In this episode, Shawn and Ross analyze the news from Facebook’s F8 event and explore the implications moving forward for Facebook, Instagram, and the other FB properties. In the Lightning Round, we take a look at Marriott’s launch of Homes & Villas, an Airbnb competitor, Google’s launch of CallJoy, a $39/month virtual customer service agent aimed at small US businesses, and the demise of robotics start-up Anki.
Shawn DuBavac 0:00
Hello, everyone. It’s Sean DuBravac from Avrio Institute.
Ross Rubin 0:15
And I’m Ross Rubin at Reticle Research.
Shawn DuBavac 0:17
Thanks for joining us for another episode of Techspansive. This week, we’re going to dive into a lot of Facebook news. And of course that includes all of their other properties and, and platforms including Oculus and Instagram. They had their big f8 developer conference this week, though it’s really not much of a developer focused conference anymore like it used to be. We’ll hit our Lightning Round. We’ll look at Marriott launching an Airbnb competitor, Google launching a virtual customer service agent and robotics startup Anki shutting down after $200 million in venture capital funding. And finally, Ross will talk about a startup that he saw at TechDay NY this week called A Cloud of My Own and their Guard Dog product.
Shawn DuBavac 1:00
All right, so with that, let’s jump into f8 News. f8 comes on the heels of pretty good revenue numbers from Facebook for Q1. It was up 26%. Advertising revenue was up the same, just under $15 billion. They set aside three billion for their forthcoming FTC settlement. And then we walk into f8 where we see Mark Zuckerberg starting off with a message that the future is private. So that is essentially the opposite of everything that Facebook has been where the past message was, “Let’s connect everyone in the world on this platform,” you know.
Ross Rubin 1:39
There was certainly a lot to unpack. And this is a continuation of what Zuckerberg’s public comments had been. I think what we’re starting to see from Facebook now is that, you know, even though the financials were good, even though the advertising businesses good, they are doing a lot of things to try to increase the utility of the product and diversify revenue. And I know you’ll you’ll have some some thoughts on this, Shawn. But in terms of increasing the utility, they want to drive people more toward groups, you know, where they can make more meaningful connections, time well spent, as they had said in the past. They’re launching this dating facility — that’s actually I think, up in a few countries now but it’s coming to the US — that allows you to, you know, see who your secret crush may be and you know, kind of a billion user version of passing around notes in eighth grade. And meanwhile, they’re they’re doing a lot on the on the commerce front, launching their own cryptocoin currency. That’s been in the news. So even though I’m sure the advertising business will be strong, dominant for some time to come, they’re putting things in place to diversify and perhaps protect themselves. And in case some of those moves interfere with their ability to drive the kind of data machine that they have had going on the past,
Shawn DuBavac 3:09
It’s clearly a push towards becoming a commerce platform and a commerce engine. Mark Zuckerberg noted during the call last week that he’s personally quite focused on payments across all of Facebook’s services. And they’re going to take a country by country approach, but definitely looking at how to push Facebook, Instagram, Messenger, WhatsApp into a commerce arena. And I think you’re seeing that already — Instagram, introducing Buy buttons to your point, some of the notes you made moving in launching a stable coin based payments network. I think the move to groups also facilitates some payments. Facebook has become a dominant platform for local yard sales and person to person transactions. And so I think they see that that move and look to monetize it. And then at the same time, they’re going to connect the back ends of all of these platforms, I think that’s a direct approach to some of the antitrust conversation that’s come out of Washington. So they’ll integrate more seamlessly all of the different platforms. So you’ll be able to message across all of the platforms, that’s the positive consumer experience. But for them, it also helps shield them from some of these desires to break up the Facebook monopoly into a variety of different segments and pieces.
Ross Rubin 4:29
So you’re saying there that you think their argument becomes, we can’t split it up now? Because it’s all integrated? One service?
Shawn DuBavac 4:39
Yeah, I think that helps their argument, or at least that I think that’s one piece of it, is that they integrate everything on the back end and make it seamless, and it makes it much more difficult to break it apart as a separate entity.
Ross Rubin 4:52
I don’t know if regulators would be quite so sympathetic. I mean, it’s, it’s different. It’s certainly a different world than it was back when Microsoft was under antitrust scrutiny. But they tried to make that argument, you know, the Internet Explorer was integrated into Windows. And you know, if you took it out, things would start breaking. And regulators were not very sympathetic to that argument back at the time, bu,t, well, maybe maybe regulators would say, All right, well, fine. In that case, you have to split off the whole messaging unit, if you want to have these disparate brands — Instagram, WhatsApp and Messenger. That’s the business, you know, the messaging business, and you would have to split that off. But in terms of these new revenue streams, I’m wondering, Shawn, what you think about who they may be moving more toward as competitors. I mean, today, they seem to have a pretty good relationship with Amazon, maybe they go and they buy an eBay, right, which would really bolster their person to person commerce. Or as they move into media, we’ve talked about the growing competition with with YouTube. But of course, Google was already a competitor. So as they start to make these moves into commerce, do, you know, do you see them pushing up against Amazon or other players?
