated content or transmission" that government officials later determine "commits, facilitates, incites, promotes, or otherwise assists the commission of a major crime."”. There are trade offs people…
COVID and the new world order
The Future of Live Events: As digital enters an industry the result is usually NOT a total flip to 100% automation. Usually it becomes a hybrid of humans and computers producing something better than either could produce on their own. The Gazette explores those ramifications for live events. Is the future of events a hybrid of live and online? (likely “yes”). Related: Will there be “virtual exhibit halls”. Almost certainly no. Creating an online exhibit hall is like the idea from two decades ago to create “online malls” for ecommerce. The future is not a duplication of the past. Early movies were filmed versions of stage plays, but that model did not last long.
Ratings: Prior to COVID-19, Johns Hopkins University, the Nuclear Threat Initiative, and the Economist Intelligence Unit created a ranking of how well prepared countries were for a future pandemic. The US was ranked first and the UK second (9th and 8th worst death rates in actual COVID). Thailand (1 COVID death/million) and Sweden (1,078 COVID deaths/million) were tied in preparedness. Be very careful trusting third party ratings
- Vaccine Side Effects: The way drugs list side effects is by including anything experienced by people who got the vaccine during trials. Well one recipient of the Moderna vaccine was hit by lightning… I am PRETTY sure was not caused by the vaccine, but note that no one in the control group was electrocuted…
- Masks: Before and after analysis shows that a mask mandate significantly reduces hospitalizations. The obvious caveat here is that it is entirely possible that the mask mandates get implemented during peak infection points and the hospitalizations would be on their way down anyway.
- Double the doses: Alex Taborrok at Marginal Revolution has a great piece on how we could double the doses available. Apparently clinical data suggest that even a 1/4 does of the vaccine is as effective as the full dose. Taborrok suggests that we at least run a trial where we test full dose vs 1/4 dose (or even 1/2 dose). Everyone in the trial would at LEAST get a 1/4 dose (which we THINK is good enough - and better than the “no dose” most people are getting right now). This is how smart companies run A/B tests on their websites. You don’t test a new landing page vs nothing at all - you test it vs the best page you have right now.
- Chicken wings: Prices are up 60% since pre-COVID. The article suggests this is due to increased demand. This surprises me. I would have though most chicken wings would be eaten on-premises at restaurants. What am I missing?
GPT-3, Machine Learning and AI
- SQL Queries: When I was an associate at McKinsey I spent one two-month study creating database queries and summarizing the results in Excel. The partner would ask a question, “When happens if someone’s phone breaks and they call in for a new one? What happens to their ARPU based on what it was before the call, and can you cut it by the value of the phone and their prior tenure with the company?”. Brian Kane has automated the ability to create these queries with GPT-3. Now rather than asking the associate, the partner could just type the question and the query would be built by the AI. At least my role creating powerpoint slides of the query answers has not been automated (yet).
- Early Executives: Fast growing companies often do not hire executives who can scale businesses early enough. They also tend to hire people too junior in order to save dollars. Good piece. Recommended.
- Prove yourself: During WWII many Asian Americans were forced into internment camps. But the military also set out a call for Japanese Americans who wanted to fight in the war?wprov=sfti1). More than 12,000 second-generation Japanese Americans answered the call and joined a Japanese-only regiment. Many of the soldiers had family members in the interment camps while they were fighting. That regiment was the most decorated unit per capita in all of US military history.
- Chief Diversity Officers: A university hiring a CDO has no impact on future actual diversity at the university. Always worth thinking about WHY these hires are happening - and it is rarely the stated reason.
- Protecting your assets during war: A look at what asset classes survived in different countries during large scale conflict. Hopefully this is not needed any time soon? But we know from 2020 that long tail events CAN happen…
- Roam and D&D: Roam is my absolute favorite piece of software I use. I get tremendous value out of it, but I know I am a total rookie in how to use it effectively. This is an interesting piece on how the author uses it as part of playing Dungeons and Dragons…
- Aliens: There are trillions of planets in the universe that likely support life. And once a civilization breaks out of its home solar system, it is likely to expand outward at something approaching the speed of light. So why have we not found aliens yet? This is a really good explanation…
Keep it simple,