Monthly Archives: June 2019

June 12, 2019 · 10:36 am

Misaligned Interests

Did you happen to hear about (or read!) the NY Times article on how a young man got “sucked into the vortex” of radical videos on YouTube? It’s an interesting and scary read. It’s about how a person goes to YouTube to watch a video on one thing and ends up multiple videos later watching something completely different and often dangerous.

As the article says:

YouTube has been a godsend for hyper-partisans on all sides. It has allowed them to bypass traditional gatekeepers and broadcast their views to mainstream audiences and has helped once-obscure commentators build lucrative media businesses.

As usual, we’re not here to rant about the politics of these videos. It’s just as easy for the videos to be dangerous and non-political and even though YouTube specifically bans harmful or dangerous content, they can’t catch everything.

The real issue here is YouTube’s – and many other platforms’ – business model. They make money by keeping you engaged and the way that they do that is often via a recommendation engine. That engine uses an algorithm that rewards videos that have lengthy watch times by promoting them more often. Of course, the more engaged you are, the more ads you’ll see and that’s really the problem. Most of the popular platforms follow that business model and their interests don’t necessarily align with yours. They all have some sort of algorithm which on YouTube, as the article says, is

the software that determines which videos appear on users’ home pages and inside the “Up Next” sidebar next to a video that is playing. The algorithm is responsible for more than 70 percent of all time spent on the site.

Of course, you can turn off the recommendations. You can also delete your search history, pausing it going forward, and your watch history which will prevent the algorithm from determining what you usually watch. If you haven’t hidden the video suggestions (it’s in your settings) at least you’ll see lots of pretty neutral offerings. More importantly, you’ll take back control and realign their interests with yours.

It would be easy for YouTube and others to prevent a host of problems by killing off the recommendation engine but they never will because it’s the thing that drives their business model. In a perfect world, every business’ interests would align perfectly with those of their customers. Maybe it’s because the big platforms are out of alignment with us that there is so much anger directed toward them?

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June 7, 2019 · 5:34 pm

Who Owns You?

Foodie Friday! I installed a couple of the food-delivery apps on my smartphone this week. Some of my favorite local places use the delivery services to expand their business and I thought having the ability to order in might be a nice option. Of course, that got me thinking about what exactly the restaurants got besides the additional order (at a lower price when you factor in the service’s cut but no service cost). The answer, as it is with almost everything today, should have been data but as it turns out, not so much.

The reality is that the delivery apps hang on to the data. They “own” the customer, not the restaurant, and that’s a problem, or it should be. Restaurants are giving up the direct connection to their customer by not getting that data and they have no way to combine it with their offline, real-world data gathered when I actually show up to eat as well as with the data they might get from a reservation service such as Open Table.

Ownership of the customer is an enormous issue no matter what business you’re in. For example, your car spits out reams of data about your location, your driving habits, and many other things. How many? A report by Consumer Reports said that “There are more than 200 data points in cars today, with at least 140 viable business uses.” Who owns the data and, therefore, the customer? The dealer who sold you the car? The manufacturer? I, of course, think the right answer is that YOU own the data until you give it to someone for a specific purpose.

Think about how many things around you gather data these days. Your TV, refrigerator, heck, even your toothbrush might be collecting information about you and your habits. Who owns you as a customer? I bought my TCL TV through Best Buy. It has Roku built in. Who “owns” me? What’s being shared?

It’s a question you need to ask as a business person when you partner or work with a third party. I think customer ownership is a fundamental issue and it’s only going to become more important. Of course, as a consumer, you ought to be every bit as concerned but we’ve talked about privacy a lot here so not today (84 posts and counting in the last 11 years!).

I really don’t care much about DoorDash or GrubHub. Without the restaurants they serve, I wouldn’t ever install or use them. I’m not their customer in any real sense – they provide a nice service but it’s the food I’m after, right? So why do they think they have a right to own me? Are you asking that question at all? Maybe you should!

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June 5, 2019 · 12:53 pm

Shared Interests

You can call shared interests believing your own BS or you can call them eating your own dog food. I like to think of it as having skin in the game, a phrase coined by Warren Buffet referring to a situation in which high-ranking insiders use their own money to buy stock in the company they are running. I use it in a much broader context and it’s something you should be looking for at every turn.

Photo by rawpixel.com

I can’t tell you how many companies paraded into my office when I was in corporate life promising to solve issues we might be having with revenue generation, audience measurement, or dozens of other common problems. Many of the offerings were actually quite interesting although not yet deployed in the real world to any extent. If I was interested but skeptical, I’d usually make an offer somewhat akin to this:

I like your product but it’s awfully difficult for me to stroke out a check on something that is promising but unproven. So let’s do this. You provide the product and service as you say and I will pay you a much lower fee (or nothing!). However, if you deliver the results you say you will deliver, we’ll set up a success fee that will pay you more than you’re currently asking. In fact, if your numbers are right, you’ll earn double what you are charging.

In other words, I wanted them to have skin in the game. I wanted our interests to be perfectly aligned and I wanted there to be consequences for us both if we didn’t achieve what we set out to do. The reality is that you should always ask yourself who has what skin where because most businesses do their damnedest to avoid any sort of risk by putting in some skin. Sure, they pay lip-service to the notion of entrepreneurship but there are few who have put their money where their mouth is and invested into the tech ecosystem or directly into startups. Pay attention – much of the time the investment comes only after the product has proven itself or is a direct ripoff of something that’s already successful. I call this the second penguin strategy (you don’t want to be the first penguin that jumps in the water since there may be predators lurking).

If you’ve ever played cards, inevitably there is a kibitzer around. You know – the person who looks on and often offers unwanted advice or comment. They have no skin in the game. There are kibitzers in business too – you can find them writing for many trade publications – and you might even have some in your company as partners or clients or even employees. Not many companies took me up on my offer to make them more money. The few that did were fantastic partners and I still speak with some of the executives from those firms almost 20 years later. Having skin in the game made all the difference. What do you think?

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