As the “Office” Goes, What May Go With It?

In 2017, Apple employees moved into the new Apple headquarters, called the Ring, in Cupertino, California. This was the last passion project of Steve Jobs, who personally made the pitch to Cupertino City Council just months before he passed away. And its design was personally overseen by Apple’s then Chief Design Office Jony Ive. The new headquarters were meant to give Apple’s Cupertino employees the ultimate “sense of place”. They were designed to be organic and flexible, evolving to continue to meet their needs.

Of course, no one saw a global pandemic in the future. COVID-19 drove almost all those employees to work from home. The massive campus sat empty. And now, as Apple tries to bring everyone back to the Ring, it seems what has evolved is the expectations of the employees, who have taken a hard left turn away from the very idea of “going to work.”

Just last month, Apple had to backtrack on its edict demanding that everyone start coming back to the office three days a week. A group which calls itself “Apple Together” published a letter asking for the company to embrace a hybrid work schedule that formalized a remote workplace. And one of Apple’s leading AI engineers, Ian Goodfellow, resigned in May because of Apple’s insistence on going back to the office.

Perhaps Apple’s Ring is just the most elegant example of a last-gasp concept tied to a generation that is rapidly fading from the office into retirement. The Ring could be the world’s biggest and most expensive anachronism. 

The Virtual Workplace debate is not new for Silicon Valley. Almost a decade ago, Marissa Mayer also issued a “Back to the Office” edict when she came from Google to take over the helm at Yahoo. A company memo laid out the logic:

“To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side. That is why it is critical that we are all present in our offices. Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings. Speed and quality are often sacrificed when we work from home. We need to be one Yahoo!, and that starts with physically being together.”

Marissa Mayer, Yahoo Company Memo

The memo was not popular with Yahooligans. I was still making regular visits to the Valley back then and heard first-hand the grumblings from some of them. My own agency actually had a similar experience, albeit on a much smaller scale.

Over the past decade – until COVID – employees and employers have tentatively tested the realities of a remote workplace. But in the blink of an eye, the pandemic turned this ongoing experiment into the only option available. If businesses wanted to continue operating, they had to embrace working from home. And if employees wanted to keep their jobs, they had to make room on the dining room table for their laptop. Overnight, Zoom meetings and communicating through Slack became the new normal.

Sometimes, necessity is the mother of adoption. And with a 27 (and counting) month runway to get used to it, it appears that the virtual workplace is here to stay.

In some ways, the virtual office represents the unbundling of our worklife. Because our world was constrained by physical limitations of distance, we tended to deal with a holistic world. Everything came as a package that was assembled by proximity. We operated inside an ecosystem that shared the same physical space. This was true for almost everything in our lives, including our jobs. The workplace was a place, with physical and social properties that existed within that place.

But technology allows us to unbundle that experience. We can separate work from place. We pick and choose what seems to be the most important things we need to do our jobs and take it with us, free from the physical restraints that once kept us all in the same place in the same time. In that process, there are both intended and unintended consequences.

On the face of it, freeing our work from its physical constraints (when this is possible) makes all kinds of sense. For the employer, it eliminates the need for maintaining a location, along with the expense of doing so. And, when you can work anywhere, you can also recruit from anywhere, dramatically opening up the talent pool.

For the employee, it’s probably even more attractive. You can work on your schedule, giving you more flexibility to maintain a healthy work-life balance. Long and frustrating commutes are eliminated. Your home can be wherever you want to live, rather than where you have to live because of your job.

Like I said, when you look at all these intended consequences, a virtual workplace seems to be all upside, with little downside. However, the downsides are starting to show through the cracks created by the unintended consequences.

To me, this seems somewhat analogous to the introduction of monoculture agriculture. You could say this also represented the unbundling of farming for the sake of efficiency. Focusing on one crop in one place in a time made all kinds of sense. You could standardize planting, fertilizing, watering and harvesting based on what was best for the chosen crop. It allowed for the introduction of machinery, increasing yields and lowering costs. Small wonder that over the past 2 centuries – and especially since World War II – the world rushed to embrace monoculture agriculture.

But now we’re beginning to see the unintended consequence. Dr. Frank Uekotter, Professor of Environmental Humanities at the University of Birmingham, calls monoculturalism a “centuries long stumble.” He warns that it has developed its own momentum, ““Somehow that fledgling operation grew into a monster. We may have to cut our losses at some point, but monoculture has absorbed decades of huge investment and moving away from it will be akin to attempting a handbrake turn in a supertanker.”

We’re learning – probably too late – that nature never intended plants to be surrounded only by other plants of the same kind. Monocultures lead to higher rates of disease and the degradation of the environment. The most extreme example of this is how monocultures of African palm oil orchards are swallowing the biodiverse Amazon rain forest at an alarming rate. Sometimes, as Joni Mitchell reminds us, “You don’t know what you’ve got til it’s gone.”

The same could be true for the traditional workplace. I think Marissa Mayer was on to something. We are social animals and have evolved to share spaces with others of our species. There is a vast repertoire of evolved mechanisms and strategies that make us able to function in these environments. While a virtual workplace may be logical, we may be sacrificing something more ephemeral that lies buried in our humanness. We can’t see it because we’re not exactly sure what it is, but we’ll know it when we lose it.

