2018’s Most Innovative FirmDecember 7, 2018
The UK Parliament released a trove of emails illuminating the inner workings of Facebook. I believe the navel-gazing around “what to do” about Zuck and Sheryl Sandberg has become ridiculous. Each day, a different media outlet calls me and asks, “What can Mark and Sheryl do?” Failing to put in place safeguards to ensure your business isn’t weaponized by a foreign government and then lying to the public and your board render a simple solution: they can be fired. However, we’ve now entered the pile-on phase, where everything the social media firm does is cast in a negative light.
I’ve read through most of the emails released by the UK Parliament. My reaction? “So what?” The email getting the most play is a dialogue between Zuck and a Facebook executive agreeing to restrict video app Vine’s access to the Facebook API, making life much harder for the Twitter property. Yes, they practice full-contact capitalism and do anything they can to kill their competitors. As they should. What the articles conveniently omit is that Twitter, a few months before, restricted Instagram’s access to Twitter’s friend-finder feature — so they did the same thing to Facebook. It’s not Facebook’s culture of competition that’s the problem, but their culture of corruption, which is a function of monopolies.
The culprits here are the DOJ and the FTC, who have enabled the firm to grow unchecked and become an invasive species, owning the four most popular apps. The DOJ’s approval of Facebook’s acquisition of Instagram is the business equivalent of invading Iraq — it appears nobody asked, “What might happen?” Facebook, Google, and Amazon have become this fucked-up counsel of child-elders who get to decide who lives or dies in the fastest-growing parts of our economy. And, more often than not, the firms channel Robert De Niro from Goodfellas and kill everyone, “just to be safe.”
Prediction: By the end of 2020, AWS and/or Instagram are spun. If their stocks stay depressed, the spins would be accretive to shareholders, and the self-imposed breakups will head trust-busters off at the pass.
Hotels, Invasive Species, and 2018’s Most Innovative Firm
Airbnb and Google are growing into every orifice of the hotel industry.
Airbnb’s site gets over 40 million monthly visitors, more than hotel giants marriott.com and hilton.com combined. Airbnb ranks fourth most popular travel app on iTunes, trailing only Uber, Lyft, and Yelp … leaving hotel apps in the dust. Airbnb is, in my view, the most innovative consumer tech firm of 2018. Some examples:
— Airbnb Plus, which tags their best properties and adds hotel-like amenities and check-ins, putting luxury hotels squarely in their crosshairs.
— Airbnb Experiences, boasting over 5,000 activities that can be booked on their app, registering 2,500% growth in 2017.
— The new features are a good move from both a usage and search perspective. Gartner L2 research found 50% of Airbnb’s unbranded keywords are “things to do in…” NYC, Los Angeles, and other cities, driving to their experience pages. This allows Airbnb to compete for traffic usually owned by TripAdvisor and news media like Condé Nast Traveler and Thrillist.
Prediction: By the end of 2019, Airbnb is worth more than Uber.
Bad to Worse
It goes from bad to worse for the incumbent players in the hotel sector. Google used to return text ads from hotel brands for relevant searches. However, sensing a chance to extract more margin from the sector, the search firm has created another layer, the Google-owned booking experience. The EU keeps making Google sign consent decrees mandating Google will send people to the best place, and not a place they can make more money. And, spoiler alert, Google keeps ignoring the decrees and has now registered two multibillion fines from the EU.
“I could give a fuck,” said Google.
Florida Power and Light is my electric utility, and because most residents of FL have no choice but to buy juice from FPL, they are regulated. If FPL were to decide that a Fort Lauderdale manufacturer of solar panels might be a threat to the long-term prospects of FPL, they could just cut off their electricity and … no more worrying about solar. But they can’t, because we have (correctly) recognized this is bad for competition and the economy. This is what we refer to as “monopolies that engage in anti-competitive behavior.”
Some other examples of monopolies? Google, Amazon, and Facebook.
However, in the case of electricity, we’ve decided these local monopolies should be required to offer electricity on an equivalent basis, without favor. With 91% of the search market, the top four apps, and 50% of the e-commerce market, Google, Facebook, and Amazon are the local utility, only they are global. We’ve fallen for a false narrative that these firms drive innovation. No, they cauterize innovation, as anything that survives infancy is either acquired or subject to infanticide, and we’re stuck with coal-fire plants and carbon emissions. A lack of regard for the commonwealth, competition, and privacy are the carbon emissions of the digital age.
The navel-gazing about celebrity execs’ futures is another distraction from negligent boards and AWOL government agencies that aren’t earning their 23% of GDP salaries.
That’s it, I’m going to write me a letter.
Life is so rich,
P.S. This week on the Pivot podcast — the business innovation story of 2019 and what Kara Swisher is getting me for Christmas.