Is Facebook the Next AOL?

 

I used to like AOL. Back in the day we called it by its full name, America Online. Prior to the broad penetration of the Internet, it was how we connected with each other. It was the company we paid on a subscription basis for both access to digital connectivity and content. For the ownership of AOL, it was a very, very good business, so explosive that it frightened the old guard in media and was merged into an even bigger entity, AOL Time Warner. If you were born after that wildly failed merger, it is difficult to convey just how powerful and influential AOL had become. Truth be told, I still have an active AOL account and get teased about that by friends. I wound it so tightly into my life it is still hard to completely unwind despite its deterioration.

I also like Facebook. As an individual enamored with words, I find it an irresistible way to communicate with a circle of acquaintances on everything from politics and social causes to MLB, The Beatles, wine, and business opportunities. As an author of fiction, I find it an essential tool to communicate with readers, let them know a new book is coming, tie that book into news of the day, and connect all of that with the monthly postings on my blog. Another confession: I was one of the earliest adopters of Facebook over the age of 40, invited for business reasons to create an account back when it required a .edu email to become a member. Companies I’ve led have been active buyers of advertising on Facebook at every stage of its evolution. Yet even with all that passion, I have been an ardent critic of Facebook. It reminds me of AOL. I hope it won’t suffer the same fate.

Is it alarmist to think that Facebook could collapse at the level of AOL simply because of its latest data breaches? Yes, I think that would be overstating the calamity of its current situation, and if Facebook does implode, it will likely be a slow and painful process much like AOL with a long-tail legacy business lingering into the digital future. I am not predicting that will happen. I am suggesting that it could if Facebook does not radically rethink its business in real time and take immediate action to course correct.

I am not specifically reacting to the gross abuse of Facebook’s members by Cambridge Analytica, but if ever there was a wake-up call to Mark Zuckerberg this bell is tolling awfully loudly. The sound of that alarm is the crying out of customers reminding the leadership of Facebook that they are not users as the descriptor goes, but human beings who have chosen to enter into a relationship with a brand. As I have mentioned here many times before, a brand is not a logo, a brand is a promise. When that promise is violated, all bets are off for the future of the brand. I believe AOL broke its promises way too many times and then sadly faded away. Facebook is now breaking many of its promises, real or presumed, and if the leadership there doesn’t do something material about it soon, they are rolling the dice against fate.

Here are the three most obvious areas of overlap I see between Facebook and AOL, and how addressing them now aggressively might change the course of history for the social network that changed our lives in the last generation much as the online access ramp that carpet-bombed the nation changed it in the previous generation.

DUMP THE MVP

I am at odds with many of my colleagues on the topic of “minimum viable product,” but I have always vastly disliked the MVP acronym and concept. I know how much Silicon Valley treasures the notion of The Lean Startup, and I suppose if a fast path to cash generation is primarily a company’s goal, a crappy first-generation product bounced off a wave of early adopters who will offer critique could make business sense. Because I favor brand development over fast monetization, I have never bought into the whole idea of “moving fast and breaking things.”

How did Facebook get into this fix with inexplicable amounts of customer data being exploited? Top management didn’t take the time to fully think through the implications of their product decisions. Likewise, AOL was legendary for releasing updates that crashed our computers and often made it impossible to even log onto the system. MVP is a shortcut that disrespects customers. Build excellent products tested thoroughly before deployment, and customer trust will compound rather than be wagered.

LEAVE SOME MONEY ON THE TABLE

AOL came to love hammering our screens with advertisements. We got them at sign-on, with our email, with instant messaging, with our stock listings, with our sports scores. The ad insertions were ceaseless and endless. When it was the onramp to connectivity we were already paying a monthly fee for the privilege of being an advertising target, but this additional banquet of media cash was a renewable feast of dots and spots. With so many eyeballs and so little competition they also assaulted advertisers with ever-increasing campaign rates.

Today on Facebook it isn’t quite that aggressive, but it’s getting there. What’s worse, the advertising depends on crawling through our personal profiles to target ads with astonishing performance response. The media business is certainly a game of haves and have-nots, but company leaders have to keep their eyes on the prize. Does the company think its demise is inevitable and thus seek to exploit its visitors with endless badgering? Or can it modulate the experience to show us a reasonable number of ads that are relevant but not beyond our comfort levels of intrusion?

