Week 12: 2018 [Facebook and Cambridge Analytica scandal]

This was one of those crazy weeks when writing becomes hard because there are so many options for exploration including the Facebook and Cambridge Analytica scandal, trade wars and stock market. Well, Q1 2018 certainly wasn’t boring. We enter the last week of the quarter and I hope everyone’s business is growing at a healthy pace.

Let’s start with the Facebook and Cambridge Analytica debacle. Most of us knew something was up and none of us would have been able to guess this was it. I remember when people started fighting in my Facebook feed during the summer before the US election and post Brexit that something was wrong. There were many friends of mine that had just become convinced rumors were facts. Even though I could show them it was false they still believed what they’d read on the internet. That summer it really began to feel like conspiracy theories would soon become an Olympic sport.

I’m certain there’s more to this story and there’s probably a connection to the changes in the feed. Do I think Facebook did this intentionally? No. Not for a second. Do I think they have to fix it? Absolutely, but it will be very difficult as Facebook has become more of a utility than a social media product.

That would have been enough stress for the week. Then someone decides that it is time to start a trade war. The market reacted quickly. Markets tend to know what’s going on all the way up until a crash. Then they eventually find their way into some form of correction. One thing markets don’t like is uncertainty and between these events and a new Fed Chairman let’s just say it was a bumpy week and there are probably a few more ahead.

Why does any of this matter to a business owner or executive? Well, macro issues impact strategies because they’re out of our sphere of influence. This is especially true if the original strategy left out macro issues in the first place.

Why macro issues matter?

If we’re aware of this then we can roll with the new information. We can dislike it, sort through it, and ultimately find a new opportunity set.

If we’re not aware then we will just keep walking down a path as if nothing is happening or worse dismiss it as not impacting us directly. Macro issues impact everyone indirectly and that’s important to remember.

We don’t know….

  • The total negative impacts of outsiders having our Facebook Data
  • Nor the impact of someone having data on millions of other people

We do know…

  • Trade wars tend to end up in tit-for-tats
  • The consumers end up paying for it with increased costs of goods
  • This means disposable incomes decrease

This is important to note because we know it now. That means if you run a business that is a luxury item for the buyer trouble is heading your way. What’s your strategy to fend that off? Can you increase prices now and build up a strong prudent reserve to ride out the next downturn? Is your business recession proof or recession sensitive?

The end of the quarter is always a great time to take a look at strategy. If you don’t have one get one. If you have one will it survive the potential storms? If yes, eyes forward. If no, adjust.