Maybe it’s loyalty. A few weeks ago, the Wharton School of Business published an article entitled, “Is Workplace Loyalty Gone for Good?” We have all heard of the “Great Resignation.” Last year, the US had over 40 million people quit their jobs. The advent of the Virtual Workplace has also meant a virtual job market. Employees are in the driver’s seat. Everything is up for renegotiation. As the article said, “the modern workplace has become increasingly transactional.”

Maybe that’s a good thing. Maybe not. That’s the thing with unintended consequences. Only time will tell.

Sensationalizing Scam Culture

We seem to be fascinated by bad behavior. Our popular culture is all agog with grifters and assholes. As TV Blog’s Adam Buckman wrote in March: “Two brand-new limited series premiering this week appear to be part of a growing trend in which some of recent history’s most notorious innovators and disruptors are getting the scripted-TV treatment.”

The two series Buckman was talking about were “Super Pumped: The Battle for Uber,” about Uber CEO Travis Kalanick, and “The Dropout,” about Theranos founder Elizabeth Holmes.

But those are just two examples from a bumper crop of shows about bad behavior. My streaming services are stuffed with stories of scammers. In addition to the two series Buckman mentioned, I just finished Shonda Rhimes’ Netflix series “Inventing Anna,” about Anna Sorokin, who posed as an heiress named Anna Delvey.

All these treatments tread a tight wire of moral judgement, where the examples are presented as antisocial, but in a wink-and-a-nod kind of way, where we not so secretly admire these behaviors. Much as the actions are harmful to well-being of the collective “we,” they do appeal to the selfishness and ambition of “me.”

Most of the examples given are rags to riches to retribution stores (Holmes was an exception with her upper-middle-class background). The sky-high ambitions of Kalanick Holmes and Sorokin were all eventually brought back down to earth. Sorokin and Holmes both ended up in prison, and Kalanick was ousted from the company he founded.

But with the subtlest of twists, they didn’t have to end this way. They could have been the story of almost any corporate America hustler who triumphed. With a little more substance and a little less scam, you could swap Elizabeth Holmes for Steve Jobs. They even dressed the same.

Obviously, scamming seems to sell. These people fascinate us. Part of the appeal is no doubt due a class conflict narrative: the scrappy hustler climbing the social ranks by whatever means possible. We love to watch “one of us” pull the wool over the eyes of the social elite.

In the case of Anna Sorokin, Laura Craik dissects our fascination in a piece published in the UK’s Evening Standard:

“The reason people are so obsessed with Sorokin is simple: she had the balls to pull off on a grand scale what so many people try and fail to pull off on a small one. To use a phrase popular on social media, Sorokin succeeded in living her best life — right down to the clothes she wore in court, chosen by a stylist. Like Jay Gatsby, she was a deeply flawed embodiment of The American Dream: a person from humble beginnings who rose to achieve wealth and social status. Only her wealth was borrowed and her social status was conferred via a chimera of untruths.”

Laura Craik – UK Evening Standard

This type of behavior is nothing new. It’s always been a part of us. In 1513, a Florentine bureaucrat named Niccolo Machiavelli gave it a name — actually, his name. In writing “The Prince,” he condoned bad behavior as long as the end goal was to elevate oneself. In a Machiavellian world, it’s always open season on suckers: “One who deceives will always find those who allow themselves to be deceived.”

For the past five centuries, Machiavellianism was always synonymous with evil. It was a recognized character flaw, described as “a personality trait that denotes cunningness, the ability to be manipulative, and a drive to use whatever means necessary to gain power. Machiavellianism is one of the traits that forms the Dark Triad, along with narcissism and psychopathy.”

Now, however, that stigma seems to be disappearing. In a culture obsessed with success, Machiavellianism becomes a justifiable means to an end, so much so that we’ve given this culture its own hashtag: #scamculture: “A scam culture is one in which scamming has not only lost its stigma but is also valorized. We rebrand scamming as ‘hustle,’ or the willingness to commodify all social ties, and this is because the ‘legitimate’ economy and the political system simply do not work for millions of Americans.”

It’s a culture that’s very much at home in Silicon Valley. The tech world is steeped in Machiavellianism. Its tenets are accepted — even encouraged — business practices in the Valley. “Fake it til you make it” is tech’s modus operandi. The example of Niccolo Machiavelli has gone from being a cautionary tale to a how-to manual.

But these predatory practices come at a price. Doing business this way destroys trust. And trust is still, by far, the best strategy for our mutual benefit. In behavioral economics, there’s something called “tit for tat,” which according to Wikipedia “posits that a person is more successful if they cooperate with another person. Implementing a tit-for-tat strategy occurs when one agent cooperates with another agent in the very first interaction and then mimics their subsequent moves. This strategy is based on the concepts of retaliation and altruism.”

In countless game theory simulations, tit for tat has proven to be the most successful strategy for long-term success. It assumes a default position of trust, only moving to retaliation if required.

Our society needs trust to function properly. In a New York Times op-ed entitled “Why We Need to Address Scam Culture,” Tressie McMillan Cottom writes,  

“Scams weaken our trust in social institutions, but their going mainstream — divorced from empathy for the victims or stigma for the perpetrators — means that we have accepted scams as institutions themselves.”

