Why Elizabeth Warren Wants to Break Up Big Tech

Earlier this year, Democratic Presidential Candidate Elizabeth Warren posted an online missive in which she laid out her plans to break up big tech (notably Amazon, Google and Facebook). In it, she noted:

“Today’s big tech companies have too much power — too much power over our economy, our society, and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation.”

We, here in the west, are big believers in Adam Smith’s Invisible Hand. We inherently believe that markets will self-regulate and eventually balance themselves. We are loath to involve government in the running of a free market.

In introducing the concept of the Invisible Hand, Smith speculated that,  

“[The rich] consume little more than the poor, and in spite of their natural selfishness and rapacity…they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.”

In short, a rising tide raises all boats. But there is a dicey little dilemma buried in the midst of the Invisible Hand Premise – summed up most succinctly by the fictitious Gordon Gekko in the 1987 movie Wall Street: “Greed is Good.”

More eloquently, economist and Nobel laureate Milton Friedman explained it like this:

“The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another.” 

But here’s the thing. Up until very recently, the concept of the Invisible Hand dealt only with physical goods. It was all about maximizing tangible resources and distributing them to the greatest number of people in the most efficient way possible.

The difference now is that we’re not just talking about toasters or running shoes. Physical things are not the stock in trade of Facebook or Google. They deal in information, feelings, emotions, beliefs and desires. We are not talking about hardware any longer, we are talking about the very operating system of our society. The thing that guides the Invisible Hand is no longer consumption, it’s influence. And, in that case, we have to wonder if we’re willing to trust our future to the conscience of a corporation?

For this reason, I suspect Warren might be right. All the past arguments for keeping government out of business were all based on a physical market. When we shift that to a market that peddles influence, those arguments are flipped on their head. Milton Friedman himself said , “It (the corporation) only cares whether they can produce something you want to buy.” Let’s shift that to today’s world and apply it to a corporation like Facebook – “It only cares whether they can produce something that captures your attention.” To expect anything else from a corporation that peddles persuasion is to expect too much.

The problem with Warren’s argument is that she is still using the language of a market that dealt with consumable products. She wants to break up a monopoly that is limiting competition. And she is targeting that message to an audience that generally believes that big government and free markets don’t mix.

The much, much bigger issue here is that even if you believe in the efficacy of the Invisible Hand, as described by all believers from Smith to Friedman, you also have to believe that the single purpose of a corporation that relies on selling persuasion will be to influence even more people more effectively. None of most fervent evangelists of the Invisible Hand ever argued that corporations have a conscience. They simply stated that the interests of a profit driven company and an audience intent on consumption were typically aligned.

We’re now playing a different game with significantly different rules.

This is Why We Can’t Have Nice Things

Relevance is the new gold standard in marketing. In an  article in the Harvard Business Review written last year, John Zealley, Robert Wollan and Joshua Bellin — three senior execs at Accenture — outline five stages of marketing (paraphrased courtesy of a post from Phillip Nones):

  1. Mass marketing (up through the 1970s) – The era of mass production, scale and distribution.Marketing segmentation (1980s) – More sophisticated research enabling marketers to target customers in niche segments.
  2. Customer-level marketing (1990s and 2000s) – Advances in enterprise IT make it possible to target individuals and aim to maximize customer lifetime value.
  3. Loyalty marketing (2010s) – The era of CRM, tailored incentives and advanced customer retention.
  4. Relevance marketing (emerging) – Mass communication to the previously unattainable “Segment of One.”

This last stage – according to marketers past and present – should be the golden era of marketing:

“The perfect advertisement is one of which the reader can say, ‘This is for me, and me alone.” 

— Peter Drucker

“Audiences crave tailored messages that cater to them specifically and they are willing to offer information that enables marketers to do so.”

 Kevin Tash, CEO of Tack Media, a digital marketing agency in Los Angeles.

Umm…no! In fact, hell, no!

I agree that relevance is an important thing. And in an ethical world, the exchange Tash talks about would be a good thing, for both consumers and marketers. But we don’t live in such a world. The world we live in has companies like Facebook and Cambridge Analytica.

Stop Thinking Like a Marketer!

