Facebook founder Mark Zuckerberg’s (so far) five-year project to expand access to the Internet in emerging markets makes plenty of business sense when you look at the latest report by the Pew Research Center — which shows social media use has plateaued across developed markets but continues to rise in the developing world.
In 2015-16, roughly four-in-ten adults across the emerging nations surveyed by Pew said they used social networking sites, and as of 2017, a majority (53%) use social media. Whereas, over the same period, social media use has generally been flat in many of the advanced economies surveyed.
Internet use and smartphone ownership have also stayed level in developed markets over the same period vs rising in emerging economies.
Pew polled more than 40,000 respondents in 37 countries over a roughly three month period in February to May last year for this piece of research.
The results show how developing markets are of clear and vital importance for social behemoth Facebook as a means to eke continued growth out of its primary ~15-year-old platform — plus also for the wider suite of social products it’s acquired around that. (Pew’s research asked people about multiple different social media sites, with suggested examples being country-specific — though Facebook and Twitter were staples.)
Especially — as Pew also found — of those who use the internet, people in developing countries often turn out to be more likely than their counterparts in advanced economies to network via social platforms such as Facebook (and Twitter) .
Which in turn suggests there are major upsides for social platforms getting into an emerging Internet economy early enough to establish themselves as a go-to networking service.
This dynamic doubtless explains why Facebook has been so leaden in its response to some very stark risks attached to how its social products accelerate the spread and consumption of misinformation in some developing countries, such as Myanmar and India.
Pulling the plug on its social products in emerging markets essentially means pulling the plug on business growth.
Though, in the face of rising political risk attached to Facebook’s own business and growing controversies attached to various products it offers, the company has reportedly rowed back from offering its ‘Free Basics’ Internet.org package in more than half a dozen countries in recent months, according to analysis by The Outline.
In March, for example, the UN warned that Facebook’s platform was contributing to the spread of hate speech and ethnic violence in crisis-hit Myanmar.
And, in recent months, Facebook policy staffers have had to spend substantial quantities of man-hours penning multi-page explanations for all sorts of aspects of the company’s operations to try to appease angry politicians. So it looks pretty safe to conclude that the days of Facebook being able to pass off Internet.org-fueled business expansion as a ‘humanitarian mission’ are well and truly done.
(Its new ‘humanitarian project’ is a new matchmaking feature — which really looks like an attempt to rekindle stalled growth in mature markets.)
Given how the social media usage gap is closing between developed vs developing countries’ there’s also perhaps a question mark over how much longer Facebook can generally rely on tapping emerging markets to pump its business growth.
Although Pew’s survey highlights some pretty major variations in usage even across developed markets, with social media being hugely popular in Northern America and the Middle East, for example, but more of a patchwork story in Europe where usage is “far from ubiquitous” — such as in Germany where 87% of people use the internet but less than half say they use social media.
Cultural barriers to social media addiction are perhaps rather harder for a multinational giant to defeat than infrastructure challenges or even economic barriers (though Facebook does not appear to be giving up on that front either).
Outside Europe, nations with still major growth potential on the social media front include India, Indonesia and nations in sub-Saharan Africa, according to the Pew research. And Internet access remains a major barrier to social growth in many of these markets.
“Across the 39 countries [surveyed], a median of 75% say they either use the internet occasionally or own a smartphone, our definition of internet use,” it writes. “In many advanced economies, nine-in-ten or more use the internet, led by South Korea (96%). Greece (66%) is the only advanced economy surveyed where fewer than seven-in-ten report using the internet. Conversely, internet use is below seven-in-ten in 13 of the 22 emerging and developing economies surveyed. Among these countries, it is lowest in India and Tanzania, at a quarter of the adult population. Regionally, internet use is lowest in sub-Saharan Africa, where a median of 41% across six countries use the internet. South Africa (59%) is the only country in the region where at least half the population is online.”
India, Indonesia and sub-Saharan Africa are also regions where Facebook has pushed its controversial Internet.org ‘free web’ initiative. Although India banned zero-rated mobile services in 2016 on net neutrality grounds. And Facebook now appears to be at least partially rowing back on this front itself in other markets.
In parallel, the company has also been working on a more moonshot-y solar-powered high altitude drone engineering to try to bring Internet access (and thus social media access) to remoter areas that lack a reliable Internet connection. Although this project remains experimental — and has yet to deliver any commercial services.
Pew’s research also found various digital divides persisting within the surveyed countries, related to age, education, income and in some cases gender still differentiating who uses the Internet and who does not; and who is active on social media and who is inactive.
Across the globe, for example, it found younger adults are much more likely to report using social media than their older counterparts.
While in some emerging and developing countries, men are much more likely to use social media than women — in Tunisia, for example, 49% of men use social networking sites, compared with just 28% of women. Yet in advanced countries, it found social networking is often more popular among women.
Pew also found significant differences in social media use across other demographic groups: Those with higher levels of education and those with higher incomes were found to be more likely to use social network sites.
Truecaller doesn’t have WhatsApp -like scale — few companies can match 200 million active users in Indua, but it did recently disclose that it has 100 million daily active users worldwide, while India is its largest country with 150 million registered users.
Truecaller isn’t disclosing how much it has paid for the deal, but it said that Chillr’s entire team of 45 people will move over and the Chillr service will be phased out. In addition, Chillr CEO Sony Joy will become vice president of Truecaller Pay, running that India-based payment business which will inherit Chillr’s core features.
“We’ve acquired a company that is known for innovation and leading this space in terms of building a fantastic product,” Truecaller co-founder and CSO Nami Zarringhalam told TechCrunch in an interview.
Zarringhalam said the Truecaller team met with Chillr as part of an effort to reach out to partners to build out an ecosystem of third-party services, but quickly realized there was potential to come together.
“We realized we shared synergies in thought processes for caring for the customer and user experience,” he added, explaining that Joy and his Chillr team will “take over the vision of execution of Truecaller Pay.”
Truecaller added payments in India last year
Joy told TechCrunch that he envisages developing Truecaller Pay into one of India’s top three payment apps over the next two years.
Already, the service supports peer-to-peer payments following a partnership with ICICI Bank, but there are plans to layer on additional services from third parties. That could include integrations to provide services such as loans, financing, micro-insurance and more.
Joy pointed out that India’s banking push has seen many people in the country sign up for at least one account, so now the challenge is not necessarily getting banked but instead getting access to the right services. Thanks to gathering information through payments and other customer data, Truecaller could, with permission from users, share data with financial services companies to give users access to services that wouldn’t be able to access otherwise.
“Most citizens have a bank account (in each household), now being underserved is more to do with access to other services,” he explained.
Joy added that Truecaller is aiming to layer in value-added services over its SMS capabilities, digging into the fact that SMS remains a key communication and information channel in India. For example, helping users pay for items confirmed via SMS, or pay for an order which is tracked via SMS.
The development of the service in India has made it look from the outside that the company is splitting into two, a product localized for India and another for the rest of the world. However, Zarringhalam said that the company plans to replicate its approach — payments and more — in other markets.
“It could be based on acquisitions or partners, time will tell,” he said. “But our plan is to develop this for all markers where our market penetration is high and the market dynamics are right.”
The slow-motion privacy train wreck that is Facebook has many users, perhaps you, thinking about leaving or at least changing the way you use the social network. Fortunately for everyone but Mark Zuckerberg, it’s not nearly has hard to leave as it once was. The main thing to remember is that social media is for you to use, and not vice versa.
Social media has now become such an ordinary part of modern life that, rather than have it define our interactions, we can choose how we engage with it. That’s great! It means that everyone is free to design their own experience, taking from it what they need instead of participating to an extent dictated by social norms or the progress of technology.
Here’s why now is a better time than ever to take control of your social media experience. I’m going to focus on Facebook, but much of this is applicable to Instagram, Twitter, LinkedIn, and other networks as well.
Stalled innovation means a stable product
The Facebooks of 2005, 2010, and 2015 were very different things and existed in very different environments. Among other things over that eventful ten-year period, mobile and fixed broadband exploded in capabilities and popularity; the modern world of web-native platforms matured and became secure and reliable; phones went from dumb to smart to, for many, their primary computer; and internet-based companies like Google, Facebook, and Amazon graduated from niche players to embrace and dominate the world at large.