SUSTAIN AN AUTHENTIC MISSION

Here we return to the luster or disposability of a brand, to the ability to make a promise and deliver on it consistently in the face of day-to-day business realities and financial opportunism. AOL’s stated mission was “to build a global medium as central to people’s lives as the telephone or television… and even more valuable.” AOL actually didn’t do that—the internet itself obviated its driving purpose—but rather than build on the goodwill of its access brand and attempt to enhance the customer experience through creativity, the company sought to keep customers in a “walled garden” and intervene in easy access to the open internet. Customers soon enough revolted and left in droves.

Facebook’s initial mission was “to make the world more open and connected.” That mission more recently has been revised “to give people the power to build community and bring the world closer together.” Those are both lofty ideals. The question is whether Zuckerberg had the maturity to comprehend the implications of what path his company’s technology cut through the landscape as a result. Of course it seems like a great idea to be closer to our friends and meet new people along the way, but if that compromises our privacy and personal security, is it worth it? Who gets to decide that? I can’t navigate Facebook’s privacy tree and I work in the medium. If its brand offers us a lasting promise of sharing and collaboration, does it also offer any guarantees of protection? If not, then we arrive at the cynical conclusion: “If we aren’t paying for the product, we are the product.” If a company wants to build a brand for the long-term, that’s simply not a sustainable value proposition.

I would guess if AOL founder Steve Case had it to do over again things would have been different at his once pioneering enterprise. It was a younger audience that first championed AOL, but his demographics didn’t stay young as the massive brand quickly lost its cool factor. Facebook is already seeing a similar demographic shift as its relevance with younger customers is waning, ceding that excitement to newer brands. I wonder if Zuckerberg will someday have the same regrets as Case or if he will find a way to shift gears with thundering resonance and reinvent his company to achieve a greater destiny.

The answer isn’t in testifying before Congress, any more than it is about inescapable government regulation. The answer is in balancing business success against the real human needs of customers, about making a promise and keeping it, about building a brand that stands for something more than the dollars it attracts. Innovation is both challenging and valuable. Trust is much harder and worth so much more.

Elon Musk Blows My Mind

I don’t know Elon Musk. I wish I did. This guy knows stuff. He’s the real deal.

MuskIf there is a possible next Steve Jobs or Bill Gates, it could be him. He’s not goofing around with thin stuff that’s going to come and go. He already did consumer software engineering as his opening act as a cofounder of PayPal. With the massive payday he got from eBay for the sale of his companya company that continues to operate as such an important platform it could someday be spun off again as an independent entityhe could have taken the path of least resistance and become an elder statesman of the industry, a board member, an investor, a wise individual of counsel. Not Elon Musk. He started not one subsequent company, but twoTesla Motors and SpaceXand leads both as CEO. He is also the CTO of SpaceX and the chief product architect of Tesla. Not exactly a path to retirement. He’s really, really changing the world.

I don’t know if he’s a nice guy. Like I said, I have never met him. But he is truly impressive and worth studying. Here are some perhaps not so obvious reasons why:

A real track record of repeat innovation.

A lot of people talk about being serial entrepreneurs. Elon Musk has pioneered three immensely important companies. The ability for an innovator to find repeat success in entirely new ventures is perhaps the rarest of proven attributes. Edison did it. So did Walt Disney and Steve Jobs. Musk made a mark in digital payment systems, then battery-powered automobiles and low-cost rocket propulsion. He didn’t start life as a rocket scientist, but he challenged himself to become one. Try to find a resume like his anywhere. I don’t think you can. He not only articulates a clear, bold vision, he leads from the front lines as a player-coach. He is simultaneously a thinker, a doer, and a peer-respected personal risk-taker with real skin in the game. He makes disruption make sense. That’s how you fire up a team and get results.

The work he does is important.

It was not clear to everyone in the first dot-com bubble that digital payments would be essential to our economy. Heck, most of us were lucky if we had a phone that could do email back then. PayPal opened our eyes. People have been betting against alternatives to fossil-fuel powered automobiles since the first suggestion of battery power on our roads. No matter how many failures it takes, we know that we can’t rely on the limited resource of petroleum forever. Space travel has been massively expensive, the province of federal bureaucracy and a very few goliath government contractors to date. We no longer have the luxury to spend endlessly on going into orbit and beyond, yet we know it is human destiny to explore our universe. All of this matters big time. Musk is actively pursuing a broad but selective set of challenges that he decides warrant his time and focus. This is real turf with lasting impact. It creates sustainable, well-paying jobs. Even when it fails, it moves the ball forward.

He is courageous and daring, but not reckless.

