Lets talk Facebook

First, I’m not recommending to any of my companies that we leave facebook. I am recommending that we de-emphasize pushing consumers or partners to like us on FB and focus on building up our followings across all existing social media platforms and to evaluate those that we feel can grow a material following. In the past we put FB first, twitter second. FB has been moved to the bottom of a longer list.

At the core of the issues I have with FB is how FB thinks about itself .

This is from their page on Newsfeed, Engagement and Promoted Posts : ”In this way, we can keep news feed an engaging service where people come to get the information that is most interesting to them.” FB believes that their news feed is an engaging information source.    They seem to really, really want to make sure that you get the information that is most engaging to you. I honestly didn’t know this.

This has to be a good thing, right ? What could possibly be wrong with wanting to improve engagement ? What could possibly be wrong with optimizing their news and information feeds ? IMHO, everything.  Defining engagement by clicks, likes, shares, unlikes and reporting works for Google’s search engine, I don’t believe it works for a social network.

People go to Google Search with every intention of leaving it. They want to “engage, click and leave”.  On the exact opposite side of the spectrum, people go to FB with the expectation that it is very likely they will stay on FB for an extended period of time. In fact we spend more than 26 minutes per day on FB. As this study said, FB is an alternative to boredom. FB is far more like TV than it is Google Search

FB is what it is. Its a time waster. That’s not to say we don’t engage, we do. We click, share and comment because it’s mindless and easy.  But for some reason FB doesn’t seem to want to accept that it’s best purpose in life is as a huge time suck platform that we use to keep up with friends, interests and stuff.  I think that they are over thinking what their network is all about .

Being a time suck that people enjoy is a good thing. There is a comfort in turning on the TV and having it work without any thought required. It’s easy. It is the best  5 hour on average per day alternative to boredom.

There is a comfort in going on FB and seeing what pictures pop up from friends or from pages you have liked.  FB is not something you have to rush through. All those pictures and posts are not going anywhere. FB is easy. In particular it’s a great alternative to boredom when you are stuck somewhere and all you have is your phone.  Actually it’s  a life saver. Head down on FB beats the hell out of that awkward feeling that you may have to at least acknowledge and possibly talk to the person next to you. Put another way, IMHO, FB really risks screwing up something that is special in our lives as a time waster by thinking they have to make it more engaging and efficient.

Who really appreciates that some posts rise to the top of their newsfeed because some folks they used to work with and are still friends with shared a baby picture ? Not only do I not like it, I like even less the obligation I feel to like the picture so I don’t seem like some grump.

I dont want to know about where you are in Wizard of Oz (currently navigating Edgerank up my top stories feed). Our FB networks have grown so big and unfriending someone is so much more difficult than it should be, that we just don’t do it. Hence, our news feed is not so pure . The math may be efficient but the result is not.

So how does this relate to brands and sponsored post ?  In a perfect FB world every post enters the friends/like/subscriber’s timeline. If they log in and want to spend the time searching their timeline they see it, if not , not. FB users go on FB looking to kill time. Why not let them ?

From a brands perspective not having to try to fall within the parameters of the algorithm (Edgerank)  allows us to post fun things, tidbits, information, anything knowing that there is at least a chance those who have a connection with us can see it and knowing that we won’t reduce our chances of the algorithm showing our post.

We should know better than an algorithm what those who like us actually like. It may well be that it’s a passive relationship. Maybe they just want to see the scores at the end of every quarter in a Mavs game ? Maybe they want to know what show is playing right now on AXS TV ? No one expects them to like, comment or share any of this. It’s just an information source. And can i just say that its really weird when Mavs end of quarter scores show up out of order.  Thats how smart the algorithm is.

It’s not like pages have carte blanche to assault people with posts.  People know their own tolerance for what they consider to be spam better than any algorithm does.  It is incumbent upon the brand not to abuse the relationship and cause the person to unlike us.  Doesn’t FB realize that is far easier for a user to opt-out of a feed by unliking a brand/person/page that has done a poor job of communication than it is to mess with all the account settings or for them to try to tweak their algorithm all the time to try to guess what people want ?

Again, FB is over complicating a simple issue.  A user can govern his/her newsfeed far better by hitting unlike than an algorithm like EdgeRank ever can.

But this over-complication via algorithm and not knowing why people use their site (feel free to say right here that of course FB knows how people use their site better than I do. ) creates a financial problem for brands. By trying to be an incredibly efficient information delivery source, they confine our ability to organically reach most of our followers to using Sponsored Posts.  THey also significantly increase our costs because if we create a post that doesn’t engage our followers to the level the algorithm expects it to, it can impact our ability to be seen in the future. Talk about pressure.  Put up a post , but be sure that Edgerank doesn’t think it sucks.