It’s been a transformative period for lots of reasons and in lots of ways. And products and services that have been there the whole time have been transformed almost continuously. You’d probably be surprised at what they looked like and how limited they were not long ago. Many things we take for granted today online were invented and popularized just in the last decade.
But the last few years have seen drastically diminished returns. Where Facebook used to add features regularly that made you rely on it more and more, now it is desperately working to find ways to keep people online. Why is that?
Well, we just sort of reached the limit of what a platform like Facebook can or should do, that’s all! Nothing wrong with that.
It’s like improving a car — no matter how many features you add or engines you swap in, it’ll always be a car. Cars are useful things, and so is Facebook. But a car isn’t a truck, or a bike, or an apple, and Facebook isn’t (for example) a broadcast medium, a place for building strong connections, or a VR platform (as hard as they’re trying).
The things that Facebook does well and that we have all found so useful — sharing news and photos with friends, organizing events, getting and staying in contact with people — haven’t changed considerably in a long time. And as the novelty has worn off those things, we naturally engage in them less frequently and in ways that make more sense to us.
Facebook has become the platform it was intended to be all along, with its own strengths and weaknesses, and its failure to advance beyond that isn’t a bad thing. In fact, I think stability is a good thing. Once you know what something is and will be, you can make an informed choice about it.
The downsides have become obvious
Every technology has its naysayers, and social media was no exception — I was and to some extent remain one myself. But over the years of changes these platforms have gone through, some fears were shown to be unfounded or old-fashioned.
The idea that people would cease interacting in the “real world” and live in their devices has played out differently from how we expected, surely; trying to instruct the next generation on the proper way to communicate with each other has never worked out well for the olds. And if you told someone in 2007 that foreign election interference would be as much a worry for Facebook as oversharing and privacy problems, you might be met with incredulous looks.
Other downsides were for the most part unforeseen. The development of the bubble or echo chamber, for instance, would have been difficult to predict when our social media systems weren’t also our news-gathering systems. And the phenomenon of seeing only the highlights of others’ lives posted online, leading to self esteem issues in those who view them with envy, is an interesting but sad development.
Whether some risk inherent to social media was predicted or not, or proven or not, people now take such risks seriously. The ideas that one can spend too much time on social networks, or suffer deleterious effects from them, or feel real pain or turmoil because of interactions on them are accepted (though sadly not always without question).
Taking the downsides of something as seriously as the upsides is another indicator of the maturity of that thing, at least in terms of how society interacts with it. When the hype cycle winds down, realistic judgment takes its place and the full complexities of a relationship like the one between people and social media can be examined without interference.
Between the stability of social media’s capabilities and the realism with which those capabilities are now being considered, choice is no longer arbitrary or absolute. Your engagement is not being determined by them any more.
Social media has become a rich set of personal choices
Your experience may differ from mine here, but I feel that in those days of innovation among social networks your participation was more of a binary. You were either on or you were off.
The way they were advancing and changing defined how you engaged with them by adding and opting you into features, or changing layouts and algorithms. It was hard to really choose how to engage in any meaningful way when the sands were shifting under your feet (or rather, fingertips). Every few months brought new features and toys and apps, and you sort of had to be there, using them as proscribed, or risk being left behind. So people either kept up or voluntarily stayed off.
Now all that has changed. The ground rules are set, and have been for long enough that there is no risk that if you left for a few months and come back, things would be drastically different.
As social networks have become stable tools used by billions, any combination or style of engagement with them has become inherently valid.
Your choice to engage with Facebook or Instagram does not boil down to simply whether you are on it or not any more, and the acceptance of social media as a platform for expression and creation as well as socializing means that however you use it or present on it is natural and no longer (for the most part) subject to judgment.
That extends from choosing to make it an indispensable tool in your everyday life to quitting and not engaging at all. There’s no longer an expectation that the former is how a person must use social media, and there is no longer a stigma to the latter of disconnectedness or Luddism.
You and I are different people. We live in different places, read different books, enjoy different music. We drive different cars, prefer different restaurants, like different drinks. Why should we be the same in anything as complex as how we use and present ourselves on social media?
It’s analogous, again, to a car: you can own one and use it every day for a commute, or use it rarely, or not have one at all — who would judge you? It has nothing to do with what cars are or aren’t, and everything to do with what a person wants or needs in the circumstances of their own life.
For instance, I made the choice to remove Facebook from my phone over a year ago. I’m happier and less distracted, and engage with it deliberately, on my terms, rather than it reaching out and engaging me. But I have friends who maintain and derive great value from their loose network of scattered acquaintances, and enjoy the immediacy of knowing and interacting with them on the scale of minutes or seconds. And I have friends who have never been drawn to the platform in the first place, content to select from the myriad other ways to stay in touch.
These are all perfectly good ways to use Facebook! Yet only a few years ago the zeitgeist around social media and its exaggerated role in everyday life — resulting from novelty for the most part — meant that to engage only sporadically would be more difficult, and to disengage entirely would be to miss out on a great deal (or fear that enough that quitting became fraught with anxiety). People would be surprised that you weren’t on Facebook and wonder how you got by.
Try it and be delighted
Social networks are here to improve your life the same way that cars, keyboards, search engines, cameras, coffee makers, and everything else are: by giving you the power to do something. But those networks and the companies behind them were also exerting power over you and over society in general, the way (for example) cars and car makers exerted power over society in the ’50s and ’60s, favoring highways over public transportation.
Some people and some places, more than others, are still subject to the influence of car makers — ever try getting around L.A. without one? And the same goes for social media — ever try planning a birthday party without it? But the last few years have helped weaken that influence and allow us to make meaningful choices for ourselves.
The networks aren’t going anywhere, so you can leave and come back. Social media doesn’t control your presence.
It isn’t all or nothing, so you can engage at 100 percent, or zero, or anywhere in between. Social media doesn’t decide how you use it.
You won’t miss anything important, because you decide what is important to you. Social media doesn’t share your priorities.
Your friends won’t mind, because they know different people need different things. Social media doesn’t care about you.
Give it a shot. Pick up your phone right now and delete Facebook. Why not? The absolute worst that will happen is you download it again tomorrow and you’re back where you started. But it could also be, as it was for me and has been for many people I’ve known, like shrugging off a weight you didn’t even realize you were bearing. Try it.
If members of the European Parliament thought they could bring Mark Zuckerberg to heel with his recent appearance, they underestimated the enormous gulf between 21st century companies and their last-century regulators.
Zuckerberg himself reiterated that regulation is necessary, provided it is the “right regulation.”
But anyone who thinks that our existing regulatory tools can reign in our digital behemoths is engaging in magical thinking. Getting to “right regulation” will require us to think very differently.
The challenge goes far beyond Facebook and other social media: the use and abuse of data is going to be the defining feature of just about every company on the planet as we enter the age of machine learning and autonomous systems.
So far, Europe has taken a much more aggressive regulatory approach than anything the US was contemplating before or since Zuckerberg’s testimony.
The European Parliament’s Global Data Protection Regulation (GDPR) is now in force, which extends data privacy rights to all European citizens regardless of whether their data is processed by companies within the EU or beyond.
But I’m not holding my breath that the GDPR will get us very far on the massive regulatory challenge we face. It is just more of the same when it comes to regulation in the modern economy: a lot of ambiguous costly-to-interpret words and procedures on paper that are outmatched by rapidly evolving digital global technologies.
Crucially, the GDPR still relies heavily on the outmoded technology of user choice and consent, the main result of which has seen almost everyone in Europe (and beyond) inundated with emails asking them to reconfirm permission to keep their data. But this is an illusion of choice, just as it is when we are ostensibly given the option to decide whether to agree to terms set by large corporations in standardized take-it-or-leave-it click-to-agree documents.
There’s also the problem of actually tracking whether companies are complying. It is likely that the regulation of online activity requires yet more technology, such as blockchain and AI-powered monitoring systems, to track data usage and implement smart contract terms.
As the EU has already discovered with the right to be forgotten, however, governments lack the technological resources needed to enforce these rights. Search engines are required to serve as their own judge and jury in the first instance; Google at last count was doing 500 a day.