Unknown Speaker 6:15
I see them pushing up against Amazon, I see them also, you know, there’s other platforms out there, something like a StockX could be a potential good acquisition for Facebook to make as they try to push more into some of these niche retail plays or commerce plays. I also think that there’s a lot of peer to peer transactions that will take place on the platform. And that fits in nicely with this Messenger model where you’re interacting with individuals on an individual basis or your interacting with groups. It fits into that idea that the future is private. I also think that the future is private is a message that Facebook is trying to convey in order to reestablish trust, sufficient to then have individually rely on them to make financial transactions. So you need to have that trust in the platform in order to feel like you can trust a Stablecoin-based payment system or that you can make transactions between individuals whether those are peer to peer transactions or you’re going out to retail. So, to your point, an eBay type model probably makes a lot of sense, though, I think what you’re going to see is a greater organization. So one of the things that happens with Twitter is you have mass communication. And I think Facebook is trying to create more well defined communication. And eBay, while they have categories and things like that, I think Facebook is going to use other elements to organize that information to that point, what I already mentioned with their yard sale success. They are an extremely successful yard sale platform, probably competing against the Craigslist of the world in that space.
Unknown Speaker 7:53
Yeah, I think that, it seems like the groups function has really been this sleeper feature of Facebook, I mean, it’s been something that’s grown kind of organically. But it really helps drive trust because it’s not just this list of friends — some of whom may post often, some of them may not, you know, some of whom you may really know in the real world, some of whom you may not. Groups, these kinds of discussions (and perhaps because you know, many of them are moderated) it really allows a better level of discussion. And it really helps relationships to form a lot better. And I think that’s that’s really going to be key. It says, to your point, Shawn, about Marketplace, Facebook, Watch and gaming, are all going to point you to groups. So there’s going to be this big push on group discovery. And, you know, I think it raises the question, “How do you do that?” How do you surface people’s interests without, again, creeping them out a little bit, the, you know, “Hey, you guys know so much about me.” So I think that’ll be the challenge.
Shawn DuBavac 9:03
And I think groups is the next natural iteration. So once you’ve connected everyone, and you’ve got varying degrees of connections, based upon how well you know, someone, the next big push is, “Let’s organize all of these individuals based upon shared interests.”
Ross Rubin 9:19
Shawn DuBavac 9:20
And you can do that in a digital space. So, similar to the way a meetup might work. For those who are wanting to get together in a physical environment, Facebook can help facilitate some of the digital connectivity and allow for a greater interaction and a greater connection than then really anywhere else. So I do think that there is tremendous promise in that group setting. How they monetize it, then is the next big thing. And I don’t know, I mean, they keep people on the platform longer. So that will help.
Ross Rubin 9:52
That will definitely drive engagement.
Shawn DuBavac 9:54
Yeah, and so the ad business will continue to grow. But I do think the next big push for them is to be a WeChat-like, platform for the the US and other markets where WeChat isn’t as prevalent. WeChat really runs major urban settings in China, where you’re doing everything through WeChat. You’re making reservations, you’re making payments, you’re paying for your rent, you’re doing everything through the platform, I’ve got to believe that Facebook sees that and sees the potential for that. And so they’re putting together all the pieces to execute that now. And a big piece of that is redeveloping trust.
Ross Rubin 10:30
And I think an interesting contrast. You know, we’ve spoken in the past. We talked a lot about the new Apple services push, and there was some good news from Apple on that front in their earnings about the progress that they’re making in subscriptions and services. Very, very different approach than I think Facebook is taking, though, where Apple is all about monetizing up front, right, you know, get me the subscription revenue now, and I’m going to provide all these content services to you. And I’m sure other things are down the line; you’ve spoken a few times about their their health opportunity where trust is paramount. But with Facebook, it’s really more of a, you know, we’re aggregating a lot of the services, but we’re building a lot of the the engines for the transactions with Stablecoin. Also, you know, Shawn, you mentioned the Instagram button. I think that’s really going to help them in the influencer community. I think if you think of the two and I just mentioned YouTube. If you think about the two big or two of the big influencer platforms today, they’re Instagram and YouTube, and YouTube has just been much easier platform to monetize, once you’ve built up, you know, several hundred thousand or millions have followers. The buy button is really going to, I think, really help people at that tier make money off Instagram, and I think it’s going to be a powerful retention tool for those high profile influencers. And, you know, cause them to move even more aggressively from Snapchat. So I think that’s going to be really huge for for users of Instagram at that scale.
