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Hooters "Hooters Girl"

Increasing Hooters Utilization

WeWork has new competition in Tokyo – Hooters. It’s all about utilization.

Hooters in Tokyo’s Ginza neighborhood has teamed up with Spacee – a space-matching service – to rent out work areas during the restaurant’s downtime.

Hooters has over 400 locations worldwide and they, like all brick and mortar businesses, have a utilization problem. After lunchtime traffic at the Hooters in Ginza dies down, 20 seats open up for rent via Spacee until the dinner rush begins.

While WeWork may not be worried about the competition yet, it’s going to be hard to beat the Hooters price. Spacee members pay only 50 yen, or about 48 cents, for a 30-minute work block, and that includes a discount on some beverages and an atmosphere that some will undoubtedly find truly inspiring.

(Oddly enough, students don’t have to pay the 50 yen fee. But if they’re under 18, then they have to be accompanied by a parent or guardian. Glad someone’s thinking about the children..)

Utilization

From an entrepreneurial theory perspective, one enormous path for adding value is to reduce inefficiencies. Low utilization – especially for capital intensive goods – is a huge contributor to inefficiency. And over the past 10 years, a new wave of utilization-focused start-ups have flourished on the shoulders of both the internet and mobile phones.

AirBnB increases the utilization of your spare bedroom or couch. Getaround increases the utilization of your car. Lyft and Uber increase the utilization of your time (and your car).

What’s interesting is that these companies are all marketplace plays. The business is in connecting parties with spare capacity with parties who need capacity. Bring together both parties in a trusted forum and you’ve got yourself an interesting business.

Look around you: What inefficiencies do you see? Where is utilization low? Is the value being squandered worth recovering? Can you create a trusted marketplace? Can you acquire customers at a reasonable price?

PS: In other WeWork news, the company is continuing to expand very rapidly. You may have seen some misleading headlines about $18 billion in leases, but that number is the sum of many years of leases, $13.2 billion of which is for 2023 and beyond. Their 2018 and 2019 lease payments are for $706 million and $984 million respectively. Bloomberg covers the story here and here.

PPS: Hooters and strategy. Strategy and Hooters. Are you not entertained?

(Photo Credit)

The Facebook Freakout

A new slice of Facebook users finally understand how much data they’ve been handing to Facebook over the years. By the way, if this piece gets you all riled up, leave a comment here.

Summary:

  • Facebook gave politically motivated parties access to user data.
  • This isn’t unusual. It’s what Facebook does and what users signed up for.
  • You are not Facebook’s customer. You are Facebook’s product.
  • The days of “click first and asks questions later” are over.
  • Facebook will most likely come out of this unscathed or stronger.

Time to Read: 2 Mins 58 Sec

What Actually Happened?

In short, Facebook did what Facebook has always done: sell access to its users to 3rd parties.

Cambridge Analytica, an organization that wanted to build “psychographic profiles” of US citizens in order to help politicians capture more votes, created a Facebook App. The app directly asked questions about “the issues” and stored user responses.

But the app also asked users to grant permission to Cambridge Analytica to access their Facebook data. Users accepted willingly. If a user didn’t grant permission, then Cambridge Analytica didn’t have access to that user’s data – yet.

There’s another way to get your Facebook data though: your friends.

This Is Too Abstract

Let’s get concrete. Let’s talk about Aaron and Betty – Facebook friends. Say Aaron is foolish enough to take this survey from Cambridge Analytica and agrees to give up a whole bunch of data about himself. Betty, who just happens to be “friends” with Aaron on Facebook, is part of Aaron’s network and data. So while Cambridge Analytica got explicit access to data about Aaron, Facebook also gave them some data about Betty.

To be clear, Cambridge Analytica didn’t get all of Betty’s data in this case – just a subset of her data.

Who Owns the Data?

In my mind, at least three parties own pieces of Betty’s data: Betty, Aaron, and Facebook. If Facebook chooses to sell their data (about you and your friends), then you’ve already given them permission to do so when you signed up. Further, Betty gave Aaron access to some of her data when she accepted his friend request.

(BTW, I’m using the word “sell” pretty loosely throughout this article. Facebook doesn’t really sell data anymore. But they do monetize their data in all sorts of ways that make it difficult to get network information without paying for something – usually an advertisement or promotion.)

What’s really confusing about all of this is that it feels like Facebook is selling Aaron’s access to Betty’s data. But they’re not. Facebook is selling their data.

You’re Not the Customer, You’re the Product.

But I wouldn’t be mad at Facebook. Facebook is in the data business.

Selling metadata about individual nodes isn’t very interesting anymore. What’s interesting is the edge data – information about how nodes are connected. But what’s most interesting is predictive edge data – information about how nodes might be connected now or in the future.

Said another way, Facebook’s business model is selling access to swaths of the social fabric. You are not the customer. You are the product.

So What Should Facebook Do?

Currently, their brand is a little more tarnished in the public eye and the stock has lost about 10% of it’s value. But honestly, I don’t see a probable scenario where Facebook loses much more here:

  • If Zuck and Facebook remain silent (or pander), then this whole thing may blow over in a few days/weeks as the media grasp for more salacious (and easier to consume) news.
  • If it doesn’t blow over, then government regulations will likely be passed in order to “crack down” on Facebook’s “misdeeds.” While this might not be ideal for TheZuckBook.com, Facebook will end up writing much of the regulations – regulations that will make creating competitors to Facebook very difficult.

The worst thing Zuck and Facebook can do is come out with some controversial statement that keeps them in the news cycle longer. Barring that or some other crazy revelations, I think Facebook will be just fine and that this is just another #FacebookFreakout.

One thing I can say very confidently though: we should all be grateful that Zuck is the CEO of Facebook instead of Theranos founder and fraudster, Elizabeth Holmes.

Let’s Have a Conversation!

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PS

  • There are a lot of details that feel important about this story (ie: Cambridge Analytica said they were doing “research” – whatever that means; Facebook asked them to delete data and they lied about doing so; Cambridge Analytica paid some users to incentivize them to grant their Facebook permissions…etc). But these things aren’t the core issue and bad actors aren’t new or unexpected.
  • Also, there’s still a lot we don’t know about this situation. It’s very possible we’ll learn things that will change my thoughts and analysis. #disclaimer.
  • PS: Follow Straty on Facebook! (jk)

Sources & Further Reading