The fundamental challenge we face, here and throughout the modern economy, is not: “what should the rules for Facebook be?” but rather, “how can we can innovate new ways to regulate effectively in the global digital age?”
The answer is that we need to find ways to harness the same ingenuity and drive that built Facebook to build the regulatory systems of the digital age. One way to do this is with what I call “super-regulation” which involves developing a market for licensed private regulators that serve two masters: achieving regulatory targets set by governments but also facing the market incentive to compete for business by innovating more cost-effective ways to do that.
Imagine, for example, if instead of drafting a detailed 261-page law like the EU did, a government instead settled on the principles of data protection, based on core values, such as privacy and user control.
Private entities, profit and non-profit, could apply to a government oversight agency for a license to provide data regulatory services to companies like Facebook, showing that their regulatory approach is effective in achieving these legislative principles.
These private regulators might use technology, big-data analysis, and machine learning to do that. They might also figure out how to communicate simple options to people, in the same way that the developers of our smartphone figured that out. They might develop effective schemes to audit and test whether their systems are working—on pain of losing their license to regulate.
There could be many such regulators among which both consumers and Facebook could choose: some could even specialize in offering packages of data management attributes that would appeal to certain demographics – from the people who want to be invisible online, to those who want their every move documented on social media.
The key here is competition: for-profit and non-profit private regulators compete to attract money and brains the problem of how to regulate complex systems like data creation and processing.
Zuckerberg thinks there’s some kind of “right” regulation possible for the digital world. I believe him; I just don’t think governments alone can invent it. Ideally, some next generation college kid would be staying up late trying to invent it in his or her dorm room.
The challenge we face is not how to get governments to write better laws; it’s how to get them to create the right conditions for the continued innovation necessary for new and effective regulatory systems.
Speaking in front of EU lawmakers today Facebook’s founder Mark Zuckerberg namechecked the GDPR’s core principles of “control, transparency and accountability” — claiming his company will deliver on all that, come Friday, when a new European Union data protection framework, GDPR, starts being applied, finally with penalties worth the enforcement.
However there was little transparency or accountability on show during the session, given the upfront questions format which saw Zuckerberg cherry-picking a few comfy themes to riff on after silently absorbing an hour of MEPs’ highly specific questions with barely a facial twitch in response.
The questions MEPs asked of Zuckerberg were wide ranging and often drilled deep into key pressure points around the ethics of Facebook’s business — ranging from how deep the app data misuse privacy scandal rabbithole goes; to whether the company is a monopoly that needs breaking up; to how users should be compensated for misuse of their data.
Made clear to Mark Zuckerberg that digital platforms have to guarantee full protection of our citizens' privacy. We cannot accept illicit use of personal data to manipulate elections. Democracy cannot be turned into a marketing operation. pic.twitter.com/Nk0MB5IK8u
Why did it refuse a public meeting with the EU parliament? Why has it spent “millions” lobbying against EU privacy rules? Will the company commit to paying taxes in the markets where it operates? What’s it doing to prevent fake accounts? What’s it doing to prevent bullying? Does it regulate content or is it a neutral platform?
Zuckerberg made like a sponge and absorbed all this fine-grained flak. But when the time came for responses the data flow was not reciprocal; Self-serving talking points on self-selected “themes” was all he had come prepared to serve up.
But when it comes to Facebook’s own operations, the company maintains a highly filtered, extremely partial ‘newsfeed’ on its business empire — keeping a tight grip on the details of what data it collects and why.
Yes, you can download the data you’ve willingly uploaded to Facebook. Just don’t expect Facebook to give you a download of all the information it’s gathered and inferred about you.
The EU parliament’s political group leaders seemed well tuned to the myriad concerns now flocking around Facebook’s business. And were quick to seize on Zuckerberg’s dumbshow as further evidence that Facebook needs to be ruled.
Thing is, in Europe regulation is not a dirty word. And GDPR’s extraterritorial reach and weighty public profile looks to be further whetting political appetites.
So if Facebook was hoping the mere appearance of its CEO sitting in a chair in Brussels, going through the motions of listening before reading from his usual talking points, that looks to be a major miscalculation.
“It was a disappointing appearance by Zuckerberg. By not answering the very detailed questions by the MEPs he didn’t use the chance to restore trust of European consumers but in contrary showed to the political leaders in the European Parliament that stronger regulation and oversight is needed,” Green MEP and GDPR rapporteur Jan Philipp Albrecht told us after the meeting.
The MEP had also asked Zuckerberg to commit to no exchange of data between the two apps. Zuckerberg determinedly made no such commitment.
Claude Moraes, chair of the EU parliament’s civil liberties, justice and home affairs (Libe) committee, issued a slightly more diplomatic reaction statement after the meeting — yet also with a steely undertone.
“Trust in Facebook has suffered as a result of the data breach and it is clear that Mr. Zuckerberg and Facebook will have to make serious efforts to reverse the situation and to convince individuals that Facebook fully complies with European Data Protection law. General statements like ‘We take privacy of our customers very seriously’ are not sufficient, Facebook has to comply and demonstrate it, and for the time being this is far from being the case,” he said.
“The Cambridge Analytica scandal was already in breach of the current Data Protection Directive, and would also be contrary to the GDPR, which is soon to be implemented. I expect the EU Data Protection Authorities to take appropriate action to enforce the law.”
Damian Collins, chair of the UK parliament’s DCMS committee, which has thrice tried and failed to get Zuckerberg to appear before it, did not mince his words at all. Albeit he has little reason to, having been so thoroughly rejected by the Facebook founder — and having accused the company of a pattern of evasive behavior to its CTO’s face — there’s clearly not much to hold out for now.
“What a missed opportunity for proper scrutiny on many crucial questions raised by the MEPs. Questions were blatantly dodged on shadow profiles, sharing data between WhatsApp and Facebook, the ability to opt out of political advertising and the true scale of data abuse on the platform,” said Collins in another reaction statement after the meeting. “Unfortunately the format of questioning allowed Mr Zuckerberg to cherry-pick his responses and not respond to each individual point.
“I echo the clear frustration of colleagues in the room who felt the discussion was shut down,” he added, ending with a fourth (doubtless equally forlorn) request for Zuckerberg to appear in front of the DCMS Committee to “provide Facebook users the answers they deserve”.
In the latter stages of today’s EU parliament session several MEPs — clearly very exasperated by the straightjacked format — resorted to heckling Zuckerberg to press for answers he had not given them.
“Shadow profiles,” interjected one, seizing on a moment’s hesitation as Zuckerberg sifted his notes for the next talking point. “Compensation,” shouted another, earning a snort of laughter from the CEO and some more theatrical note flipping to buy himself time.
Then, appearing slightly flustered, Zuckerberg looked up at one of the hecklers and said he would engage with his question — about shadow profiles (though Zuckerberg dare not speak that name, of course, given he claims not to recognize it) — arguing Facebook needs to hold onto such data for security purposes.
Zuckerberg did not specify, as MEPs had asked him to, whether Facebook uses data about non-users for any purposes other than the security scenario he chose to flesh out (aka “keeping bad content out”, as he put it).
He also ignored a second follow-up pressing him on how non-users can “stop that data being transferred”.
“On the security side we think it’s important to keep it to protect people in our community,” Zuckerberg said curtly, before turning to his lawyer for a talking point prompt (couched as an ask if there are “any other themes we wanted to get through”).
His lawyer hissed to steer the conversation back to Cambridge Analytica — to Facebook’s well-trodden PR about how they’re “locking down the platform” to stop any future data heists — and the Zuckbot was immediately back in action regurgitating his now well-practiced crisis PR around the scandal.
What was very clearly demonstrated during today’s session was the Facebook founder’s preference for control — that’s to say control which he is exercising.
Hence the fixed format of the meeting, which had been negotiated prior to Facebook agreeing to meet with EU politicians, and which clearly favored the company by allowing no formal opportunity for follow ups from MEPs.
Zuckerberg also tried several times to wrap up the meeting — by insinuating and then announcing time was up. MEPs ignored these attempts, and Zuckerberg seemed most uncomfortable at not having his orders instantly carried out.
