Zuckerberg snatches victory from the (false) teeth of his nemeses

The disarming face of the man who sold the world.
Credit: Lukasz Porwol

By Neil Patrick


Zuckerberg's triumph of timidity signals no change soon.

Tuesday this week was billed as the ultimate showdown between the analogue world and the digital. A colossal Congressional panel (average age 62) deployed to call to account a small and nervous looking 33 year old boy called Mark Zuckerberg.

The old media delighted in the spectacle; Zuckerberg is the embodiment of their nemesis more than any other. This boy and his Facebook money making machine have humbled their own media empires and taken billions of dollars worth of advertising revenues that in decades past would flow unchallenged to them.

In my last post about this I opined that politicians and the legal system would be wrong footed and far too slow to act to remedy the distortions of power that Facebook has created in our society. And that a multi-billion dollar business like Facebook could easily resist the challenges from a bunch of old people who have only the faintest grasp of how the digital age is turning their world on its head.

Over the course of Tuesday and Wednesday’s hearings, we could watch Facebook’s share price react in real time to the questions and Zuckerberg’s fielding of them. He may have needed a booster seat to get his arms on the table, but during the course of the hearing, Facebook’s market cap increased by $4bn.

Not a bad financial outcome for an event which had the potential (a now totally disproven theory)  to send Facebook's market value into collapse. The markets never lie about confidence. The irony was that Zuckerberg's obvious nervousness and expressions of contrition, inspired and revitalised market confidence. But it wasn't so much that he played a blinder as that his army of opponents couldn't even see the ball, let alone run with it.

The politicians lost massively on points. There were some entertaining moments such as when Mr Z was asked if he would like to disclose the hotel he stayed in last night, or the email addresses of the last people he had sent emails too. These were smart and meaningful questions, but they did nothing to address the critical and fundamental matters of what and how Facebook would change in future.

Zuckerberg deflected many questions by kicking the can down the road with responses such as ‘ I don’t know, but I’ll get my people to come back to you about that’. This is hardly a confidence inspiring answer, but the markets reacted with relief because it was a sure sign that Facebook was more likely to survive with cuts and bruises than fatal injuries.

Zuckerberg had prepared intensively for the hearing with a team of consultants and lawyers grooming him so that instead of his robotic and hollow sounding delivery of norm, he conveyed a humility and likeability that seemed to charm some senators. They reacted like indulgent parents, wooed by the contrition of a wayward child.

But I didn't buy any of it. This is a man whose outward appearance of geeky frailty conceals a mind which is entirely committed to the exploitation for his commercial gain of any and every human weakness, whether we are a leader of government or a dishwasher in Detroit. In that sense, his mission is truly egalitarian.

He was able to duck answering questions he didn’t like. His preparation and the ignorance of his interrogators ensured that none were able to press him to the point where he became visibly uncomfortable.

But despite his appearance and demeanor, Zuckerberg is not a child and neither is he undergoing a transformation from inadvertent miscreant to redeemed character. He, by design and no small amount of luck, leads one of the most valuable business enterprises on earth. He is at the helm of a business which enables digital lawlessness more than any other. 

His preparation and demeanour of vulnerability successfully blunted the assault of an array of America’s most senior and powerful people, because they were completely under equipped to effectively challenge him. Most displayed a complete void in their understanding of how the internet works, let alone how Facebook works.

The format of the hearing didn't enable any genuine insight. Every time it got even half-way relevant, such as when South Dakota senator John Thune asked about the technical and linguistic difficulties involved in programming AI bots to discern hate-speech, the exchange was abruptly terminated as each successive legislator ran up against their four-minute time limit. Their world and Zuckerberg’s are so different as to be unable to communicate effectively. That is no fault of Zuckerberg’s; it is the fault of a generation of leaders who have comprehensively failed to keep in touch with the world they are supposed to be leading. The tragic irony here is that both politicians and social media claim to be all about open communication and building a better world.

These increasingly unrelated world views retain one common aspiration; the building and protection of wealth and power. And now these two worlds are in collision. Those with directly vested financial interests in Facebook sensed this was a stalemate and were thus relieved of their deepest fears. The markets could see this event was now unlikely to damage their financial interests and that their investment was no longer looking as shaky as it did just a week ago.

