Opinion
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If we let the US Postal Service die, we’ll be killing small businesses with it
Laura Behrens Wu is the co-founder and CEO of Shippo, which is building a shipping platform for 21st century e-commerce.
Since moving to the United States, I’ve come to appreciate and admire the United States Postal Service as a symbol of American ingenuity and resilience.
Like electricity, telephones and the freeway system, it’s part of our greater story and what binds the United States together. But it’s also something that’s easy to take for granted. USPS delivers 181.9 million pieces of First Class mail each day without charging an arm and a leg to do so. If you have an address, you are being served by the USPS — and no one’s asking you for cash up front.
As CEO of Shippo, an e-commerce technology platform that helps businesses optimize their shipping, I have a unique vantage point into the USPS and its impact on e-commerce. The USPS has been a key partner since the early days of Shippo in making shipping more accessible for growing businesses. As a result of our work with the USPS, along with several other emerging technologies (like site builders, e-commerce platforms and payment processing), e-commerce is more accessible than ever for small businesses.
And while my opinion on the importance of the USPS is not based on my company’s business relationship with the Postal Service, I want to be upfront about the fact that Shippo generates part of its revenue from the purchase of shipping labels through our platform from the USPS along with several other carriers. If the USPS were to stop operations, it would have an impact on Shippo’s revenue. That said, the negative impact would be far greater for many thousands of small businesses.
I know this because at Shippo, we see firsthand how over 35,000 online businesses operate and how they reach their customers. We see and support everything from what options merchants show their customers at checkout through how they handle returns — and everything in between. And while each and every business is unique with different products, customers operations and strategies, they all need to ship.
In the United States, the majority of this shipping is facilitated by the USPS, especially for small and medium businesses. For context, the USPS handles almost half of the world’s total mail and delivers more than the top private carriers do in aggregate, annually, in just 16 days. And, it does all of this without tax dollars, while offering healthcare and pension benefits to its employees.
As has been the case for many organizations, COVID-19 has significantly impacted the USPS. While e-commerce package shipments continue to rise (+30% since early March based on Shippo data), it has not been enough to overcome the drastic drop in letter mail. With this, I’ve heard opinions of supposed “inefficiency,” calls for privatization, pushes for significant pricing and structural changes, and even indifference to the possibility of the USPS shutting down.
Amid this crisis, we all need the USPS and its vital services now more than ever. In a world with a diminished or dismantled USPS, it won’t be Amazon, other major enterprises, or even Shippo that suffer. If we let the USPS die, we’ll be killing small businesses along with it.
Quite often, opinions on the efficiency (or lack thereof) of the USPS are very narrow in scope. Yes, the USPS could pivot to improve its balance sheet and turn operating losses into profits by axing cumbersome routes, increasing prices and being more selective in who they serve.
However, this omits the bigger picture and the true value of the USPS. What some have dubbed inefficient operations are actually key catalysts to small business growth in the United States. The USPS gives businesses across the country, regardless of size, location or financial resources, the ability to reach their customers.
We shouldn’t evaluate the USPS strictly on balance sheet efficiency, or even as a “public good” in the abstract. We should look at how many thousands of small businesses have been able to get started thanks to the USPS, how hundreds of billions of dollars of commerce is made possible by the USPS annually and how many millions of customers, who otherwise may not have access to goods, have been served by the USPS.
In the U.S., e-commerce accounts for over half a trillion dollars in sales annually, and is growing at double-digit rates each year. When I hear people talk about the growth of e-commerce, Amazon is often the first thing that comes up. What doesn’t shine through as often is the massive growth of small business — which is essential to the health of commerce in general (no one needs a monopoly!). In fact, the SMB segment has been growing steadily alongside Amazon. And with the challenges that traditional businesses face with COVID-19, more small businesses than ever are moving online.
USPS Priority Mail gets packages almost anywhere in the U.S. in two to three days (average transit time is 2.5 days based on Shippo data) and starts at around $7 per shipment, with full service: tracking, insurance, free pickups and even free packaging that they will bring to you.
In a time when we as consumers have become accustomed to free and fast shipping on all of our online purchases, the USPS is essential for small businesses to keep up. As consumers we rarely see behind the curtain, so to speak, when we interact with e-commerce businesses. We don’t see the small business owner fulfilling orders out of their home or out of a small storefront, we just see an e-commerce website. Without the USPS’ support, it would be even harder, in some cases near impossible, for small business owners to live up to these sky-high expectations. For context, 89% of U.S.-based SMBs (under $10,000 in monthly volume) on the Shippo platform rely on the USPS.
I’ve seen a lot of talk about the USPS’s partnership with Amazon, how it is to blame for the current situation, and how under a private model, things would improve. While we have our own strong opinions on Amazon and its impact on the e-commerce market, Amazon is not the driver of USPS’s challenges. In fact, Amazon is a major contributor in the continued growth of the USPS’s most profitable revenue stream: package delivery.
While I don’t know the exact economics of the deal between the USPS and Amazon, significant discounting for volume and efficiency is common in e-commerce shipping. Part of Amazon’s pricing is a result of it actually being cheaper and easier for the USPS to fulfill Amazon orders, compared to the average shipper. For this process, Amazon delivers shipments to USPS distribution centers in bulk, which significantly cuts costs and logistical challenges for the USPS.
Without the USPS, Amazon would be able to negotiate similar processes and efficiencies with private carriers — small businesses would not. Given the drastic differences in daily operations and infrastructure between the USPS and private carriers, small businesses would see shipping costs increase significantly, in some cases by more than double. On top of this, small businesses would see a new operational burden when it comes to getting their packages into the carriers’ systems in the absence of daily routes by the USPS.
Overall, I would expect to see the level of entrepreneurship in e-commerce slow in the United States without the USPS or with a private version of the USPS that operates with a profit-first mindset. The barriers to entry would be higher, with greater costs and larger infrastructure investments required up-front for new businesses. For Shippo, I’d expect to see a much greater diversity of carriers used by our customers. Our technology that allows businesses to optimize across several carriers would become even more critical for businesses. Though, even with optimization, small businesses would still be the group that suffers the most.
Today, most SMB e-commerce brands, based on Shippo data, spend between 10-15% of their revenue on shipping, which is already a large expense. This could rise well north of 20%, especially when you take into account surcharges and pick-up fees, creating an additional burden for businesses in an already challenging space.
I urge our lawmakers and leaders to see the full picture: that the USPS is a critical service that enables small businesses to survive and thrive in tough times, and gives citizens access to essential services, no matter where they reside.
This also means providing government support — both financially and in spirit — as we all navigate the COVID-19 crisis. This will allow the USPS to continue to serve both small businesses and citizens while protecting and keeping their employees safe — which includes ensuring that they are equipped to handle their front-line duties with proper safety and protective gear.
In the end, if we continue to view the USPS as simply a balance sheet and optimize for profitability in a vacuum, we ultimately stand to lose far more than we gain.
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Under quarantine, media is actually social
The flood of status symbol content into Instagram Stories has run dry. No one is going out and doing anything cool right now, and if they are, they should be shamed for it. Beyond sharing video chat happy hour screenshots and quarantine dinner concoctions, our piece-by-piece biographies have ground to a halt. Oddly, what remains feels more social than social networks have in a long time.
With no source material, we’re doing it live. Coronavirus has absolved our desire to share the recent past. The drab days stuck inside blur into each other. The near future is so uncertain that there’s little impetus to make plans. Why schedule an event or get excited for a trip just to get your heartbroken if shelter-in-place orders are extended? We’re left firmly fixed in the present.
A house-arrest Houseparty, via StoicLeys
What is social media when there’s nothing to brag about? Many of us are discovering it’s a lot more fun. We had turned social media into a sport but spent the whole time staring at the scoreboard rather than embracing the joy of play.
But thankfully, there are no Like counts on Zoom .
Nothing permanent remains. That’s freed us from the external validation that too often rules our decision making. It’s stopped being about how this looks and started being about how this feels. Does it put me at peace, make me laugh, or abate the loneliness? Then do it. There’s no more FOMO because there’s nothing to miss by staying home to read, take a bath, or play board games. You do you.