Tressie McMillan Cottom – NY Times

The reason that trust is more effective than scamming is that predatory practices are self-limiting. You can only be a predator if you have enough prey. In a purely Machiavellian world, trust disappears — and there are no easy marks to prey upon.

Same War, Different World?

I suspect if you checked Putin’s playbook for the Ukraine invasion, it would be stale-dated by at least six decades — and possibly more.

Putin wants territory. This invasion is a land grab. And his justification, outlined in a speech he gave on February 21, is that Ukraine was never really a country, it was just an orphaned part of Russia that should be brought back home, by force if necessary:

“Ukraine is not just a neighboring country for us. It is an inalienable part of our own history, culture and spiritual space,” he said, per the Kremlin’s official translation. “Since time immemorial, the people living in the south-west of what has historically been Russian land have called themselves Russians.”

Those words sound eerily familiar. In fact, here’s another passage that follows exactly the same logic

“German-Austria must return to the great German motherland, and not because of economic considerations of any sort. No, no: even if from the economic point of view this union were unimportant, indeed, if it were harmful, it ought nevertheless to be brought about. Common blood belongs in a common Reich.”

That was written in 1925 by Adolf Hitler, while in prison. It’s an excerpt from “Mein Kampf.” Thirteen years later, Hitler brought Austria back to Germany with the Anschluss, under threat of invasion.

Both strategies — which are essentially the same strategy — come from the nationalism handbook. Despite knee-jerk spasms of alt-right nationalism that have appeared around the globe, including here in North America, I must believe that our world is not the same as it was a century ago.

Then, nationalism was still very much THE play in the political play book. Power was derived from holding territory. The more you held, the greater your power. The world was anchored by the physical, which provided both resources and constraints.

You protected what you held by fortified borders. You restricted what went back and forth across those borders. The interests of those inside the borders superseded whatever lay outside them.

Trade was a different animal then. It occurred within the boundaries of an empire. Colonies provided the raw resources to the Mother Country. But two world wars decisively marked the end of that era.

The McDonald’s Theory of War

After that, the globe was redefined. Nations coalesced into trading blocs. Success came from the ease of exchange across borders. Nationalism was no longer the only game in town. In fact, it seemed to be a relic of a bygone era. Pulitzer Prize-winning columnist Thomas Friedman wrote an essay in 1996 that put forward a new theory: “So I’ve had this thesis for a long time and came here to Hamburger University at McDonald’s headquarters to finally test it out. The thesis is this: No two countries that both have a McDonald’s have ever fought a war against each other.”

It was a nice theory, but the Russia-Ukraine conflict seems to have put the final nail in its coffin. Both countries have hundreds of McDonald’s. Even Thomas Friedman has had to note that his theory may no longer be valid.

Or is it? Perhaps this will be the exception that proves Friedman right.

In essence, the global economy is a network that relies on trust. If Friedman was right about his theory, repeated in his 2005 book “The World is Flat,” the world is not only flat, it’s also surprisingly small. To trade with another country, you don’t have to be best friends, you just have to make sure you don’t get stabbed in the back. And to be sure of that, you have to know who you’re dealing with.

China is an example. Politically, we don’t see eye-to-eye on many things, but there is a modicum of trust that allows us to swap several billion dollars’ worth of stuff every year. The trick of trade is to know where that line is where you piss off your partner to the point where they pack up their toys and go home.

Putin just rolled his tanks right over that line. He has doubled down on the bet that nationalism is still a play that can win. But if it does, it will reverse a historic trend that has been centuries in the making — a trend toward cooperation and trust, and away from protectionism and parochial thinking.

This is a war that — initially, anyway —  seems to be playing out unlike any war in the past.

It’s being covered differently. As Maarten Albarda, poignantly shared, we are getting reports directly from real people living through a unreal situation.

It is being fought differently. Nations and corporations are economically shunning Russia and its people. Russian athletes have been banned from international sporting events. We have packed up our toys and gone home.

We are showing our support for Ukraine differently. As one example, thousands of people are booking Airbnbs in Ukraine with no intention of ever going there. It’s just one way to leverage a tool to funnel funds directly to people who need it.

And winning this war will also be defined differently. Even if Putin is successful in annexing Ukraine, he will have isolated himself on the world stage. He will have also done the impossible: unified the West against him. He has essentially swapped whatever trust Russia did have on the world stage for territory. By following an out-of-date playbook, he may end up with a win that will cost Russia more that it could ever imagine.

The Canary in the Casino

It may not seem like it if you’ve watched the news lately, but there are signs we’re balanced on the edge of a gigantic party. We’re all ready to treat ourselves with a little hedonistic indulging.

As I mentioned in a previous column (rerun last week), physician, epidemiologist and sociologist Nicholas Christakis predicted this behavior, but not for a few years yet. Christakis predicted a sort of global “letting loose” starting some time in 2024:

“What typically happens is people get less religious. They will relentlessly seek out social interactions in nightclubs and restaurants and sporting events and political rallies. There’ll be some sexual licentiousness. People will start spending their money after having saved it. They’ll be joie de vivre and a kind of risk-taking, a kind of efflorescence of the arts, I think.”

So, there is light at the end of the pandemic tunnel — but, according to a report just out from the American Gaming Association, some of us can’t wait a couple of years. First out of the gate were gamblers. Well before we started emerging from the pandemic, they were already rolling the dice and starting the party.