That Zuckerberg and Facebook should triumph in this encounter proves I think that the power held by the owners of digital real estate is unlikely to be dented anytime soon. Or at least not until government gets to understand what their role is in a digital world.

Prepare yourself accordingly.

Cambridge Analytica: Datakreig is upon us

Photo Credit:  Bundesarchiv, Bild 101I-646-5188-17 / Opitz / CC-BY-SA 3.0

By Neil Patrick

The new Agents of Fortune have emerged from the shadows

In the summer of 1940, the Nazi Blitzkreig overran the whole of Western Europe. Blitzkreig was a revolution in warfare. It used the concentration of forces, speed and communications to outwit the bigger and better armed allied powers of Western Europe. I use the word ‘speed’ advisedly; German troops used a lot of amphetamines, but that’s another story. Great Britain and France had prepared for a traditional war. They were outwitted and outmanoeuvred at every turn.

Over seventy five years on and Datakreig is on the rampage. The Cambridge Analytica and Facebook scandal has remarkable similarities to the 1940 Blitzkreig. It represents a revolution in how power is acquired and disseminated (or more likely sold) by a new breed of digital data warriors. With or without the use of amphetamines, they are running rings around a complacent and out of touch old media, government and judiciary.

Yesterday I observed how this scandal was unfolding and how the public were reacting. Most used the situation to voice their political prejudices, citing this case as proof of the correctness of their viewpoints. In my opinion:

The fact that the now ex-CEO of Cambridge Analytica, Alexander Nix went to Eton is not evidence of a global elite intent on enslaving the rest of us.

The (big) dent in Facebook's share price doesn’t mark the beginning of the end for the big digital media firms.

The fact that Facebook holds an immense amount of personal data is not a crime IF it is gathered fairly and transparently and only shared with our full knowledge and explicit consent.

Nonetheless, there is something deeply unsettling emerging here. Lines must be drawn. But where?

Use of our individual and personal data for political purposes is unacceptable in a democracy

The way that the Trump campaign used social media data would be recognised and well understood by any marketing specialist or military strategist. But this doesn't make it acceptable within the political process.

Better intelligence and targeting than your competitors or rivals provides a serious tactical advantage. And Cambridge Analytica’s strategy worked better than probably even they had expected. A previous attempt to use it with Republican nominee Ted Cruz had disappointing results. Nonetheless Cambridge Analytica were surely not exactly grief-stricken having pocketed $5.8m in fees for this work.

The pooling and utilisation of personal data in this way is probably at least tacitly accepted by social media users as a fair exchange if it is just being used for advertising products and services. Irritating perhaps, but a reasonable price to pay for an essentially free platform. After all, most people would accept that old media advertising is fair and reasonable, provided it can be clearly identified for what it is, ie. not cloaked within editorial content.

But politics is not about commerce. It is about power. And personal digital data is not old media. It is or should be private. When our data is being passed to political groups, a line is crossed. Yet Cambridge Analytica may well not have broken any laws however unacceptable their actions may be – because the law is completely out of step with the nature and pace of the digital revolution. If and when legal actions and government interventions occur, we can fully expect that by the time they are enacted, the game and its tactics will have moved on.

This is a very unequal struggle

Data regulators are not adequately empowered to act independently of the judiciary. The UK Data Commissioner has a team of ten people working on this case. That’s ten UK civil servants with their hands tied behind their backs vs. a corporation with total assets in 2017 of $84billion.

The power and capital amassed by Facebook is more than monopoly power; FB had a revenue of $40.6bn in 2017, which is greater than the entire GDP of many countries.

Because the UK Data Commissioner cannot raid premises without a court order, the whole world knew they intended to examine Cambridge Analytics' servers long before they actually gained access. Facebook on the other hand entered Cambridge Analytica's premises on Monday. We can conjecture that both Facebook and CA will have erased without trace any evidence of possible malpractice long before the civil servants arrive.

And it has now emerged that Cambridge Analytica used ProtonMail accounts set to self-destruct without trace within two hours of being delivered. This fact alone suggests that they were intent on establishing a cloak of secrecy over everything they did. There will be no paper trail here…

Remember though that the whistle blowers have a deeply vested interest

The media forces which have ranged themselves against the new agents of fortune are the old agents of fortune. The New York Times, the Observer and Channel 4 Television News. The old guard are used to having the power to influence events. Usually in favour of their own proprietors' political and business allegiances.

