Volume 79: Ray-FACE.

1. Ray-FACE.

tl;dr: Toxic anti-brand spreads its sleaze to your face.

Not so long ago, Ray-Ban Wayfarers were cool; now they turn you into a creep. Because Facebook.

It’s not uncommon to be judged by the company you keep, which is why brand partnerships can be so valuable (I love Netflix and Ben & Jerry’s, for example). Unfortunately, there’s no good way to partner with Facebook without also being coated in sleaze. It’s our generation’s big tobacco, big oil, and big pharma all wrapped into a single company. With Facebook, there aren’t skeletons in the closet; the whole company is a closet full of skeletons. Pick any random moment over the past few years, and you’ll find a Facebook scandal. Just this week, we heard about secret VIP program, XCheck that excludes celebrities and politicians from their own standards, which meant footballer Neymar was able to disseminate intimate photographs of his rape accuser, which Facebooks own internal documents refer to as “revenge porn,” to 50 million people without being stopped and without censure. As if that weren’t enough, we also learned that internal research shows they’re well aware of the emotional trauma caused by Instagram among teen girls but choose to do nothing about it.

They’re utterly awful. And the above is just a single week’s worth of awful.

But, knowing all of this, for some reason, Luxottica, owners of Ray-Ban, still decided to partner with Facebook to create Ray-Ban Surveillance. So now, if you happen to be out and about in a pair of Wayfarers, folks are going to assume you have a Facebook recording device strapped to your face even if you don’t. At least, Google and Snapchat have the good grace to make Google Glass and Snap Spectacles obvious, but why would Facebook take ethical concerns into account for a product? They never have before. (Not to mention their blithely talking about building facial recognition into future versions. We should all be worried.)

Instead, we get a pair of tech-augmented sunglasses that look exactly like the original and where the tiny recording lights are trivially easy to disguise. So guess what? Yeah, you guessed it, you’re going to start seeing angry people accosting Wayfarer wearers, assuming they’re being spied upon and recorded, or as Ray-Ban puts it, “capture, share and listen.”

What a disaster in the making. Surely, if nothing else, the idea of having the worlds least cool CEO do the unveiling should’ve been enough to put them off, so why would Luxottica choose to partner with the most toxic anti-brand on earth to wreck perceptions of an iconic product in the interests of a fairly crappy and niche surveillance version hardly anyone will buy?

Well, the whole thing smacks of greed crashing head-on into fear. On the greed front, Facebook knows it’s an anti-brand, so it likely offered a very large bag of cash, which Luxoticca took, toxic side-effects be damned. On the fear side, eyewear will inevitably be the next big wearables battleground. And, as the world’s largest eyewear business, Luxottica doesn’t want to fall victim to smart-tech in the same way the watch industry fell victim to Apple, which now makes more watches than Switzerland. And being that they aren’t likely to develop their own tech anytime soon, Luxottica likely felt a tech partner would be the safest and easiest way to hedge their bets.

But, really…Facebook? Let’s face it, the moment there’s some serious competition on the augmented-eyewear front, and you can choose from Apple Glasses or Ray-FACE, I’m pretty sure I can predict what’s going to happen.

2. Lies and the lying liars that tell them.

tl;dr: The next big financial shock?

Unlike marketing talking heads who seem inordinately obsessed with crypto and NFTs and the metaverse for reasons I cannot fathom outside of their own publicity, my obsession with crypto is rooted in ongoing PTSD from 2008, which left me with a morbid obsession with the next financial crisis. For a while, I was convinced the exceptionally shady world of synthetic ETFs would be it, but that never came to pass. Now, it’s looking increasingly likely that it’ll come from the even more shady and vastly less regulated world of crypto.

Now, crypto is all around bizarro, and I don’t pretend to have even a tiny understanding of how it operates as a sub-culture. I first stumbled onto it when friends in the early days a dozen years ago were buying and mining Bitcoin, which seemed kind of, well, pointless. I understood the potential in blockchain and distributed ledger technology, but Bitcoin itself just felt like this weird libertarian fantasyland with extremely odd conceptual underpinnings driven by even odder people. I couldn’t see how this would ever hold actual value and take over from actual currencies. So, largely, I put Bitcoin out of mind.

And then last year happened, and Bitcoin and crypto in general exploded, and I kicked myself heartily for not sticking $1,000 into it when it was worth approximately nothing. (I sincerely hope the folks I used to hang out with who were buying and mining Bitcoin made out big).

Anyway, crypto has become a fascinating Wild West world of branding excess. Because the technology is largely commoditized and it costs almost nothing to create a cryptocurrency, the game has become one of being noticed and capturing attention to try and get people to ascribe value to whichever coin you’ve created. Or sometimes not. Dogecoin was literally created as a joke, which then spawned its own copycats like Shiba Inu. Dig a little, and there’s more weird than you can shake a stick at. So if you’re looking for examples of branding creativity in this wild world we live in, look no further than crypto.

