Volume 28: The Better Angels of Capital.
1. Appealing to the better angels of capital.
Tl;dr: Purpose only matters if capital wants it to.
I wrote previously about the origins of brand purpose amidst the depths of the financial crisis. A combination of plain old guilt on behalf of those in the banking sector and survivor guilt on the part of the technorati. Then, over the last ten years the idea bifurcated and metastasized into a one-size-fits-all branding program for DTC startups on the one hand and purpose-vertising campaigns for shaving cream on the other.
All in all, though, purpose mostly ended up as a crock of corporate nonsense packaged up by PR folks, when it could and should have been so much more.
Of course, now that the world is in a terrible position once again we’re seeing old ideas raising their heads again, with folks stating the need to build conscious brands that are good for the world and good for people and all that great stuff. Except that it doesn’t bear out in the real world. In the real world, we no longer have an S&P 500, we have an S&P 5. Capital decided there are only five winners that matter, and the thing that connects them isn’t their commitment to purpose or conscious capitalism, it’s that every single one is a massive and massively unregulated monopolist.
So what’s to be done? Well, as William Gibson once said “the future’s already here, it’s just widely distributed.” The problem with folks calling for conscious brands isn’t that it’s wrong per se, but that they aren’t connecting the widely distributed dots. Before brands can truly be built to do good and drive toward a better future, we need to connect the following:
Capital that isn’t just flowing like water toward the best return for a given risk, but is making conscious decisions on the basis of both financial and non-financial factors.
Management and leadership that wants to embed good into the charter and operating model of their business in a way that it cannot easily be removed.
Employees that want to work for this kind of company ahead of others and are willing to create the culture to sustain it.
Customers who will walk the talk with their dollars, and believe in the value of the good of the brand they’re doing business with.
The good news is that all of the above already exists in some form or another, the bad news is that it’s widely distributed and currently not at all well connected.
ESG investing is growing, particularly in Europe, and represents a shift away from a focus on pure returns. B-Corporation registrations are growing, embedding purpose and good into corporate charters and operating models. Employees increasingly view social impact as a business imperative, and consumers, while patchy in their behavior, consistently claim the desire to support businesses that do good.
What we’re lacking in all the talk is the realization that the only way for this to work is to connect the dots from capital through management and the operating model into the employee experience and ultimately out into the value proposition to the customer.
The challenge is that unless we much more effectively manage the demands of capital, which is the element that makes corporations dance, then purpose will be doomed to be little more than the horseshit it is today.
2. Basic security just became a paid feature. That’s bad news for all of us.
Tl;dr: Zoom sets a bad precedent.
Zoom has security issues. That’s pretty well known by now. For them, it’s unfortunate that they need to fix these while experiencing unprecedented growth because what they really want to be doing is innovating the product in order to build sustainable stickiness.
While their stock value has rocketed to a heady $46bn, this isn’t a great business, and it isn’t all that great a product. There aren’t any real competitive moats as yet, and building video products isn’t particularly hard (or so I’ve been told). With the CV-19 enforced change in how we are working and socializing right now, there are almost certainly a LOT of competitors waiting in the wings to take a slice of their action.
Frankly, Zoom got lucky. Right place, right time, and they had the good fortune of Microsoft and Google taking their eyes off the ball with Skype and Hangouts at exactly the same time.
Anyway, it was with a sense of some significant discomfort that I just read a statement from Zoom that it intends to make end to end encryption a paid feature. The CEO came out with this pearler on the topic:
“Free users — for sure we don’t want to give [them] that, because we also want to work together with the FBI, with local law enforcement, in case some people use Zoom for a bad purpose”
What a load of absolute and utter codswallop. Utter nonsense on so many levels, but let’s look at it just one for a second. What he’s essentially saying is that if you want to use Zoom for a bad purpose all you have to do is become a paid subscriber. Hey bad guys, come on over and pay us!
What this neatly avoids mentioning is that because Zoom doesn’t have end-to-end encryption today, retrofitting it is hard and expensive. It will force practical trade-offs in use for free users that they’d rather avoid because it will mean people will leave, and you can’t monetize their data if they’re gone.
More deeply disturbing is that this might precipitate what we’ve seen with streaming media and advertising, which is that we’ve created a class system. Those who can afford to pay for it get to avoid advertising, while those who cannot afford to, cannot. Only this time, what we’re saying is that if you can afford it then you get basic security and privacy, but if you cannot, you do not. And that’s just a really bad thing.