Then of course there is the money. As many have written before me, sponsored posts can get expensive. If you post many times a day, that can get incredibly expensive.

So why would brands who cant afford the algorithmic presentation risk or the financial cost want to continue to drive their user interaction by investing in  FB if there are alternatives ?

FB’s has a couple of other serious issues that impact their desire to be a source for “information that is most interesting to them”. Because FB has become such a store of personal information, we have become very protective of our profiles.  I don’t know the percentage of individuals posts on FB that are available to the general public, but it can’t be very high. We show our posts and see the posts only of our extended network.  While that network may get you close to Kevin Bacon, it’s not going to let you use FB as a primary information source .

Why? Because you can’t gain the value of all those posts outside of your network. They are closed off to you. Yes you can search on Bing which actually does a good job of integrating your own social network, but it still doesn’t take you out to the rest of the social world and all the insights and information that it has to offer like Twitter , Tumblr and specialized sites do.  Some  of the best sources of current information are searches on Twitter, Tumblr and Instagram (the irony), and of course relevant websites.

If you want to see what every one is saying about the election, you have to go outside of FB. So by default you are not going to use your newsfeed as a primary source of information. It’s more like the township newspaper .  You get the basic local stuff and updates , but it can’t be a comprehensive source.

The same applies to the real time social universe. There could be 120 people talking about a topic that they have not yet liked  or for which there has not been a topic yet created and you would have no way to know the conversation was going on or how to reach the people if you did. This is exactly why Twitter has trending topics that are becoming more and more granular by the day.

So back to sponsored posts and algorithms. I’m not against sponsored posts per se. I’m against sponsored posts being the primary, if not the only way to reach most of the people my companies have built a connection with on FB.

Take away EdgeRank so we all have a fair chance to reach those who like us with Sponsored Posts being a way to improve our odds, great. I’m all for it.  That is like any other medium.

I also think that FB is making a big mistake by trying to play games with their original mission of connecting the world.  FB is a fascinating destination that is an amazing alternative to boredom which excels in its SIMPLICITY.  One of the threats in any business is that you outsmart yourself. FB has to be careful of just that.

I have to be honest, I watch fox news more often than any of the other cable news nets. I watch CNN next , then MSNBC.  So lets get that out of the way.

I watched Fox and MSNBC during the election cycle because it told me the worst possible elements that could be found about President Obama. and Governor Romney.  Both networks work so hard at branding every possible negative issue  about the other side that it’s very interesting to look at it as an exercise in branding and marketing. Neither truly was reporting the news. They were telling us how they believed a negative brand could be built.  And not only did they tell us how negative the other brand was, they were relentless in trying to create confirmation of that negative brand by bringing in “experts” to confirm their brand bias.

You know who both networks reminded me of ? All of their shows, with the exception of Bill OReilly reminded me of the old Coast to Coast with Art Bell radio show. Every night Art Bell would bring in  what were  essentially crackpots talking about life on mars, alien abductions (accept for the true ones of course , Black Helicopter operations , pretty much crazy thinking across the board. What made Art Bell masterful was that he interviewed them and talked to them like there was absolutely no doubt in his and his listeners mind that everything the interviewee said was true.  Of course there is life on mars. Of course there are aliens living among us who can shift change to different animals. Of course the government has been working with Planet X for years .  Callers would call in and give their personal experiences with all the above. He confirmed for his listeners, callers and the crackpots he interviewed  that it was all true. Just because Art Bell made you believe he believed it was true. Whether or not he actually did, I have no idea. His show had a huge radio audience nationwide.

Both MSNBC and FOx News do the same thing with their branding efforts. No matter what the story, true or not, they were going to pull out every stop to make you think its true. Facts be damned.  Gov Romney lies about everything. Here are 3 people to confirm it. President Obama is running the dirtiest campaign ever, here are 3 people to confirm it. For every attempt to create a negative brand association for the other side, there were 3 experts confirming it multiple times a day.