Earlier this year when Elon Musk was profiled on 60 Minutes, he said he was an engineer first. I do think he believes that, which is part of what makes him great, but even more than an engineer, even more than innovator, he is a pioneer. To be a pioneer in technology doesn’t just mean you have interesting ideas. It means you stand by your ideas and will them into being. Musk said in the 60 Minutes piece that with SpaceX he went “past strike 3 to strike 4,” not just betting the farm in failure, but staying with his conviction to the last test he could fund, even if it meant losing everything. He knew he was right, and if he wasn’t right, he needed to exhaust every resource at his disposal to make the case that he should have been right. When Musk recently faced a roadblock in submitting a competitive bid for a government contract controlled by Lockheed Martin and Boeing, he sued the federal government for the right to compete at substantially lower cost. Imagine the guts, to take on his own customer in a public forum, risking financial ruin for a principle. He won an injunction from a federal judge. Whether he ultimately prevails in winning the contract (and I think he will), there is little question that the price of that contract is coming down. Want to know how to get the government to think smarter about our tax money? I like this way.

He walks the walk, with standards that matter.

So much of what I write about on this blogideas like “good enough is not good” and “eat your own dog food”are very hard to understand unless you have lived them. If you’re lucky in your career, you get to work for someone for a while who grinds this stuff into your brain until you literally cannot act any other way, no matter the stakes, no matter the challenges. If you don’t get a boss who inserts that chip into the back of your spinal cord, study Elon Musk. You can’t cut corners on quality with the work he tackles, or people die. Of course you’re going to say, Well, in automobiles and rockets, people do die. Sadly in the march of progress where new machinery does fail, there is no way around that no matter the commitment to extraordinary quality, but the question is, what is the ethos at the core of an enterprise? Is it profit first, a love letter to Wall Street with lip service to safety and excellence? Or is it a standard of safety and excellence that exists a priori to all other decision-making that of itself creates value? When I see Musk discuss failure or success in any public setting after something has gone wrong or right, I don’t worry that his statement has been pureed by a publicist. I see an engineer who knows winning means perfection, and as elusive as perfection remains, he is never self-satisfied, never standing on his laurels. What do you really need to say about a reusable rocket that leaps sideways and then lands on its launchpad? The Grasshopper speaks for itself.

Why write about Elon Musk?

In this never-ending discussion of whether we are in a tech bubble, I have grown weary of broad generalizations. If all we are worried about is whether the stock market is due for a correction, then we are wasting brain cycles on an inevitable head fake we cannot control, so why bother? Our world has an abundance of trendy apps, head-bobbing diversions, and flavor-of-the-month prognostications of what at the moment constitutes cool. You know what’s cool? Stuff that lasts, stuff that can have a lasting impact on growing our economy, stuff that makes scientific dreams into tangible realities, and stuff that in doing so makes investment capital make sense. Musk is doing that, which to me looks like real leadership, and it feels good to applaud him. I don’t care that he is a billionaire. I care that he is a creative leader, with half his life likely still ahead of him to teach us things we don’t know and take us places we couldn’t otherwise find.

As Andy Grove taught us decades ago, Only the Paranoid Survive. Somewhere along the ride, Elon Musk must have gotten the memo. He is probably rewriting it with some form of ink yet to be discovered.

Too Busy To Save Your Company

One of my final posts of 2012 memorialized the brands we lost last year, and inspired the question, how do so many companies so often and so badly miss the boat? It’s even more perplexing when they know where it’s docked, what time it leaves, and who the captain of that departing ship is. Seems they are just too busy to make their way to the boarding gate.

Yep, you could have found your way out, met the challenge of Creative Destruction, and banked the opportunity by reallocating resources from historic enterprises to future growth, but you didn’t. How does that keep happening?

In a recent Wall Street Journal profile, longtime media executive Strauss Zelnick, who has worked his way through several platform shifts, summarized it perfectly:

One of the problems with some of the diversified media conglomerates is you get the benefit of the cash flow of legacy assets and the burden of owning legacy assets. You own a motion-picture company and you should be thinking about what digital technology will do to your business. But when you wake up in the morning you’ve got to be on the phone with the folks in your studio, talking about a $200 million picture that’s going to cost $300 million and the star who’s not showing up at work and the marketing plan that’s going to cost you $100 million world-wide.

When someone says to you, “I think you should meet with this guy, he’s 26 years old, he graduated from MIT, he’s in Brooklyn doing a really interesting social media startup,” you say, “It does sound interesting but I’m too busy to do that.”

