Don’t pay attention to what people say. Pay attention to what they do. That goes quintuple for tech and media start ups where revealed preferences tell the real story.
Enter Arianna Huffington, the founder of the Huffington Post.
Why is a supposedly successful media entrepreneur writing a book on sleep and getting a seat on ride sharing company Uber’s board?
Weird: CEO who grew her empire by enlisting legions of workers who weren't deemed employees just joined Uber's board https://t.co/bHpRORLvi4
— Owen Davis (@odavis_) April 27, 2016
— Arianna Huffington (@ariannahuff) May 1, 2016
Her business is failing. The Huffington Post generated $146 million in revenue in 2014 but it still failed to turn a profit.
Now Huffington Post Live — which was supposed to be the future of video content — shutting down and laying off people.
Huffington Post Live is, well, no longer live. This followed recent layoffs which included some of its video team. https://t.co/YIuHdnkopt
— allDigitocracy (@allDigitocracy) January 15, 2016
And the dumb employees remaining have decided that they need a union.
— Jobs With Justice (@jwjnational) February 12, 2016
Why is Huffington running around looking for her next gig? And why has Uber accepted?
Because click bait no longer pays the bills and the sharing economy is a sign of tech’s decline, not its success.
The only two really successful pre-IPO companies of this cycle are Uber and AirBNB which are essentially turning over credentialed people into gypsy cab drivers or clandestine hoteliers. (Xiaomi is likely to become a commodities business and Palantir will probably never go public given its sensitive work. Snapchat and Pinterest will have the same advertisement based difficulties as Twitter once they hit the market.)
10 most valuable private companies:
— Vala Afshar (@ValaAfshar) May 1, 2016
You may want to be long camels as the Roman empire collapses and the roads go to hell but it isn’t a sign of a robust economy. Mutual funds which have been pumping money into overheated IPOs are backing off and the stock market is punishing those publicly traded companies.
Interestingly both Uber and AirBNB have come up against political forces that limit their reach. They’ve responded in the typical way: carefully.
Uber says Latin America is its fastest-growing market, but it has hit a pothole in Buenos Aires https://t.co/3OpdhGvNMG
— Wall Street Journal (@WSJ) May 1, 2016
At one point I even half jokingly told Uber CEO Travis Kalanick that I didn’t think Uber was being tough enough against the taxi cab regulators and politicians.
— Bill Hammond (@NYHammond) January 2, 2015
As companies find their work politicized they are starting to respond like politicians — either signaling their virtue or hiring opposition researchers to harm their perceived enemies.
Political operatives find demand for their skills in the business world https://t.co/qFjchyexHJ
— Wall Street Journal (@WSJ) May 1, 2016
Both actions reveal that real global growth has slowed and CEOs are competing over market share (or against government takings) then in growing the overall pie.
Kalanick’s decision to add Huffington to the board can be seen as a little bit of both strategies:
1) he gets in the good graces of the queen of left-wing media
2) he gets to learn how she could built her empire on the backs of
slaves free labor interested in exposure.
Of course it’s not going to go well for either party…
HuffPo killed a story critical of Uber after Uber announced Arianna was joining its board. https://t.co/NE9ZiaNhFG
— Shane Bauer (@shane_bauer) April 29, 2016
Huffington’s site is routinely promoting Uber public relations without disclosure.
— Huffington Post (@HuffingtonPost) April 9, 2016
— Huffington Post (@HuffingtonPost) April 11, 2016
Technology – The Huffington Post Uber's Donating $1 Million To Veterans Groups https://t.co/0xU992Lx67
— Tech Aggregator (@AggregatorTech) April 7, 2016
Like the so-called “robber barons” of old who sought to convert financial wealth into political power through the press, it’s an interesting strategy — so long as their valuations hold.
Will they? Of course not.