There is a cognitive whiplash that happens when our perspective changes from that of marketer to that of a consumer. I’ve seen it many times. I’ve even prompted it on occasion. But to watch it in 113 minutes of excruciating detail, you should catch “The Great Hack” on Netflix. 

The documentary is a journalistic peeling of the onion that is the Cambridge Analytica scandal. It was kicked off by the whistle blowing of Christopher Wylie, a contract programmer who enjoyed his 15 minutes of fame. But to me, the far more interesting story is that of Brittany Kaiser, the director of business Development of SCL Group, the parent company of Cambridge Analytica. The documentary digs into the tortured shift of perspective as she transitions from thinking like a marketer to a citizen who has just had her private data violated. It makes for compelling viewing.

Kaiser shifted her ideological compass about as far as one could possibly do, from her beginnings as an idealistic intern for Barack Obama and a lobbyist for Amnesty International to one of the chief architects of the campaigns supporting Trump’s presidential run, Brexit and other far right persuasion blitzkriegs. At one point, she justifies her shift to the right by revealing her family’s financial struggle and the fact that you don’t get paid much as an underling for Democrats or as a moral lobbyist. The big bucks are found in the ethically grey areas.  Throughout the documentary, she vacillates between the outrage of a private citizen and the rationalization of a marketer. She is a woman torn between two conflicting perspectives.

We marketers have to stop kidding ourselves and justifying misuse of personal data with statements like the one previously quoted from Kevin Tash. As people, we’re okay. I like most of the marketers I know. But as professional marketers, we have a pretty shitty track record. We trample privacy, we pry into places we shouldn’t and we gleefully high-five ourselves when we deliver the goods on a campaign — no matter who that campaign might be for and what its goals might be. We are very different people when we’re on the clock.

We are now faced with what may be the most important questions of our lives: How do we manage our personal data? Who owns it? Who stores it? Who has the right to use it? When we answer those questions, let’s do it as people, and not marketers. Because there is a lot more at stake here than the ROI rates on a marketing campaign.

Catching Travel by the Long Tail

It’s been 13 years since then-Wired Editor in Chief Chris Anderson wrote his book “The Long Tail.” His analysis of the “Amazon Economy” completely flipped our notions of supply and demand. In theory, The Long Tail should have ushered in a democratization of the marketplace, spreading the wealth among a greater number of participants. And, in a perfect implementation of the Long Tail, that would be true. But bits and pieces of Long-Tail economics have ported over to a number of markets — and sometimes, an imperfect fit creates some undesirable consequences.

Long-Tail Economics

In order to create an effective Long-Tail market, three conditions have to be met.

Unlimited inventory: Products that can be delivered digitally with no manufacturing costs free markets from the physical restraints of production and warehousing. Inventories are unlimited and fulfillment can be on demand.

Unlimited shelf space: Similarly, products in the digital domain allow for infinite shelf space — simply because no actual “space” is required. Spotify, Netflix and Amazon can make millions of digital copies available.

Perfect information: The last requirement is sometimes the most problematic. In order for the Long Tail marketplace to be the most effective, consumers need perfect information about their options. They need to know everything about anything that’s available and be able to make their choice accordingly.

This is impractical in the real world. Even the most effective search platform falls well short of providing perfect information.

Theoretically, if all three prerequisites are met, demand flows down from the head to the tail, shortening the first and extending the second. But Long-Tail economics don’t necessarily apply equally to every marketplace. Take travel, for instance.

Too Much of a Good Thing

In a recent MediaPost column looking at marketing travel, Harvey Chipkin outlined the problems being felt worldwide by “overtourism.”  Barcelona is a cautionary tale of what happens when consumers are deluded by the illusion of a Long-Tail market and suppliers are dealing with the realities of an infrastructure held back by physical constraints.

First, let’s deal with the delusion. We travel a lot differently than our parents did. Back in the ’80s, travel to Europe was the sole domain of the rich and famous. If one of us mere mortals did hit the continent, chances were we were doing the European Bus Tour Trifecta: London, Paris and Rome. For most of us, Disneyland was about as exotic and adventurous as our travel plans got.

But then we started craving authentic experiences. We wanted the thrill of unearthing the hidden gem. That was about the time we discovered Barcelona.