Being social animals, what feels most natural is to connect. Not asynchronously through feeds of what we just did. But by coexisting concurrently. Professional enterprise technology for agenda-driven video calls has been subverted for meandering, motive-less togetherness. We’re doing what many of us spent our childhoods doing in basements and parking lots: just hanging out.
It’s time to Houseparty
For evidence, just look at group video chat app Houseparty, where teens aimlessly chill with everyone’s face on screen at once. In Italy, which has tragically been on lock down since COVID-19’s rapid spread in the country, Houseparty wasn’t even in the top 1500 apps a month ago. Today it’s the #1 social app, and the #2 app overall second only to Zoom which is topping the charts in tons of countries.
Houseparty topped all the charts on Monday, when Sensor Tower tells TechCrunch the app’s download rate was 323X higher than its average in February. As of yesterday it was #1 in Portugal (up 371X) and Spain (up 592X), as well as Peru, Argentina, Chile, Austria, Belgium, and the U.K. I despite being absent from the chart a week earlier. Apptopia tells me Houseparty saw 25 downloads in Spain on March 1st and 40,000 yesterday.
Houseparty rockets to #1 in many countries
A year ago Houseparty was nearly dead, languishing at #245 on the US charts before being acquired by Fortnite-maker Epic in June. Our sudden need for unmediated connection has brought Houseparty roaring back to life, even if Epic has neglected to update it since July.
“Houseparty was designed to connect people in the most human way possible when they are physically apart” the startup’s co-founder Ben Rubin tells me. “This is a time of isolation and uncertainty for us all. I’m grateful that we created a product that gives a sense of human connection to millions people during this critical moment.”
Around the world, apps for direct connection are spiking. Google Hangouts rules in Sweden. Discord for chat while gaming is #1 in France. Slack clone Microsoft Teams is king in the Netherlands. After binging through Netflix, all that’s left to entertain us is each other.
Undivided By Geography
If we’re all stuck at home, it doesn’t matter where that home is. We’ve been released from the confines of which friends are within a 20 minute drive or hour-long train. Just like students are saying they all go to Zoom University since every school’s classes moved online, we all now live in Zoom Town. All commutes have been reduced to how long it takes to generate an invite URL.
Nestled in San Francisco, even pals across the Bay in Berkeley felt far away before. But this week I had hour-long video calls with my favorite people who typically feel out of reach in Chicago and New York. I spent time with babies I hadn’t met in person. And I kept in closer touch with my parents on the other coast, which is more vital and urgent than ever before.
Playing board game Codenames over Zoom with friends in New York and North Carolina
Typically, our time is occupied by acquaintances of circumstance. The co-workers who share our office. The friends who happen to live in the neighborhood. But now we’re each building a virtual family completely of our choosing. The calculus has shifted from who is convenient or who invites us to the most exciting place, to who makes us feel most human.
Even celebrities are getting into it. Rather than pristine portraits and flashy music videos, they’re appearing raw, with crappy lighting, on Facebook and Instagram Live. John Legend played piano for 100,000 people while his wife Chrissy Teigen sat on screen in a towel looking salty like she’s heard “All Of Me” far too many times. That’s more authentic than anything you’ll get on TV.
And without the traditional norms of who we are and aren’t supposed to call, there’s an opportunity to contact those we cared about in a different moment of our lives. The old college roommate, the high school buddy, the mentor who gave you you’re shot. If we have the emotional capacity in these trying times, there’s good to be done. Who do you know who’s single, lives alone, or resides in a city without a dense support network?
Reforging those connections not only surfaces prized memories we may have forgotten, but could help keep someone sane. For those who relied on work and play for social interaction, shelter-in-place is essentially solitary confinement. There’s a looming mental health crisis if we don’t check in on the isolated.
The crisis language of memes
It can be hard to muster the energy to seize these connections, though. We’re all drenched in angst about the health impacts of the virus and financial impacts of the response. I certainly spent a few mornings sleeping in just to make the days feel shorter. When all small talk leads to rehashing our fears, sometimes you don’t have anything to say.
Luckily we don’t have to say anything to communicate. We can share memes instead.
My father-in-law sent me this. That’s when you know memes have become the universal language
The internet’s response to COVID-19 has been an international outpour of gallow’s humor. From group chats to Instagram joke accounts to Reddit threads to Facebook groups like quarter-million member “Zoom Memes For Quaranteens”, we’re joining up to weather the crisis.
A nervous laugh is better than no laugh at all. Memes allow us to convert our creeping dread and stir craziness into something borderline productive. We can assume an anonymous voice, resharing what some unspecified other made without the vulnerability of self-attribution. We can dive into the creation of memes ourselves, killing time under house arrest in hopes of generating smiles for our generation. And with the feeds and Stories emptied, consuming memes offers a new medium of solidarity. We’re all in this hellscape together so we may as well make fun of it.
The web’s mental immune system has kicked into gear amidst the outbreak. Rather than wallowing in captivity, we’ve developed digital antibodies that are evolving to fight the solitude. We’re spicing up video chats with board games like Codenames. One-off livestreams have turned into wholly online music festivals to bring the sounds of New Orleans or Berlin to the world. Trolls and pranksters are finding ways to get their lulz too, Zoombombing webinars. And after a half-decade of techlash, our industry’s leaders are launching peer-to-peer social safety nets and ways to help small businesses survive until we can be patrons in person again.
Rather than scrounging for experiences to share, we’re inventing them from scratch with the only thing we’re left with us in quarantine: ourselves. When the infection waves pass, I hope this swell of creativity and in-the-moment togetherness stays strong. The best part of the internet isn’t showing off, it’s showing up.
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Yo Facebook & Instagram, stop showing Stories reruns
If I watch a Story cross-posted from Instagram to Facebook on either of the apps, it should appear as “watched” at the back of the Stories row on the other app. Why waste my time showing me Stories I already saw?
It’s been over two years since Instagram Stories launched cross-posting to Stories. Countless hours of each feature’s 500 million daily users have been squandered viewing repeats. Facebook and Messenger already synchronized the watched/unwatched state of Stories. It’s long past time that this was expanded to encompass Instagram.
I asked Facebook and Instagram if it had plans for this. A company spokesperson told me that it built cross-posting to make sharing easier to people’s different audiences on Facebook and Instagram, and it’s continuing to explore ways to simplify and improve Stories. But they gave no indication that Facebook realizes how annoying this is or that a solution is in the works.
The end result if this gets fixed? Users would spend more time watching new content, more creators would feel seen, and Facebook’s choice to jam Stories in all its apps would fee less redundant and invasive. If I send a reply to a Story on one app, I’m not going to send it or something different when I see the same Story on the other app a few minutes or hours later. Repeated content leads to more passive viewing and less interactive communication with friends, despite Facebook and Instagram stressing that its this zombie consumption that’s unhealthy.
The only possible downside to changing this could be fewer Stories ad impressions if secondary viewings of peoples’ best friends’ Stories keep them watching more than new content. But prioritizing making money over the user experience is again what Mark Zuckerberg has emphasized is not Facebook’s strategy.
There’s no need to belabor the point any further. Give us back our time. Stop the reruns.
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Instagram still doesn’t age-check kids. That must change.
Instagram dodges child safety laws. By not asking users their age upon signup, it can feign ignorance about how old they are. That way, it can’t be held liable for $40,000 per violation of the Child Online Privacy Protection Act. The law bans online services from collecting personally identifiable information about kids under 13 without parental consent. Yet Instagram is surely stockpiling that sensitive info about underage users, shrouded by the excuse that it doesn’t know who’s who.
But here, ignorance isn’t bliss. It’s dangerous. User growth at all costs is no longer acceptable.
It’s time for Instagram to step up and assume responsibility for protecting children, even if that means excluding them. Instagram needs to ask users’ age at sign up, work to verify they volunteer their accurate birthdate by all practical means, and enforce COPPA by removing users it knows are under 13. If it wants to allow tweens on its app, it needs to build a safe, dedicated experience where the app doesn’t suck in COPPA-restricted personal info.