So we should also recognise that the whistle blowers are not without their own motives. Old media has been losing billions in revenues to digital platforms for years. They have tried every trick to get in step with the digital revolution and have mostly failed. The Cambridge Analytica situation is possibly the best news old media has received in years. They can fully expect that in the coming weeks and months their digital nemeses will likely have their wings seriously clipped.

Datakreig deploys pace and opaqueness to assure its goals are accomplished

Tech knows it can easily exceed the pace at which government and regulators can respond. Digital media owners know that their opaqueness, resources and pan-national organisations make them able to out run and out gun regulatory controls.

Cambridge Analytics represents a new revolutionary guard. Whether they acted legally or not is a moot point. Data regulations and enforcement are hopelessly out of step with digital media. The big digital media firms can afford the best lawyers and tech heads to ensure the not very digital regulators are outwitted at every turn. Just like blitzkrieg, they use speed and camouflage to leave the forces of justice choking in their dust.

If we wish to live in a democracy, we can and should demand that legal lines are drawn over how our personal data can be used. Government action requires though that we wait for their painfully slow next moves. I'd venture that a much more effective response is to vote with our consciences, our smartphones and our wallets...


For my views on Mark Zuckerberg's Congressional hearing click here

Is social media a bubble and what does that mean for us?

By Neil Patrick

I love social media. But I’m worried it's becoming a bubble. Over the last couple of years, it’s been displaying some typical features of bubble-like behaviour.

We’re witnessing endless expansion of the main platforms. A rush of investor cash into ‘the next Facebook’. Irrational IPO valuations. A sense that we must get in or miss out. The rise of exploiters and gamification. Rising quantity but falling quality of content. And an ever rising number of scammers, fakers and fraudsters.

Gary Sharpe posted his take on this phenomenon the other day:

The evils of the social media scene have made the networks places of corruption, vice and crime. The levels of fraud, returns-on-incompetence, digital de-reputation, self-servicing, rip offs, anti-knowledge, time wasting, money-down-the-draining, preying on the weak/naive/desperate, copy-cats, liars, cheats and ill-informers has reached epic proportions.

Gary never minces his words!

I track stock market sentiments about social media platforms and there’s some definite nervousness showing especially around Twitter:

Only one platform, Facebook has managed to deliver the sort of revenue growth that investors expect to see. All the other platforms are struggling to meet this key objective.

Another of my respected online friends, Jesse Colombo, Forbes columnist, analyst, and bubble expert had this to say about LinkedIn way back in 2012: 

The general public, in my view, still has irrationally high hopes for the commercial success of social media companies and LinkedIn, one of the last vestiges of the social media dream, is expected by many to carry the torch for the sector going forward. These irrationally high hopes can certainly be seen in LinkedIn's astronomical 1,000 P/E ratio (source), which is far too rich even when taking into consideration the company's healthy expected 5-yearearnings growth rate of 64.69%. Richly-valued growth stocks, such as LinkedIn, have a strong tendency of plunging if there is even a slight disappointment in revenue and earnings growth.

Jesse’s cautiousness about Linkedin has proved to be well founded. Just look at the stock value since he wrote this in 2012:

Now I am assuming that you are neither an investor, nor a shareholder in social media.

But you are probably a user.

And if your use of social media has any sort of connection to your business or career this stuff matters.

So this post is about my take on what I see ahead and what we as users should do about it to protect our vested interests.

The outlook

First I see some consolidation ahead as undercapitalised platforms get acquired by others who see potential synergies arising from such acquisitions. The struggling share valuations make such acquisitions more and more likely. The worst case scenario is an event triggering total collapse of investor confidence in the sector. If you think that’s unlikely, think Lehman Brothers.

The implications

Weak revenue and profit growth is the principal reason for growing investor disillusionment with social media firms. This means that we can fully expect to see a steady rise in things we as users mostly don’t like – limited free access, more paid-for elements, more demands for personal data to access content and apps, more intrusive advertising, higher quantities of junk content.

More intrusive data capture

All data has value. And when you're a social media platform owner you have bucketloads of it. Better still you acquire it more or less for free. And you can secure pretty much unlimited rights over what you do with it - provided you describe these rights within a long and legally dense set of user terms and conditions which no-one ever reads, yet still clicks the “I agree” button.

