Facebook looks to lock in its network via Libra…will others follow?

A few weeks ago, Facebook announced it was jumping into the cryptocurrency space with its Libra product – click here for more details. The currency will be pegged to a basket of “real” currencies, but not controlled by any government’s central bank. At first blush this smells of Zuckerberg trying to get in on the cryptocurrency game. Not sure if cryptocurrencies are still as “hot” as they were a year ago. Regardless of whether or not this venture becomes a viable cryptocurrency, the announcement has some interesting repercussions for the world of technology and commerce.

Without going into too much history of currency, but transitioning from a world of barter to one of money was revolutionary. We no longer had to trade a chicken for a winter coat. Humankind had a tool, coins and paper money, which allowed a much greater fluidity to our consumption. Nation states quickly demonstrated their value in being able to issue this currency but also guarantee its worth. Originally currency was pegged to the amount of gold a nation may have under control, but thanks to Bretton Woods, most nations have moved off the gold standard. Now monetary policy has become a lever for nations to try and manipulate its economy.

However today with the rise of digitization, the entire notion of money is becoming stretched. Credit cards have been around for decades, but in the past few years we have seen services from large technology players such as Apple, Google and Samsung get into the game. But these services are really just a conduit to your traditional credit cards: the mobile phone becomes your wallet. We have started to see the rise of true digital currencies – think Bitcoin, Ethereum or other cryptocurrencies. These forms of payment and currency remain niche products. But what if they had a 2 billion-member network that would leverage this form of payment?

We have all seen the statistic that Facebook has, by number of users, is one of the largest “nations” in the world. This digital nation has created communities, has a communications vehicle, and has infused commerce into their network. Facebook continues to work hard to keep you within their family of products for all your online needs. Why not add a vehicle to reduce friction of commerce and transactions within this community? So what does this mean for the overall world of commerce?

Facebook is betting that their network’s heft automatically gives them an addressable market for their cryptocurrency venture. It also gives them another vehicle to create greater stickiness for that audience. Reasonable bets. As they continue to add increased ways to transact on their networks, whether it is from external retailers pushing their products through the platform, or peer-to-peer transactions, the ability to offer their own currency could lock in these pieces of the network. But it also opens them up to some possible serious issues such as money laundering, more potential privacy issues, tax related problems to name a few. Facebook clearly sees this as a risk worth taking.

The question arises; will other large technology players stick their nose in the world of cryptocurrencies? Samsung, Apple and Google all have their own pay offerings. Granted these services are just a conduit to a traditional credit card for the consumer. But it does convert your payment tools into a digital asset. Could these players contemplate a cryptocurrency play for their own network?

What about large retailers? Could the likes of Walmart, Target or Kroger decide to explore creating their own cryptocurrencies to lock down their network? These retail mega communities could view the rise of their own cryptocurrencies as an enhanced version of their loyalty programs. Rather than accumulating points for samples, special events and other perks, these points would be more like currency. Think of such an effort as loyalty

program giving you a currency in the form of points. Possible, but I believe this would be too far a stretch for them. They can have a hard enough time managing their loyalty programs. But the possible creation of Libra should be a wake up call for these players. They need to constantly work on how to create products and services that ensure true loyalty within their network. Can they create a vehicle to keep their customers loyal, but also allow their partners to participate in such a way that the entire network becomes more tightly integrated?

Whether or not Libra becomes a cryptocurrency is still to be determined. But this exercise has opened our eyes to the possibility in the world of digital. With the increase in digitization of our world, the notion of money and currency is already being pushed towards bits and bytes rather than coins and paper bills. If Sephora decides to convert their loyalty points into a system of currency, backed by their brand, who’s to stop them from having their consumers transact with this “money?” Can we expect to see large technology players as well as mega retail networks look to increasingly lean on digital to open the door to creating their own currencies? Create a not so subtle vehicle to locking in their network. That was what we thought loyalty programs would do, and for airlines and hotels they have done just that, but in the world of retail it has not had the same effect. Could a digital currency achieve this? Quite possibly, time will tell.

Facebook adds to empire – final gets their communication platform in Whatsapp

Earlier today Facebook announced a massive acquisition of mobile instant messaging platform Whatsapp. The deal will be for $16billion, of which $4billion will be in cash and the remainder in equity. Regardless of how you structure it, that is a lot of money, wonder how many bitcoins that could have purchased.

From what I have been able to read, most agree, as do I, that Facebook needed to get a stronger footprint in the world of mobile communications. Yes Facebook remains one of the most used mobile apps and the growth continues on the upwards trend. Within that segment, the non – “US & Canada” are showing continued growth, while US & Canada remain steady.

Growth curve outside North America picking up steam

Facebook has tried to get a foothold on the world of IM/SMS type communications on mobile devices. Anyone who is a regular Facebook user knows how they have been constantly pushing their mobile messenger app on users. I will admit I actually finally broke down and downloaded the app, only to delete it after a few days and went back to going through the regular Facebook to leverage the messaging function. Of course for Facebook they realize that not everyone has a Facebook account…gasp….and therefore might be accessible through Facebook messenger. Just like Apple knows that not everyone is on iOS…gasp…and cannot all use iMessenger the same way. For this reason 3rd party messaging platforms like Whatsapp, Viber, Snapchat or old school ones such as AIM and Yahoo! try to be device agnostic and focus just on being communications platforms. Not some uber social media community. Of course the growth shown by Whatsapp doesn’t hurt their attractiveness either!