When we got to the last week before the election, I noticed a subtle change in the branding of this election by Fox. Maybe MSNBC did it and I just didn’t see it. But Fox started branding hard the notion that Romney had all the momentum and was on his way to a win.  Dick Morris predicted a landslide over and over. Karl Rove would tell stories about Romney momentum and Obama being on the run.  Which ever poll showed Romney in the best light, that was the focus.  Charles Krauthammer was relentless in talking about the imminent disaster for Obama and win for Romney. It seemed to me in hindsight that only Bill Oreilly , (who’s show I like and who is a master of asking questions that are pre -spun so that the answers fit his needs, and dis engaging when he knows he is beat,  like he says, “Its my show. I can do what I want”), and Chris Wallace really tried to temper the branding blitz.( I like Chris as well. He asked questions the others seemed afraid to ask). Outside of these two, Fox was relentless in sending the message that a Romney win was imminent. There was no doubt about it and if you didn’t believe it , it was because you either followed the mainstream media too much or you were just stupid.

Like Art Bell, Fox made you believe that a Romney win was all but assured.  In the last couple days it was all they focused on.  We got this. Here is the proof. Here are people you trust telling you that its the truth.

But Fox had two huge problems. THe first was that there audience was far, far bigger than MSNBC or the other networks. They were the biggest during the debates. They were the biggest time and again leading up to election day. You would think that was great for Governor Romney. Right ?

Wrong.

THe 2nd huge problem for Fox and as a result Governor Romney is that they didn’t know the Dancing with the Stars bottom two principle. You would think that when one of the couples on DWTS is in the bottom two, thats a horrible sign.  It must mean they are close to elimination. Not for couples with a large voting base. When you have a large voting base and find yourself in the bottom two, your voting base recognizes that you are at risk of losing. Because they want you to stay on the show and voting counts as much as the dancing, they will step up and vote and keep you on the show until you find yourself up against couples that have a bigger voting base than you.

So what does this have to do with Fox and the Presidential election ?

I truly believe that supporters of Romney that watched Fox News thought it was a no brainer and that Gov Romney would win. Living in Texas I was around a lot of Romney supporters on Tuesday night who had no doubt that Gov Romney would win. None.

On the flipside, MSNBC doesn’t have the audience or do as good a job at branding issues as Fox News.  Fox News viewers take to hear what MSNBC viewers don’t.  When President Obama’s team reached out to minorities , women and others who felt threatened, it was easy to convey to them that they were the underdog. That no one thinks they can win. That they could make a difference.

And they did.

By all accounts, one of the defining differences in the election was “The Ground Game” . The outreach by the 2 candidates to reach voters “on the ground”, in their homes, on their phones, wherever it was possible to make a possible contact. Once the contact was made, the goal was to get them to the polls to vote for their candidate.

You would think that the candidate with the most business experience would be best prepared to build a national organization that ran like clock work and made the final difference in the election. You would be wrong.

In the 2008 election President Obama was able to utilize social media as a call to action and funding and gain a huge advantage over the Republican candidate who couldn’t match the online advantage that President Obama created.

In this election it appears that President Obama was able to gain re-election by putting together a national organization that only raised the same amount of funds as the Republican candidate, but was able to better use that funding to put together a ground game “business plan” that was not only better than the Republicans, but had better messaging, voter connection and was better planned, implemented, distributed and executed on than their “far better business people” Republicans.

oh the irony

Now that i created a headline that got your attention. Sorry, this is a 140 character headline world, right ?

I couldn’t resist writing about the irony of the race to be POTUS..

What are two of  the biggest, if not the biggest issues in this presidential election  ? Healthcare and the Economy

Consider the following:

1. Who invented ObamaCare and has the most successful implementation to date ?

2. We are in a period where the government is borrowing money at a net effective rate of less than zero percent. Who has made hundreds of millions of dollars and a career of borrowing significant amounts of money to acquire companies in heavily leveraged deals ?

It’s crazy, but true.

1. Of course Governor Romney basically invented Obamacare for the state of Massachusetts.

Can you imagine the following conversation from a Democratic candidate Romney with a hypothetical Republican candidate

“Business in the US needs certainty over healthcare costs.  With my RomneyCare program instituted across the country big businesses will no longer have to deal with the variability and uncertainty from state to state in healthcare costs and benefits. They will no longer have to face the uncertainty of state and local politicians pushing their agendas that can create annual changes and huge cost increases at the expense of well negotiated and time tested plans like RomneyCare. Ask my Republican opponent which state , other than Massachusetts has been able to get their Healthcare costs and services under control ? It’s not like they all haven’t been trying.  Massachusetts is the only state which has been able to create any level of certainty in healthcare costs and services.  Which is exactly what businesses want and why we need RomneyCare as a national program. “

2. As the head honcho at Bain Capital, a private equity firm, Governor Romney made huge profits by borrowing heavily to acquire companies and then operate them with the goal of getting an operating return on capital or selling the companies for a profit. He turned the art of using leverage into an art form.  I should add here that I fully understand that Bain was not and is not a slash and burn Private Equity firm. They put people in their acquired companies to try to improve operations rather than just slash costs. But that is not really the issue here. Governor Romney knows how to invest using debt.

