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So this week when we’re recording, we’re in the end of July 2020. We’re in the middle. Well, we assume we’re in the middle of the covered pandemic. And there’s been some really interesting movements in the sort of digital marketing world, the e-commerce world, as a result of the pandemic. And also very recently, there’s been also some antimonopoly hearings in the US Congress around like the big tech firms.
So Facebook, Google, Apple, Amazon, etc..
And so there’s been a lot of talk on social media around how these different things are coming together to impact this sort of e-commerce and the digital marketing, the entrepreneurial space. And I saw a tweet from a guy that we’ve talked about before called Jafa Ali is quite deeply involved in the sort of e-commerce world in the US. And I thought that this was quite an interesting sort of tweet thread because of all the stuff that’s going on in the background. And he says no one advice right now for entrepreneurs with an online business. Use the free and crushing media rights to build your own media, ASEP, especially build your email database, which is maybe because converting other media to owned and operated media would yield huge returns over time. The reason I say this is as soon as possible is because it’s only a matter of time that Twitter follows Facebook and limits your promotions for your business or goods. And you need to take advantage of the declining media rates whenever you can. Once you own the media, this is an asset. You can try to sell goods, sell ads, cetera. So what you talking about here is that.
A lot of large organisations as a result of the economic downturn due to COGAT and things like that, one of the first things that they cut back on was like marketing and media spending, particularly advertising spend. And so when you’re talking about Facebook marketing, you know, Instagram marketing, Google ads, all of those sort of online paper click forms of advertising, all of the rates across the board are much lower than they normally are because the competition is lower. And so he’s essentially saying that this is like a unique time. You want to take advantage of that and the whites take advantage of that to invest for the long term. If you’re some sort of e-commerce or for selling something online is to try and buy up this these ads and visits an audience on these platforms while the rates are cheap and try and convert them into your own, what he calls media. But essentially what he’s talking about here is things like. Get them on your e-mail list and get them interested and subscribe to your blog, get them interested and subscribed into your podcasts, because once you’ve got them within, you’re already case system. You’ve then got a cheaper audience that you can then market to sell to, et cetera, down the line. And the trend on the other platforms, so Facebook and Twitter and things like that is it’s only gets more expensive over time to talk to the same audience. They want to talk about. Right, because the the arbitrage opportunity that there is is that Twitter and Facebook and Google and all these people, those platforms want to capture as much of the value in those markets as possible. And so the rates are only going to go up over time. So there’s kind of a unique opportunity here to take advantage of this confluence of events. What’s your thoughts on this myself?
I agree. Hundred percent. And also, we have talked about building an audience to improve both Guss and especially on the distribution versus broked how distribution is key, actually, or is maybe the most important part of your business. And also, we talked up as well before about the order of priorities and to tap into opportunity. So if you want to sell anything, you first need to have interested customers or find them like cold selling. AIDS is more expensive. So certainly if you build a brand, that’s the lowest risk and also the better long term investment. So if now you have a cheaper way of doing that, it’s great. And also not only to build the brand or your audience, but to just deliver your messages, get seen by them before it was harder. So, yeah, just get out there. Yeah. And build your ramp up your audience, cheque out the different also industries where you can take the most advantage from Protei consumer goods because just people are spending less. That could be like natural. Yes. Sector where you want to look at. But it could be as well. Other countries, some countries are more affected than others. So. So, yeah, you may want to look into that as well.
So another tweet that caught my eye was from a guy called our Levie. And he said as a start up the launch before we had the App Store I, W.S., or today’s very online distribution channels, I can say I would never want to go back to Helsing’s work before. There are many issues to care about in tech. But let’s tread carefully to address the right ones. So this way is in relation to the U.S. congressional hearings that are going on at the time that we’re recording this into sort of big tech monopolistic or anti monopolistic practises.
So the U.S. Congress have currently got the sort of main people in from Apple, Google, Facebook and Amazon, and they’re sort of giving them a grilling on their practises, both as the promise of a platform perspective, but also from an advertising perspective. A couple of things that have come along the lines recently, which have sort of caused some of this kind of stuff, is there’s a big hoo ha about the Appstore, you know, the apple up. So it takes 30 percent of every sort of transaction that goes through their app store. And a lot of people are unhappy with that. Some particularly vocal people in the tech world are unhappy with that. There’s also the rising advertising prices and the aggregation of a lot of these sort of online advertising volume that go through just very few of these channels. And so, you know, you have sort of large organisations that control large swathes of the industry, the. So there’s there’s obviously a lot of stuff that’s being talked about and a lot of stuff that, you know, causes some controversy and some discussion online. And I did think it was interesting, this tweet, because essentially he’s pointing out that. There are pros and cons with it, as with all things, and that, as you know, starting business is now a lot of these companies have actually provided platforms and services that make it easier for people to do business than it was in the past. So from a distribution perspective, you know, the App Store and the and the equipment pace places Facebook marketplace and Google shopping. Google ads and all the ad networks make it much easier as an entrepreneur to actually go out and buy access to your audience, which in the past was a much harder thing. It would it would not necessarily cost you more money, but would take more legwork, would take you a lot longer time to do it. And so that’s enabled a whole class of business which wasn’t previously available. And then there’s also the actual sort of platform side of things. So I W.S. being able to rent and scale computing resources has enabled a whole class of business that hasn’t existed before. A lot of these companies. And there are companies just outside of big tech people like Shopify and things like that who just enable, again, a whole class of simplify and enable a whole class of business when it comes to e-commerce and things like that. So we’ve got to be careful about throwing the baby out with the bathwater. You know, if there are sort of break ups or in a monopolistic actions that are taken by governments, that could be EU, that could be us, wherever, you know, we’ve got to be careful because there’ll be knock on effects in both directions if you got any thoughts on it.