According to the report from the AGA, U.S. commercial gaming revenue hit a record $53 billion in 2021. That was more than 21% higher than the previous record, set in 2019, and a huge rebound of 77% from 2020 numbers, when COVID forced casinos to shut down for months at a time.

You might think online gaming accounts for the jump, but you’d be wrong. In-casino gambling underpins this huge spike, accounting for $45.6 billion of the $53 billion total. People were saying to hell with health mandates and streaming into casinos across the country, with most of the top markets seeing significant gains from pre-COVID 2019.

While some of us might not be ready to ditch the masks and belly up to the bar, I suspect these gamblers are an early indicator of things to come. Call them a canary in a coal mine, if you will.

Because I can’t resist interesting historical tidbits, I thought I’d share the story behind this saying about how canaries ended up in coal mines in the first place. Early in the last century, canaries were used as an early warning system for poison gas in England. John Scott Haldane, who was researching the effects of carbon monoxide on humans, suggested using canaries as a “sentinel species,” an animal more sensitive to the impact of poisonous gases. They were kept in cages throughout the mines — and if a canary died, the miners were warned to evacuate the mine.

But why canaries?

Canaries, like most birds, need tremendous amounts of oxygen to fly and to avoid altitude sickness. They actually take in oxygen twice on each breath, once while inhaling and again when exhaling. This, combined with their relatively small size, make them hyper-sensitive to the impact of a poisonous gas. Also, canaries were easy to come by in England and convenient to transport. So, they were recruited to help keep humans alive.

This makes them analogous to gamblers in the following way: Gamblers, by their nature, are built to be more willing to take some risk in search of a reward. You could say they are hyper-sensitive to the rush that comes from rewarding themselves. As such, they are the early adopters in the onrushing desire to put bad news behind them and let loose with a little hedonistic hell-raising. They are not atypical; they’re just ahead of the curve in this one respect.

Sooner or later, the rest of us will follow. Look for similar huge rebounds in the travel and hospitality sectors, entertainment, events and other industries focused on providing pleasure. The world will become one giant spring break party.

Which is perhaps only fitting, coming after a two-year-long winter of our discontent.

The Joe Rogan Experiment in Ethical Consumerism

We are watching an experiment in ethical consumerism take place in real time. I’m speaking of the Joe Rogan/Neil Young controversy that’s happening on Spotify. I’m sure you’ve heard of it, but if not, Canadian musical legend Neil Young had finally had enough of Joe Rogan’s spreading of COVID misinformation on his podcast, “The Joe Rogan Experience.” He gave Spotify an ultimatum: “You can have Rogan or Young. Not both.”

Spotify chose Rogan. Young pulled his library. Since then, a handful of other artists have followed Young, including former band mates David Crosby, Stephen Stills and Graham Nash, along with fellow Canuck Hall of Famer Joni Mitchell.

But it has hardly been a stampede. One of the reasons is that — if you’re an artist — leaving Spotify is easier said than done. In an interview with Rolling Stone, Rosanne Cash said most artists don’t have the luxury of jilting Spotify: 

It’s not viable for most artists. The public doesn’t understand the complexities. I’m not the sole rights holder to my work… It’s not only that a lot of people who aren’t rights holders can’t remove their work. A lot of people don’t want to. These are the digital platforms where they make a living, as paltry as it is. That’s the game. These platforms own, what, 40 percent of the market share?”

Cash also brings up a fundamental issue with capitalism: it follows profit, and it’s consumers who determine what’s profitable. Consumers make decisions based on self-interest: what’s in it for them. Corporations use that predictable behavior to make the biggest profit possible. That behavior has been perfectly predictable for hundreds of years. It’s the driving force behind Adam Smith’s Invisible Hand. It was also succinctly laid out by economist Milton Friedman in 1970:

“There is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

We all want corporations to be warm and fuzzy — but it’s like wishing a shark were a teddy bear. It just ain’t gonna happen.

One who indulged in this wishful thinking was a little less well-known Canadian artist who also pulled his music  from Spotify, Ontario singer/songwriter Danny Michel. He told the CBC:

“But for me, what it was was seeing how Spotify chose to react to Neil Young’s request, which was, you know: You can have my music or Joe. And it seems like they just, you know, got out a calculator, did some math, and chose to let Neil Young go. And they said, clear and loud: We don’t need you. We don’t need your music.”

Well, yes, Danny, I’m pretty sure that’s exactly what Spotify did. It made a decision based on profit. For one thing, Joe Rogan is exclusive to Spotify. Neil Young isn’t. And Rogan produces a podcast, which can have sponsors. Neil Young’s catalog of songs can’t be brought to you by anyone.

That makes Rogan a much better bet for revenue generation. That’s why Spotify paid Rogan $100 million. Music journalist Ted Gioia made the business case for the Rogan deal pretty clear in a tweet

“A musician would need to generate 23 billion streams on Spotify to earn what they’re paying Joe Rogan for his podcast rights (assuming a typical $.00437 payout per stream). In other words, Spotify values Rogan more than any musician in the history of the world.”