Minimum Viable Responsibility
Instagram is woefully behind its peers. Both Snapchat and TikTok require you to enter your age as soon as you start the sign up process. This should really be the minimum regulatory standard, and lawmakers should close the loophole allowing services to skirt compliance by not asking. If users register for an account, they should be required to enter an age of 13 or older.
Instagram’s parent company Facebook has been asking for birthdate during account registration since its earliest days. Sure, it adds one extra step to sign up, and impedes its growth numbers by discouraging kids to get hooked early on the social network. But it also benefits Facebook’s business by letting it accurately age-target ads.
Most importantly, at least Facebook is making a baseline effort to keep out underage users. Of course, as kids do when they want something, some are going to lie about their age and say they’re old enough. Ideally, Facebook would go further and try to verify the accuracy of a user’s age using other available data, and Instagram should too.
Both Facebook and Instagram currently have moderators lock the accounts of any users they stumble across that they suspect are under 13. Users must upload government-issued proof of age to regain control. That policy only went into effect last year after UK’s Channel 4 reported a Facebook moderator was told to ignore seemingly underage users unless they explicitly declared they were too young or were reported for being under 13. An extreme approach would be to require this for all signups, though that might be expensive, slow, significantly hurt signup rates, and annoy of-age users.
Instagram is currently on the other end of the spectrum. Doing nothing around age-gating seems recklessly negligent. When asked for comment about how why it doesn’t ask users’ ages, how it stops underage users from joining, and if it’s in violation of COPPA, Instagram declined to comment. The fact that Instagram claims to not know users’ ages seems to be in direct contradiction to it offering marketers custom ad targeting by age such as reaching just those that are 13.
Instagram Prototypes Age Checks
Luckily, this could all change soon.
Mobile researcher and frequent TechCrunch tipster Jane Manchun Wong has spotted Instagram code inside its Android app that shows it’s prototyping an age-gating feature that rejects users under 13. It’s also tinkering with requiring your Instagram and Facebook birthdates to match. Instagram gave me a “no comment” when I asked about if these features would officially roll out to everyone.
Code in the app explains that “Providing your birthday helps us make sure you get the right Instagram experience. Only you will be able to see your birthday.” Beyond just deciding who to let in, Instagram could use this info to make sure users under 18 aren’t messaging with adult strangers, that users under 21 aren’t seeing ads for alcohol brands, and that potentially explicit content isn’t shown to minors.
Instagram’s inability to do any of this clashes with it and Facebook’s big talk this year about its commitment to safety. Instagram has worked to improve its approach to bullying, drug sales, self-harm, and election interference, yet there’s been not a word about age gating.
Meanwhile, underage users promote themselves on pages for hashtags like #12YearOld where it’s easy to find users who declare they’re that age right in their profile bio. It took me about 5 minutes to find creepy “You’re cute” comments from older men on seemingly underage girls’ photos. Clearly Instagram hasn’t been trying very hard to stop them from playing with the app.
Illegal Growth
I brought up the same unsettling situations on Musically, now known as TikTok, to its CEO Alex Zhu on stage at TechCrunch Disrupt in 2016. I grilled Zhu about letting 10-year-olds flaunt their bodies on his app. He tried to claim parents run all of these kids’ accounts, and got frustrated as we dug deeper into Musically’s failures here.
Thankfully, TikTok was eventually fined $5.7 million this year for violating COPPA and forced to change its ways. As part of its response, TikTok started showing an age gate to both new and existing users, removed all videos of users under 13, and restricted those users to a special TikTok Kids experience where they can’t post videos, comment, or provide any COPPA-restricted personal info.
If even a Chinese app social media app that Facebook CEO has warned threatens free speech with censorship is doing a better job protecting kids than Instagram, something’s gotta give. Instagram could follow suit, building a special section of its apps just for kids where they’re quarantined from conversing with older users that might prey on them.
Perhaps Facebook and Instagram’s hands-off approach stems from the fact that CEO Mark Zuckerberg doesn’t think the ban on under-13-year-olds should exist. Back in 2011, he said “That will be a fight we take on at some point . . . My philosophy is that for education you need to start at a really, really young age.” He’s put that into practice with Messenger Kids which lets 6 to 12-year-olds chat with their friends if parents approve.
The Facebook family of apps’ ad-driven business model and earnings depend on constant user growth that could be inhibited by stringent age gating. It surely doesn’t want to admit to parents it’s let kids slide into Instagram, that advertisers were paying to reach children too young to buy anything, and to Wall Street that it might not have 2.8 billion legal users across its apps as it claims.
But given Facebook and Instagram’s privacy scandals, addictive qualities, and impact on democracy, it seems like proper age-gating should be a priority as well as the subject of more regulatory scrutiny and public concern. Society has woken up to the harms of social media, yet Instagram erects no guards to keep kids from experiencing those ills for themselves. Until it makes an honest effort to stop kids from joining, the rest of Instagram’s safety initiatives ring hollow.
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Facebook staff demand Zuckerberg limit lies in political ads
Submit campaign ads to fact checking, limit microtargeting, cap spending, observe silence periods or at least warn users. These are the solutions Facebook employees put forward in an open letter pleading with CEO Mark Zuckerberg and company leadership to address misinformation in political ads.
The letter, obtained by The New York Times’ Mike Isaac, insists that “Free speech and paid speech are not the same thing . . . Our current policies on fact checking people in political office, or those running for office, are a threat to what FB stands for.” The letter was posted to Facebook’s internal collaboration forum a few weeks ago.
The sentiments echo what I called for in a TechCrunch opinion piece on October 13th calling on Facebook to ban political ads. Unfettered misinformation in political ads on Facebook lets politicians and their supporters spread inflammatory and inaccurate claims about their views and their rivals while racking up donations to buy more of these ads.
The social network can still offer freedom of expression to political campaigns on their own Facebook Pages while limiting the ability of the richest and most dishonest to pay to make their lies the loudest. We suggested that if Facebook won’t drop political ads, they should be fact checked and/or use an array of generic “vote for me” or “donate here” ad units that don’t allow accusations. We also criticized how microtargeting of communities vulnerable to misinformation and instant donation links make Facebook ads more dangerous than equivalent TV or radio spots.
The Facebook CEO, Mark Zuckerberg, testified before the House Financial Services Committee on Wednesday October 23, 2019 in Washington, D.C. (Photo by Aurora Samperio/NurPhoto via Getty Images)
More than 250 employees of Facebook’s 35,000 staffers have signed the letter, which declares, “We strongly object to this policy as it stands. It doesn’t protect voices, but instead allows politicians to weaponize our platform by targeting people who believe that content posted by political figures is trustworthy.” It suggests the current policy undermines Facebook’s election integrity work, confuses users about where misinformation is allowed, and signals Facebook is happy to profit from lies.
The solutions suggested include:
- Don’t accept political ads unless they’re subject to third-party fact checks
- Use visual design to more strongly differentiate between political ads and organic non-ad posts
- Restrict microtargeting for political ads including the use of Custom Audiences since microtargeted hides ads from as much public scrutiny that Facebook claims keeps politicians honest
- Observe pre-election silence periods for political ads to limit the impact and scale of misinformation
- Limit ad spending per politician or candidate, with spending by them and their supporting political action committees combined
- Make it more visually clear to users that political ads aren’t fact-checked
A combination of these approaches could let Facebook stop short of banning political ads without allowing rampant misinformation or having to police individual claims.
Facebook’s response to the letter was “We remain committed to not censoring political speech, and will continue exploring additional steps we can take to bring increased transparency to political ads.” But that straw-man’s the letter’s request. Employees aren’t asking politicians to be kicked off Facebook or have their posts/ads deleted. They’re asking for warning labels and limits on paid reach. That’s not censorship.
Zuckerberg had stood resolute on the policy despite backlash from the press and lawmakers, including Representative Alexandria Ocasio-Cortez (D-NY). She left him tongue-tied during a congressional testimony when she asked exactly what kinds of misinfo were allowed in ads.
But then Friday, Facebook blocked an ad designed to test its limits by claiming Republican Lindsey Graham had voted for Ocasio-Cortez’s Green Deal he actually opposes. Facebook told Reuters it will fact-check PAC ads.