Yeah, I have many probably I would rank them by career. So. Yeah. Essentially, I would say that certainly they have a drawback song on or negative things from a company point of view for sure. They are taking advantage of their dominant position as big like funnel of Internet traffic. Basically, Europe has been taking action, though, with some of them, although they lost recently a lawsuit against Apple, I think.
But I don’t know the specifics, but it was related to monopolistic practises. But they took action, like with Google, on self promoting use of its products, first on search results that have changed some of how Google works in Europe, at least. So then there is also the controversy, and this is quite big actually on. Given that they funnel not only like funnel the distribution of traffic of the Internet, but also the news or the ideas. So they concentrate that on these kind of very centralised. So then they can allow or censor some content. And that’s a very risky or very delicate move. I’m not saying they shouldn’t do it. Probably they should sense or some content. But who gets to decide that? That’s a big question. So easy company that you say that dories who within the companies decided making those decisions. So I’ve seen within this context as well. I think Elon Mosque.
Yeah. One for handing on just so on. Jeff Bezos on Twitter saying you’re asking for Amazon. Do these split up because just an far they’re trying to publish a book on Amazon about the coronavirus. And it was apparently a research paper, some Oracle combine compilation of research papers and so on, and he was banned. Anyway, Amazon said it was by mistake. But the point is, yeah, that was one case.
But actually, it could be many cases out there, certainly on this. So I think, look, I think those companies innovate a lot.
And you should let. I don’t think you should split them. I think you should definitely.
One of the main disadvantages of that, like concentrated power, is exactly that. It’s basically the economic inequality. So very few concentrate a lot. And also the Sherbon. They have few shareholders that control you. And I get all the benefits from that.
But if governments tax them correctly and they’re struggling to do that, but they eventually shoot. So. So then if those companies drive innovation or you end if they make it harder to compete to some wise and enabling more opportunities to other supporters. So if they negative economic impact of just hitting some competitive sectors or or distribution system, then if at that country level or regional level, people do get the benefits through the money coming into a state for anything else they can pump that money into. If you collect from taxes, you can puppini the system for the new company. So are building infrastructure. So then then it is worth it also. What I’m against with these companies is when they sit on a pile of immense pile of cash like Apple. So yeah, then you’re then you’re not driving innovation at all. I mean, Apple, arguably, they built the iPhone long time ago and now it’s a cash cow that they’re just sitting on that success and trying to spread it as long as possible and as much as possible. And they have not been. Pushy now denoting Brett or like groundbreaking products, they can innovate a little bit. Some wireless staff are trying something that’s fine, but. It’s not at the pace that you would expect for a company sitting on the tens of millions in cash.
So that’s cash. They use it to buy back shares on, you know, pay, set certain shareholders and so on. So then it’s if you call all that power on money concentrated on very few that are making all the decisions. That’s the problem. So you should you should tax them differently. So if they have less cash as well, they would need to become more competitive. So they will not just go. They will not not have enough cash to basically do the dumping.
They do try to go at a loss for on certain sectors just for the only sake of capturing market share to make money 20 years down the road. So it will change their business model. And it will force them to innovate, will force them to share the benefits at country level as well. And not just take some complicated tax haven structures, but just for the sake of maximising those dollars or whatever revenue that they have. So, yeah, probably just just go. Just set up some rules on taxation, on aligning incentives and restricting make maybe some abusive practises. But, Bob, anything that can motivate or align interests for those managers, senior managers, so directors of those companies to innovate and try and be a driving force of innovation rather than cash cows.
Yes. So I suppose, you know, one of the main levers of legislation when it comes to this sort of stuff is breaking up. You know, you break up large monopolies. And the reason why you want to as a government, as a society is to break up monopolies is to to re-enable that innovation and competition. Because, you know, a lot of these companies have gotten so many different.
Parts to them.