No one went to Barcelona in 1990. But then the city hosted the Olympics in 1992. This exposure on the world stage boosted tourism, effectively doubling it by 2000. Barcelona was cool, it was hip — and, most importantly, our next-door neighbors had never been there.

But it was the Long Tail of travel that really broke the back of Barcelona when it came to tourism. From 2000 to 2010, with the advent of the web and the explosion of available travel information, tourism to Barcelona again doubled and almost tripled.

Today, about 20 million annual visitors flock to a city with a population less than one tenth that number. The city is groaning under the weight of all those sun-burned bodies desperately searching for authenticity, to the point that Barcelona’s mayor, Ada Colau, is threatening to slam the door on those gringo turistas in order to make the city livable again.

The delusion of the Long Tail leads us to believe there’s a smorgasbord of authentic travel options just waiting for us. But the reality falls far short of that. If we look at the prerequisites of a Long-Tail market, we begin to see why.  We can argue that there is unlimited shelf space. There is no corner of the world we can’t travel to if we have the budget and inclination. Destinations we never heard of just a few decades ago are now the new hot spots.

Perfect information is a little more of a challenge. When the options are limitless, we run into the limits of our own cognition. Working memory being what it is, we can’t endlessly juggle potential destinations. We rely on a search and suggestion engine like TripAdvisor. And there we run into the realities of the Matthew Effect: The rich tend to get richer and the poor get poorer. This can be otherwise stated as the Rule of Google: “No one goes past the first page.” Shelf space may be unlimited, but screen real estate is anything but.

Finally, as Barcelona is painfully discovering, there are definite limits to the inventory of authentic, one-of-a-kind travel experiences. Once, visiting La Sagrada Familia Basilica was an awe-inspiring, soul-stirring spiritual journey. Today, it’s a highly manufactured tourism machine that usually sells out for the day by 9 a.m.

This means that rather than the trickle-down effect we would hope to see in a Long-Tail market, demand tends to bunch up due to network effects. A new “authentic” experience climbs to the top of the listing and is suddenly inundated with new demands.

As Chipkin said in his column: “After a few people get the privilege of cooking with a Contessa in her ancestral home or taking in a remote tribal village … these “authentic” locals (and their neighbors) begin to catch on and think like entrepreneurs. In come the value engineers and the souvenir shops … and out goes the authenticity.”

Seeking Sustainability

The Barcelona effect is beginning to be seen everywhere, including my own little corner of Canada. Forward-thinking tourism marketers are trying to get ahead of the deluge by finding ways to push traffic to the less-popular margins, artificially creating a Long-Tail effect. Labels like “slow tourism” and “immersive travel” are emerging to try to encourage a different mindset among visitors. But, in the end, most tourism operators are still trapped within the tyranny of TripAdvisor mindset, hoping to climb to the top of the rankings. They feel the potential trade-off is worth it.

To them, being “too popular” sounds like a tomorrow kind of problem.

Lee Iacocca and the Celebrity CEO

The recent passing of Lee Iacocca (on July 2) got me thinking about the celebrity CEO phenomenon. This is a sign of our times — our obsession with celebrity. Iacocca was not the first celebrity CEO, but he certainly ushered in a new era of personalized corporate brand building.

With Iacocca, having a bigger than life CEO went from being an oddity to a corporate expectation. In an article on Bloomberg.com, writer Joe Nocera notes, “Yes, there had been other famous corporate chieftains before Iacocca — John D. Rockefeller and Walt Disney come to mind — but they were the exceptions to the rule that CEOs should be low-key, boring even. Iacocca made it okay for a chief executive not just to gain fame, but to desire it.”

If you read any of the tributes to Iacocca, he is credited with:

  • Introducing the concept of auto loans
  • Creating the Ford Mustang
  • Introducing the Minivan
  • Saving Chrysler

But perhaps Iacocca’s biggest legacy was paving the way for celebrity CEOs who would follow in his footsteps. By stepping out from behind the mahogany desk and in front of the camera, he created the mold that would later turn out Steve Jobs, Bill Gates and Elon Musk.

My intention is not to take anything away from these leaders. It’s just to put things in perspective.