One sensible approach for politicians’ ads would be for Facebook to ramp up fact-checking, starting with presidential candidates until it has the resources to scan more. Those fact-checked as false should receive an interstitial warning blocking their content rather than just a “false” label. That could be paired with giving political ads a bigger disclaimer without making them too prominent-looking in general and only allowing targeting by state.
Deciding on potential spending limits and silent periods would be more messy. Low limits could even the playing field and broad silent periods, especially during voting periods, and could prevent voter suppression. Perhaps these specifics should be left to Facebook’s upcoming independent Oversight Board that acts as a supreme court for moderation decisions and policies.
Zuckerberg’s core argument for the policy is that over time, history bends toward more speech, not censorship. But that succumbs to utopic fallacy that assumes technology evenly advantages the honest and dishonest. In reality, sensational misinformation spreads much further and faster than level-headed truth. Microtargeted ads with thousands of variants undercut and overwhelm the democratic apparatus designed to punish liars, while partisan news outlets counter attempts to call them out.
Zuckerberg wants to avoid Facebook becoming the truth police. But as we and employees have put forward, there is a progressive approach to limiting misinformation if he’s willing to step back from his philosophical orthodoxy.
The full text of the letter from Facebook employees to leadership about political ads can be found below, via The New York Times:
We are proud to work here.
Facebook stands for people expressing their voice. Creating a place where we can debate, share different opinions, and express our views is what makes our app and technologies meaningful for people all over the world.
We are proud to work for a place that enables that expression, and we believe it is imperative to evolve as societies change. As Chris Cox said, “We know the effects of social media are not neutral, and its history has not yet been written.”
This is our company.
We’re reaching out to you, the leaders of this company, because we’re worried we’re on track to undo the great strides our product teams have made in integrity over the last two years. We work here because we care, because we know that even our smallest choices impact communities at an astounding scale. We want to raise our concerns before it’s too late.
Free speech and paid speech are not the same thing.
Misinformation affects us all. Our current policies on fact checking people in political office, or those running for office, are a threat to what FB stands for. We strongly object to this policy as it stands. It doesn’t protect voices, but instead allows politicians to weaponize our platform by targeting people who believe that content posted by political figures is trustworthy.
Allowing paid civic misinformation to run on the platform in its current state has the potential to:
— Increase distrust in our platform by allowing similar paid and organic content to sit side-by-side — some with third-party fact-checking and some without. Additionally, it communicates that we are OK profiting from deliberate misinformation campaigns by those in or seeking positions of power.
— Undo integrity product work. Currently, integrity teams are working hard to give users more context on the content they see, demote violating content, and more. For the Election 2020 Lockdown, these teams made hard choices on what to support and what not to support, and this policy will undo much of that work by undermining trust in the platform. And after the 2020 Lockdown, this policy has the potential to continue to cause harm in coming elections around the world.
Proposals for improvement
Our goal is to bring awareness to our leadership that a large part of the employee body does not agree with this policy. We want to work with our leadership to develop better solutions that both protect our business and the people who use our products. We know this work is nuanced, but there are many things we can do short of eliminating political ads altogether.
These suggestions are all focused on ad-related content, not organic.
1. Hold political ads to the same standard as other ads.
a. Misinformation shared by political advertisers has an outsized detrimental impact on our community. We should not accept money for political ads without applying the standards that our other ads have to follow.
2. Stronger visual design treatment for political ads.
a. People have trouble distinguishing political ads from organic posts. We should apply a stronger design treatment to political ads that makes it easier for people to establish context.
3. Restrict targeting for political ads.
a. Currently, politicians and political campaigns can use our advanced targeting tools, such as Custom Audiences. It is common for political advertisers to upload voter rolls (which are publicly available in order to reach voters) and then use behavioral tracking tools (such as the FB pixel) and ad engagement to refine ads further. The risk with allowing this is that it’s hard for people in the electorate to participate in the “public scrutiny” that we’re saying comes along with political speech. These ads are often so micro-targeted that the conversations on our platforms are much more siloed than on other platforms. Currently we restrict targeting for housing and education and credit verticals due to a history of discrimination. We should extend similar restrictions to political advertising.
4. Broader observance of the election silence periods
a. Observe election silence in compliance with local laws and regulations. Explore a self-imposed election silence for all elections around the world to act in good faith and as good citizens.
5. Spend caps for individual politicians, regardless of source
a. FB has stated that one of the benefits of running political ads is to help more voices get heard. However, high-profile politicians can out-spend new voices and drown out the competition. To solve for this, if you have a PAC and a politician both running ads, there would be a limit that would apply to both together, rather than to each advertiser individually.
6. Clearer policies for political ads
a. If FB does not change the policies for political ads, we need to update the way they are displayed. For consumers and advertisers, it’s not immediately clear that political ads are exempt from the fact-checking that other ads go through. It should be easily understood by anyone that our advertising policies about misinformation don’t apply to original political content or ads, especially since political misinformation is more destructive than other types of misinformation.
Therefore, the section of the policies should be moved from “prohibited content” (which is not allowed at all) to “restricted content” (which is allowed with restrictions).
We want to have this conversation in an open dialog because we want to see actual change.
We are proud of the work that the integrity teams have done, and we don’t want to see that undermined by policy. Over the coming months, we’ll continue this conversation, and we look forward to working towards solutions together.
This is still our company.
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The new iPhone is ugly
I’ll be the first to admit that I’m a bit old-fashioned when it comes to phones. Everyone scoffs at my iPhone SE, but the truth is it’s the best phone Apple ever made — a beautiful, well designed object in just about every way. But damn is the iPhone 11 Pro ugly. And so are the newest phones from Samsung and Google, while we’re at it.
Let’s just get right to why the new iPhones are ugly, front and back. And sideways. We can start with the notch. Obviously it’s not new, but I thought maybe this would be some kind of generational anomaly that we’d all look back and laugh at in a year or two. Apparently it’s sticking around.
I know a lot of people have justified the notch to themselves in various ways — it technically means more raw screen space, it accommodates the carrier and battery icons, it’s necessary for unlocking the phone with your face.
Yeah, but it’s ugly.
If they removed the notch, literally no one would want the version with the notch, because it’s so plainly and universally undesirable. If Apple’s engineers could figure out a way to have no notch, they’d have done it by now, but they can’t and I bet they are extremely frustrated by that. They try to hide it with the special notch-camouflaging wallpaper whenever they can, which is as much as saying, “hey, we hate looking at it too.”
You can forget for a few seconds. But in the back of your mind you know it’s there. Everyone knows.
It’s a prominent, ugly compromise (among several) necessitated by a feature no one asked for and people can’t seem to figure out if they even like or not. Notches are horrible and any time you see one, it means a designer cried themselves to sleep. To be fair that probably happens quite a bit. I grew up around designers and they can be pretty sensitive, like me.
I’m not a big fan of the rounded screen corners for a couple reasons, but I’ll let that go because I envision a future where it doesn’t matter. You remember how in Battlestar Galactica the corners were clipped off all the paper? We’re on our way.
Having the screen extend to the very edge of the device on the other hand isn’t exactly ugly, but it’s ugly in spirit. The whole front of the phone is an interface now, which would be fine if it could tell when you were gripping the screen for leverage and not to do something with it. As it is, every side and corner has some kind of dedicated gesture that you have to be wary of activating. It’s so bad people have literally invented a thing that sticks out from the back of your phone so you can hold it that way. Popsockets wouldn’t be necessary if you could safely hold your phone the way you’d hold any other object that shape.
The back is ugly now, too. Man, is that camera bump bad. Bump is really the wrong word. It looks like the iPhone design team took a field trip to a maritime history museum, saw the deep sea diving helmets, and thought, Boom. That’s what we need. Portholes. To make our phone look like it could descend to 4,000 fathoms. Those helmets are actually really cool looking when they’re big and made of strong, weathered brass. Not on a thin, fragile piece of electronics. Here it’s just a huge, chunky combination of soft squares and weirdly arranged circles — five of them! — that completely take over the otherwise featureless rear side of the phone.