Shawn DuBavac 12:32
When you saw some other announcements about Instagram, and Canada, they were testing, removing the number of likes, right. And so…
Ross Rubin 12:41
Which I think would go opposite to helping influencers but…
Shawn DuBavac 12:45
Right, well, I think what they’re doing is trying to reverse some of the negative influences that drive and then the dopamine hits that users get from driving likes and, as a result, creating adverse behavior on the platform. Whether that’s successful or not, I think it’s an interesting approach. They also are testing some anti-bullying features like warning users before they say something hurtful and the ability to limit interactions without blocking. So I think that’s really interesting, too, where you’re seeing these platforms utilizing things like machine learning to curb certain behavior. And then that’s clearly one of the things that’s influencing all of these platforms today, whether it’s instagram or Facebook or Twitter, is rogue players that are negatively influencing the platform. And so Instagram is looking to address some of that in a natural way.
Ross Rubin 13:40
My take on the anti-bullying and the like suppression is it’s for a different kind of user. And I think maybe Facebook, maybe they have tools today for people on the Facebook platform itself, different kinds of tools for you know, normal people, if you will, versus celebrities who are, you know, managing pages and it’s an integrated part of their social media strategy. And I think we’re starting to see some of that move to Instagram. So there are going to be people with millions of followers and they have different kinds of needs, then, you know, some kids in junior high school who are in a chat and, you know, getting nasty things said about them. These other two features that you mentioned, are more for the everyday user, the teen user to kind of, you know, shield their ego a little bit, you know, so you don’t feel so bad if you, you know, I have fewer likes than, you know, my friend, and, you know, then to cut down on the bullying.
Shawn DuBavac 14:44
Well, and it isn’t just teens, I mean, it’s stay-at-home moms, it’s, you know, everybody gravitates towards wanting to have those likes. And you see very interesting behavior among teens, where if they don’t get a certain number of likes and a certain number of time, they’ll just delete the post, right? So they’re playing in a very different market. But also I think some of those tools will help strengthen the platform so that parents are comfortable letting their teens and preteens on the platform. So one of the things that has, I think, hurt Snapchat is that some parents don’t let their kids on the platform. And Instagram certainly doesn’t want to go in that same direction. Also, Facebook as a whole has to continue to garner the attention of those younger cohorts and drive them onto the platforms. They haven’t been very successful. With respect to Facebook, they have been successful with Instagram. And so they need to continue to maintain that and figure out how to move them across the different platforms.
Shawn DuBavac 14:45
Right. The new users of today are the big celebrities of tomorrow.
Shawn DuBavac 15:50
Well, good. Let’s move now into our Lightning Round. First up Marriott launches Homes and Villas. It’s an Airbnb competitor. They’re launching it in more than 100 markets around the world following a year-long pilot program that they were doing in Londo-.
Shawn DuBavac 16:05
I think I’ve got two cliches for this. If you can’t beat them, join them and, maybe, too little too late. I actually think that there is an opportunity for them because of the brand name and an opportunity to enforce certain standards that Airbnb may be less willing to enforce .Unfortunately, for Marriott, you know, Airbnb has become more of a trusted brand at this point. So some of their advantage there is not as strong as it would have been a few years ago,
Shawn DuBavac 16:36
I think it’s a huge opportunity for them. And it makes a lot of sense to go into space. And I do think their willingness to maintain a certain level of standard service helps Mariott. So whether it’s the amenities, or the types of linens, they announced that they would have 24/7 support, high-speed Wi-Fi. So you’re able to standardize the Airbnb market to some extent. And I think that benefits Mariott.
Shawn DuBavac 17:06
Story number two Google launches CallJoy. This is a roughly $40 a month virtual customer service agent aimed at primarily small US businesses. It’s available now on an invite-only basis, I think it’s a really interesting move,where we see virtual agents being deployed in different ways. And it certainly provides a needed service for small businesses that couldn’t employ this on a standalone basis. They can now take advantage of this. And I think it shows that Google services are going to become even deeper entrenched in small businesses. They’ve clearly made a big push with G Suite. And clearly they’re looking at other ways of servicing small businesses.
Ross Rubin 17:51
Yeah, I definitely see a connection to G Suite. And they have spoken before about the small business opportunity, it’s also kind of the other shoe dropping on Duplex, which is the consumer service, to reach out to small businesses and set up appointments and things like that. So I think there’s a lot of similar technology being deployed. I think, probably at some point, you know, if a Duplex calls, a CallJoy business, something will kick in and you know, everything will happen automated, because right now, they’re both kind of simulating human interaction, which wouldn’t be necessarily in that conversation, in that scenario. So I think there are many options for small business in this virtual assistant space. I’m not sure how this compares price wise. But yeah, I bet if you’re a G Suite customer, they’ll be able to build some interesting hooks in there.