Instead he had to sit and watch a micro negotiation between the EU parliament’s president and the political groups over whether they would accept written answers to all their specific questions from Facebook — before he was publicly put on the spot by president Antonio Tajani to agree to provide the answers in writing.
Although, as Collins has already warned MEPs, Facebook has had plenty of practice at generating wordy but empty responses to politicians’ questions about its business processes — responses which evade the spirit and specifics of what’s being asked.
The self-control on show from Zuckerberg today is certainly not the kind of guardrails that European politicians increasingly believe social media needs. Self-regulation, observed several MEPs to Zuckerberg’s face, hasn’t worked out so well has it?
The first MEP to lay out his questions warned Zuckerberg that apologizing is not enough. Another pointed out he’s been on a contrition tour for about 15 years now.
Facebook needs to make a “legal and moral commitment” to the EU’s fundamental values, he was told by Moraes. “Remember that you’re here in the European Union where we created GDPR so we ask you to make a legal and moral commitment, if you can, to uphold EU data protection law, to think about ePrivacy, to protect the privacy of European users and the many millions of European citizens and non-Facebook users as well,” said the Libe committee chair.
But self-regulation — or, the next best thing in Zuckerberg’s eyes: ‘Facebook-shaped regulation’ — was what he had come to advocate for, picking up on the MEPs’ regulation “theme” to respond with the same line he fed to Congress: “I don’t think the question here is whether or not there should be regulation. I think the question is what is the right regulation.”
“The Internet is becoming increasingly important in people’s lives. Some sort of regulation is important and inevitable. And the important thing is to get this right,” he continued. “To make sure that we have regulatory frameworks that help protect people, that are flexible so that they allow for innovation, that don’t inadvertently prevent new technologies like AI from being able to develop.”
He even brought up startups — claiming ‘bad regulation’ (I paraphrase) could present a barrier to the rise of future dormroom Zuckerbergs.
Of course he failed to mention how his own dominant platform is the attention-sapping, app gobbling elephant in the room crowding out the next generation of would-be entrepreneurs. But MEPs’ concerns about competition were clear.
Instead of making friends and influencing people in Brussels, Zuckerberg looks to have delivered less than if he’d stayed away — angering and alienating the very people whose job it will be to amend the EU legislation that’s coming down the pipe for his platform.
Ironically one of the few specific questions Zuckerberg chose to answer was a false claim by MEP Nigel Farage — who had wondered whether Facebook is still a “neutral political platform”, griping about drops in engagement for rightwing entities ever since Facebook’s algorithmic changes in January, before claiming, erroneously, that Facebook does not disclose the names of the third party fact checkers it uses to help it police fake news.
So — significantly, and as was also evident in the US Senate and Congress — Facebook was taking flak from both left and right of political spectrum, implying broad, cross-party support for regulating these algorithmic platforms.
Actually Facebook does disclose those fact checking partnerships. But it’s pretty telling that Zuckerberg chose to expend some of his oh-so-slender speaking time to debunk something that really didn’t merit the breath.
Farage had also claimed, during his three minutes, that without “Facebook and other forms of social media there is no way that Brexit or Trump or the Italian elections could ever possibly have happened”.
Funnily enough Zuckerberg didn’t make time to comment on that.
A team of progressive advocacy groups, including MoveOn and Demand Progress, are asking the Federal Trade Commission to “make Facebook safe for democracy.” According to Axios, the campaign, called Freedom From Facebook, will launch a six-figure ad campaign on Monday that will run on Facebook, Instagram and Twitter, among other platforms.
The other advocacy groups behind the campaign are Citizens Against Monopoly, Content Creators Coalition, Jewish Voice for Peace, Mpower Change, Open Markets Institute and SumOfUs. Together they are calling on the FTC to “break up Facebook’s monopoly” by forcing it to spin off Instagram, WhatsApp and Messenger into separate, competing companies. They also want the FTC to require interoperability so users can communicate against competing social networks and strengthen privacy regulations.
Freedom From Facebook’s site also includes an online petition and privacy guide that links to FB Purity and the Electronic Frontier Foundation’s Privacy Badger, browser extensions that help users streamline their Facebook ad preferences and block online trackers, respectively.
The FTC recently gained a new chairman after President Donald Trump’s pick for the position Joseph Simons was sworn in early this month, along with four new commissioners also nominated by Trump. Simons is an antitrust lawyer who has represented large tech firms like Microsoft and Sony. The FTC is currently investigating whether or not Facebook’s involvement with Cambridge Analytica violated a previous legal agreement it had with the commission, but many people are wondering if it and other federal agencies are capable of regulating tech companies, especially after many lawmakers seemed confused about how social media works during Facebook CEO Mark Zuckerberg’s Congressional hearing last month.
Despite its data privacy and regulatory issues, Facebook is still doing well from a financial perspective. Its first-quarter earnings report showed strong user growth and revenue above Wall Street’s expectations.
TechCrunch has contacted Freedom From Facebook and Facebook for comment.
It’s 4:55pm Central Time on a Tuesday at Bumble headquarters in Austin, Texas. Whitney Wolfe Herd, the 28-year-old founder and CEO of the woman-led dating app is showing me around the nearly four-year-old startup’s office before we sit down to talk.
Our first stop is the standard startup watering hole, with a few twists. The fridges are stocked with Topo Chico instead of La Croix and the built-in taps are purely for decoration. Maybe one day they’ll be filled with Kombucha or iced coffee, a team member tells me. But no mention of beer. We’re not in Silicon Valley anymore.
As Wolfe Herd pours two glasses of white wine and plops in a few ice cubes, she briefly pauses to ask if I’m okay with the drink selection. Her question quickly caused my mind to wander back to my 21st birthday when a waiter told me men aren’t supposed to drink white wine with ice cubes.
There was perhaps no better way to begin my time with Wolfe Herd than a reminder that no matter how many hundreds of millions of woman-initiated matches have been made on Bumble, the company still exists in a world so ingrained with gender stereotypes that we couldn’t get through pouring a drink before the first one reared its head.
Luckily for me and my unsophisticated palate, I’d soon learn that Whitney Wolfe Herd doesn’t particularly care what people think that she or Bumble are supposed to do, let alone what we should be drinking.
‘I’m not building a dating app’
Bumble isn’t Wolfe Herd’s first exposure to the world of digital dating and connections. She moved to Los Angeles in 2012 and became an early co-founder of Tinder, but eventually left the company amid allegations of sexual harassment and discrimination against another one of the company’s co-founders. The lawsuit was settled, and while the past is the past, the history does help set the stage for the idea that would eventually turn into Bumble.
“I was just poof, gone, ceased to exist. It was like leaving behind an abandoned life, fleeing from the storm or whatever it was,” explained Wolfe Herd when talking about leaving Los Angeles after her time at Tinder. “I was experiencing all this, and then the Twitterverse and the Instagram world and the online sphere started attacking me. And I had never really understood online bullying. I didn’t even know what that meant or what it felt like. It made me really depressed.”
As successful entrepreneurs are known to do, Wolfe Herd soon began figuring out a way to leverage these closely held personal experiences into a new product. Her solution was Merci, a female-only social network “rooted in compliments and kindness and good behavior.”
Original mockup of Bumble, then known as Merci
While she was building out the idea, Andrey Andreev, founder and CEO of Badoo, the largest dating platform in the world, contacted her. Little did Wolfe Herd know, but Andreev saw her departure from Tinder as an opportunity, inviting her to meet the Badoo team in London where it had been based for more than 10 years. After some reluctance on Wolfe Herd’s part, she decided to go for it. After all, she was looking for feedback on her Merci idea, and worst-case she’d at least leave with a better idea of what she wanted to build next.
But Andreev had other plans. During their first meeting he frankly asked Wolfe Herd to become the chief marketing officer of Badoo.
She didn’t even consider the offer. First, it would have required her to move to London and, more importantly she was adamant about never working in the dating world again. With the CMO offer in the meeting’s rearview mirror, Wolfe Herd shifted the conversation to Merci, and gave Andreev a deep dive into her idea for a woman-only social network grounded in compliments and positive feedback.
“I love it,” Andreev said. “We’re going to name the dating app Merci.”
She was aghast, even in her retelling of the story.
“The what? What are you talking about? Did you hear what I said? I’m not building a dating app. Merci is the name of my female-only social network.”