That happens a lot, way too often. People are so busy in their jobs, ensconced in the past, they have no time to breathe the future. Then the future becomes the present, and it’s too late.

Busy, busy, busy. But is busy the same as productive? Not quite. Sometimes, not at all. Companies intend to keep you busy. If you aren’t busy, or if you at least don’t look busy, you’re probably at risk. But do you add real value, especially in light of constant change?

How we prioritize our time says a great deal about what we value. In leadership positions, we have to manage available time carefully, our “to-do” lists are rewritten each day, week, month, and year as a series of choices. In the simplest examples, we have to decide which emails and calls to answer, which reports to read, which employees and customers to see. On a more grand scale, we have to develop a strategic plan and manage the component tactics that are meant to create value for all stakeholders in that plan.

Exhaustion does not look forwardWe have an awful lot of choices to make short-term and long-term. There are things we can change and some we cannot. One thing human beings have yet to do is create more time on the clock. We think we do this by multi-tasking (or foregoing sleep, family, and fun), but we are just borrowing against a fixed asset. The choices we make about priorities have much more impact on the far-ranging output of our ventures than any hour we steal back, the memo we draft during the meeting we’ve decided we can ignore while sitting in it.

Which brings us back to the most important question—are we not only busy, but productive? Are the choices we are making that comprise that busy state truly adding value commensurate with our position and expectation? Surely meeting with every young entrepreneur or technologist who fires off a business plan would be impractical, in fact irresponsible! Think of all the wasted time given the low the hit rate for unproven initiatives. Many executives choose to delegate this kind of responsibility to a new box on the org chart—for a while it was vogue to have a Chief Innovation Officer. I was sourced on what I thought of that several times over the past few years, to which I replied, isn’t the CEO always the Chief Innovation Officer? And if she or he is, doesn’t everyone on the leader’s team, up and down the line, know immediately they are a de facto part of the solution by virtue of the reporting structure? Remember the old maxim—what my boss finds interesting, I find fascinating.

Carving out discretionary time might be the most important thing an executive can do—thinking time, learning time, creative time—and yet, where does it get prioritized? Too often somewhere between doing an expense report and tidying up your desk, after hours when you’re exhausted. What if you scheduled an hour at the beginning of each day specifically for exploratory purpose? Or if not at the beginning of the day, as a respite sometime during the day? You could block it on your calendar like an appointment with your boss, inviolable, as important as anything else you are doing. You could make it clear to those around you that you want them to help you fill that hour with introductions to out-of-the-ordinary people, invitations to exhibits, maybe just an obscure white paper on a tangential topic. Your hour could then become their hour, and the exploration could cascade. Would you catch every single opportunity that might have eluded you? Doubtful. But would you instill a culture of openness where meaningful resources were clearly dedicated to the unknown? It couldn’t hurt.

Just walking that walk, talking often about your natural curiosity, leading by example to set the tone for the mandate and institutional respect of creativity, yeah, I think that would help. There is a good deal of room between having to ingest every new idea that comes your way and fully delegating innovation to an isolated “special projects” department. Balance in leadership is critical, making good on today’s commitments while preparing for tomorrow, and it would be hard to maintain respect in an organization for a boss who neglected contractual obligations that paid the bills to wander aimlessly in dreamland.

Clearly there is no textbook approach on getting this right or fewer companies would fail, but leaders who strive to find a workable balance between maintaining focus on existing lines of business while bridging access to the unknown—even if only by maintaining an honest open-door policy—seem to have a better shot at extended shelf life. Whenever I worked for someone who did this, who asked me to bring them interesting stuff to look at that may not have mattered to everything else we were doing, that made me think harder about everything we weren’t doing to deflect the attackers quietly sneaking up on our castle. It also led to a few projects over the years I never would have conceived could make a difference in our business.

Fostering a culture of openness is much more promising than insisting on a culture of busy-ness. And there you have it, that strange root word that compels us to activity often in abstraction of thought. We need both to survive, don’t you think? If you have a moment, get back to me on that—although I will understand if your dance card is full. In fact I expect just that.

Learning from Mars

If you went to elementary school circa the 1960s, you remember that one of the few times TV was brought into the classroom—likely a dusty, early model, enormous 21-inch Zenith B&W CRT with bent rabbit ears, strapped to a prison issue, grey steel rolling wheel cart—was for the Apollo lift offs, splash downs, and moon walks. During those turbulent years of hard-won civil rights and compounding economic expansion, you might have dreamed about growing up to be the next Mick Jagger, but it is equally possible you aspired to have The Right Stuff and be the next Neil Armstrong.