More noise

We are already at saturation point. The sheer volume of content pumped daily into my social media channels is completely beyond my capacity to consume any but a truly tiny fraction of it. All our capacities to consume media are finite. But the supply is rising exponentially. The only possible mathematical outcome is a continual fall in the overall level of media consumption as a share of what’s produced. In other words, if you produce online content, you can only expect your overall consumption levels to fall in future.

What to do about it

So against this backdrop, there seem to me to be several sensible actions to take if any of your career or business interests are connected with social media:

Build real communities that share your beliefs

Having a million Facebook likes, a hundred thousand Twitter followers and 10,000 Linkedin connections, is going to become less and less valuable, unless they are a truly connected audience that has active goodwill towards you.

Earn your goodwill by being kind to your online friends

Goodwill isn’t created by people being so amazed at your profile stats, that they are wowed into following or liking you. Goodwill is created by showing people you care about them.

Focus on quality over quantity

The exponential growth of content and the finite capacity of people to consume it, means that content quality will become increasingly important.

Build trust

We don’t create trust by slick presentation, or shouting about how great we are, or bludgeoning people into submission with sales messages. We create trust by our actions that show we care about the people we are connected with. And by being willing to help them, whilst asking for nothing in return.

Own your own media

Social media platform owners have all recognised that crowdsourced content is a fabulous (free) source of assets for their businesses. By putting our work onto Facebook or Linkedin, we are surrendering our ownership of that media and placing our fate in their hands. And if you have any sort of online content, it’s essential that you own its domain. In other words “Don’t build your house on rented land.”

I’m not saying don’t post on Linkedin or Facebook, I’m just saying that if that’s all you do you cannot realistically expect to see value growth from these activities in future. The only sensible decision is not to have all your eggs in someone else’s basket(s).

Expect change - permanently

It’s easy to forget that social media has already had a string of casualties in its brief period of existence. Remember MySpace? Friends Reunited?

I believe that social media platforms have lifecycles. But because the pace of tech change is now so rapid and mature platforms so slow to change (Facebook is apparently working on introducing a ‘major innovation’ - a dislike button), I think there will be more casualties sooner than we might think.

When we try and predict the future, we are almost certain to be wrong. But I hope these observations are at least helpful in framing your own expectations and actions in the coming months and years.

I would love to hear your reactions to these forecasts!

The Perils of Facebookisation

By Neil Patrick

My good friend Dr Gary Sharpe at Blue Dog Scientific coined a term the other day in a conversation with me.

It was “Facebookisation”.

He didn’t need to explain what he meant. It’s the spread of trivial, egotistical, self-obsessive social media content creeping out of Facebook and into other and often mainstream media.

It’s the idea that we are all celebrities and should try and emulate them.

Except, most celebrities are hardly good role models at least in social media.

At first, I gave it little thought. It was a nice term though and I mentally filed it away for future use.

Then this morning I saw a Huffington Post newsfeed that Michelle Mone, new Tory peer, successful entrepreneur and founder of Ultimo had recieved a Twitter backlash for "bragging" that she’d been given a ministerial car and driver whilst on an assignment in connection with her unpaid work for the government. (she’s working pro bono on the DWP’s work on stimulating entrepreneurialism).

Apparently, Michelle or more likely her media team, quickly took the tweet down and tweeted this in her defence:

At a time when Jeremy Corbyn’s authentic voice and humble, consultative, non-ego-centric approach is drawing millions of supporters especially amongst the young, we have to question whether the “Look how rich and successful I am” approach to personal branding is really valid in the 21st century.

I suspect this approach just inflames the rage of those who rightly or wrongly feel that ‘the system’ has dumped them on the scrap heap. Does presenting ourselves and showing people how wealthy and successful we are really enable them to achieve amazing things with their own lives?

I'd argue it does not because the faulty premise is that all any of us need to succeed is motivation. And because that is free, we can all access it from within ourselves.

But the real barriers to success are not insufficient motivation. They are things like education, access to resources, contacts, creativity, innovation and know how. Without these things, no amount of self-belief and aspiration will deliver success.

The other key requirement is personal credibility.

Humility, empathy and modesty are in my opinion at the heart of personal credibility. Bragging, narcissism and displays of wealth, influence and success are not.