The real issue is that rather than saying that he thinks its a horrible idea for the government to invest in companies and that he would not permit it, I really, really would love to see him take the opposite approach and own and crow about the fact that he is a MASTER of USING DEBT.

Lets get back to our debate with a Democratic candidate Romney and a hypothetical Republican candidate

“No one knows how to get a return on capital better than I do. I’m great at it. Look at my history. With the government’s ability to borrow at an effective tax rate of less than zero, I promise you as President that I will know better than anyone how to get a return on investment for the American people. In this time when we need to grow the economy and create jobs, we need to cut ineffective and inefficient government spending in bureaucracy and administrivia and increase investment where we can get the greatest return for the American people. And you know what makes my approach all the sweeter ? We are borrowing money from China DIRT CHEAP and I will invest that to create American jobs !

We need to invest in American companies. We need to invest in new technologies. We need to invest in Research and Development. We need to invest in new medicines and healthcare options.  Now some people might say that it will be very difficult to pick winners and losers and they are right. It will be very difficult. There will be losers. More importantly there will be winners. Winning investments will create jobs. Winning investments will create new technologies and medicines that improve the standard of living for all of us and does so at a lower cost. We won’t compete with private investment, we will complement it.

Right now my friends the economy is growing. No its not growing as fast as we like and too many people don’t have jobs or are underemployed, but it is growing and that growth is accelerating, led by an improvement in the housing market.  My plan is to  let that growth continue to accelerate and to also continue the existing Bush Tax Cuts with the exception of an increase in  individual taxes from 35pct to 39pct for those earning more than 1mm dollars.  I will also increase capital gains from 15 pct to 20pct and eliminate the advantages of carried interest.

I believe in America. I believe our future is bright. I will do what corporate America is not doing and no amount of effort to manipulate the tax code will make them change, I will invest in America and create jobs.

My Republican friends on the other hand,  believe that if you reduce tax rates, large corporations hoarding cash will miraculously bring that cash back to the US and invest and hire . Trust me. I know investment. That won’t do it. They can borrow money so cheaply there is no reason to bring it home and it certainly won’t lead to jobs. If they had something to invest in that would generate a return, they would. They haven’t.

Again, they won’t invest in America. I will.

As a long time investor, I have never turned down an investment because of tax rates. I was just as successful investing when capital gains were much higher. I was just as successful investing when individual tax rates were much higher.  No smart investor turns down a good deal because of tax rates. I always remind people you only pay taxes on profits. And if you make more than 1mm dollars in profits, whether through capital gains or ordinary income,  you should pay more taxes. 

Now look at the alternative my Republican opponents are proposing. The Republican candidate is trying to convince us all that it is going to be easy to convince both sides of Congress to come together and figure out at what number they can cap individual tax deductions. He is also saying  that he is going to reduce corporate taxes AFTER he is able to get consensus on which corporate deductions to eliminate.  That is not going to happen unless we outlaw corporate lobbyists. Everyone is for eliminating all deductions other than their own. The idea that everyone will happily agree to compromise is not consistent with the actions of this Congress and not going to happen.

It’s not going to happen. He is not going to be able to get anyone to agree on which deductions to eliminate.   Not only that, he believes that the net result of these improbable actions is that tax revenues from corporations will go up. Do we really believe that corporations will gladly accept an increase in their net tax bill ? I don’t think so.

So my friends it comes down to this. Do you trust my Republican opponent to convince Congress to do the right thing and work together like a big happy family and do it quickly, or do you trust my track record and ability to get this economy back on track through smart investments in the ingenuity and ambition of the America people . There is no greater opportunity than here in America. Lets invest in America. Let’s create jobs.

Now is the time to vote Democrat. Now is the time to Vote for Romney

Hey, this is all fiction but hopefully you can see the same irony I did.

Damn, I am so ready for a 3rd party.

Maybe I will start one on KickStarter.

and as always i write these fairly quickly. feel free to comment on typos

The most interesting aspect of the debate last night was with the President referring to Gov Romney as an investor while Gov Romney referred to himself as a businessman. It’s a distinction with a huge difference.