So it makes perfect sense for Facebook to find in Whatsapp their potential asset in the mobile messenger world. Much like Instagram provided them with their photo-sharing platform. While Facebook has these functions in their existing platform, they just aren’t very good at differentiating them, as they are just drowned out in the overall Facebook environment. Buying Whatsapp gives Facebook a strong asset in the mobile messaging space. It gives them an asset that has done well outside the United States, an area where Facebook mobile enjoys continued upward movement – could be very complimentary in that aspect. Does it admit failure in decoupling Facebook Messenger as a stand alone? Sure. But Facebook doesn’t seem to be afraid to go out and throw around their vast cash resources to shore up a need when their own efforts fall short. Hey, if you have the cash and financial heft, use it!

Of course one has to hope that Facebook treats Whatsapp like it did Instagram, allows it to function independently. If they do so, I think that Whatsapp will continue to grow its user base and messaging position.

Wonder if Snapchat is kicking themselves today…I guess Facebook wasn’t really after the ability to send “mission impossible” type messages but just wanted a messaging platform.

Big Data – bringing “Minority Report” closer to reality

I read an interesting article about the usage of big data and fighting crime – click here for piece. The basic premise is that law enforcement agencies are taping into the mountains of data that is out there to start determining where crimes might occur. Using predictive analytics coupled with the mountains of available data allows for an improved ability to understand where and even when crimes might occur. The article points out some measurable improvements of using some versions of the predictive solutions:

“the intermediate results look quite impressive. In Los Angeles, five LAPD divisions that use it in patrolling territory populated by roughly 1.3m people have seen crime decline by 13%. The city of Santa Cruz, which now also uses PredPol, has seen its burglaries decline by nearly 30%. Similar uplifting statistics can be found in many other police departments across America.”

Impressive to say the least, even if it remains early. There is even more discussion of how law enforcement could leverage sites such as Facebook to track and anticipate users who might have a higher probability of committing a crime.

Showing up based on your Facebook posts

“The police are also finding powerful allies in Silicon Valley. Companies such as Facebook have begun using algorithms and historical data to predict which of their users might commit crimes using their services. Here is how it works: Facebook’s own predictive systems can flag certain users as suspicious by studying certain behavioural cues: the user only writes messages to others under 18; most of the user’s contacts are female; the user is typing keywords like “sex” or “date.” Staffers can then examine each case and report users to the police as necessary. Facebook’s concern with its own brand here is straightforward: no one should think that the platform is harbouring criminals.”

So think twice when you drunk post on Facebook!

So what does this mean for us and our privacy? While there are some positives, what about the potential down side? Remember the movie – Minority Report? Tom Cruise and his police team would be able to anticipate crimes before they happened and arrest the future criminal…before they actually committed the crime. How would one feel to have big data “predict” that you are about to do something against the law…before you even do it. Is it worth to have a percentage of citizens be mislabeled to have a larger percentage of future crimes nipped in the bud? And what happens if big data predicts a crime and law enforcement does not act upon it…and it does happen?

It creates some very interesting issues. I think that this is an another example of Big Data and the potential it might hold, but also the dangers associated with advances in technology.

Another reason to be careful about what you post on Facebook!

Be good to your customers…especially in the world of social media

There is a story about Lego responding to a client’s letter that has gone viral. The basic premise – a Lego fan builds a set, against his father’s wishes he takes the completed set out and ends up losing a mini-figure. His father suggests he writes to Lego, which he does, and Lego responds by sending him a replacement as well as extra Legos. Great story. And good marketing buzz for Lego. Not only did they make an even bigger fan of the 7 year old, but they got a tremendous buzz about their actions – outlets from Huffington Post to Yahoo! wrote about the story.

Be the ninja of good customer care

So what is the moral of the story? Take care of you customers…d’uh. Okay that is the obvious. But what this really shows is the greater importance good customer care takes with the rise of social media. Before blogs, Twitter, Facebook, Linkedin and other social outlets, the above story might have been picked up by a local newspaper reporter as filler. Good story, but buried in the business section of the Sunday edition. With social there is long tail as well as a wider reach. The originally story came out earlier this year, I just read about it and I am now blogging about it. Long tail.

Of course this sword can cut both ways. Have a bad customer care story and that could hang around your neck for much longer than it took to resolve the issue. Or if your fried chicken actually seems to be a brain or a kidney- aka what happened with KFC – click here, but be forewarned it isn’t too “appetizing” to view. Same holds true for Dell that dealt with huge headaches, both in terms of recall as well as image when one of their laptop batteries caught on fire and was videoed and spread like…ahem…wildfire on the web. This was the catalyst for Dell placing more emphasis on social listening.

These examples demonstrate the importance of being much more in tune with customer service and listening to what your customers are saying, and doing. Social media has given everyone a megaphone. Regardless of how loud or quiet that megaphone is, it is out there. End of the day customers will always vote with their wallets, but now they have another way to vote – with social media. One could argue that when it was only with a wallet, you could always expect to find another “sucker” for your products. The reality was the wallet voting is buried in the aggregate. Social media makes the vote personal and pointed. Take a cue from Lego and always treat your customer well – provide outrageous service and it will come back to you in spades. And take another cue from Dell – make social media key to your customer listening and service.

Friday funny – let’s not forget the basics!

Thanks to my BFF for sending this to me!