The back of the SE is designed to mirror the front, with a corresponding top and bottom “bezel.” In the best looking SE (mine) the black top bezel almost completely hides the existence of the camera (unfortunately there’s a visible flash unit); it makes the object more like an unbroken solid, its picture-taking abilities more magical. The camera is completely flush with the surface of the back, which is itself completely flush except for texture changes.
The back of the iPhone 11 Pro has a broad plain, upon which sits the slightly higher plateau of the camera assembly. Above that rise the three different little camera volcanoes, and above each of those the little calderas of the lenses. And below them the sunken well of the microphone. Five different height levels, producing a dozen different heights and edges! Admittedly the elevations aren’t so high, but still.
If it was a dedicated camera or another device that by design needed and used peaks and valleys for grip or eyes-free navigation, that would be one thing. But the iPhone is meant to be smooth, beautiful, have a nice handfeel. With this topographic map of Hawaii on the back? Have fun cleaning out the grime from in between the volcanoes, then knocking the edge of the lens against a table as you slide the phone into your hand.
Plus it’s ugly.
The sides of the phones aren’t as bad as the front and back, but we’ve lost a lot since the days of the SE. The geometric simplicity of the + and – buttons, the hard chamfered edge that gave you a sure grip, the black belts that boldly divided the sides into two strips and two bows. And amazingly, due to being made of actual metal, the more drops an SE survives, the cooler it looks.
The sides of the new iPhones look like bumpers from cheap model cars. They look like elongated jelly beans, with smaller jelly beans stuck on that you’re supposed to touch. Gross.
That’s probably enough about Apple. They forgot about good design a long time ago, but the latest phones were too ugly not to call out.
Samsung has a lot of the same problems as Apple. Everyone has to have an “edge to edge” display now, and the Galaxy S10 is no exception. But it doesn’t really go to the edge, does it? There’s a little bezel on the top and bottom, but the bottom one is a little bigger. I suppose it reveals the depths of my neurosis to say so, but that would never stop bugging me if I had one. If it was a lot bigger, like HTC’s old “chins,” I’d take it as a deliberate design feature, but just a little bigger? That just means they couldn’t make one small enough.
As for the display slipping over the edges, it’s cool looking in product photos, but I’ve never found it attractive in real life. What’s the point? And then from anywhere other than straight on, it makes it look more lopsided, or like you’re missing something on the far side.
Meanwhile it not only has bezels and sometime curves, but a hole punched out of the front. Oh my god!
Here’s the thing about a notch. When you realize as a phone designer that you’re going to have to take over a big piece of the front, you also look at what part of the screen it leaves untouched. In Apple’s case it’s the little horns on either side — great, you can at least put the status info there. There might have been a little bit left above the front camera and Face ID stuff, but what can you do with a handful of vertical pixels? Nothing. It’ll just be a distraction. Usually there was nothing interesting in the middle anyway. So you just cut it all out and go full notch.
Samsung on the other hand decided to put the camera in the top right, and keep a worthless little rind of screen all around it. What good is that part of the display now? It’s too small to show anything useful, yet the hole is too big to ignore while you’re watching full-screen content. If their aim was to make something smaller and yet even more disruptive than a notch, mission accomplished. It’s ugly on all the S10s, but the big wide notch-hole combo on the S10 5G 6.7″ phablet is the ugliest.
The decision to put all the rear cameras in a long window, like the press box at a hockey game, is a bold one. There’s really not much you can do to hide 3 giant lenses, a flash, and that other thing. Might as well put them front and center, set off with a black background and chrome rim straight out of 2009. Looks like something you’d get pointed at you at the airport. At least the scale matches the big wide “SAMSUNG” on the back. Bold — but ugly.
Google’s Pixel 4 isn’t as bad, but it’s got its share of ugly. I don’t need to spend too much time on it, though, because it’s a lot of the same, except in pumpkin orange for Halloween season. I like the color orange generally, but I’m not sure about this one. Looks like a seasonal special phone you pick up in a blister pack from the clearance shelf at Target, the week before Black Friday — two for $99, on some cut-rate MVNO. Maybe it’s better in person, but I’d be afraid some kid would take a bite out of my phone thinking it’s a creamsicle.
The lopsided bezels on the front are worse than the Samsung’s, but at least it looks deliberate. Like they wanted to imply their phone is smart so they gave it a really prominent forehead.
I will say that of the huge, ugly camera assemblies, the Pixel’s is the best. It’s more subtle, like being slapped in the face instead of kicked in the shins so hard you die. And the diamond pattern is more attractive for sure. Given the square (ish) base, I’m surprised someone on the team at Google had the rather unorthodox idea to rotate the cameras 45 degrees. Technically it produces more wasted space, but it looks better than four circles making a square inside a bigger, round square.
And it looks a hell of a lot better than three circles in a triangle, with two smaller circles just kind of hanging out there, inside a bigger, round square. That iPhone is ugly!
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Zuckerberg misunderstands the huge threat of TikTok
“It’s almost like the Explore Tab that we have on Instagram” said Facebook CEO Mark Zuckerberg in leaked audio of him describing TikTok during an all-hands meeting. But it’s not. TikTok represents a new form of social entertainment that’s vastly different from the lifelogging of Instagram where you can just take a selfie, show something pretty, or pan around what you’re up to. TikToks are premeditated, storyboarded, and vastly different than the haphazard Stories on Insta.
That’s why Zuckerberg’s comments cast a dark shadow over the future of the Facebook family of apps. How can it beat what it doesn’t understand? He certainly can’t ignore it. Facebook’s copycat Lasso has been installed just 425,000 times since it launched in November, while TikTok has 640 million installs in the same period outside of China. Oh, and TikTok has 1.4 billion total installs beyond China to date.
TikTok
Casey Newton of The Verge today published two hours of audio and transcripts from two internal-only all-hands Q&As held by Zuckerberg at Facebook in July. His comments touch on the company’s plan to fight being broken up by regulators, especially if Elizabeth Warren becomes President. He thinks Facebook would win, but on resorting to suing the government, he says “does that still suck for us? Yeah.” Zuckerberg also describes how Facebook is working to launch a payments product in Mexico and elsewhere by year’s end as Libra deals with regulatory scrutiny.
But beyond his comments on regulation, it’s his pigeonholing of TikTok that’s most alarming. It foreshadows Facebook failing to win one of the core social feeds that its business depends on. Perhaps his perspective on the competitor is evolving, but the leak portrays him as thinking TikTok is just the next Snapchat Stories to destroy.
Zuckeberg’s Thoughts On TikTok
Here’s what Zuckerberg said about TikTok during the internal Q&A sessions, (emphasis mine):
So yeah. I mean, TikTok is doing well. One of the things that’s especially notable about TikTok is, for a while, the internet landscape was kind of a bunch of internet companies that were primarily American companies. And then there was this parallel universe of Chinese companies that pretty much only were offering their services in China. And we had Tencent who was trying to spread some of their services into Southeast Asia. Alibaba has spread a bunch of their payment services to Southeast Asia. Broadly, in terms of global expansion, that had been pretty limited, and TikTok, which is built by this company Beijing ByteDance, is really the first consumer internet product built by one of the Chinese tech giants that is doing quite well around the world. It’s starting to do well in the US, especially with young folks. It’s growing really quickly in India. I think it’s past Instagram now in India in terms of scale. So yeah, it’s a very interesting phenomenon.
And the way that we kind of think about it is: it’s married short-form, immersive video with browse. So it’s almost like the Explore Tab that we have on Instagram, which is today primarily about feed posts and highlighting different feed posts. I kind of think about TikTok as if it were Explore for stories, and that were the whole app. And then you had creators who were specifically working on making that stuff. So we have a number of approaches that we’re going to take towards this, and we have a product called Lasso that’s a standalone app that we’re working on, trying to get product-market fit in countries like Mexico, is I think one of the first initial ones. We’re trying to first see if we can get it to work in countries where TikTok is not already big before we go and compete with TikTok in countries where they are big.