I hate to admit that Milton Friedman is right, but he is. I’ve said it time and time before, to expect corporations to put ethics ahead of profits is to ignore the DNA of a corporation. Spotify is doing what corporations will always do, strive to be profitable. The decision between Rogan and Young was done with a calculator. And for Danny Michel to expect anything else from Spotify is simply naïve. If we’re going to play this ethical capitalism game, we must realize what the rules of engagement are.

But what about us? Are we any better that the corporations we keep putting our faith in?

We have talked about how we consumers want to trust the brands we deal with, but when a corporation drops the ethics ball, do we really care? We have been gnashing our teeth about Facebook’s many, many indiscretions for years now, but how many of us have quite Facebook? I know I haven’t.

I’ve seen some social media buzz about migrating from Spotify to another service. I personally have started down this road. Part of it is because I agree with Young’s stand. But I’ll be brutally honest here. The bigger reason is that I’m old and I want to be able to continue to listen to the Young, Mitchell and CSNY catalogs. As one of my contemporaries said in a recent post, “Neil Young and Joni Mitchell? Wish it were artists who are _younger_ than me.”

A lot of pressure is put on companies to be ethical, with no real monetary reasons why they should be. If we want ethics from our corporations, we have to make it important enough to us to impact our own buying decisions. And we aren’t doing that — not in any meaningful way.

I’ve used this example before, but it bears repeating. We all know how truly awful and unethical caged egg production is. The birds are kept in what is known as a battery cage holding 5 to 10 birds and each is confined to a space of about 67 square inches. To help you visualize that, it’s just a bit bigger than a standard piece of paper folded in half. This is the hell we inflict on other animals solely for our own gain. No one can be for this. Yet 97% of us buy these eggs, just because they’re cheaper.

If we’re looking for ethics, we have to look in other places than brands. And — much as I wish it were different — we have to look beyond consumers as well. We have proven time and again that our convenience and our own self-interest will always come ahead of ethics. We might wish that were different, but our spending patterns say otherwise.

It’s the Buzz That Will Kill You

If you choose to play in the social arena, you have to accept that the typical peaks and valleys of business success can suddenly become impossibly steep.

In social media networks, your brand message is whatever meme happens to emerge from the collective activity of this connected market. Marketers have little control — and sometimes, they have no control. At best, all they can do is react by throwing another carefully crafted meme into the social-sphere and hope it picks up some juice and is amplified through the network.

That’s exactly what happened to Peloton in the past week and a half.

On Dec. 9, the HBO Max sequel to “Sex and the City” killed off a major character — Chris Noth’s Mr. Big — by giving him a heart attack after his one thousandth Peloton ride. Apparently, HBO Max gave Peloton no advance warning of this branding back hand.

On Dec. 10, according to Axios,  there was a dramatic spike in social interactions talking about Mr. Big’s last ride, peaking near 80 thousand. As you can imagine, the buzz was not good for Peloton’s business.

On Dec. 12, Peloton struck back with its own ad, apparently produced in just 24 hours by Ryan Reynold’s Maximum Effort agency. This turned the tide of the social buzz. Again, according to data from Newswhip and Axios, social media mentions peaked. This time, they were much more positive toward the Peloton brand.

It should be all good — right? Not so fast. On Dec 16, two sexual assault allegations were made against Chris Noth, chronicled in The Hollywood Reporter. Peloton rapidly scrubbed its ad campaign. Again, the social sphere lit up and Peloton was forced back into defensive mode.

Now, you might call all this marketing froth, but that’s  the way it is in our hyper-connected world. You just have to dance the dance — be nimble and respond.

But my point is not about the marketing side of this of this brouhaha – which has been covered to death, at least at MediaPost (sorry, pardon the pun.) I’m more interested  in what happens to the people who have some real skin in this particular game, whose lives depend on the fortunes of the Peloton brand. Because all this froth does have some very IRL consequences.

Take Peloton’s share price, for one.

The day before the HBO show aired, Peloton’s shares were trading at $45.91. The next day, they tumbled 16%. to $38.51.

And that’s just one chapter in the ongoing story of Peloton’s stock performance, which has been a hyper-compressed roller coaster ride, with the pandemic and a huge amount of social media buzz keeping the foot firmly on the accelerator of stock performance through 2020, but then subsequently dropping like a rock for most of 2021. After peaking as high as $162 a share exactly a year ago, the share price is back down to spitting distance of its pre-pandemic levels.

Obviously, Peloton’s share price is not just dependent on the latest social media meme. There are business fundamentals to consider as well.

Still, you have to accept that a more connected meme-market is going to naturally accelerate the speed of business upticks and declines. Peloton signed up for this dance — and  when you do that, you have to accept all that comes with it.

In terms of the real-world consequences of betting on the buzz, there are three “insider” groups (not including customers) that will be affected: the management, the shareholders and the employees. The first of these supposedly went into this with their eyes open. The second of these also made a choice. If they did their due diligence before buying the stock, they should have known what to expect. But it’s the last of these — the employees — that I really feel for.

With ultra-compressed business cycles like Peloton has experienced, it’s tough for employees to keep up. On the way up the peak, the company is running ragged trying to scale for hyper-growth. If you check employee review sites like Glassdoor.com, there are tales of creaky recruitment processes not being able to keep up. But at least the ride up is exciting. The ride down is something quite different.