Even if they are presented with a big grin and 'motivational' message.

How professional services firms can become social media superheroes (Part 2)

By Neil Patrick

This is part two of my post on social media for professional services businesses.

In part one here, I presented the latest evidence from FTI Consulting which showed that professional services firms:

• Lag behind other sectors in their utilization of social media

• Are handicapped by compliance and regulatory obstructions, lack of understanding of how to execute it and difficulties in producing the necessary content

Nevertheless, most reported that they anticipated an increase in their use of social media in 2014. And critically, those that had already successfully implemented social media programmes reported not only higher numbers of new clients, but also a doubling of the average value of business generated.

To recap, the research asked 408 US-based financial advisors about their use of social media for business. They grouped respondents into the following 4 categories:

In the Wings (25%) Respondents who don’t use social media in business at all. However, they are active users of social media in their personal lives. For example, 62% of this group use Facebook, 33% use LinkedIn, 58% view or share videos on YouTube, 27% use Twitter and 24% use Google+.

Network Novices (38%) Respondents who use social media passively. They use it to build their personal brands, enlarge referral networks and connect with other professionals.

Connectors (17%) Respondents who use social media more actively to cultivate relationships with prospects and current clients.

Power Professionals (20%) Respondents who use social media to deepen business relationships by gathering information and disseminating thought leadership. Power Professionals are more than twice as likely as Network Novices and more than 60 percent more likely than Connectors to use social media for business on a daily basis.


In this post, I’ll look at how the most progressive users of social media in professional services are overcoming the obstacles and examine 5 keys steps to making this happen.

1. Demolish the obstacles

The FTI Consulting research examined what professional services organizations can do to move up the ladder from passive to active users of social media. Part of this research asked respondents what their company could do that would increase their usage of social media.

The results from this open-ended question revealed the most serious obstacles. The major barriers to successful social media use are very pragmatic: regulatory and compliance issues and a lack of training and content.

20% to 25% of respondents from all four segments were asking for modifications to compliance requirements. But regulatory constraint doesn't seem to be the problem per se. Rather, the primary issue pivots on an understanding of compliance policies. Moreover, these policies are often unhelpful because they were framed before the existence of social media. They are reflective of a different media age and the associated top down, command and control approach to communications which characterised it.

In the Wings respondents were twice as likely as Power Professionals to cite regulation as a hindrance. However, once respondents felt they understood compliance policies, they called for more training, content and social media marketing from their firm.

I would endorse this observation. Recently I was consulting with the marketing team of an established financial firm. They were keen to grow their social media activity. But they had one big obstacle. Every single item they wished to post online had to be approved first by their in-house compliance team. And this could take up to two months. TWO MONTHS! That’s an age even in the old world of marketing. In the digital age it’s an eternity.

The pattern is clear. The most progressive companies and professionals are coming to terms with regulatory boundaries and are learning how to use social media within the constraints. So for professionals to reap the rewards of social business, professional services organizations must tackle these three issues:

• Modify or loosen policies as much as possible

• Communicate and provide training

• Invest in the creation of meaningful content

2. Trust your people and liberalise your policies

To help professional services firms take a closer look at their social media policies, FTI asked respondents to tell them which of 12 common LinkedIn activities their company permitted them to use. These activities ranged from passive tasks such as accepting connections and listing the company name in a profile to active outreach, including sending InMail and requesting recommendations.

More than 90% of respondents reported they could use LinkedIn at work at least to accept connections. The vast majority were allowed to accept and request connections and name the firm on a profile page. Some 70% were allowed to join LinkedIn groups.

However, the percentages declined for more active outreach activities. Permission to post content to groups had been granted to only 27% to 55% of respondents, depending on the segment. Permission to write or request recommendations ranged from 21% to 41%. However, at least 20% of respondents, said their company allowed them to engage in each activity.

This suggests that most social media activities are on their way to acceptance. While seemingly small, 20% indicated that every activity, from accepting connections to posting content, was permissible. We can conclude that liberalized social business policy is moving from a small cadre of progressive professional firms into the mainstream.

Interestingly, Network Novices - professionals whose use of social media is most passive - may be the group best primed for action. Network Novices are less likely than Connectors and Power Professionals to use social media for outward communications such as posting updates to their profile or to groups. Surprisingly, respondents in the Network Novices group were most likely to believe that their firm’s policies permitted them to do so - sometimes to an even greater extent than Power Professionals.


