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Today, we’ll be looking at how Facebook purged “low-quality” and “regrettable” content from the newsfeed.

Taleb’s “Turkey Problem”
Will Amazon axe Alexa?
When Disney tried to buy Twitter
And of course, memes (including more FTX)

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Facebook cleans up

I’ve barely used Facebook since 2014.

Other then moderating an entrepreneur Facebook Group while writing for The Hustle newsletter, I literally haven’t posted a thing on my personal account for 9 years (and didn’t even have an account for 8 of those years).

Why’d I stop? Well, I used Facebook — now under the corporate entity of Meta — while living in Vietnam as a way to keep my friends in North America up-to-date on my Asia shenanigans. However, when I moved back to North America, those updates were less necessary.

I’m still able to keep up with what’s trending, though, because Meta releases a quarterly “Widely Viewed Content Report”. According to the Wall Street Journal, the latest report is quite an accomplishment for the platform (which still has frickin’ 1.9B daily active users).

Why? Because earlier this year “virtually all of Facebook’s top-ranked content was spammy, oversexualized or generally what the company classified as regrettable” including engagement bait (“Post the four words every girl wants whispered in her ear”) or links to “sketchy online shops”.

This type of content — including a lot of anger-inducing political posts — manipulates our emotions and triggers our worst instinct, so Facebook made an effort to fix it…and succeeded.

First, it put together a “war room” of product, UX and integrity team members. Next, they created “better definitions” of low-quality content and figured out ways to reduce the reach.

The last thing I saw on Facebook — and this is only because my wife showed me a few months back (I swear) — was a 12-minute of someone using duct tape to force open a locked door. The person wrapped duct tape around a door for 12 minutes, then tried to pull the door open…and it didn’t work. It was pure engagement bait. I got sucked into giving them watch time. And I felt gross after.

While the new Facebook algo won’t exactly serve you Shakespearean-caliber content, it also won’t make you physically ill.

From the latest report, the most clicked links are celebrity and lifestyle stories (dominated by Insider):

“Elon Musk's mom, Maye, says she sleeps in a 'garage' when she visits him because 'you can't have a fancy house near a rocket site’” (Business Insider)
“Millie Bobby Brown was left in tears after being told she wouldn't make it in Hollywood because she was 'too mature' at 10 years old” (Insider)
“13-time Grammy winner Lady Gaga went bankrupt and was $3 million in debt after her Monster Ball tour” (CNBC)
“Natalie Portman says Chris Hemsworth would hide behind a tree to avoid drawing attention while picking up his kids from school” (Business Insider)
“Tiger Woods is now a billionaire — here's how he spends his money and lives his life” (Business Insider)

Here were the most-visited sites (didn’t expect Zillow):

Meanwhile, the most shared posts are fun facts, memes and feel-good stories (that clearly appeal to the older-skewing audience):

As much as I love memes, I’m still never going back to Facebook (and I can obviously find fire memes on Twitter, where I spend too much time).

Still, it’s nice that Facebook fixed a clear problem. A year ago, 100% of the top 20 most-viewed posts were considered “engagement bait” while the latest report only had one such post.

The platform’s most popular content is no longer politics, engagement bait and scams. It’s upgraded to the vibe of a checkout aisle rack at the grocery store: full of tabloids and comics.

The Turkey Problem

Every Thanksgiving, I have to re-hash my favorite Thanksgiving-related economics lesson. In his widely-read book The Black Swan, economist Nassim Nicholas Taleb tells the story about the life of a turkey.

“Consider a turkey that is fed every day [for 1000 straight days in the lead-up to Thanksgiving]. Every single feeding will firm up the bird’s belief that it is the general rule of life to be fed every day by friendly members of the human race ‘looking out for its best interests’, as a politician would say. On the afternoon of the Wednesday before Thanksgiving, something unexpected will happen to the turkey. It will incur a revision of belief.”

Here is a chart that is often paired with Taleb’s tale.

Taleb uses the turkey story to explain “The Problem of Induction”, a philosophical question that asks whether it is possible to generalize a principle (the rule of the turkey’s life is to be fed) from a series of observations (the turkey has been fed for 1000 straight days).

In the case of the turkey, the surprise on Thanksgiving (Day 1001) demonstrates that the generalization is false.

“Taleb’s Turkey” often comes up in finance when the price of an asset collapses after a strong run-up (AKA past performance is not indicative of future results).

And we’re going through another example right now:

Trung Phan @TrungTPhan

FTX valuation history

Speaking of FTX, the latest development is bonkers. Earlier this year, FTX founder Sam Bankman-Fried (SBF) invested $11.5m in Farmington State Bank in the state of Washington. Up until this year, the bank had 3 employees and the town it served has 146 people. It was also the 26th smallest bank in the country.

Despite only having $10m in deposits — and a very conservative business (Farmington did farm-related loans and didn’t offer ancillary products like credit cards or online banking) — SBF’s investment was for a 10% stake valuing the entire enterprise at $115m (the FDIC had said the bank was only wroth $5.7m).

After SBF’s investment, the deposits jumped to $84m, with the majority of funds coming from only 4 accounts.

The bank renamed to Moonstone, a wild portmanteau of “to the moon” and “stone” (representing the crypto and cannabis business lines it operates in). Moonstone now employs 25 people and there may be an association with Tether, the much-maligned stablecoin.

In sum: SBF — through his off-shore hedge fund Alameda Research — bought a stake in a US bank that wildly overvalued it (perhaps to skip regulatory scrutiny of majority ownership). SBF’s equity stake in the bank is now part of FTX’s bankruptcy proceedings. But, how dafuq did regulators let him buy a stake in the first place?

