Volume 26: Ego and unicorns slam into the blindingly obvious.

1. Masayoshi Son loses billions, compares himself to Jesus with unicorns.

Tl;dr: Fire-sale at Softbank as hubristic Vision Fund losses pile up.

Warren Buffett once observed that “only when the tide goes out do you get to see who was swimming naked.” Well, the tide is well and truly out for Softbank CEO Masayoshi Son and it appears he wasn’t just swimming naked, he thought he could walk on water too. During a spectacularly bizarre investor relations call this week, Son replete with a presentation that looked like it was designed by five-year-olds, announced the Softbank Vision fund had made investment losses of $18bn on re-valutions of businesses he’d heavily invested in, such as Uber and WeWork. WeWork, in particular, saw its valuation crater from a hubris-inspired high of $47bn to today’s hardly-likely-to-sustain-even-this, $2.9bn. Even by Son’s standards, a truly spectacular incineration of the $18.5 billion in capital Softbank had pumped into the business. While the media headlines focused mostly on his slide showing unicorns falling into the “valley of coronavirus,” the more telling moment was when he compared himself to Jesus. Clearly an ego that knows no bounds. Unfortunately for Son, hyper-aggressive hedge fund Elliot Management smells blood and is pressuring Softbank to engage in a fire-sale of valuable assets. Jack Ma, CEO of Son’s one good investment decision has decided to jump ship. This is a tale that’s only just getting started. The Vision Fund just imploded and it isn’t going to end well for either Son or Silicon Valley, starting with the startups his capital artificially inseminated and the earlier stage VCs that relied on Softbank to pump the value of their investments stratospherically.

2. Pepsico CMO states the blindingly obvious, calls it a mandate.

Tl;dr: But who are the 6% of people who don’t think empathy matters?

If you don’t subscribe to the Bob Hoffman newsletter on advertising, you really should. It’s great. This week a story caught my eye as he identified yet more nonsense coming out of the Pepsico marketing dept. Now, I’ve written before about how terrible Pepsi is when it comes to, well, pretty much everything (These are the same people who’ve tried and failed to launch a dedicated breakfast cola, multiple times) but this is bad even by their standards.

Apparently, they’ve done a longitudinal study on empathy as a new brand mandate that is so good they felt the need to PR it in a trade rag. Looking at it, the questions are a brilliant exercise in presupposing an outcome. Like asking if empathy is important (94% of Americans say yes, but who are the 6% who say no and why?) and then seeking to connect empathy to “whether brands should treat people with respect” (52% yes), “treat people as human beings” (50%), “listening to people” (43%) or “caring about people” (41%).

This is just terrible research. Take the thing you want to prove and then connect many obvious questions to prove it out. I mean, who thinks brands should treat people inhumanely, fail to listen to them, not care about them, and give them no respect? Of course the answers are yes. What’s really concerning is Pepsico's need to ask these blindingly obvious questions in the first place.

Let’s cut to the chase Mr. Pepsico CMO, empathy and treating people decently isn’t a magical new brand mandate, it’s always been a minimum freaking expectation.

This, by the way, should be contrasted with Costco, where store brand Kirkland is having its moment right now because, guess what? For over 40 years Costco has embodied the values Mr. Pepsico is only now figuring out.

3. No it’s not you, the web really is boringly all the same.

Tl;dr: New research quantifies commodification of the web.

I fear that I’ve been a stuck record on this subject for years, but the commodification of the web concerns me very much. When we know that brand distinctiveness is one of the keys to driving commercial success, anything you do to reduce it is objectively bad.

Just this week while prepping for a pitch, I found four US banking startups (here, here, here and here) that are all working from the same template. I mean, come on.

Unfortunately, my monolog on this topic has always seemed like an anecdotal rant—even to me—until now.

New research has sought to quantify the commodification of the web by using a data mining approach to study over 10,000 websites. And what did they find? The web achieved a peak difference between 2008 and 2010 and has been on a long trend toward conformity ever since. And while some good things can come from this (accessibility for the visually impaired for example), it’s also a damning indictment of our rote use of major design libraries and a blinkered focus on “usability” that really means “familiarity.” A particular trap that so much design research falls into so often.

This is a major arena for branding to tackle in 2020 and beyond. There’s a massive opportunity for more creativity and distinctiveness on the web. It’s just going to require folks who’re willing to step outside the familiarity bubble to deliver it.

4. Scaling losses isn’t marketing, it’s just old-fashioned value destruction.

Tl;dr: A whole generation of marketers suddenly needs to learn new skills.

In 1983, Factory Records released FAC SEVENTY THREE, a 12” single that sold more than any other in history, but whose die-cut packaging cost so much to produce that every sale cost the label money. Little did they realize they were presaging an entire era of marketing that would follow almost 40 years later.

As the Softbank Vision fund spectacularly implodes, we’re now seeing what happens when you pump vast amounts of capital into terrible businesses that have little hope of ever making a dime in profit. A deliberate disconnect is created between customer acquisition and sustainable business performance, changing the way we think about marketing in the process. As Silicon Valley companies accidentally decentralized responsibility for the marketing mix because engineers wanted to take ownership of product, the marketing function lost sight of its role as a creator of value, and instead became little more than carnival barkers scaling losses and destroying value, while pricing responsibility went out the window entirely.

There will always be a discount shopper looking for a deal, but you literally can’t make money if attracting that shopper means pricing way below cost. If we assume greater scrutiny of gross margins by VCs in the future, then we’re going to need marketers in places like San Francisco, Boston, and New York to learn a completely new skillset. Beyond customer acquisition tools, they’ll need to figure out how to understand and frame customer needs, define value propositions, guide product roadmaps, understand customer trade-offs, build a brand and establish (and then maintain) a price-point that sustains gross margin at the same time as acquiring new customers. You know, the hard yards that massive injections of capital have disguised the need for.