We’re taking a number of approaches with Instagram, including making it so that Explore is more focused on stories, which is increasingly becoming the primary way that people consume content on Instagram, as well as a couple of other things there. But yeah, I think that it’s not only one of the more interesting new phenomena and products that are growing. But in terms of the geopolitical implications of what they’re doing, I think it is quite interesting. I think we have time to learn and understand and get ahead of the trend. It is growing, but they’re spending a huge amount of money promoting it. What we’ve found is that their retention is actually not that strong after they stop advertising. So the space is still fairly nascent, and there’s time for us to kind of figure out what we want to do here. But I think this is a real thing. It’s good.
To Zuckerberg’s credit, he’s not dismissing the threat. He knows TikTok is popular. He knows it’s growing in key international markets Facebook and Instagram depend on to keep user counts rising. And he knows his company needs to respond via its standalone clone Lasso and more.
Lasso
But while TikToks might look like Stories because they’re vertical videos, and TikTok might algorithmically recommend them to people like Instagram Explore, it’s a whole ‘nother beast of a product and one that may be harder than it seems to copy.
To crystallize why, let’s rewind to Snapchat. With the launch of Stories, it started to blow up with US teens. Facebook’s attempts to clone it in standalone apps like Poke and Slingshot never gained traction. In fact, none of Facebook’s standalone apps have succeeded unless they splintered off an already-popular piece of Facebook like chat and users were forced to download them like Messenger. It wasn’t until Zuckerberg stuck his clone of Stories front-and-center atop Instagram and Facebook that Snapchat’s user count went from growing 18% per quarter to shrinking. There, Facebook used the same strategy laid out in Zuckerberg’s comments — push its good-enough clone in countries where the original isn’t popular yet.
But Facebook was fortunate because Stories really wasn’t that dissimilar to the content users were already sharing on Instagram — tiny biographical snippets of their lives. Snapchat CEO Evan Spiegel had originally invented Stories as a vision of Facebook’s News Feed through the lens of an ephemeral camera. All users had to know was “I take the same videos, but shorter and sillier, posted more often, and then they disappear”. The concept of Instagram and Facebook didn’t have to change. They were still about telling friends what you were up to. Choking off TikTok’s growth will be much more complicated.
Why TikTok Is Tough To Clone
TikTok isn’t about you or what you’re doing. It’s about entertaining your audience. It’s not spontaneous chronicling of your real life. It’s about inventing characters, dressing up as someone else, and acting out jokes. It’s not about privacy and friends, but strutting on the world stage. And it’s not about originality — the heart of Instagram. TikTok is about remixing culture — taking the audio from someone else’s clip and reimagining the gag in a new context by layering it atop a video you record.
That makes TikTok distinct enough that it will be very difficult to shoehorn into Instagram or Facebook, even if they add the remixing functionality. Most videos on those apps aren’t designed to be templates for memes like TikToks are. Insta and Facebook’s social graphs are rooted in friendship and augmented by the beautiful and famous, but don’t encompass the new wave of amateur performers TikTok elevates. And since each post to the app becomes fodder for someone else’s creativity, a competitor starting from scratch doesn’t offer much to remix.
That means a TikTok clone would have to be somewhat buried in Instagram or Facebook, rebuild a new social graph, and retrain users’ understanding of these apps’ purpose…at the risk of distracting from their core use cases. This leaves Facebook hoping to grow its standalone TikTok clone Lasso which TechCrunch scooped a year ago before it launched last November. But as we’ve seen, Facebook struggles growing brand new apps, and that effort is further hindered by its increasingly toxic brand and sheen of uncoolness. Nor does it help that Facebook must divert development resources to comply with all the new privacy and transparency obligations as part of its $5 billion FTC fine and settlement.
The Next Feed
Facebook’s best bet is to assess the future value of the ads it could run on a successful TikTok clone and apply some greater fraction of that grand sum to competing directly. It’s already made some smart additions to Lasso like tutorials for how to remix and the option to add GIFs as sections of your video. But it’s still failing to gain serious traction in the US. While typical videos on the TikTok homepage where I’m spending a few hours a week have hundreds of thousands of Likes, the top ones I saw in my Lasso feed today received 70 or fewer.
TikTok trounces Facebook’s Lasso in the US iOS App Store charts
I had Sensor Tower run some analysis comparing TikTok with Lasso since its launch last November, and found that Lasso gets 6 downloads for every 1000 for TikTok in the US. Some more stats:
- US Total Downloads Since November: Lasso – 250,000 // TikTok – 41.3 million
- US Downloads Per Day Since November: Lasso – 760 // TikTok – 126,000
- Average US Google Play Social App Chart Ranking: Lasso – #155 // TikTok – #2
Beyond the US, Lasso has only launched in one other market, Mexico in April, where it’s been faring better but could hardly even be considered a competitor to TikTok. Facebook needs to lean harder into Lasso:
- Mexico Total Downloads Since April: Lasso – 175,000 // TikTok – 3.3 million
- Mexico Downloads Per Day Since November: Lasso – 1,000 // TikTok – 19,000
Zuckerberg may need to find a coherent place for TikTok style features inside Instagram and potentially Facebook. That could be another horizontal row of previews like with Stories and/or a header on the Explore page dedicated to premeditated content. Certainly something more prominent than a single button like IGTV that still no one is asking for. One opportunity to best TikTok would be building a dedicated remix source browser into the Stories camera to help users find content to put their own spin on.
Facebook will also need to buy out top TikTok creators to make videos for it instead, and even quasi-hire some of the most prolific video meme or challenge inventors to give users trends to jump on rather than just one-off clips to watch. Its failure to offer IGTV stars monetization has led many to ignore that platform, and it can’t afford that again.
If Zuckerberg approaches TikTok as merely an algorithmic video recommender like Explore, Facebook will miss out on owning the social entertainment feed. If he doesn’t decisively move to challenge TikTok soon, its catalog of content to remix will grow insurmountable and it will own the whole concept of short form performative video. Snapchat’s insistence on ephemerality makes it incompatible with remixing, and YouTube isn’t nimble enough to reinvent itself.
If no American company can step up, we could see our interest data, faces, and attention forfeited to an app that while delightful to use, heralds Chinese political values at odds with our own. If only Twitter hadn’t killed Vine.
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Facebook promises not to stop politicians’ lies & hate
Facebook confirms it won’t fact check politicians’ speech or block their content if it’s newsworthy even if it violates the site’s hate-speech rules or other policies. This cementing of its policy comes from Facebook’s head of global policy and communication Nick Clegg, who gave a speech today about Facebook’s plans to prevent interference in the 2020 presidential election.
But by seeking neutrality, Facebook may become complicit in the misinformation and malevolence some politicians will use it to spread. It leaves users to fend for themselves as they try to discern fact from fiction and opinion from reality. Clegg claims the idea is for users to “judge what politicians say themselves.”
Isn’t that disgorgement of responsibility already what Facebook was doing by merely routing false news links to fact checkers and affixing their verdicts to shares of the content while still leaving it up on the site? To now say politicians can’t be fact-checked directly at all sets a critical and questionable precedent.
Facebook’s head of global policy and communications, Nick Clegg
“We don’t believe, however, that it’s an appropriate role for us to referee political debates and prevent a politician’s speech from reaching its audience and being subject to public debate and scrutiny,” writes Clegg, the former deputy Prime Minister of the U.K. “That’s why Facebook exempts politicians from our third-party fact-checking program . . .This means that we will not send organic content or ads from politicians to our third-party fact-checking partners for review.”
Yes, it prevents direct censorship of politicians and leaves critique to the media. Yet it also ignores how Facebook turns any voice into a publication, amplified by engagement-seeking algorithms distributed to billions of people. Users often treat Facebook as the internet and what they see on the internet as true.
Facebook doesn’t want false news distorting voters’ decisions ahead of the 2020 elections. However, the year-old “no fact-checks” rule and three-year-old “protected newsworthy speech” rule effectively elevate whatever comes out of a politicians mouth as above consequence.
If they share a debunked link, that can be labeled as wrong and demoted, but what they say is free to proliferate and confuse people. Not even a politician’s ads are subject to fact check, so you can spread whatever lies you want on Facebook as long as you’re rich enough and running for office. Facebook only draws the line at allowing content from politicians that would cause real-world harm, or running politicians’ ads that violate its policies.