In psychological terms, there is something called the locus of control. These are the things you feel you have at least some degree of control over. And there is an ever-increasing body of evidence that shows that locus of control and employee job satisfaction are strongly correlated. No one likes to be the one constantly waiting for someone else to drop the other shoe. It just ramps up your job stress. Granted, job stress that comes with big promotions and generous options on a rocket ship stock can perhaps be justified. But stress that’s packaged with panicked downsizing and imminent layoffs is not a fun employment package for anyone.

That’s the current case at Peloton. On Nov. 5 it announced an immediate hiring freeze. And while there’s been no official announcement of layoffs that I could find, there have been rumors of such posted to the site thelayoff.com.  This is not a fun environment for anyone to function in. Here’s what one post said: “I left Peloton a year ago when I realized it was morphing into the type of company I had no intention of working for.”

We have built a business environment that is highly vulnerable to buzz. And as Peloton has learned, what the buzz giveth, the buzz can also taketh away.

When Social Media Becomes the Message

On Nov. 23, U.K. cosmetics firm Lush said it was deactivating its Instagram, Facebook, TikTok and Snapchat accounts until the social media environment “is a little safer.” And by a “safer” environment, the company didn’t mean for advertisers, but for consumers. Jack Constantine, chief digital officer and product inventor at Lush, explains in an interview with the BBC:

“[Social media channels] do need to start listening to the reality of how they’re impacting people’s mental health and the damage that they’re causing through their craving for the algorithm to be able to constantly generate content regardless of whether it’s good for the users or not.”

This was not an easy decision for Lush. It came with the possibility of a substantial cost to its business, “We already know that there is potential damage of £10m in sales and we need to be able to gain that back,” said Constantine. “We’ve got a year to try to get that back, and let’s hope we can do that.”

In effect, Lush is rolling the dice on a bet based on the unpredictable network effects of social media. Would the potential loss to its bottom line be offset by the brand uptick it would receive by being true to its core values? In talking about Lush’s move on the Wharton Business Daily podcast, marketing lecturer Annie Wilson pointed out the issues in play here:

“There could be positive effects on short-term loyalty and brand engagement, but it will be interesting to see the long-term effect on acquiring new consumers in the future.”

I’m not trying to minimize Lush’s decision here by categorizing it as a marketing ploy. The company has been very transparent about how hard it’s been to drop — even temporarily — Facebook and its other properties from the Lush marketing mix. The brand had previously closed several of its UK social media accounts, but eventually found itself “back on the channels, despite the best intentions.”

You can’t overstate how fundamental a decision this is for a profit-driven business. But I’m afraid Lush is probably an outlier. The brand is built on making healthy choices. Lush eventually decided it had to stay true to that mission even if it hurts the bottom line.

Other businesses are far from wearing their hearts on their sleeves to the same extent as Lush. For every Lush that’s out there, there are thousands that continue to feed their budgets to Facebook and its properties, even though they fundamentally disagree with the tactics of the channel.

There has been pushback against these tactics before. In July of 2020, 1000 advertisers joined the #StopHateForProfit Boycott against Facebook. That sounds impressive – until you realize that Facebook has 9 million clients. The boycotters represented just over .01% of all advertisers. Even with the support of other advertisers who didn’t join the boycott but still scaled back their ad spend, it only had a fleeting effect on Facebook’s bottom line. Almost all the advertisers eventually returned after the boycott.

As The New York Times reported at the time, the damage wasn’t so much to Facebook’s pocketbook as to its reputation. Stephen Hahn-Griffiths, the executive vice president of the public opinion analysis company RepTrak, wrote in a follow-up post,

“What could really hurt Facebook is the long-term effect of its perceived reputation and the association with being viewed as a publisher of ‘hate speech’ and other inappropriate content.”

Of course, that was all before the emergence of a certain Facebook data engineer by the name of Frances Haugen. The whistleblower released thousands of internal documents to the Wall Street Journal this past fall. It went public in September of this year in a series called “The Facebook Files.” If we had any doubt about the culpability of Zuckerberg et al, this pretty much laid that to rest.

Predictably, after the story broke, Facebook made some halfhearted attempts to clean up its act by introducing new parental controls on Instagram and Facebook. This follows the typical Facebook handbook for dealing with emerging shit storms: do the least amount possible, while talking about it as much as possible. It’s a tactic known as “purpose-washing.”

The question is, if this is all you do after a mountain of evidence points to you being truly awful, how sincere are you about doing the right thing? This puts Facebook in the same category as Big Tobacco, and that’s pretty crappy company to be in.

Lush’s decision to quit Facebook also pinpoints an interesting dilemma for advertisers: What happens when an advertising platform that has been effective in attracting new customers becomes so toxic that it damages your brand just by being on it? What happens when, as Marshall McLuhan famously said, the medium becomes the message?

Facebook is not alone with this issue. With the systematic dismantling of objective journalism, almost every news medium now carries its own message. This is certainly true for channels like Fox News. By supporting these platforms with advertising, advertisers are putting a stamp of approval on those respective editorial biases and — in Fox’s case — the deliberate spreading of misinformation that has been shown to have a negative social cost.

All this points to a toxic cycle becoming more commonplace in ad-supported media: The drive to attract and effectively target an audience leads a medium to embrace questionable ethical practices. These practices then taint the platform itself, leading to it potentially becoming brand-toxic. The advertisers then must choose between reaching an available audience that can expand its business, or avoiding the toxicity of the platform. The challenge for the brand then becomes a contest to see how long it can hold its nose while it continues to maximize sales and profits.