Shawn DuBavac 18:53
And over time, this type of service should drop to close to zero. So everybody can employ it. I think what you’re seeing is the automation of everything and bringing services to small, especially small businesses that historically haven’t had the resources or the bandwidth to do it. Now they can automate some of those things. And so in the future, small businesses may pay some lumps monthly sum to Google or to others and get a plethora of automated services, including customer service, and all of these other type of virtual features.
Shawn DuBavac 19:28
Third Lightning Round: Robotics startup Anki announced that they were shutting down to the dismay of every consumer robot fan out there. Yeah, everybody who doesn’t have one, but yet was heartbroken to see them shut down. One of the storylines here is that it is a very difficult market to be in the hardware business. They had had about $200 million in venture capital. Tthey aren’t the first one to try, they also aren’t the first one to fail. There’s been a series of companies in this space shutting down, it’s still a very difficult market to come out with hardware that really resonates with consumers, and that they’ll continue to adopt that at fast clip.
Ross Rubin 20:12
These guys had a very big debut. Their first product, which was kind of a high tech slotless slot car racing game, Anki Drive, was debuted at an Apple developer conference and really wowed the crowd. They always positioned themselves as an AI company, bringing their technology into the world through toys. And I think that’s really the problem. I mean, I actually met with Anki before they released their last product, final product: this Vector robot. And they talked at length about the investments that they had made in training it for all these reactions and things like that, and really, really intense development effort. Just very difficult to monetize that on the back end as a toy, you know. You wind up with very high price points and marginal utility. If you look at what’s working in robotics, like these vacuum cleaners, because they do things for people, but much, much more difficult to sell something at a substantive price, with substance and margin as a toy. So unfortunately, I think that was a big part of their challenge.
Shawn DuBavac 21:36
Ross, you want to kick off our tech of the week story?
Ross Rubin 21:41
Yeah, sure. So this week, just yesterday, in fact,, from our recording time, was Tech Day NY. It bills itself as the largest startup event in the country, hundreds of companies in relatively small booths, showing off what they’re doing, talking to investors talking to media. And a lot of fintech companies — different kinds of credit cards, for example, that you could use with very tight controls, sort of a corporate extension of some of the things we’re seeing for kids these days. But one of the companies, one of the relatively few companies actually in the consumer space, was a company called A Cloud of My Own. And the more memorable name is the product name, which is Guard Dog. And essentially what it is, it’s a little box, I think the prototype is built on Raspberry Pi, and it sits on your network. And it looks for anomalies in how your IoT devices, your cameras, your smart light bulbs, and things are communicating going out to the internet. And it, I guess, alerts you or tries to shut down instances where where some of these products might have been compromised. There was a big story, I think in the Times a while back about a webcam, I’m sorry, a Nest camera that had been compromised. And, you know, these hackers were playing, you know, porn sounds through it and keeping a poor kid up at night. So this is what, you know, the kinds of things that they’re looking to to avoid. The product itself, they have a Kickstarter going on right now. It’s about 100 bucks. with six months of service. I mean, one of the issues with a lot of these home network protection devices that you have to pay a subscription. So I’m not sure about how big the market is for that. But it’s definitely a very modern-day problem, you know, the idea that we have these devices in our home, that we need to be protected against.
Shawn DuBavac 24:02
I think it’s very interesting world we live in when we have to buy products to protect ourselves from the products that we’ve already bought.
Ross Rubin 24:12
Sure. Yeah, you know, also I would just say that their approach may be interested in you unique, perhaps, but there are a number of products, home security products beyond what, you know, your vanilla router does to prevent you from all kinds of viruses and malware, I guess the hook on this one is that it’s really focused on other devices. So a new a new kind of network security.
Shawn DuBavac 24:44
Unfortunately, what we see in technology is that we create something that has some positive benefits, and then it has all these negative externalities until we create new products to address all those negative externalities. And that’s exactly what this is, a product to protect you from all of the adverse consequences from everything you’ve already plugged into your home. The alternative to this is the products just get really good at protecting themselves and they don’t need a Guard Dog.
Ross Rubin 25:16
Sure. And of course, I’m sure the founder here wouldn’t wouldn’t necessarily be averse at some point to, you know, selling this to a Netgear or some company where it could be integrated into the router.
Shawn DuBavac 25:30
Yeah, that would make a lot of sense. Thanks, everyone, for joining us for another episode of Techspansive. Again, I’m Shawn DuBravac at Avrio Institute, and you can find me on Twitter at @shawndubravac
Ross Rubin 25:40
And I’m Ross Rubin. You can find me on Twitter at @rossrubin.
Transcribed by https://otter.ai