Ted Audio Collective.
HBR presents. Hi, everyone.
You're listening to After Hours.
I'm Yang Mi, and I'm here with Felix and me here.
Hey, guys. Hey, Yang Mi.
Hey, Felix. So, Felix, you have to get on social media.
And the reason is, this week, Mi here violated one of his lifestyle tenets.
So, remember we did that one episode on food, and he said, I never take photos of my food.
Oh, yeah, I do remember, yes.
Okay. And now he did it?
This week, he tweeted out a photo of two burgers, side by side.
One was the Impossible Burger, and one was the Beyond Burger.
And he was doing a taste test of these two meatless burgers, and he tweeted it out for the entire world to see.
This is what the podcast has done to me, the lows to which I've sunk.
I am now tweeting out pictures of my food.
So, we have to talk about the meatless meat phenomenon, right?
Yeah. And then, Felix, you brought in a topic tonight.
There was this annual developer conference that Facebook has every year, and there's the famous Pivot to Privacy.
So, I think we should probably talk about that.
That sounds great. Okay, fantastic.
So, this past week, Beyond Meat went public.
For those of you who haven't heard of Beyond Meat, Beyond Meat specializes in meatless meat, if that's something.
It's plant -based meat alternatives, essentially.
But what's interesting about not just Beyond Meat, but this whole breed of companies, including Impossible Burger, is that they're not trying to market to vegans and vegetarians, which represent, I think, less than 5 % of the U .S.
population. But rather, they're trying to target real meat -eaters.
So, Americans, of course, eat more meat than any other country.
And so, I'm really curious to hear what you guys think about this company.
At least, the initial market reaction has been so positive.
Yeah, before we get into it, though, first I have to ask, have you tried the Beyond Burger, or have you tried the other one that's made of big splash, which is the Impossible Burger?
I know, Mejia, you have.
What's your verdict?
So, I actually tried it twice.
And so, I tried the Beyond.
Yeah. You had four burgers?
I'll tell you honestly with you, which is because I tried it the first time, and it was pretty disappointing, and I wanted to like it so badly.
I tried it again. The second time, I have to say, I kind of actually got it.
It's interesting. And from a taste perspective, I actually quite liked it the second time around.
Which one? The Impossible was better, I thought.
Oh, but you did, you ate exactly the same burger with same sauce, same everything?
Well, yeah, I take this very seriously, Felix.
Yeah. So, I did the same thing.
I went to a restaurant that serves both types, the Beyond Burger and Impossible Burger, and I thought the Impossible Burger is impossible to like.
I thought it was a pretty big difference between the two, and I like the Beyond Burger much, much better.
I mean, there's like a simple reason.
The Beyond Burger has much more fat.
And so, of course, you know, well, it tastes good, fat tastes good.
Well, yeah. That's one of the ironies here, which is the healthiness of these things is seriously dubious, both on sodium and on fat.
It's kind of dicey.
Yeah, not so clear, yes.
Okay, so let's get into it.
Animal food production is one of the causes of climate change.
And so, one of the marketing messages behind this particular product is that this is really good for the planet.
The individual health benefits?
Yeah, not so clear.
Not clear at all. Yeah, so, Felix, what do you think?
I completely agree, Ada.
These are the two main motivations.
I think some people will gravitate towards plant -based replacement of meat for health reasons.
And there, you know, you can say there's some health benefits, but they're probably not as big.
And then, even a little more concerningly, the climate change benefits are not quite as significant.
So, agriculture, globally speaking, is about 13 percent of climate change.
And a good fraction of that comes from deforestation, which of course is not an issue in the United States, both because we have much more efficient agriculture and we don't do really forestation.
I think even the climate benefits are much smaller than probably many people implicitly believe.
I didn't mean to say on the climate change front, it makes no difference at all.
Agriculture is, you know, 13 percent is 13 percent.
That's something. But is it a cure -all?
No. If you really want to do something with regards to climate change, don't take that flight.
That is, like, so much more powerful than basically not eating hamburgers for the rest of your life.
Mihir, what do you think?
Well, so, I'm a little bit more bullish on the category and maybe less on the company.
So, I actually think there is a little bit of a technological change here with these new products, which is I think they are substantively better than the veggie burgers.
And so there's the possibility of peeling off more traditional meat eaters who want something that, at least on occasion, is plant -based.
What I don't buy is beyond meat per se.
In particular, they are at about $100 million of sales and they're getting valued at $4 billion.
They are effectively, right now, barely have an operation.
They're using co -packers.
They don't even have their own operations to speak of yet.
And I end up seeing a world that is a little bit more fragmented without a big winner.
And when the big food companies get serious, they can come and do what they've done really well.