How Much Influence Does a CEO Really Have?

We love a great story, and one of the foundations of a story has always been the hero. We find the hero’s journey a compelling narrative arc, and we tend to ascribe heroic qualities without necessarily making sure our anointed heroes have the right qualifications. This is certainly true in the corporate world.

Phil Rosenzweig’s extraordinary book, “The Halo Effect,” strips the compelling narratives away from corporate success stories. He urges us to take a more scientific approach to determining what really works. And when we apply some scientific rigor to the concept of a celebrity CEO, we find (according to two studies Rosenzweig cites in his book) that the actual influence of a leader on the success of a company is between 4% and 10%.

A 10% swing is nothing to sneeze at. It’s certainly statistically significant. And this is an average over a number of companies in the study. I suspect if one was to accurately measure the influence of a Steve Jobs or Lee Iacocca on their companies, it could be much higher.

But when we consistently confuse correlation and causation and automatically give a celebrity CEO all the credit for a company’s success, we could be making an attribution error. We are giving short shrift to all the other factors that may have led to that success. We are applying a simple answer to a complex question. And we humans tend to do that — a lot.

The Cult of Personality

When we make this mistake while looking backwards, it’s one thing. But when we move forward under this mistaken assumption, it’s quite another. We fall victim to the oversimplification of the “great man theory,” where we believe history can pivot on the capabilities of one person. We also run the very real risk of creating a cult of personality.

The idea of the personality cult came from a speech by former Soviet Union Premier Nikita Khrushchev. In it, he criticized the idealization of Joseph Stalin and Mao Zedong. When a populace believes that one person has the power to right all wrongs, it confers on that person a frightening amount of authority. It also condones the mechanisms required to consolidate power in the hands of that person.

Wikipedia outlines the typical path that leads to a cult of personality:“(it) arises when a country’s regime – or, more rarely, an individual – uses the techniques of mass media, propaganda, the big lie, spectacle, the arts, patriotism, and government-organized demonstrations and rallies to create an idealized, heroic, and worshipful image of a leader, often through unquestioning flattery and praise.” 

Mistaking Charisma for Competency

Even if we do accept that the right person may make all the difference, we then come to the issue of how we’d recognize that person when we see them. Again, we run into the fallacy of the “Halo Effect.”

When we don’t have (or want) empirical evidence of a person’s competence, we look for a proxy signal for that competence. That’s why CEOs of Fortune 500 companies are generally two-and-a-half inches taller than the average American. Its why good-looking people are assumed to be kinder and more compassionate. And — if we’re looking for a leader — it’s why we believe charisma equals competency. We are often wrong about this. In fact, there’s probably a better chance that charisma goes hand in hand with sociopathy.  Oops.

I do believe that we have been blessed with some extraordinary corporate leaders. And some of these have deservedly become celebrities. Lee Iacocca was probably one of these.

But I also believe we are walking down a dangerous path when we believe this is the rule rather than the exception. To succeed in solving complex problems — which defines almost every problem we face — we need complex solutions. And those solutions almost never come in the form of one person. To believe they do is to ignore the true scope of the issue.

Is There Still Room In Today’s Marketing World For Rick Steves?

U.S. travel writer and TV personality Rick Steves is — well, there’s no really kind way to put this — a weenie.

His on-air persona (on “Rick Steves’ Europe”) is a mix of high school social studies teacher, khaki-clad accountant cracking Dad jokes — and the guy you get stuck next to at a museum lecture on 16th century Venetian architecture that your wife made you go to.

According to a recent profile in The New York Times, he’s “one of the legendary PBS superdorks — right there in the pantheon with Mr. Rogers, Bob Ross and Big Bird.”

Rick Steves is undoubtedly a nice guy — Ned Flanders (of “The Simpsons” fame) nice. He’s not the guy you’re going to invite to your stag party in Las Vegas — not unless you were planning a prank involving prostitutes, illicit drugs and an involuntary neck tattoo. But Ed Helms already had that role.

Despite all this — or perhaps because of it — Steves is one of the most trusted travel brands in the U.S. and Canada. His name appears prominently on countless guide books, podcasts, seminars, a weekly syndicated column and the perennially running PBS series.

