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036 - Monopolies: AT&T Yesterday, Facebook and Google Today - Robert Binder

Robert Binder is a Senior Engineer member of the technical staff at the Software Engineering Institute of Carnegie Mellon University. He has 43 years of experiencing working in technology on everything from mainframe computers to embedded cyber physical systems, including work in institutions in financial markets in Chicago including the CBOE (Chicago Board Options Exchange).

We talked about how the drivers of economics and business are sending Facebook in the same direction AT&T was sent. Topics include:

  • Classical Economics

  • The Network Effect

  • The Monopolist's Demand Curve

When it came to AT&T's breakup in the 1980s, it was not just the new technology that mattered, it was the business opportunities created at that moment. Capital investment and risk taking and entrepreneurial activity that resulted happened at a very large scale.


Customers used to lease landline phones from AT&T.

Customers used to lease landline phones from AT&T.

Timestamps:

3:15 How Robert got involved with software in 1976

4:00 2 GTE software project the theory of the firm monopolist's demand curve

2.40 Robert's project with GTE Automatic Electric, which operated specialized telephone networks. At the time AT&T operated all the wires and owned all the phones. People leased their home phones from AT&T.

The deregulation in 1985 of ATT opened the door for cellular networks and led to what we have today; this is a hugely complex topic. But we discussed a few aspects. 

6:00 The Theory of the Firm

6:15 In a competitive market, no individual company can control price; they price based on supply and demand

6:43 The Monopolist's Demand Curve

7:09 Martin Shkreli and high cost drug monopoly- ‘Pharma bro’ Martin Shkreli sentenced to 7 years in prison — says, ‘This is my fault’

9:20 AT&T was a monopoly but they made more money by charging less - not gouging customers even though they could

10:00 Facebook is the greatest deal in advertising but is quickly increasing in cost

11:02 The power of monopoly is a street that cuts both ways for Facebook (privacy issues, scrutiny)

11:20 Most users don't realize Facebook owns Instagram or that user data is the product - the model is much more complex than AT&T's monopoly

12:20 In the 1930s people realized that if the telephone system was to grow, they would need to employ an inordinate amount of humans to man the switches - not scalable

13:20 Was there skepticism about technology like the telephone like there has been for the PC, the smart phone, email, and now voice technology?

13:50 Long distance calls were expensive

14:15 New technology, when scalable and affordable, can be adopted readily and becomes quotidian

14:30 The Network Effect (the value of a network increases to a power of two with the number of connections) - exponential growth

Connect with Robert Binder:

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026 - Marketing in 2019 & Beyond: Social Media and Voice

Year-end episode. Predictions - keeping it simple, two areas of focus:

  1. Social media - tech companies and their manipulation-based business models will change. They’ll evolve in two ways: First, greater transparency that frustrated users will seek. Second, more cohesion with government (as Steve Case posits in The Third Wave).

    Facebook (including Instagram), Twitter, and LinkedIn: the revenue models are based on manipulation through constant feedback loops that surveil users (the product). This is the new fast food. Users will begin to see it as unhealthy like they do cigarettes and Big Macs.

  2. Voice marketing - why smart speakers and voice assistants are like the automobile in 1903 (famous Ford/Horace Rackham quote). Voice is not a fad.

1-minute clip:

Also mentioned:

  • 06:40 - Brian Roemmele, The Oracle of Voice re: “computerese” - Brian is spot on. 06:40

  • 08:16 - Mitch Joel (I quote Mitch re: the 1.0 state of smart speakers and how it’s like the internet before the hyperlink - hard to navigate). Spot on again.

  • Join me at The Alexa Conference on January 15-17, 2019. Get 20% off tickets with promo code: ALEXASPRK203