You know, that they’ve created so like an ecosystem out there. But there’s no reason why any of those things should. Have to exist under one singular sort of like entity. If you’re to break them out into separate entities, then you’d be up to it would you wouldn’t have one part of the business propping up another part of the business, which means that no other company is able to compete because you’re falling revenues from one highly profitable thing into something which is far less profitable. But you say so you have sort of an infrastructural advantage, which only comes from the fact that you’re in these multiple industries as opposed to just being in single industry. So I think it will be interesting. I don’t think that. I don’t think there will be any. So everything that comes out, these current sort of talks towards sort of like The Break-Up anti monopolistic kind of a Break-Up legislation, any description. But I think it puts a lot these companies on notice to change the way that they’re doing certain things to make sure that they avoid that kind of stuff. So hopefully that will also introduce some of this competition, the innovation that you talked about.
Well, then it’s not only the US. That’s the thing. So so you have big Chinese companies as well. So if you break up the U.S. companies, then maybe Chinese companies will take that role by, for instance, providing free services on many stuff we have for free today. The other on a competitive environment. Maybe some companies would charge forward certain services and then you will have subsidised companies, maybe from China, could be from somewhere else taking that role as long as they gathered your data. So so splitting the U.S. companies is not necessarily going to. If there is a viable business model on how to do it, someone else will do it. But certainly they are being subsidised. But because they don’t pay enough tax and I’m not like I’m pro capitalism and I’m all for low taxation, but not for like one person or two or obtain. And they do pay tax, but they they say that they have billions in revenue and they pay like single figger million in tax so they can have tens of billions. So then it’s on. And then if you are a regular guy and you have a company, you pay Darwell figure. So then that’s that’s crazy. I mean, regulators are trying to buy the lot, but they there are loopholes everywhere. So they they cannot get around it. And if they put if they impose just just some hard rules on tax to them, then the U.S. will backlash and it will affect other industries. So it’s very complicated. So it will need to be coordinated as they are trying to push the U.K. government or so they’re trying to push that.
It will be. It needs to be like a world wide, like digital tax or whatever. But again, even in the US, you have fragmented states with different rules.
I don’t see how they would agree to a worldwide tax on their countries companies. So I don’t see that coming.
Not to mention their huge power of lobbying.
They having Washington, which is well known. Well disclosed.
Yeah, it’s an industry only Soane just Congress in the US. So, yeah, I think probably over time they will make some changes. The most annoying thing I can see, I to me, at least with this issue is that they’re not driving a lot of innovation. Google has thrown some.
Projects all day with deep mind. They’re trying to great things that they tried to tap into. Biotech as well. And they have been trying at other stuff. They give you free stuff as well. I mean, got your date, of course, but that you Google Maps, GMAT, et cetera. So. So you have some benefits of that. But they also pioneered the innovation to save self-driving cars with way. So they have been doing some stuff. I can see Apple doing as much for a ton of money. I have I my son, I think probably also the differences because Apple lost its core founder and intrapreneur. And then it became a cash cow because they put just some people that know how to maximise returns on what they have up cost increase sales, your margins longer term. So that’s how it grew as big superpower, but not from an innovation play the field. They tried to innovate something by they take so long that someone is like Destler will do it first. Like with cars or or whatever. On Facebook, accustoming, trying as well to do some stuff by these VR which can take off.
And they usually do acquisitions. But again, probably Google kept until recently the founders.
So at the board level.
So they were still we did that you in noetic spirit. But it’s not the case anymore. I think Serguei quit last year or simply that step down. And then, yeah, you will see companies like Jeff Bezos is innovating, but separately from Amazon.
So on his own ventures long term as well. I mean, I guess he could be doing with his fortune. He could be. He’s not. Blake let you anything for charity and then or philanthropy. He’s not innovating either. Definitely.
They are crashing the retail sector in all countries that they operate and they operate at a loss in many of those countries is well known that that most of the margin came from Amazon Web service rather than the just marketplace of selling goods at a marginal well, at a marginal profit or a loss. That’s why they buy they capture market share.
So, yeah, those kind of practises are annoying, as if if you don’t get anything, if you capture all your data and they crash, holds small businesses and then just become richer. That’s that. It’s not that work. So, of course, I say you, Sarah, farnesene is great on this and that you will need to set up a twitch cost. So it’s not at all cost. That’s a point. And then they will need to give back end up in some form, either through innovation or through taxation, that it can level up the benefits of their success, basically at the expense of other people.
So, yeah, I think still it’s difficult to enforce for policy makers. So I will do that.
Absolutely. Well, I look forward to the launch to your political party whenever that might be. Thank you so much for listening, guys. We’ll be back next week with some more nuggets of knowledge. In the meantime, please do cheque out our YouTube channel, which is where we post this and our other podcasts. You can search for net workers, two words or you find a link in the show notes. If you’re interested in a deeper dive into all things entrepreneurial, including help mentorship courses, cheque out our Web site. And that is at Networkers DOT Code. All right. See you next time. Thank you.