It was the last of these that brought him top of mind for me recently. He was hosting a fund-raising marathon this past weekend on my nearest PBS affiliate, KCTS in Seattle. And as Steves good-naturedly bumbled his way through Tuscany, I asked myself this question: “Could Rick Steves be a start-up brand today?”

Yes, he is a successful brand, but could he become a successful brand from a standing start? In other words, can a weenie still win in today’s world?

Today, everything needs to be instantly shareable. Branding is all about virality. Things that live at the extremes are the ones that spread through social networks. We are more Kanye West and Kim Kardashian than we are Danny Kaye and Doris Day. That was then. This is now.

You can’t ignore the fact that Steves’ target market is well north of their 50thbirthday. They are the ones who still remember who Danny Kaye and Doris Day were. So I ask again: Is being passionate and earnest (two things Rick Steves undoubtedly is) enough to break our collective ennui in today’s hyperbolic world?

I ask this question somewhat selfishly, for I, too, am a weenie. I have long lived on the dorkish end of the spectrum. I like me a good dad joke (e.g., People in Athens hate getting up early. Because Dawn is tough on Greece). And I have to wonder. Can nice, decidedly un-cool people still finish first? Or  at least not last?

It’s an important question. Because if there is no longer room in our jaded awareness for a Rick Steves, we’re missing out on something very important.

Steves has won his trust the hard way. He has steadfastly remained objective and unsponsored. He provides advice targeted at the everyday traveler. He is practical and pragmatic.

And he is consistently idealistic, believing that travel pries open our perspective and makes us better, more tolerant people. This mission is proudly stated on his corporate website: “We value travel as a powerful way to better understand and contribute to the world in which we live. We strive to keep our own travel style, our world outlook, and our business practices consistent with these values.”

This is no “flash-in-the pan” brand bite crafted for a social share. This is a mission statement backed by over 40 years of consistent delivery to its ideals. It’s like Steves himself: earnest, sincere, thoughtful and just a little bit dorky.

If you ask me, the world could use a little less Kanye West and a little more Rick Steves.

The Dilemma of the Middle Aged Marketer

Today is my birthday. I still call myself middle-age, but truth be told, I passed being middle-aged some time ago. I would more accurately be called two/thirds-aged (hopefully).

 That’s not the only half-truth I’m hanging on to.

When new people I meet ask me my profession, I like to say I’m a “reformed marketer.” In addition to being somewhat untruthful, I also realize now that this response is pretentious on many different levels.

First of all, it gives off this “holier than thou” vibe that’s a little off-putting.

Secondly, if I regret being a marketer so much, why am I still hanging on for dear life to that particular epithet? The people I’m being introduced to now often have no idea of my past. The fact that I once called marketing my career has no relevance to them. They could care less. I’m just saying it for effect.

That’s a little sad.

If I dig way down to the truth, I have to admit being a marketer defined me for most of my life. I loved influencing people. I adored my career. And I’m not ready to let that part of me go.

Calling myself a reformed marketer gives me the illusory comfort of still hanging on to something important to me, but holding it at arm’s length, like a disease I’ve recovered from. I’m trying to play both ends against the middle.

And thus comes the Middle Aged Marketer’s Dilemma. It hit me in my 40s.

In last week’s column, I started talking about “Why” vs the other 4 Ws: “Who, What, When and Where.” I have a love/hate relationship with “Why.” It was that damned “Why” that ushered in the Dilemma.

As I said, I loved “What” I did as a marketer. It was endlessly challenging and fascinating. And if you love “What” enough, you don’t really care so much about “When” and “Where.” You’ll work ridiculously long hours in whatever location your career takes you.

I even came to terms with “Who.” I loved most of my clients. The few I didn’t, I managed to either cut loose or build a big enough buffer so that they didn’t make my life too miserable for too long. Those 4 Ws allowed me to carve out a pretty fantastic life for myself.

But then came along that damned “Why.” It was innocent at first. My “whys” had a limited and very applied scope. They were specific to the work I did for my clients. They allowed me to add another dimension to the market research we were doing for others. The more I asked “why,” the more I wanted to learn about how people ticked. I loved “what” I was doing even more.