Andreev clarified: “I love your vision for a female-first platform, but you need to do this in dating.”
He essentially offered her the funding she needed to get the app off the ground, and, perhaps more importantly, full access to Badoo’s technical team to build and ship it. Plus, full creative control and decision-making ability regarding the direction of the new company.
From L-R: Whitney Wolfe Herd, Andrey Andreev and Sarah Jones Simmer, Bumble’s COO
But Wolfe Herd had no interest in building such an app, and Andreev had no interest in getting involved with a new social network. So she headed home, all the more determined to make Merci the next big thing. But the offer from Andreev was still lingering in the back of her mind.
“My husband, boyfriend, whatever you want to call him — Michael, we’ll just call him Michael,” Wolfe Herd told me. “Michael was like, ‘Whit, this opportunity doesn’t strike twice. You’re going to try and raise money right now? You’re literally a scorned seductress, according to the VC community right now. Good luck to you. I know you don’t have the backbone right now,’ because I had been so depleted and I was so low on myself.”
With the encouragement of her then-boyfriend (now husband) Michael Herd, she decided that Andreev’s offer was too good to pass up, and headed back to London, where she essentially made a handshake deal with him to build this new woman-first dating app.
Bumble was born
The company would exist as a new entity with 20 percent ownership belonging to Wolfe Herd, 79 percent to Badoo and 1 percent divided between Christopher Gulczynski and Sarah Mick, two early consultants who went on to join full-time after the company was up and running. Briefly named Moxie, the group settled on Bumble after a trademark search turned up conflicts.
Bumble would be run independently from Austin, Texas, with the ability to tap into Andreev and Badoo’s years of experience in the dating industry when needed. It certainly wasn’t a typical arrangement, especially in the world of tech startups where, in order to build a successful company, you’re supposed to rally a group of two to three co-founders, raise a seed round, then a Series A and so on.
But now, four years and 30 million users later, Bumble’s cap table looks exactly the same as it did the day the company was founded. Wolfe Herd’s 20 percent undiluted founder’s stake is evidence that an atypical path was right for Bumble.
A startup office with no engineers
It quickly becomes apparent to me as a technology writer walking through Bumble’s Austin headquarters that this isn’t your typical startup office. It looks and feels much more like a living room than any sort of standard tech office environment.
For a small space that is now overflowing with more than 50 employees, there are only about 25 desks, and most of those remained empty during my two-day visit. Everyone seems to prefer rotating through conference rooms, counters, coffee tables, floors and the largest couch I’ve ever seen, which sits in a semicircle ready to comfortably fit upwards of 30 people, if needed.
“I believe in taking people away from their desks and making them feel collaborative and inspire one another instead of being siloed,” she explained.
While the setup may not work for some companies, it certainly does for Bumble. But that doesn’t mean everyone agrees. Wolfe Herd explained that they had to rotate through multiple designers before settling on one that aligned with her vision.
“So many people wanted to make it hyper functional and minimalistic and stark…almost cold,” she told me. “I didn’t want it to feel that way. I wanted it to feel welcoming and warm and do it differently.”
The design isn’t the only thing that stands out when walking through Bumble’s office. It also doesn’t have a single engineer.
Just like Andreev promised Wolfe Herd when they first decided to build Bumble, all engineering is still handled in Badoo’s London offices. While some technology veterans may bash Bumble for offloading their engineering to their parent company, she is unapologetic about the benefits and practicality of the arrangement.
“Had I gone out and tried to do this on my own with no tech support, Bumble would be a year-and-a-half behind. Think of all the marriages and babies and connections we’ve made [in that time],” explained Wolfe Herd.
She continued: “It’s like building a road. If you can get the materials from someone quicker that will make people’s lives easier, why would you say, ‘No, I want to build this with my own two hands,’ just to be able to say I did?”
I asked Wolfe Herd if there are ever times when their team has wished that their developers were sitting in the next room, standing by for a product consultation or roadmapping session.
But Wolfe Herd actually attributes much of Bumble’s success to working in an environment devoid of a dev team. Specifically, she explained that it gave her team the creative freedom to allow Bumble’s message and brand to drive the product, and not vice versa. By letting branding take the front seat instead of product, Bumble leapfrogged the “connections app” phase and became a lifestyle brand.
“How do you have different touch points in a user’s life? How do you reach them on their drive home from work? How do you talk to them on social media? How do you make them feel special? How do you add your brand into their different touch points?” Wolfe Herd says. Her original vision was to build a social network rooted in positivity and affirmations, but asking (and answering) these questions has allowed her to help in building a whole world for Bumble users rooted in positivity and affirmations.
Versace, Balenciaga, Bumble
Last summer if you happened to be walking through New York’s trendy Soho neighborhood you may have noticed a new tenant sandwiched between Versace and Balenciaga on Mercer Street.
In a first for a dating app and pretty much any social app, Bumble opened a physical space as an attempt to formalize the community that was naturally forming around it. At the time she told me that the opening coincided with Bumble’s brand becoming something that people are now proud to associate with in real life.
Bumble’s New York City Hive
This message was repeatedly echoed to me by others around Wolfe Herd, and it seems to be one of the internal barometers the company uses to track its success. Samantha Fulgham, Bumble’s second employee who now leads campus marketing and outreach, explained how male college students are now applying to become ambassadors, interns and even full-time employees.
“We tried to [have male students be campus ambassadors] in the U.S. probably two years ago. They didn’t really want to do it, because they thought it was a girl thing. Now we’re trying it again in Canada and we’ve already had so many guys asking how they can work for Bumble… saying, ‘I want to be a part of this company.’”
And it’s not just college students champing at the bit to associate themselves with the brand. When Bumble launched its business networking product last fall, the startup’s NY launch party was attended by Priyanka Chopra, Kate Hudson and Karlie Kloss, while the L.A. event hosted Gwyneth Paltrow, Jennifer Garner and Kim Kardashian West.
Bumble Bizz’s NYC Launch Party. From L-R: Whitney Wolfe Herd, Priyanka Chopra, Karlie Kloss, Fergie and Kate Hudson. By Neil Rasmus/BFA.com.
A digital response to a real problem
Bumble has been able to grow into the company it is today because it was founded on the basic principle of taking a stance on a contested issue: Women were never supposed to make the first move. But Bumble didn’t stop there, and under Wolfe Herd the startup has been very vocal about making sure they are using their voice to address issues that other companies are taught to avoid taking a stance on.
In the wake of the Stoneman Douglas school shooting, Bumble did something that breaks just about every rule taught in marketing and PR 101: The dating app very publicly decided to insert itself right in the middle of our nation’s ongoing gun debate by banning images of guns on its platform.
“We just want to create a community where people feel at ease, where they do not feel threatened, and we just don’t see guns fitting into that equation,” Wolfe Herd told The New York Times after the ban.
She told me at the time that the move shouldn’t be seen as Bumble taking a hard stance against guns or gun owners, but rather taking a hard stance against normalizing violence on their platform.
While an outsider may have been surprised to see such a fast-growing company break the status quo and decide to take a stance on a political issue, those who know Wolfe Herd will say that doing things like this is exactly why Bumble has become so successful in such a short amount of time.
For an industry that’s been around since the beginning of time, matchmaking sure is having its moment. And even the big players want a piece of the action; Facebook has announced it’s expanding into the dating space. So how does Bumble, a barely four-year-old, non-venture-backed company take advantage of all this attention while simultaneously defending itself from the threat of big players entering the space?
Over the summer we reported that Tinder’s parent company Match was set on acquiring Bumble, first at a $450 million valuation, then a few months later at “well over” $1 billion. It would have been an ironic ending for a company that was at least partially founded because of Wolfe Herd’s negative experiences surrounding her time at Tinder and Match.
Ultimately negotiations fell through between the two companies, and from there things escalated quickly. In March, Match sued Bumble for “patent infringement and misuse of intellectual property,” and a few weeks later Bumble sued Match for fraudulently obtaining trade secrets during the acquisition process. Both lawsuits are still making their way through the courts, but it’s safe to say that a deal between the two is off the table for the foreseeable future.
