Hello again! In personal news, I’ve just completed my first week in a new role at Instagram, where I’ll be focused on the consumer-facing side of the Reels product. You can expect more thoughts and coverage on social media + the creator economy as I wade deeper into this industry. Also, you could say I have a thing for controversial companies.
Now, whenever you load a website, scroll on social media, or hit Enter on a Google search, hundreds or thousands of companies compete in a cascade of auctions to show you their ad. The process, known as “programmatic” advertising, occurs in milliseconds, tens of billions of times each day. Only automated software can manage it.
Similar conditions were in place when mortgage-backed securities flooded the market in the early 2000s. These financial instruments traded at prices far above their true value, because the average trader had no idea they were backed by toxic assets. Once the truth came out, the bubble burst.
Advertising is the foundation of the “free” internet. As the saying goes, if you’re not paying for the product, you are the product - and businesses are paying for your attention.
As someone with Ad Block installed, I’m thankfully spared from the majority of internet advertising, but I’m also very much part of the problem the author outlines: that internet advertising is not really nearly as powerful of a marketing tool as advertisers might expect. Because of the highly obfuscated nature of machine-learning driven targeted advertising, it’s almost impossible for an internet advertiser to really confirm their return on ad spend - it’s not nearly as trivial as checking the newspaper classifieds to see if your ad was really printed - and attribution is as difficult a problem as it’s always been.
There are some aspects of the author’s premise that I don’t completely agree with. Remember this article from way back in 2012 that claimed Target was able to determine that a teenager was pregnant by analyzing her spending patterns? If that was possible then, imagine what Facebook, Google, and Amazon know about you now. That, then, challenges the idea that the targeting is ineffective - it may be that the targeting is perfectly effective, but we’ve collectively gotten savvy enough at the internet to simply ignore the advertising that we encounter, however well targeted it may be.
Another supposal that I don’t agree with is that advertisers will for some reason back out of internet advertising through such targeted platforms. The days of newspaper advertising are long gone, and there isn’t much of an alternative to reaching audiences at scale today. A collapse of faith in internet advertising would be disruptive to every party involved: global internet giants would need to find new revenue streams, consumers might lose access to services they’ve been expecting to be free, and advertisers would still be out of an effective way to reach audiences. The industry could be disrupted, sure, but it’s not liable to collapse in on itself.
Considering how the internet was founded and funded, it’s difficult to imagine a different growth engine than advertising. While the “passion economy” is popularizing direct payments to creators, with companies like Kickstarter, Shopfiy, and Stripe pioneering electronic commerce and payments, there’s absolutely tons of untapped potential yet in internet monetization. But as the article points out, the giants of the internet era have ridden in on the backs of ad spend.
[Facebook, Google, and Amazon] alone account for roughly 10 percent of the US stock market’s total value. Their destiny is bound up with that of the global economy.
Like it or not, advertising pays the bills, and we should hope it continues to stay that way.
Uber, Lyft, Doordash, Instacart, and all manner of “gig economy” tech companies are throwing their hats in for Proposition 22 on the California ballot, which would carve out a “third category” of workers who are neither traditionally employed nor independent contractors - giving them certain benefits and guarantees that are lacking as a contractor, but enabling the flexibility of contracting work. Sounds good, right?
As it turns out, the answer is more complicated than either side will let on. I’ve written about this before and, as a frequent Uber rider (and now ex-employee), I’m a bit biased in that I’d like to see the service continue in California. But the the ramifications of this decision will be significant - for many full time gig workers, their rights and livelihoods are at stake.
An Uber engineer wrote this memo in TechCrunch this week that made waves, as he publicly spoke out against Proposition 22.
I’ve met drivers who have to sleep in their cars, risk financial ruin over a single doctor’s appointment or go without life-saving medication. There’s no way around it, Uber’s Prop 22 is a multimillion dollar effort to deny these workers their rights.
This is a well written take, and it lines up with what some researchers are saying as well: Proposition 22 doesn’t do nearly enough to guarantee livable wages, and it is the wrong solution to heavy handed legislation (legislation that itself was a bad solution to the real issue of the gig economy).
In many ways, we are now facing the reckoning of technology grown beyond our wildest expectations. When Zuckerberg launched Facebook to Harvard students in 2004, he could not have imagined its role in enabling the Rohingya crisis in Myanmar. When Kalanick created Uber in 2009 in response to a poor taxi experience in Paris, he could not have foreseen the consequences it, and the gig economy, would have on the well-being of the working class. As real benefits to society (connectedness, convenience) propelled these businesses forward, costs multiplied and were often borne by the unseen and underserved.
In the case of Prop 22 specifically, I’m leaning gingerly towards yes, but very close to the fence. I’m not a fan of all its stipulations, and I don’t think it’s the best outcome for the drivers it claims to support. But I also don’t agree with AB 5, the ruling that made Prop 22 necessary for Uber/Lyft’s survival, and as I’ve said before, a more nuanced approach is needed to properly protect both business and livelihood, interests which are now unfortunately at odds. Choosing between independence and security is a false dilemma - why has our society delivered us into a world where we cannot have both?
Looking at what’s on the table, Prop 22 isn’t great, but in maintaining the interests of most drivers, it’s better than nothing. It still doesn’t do nearly enough for some who need it most. Its very existence tells us that, somewhere along the way, government failed to adapt to innovation - advances in technology have gotten ahead of advances in healthcare, taxation, regulation. This story will play out in other industries as well.
This writeup is getting long, but I don’t think there’s a nice bow to tie on this situation. The more I read about it, the more sad I feel for everybody involved. This endorsement in the LA times against Prop 22 is quite fair about the context of the Proposition, though it sits on the other side of the fence.
But the ruling affects a broad array of industries, and the Legislature has failed to come up with a response that meets the needs of the state’s 21st century workforce. Unfortunately, Proposition 22 doesn’t provide a good answer either, offering a solution that’s too narrow and rigid.
Regardless of the outcome, Uber and gig economy companies are the nimble ones here, and they’ll be forced to innovate, pivot, or go the way of Blockbuster. History will vindicate the victor, and if this means no more Ubers in California - well, I wasn’t going anywhere anyway.
In other reading this week:
Slouching Towards Bethlehem, a close, practically uncomfortable look at the ebb and flow of life on the fringe that was Haight-Ashbury at the height of the LSD boom.
Profile on Daniel Ek, founder and CEO of Spotify, a fascinating glimpse into the mind of an understated yet very successful technology and business leader.
A Machine Learning Primer, a very helpful community-made exploration of fundamental machine learning concepts. As I’m dabbling in this field, I’m really impressed by how homegrown and well distributed the knowledge seems to be, especially given how esoteric (and math-heavy) the concepts are. Loving the energy.