Newsletter #80: When Sheryl Sandberg joined Facebook, the social media giant was a $150 million a year business. Now it's a $118 billion business. This week Sandberg called time. Plus: Mastercard's facial recognition payments, Twitter is fined and Elon wants everyone in the office.
w/Issue #80 - 3rd June 2022
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This week I'm mainly covering the news that Sheryl Sandberg is stepping down as Facebook COO. It's a big story. Plus Mastercard's move to biometric payments. And a ton of other stuff about Twitter, Elon Musk (not Twitter related), Apple's AR/VR Glasses, some Space, some Crypto and some China CBDC.
Oh, and I just recorded Episode 3 of Big Tech Little Tech with Shaun this morning. It will be out very soon. Subscribe on your favourite podcast platform to be the first to hear it.
Sheryl Sandberg to Leave Facebook
Back Story: Sandberg has been the COO of Facebook for 14 years. More importantly, she was Mark Zuckerberg's right hand and instrumental in monetising the world's largest social network.
- Facebook revenue was c$150 million in 2007, the year before Sandberg joined. Last year, it was $118 BILLION.
Sandberg's tenure at Facebook is a tale of 2 halves. In the the first half, Sandberg was instrumental in making Facebook a money printing machine.
The second half is defined by 2 major events: in 2015 her husband passed away unexpectedly, followed a year later by Donald Trump becoming president, the Brexit referendum in the UK and the Cambridge Analytica scandal.
Emergence of digital ads
The hiring of Sandberg away from Google was seen as a major coup for Zuckerberg. Sandberg's role at Google is explained in The Ugly Truth (a book about the inner workings of Facebook by Sheera Frankel):
Sandberg had been in charge of Google’s in-house ad auction known as “AdWords” and of another program, called “AdSense,” which was used by publishers to run text and graphic ads on sites across the internet. The biggest innovation was Google’s use of search data to spit out ads directly related to a user’s query. Type in “Hawaii flights cheap,” and an auction immediately ran behind the scene for vendors to bid to place their ads for Honolulu budget hotels, swimwear, and surfing lessons within search results. It was the purest and most powerful way of directly pitching products to someone already in the mood for shopping.
Here's the thing: When Sandberg joined Facebook, she was the adult in the room. Mark Zuckerberg was only 23 and she was 38. At the time, it was seen as a major coop for Zuckerberg to bring Sandberg into the Facebook team.
- Kara Swisher described Sandberg as Zuckerberg’s “very hip mom”.
The 1st half - defining digital ads
In the begining: In the early days of Facebook, especially around the time of the $100 billion IPO in 2012, there was a big question about whether Facebook could actually make money.
- It’s incredible to believe it now, but back then digital ads was a fledgling business model and considered to be “unproven”.
When Sandberg joined she brought in discipline and processes and experience to an organisation that was largely run by college grads.
It also marked a clear demarcation of duties. CEO Zuckerberg was the geek who concentrated on product development and the underlying tech whilst COO Sandberg focused on making money and handling public relations. Sandberg brought a gravitas and credibility that opened doors to advertisers that had previously been closed to Zuckerberg.
In the early years, Sandberg’s profile grew outside the company. She was on Oprah, promoted the role of women in the workplace, published a book called Lean In * and became, arguably, the most famous COO in America.
The 2nd half - misinformation era
Fake News: In 2016, the world changed for Zuckerberg, Sandberg and Facebook. The social media giant was on the back foot as the Cambridge Analytica scandal broke about user manipulation in the run up to Trump’s election and the Brexit referendum. Both were directly tied to the Facebook business model that connected user data to advertising revenue.
- The Facebook ad machine was exposed as a vehicle that could be exploited to promote a political agenda in a highly targeted and effective manner in plain sight. Except that nobody saw it until it was too late.
For both the Trump and the Brexit campaigns, Facebook data was secretly harvested, manipulated and exploited to influence voters to support the political campaigns. Nobody can say for certain if it was enough to sway the democratic process in the USA and in the UK.
However, we can say with 100% certainty that both campaigns won!
Legacy of the most famous COO in America
Whilst it is used by almost 3 billion people every month (that’s more than 1 in 3 of the world’s population), Facebook will never shake off it’s connection to human rights abuse, the proliferation of fake news, the polarisation of society, the rise in mental health issues and teenage suicide, and election interference.
By association, this will be Sandberg’s legacy.
She will always be seen as the key player in creating the business model that fuelled the downside, as well as the upside, of Facebook. Because the fact remains, that for all the good that Sheryl Sandberg did throughout her time at Facebook, she was in a position of power and influence to have made material changes to address this issues, and she didn’t (or so it appears).
➣Why Sheryl Sandberg Quit Facebook’s Meta (Wall Street Journal)
Big Tech Little Tech - Shaun Weston and Rick Huckstep
Every fortnight, Shaun and I chat about what's happening in the tech economy. Nothing heavy, nor technical. In good old fashioned, plain and simple speak, we make sense of the latest stories so that even my mum can understand.
The podcast is available on all the major podcast platforms. You can find out more here.👇
Mastercard Piloting a Scheme For Shoppers to Pay Using Facial Recognition
Back Story: It’s underway at 5 grocery stores in Brazil, and Mastercard plans to debut it globally later this year. All that customers need to do is take a selfie or scan their fingerprint...and a credit card is linked to their biometric data.