So what’s next for Bumble? The company is profitable and self-sustaining, and has no need to take on capital or sell itself. But Wolfe Herd acknowledged that the right acquirer may allow them to fulfill their goal of “recalibrating gender norms and empowering people to connect globally” at a much faster pace.
Wolfe Herd explained: “If the right opportunity presents itself, we’ll absolutely explore that and we’ll absolutely always explore the best way to take what we’re trying to do and what our mission is and what our values are. If we can be acquired, that will help us scale 10 times faster and that’s something that’s interesting to us, right?”
But she was also clear that cash isn’t what they’re looking for. “We would only ever consider an acquisition of sorts that brings strategic intellectual capital to the table, strategic knowledge of new markets that we have not yet gone into, and added value in ways that supersedes just straight cash,” said Wolfe Herd.
To the casual observer it sounds a lot like Facebook and its 2+ billion active users could do a pretty good job helping Bumble quickly spread its message around the world.
And Bumble seems to agree. After Facebook’s announcement about its dating play, Bumble issued a statement saying, “We were thrilled when we saw today’s news. Our executive team has already reached out to Facebook to explore ways to collaborate. Perhaps Bumble and Facebook can join forces to make the connecting space even more safe and empowering.”
In a conversation with me following the announcement, Wolfe Herd said that Facebook’s expansion into dating “is actually super exciting for the industry, because if you look at the history of Facebook when it comes to building their own products versus acquiring, they oftentimes attempt to build their own. If those products don’t successfully come to market, there’s usually a transition into acquisition. Who knows what will happen?”
So if Facebook comes knocking, don’t be surprised if Bumble answers… and quickly. But if they don’t, then current indicators are that Bumble will be just fine.
In just four years the company has flipped the switch on app-based dating, taking something that was once taboo and making it something that users are proud to associate with. So luckily for the more than 30 million women (and men) who have used Bumble to break gender stereotypes and make over 2 billion matches on their own terms, Whitney Wolfe Herd didn’t care what she or her company were supposed to do.
Earlier today, the services marketplace Thumbtack held a small conference for 300 of its best gig economy workers at an event space in San Francisco.
For the nearly ten-year-old company the event was designed to introduce some new features and a redesign of its brand that had softly launched earlier in the week. On hand, in addition to the services professionals who’d paid their way from locations across the U.S. were the company’s top executives.
It’s the latest step in the long journey that Thumbtack took to become one of the last companies standing with a consumer facing marketplace for services.
Back in 2008, as the global financial crisis was only just beginning to tear at the fabric of the U.S. economy, entrepreneurs at companies like Thumbtack andTaskRabbit were already hard at work on potential patches.
This was the beginning of what’s now known as the gig economy. In addition to Thumbtack and TaskRabbit, young companies like Handy, Zaarly, and several others — all began by trying to build better marketplaces for buyers and sellers of services. Their timing, it turns out, was prescient.
In snowy Boston during the winter of 2008, Kevin Busque and his wife Leah were building RunMyErrand, the marketplace service that would become TaskRabbit, as a way to avoid schlepping through snow to pick up dog food .
Meanwhile, in San Francisco, Marco Zappacosta, a young entrepreneur whose parents were the founders of Logitech, and a crew of co-founders including were building Thumbtack, a professional services marketplace from a home office they shared.
As these entrepreneurs built their businesses in northern California (amid the early years of a technology renaissance fostered by patrons made rich from returns on investments in companies like Google and Salesforce.com), the rest of America was stumbling.
In the two years between 2008 and 2010 the unemployment rate in America doubled, rising from 5% to 10%. Professional services workers were hit especially hard as banks, insurance companies, realtors, contractors, developers and retailers all retrenched — laying off staff as the economy collapsed under the weight of terrible loans and a speculative real estate market.
Things weren’t easy for Thumbtack’s founders at the outset in the days before its $1.3 billion valuation and last hundred plus million dollar round of funding. “One of the things that really struck us about the team, was just how lean they were. At the time they were operating out of a house, they were still cooking meals together,” said Cyan Banister, one of the company’s earliest investors and a partner at the multi-billion dollar venture firm, Founders Fund.
“The only thing they really ever spent money on, was food… It was one of these things where they weren’t extravagant, they were extremely purposeful about every dollar that they spent,” Banister said. “They basically slept at work, and were your typical startup story of being under the couch. Every time I met with them, the story was, in the very early stages was about the same for the first couple years, which was, we’re scraping Craigslist, we’re starting to get some traction.”
The idea of powering a Craigslist replacement with more of a marketplace model was something that appealed to Thumbtack’s earliest investor and champion, the serial entrepreneur and angel investor Jason Calcanis.
Thumbtack chief executive Marco Zappacosta
“I remember like it was yesterday when Marco showed me Thumbtack and I looked at this and I said, ‘So, why are you building this?’ And he said, ‘Well, if you go on Craigslist, you know, it’s like a crap shoot. You post, you don’t know. You read a post… you know… you don’t know how good the person is. There’re no reviews.'” Calcanis said. “He had made a directory. It wasn’t the current workflow you see in the app — that came in year three I think. But for the first three years, he built a directory. And he showed me the directory pages where he had a photo of the person, the services provided, the bio.”
The first three years were spent developing a list of vendors that the company had verified with a mailing address, a license, and a certificate of insurance for people who needed some kind of service. Those three features were all Calcanis needed to validate the deal and pull the trigger on an initial investment.
“That’s when I figured out my personal thesis of angel investing,” Calcanis said.
“Some people are market based; some people want to invest in certain demographics or psychographics; immigrant kids or Stanford kids, whatever. Mine is just, ‘Can you make a really interesting product and are your decisions about that product considered?’ And when we discuss those decisions, do I feel like you’re the person who should build this product for the world And it’s just like there’s a big sign above Marco’s head that just says ‘Winner! Winner! Winner!'”
Indeed, it looks like Zappacosta and his company are now running what may be their victory lap in their tenth year as a private company. Thumbtack will be profitable by 2019 and has rolled out a host of new products in the last six months.
Their thesis, which flew in the face of the conventional wisdom of the day, was to build a product which offered listings of any service a potential customer could want in any geography across the U.S. Other companies like Handy and TaskRabbit focused on the home, but on Thumbtack (like any good community message board) users could see postings for anything from repairman to reiki lessons and magicians to musicians alongside the home repair services that now make up the bulk of its listings.
“It’s funny, we had business plans and documents that we wrote and if you look back, the vision that we outlined then, is very similar to the vision we have today. We honestly looked around and we said, ‘We want to solve a problem that impacts a huge number of people. The local services base is super inefficient. It’s really difficult for customers to find trustworthy, reliable people who are available for the right price,'” said Sander Daniels, a co-founder at the company.
“For pros, their number one concern is, ‘Where do I put money in my pocket next? How do I put food on the table for my family next?’ We said, ‘There is a real human problem here. If we can connect these people to technology and then, look around, there are these global marketplace for products: Amazon, Ebay, Alibaba, why can’t there be a global marketplace for services?’ It sounded crazy to say it at the time and it still sounds crazy to say, but that is what the dream was.”
Daniels acknowledges that the company changed the direction of its product, the ways it makes money, and pivoted to address issues as they arose, but the vision remained constant.
Meanwhile, other startups in the market have shifted their focus. Indeed as Handy has shifted to more of a professional services model rather than working directly with consumers and TaskRabbit has been acquired by Ikea, Thumbtack has doubled down on its independence and upgrading its marketplace with automation tools to make matching service providers with customers that much easier.
Thumbtack processes about $1 billion a year in business for its service providers in roughly 1,000 professional categories.
Now, the matching feature is getting an upgrade on the consumer side. Earlier this month the company unveiled Instant Results — a new look for its website and mobile app — that uses all of the data from its 200,000 services professionals to match with the 30 professionals that best correspond to a request for services. It’s among the highest number of professionals listed on any site, according to Zappacosta. The next largest competitor, Yelp, has around 115,000 listings a year. Thumbtack’s professionals are active in a 90 day period.
Filtering by price, location, tools and schedule, anyone in the U.S. can find a service professional for their needs. It’s the culmination of work processing nine years and 25 million requests for services from all of its different categories of jobs.
It’s a long way from the first version of Thumbtack, which had a “buy” tab and a “sell” tab; with the “buy” side to hire local services and the “sell” to offer them.