3. Communicate and train people to give them confidence

Companies need to communicate their policies clearly and make sure employees understand the content. Effective communication of policy bolsters social media use and also prevents its misuse.

Communication should be anchored in training and education. With the exception of In the Wings, respondents from all segments are asking for more training in social business skills and information about best practices.

Given the hectic schedule of most professionals, on-demand training may be the best choice for their firm. For example, companies can provide pre-recorded webinars on complex topics such as social business strategy or simple fact sheets covering straightforward issues like LinkedIn usage policies. Ideally, professional services firms would offer training, best practices and sample content on a single platform so professionals easily can access what they need as they need it.

4. Create and share pertinent content

A growing number of experts are warning about social media fatigue. As a tsunami of content hurtles around the globe, they assert that the bar for getting noticed is rising, arguing that creating fresh, compelling content is becoming more and more difficult.

I would partly dispute this argument. It is applying the old world marketing model which scales vertically by expenditure to the new digital world which scales laterally through peer to peer endorsement.

Put another way, if your audience is well targeted and engaged, then you are not fighting it out to gain attention from a largely disinterested audience. You are successfully engaging with people who know you and are interested to hear what you have to say. It doesn’t mean you can settle for substandard or sporadic content, but I think this alleged threat is over-stated.

Of course as the volume of content shared expands, so the finite capacity for your audience to consume it comes under pressure, but this is more than compensated for by the nature of social networks which amplify your reach through the process of sharing content they like.

Nevertheless the requirement for sound content at the core of social media remains a challenge for firms who are already stretched. There’s no short cut to the production of great content. However, once a firm understands that this is a sound marketing investment (and that compared to traditional marketing is relatively low cost), the investment needed becomes much easier to bear.


5. Choose your platforms with care

Although respondents view LinkedIn as their primary network for social business, the number has declined slightly. In a study conducted in 2012, 90% of respondents said LinkedIn was their primary business network; in 2013, the number was 80%. This fall has coincided with the growth of the Linkedin userbase and the attempts by Linkedin to drive up user engagement and revenues. Inevitably this more diverse membership and commercialisation of the platform has resulted in some reacting negatively to these developments.

30% of respondents said that if their firm allows them to use it, Facebook would be the best platform for brand building. Twenty-seven percent see Facebook as the most desirable tool for improving the effectiveness of their network. For cultivating prospects, Facebook would be the platform of choice for 33% of respondents.

I wonder if this apparent endorsement of Facebook is skewed by the respondents’ personal experience of social media platforms however. As one of the earliest and still the largest platform, Facebook is familiar to most of us. But neither this fact, not its scale mean it is automatically the most suitable platform for business users of social media. Personally I feel it is not the best environment for a professional services firm to be seen in. It may be fine for restaurants and travel businesses, but accountants and solicitors...?

Although these percentages are lower than those of LinkedIn, respondents were slightly more likely to say that Facebook was the preferred network for nurturing existing relationships. On every dimension, In the Wings respondents gave higher marks to Facebook than they did to LinkedIn. 

In conclusion

Social media has huge potential to change the way professionals communicate with their clients and build a positive reputation. Although regulatory compliance and brand reputation remain issues, the most successful social media business users have already overcome these concerns. Their next challenge will be to further develop businesses social media skill and expertise. And critically, this research demonstrates that social media investment and expertise does find its way to the bottom line.

The time to act is now. Social media isn't a fad and it isn't going away. It is reshaping the very essence of how the world communicates and it is the most powerful development in human communications since the invention of the printing press. And whilst the social platforms allow almost instant communications, the results are far from instant - social media success is a marathon not a sprint.

You can try to survive with 20th century approaches if you like. Personally, I prefer to seize the limitless opportunities of this new world.



About the Research

The FTI Consulting research was based on a survey of 408 U.S.- based financial advisors, conducted in July 2013, in conjunction with Putnam Investments. The sample was drawn from a proprietary research panel of financial advisors maintained by FTI Consulting Strategic Communications and from panelists provided by Harris Interactive.

This post is adapted from an article that originally appeared here:
http://ftijournal.com/article/social-media-power-users-and-why-they-matter