For Lush, the scent of Facebook’s bullshit finally grew too much to bear — at least for now.

The Unusual Evolution of the Internet

The Internet we have today evolved out of improbability. It shouldn’t have happened like it did. It evolved as a wide-open network forged by starry-eyed academics and geeks who really believed it might make the world better. It wasn’t supposed to win against walled gardens like Compuserve, Prodigy and AOL — but it did. If you rolled back the clock, knowing what we know now, you could be sure it would never play out the same way again.

To use the same analogy that Eric Raymond did in his now-famous essay on the development of Linux, these were people who believed in bazaars rather than cathedrals. The internet was cobbled together to scratch an intellectual and ethical itch, rather than a financial one.

But today, as this essay in The Atlantic by Jonathan Zittrain warns us, the core of the internet is rotting. Because it was built by everyone and no one, all the superstructure that was assembled on top of that core is teetering. Things work, until they don’t: “The internet was a recipe for mortar, with an invitation for anyone, and everyone, to bring their own bricks.”

The problem is, it’s no one’s job to make sure those bricks stay in place.

Zittrain talks about the holes in humanity’s store of knowledge. But there’s another thing about this evolution that is either maddening or magical, depending on your perspective: It was never built with a business case in mind.

Eventually, commerce pipes were retrofitted into the whole glorious mess, and billions managed to be made. Google alone has managed to pull over a trillion dollars in revenue in less than 20 years by becoming the de facto index to the world’s most haphazard library of digital stuff. Amazon went one better, using the Internet to reinvent humanity’s marketplace and pulling in $2 trillion in revenue along the way.

But despite all this massive monetization, the benefactors still at least had to pay lip service to that original intent: the naïve belief that technology could make us better, and  that it didn’t just have to be about money.

Even Google, which is on its way to posting $200 billion in revenue, making it the fifth biggest media company in the world (after Netflix, Disney, Comcast, and AT&T), stumbled on its way to making a buck. Perhaps it’s because its founders, Larry Page and Sergey Brin, didn’t trust advertising. In their original academic paper, they said that “advertising-funded search engines will inherently be biased toward the advertisers and away from the needs of consumers.”  Of course they ultimately ended up giving in to the dark side of advertising. But I watched the Google user experience closely from 2003 to 2011, and that dedication to the user was always part of a delicate balancing act that was generally successful.

But that innocence of the original Internet is almost gone, as I noted in a recent post. And there are those who want to make sure that the next thing — whatever it is — is built on a framework that has monetization built in. It’s why Mark Zuckerberg is feverishly hoping that his company can build the foundations of the Metaverse. It’s why Google is trying to assemble the pipes and struts that build the new web. Those things would be completely free of the moral — albeit naïve — constraints that still linger in the original model. In the new one, there would only be one goal: making sure shareholders are happy.

It’s also natural that many of those future monetization models will likely embrace advertising, which is, as I’ve said before, the path of least resistance to profitability.

We should pay attention to this. The very fact that the Internet’s original evolution was as improbable and profit-free as it was puts us in a unique position today. What would it look like if things had turned out differently, and the internet had been profit-driven from day one? I suspect it might have been better-maintained but a lot less magical, at least in its earliest iterations.

Whatever that new thing is will form a significant part of our reality. It will be even more foundational and necessary to us than the current internet. We won’t be able to live without it. For that reason, we should worry about the motives that may lie behind whatever “it” will be.

The Relationship between Trust and Tech: It’s Complicated

Today, I wanted to follow up on last week’s post about not trusting tech companies with your privacy. In that post, I said, “To find a corporation’s moral fiber, you always, always, always have to follow the money.”

A friend from back in my industry show days — the always insightful Brett Tabke — reached out to me to comment, and mentioned that the position taken by Apple in the current privacy brouhaha with Facebook is one of convenience, especially this “holier-than-thou” privacy stand adopted by Tim Cook and Apple.

“I really wonder though if it is a case of do-the-right-thing privacy moral stance, or one of convenience that supports their ecosystem, and attacks a competitor?” he asked.

It’s hard to argue against that. As Brett mentioned, Apple really can’t lose by “taking money out of a side-competitors pocket and using it to lay more foundational corner stones in the walled garden, [which] props up the illusion that the garden is a moral feature, and not a criminal antitrust offence.”

But let’s look beyond Facebook and Apple for a moment. As Brett also mentioned to me, “So who does a privacy action really impact more? Does it hit Facebook or ultimately Google? Facebook is just collateral damage here in the real war with Google. Apple and Google control their own platform ecosystems, but only Google can exert influence over the entire web. As we learned from the unredacted documents in the States vs Google antitrust filings, Google is clearly trying to leverage its assets to exert that control — even when ethically dubious.”

So, if we are talking trust and privacy, where is Google in this debate? Given the nature of Google’s revenue stream, its stand on privacy is not quite as blatantly obvious (or as self-serving) as Facebook’s. Both depend on advertising to pay the bills, but the nature of that advertising is significantly different.

57% of Alphabet’s (Google’s parent company) annual $182-billion revenue stream still comes from search ads, according to its most recent annual report. And search advertising is relatively immune from crackdowns on privacy.