Oh and the “$115m bank” looks like this:

Genevieve Roch-Decter, CFA @GRDecter

If this bank that FTX invested in is worth $115 million, then I'm a trillionaire

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Links and memes

Amazon to axe Alexa? Amazon’s voice business — Alexa — was launched in 2014 is on pace to lose $10B in 2022 (having already lost $10B+ total in previous years). That’s a Zuck/Metaverse level of investment and Amazon CEO Andy Jassy is considering cutting the unit which was a Bezos pet project.

I’ve had a number of Alexa devices and basically use them for only two reasons: ask what time it is and play Blippi songs for my kid on repeat (I can live without both).

Dare Obasanjo has a great take on Alexa: “A big tech failure mode is to confuse their business problem (e.g owning the next big platform) with a customer problem (e.g improving lives of consumers & businesses).”

Meanwhile, Gary Marcus asks why voice assistants (like Alexa) have not achieved decent chat capabilities even as AI large language models (LLM) have gotten so powerful.

Mainly, LLMs can say offensive or incorrect things. A user will stop relying on the voice assistant if it can’t be trusted to give the right answer. And if Alexa lies or gives incorrect instructions, Amazon could open itself up to litigation…so the company has kept Alexa’s value prop pretty basic.

When Disney tried to buy Twitter: Bob Iger — Disney CEO from 2005 to 2020 — is back as Disney CEO. He replaces Bob Chapek, who he handpicked to be his replacement.

Chapek was given a tough hand: he took over during the pandemic and had to implement Iger’s plan to pivot Disney hard into streaming. But macro trends have been tough: 1) the cable bundle keeps deteriorating; 2) Disney+ had to hike prices and there is subscriber fatigue (as with other streamers); and 3) the theme park business went from the pandemic to a recession. Now, Iger will try to right the ship.

In a big “tech what if” moment, Iger and Disney’s board actually agreed to buy Twitter back in 2016 for ~$12B. But Disney dropped the bid at the last second because Iger didn’t want to deal with moderation issues and how it conflicted with Disney’s image. Here’s Iger explaining the decision a few years later:

Why Twitter? The tech: “We were intent on going into the streaming business. We needed a technology solution. We have all this great IP. We weren’t a technology company. How do we get that IP to consumers around the world? … And we were kicking tires left and right. We thought about developing ourselves. Five years, $500 million. It wasn’t the money, it was the time, because the world was changing fast. And at the same time, we heard that Twitter was contemplating a sale.
We enter the process immediately, looking at Twitter as the solution: a global distribution platform. It was viewed as sort of a social network. We were viewing it as something completely different. We could put news, sports, entertainment, [and] reach the world. And frankly, it would have been a phenomenal solution, distribution-wise.”
The problem = moderation: “Then, after we sold the whole concept to the Disney board and the Twitter board, and we’re really ready to execute — the negotiation was just about done — I went home, contemplated it for a weekend, and thought, ‘I’m not looking at this as carefully as I need to look at it.’ Yes, it’s a great solution from a distribution perspective. But it would come with so many other challenges and complexities that as a manager of a great global brand, I was not prepared to take on a major distraction and having to manage circumstances that weren’t even close to anything that we had faced before.
Then you have to look, of course, at all the hate speech and potential to do as much harm as good. We’re in the business of manufacturing fun at Disney — of doing nothing but good, even though there are others today that criticize Disney for the opposite, which is wrong. This was just something that we were not ready to take on and I was not ready to take on as the CEO of a company and I thought it would have been irresponsible.”
Lots of bots: “Interestingly enough, because I read the news these days, we did look very carefully at all of the Twitter users — I guess they’re called users? — and we at that point estimated with some of Twitter’s help that a substantial portion — not a majority — were not real.
I don’t remember the number but we discounted the value heavily. But that was built into our economics. Actually, the deal that we had was pretty cheap.”

The best breakdown of the Qatar World Cup: My friend Joe Pompliano explains the financial and human cost to host the event. Qatar — which currently has a national GDP of $180B — spent a ludicrous $220B over the past decade to put the event together.

And here some memes

Joe @JoePostingg

Microsoft is different from other tech giants, because they have a unique strategy where they sell products to users for money. This generates "profits" for them. Really interesting stuff.

trash jones @jzux

(me as a camel) ok one more straw would probably be fine

You know I gotta bring the FTX memes. First, there’s been a series of mainstream puff pieces about SBF. The latest was from the Wall Street Journal, which framed the (highly likely) criminal as someone that was just “trying to save the world” (through his philantrophic ventures). Anyways, this meme takes the SBF puff pieces to the logical extreme.

Amjad Masad ⠕ @amasad

This is getting ridiculous

And despite overwhelming evidence that SBF committed one of the great financial crimes of the past decade, he’s still free in Bahamas and plans to speak at the New York Time’s conference at the end of the month. I can’t believe this is still happening:

The first week of the Qatar World Cup has delivered some great highlights. Saudi Arabia upset Argentina and the celebrations have been wild (Saudi Arabia also declared a national holiday after the victory and each player was gifted a Rolls-Royce Phantom). Meanwhile, Japanese fans are being lauded as upstanding citizens (footage of fans cleaning up stadiums after the game, even for games where Japan didn’t play). The memes have been crazy, but this next one about the South Korean national team really made me chuckle. Why? As a Vietnamese person — where 60% of last names are Nguyen, Tran or Le — it hits home.

george @StokeyyG2

Commentators nightmare at 1pm tomorrow

Meanwhile, the US and UK played to a 0-0 draw, which lead to these gems:

Rhys James @rhysjamesy

USA and England once again fail to find anything in the Middle East.

Dr. Parik Patel, BA, CFA, ACCA Esq. @ParikPatelCFA

A tie means England and the USA have to share joint custody of James Corden

SatPost by Trung Phan

How Facebook fixed its newsfeed