This is certainly easier operationally for Facebook. It doesn’t have to be responsible for paying in-house staff or outside fact checkers to assess politicians’ diatribes. And it won’t as often end up in the cross-hairs of elected officials claiming Facebook is biased against them.
Some could see the benefit of these rules being that Facebook could never directly censor a politician unless they directly threatened people. If speaking for themselves from their own accounts, they get what’s close to free speech.
But it ignores how politics has evolved in the post-truth era. Rather than win with facts, it’s easier just to shout lies or insults loud and frequently enough that they’re accepted at face value, rebroadcast and culturally ingrained. Sensationalism spreads further than what’s level-headed. The fact check never gets as many shares as the incendiary claim. And those with a bully pulpit can keep an iron grip on their megaphone.
Facebook may not want to be the arbiter of truth, or even be considered “media,” but it transmits falsity without question; it’s not a platform, it’s a pawn.
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How Peloton made sweat addictive enough to IPO
It makes lazy people like me work out. That’s the genius of the Peloton bicycle. All you have to do is velcro on the shoes and you’re trapped. You’ve eliminated choice and you will exercise. Through a succession of savvy product design choice I’ll break down here, Peloton removes the friction to getting fit. It’s the leader in a movement I call “pushbutton health”. And this is why I think Peloton will be a big succes no matter what short-term investors do when it IPOs this week after raising $994 million in venture capital.
The bike
Basically, Peloton is a $2300 stationary bike with an iPad stuck to the front. The $40 per month subscription unlocks thousands of live and on-demand video cycling classes where instructors positively yell at you. When you think you’re tired already, they look into your eyes, tell you “you got this”, the soundtrack crescendos, you crank up the resistance, and you pedal harder at home. The resulting endorphin rush is addictive, and you find yourself persuading friends they need a Peloton too.
That viral loop which adds to its 500,000 subscribers is how Peloton plans to raise ~$1.16 billion going public this week at an ~$8 billion valuation. Its revenue doubled this year as it began to dominate the connected exercise equipment market, though losses quadrupled as it burned cash to become a household name. But after riding 110 of 150 days I’ve been home since buying its bike, I’m confident in the company. Whatever it invests now to build its lead will likely be paid back handsomely by its increasingly handsome customers who can’t bear to clip out. Here’s why.
Peloton classes are recorded in front of a live studio audience of riders
The Brilliance Of This Bike
The Shoes – Usually the activation energy to start a workout requires dragging yourself to the gym or suiting up to face the elements outside. That can be daunting enough that you rarely do. But once you slip into the Peloton bike shoes, you can hardly walk normally which means you can hardly procrastinate. You’re home so you don’t even need clothes. Just a few velcro straps and you’re over the hump and resigned to exercise.
The Clips – Home gym equipments reduces the barrier to entry but also the barrier to exit. You can tell yourself you’ll keep doing push-up sets or squats jumping rope, but you can stop any time. Yet after you’re clipped into the Peloton bike, you’re almost assured to keep pedaling until the instructor gives you that end-of-ride congratulations.
Just put the shoes on and you’ll exercise
The Schedule – You can get a sweat in just 10 or 20 minutes going hard on a Peloton. Combined with zero commute, that means you’ll practically always be able fit in a ride regardless of how busy you are. No more “I don’t have time to make it to the gym so I’ll just skip out”. When my calendar gets crunched or I dawdle a little before deciding to ride, classes as short as 5 minutes ensure there’s no weaseling out.
The Instructors – I wish I had these coaches to motivate me through sorting email. Peloton’s 20+ instructors range from hippie-dippie gurus to no-nonsense trainers that fit your personality type. You find yourself craving your favorite’s special brand of relentless positivity. I burn far more calories in a shorter time than exercising solo because they inspire me to push a little harder or they slow their countdown to add a couple all-out seconds to the end of a sprint. They’re even becoming celebrities, with bankers lining up for selfies during Peloton’s IPO road show. Sick of them? You can always Scenic Ride through video of some of the world’s prettiest bike paths.
Peloton instructors (from left): Alex Toussaint, Emma Lovewell, Ben Alldis, and Leane Hainsby
The Intimacy – You’re eye-to-eye with those instructors as they stare into the camera and out of the giant screen bolted to your handlebars. That generates intimacy despite them broadcasting to thousands. Even in person, a SoulCycle coach across the room can feel further away. You’re mostly guided by audio cues, but their gaze compels you to perform. Peloton almost feels like FaceTime, and that’s a sense of connection many long for more of these days.
The Pavlovian Response – Your brain quickly begins to associate the sounds of Peloton with the glowing feeling of finishing a workout. The rip of the velcro shoe straps, the click of clipping into the bike, but most of all the instructor catch-phrases. You get hooked on hear the bubbling British accent of “I’mmmm Leeaannne Haaaaainsby” as she introduces herself, Ben Alldis’ infectious “You got 5, you got 4…” countdowns, or Emma Lovewell reminding you to “Live, learn, love well”. That final ‘namaste’ followed by wiping down the bike and jumping in a cold shower forms a ritual you’re inclined to repeat.
Eye-contact with the instructors creates an intimate bond
The Soundtrack – Popular songs are more than just a pump-up accompaniment to Peloton classes. Your pedaling pace is often pegged to the tempo, with sprints starting when the beat drops. As your legs tire, you feel obliged to maintain your speed so you don’t fall behind the drums. You can even search classes by music genre and preview each’s playlist. Peloton has paid out $50 million in royalties for its music, and faces $300 million-plus in lawsuits for copyright infringement. But having the best tunes to bike to might end up worth the penalty since it helped Peloton race ahead in a lucrative market.
The Bike As Decor – Most home exercise equipment ends up in a closet or as a clothing rack. By designing its bicycles for beauty, Peloton coerces you to place them conspicuously in your home. You might have seen the hysterical Twitter thread parodying this practice, but it’s funny because it’s true. You’re a lot more likely to ride it if it’s central to your home (ours is between our bed and the doors to the veranda), and you’ll be embarassed if visitors ask about it and you haven’t hopped on recently.
“A good place for your Peloton bike is between your kitchen and your living room facing the cactus garden so you always remember virtual spin class” –ClueHeywood on Twitter
The Network Effect – Many of these smart product design moves could be copied by competitors. But by amassing a community of 1.4 million members to date, Peloton benefits from social features and economies of scale. You can ride together with pals over video chat, send each other digital high fives, or race and compare achievements. Each friend that joins Peloton is one more reason not to sign up for a competitor. The whole concept virtual personal training is being legitimized. And the cost of producing more classes gets spread wider as membership grows.
The Shared Accounts – Peloton has even built in a way to feel noble about your sanctimonious prosyletizing about how it “jumpstarted your metabolism”. Each $39 on-bike subscription allows unlimited accounts on up to three devices, so you can hook up some friends if you convince them to buy the big-budget gadget.
High-five fellow riders as you virtuall pass them
The Growth Hacks – Peloton streaks are for adults what Snapchat streaks are to kids: a clever way to reward consistent usage. But beyond the achievement badges displayed on your profile, you’ll get in-ride leaderboards full of people to proudly pass, progress bars to fill by pedaling, and kilojoule output high scores to beat. Peloton makes exercise a game you want to win.
The Shoutouts – Yet Peloton’s most explicit levering of our psychology comes from the in-class name-drop shoutouts instructors give. Whether mentioning the screen names of a few participants at the start of a session or congratulating users hitting their 50th, 200th, or 500th ride, the recognition pushes people to join the dozen live-streamed classes each day that add urgency to the on-demand catalog. Proof it works? People strategize to ensure their 100th ride is a long live class to maximize the chance of a shout-out.
A free cult shirt after your 100th ride
The ‘Transcendence’ – Peloton minimizes the isolation from working out at home. In fact, its whole product enables people to feel ‘glamorous’ and ‘manifested’ yet nonchalant in ways going to a sweaty gym or using a personal trainer can’t. It’s like being able to buy a little piece of the smug satisfaction and in-group affiliation of going to Burning Man. That’s why the company even sends you a free “Century Club” t-shirt when you hit your 100th ride. You’re meant to feel cool sharing that you “Peloton”, using the startup’s name as a verb.