The Space Race captured our imaginations. We watched in awe as the first boot imprint and an American flag were planted in the Sea of Tranquility. We lost sleep with the good people at Houston who had “a problem” bringing home Apollo 13. It was all so captivating, the science in our textbooks was made real, technology was cool, and the Warp Factors of Star Trek seemed someday plausible. I’m glad I got to experience that as a child—it made childhood more childlike and less childish. The Little Prince would have been proud.

Much has been written about the fall off in public enthusiasm for the space program after the tapering Apollo missions and the less grandiose but still near miraculous Space Shuttle missions. As we left The Cold War behind with the collapse of the Soviet Union, we came to worry less about controlling our Solar System. Satellites became our path to better television and radio entertainment, not so much a magic portal to the future as a manufactured bridge to enhanced convenience. It all became ordinary, and then expensive, a difficult pair to keep at the high-end of federal funding without public enthusiasm. We moved on, to the information age, to the PC revolution, to the wildly lucrative internet. NASA was scaled back year after year, and although we knew that wasn’t optimal, we were largely okay with it.

Too often we forget all the ancillary learning that occurred as part of space exploration—not just the nifty consumer products like cordless power tools and vastly improved athletic shoes, but the processes of working together in high function teams. Getting tonnage into and out of space safely has never been a job for individual heroes as much as it sets the tone for working together in groups, combining scientific work methods that emphasize cooperation, breaking down gigantic projects into manageable tasks. Engineering is a profession of shared ideas, where the accuracy of each single contribution matters immensely, but the compiled knowledge of all participants matters even more. We take so much of that kind of process for granted now when we bite off big chunks. I wonder if we take appropriate time to digest just what the process of doing the incredible really means.

As we took a brief intermission from the Games of the 30th Olympiad these past few weeks to observe the otherworldly, never before tried jet-softened hard landing on Mars, I was left pondering if perhaps we were being a bit too casual about the successful parachuting of the Curiosity Rover. No, there were no astronauts on board, and yes, we had landed on Mars before—but not this way, and not with a nuclear powered craft of such immense size and scale. I think everything that involves operating with precision at distances of this magnitude is astonishing, and no matter how clear the physics, we should celebrate with the geniuses at JPL and NASA anytime they pull off the near impossible. Getting to Mars and sending back data to Earth is not a little thing no matter how many times we do it.

This one left me thinking even further. In the midst of a floundering economy and awful recession, precisely the opposite of the Apollo climate, our national tech teams did more with less and made us proud. What were the business lessons, I wondered—more ancillary byproducts of this adventure in science—from which we can additionally benefit in learning by example? I am sure there are many, but three leap out for me:

  1. Difficult is Good.  Paraphrasing President Kennedy’s challenge to set an arbitrary deadline without a known roadmap, the Curiosity team chose their path not because it was easy, but because it was hard. This was wide-eyed enthusiasm for a mission about something other than personal gain. Want people to rally around a task? Give them something where they need each other, where failure is acceptable in concept, but not in approach. Big problems are always worth solving.
  2. Resilience is Rebound.  Here was a team that had just put the Shuttle in mothballs, experienced colossal layoffs, and had no choice but to accept for the immediate future that our astronauts would have to hitchhike across the galaxy in the form of renting seats from former competitors. They put this behind them by committing to the project at hand.
  3. Sharing Triumph is Personal.  How do you get a team fired up and motivated? Bypassing cynicism is a decent route. This mission was about proving what was possible, about intrinsic meaning as much as the survival of equipment. The Curiosity team built pride because they did something together they will forever share, advancing progress, continuing exploration. Often you forget the details of a project, but you don’t forget people who matter. This is where emotion has a clear role in that which is otherwise objective.

I hope enough people at home were paying attention, partly because the landing was worthy of our attention, but more because when you think about it in the abstract, there is more application than meets the eye. Getting out of this recession is no small task, and it won’t be our government who gets the job done. It will be teamwork, commitment, creativity, motivation, and entrepreneurial spirit. Our move forward will be economic, but satisfaction has come from more than that. It will be of the human spirit, with celebration in the process of innovation as well as getting some problems solved.

I like that they named the rover Curiosity. It’s a good, real world metaphor. It sings aspiration. It’s worthy of our attention, a form of pedagogy that really does come from another planet.