“From the very early days… the design was to iterate beyond the traditional model of business listing directors. In that, for the consumer to tell us what they were looking for and we would, then, find the right people to connect them to,” said Daniels. “That functionality, the request for quote functionality, was built in from v.1 of the product. If you tried to use it then, it wouldn’t work. There were no businesses on the platform to connect you with. I’m sure there were a million bugs, the UI and UX were a disaster, of course. That was the original version, what I remember of it at least.”
It may have been a disaster, but it was compelling enough to get the company its $1.2 million angel round — enough to barely develop the product. That million dollar investment had to last the company through the nuclear winter of America’s recession years, when venture capital — along with every other investment class — pulled back.
“We were pounding the pavement trying to find somebody to give us money for a Series A round,” Daniels said. “That was a very hard period of the company’s life when we almost went out of business, because nobody would give us money.”
That was a pre-revenue period for the company, which experimented with four revenue streams before settling on the one that worked the best. In the beginning the service was free, and it slowly transitioned to a commission model. Then, eventually, the company moved to a subscription model where service providers would pay the company a certain amount for leads generated off of Thumbtack.
“We weren’t able to close the loop,” Daniels said. “To make commissions work, you have to know who does the job, when, for how much. There are a few possible ways to collect all that information, but the best one, I think, is probably by hosting payments through your platform. We actually built payments into the platform in 2011 or 2012. We had significant transaction volume going through it, but we then decided to rip it out 18 months later, 24 months later, because, I think we had kind of abandoned the hope of making commissions work at that time.”
While Thumbtack was struggling to make its bones, Twitter, Facebook, and Pinterest were raking in cash. The founders thought that they could also access markets in the same way, but investors weren’t interested in a consumer facing business that required transactions — not advertising — to work. User generated content and social media were the rage, but aside from Uber and Lyft the jury was still out on the marketplace model.
“For our company that was not a Facebook or a Twitter or Pinterest, at that time, at least, that we needed revenue to show that we’re going to be able to monetize this,” Daniels said. “We had figured out a way to sign up pros at enormous scale and consumers were coming online, too. That was showing real promise. We said, ‘Man, we’re a hot ticket, we’re going to be able to raise real money.’ Then, for many reasons, our inexperience, our lack of revenue model, probably a bunch of stuff, people were reluctant to give us money.”
The company didn’t focus on revenue models until the fall of 2011, according to Daniels. Then after receiving rejection after rejection the company’s founders began to worry. “We’re like, ‘Oh, shit.’ November of 2009 we start running these tests, to start making money, because we might not be able to raise money here. We need to figure out how to raise cash to pay the bills, soon,” Daniels recalled.
The experience of almost running into the wall put the fear of god into the company. They managed to scrape out an investment from Javelin, but the founders were convinced that they needed to find the right revenue number to make the business work with or without a capital infusion. After a bunch of deliberations, they finally settled on $350,000 as the magic number to remain a going concern.
“That was the metric that we were shooting towards,” said Daniels. “It was during that period that we iterated aggressively through these revenue models, and, ultimately, landed on a paper quote. At the end of that period then Sequoia invested, and suddenly, pros supply and consumer demand and revenue model all came together and like, ‘Oh shit.'”
Finding the right business model was one thing that saved the company from withering on the vine, but another choice was the one that seemed the least logical — the idea that the company should focus on more than just home repairs and services.
The company’s home category had lots of competition with companies who had mastered the art of listing for services on Google and getting results. According to Daniels, the company couldn’t compete at all in the home categories initially.
“It turned out, randomly … we had no idea about this … there was not a similarly well developed or mature events industry,” Daniels said. “We outperformed in events. It was this strategic decision, too, that, on all these 1,000 categories, but it was random, that over the last five years we are the, if not the, certainly one of the leading events service providers in the country. It just happened to be that we … I don’t want to say stumbled into it … but we found these pockets that were less competitive and we could compete in and build a business on.”
The focus on geographical and services breadth — rather than looking at building a business in a single category or in a single geography meant that Zappacosta and company took longer to get their legs under them, but that they had a much wider stance and a much bigger base to tap as they began to grow.
“Because of naivete and this dreamy ambition that we’re going to do it all. It was really nothing more strategic or complicated than that,” said Daniels. “When we chose to go broad, we were wandering the wilderness. We had never done anything like this before.”
From the company’s perspective, there were two things that the outside world (and potential investors) didn’t grasp about its approach. The first was that a perfect product may have been more competitive in a single category, but a good enough product was better than the terrible user experiences that were then on the market. “You can build a big company on this good enough product, which you can then refine over the course of time to be greater and greater,” said Daniels.
The second misunderstanding is that the breadth of the company let it scale the product that being in one category would have never allowed Thumbtack to do. Cross selling and upselling from carpet cleaners to moving services to house cleaners to bounce house rentals for parties — allowed for more repeat use.
More repeat use meant more jobs for services employees at a time when unemployment was still running historically high. Even in 2011, unemployment remained stubbornly high. It wasn’t until 2013 that the jobless numbers began their steady decline.
There’s a question about whether these gig economy jobs can keep up with the changing times. Now, as unemployment has returned to its pre-recession levels, will people want to continue working in roles that don’t offer health insurance or retirement benefits? The answer seems to be “yes” as the Thumbtack platform continues to grow and Uber and Lyft show no signs of slowing down.
“At the time, and it still remains one of my biggest passions, I was interested in how software could create new meaningful ways of working,” said Banister of the Thumbtack deal. “That’s the criteria I was looking for, which is, does this shift how people find work? Because I do believe that we can create jobs and we can create new types of jobs that never existed before with the platforms that we have today.”
Another big development in the personal data misuse saga attached to the controversialTrump campaign-linked UK-based political consultancy, Cambridge Analytica — which could lead to fresh light being shed on how the company and its multiple affiliates acquired and processed US citizens’ personal data to build profiles on millions of voters for political targeting purposes.
The UK’s data watchdog, the ICO, has today announced that it’s served an enforcement notice on Cambridge Analytica affiliate SCL Elections, under the UK’s 1998 Data Protection Act.
The company has been ordered to give up all the data it holds on one US academic within 30 days — with the ICO warning that: “Failure to do so is a criminal offence, punishable in the courts by an unlimited fine.”
The notice follows a subject access request (SAR) filed in January last year by US-based academic, David Carroll after he became suspicious about how the company was able to build psychographic profiles of US voters. And while Carroll is not a UK citizen, he discovered his personal data had been processed in the UK — so decided to bring a test case by requesting his personal data under UK law.
Carroll’s complaint, and the ICO’s decision to issue an enforcement notice in support of it, looks to have paved the way for millions of US voters to also ask Cambridge Analytica for their data (the company claimed to have up to 7,000 data points on the entire US electorate, circa 240M people — so just imagine the class action that could be filed here… ).
The Guardian reports that Cambridge Analytica had tried to dismiss Carroll’s argument by claiming he had no more rights “than a member of the Taliban sitting in a cave in the remotest corner of Afghanistan”. The ICO clearly disagrees.
Cambridge Analytica/SCL Group responded to Carroll’s original SAR in March 2017 but he was unimpressed by the partial data they sent him — which ranked his interests on a selection of topics (including gun rights, immigration, healthcare, education and the environment) yet did not explain how the scores had been calculated.
It also listed his likely partisanship and propensity to vote in the 2016 US election — again without explaining how those predictions had been generated.
So Carroll complained to the UK’s data watchdog in September 2017 — which began sending its own letters to CA/SCL, leading to further unsatisfactory responses.
“The company’s reply refused to address the ICO’s questions and incorrectly stated Prof Caroll had no legal entitlement to it because he wasn’t a UK citizen or based in this country. The ICO reiterated this was not legally correct in a letter to SCL the following month,” the ICO writes today. “In November 2017, the company replied, denying that the ICO had any jurisdiction or that Prof Carroll was legally entitled to his data, adding that SCL did “.. not expect to be further harassed with this sort of correspondence”.”
In a strongly worded statement, information commissioner Elizabeth Denham further adds:
The company has consistently refused to co-operate with our investigation into this case and has refused to answer our specific enquiries in relation to the complainant’s personal data — what they had, where they got it from and on what legal basis they held it.