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Conspicuous Self-Actualization
Still, Peloton has plenty left to optimize. There’s room to expand use of its camera to offer premium one-on-one coaching, head-to-head racing, group video chat with friends, and augmented reality filters to make people feel comfortable on screen and take shareable selfies. A wider range of intense but short classes could appeal to overworked professionals who picked Peloton precisely because they don’t have an hour for the gym.
Novelty could come from celebrity guest instructors, or themed classes for pre-gaming for a night out, fans of a particular artist, or songs about a certain topic. And it should definitely have some iconic sounds like an om or singing bowl chime that play before each class to center you and after to release you.
Most excitingly, the Peloton screen has the potential to be a platform for exercise-controlled gaming and apps. Whether pedaling to escape zombies chasing you or piece together a puzzle, maintaining an output level to keep your cross-hairs locked on an enemy plane as you dogfight, or making a garden bloom by growing each flower during a different interval, Peloton could evolve riding to be much more interactive. Apps could offer training simulators for different sports focused on sprints for basketball or marathons for soccer. Or just put Netflix on it! By opening up to outside developers, Peloton could build a moat of extra experiences competitors can’t match.
With the strengths and opportunities of its core product, Peloton is poised to absorb more of your fitness time and money. It’s already branching out with yoga, meditation, lifting, bootcamp, and jazzercise classes you can do standing next to your bike or without one on its $19 per month app. Its second gadget is a $4300 treadmill.
From there it could break into more of the “pushbutton health” business. I categorize these as wellness products and services that rely on convenience instead of your will power. Think delivery health food instead calorie-counting apps that are a chore. My pushbutton regimen includes Peloton, six salads per week dropped off in batches by Thistle, monthly packages of Nomiku vacuum-sealed meals that RFID scan into its sous vide machine, and a Future remote personal trainer who nags me by text message.
It’s easy to get hooked on the positivity
Peloton could easily dive into selling meal kits, personal training, or a wider range of workout clothes to compete with Lulu Lemon. If it’s the center of your fitness routine, the company could become a gateway to new health products it owns or partners with.
I’m bullish on Peloton because I’m betting people are going to stay busy, lazy, and competitive. It offers the effectiveness of a spin class but with scheduling flexibility. It removes every excuse for staying on the couch. And in an age of visual communication where many seek to share both the journey to and the destination of an Instagrammable body and the discipline to ge there, Peloton provides conspicuous self-actualization through consumerism. Plus, finishing a ride feels damn good.
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Confidence: The currency of acceleration
Eric Paley
Contributor
Contributor
Eric Paley is a managing partner at Founder Collective.
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Imagine you’re a billionaire starting a new company. You’re happy to bet your entire fortune on it. As a result, capital is no constraint. How fast should you burn money?
You probably wouldn’t use the generic startup math of dividing your available capital by 18 months and burn $55.5 million a month — though it would be fun. So if capital is no longer the currency that determines how fast you go, what should?
It’s confidence, not capital, that should be the currency of acceleration at a startup — no matter if you have a million dollars or a billion dollars to burn.
Confidence is often misunderstood by those who feign it. It is not bluster or arrogance. It’s not “trusting your gut.” Competitors raising big rounds of funding shouldn’t change your level of confidence one way or the other unless they’re doing exactly what you are. Glowing press coverage helps team morale, but it shouldn’t color your assessment of readiness to scale up.
It’s also important to note that venture capital interest is a terrible proxy for founder confidence. VCs have different structural incentives than founders; in an easy money environment, placing a big bet in a hot category, backed by a good enough team, is a job well done for a VC. Remember that they have a portfolio of companies, you’ve just got the one.
So what should drive you to scale up spend? There’s no perfect answer, but if you consistently see strong customer response to your product, marketing delivering more qualified leads for less money, sales channels becoming better instrumented and more efficient, LTV expanding with product improvements and lower churn thanks to your customer success team, you’re probably in good position to accelerate investment.
Too many startups feel pressure to spend money based on hope, not confidence.
Compounding successes at all levels of the business should provide data points that give you the determination to plan out a more ambitious trajectory. The requirement for confidence shouldn’t be mistaken for conservatism. Startups need to take risks in order to thrive, but they should be calculated, not capricious. There is a limited speed any company should go based on what they’ve learned to date about their market and offering.
If you have a high degree of confidence that you can turn $1 into $2, or $10, you should invest immediately. If you don’t have that confidence, you should spend time, but limited capital, to build it. Unfortunately, too many startups feel pressure to spend money based on hope, not confidence.
Authentic growth
Startups appreciate in value through growth. This isn’t just another VC mantra: even bootstrapped startups or public companies become more valuable when they grow faster. Two $10 million companies where one is growing at 80% and the other 20% will be valued very differently. Even if the slower-growth company is generating some limited cash flow and the high-growth company is burning within reason, the high-growth company will usually be worth much more.
So given that growth drives value, why shouldn’t every startup grow as quickly as it possibly can? With capital in hand, why not spend to generate more growth and therefore more value?
Capital without confidence shouldn’t dictate a startup’s acceleration.
Shattered confidence kills startups
Companies that misuse capital as the driver of acceleration cause irreparable harm to confidence. When a company over-accelerates and misses, it takes a painful amount of time to observe the mistake, admit the mistake, correct the mistake and rebuild confidence with the team and investors that you won’t repeat the mistake. Eventually, the company must undertake the inevitable process of taking a huge step back to try to rebuild that faith. This requires going much slower than a similar company that has never faltered.
If you spend a small amount of money on a pilot and it fails, you’ve helped home in on what your product should be, and you’ve not burnt any credibility with your team or investors. Spend 10 times that amount and you’ll have no more confidence in what to do next, far less credibility and a diminished balance sheet. Worst yet, the next time you want to lean in on a major initiative, the lack of confidence of key stakeholders will likely overwhelm what may well be the right decision.
Three startup currencies: Confidence, credibility and capital
Companies create value by compounding learning and therefore compounding confidence in their future. As confidence grows, companies will earn credibility inside the management team and with investors. Once you have both, it usually gets easier and easier to find the right amount of capital needed to fuel that confidence. Confidence is the most important currency, followed closely by credibility, and only then, cash. By way of contrast, driving up revenue artificially by burning capital with low return on investment is not sustainable and does not create long-term value. This will ultimately damage confidence and credibility.
You can buy confidence with capital, but it’s rate-limited and there’s no benefit to scale
Arguably, there should be little difference between the acceleration of two competitive companies that have the same amount of confidence but radically different capitalizations. If both are early-stage startups and one company has $10 million in cash and the other has $1 billion, they should spend their money with the same principle in mind: what does it cost to build confidence that our most important experiments are working?
Authentic confidence is the only real winning weapon at a startup.
For a company with a million dollars, this may mean hiring a single inside sales rep to test out a direct channel based on some early successes with a specific type of customer. A company with a billion dollars will likely make the mistake to open global offices to meet international demand, without first validating that they can make that single inside sales rep successful. In both cases, the confidence of the management team and their ability to execute should be driving the decision, not the available capital.
Credibility is earned, not purchased
If you spend like you’re headed to $20 million ARR and only hit $10 million ARR, your business is in a very difficult position. Not only because you sustained large losses, but also because you’ve damaged confidence in execution — team members and investors won’t believe in the company’s ability to achieve the target the next time it wants to hit the gas pedal hard.
Conversely, If you confidently hit $10 million in sales and have sight lines to $20 million, you will not struggle to raise more money to achieve your goals. The more the management team meets its goals, the more confidence grows and the pace of acceleration can be increased. Compound confidence and acceleration is boundless.
One of the biggest mistakes of the startup community, fueled by an overcapitalized venture market and an overhyped argument about winner takes all market dynamics, is the belief that capital is a weapon that will win the startup wars.
Authentic confidence is the only real winning weapon at a startup. Capital can fuel that weapon, but when used without confidence, it usually becomes a weapon of self-destruction.
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