Then my “why” flipped on me and went for the jugular. It has a habit of doing that. I made the mistake of asking myself why I was doing what I did for a living.

It’s a tough question. I don’t think many of us want to go gentle into that good night without having sussed for ourselves a pretty good reason why we have lived our lives.  And when middle-aged marketers asks themselves “why,” a satisfying answer does not immediately spring to mind.

“So I could help profit-obsessed companies sell more shit to people who don’t need it” is not exactly a sterling argument for canonization.

And yes, I did just toss everything about marketing into the same over-generalized bucket. Quibble if you will. I know there are exceptions. If you navel-gaze long enough, you’re sure to find them. But I’ll stand by my struggle with “why,” if you can stand by yours.

Today, I’m still struggling with the Dilemma. The fact that I’m still writing this column week after week speaks to my inability to let the past go. I remain totally in love with the “what” of marketing, but have ethical issues with the “why.”

I do believe marketing is built upon the questionable edifice of consumerism — and I’m not sure there’s a lot of moral high ground we can lay claim to.We work (or, in my case, did work) in an industry that depends on humans having baser instincts.

Data does NOT Equal People

We marketers love data. We treat it like a holy grail: a thing to be worshipped. But we’re praying at the wrong altar. Or, at the very least, we’re praying at a misleading altar.

Data is the digital residue of behavior. It is the contrails of customer intent — a thin, wispy proxy for the rich bandwidth of the real world. It does have a purpose, but it should be just one tool in a marketer’s toolbox. Unfortunately, we tend to use it as a Swiss army knife, thinking it’s the only tool we need.

The problem is that data is seductive. It’s pliable and reliable, luring us into manipulation because it’s so easy to do. It can be twisted and molded with algorithms and spreadsheets.

But it’s also sterile. There is a reason people don’t fit nicely into spreadsheets. There are simply not enough dimensions and nuances to accommodate real human behavior.

Data is great for answering the questions “what,” “who,” “when” and “where.” But they are all glimpses of what has happened. Stopping here is like navigating through the rear-view mirror.

Data seldom yields the answer to “why.” But it’s why that makes the magic happen, that gives us an empathetic understanding that helps us reliably predict future behaviors.

Uncovering the what, who, when and where makes us good marketers. But it’s “why” that makes us great. It’s knowing why that allows us to connect the distal dots, hacking out the hypotheses that can take us forward in the leaps required by truly great marketing. As Tom Goodwin, the author of “Digital Darwinism,” said in a recent post, “What digital has done well is have enough of a data trail to claim, not create, success.”

We as marketers have to resist stopping at the data. We have to keep pursuing why.

Here’s one example from my own experience. Some years ago, my agency did an eye-tracking study that looked at gender differences in how we navigate websites.

For me, the most interesting finding to fall out of the data was that females spent a lot more time than males looking at a website’s “hero” shot, especially if it was a picture that had faces in it. Males quickly scanned the picture, but then immediately moved their eyes up to the navigation menu and started scanning the options there. Females lingered on the graphic and then moved on to scan text immediately adjacent to it.

Now, I could have stopped at “who” and “what,” which in itself would have been a pretty interesting finding. But I wanted to know “why.” And that’s where things started to get messy.

To start to understand why, you have to rely on feelings and intuition. You also have to accept that you probably won’t arrive at a definitive answer. “Why” lives in the realm of “wicked” problems, which I defined in a previous column as “questions that can’t be answered by yes or no — the answer always seems to be maybe.  There is no linear path to solve them. You just keep going in loops, hopefully getting closer to an answer but never quite arriving at one. Usually, the optimal solution to a wicked problem is ‘good enough – for now.’”

The answer to why males scan a website differently than females is buried in a maze of evolutionary biology, social norms and cognitive heuristics. It probably has something to do with wayfinding strategies and hardwired biases. It won’t just “fall out” of data because it’s not in the data to begin with.

Even half-right “why” answers often take months or even years of diligent pursuit to reveal themselves. Given that, I understand why it’s easier to just focus on the data. It will get you to “good,” and maybe that’s enough.

Unless, of course, you’re aiming to “put a ding in the universe,” as Steve Jobs said in an inspirational commencement speech at Stanford University. Then you have to shoot for great.