Anyway, it’s also becoming increasingly apparent that a lot of what’s going on in this unregulated corner of the financial services system is bullshit. Take Tether. Tether is currently the most valuable stablecoin in the world, valued somewhere around $69bn. In theory, a stablecoin is supposed to be backed 1:1 with something else that has a stable value, like, say, the US dollar. And, for a while, that’s exactly what Tether claimed it was doing, only now it does not. Instead, it claims its coin is backed by a mix of currency and marketable securities and claims to prove it via a letter from its Cayman Islands accountant. The only problem is that it refuses to let anyone know what these securities are, or the value they hold, or how liquid they might actually be because states that its counterparties are proprietary business secrets too valuable to be revealed (yes, seriously). So instead, we have to take them at their word, and unfortunately, it doesn’t look like their word is worth much.

After an investigation and an $18.5m fine, Tether is now banned from operations in the state of New York and barred from doing business with NY corporations. Accompanying this ruling, NY State AG Letitia James stated that:

“Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie. These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system.”

Yeah, basically, she says they’re lying about having anything of value backing their currency, which becomes even more problematic when we take into account the mutterings on crypto Twitter and Reddit that Tether is little more than a Ponzi scheme dreamt up to artificially prop up the value of Bitcoin, evidenced by it issuing huge volumes of what people claim are unbacked coins to buy Bitcoin every time the value slips. (but we don’t know if they’re backed or not because that’s apparently a proprietary business secret) And, well, I think you can guess where this is heading.

If Tether really is fraudulent and backed by little more than hot air, and there’s a lot of indicators to suggest that it might be, then a run on the currency because of, say, a criminal investigation won’t just cripple Tether, but might also take down Bitcoin, which might then have big knock-on effects on the entire crypto economy. And, well, I’m having deja-vu by this point. Sheesh.

But hey, I’m usually wrong in my morbid obsession with future financial crises, so probably we should get back to obsessing over NFTs as our next campaign concept.

3. Mailchimp goes where innovation goes to die.

Tl:dr: Intuit buys Mailchimp

Mailchimp is an unprecedented success story, especially if you look at it through the lens of the founders. A bootstrapped startup that never took a cent of VC money, where the founders chose to pay employee bonuses as profit share rather than dilute their shareholding, is now selling for the heady sum of $12bn. A huge sum of money no matter how you cut it. As a comparison, just a few years ago, Disney paid $4bn for Marvel (Or maybe that shows how incredibly astute the Marvel deal was).

Anyway, they’ve sold to Intuit, which is more famous for hobbling government attempts to make filing taxes free and easy than it is for innovating. In fact, if you look at the formerly innovative companies that have sold to Intuit - think Mint or Credit Karma - it’s abundantly clear that Intuit is where innovation goes to die. At a core competency level, Intuit isn’t a value creator; it’s a value extractor. What do I mean by this? Well, Intuit excels at extracting as much value from its franchises as possible while putting very little back in. For example, as briefly touched on above, TurboTax, Intuit’s premium tax filing product only exists as a multi-billion dollar franchise because of a 20-year lobbying equivalent of a full-court press.

So, why, one wonders, are they buying Mailchimp? What’s the value they’re seeking to extract here. And, well, I’m struggling to figure it out. They claim there’s overlap with their existing small business owners and Mailchimp customers, and I can see that’s probably true. But, as is often the case with these supposed customer synergies, seeing an overlap and actually growing into it with a different product and a different positioning and brand is far from a sure thing.

They also claim there’s a data play here. By combining marketing and financial data, there’s some magical equation for small businesses to better manage their advertising and marketing spend. And well, OK, I’m really, really, still not convinced, mostly for three reasons. First, for how many businesses does Mailchimp represent the full marketing stack? Where it represents the full stack, how many are willing to pay for some kind of advanced data analytics? And 3rd, have you ever tried using Quickbooks? It’s awful. I can’t even imagine how bad a Quickbooks/Mailchimp mashup is going to be.

And this is before we even get to the inevitable culture clash that’s coming between the fast-moving, innovating, customer-friendly Mailchimp and the value extractive, non-innovative, hard-lobbying Intuit.

It’s also not entirely clear that Mailchimp is a great business to be getting into. While I love the brand they’ve built, especially the way they use voice in a unique way and how they’ve differentiated against things like the horrific badness of the Constant Contact brand, small business marketing is a competitive space and getting more so with the advent of the “creator economy” and VC money pouring into things like Substack and other newsletter providers, which means it’s unclear how much of an opportunity there will be for Intuit to apply its usual extractive pricing model, especially in the short term.

And these two things are important because to justify the $12bn purchase, they need to cross-sell a bunch of Mailchimp to a lot of existing Quickbooks and TurboTax customers and maintain a fairly decent level of extractive pricing while not churning customers that are used to Mailchimp innovation and affordability to cheaper alternatives. And, well, I’m really not sure. Feels like a bit of a hail Mary to me.

And I’m not the only one. Intuit stock dropped on the news.