When you search for something on Google, you have already expressed your intent, which is the clearest possible signal with which you can target advertising. Yes, additional data taken with or without your knowledge can help fine-tune ad delivery — and Google has shown it’s certainly not above using this  — but Apple tightening up its data security will not significantly impair Google’s ability to make money through its search revenue channel.

Facebook’s advertising model, on the other hand, targets you well before any expression of intent. For that reason, it has to rely on behavioral data and other targeting to effectively deliver those ads. Personal data is the lifeblood of such targeting. Turn off the tap, and Facebook’s revenue model dries up instantly.

But Google has always had ambitions beyond search revenue. Even today, 43% of its revenue comes from non-search sources. Google has always struggled with the inherently capped nature of search-based ad inventory. There are only so many searches done against which you can serve advertising. And, as Brett points out, that leads Google to look at the very infrastructure of the web to find new revenue sources. And that has led to signs of a troubling collusion with Facebook.

Again, we come back to my “follow the money” mantra for rooting out rot in the system. And in this case, the money we’re talking about is the premium that Google skims off the top when it determines which ads are shown to you. That premium depends on Google’s ability to use data to target the most effective ads possible through its own “Open Bidding” system. According to the unredacted documents released in the antitrust suit, that premium can amount to 22% to 42% of the ad spend that goes through that system.

In summing up, it appears that if you want to know who can be trusted most with your data, it’s the companies that don’t depend on that data to support an advertising revenue model. Right now, that’s Apple. But as Brett also pointed out, don’t mistake this for any warm, fuzzy feeling that Apple is your knight in shining armour: “Apple has shown time and time again they are willing to sacrifice strong desires of customers in order to make money and control the ecosystem. Can anyone look past headphone jacks, Macbook jacks, or the absence of Macbook touch screens without getting the clear indication that these were all robber-baronesque choices of a monopoly in action? Is so, then how can we go ‘all in’ on privacy with them just because we agree with the stance?”

The Tech Giant Trust Exercise

If we look at those that rule in the Valley of Silicon — the companies that determine our technological future — it seems, as I previously wrote,  that Apple alone is serious about protecting our privacy. 

MediaPost editor in chief Joe Mandese shared a post late last month about how Apple’s new privacy features are increasingly taking aim at the various ways in which advertising can be targeted to specific consumers. The latest victim in those sights is geotargeting.

Then Steve Rosenbaum mentioned last week that as Apple and Facebook gird their loins and prepare to do battle over the next virtual dominion — the metaverse — they are taking two very different approaches. Facebook sees this next dimension as an extension of its hacker mentality, a “raw, nasty networker of spammers.” Apple is, as always, determined to exert a top-down restriction on who plays in its sandbox, only welcoming those who are willing to play by its rules. In that approach, the company is also signaling that it will take privacy in the metaverse seriously. Apple CEO Tim Cook said he believes “users should have the choice over the data that is being collected about them and how it’s used.”

Apple can take this stand because its revenue model doesn’t depend on advertising. To find a corporation’s moral fiber, you always, always, always have to follow the money. Facebook depends on advertising for revenue. And it has repeatedly shown it doesn’t really give a damn about protecting the privacy of users. Apple, on the other hand, takes every opportunity to unfurl the privacy banner as its battle standard because its revenue stream isn’t really impacted by privacy.

If you’re looking for the rot at the roots of technology, a good place to start is at anything that relies on advertising. In my 40 years in marketing, I have come to the inescapable conclusion that it is impossible for business models that rely on advertising as their primary source of revenue to stay on the right side of privacy concerns. There is an inherent conflict that cannot be resolved. In a recent earnings call,  Facebook CEO Mark Zuckerberg said it in about the clearest way it could be said, “As expected, we did experience revenue headwinds this quarter, including from Apple’s [privacy rule] changes that are not only negatively affecting our business, but millions of small businesses in what is already a difficult time for them in the economy.”

Facebook has proven time and time again that when the need for advertising revenue runs up against a question of ethical treatment of users, it will always be the ethics that give way.

It’s also interesting that Europe is light years ahead of North America in introducing legislation that protects privacy. According to one Internet Privacy Ranking study, four of the five top countries for protecting privacy are in Northern Europe. Australia is the fifth. My country, Canada, shares these characteristics. We rank seventh. The US ranks 18th.

There is an interesting corollary here I’ve touched on before. All these top-ranked countries are social democracies. All have strong public broadcasting systems. All have a very different relationship with advertising than the U.S. We that live in these countries are not immune from the dangers of advertising (this is certainly true for Canada), but our media structure is not wholly dependent on it. The U.S., right from the earliest days of electronic media, took a different path — one that relied almost exclusively on advertising to pay the bills.

As we start thinking about things like the metaverse or other forms of reality that are increasingly intertwined with technology, this reliance on advertising-funded platforms is something we must consider long and hard. It won’t be the companies that initiate the change. An advertising-based business model follows the path of least resistance, making it the shortest route to that mythical unicorn success story. The only way this will change will be if we — as users — demand that it changes.

And we should  — we must — demand it. Ad-based tech giants that have no regard for our personal privacy are one of the greatest threats we face. The more we rely on them, they more they will ask from us.