Mastercard believes consumers want the easiest way to checkout. (You don't say!)
That's why they're confident in the technology’s adoption. Which is backed up by research from payment rival Visa. They surveyed consumers and found an overwhelming majority (86%) of shoppers are interested in using biometrics to make payments.
- Thereby supporting Mastercard's claim that the contactless biometric payments market is expected to reach $18.6 billion by 2026.
“All the research that we’ve done has told us that consumers love biometrics,” Ajay Bhalla, Mastercard’s president of cyber and intelligence, told CNBC. “They want making a payment at a store to be as convenient as opening their phone.”
Mastercard says customer data is encrypted for privacy protection, and the biometric data is replaced with a “token,” or set of alphanumeric characters, for security, according to a report by CNBC.
- Two-thirds (67%) of consumers express interest in using fingerprint scanning to make payments, per the Visa survey.
Consumer Adoption Is Driven By Convenience
Bigger Picture: Mastercard is the latest to push into biometric payment systems. There’s also the tech that Amazon has deployed at its Go stores, which are creeping into suburbia.
These are the cashier-less Amazon stores that allow consumers to walk in, pick up what they want and then walk out again, without having to go to a checkout till.
Increased adoption of cashier-less checkout is one reason why Amazon is trying to get out ahead of the competition. As Jeff Bezos used to say repeatedly, "convenience" is critical to winning and retaining customers.
And biometrics make shopping and paying for things as convenient as it gets. If you don't believe me, look at China!
w/Snippets of Insight and Information
Stories From Around The Tech Economy
🐦 Twitter’s privacy screwup
Twitter has been fined $150m for pushing people to give them a phone number for 2FA and then using that number to target advertising, without notice or consent. This practice started in 2013 and continued through to 2019.
🍎 Apple reducing reliance on China
The WSJ reports how Apple is trying to move more of its production outside China. The current round of lockdowns and the longer-term political risk of having so many eggs in a Chinese basket are cited as the key reasons.
🕶Apple Glasses: Coming in June?
Excitement and anticipation of the release of Apple's mixed reality Glasses was triggered when Apple filed trademarks for ‘RealityOS’ with a deadline two days after its WWDC developer event on the 6th of June. For many observers, especially Metaverse aficionados, glasses are the missing piece from the wearables triumvirate of smartphone, wireless earphones and AR glasses
✍️ A Closer Look At Substack
I have mixed views on Substack. Great idea (to create a bundled newsletter stack) but expensive (10% of all your earn). Anyhow, 2 recent articles caught my eye. The first in Vanity Fair on Substack's content policies which have failed to stop the newsletter platform from becoming a source of misinformation (a subject I covered last year). The second in the New York Times getting underneath the financials as Substack drop plans to raise $100 million on a $1 billion valuation in the current downmarket.
👔 Musk: Come To The Office Or Clear Off
Elon Musk has sent emails to Tesla ans SpaceX employees telling them in no uncertain terms that they either get back to the office or leave the company. Musk said that he expects Tesla staff to be in the office for a minimum 40 hours a week. And it has to be an office where their co-workers are based, not a remote office. Anyone who claims exceptional circumstances will be personally reviewed by Musk. In stark contrast to AirBnB's “work wherever you want" approach.
🤖 Elon Musk is Deepfaked in a Crypto Scam
A deepfake of Tesla CEO Elon Musk talking about crypto in a TED talk interview has appeared online. "Yikes. Def not me," Musk tweeted after seeing the 3 min video that appeared on YouTube last week. It shows a digitally altered Musk introducing the crypto platform known as BitVex. Spoiler alert: It’s a fake cryptocurrency scam.
P.S. I am a recovering deepfake victim too...
🚀 Space to Become a $1 Trillion Market
Citi released a 92-page report on the space industry, estimating that it will generate $1 trillion in revenue by 2040. The banking group speculated the satellite market will continue to dominate, but the fastest growth will come from “new space applications and industries” like space logistics and asteroid/moon mining. The global space economy’s value reached $424 billion in 2020, according to research from Space Foundation.
💵 Moneygram’s Crypto Money Transfers
Moneygram is launching a new stablecoin-based platform for international money transfers. Users will be able to easily send stablecoins and convert them to their local currency.
🇨🇳China Giving Away Free Digital Money
China is airdropping some residents $4.5M in e-CNY (I wrote about China's Central Bank Digital Currency) to help bolster the local economy.
🕵️♀️ Privacy Negotiations Between the EU and US Are a Mess
GDPR doesn’t work and isn’t working. Or is it? Meanwhile, people’s data is being collected on an industrial scale, often without their understanding, in ways that bridge both the online and offline worlds, according to a report by the Finnish Innovation Fund.
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⇒ Amazon now generates 40% of US parcel volume and delivers half of that itself, according to data from Pitney Bowes.
⇒ A third of Americans who earn $250K+/year live paycheck to paycheck, and many are millennials.
⇒ 333.2 billion is the number of emails sent per day in 2022. And it's getting bigger, expected to increase by 13% by 2025.
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