The right to request personal data that an organisation holds about you is a cornerstone right in data protection law and it is important that Professor Carroll, and other members of the public, understand what personal data Cambridge Analytica held and how they analysed it.
We are aware of recent media reports concerning Cambridge Analytica’s future but whether or not the people behind the company decide to fold their operation, a continued refusal to engage with the ICO will potentially breach an Enforcement Notice and that then becomes a criminal matter.
But Carroll’s curiosity about what data Cambridge Analytica might hold about him predates the scandal blowing up last month. Although journalists had actually raised questions about the company as far back as December 2015 — when the Guardian reported that the company was working for the Ted Cruz campaign, using detailed psychological profiles of voters derived from tens of millions of Facebook users’ data.
Carroll, who has studied the Internet ad tech industry as part of his academic work, reckons Facebook is not the sole source of the data in this case, telling the Guardian he expects to find a whole host of other companies are also implicated in this murky data economy where people’s personal information is quietly traded and passed around for highly charged political purposes — bankrolled by billionaires.
“I think we’re going to find that this goes way beyond Facebook and that all sorts of things are being inferred about us and then used for political purposes,” he told the newspaper.
Under mounting political, legal and public pressure, Cambridge Analytica claimed to be shutting down this week — but the move appears more like a rebranding exercise, as parent entity, SCL Group, maintains a sprawling network of companies and linked entities. (Such as one called Emerdata, which was founded in mid-2017 and is listed at the same address as SCL Elections, and has many of the same investors and management as Cambridge Analytica… But presumably hasn’t yet been barred from social media giants’ ad platforms, as its predecessor has.)
Closing one of the entities embroiled in the scandal could also be a tactic to impede ongoing investigations, such as the one by the ICO — as Denham’s statement alludes, by warning that any breach of the enforcement notice could lead to criminal proceedings being brought against the owners and operators of Cambridge Analytica’s parent entity.
In March ICO officials obtained a warrant to enter and search Cambridge Analytica’s London offices, removing documents and computers for examination as part of a wider, year-long investigation into the use of personal data and analytics by political campaigns, parties, social media companies and other commercial actors. And last month the watchdog said 30 organizations — including Facebook — were now part of that investigation.
The Guardian also reports that the ICO has suggested to Cambridge Analytica that if it has difficulties complying with the enforcement notice it should hand over passwords for the servers seized during the March raid on its London office – raising questions about how much data the watchdog has been able to retrieve from the seized servers.
SCL Group’s website contains no obvious contact details beyond a company LinkedIn profile — a link which appears to be defunct. But we reached out to SCL Group’s CEO Nigel Oakes, who has maintained a public LinkedIn presence, to ask if he has any response to the ICO enforcement notice.
Meanwhile Cambridge Analytica continues to use its public Twitter account to distribute a stream of rebuttals and alternative ‘facts’.
European dating giant Badoo has added a live video chat feature to its apps, giving users the chance to talk face-to-face with matches from the comfort of their own home — and even before agreeing to go out on a first date.
It’s claiming it’s the first dating app service to add a live video feature, though clearly major players in the space were not holding back because of the complexity of the technical challenge involved.
Rather live video in a dating app context raises some immediate risk flags, including around inappropriate behavior which could put off users.
And for examples on that front you only need recall the kind of content that veteran Internet service Chatroulette was famed for serving straight up — if you were brave enough to play.
(“I pressed ‘play’ last night at around 3:00 am PST and after about 45 clicks on ‘Next’ encountered 5 straight up penis shots,” began TechCrunch’s former co-editor Alexia Tsotsis’ 2010 account of testing the service — which deploys live video chat without any kind of contextual wrapper, dating or otherwise. Clearly Badoo will be hoping to achieve a much better ratio of quality conversation to animated phalli.)
But even beyond the risk of moving dick pics, video chatting with strangers can just be straight up awkward for people to jump into — perhaps especially in a dating context, where singles are trying to make a good impression and won’t want to risk coming across badly if it means they lose out on a potential date.
Sending an opening text to a dating match from a cold start can be tricky enough, without ramping up the pressure to impress by making ‘breaking the ice’ into a video call.
So while dating apps have been playing around with video for a while now it’s mostly been in the style of the Snapchat Stories format — letting users augment their profiles with a bit of richer media storytelling, without the content and confidence risks associated with unmoderated live video. Tinder also recently introduced a GIF-style video loops feature. And it’s a big step from curated and controlled video snippets to the freeform risk and rush of live video.
Regardless, Badoo is diving in — so full marks for taking the plunge.
The feature has been introduced with some prudent limits too though. Badoo says video chat will only be switched on once both parties have matched and exchanged at least one message each.
And on the inappropriate content front, it has this guidance: “If a user is not what you expected, you can easily block or report that person so they will no longer be able to contact you again.” So basically if you get flashed, you can block and report the flasher.
To start a video chat with a match they’ve messaged with a user taps the icon in the top right corner of the chat screen — then they have to wait (and hope) for their call to be accepted.
While there are risks here, there is the potential for the feature to be really useful in an online dating context — if enough users can get over the confidence bump to use it.
Video chats could help to solve the core problem for online daters of how to know whether there’s any chemistry with a match before you actually meet them. Because while two people can aesthetically appreciate each other’s Instagram portraits from afar, and even like the cut of each other’s textual jib remotely, they still can’t know for sure ahead of time whether there’s any chemistry until they meet. And by then it’s too late — hence all those awkward first date stories.
Live video chatting isn’t as informative as meeting in person, of course, but it’s the next best thing technology can deliver for now — hence Badoo couching the feature as a way to “audition your date” before you meet. Though that phrasing does risk amping up the pressure.
The company also says live video can help enhance dating app safety — saying the feature can be a way for users to suss out a stranger to see whether seem trustworthy before risking meeting in person, and also help to weed out fake profiles and catfishing attempts — arguing: “It’s a safe way to have clarity on exactly who you’re talking to.”
So it may help to figure out if that stunner you matched with really is a Russian model wanting to date you or some Kremlin-backed scammer. (Though Badoo does already have some features aimed at thwarting catfishing, such as a request a selfie feature and a photo verification option; and, well, fake Russian models are unlikely to ever pick up your incoming call — unless it’s a very sophisticated scam indeed. Or, well, you’re actually talking to a professional dating service who your match has paid to carry out their dating ‘grunt work’ — in which case they’ll make you schedule in a live video hours or days in advance.)
On the flip side, live video chatting will inevitably be more daunting for less confident singles to use, so certain users may end up feeling disadvantaged and/or falling to the back of the dating queue vs more extroverted types who relish the opportunity to express themselves in the moment and in front of a lens.
Or it could just end up being a feature that attracts only a subset of likeminded users and the rest carry on as normal.
Now that Facebook has decided to take inspiration from Bang With Friends and directly cater to date-seekers inside its walled garden — announcing a forthcoming matchmaking service at its f8 conference yesterday — it’s clear that dedicated dating/matchmaking services like Badoo are going to have to up their game to stave off the competitive threat. So offering richer feature sets to further engage their communities of singles is going to be important.
Facebook’s dating foray has been given the unfortunate name of ‘FaceDate’ but will nonetheless benefit from the massive leg over of Facebook’s gigantic reach combined with the gravitational network pull of it owning and operating multiple popular social services.
The company also has oodles of data — thanks to its pervasive snooping on people’s online activities — so if you buy into the theory that love can be algorithmically reverse engineered then Facebook certainly has enough data-points to play at being Emma.
It does not yet have the direct community of daters though — so it’s coming from behind in that sense. And young users have been less engaged on Facebook itself for a while — preferring other social apps like Instagram, for example.
Even so, dating apps like Badoo can’t afford to get complacent and will need to work hard to keep their communities engaged — or risk Facebook spinning up another gravitational blackhole to suck out their USP. This is why investors punished Match’s stock yesterday.
Right now, Badoo has around 380M users, and names its best markets as Europe and South America. It also says it sees 300,000+ daily sign-ups, along with 60 million swipes and six million matches each day — running a live tracker of usage here. It’ll be hoping the new live video feature keeps those numbers tracking up.