It made me think back to a post I wrote almost exactly 4 years ago, prior to the last election. We need entrepreneurs. We need Investors. There is definitely a place in the market for “spreadsheet capitalists” Just as short sellers can help us identify poor companies or poor company habits, SpreadSheet Capitalists make us realize just where our system is wrong and needs to be changed, but we have to also recognize the parts of the system they will exploit and the HUGE problems they will cause to our economy if not proactively considered. With the multiple bubbles and collapses of the last 20 years my hope is that we will have learned some lessons. We can’t do the same things over and over and expect different results. LIke everyone else I want to see more people go back to work. In fact, I’m investing in companies as fast as I can to help add to the economy and create jobs. But we can’t let our desperation to create jobs blind us from the exact problems that put our economy in this position.

The Cause of Bubbles =Investment vs Financial Engineering

Oct 11th 2008 3:12PM

After watching interviews of Governor Romney and the debates, both Presidential and VP, I’m starting to fully get my arms around how Governor Romney works and the details of his tax plan.

Governor Romney is a successful financier. He is an amazing deal maker. When he has control of a situation, he knows exactly how to get things done. He knows exactly what he wants to do and he knows exactly the process he needs to take to get there. He is incredibly confident in his ability.

I see some of me in him. When it comes to my companies, I know what i want to do and I have complete confidence that I will get to where i need to go. I might not always get there, but I tend to only get into businesses and battles where I am extremely confident I can come out ahead. My failures have never stopped  me from having absolute confidence in how I approach business.  I have the feeling that Governor Romney has this trait to a far greater degree than even I do. No failure will ever slow down Governor Romney’s confidence.

That confidence is exactly the foundation of his tax plan.  This is how I see his plan:

-  He will work to create bipartisan agreement to reduce federal spending as a share of GDP to 20 percent – its pre-crisis average – by2016.

- He will work to create bipartisan agreement to simplify the Tax Code

-  That the rich will continue to pay the same share of taxes as they pay now.

- He believes that income and corporate tax cuts across the board will increase economic growth which will offset the impact of any tax cuts that he is able create in a revenue neutral manner

- He intends to first negotiate  a bipartisan agreement to  eliminate corporate and individual deductions other than mortgage interest deductions, health care deductions and several other tax deductions that he feels are important to the middle class

- Once he has negotiated a bipartisan agreement to eliminate corporate and individual deductions he will be able to access the impact on revenues and determine what tax cuts that can be reasonably made. His goal and hope is that those tax cuts will be 20pct across the board for individuals and to 25pct for corporations.  But he has been clear that it is not absolutely certain that these will be the exact numbers.

Well I’m going to fill in those details in a second. But first I want to provide a little more detail on my perception of Governor Romney.  As I said at the beginning of this post Governor Romney is a deal maker who has extreme confidence in his ability to get his deals done.

Agree or not, I am certain that Governor Romney firmly believes the following – at Bain he created a company that was built on his ability alone to close deals to buy or invest in companies. He knew that he took people’s money and he was relentless in getting profitable deals done to make them money.  He was hired to fix the Olympics. and he did.  He  was hired to fix the state of Massachusetts and he feels certain that he did.  Add all this together and I believe that Governor Romney firmly believes that he is as good a negotiator and dealmaker as there is.  

If you put a problem in front of him, he knows in his mind that given enough time, resources and control he can solve the problem. 

Which is the exact detail of the Romney Tax Plan that makes all the numbers add up.  Governor Romney is the detail.  He will take all the unsolved variables in the algorithm that is our desire to reduce the budget deficit , increase economic growth and thereby  increase employment and negotiate them into the outcome that will solve this country’s financial problem.

Can he do it ? I don’t know. What I do know is that in order for him to have a rational negotiation on all of these variables it requires the politicians he will be negotiating with to negotiate in the best interests of the country rather than for their own personal interests and for the projections of the economists advising him to be accurate.  Those are both high risk factors that will be difficult to overcome.  I don’t know that anyone can over come them, including Governor Romney. I think it will be difficult for anyone to walk in to the office  and get to a compromise that solves the algorithm. But I know Governor Romney has no doubt in his mind that he is more than up to the challenge.  Which leads to the next algorithm, what happens if he gets elected and can’t get bipartisan agreements ? That has to be part of the equation as well.

So what does all this mean ? It means this is how I was thinking and I wanted to get it out there to let people comment on it. Thats the beauty of a blog, it can create discussion on topics i am interested in.

I’m not saying you should or should not vote for either of the candidates. That is up to you. Nor am i saying that economic issues should be the only factor in who you should vote for.  Everyone needs to make their own decisions. Just as I will make my own decision on Nov 6th. 

Thanks for reading this far. I hope you jump in on the comments

Wall Street doesn’t know what business it is in. Regulators don’t know what the business of Wall Street is. Investor/shareholders don’t know what business Wall Street is in.