So, I like the category more than I thought I would before I did the taste test.
But I just can't buy into the hype about these particular companies.
And I don't know how long -lasting their staying power is.
What do you say, Youngmi?
I have to agree with you.
I'm optimistic about the category.
I'm not very sure about this particular company for the reasons you said.
I mean, number one, I think they'll never be a mass market product until they can bring the price premium down.
And they're always at a pricing disadvantage because animal agriculture in this country is so heavily subsidized by the government.
The second is that I don't think people realize perishable food is so hard to scale.
So, food is more heavily regulated than the pharmaceutical industry.
And not only are there different regulations from country to country, but from state to state.
The bigger you get, the more difficult the quality control becomes.
And so, like you, Mihir, when I look at a company like this that seems to be having some momentum, the first thing I do is that you look inside the company to see, is this company operationally set up to scale?
And when you look inside Beyond Meat, there are two things that jump out.
Number one, their primary ingredient is something called pea protein.
They have one supplier.
Exactly. And then the second, as you pointed out, Mihir, they have just two co -manufactures.
They have no long -term contracts.
The vulnerability of their supply chain just jumps right out at you.
And then the final point I'll make is that if this becomes interesting, the competition is going to get so fierce.
And once big food gets involved, so Tyson Food, which is the biggest meat producer in the U .S., was an investor.
It had like a 6 % stake in the company.
And pre -IPO, they divested.
And then they announced that they were going to produce their own meatless alternative.
Think about the thought process they went through.
They could either try to acquire this company that they already had a stake in, or they could say, you know what?
We've seen how this thing works.
We are very confident we can build it ourselves.
And so you know they did that calculation, and you know they went away thinking, if this thing gets interesting, we'll go ahead and build ourselves.
And to your point about scale, and the advantages of somebody like Tyson in doing this are just spectacular from a manufacturing perspective, right?
And so if you want to go down that cost curve, it's just so much easier for someone else to do it.
That's the real problem.
To your point also, Young Me, the exit for these guys and for Impossible is a buyout, right?
Like a big food company who wants to buy that brand.
And if Tyson didn't exercise that option, it does kind of make you wonder in a way.
Can I ask a marketing question?
So one of the things that I have always found so interesting is that you come up with this new product, and essentially the value proposition is you have a different source of protein, and then the big question is like, what's the product that you produce with this other form of protein?
And you take the most prototypical meat product that exists on the planet, the hamburger.
Like from a marketing perspective, Young Me, what do you think?
Is that a really wise choice, or is that just foolish that you sort of go against the heart of the competition if the competition is a real meat?
So I actually think that's one of the things I find somewhat brilliant about both Beyond Meat and Impossible Burger.
And so why is that brilliant?
Okay, so imagine you develop a new source of protein, you want to target meat eaters, because that's where the market is.
It's too small a market to go after vegetarians, and we've all had a veggie burger, and we've all been disappointed.
And so you want to move away from that.
So you go to beef because that's how people think of meat.
And then you think of what is the most forgiving kind of meat out there?
What's the most forgiving, taste -wise?
So for example, we started out, here, did you try the burger?
Did you put the sauce on it?
How many pickles? So I've had an Impossible Burger, I couldn't tell the difference between it and a regular burger.
I'm not a burger connoisseur.
And quite honestly, everyone who doesn't live in Brooklyn isn't either, okay?
Most Americans are not.
It's just a burger.
But then they did a second thing, which is also from a marketing perspective, I think really very clever, which is they branded the ingredient.
Impossible Burger is the closest thing to Intel Inside that I have seen in a long time.
So Intel Inside was brilliant because they branded ingredient inside of a computer.
They're branding a burger.
And then the third reason I think it's really brilliant is it creates a huge number of partnership opportunities.
And so you have partnership opportunities from everyone from Carl's Jr.
to Burger King. So if you're going to target the mass market and you're going to go after the most forgiving piece of that mass market, then I think that's where you go.
I think the other thing that really struck me about this is I've been paying attention as well in the UK to this climate emergency stuff.
And people are talking about the climate in new ways.
It feels to me like, right?
And in the UK, the conversation is now about not flying and it's about not eating meat.
And it to me feels a little bit like we're reaching a tipping point on consumer behavior and people seriously talking about things that they wouldn't have talked about five years ago.
Do you perceive that as well?
Are we at some kind of larger tipping point on the willingness of consumers to actually make significant changes?
The element that I always find a little disconcerting is, so for instance, if you switch from beef to pork, you reduce your climate impact by 50%.
So it's great that we're talking about the food system and to what extent it contributes to global warming.
But there's so little sophistication in the conversation.
And then this is almost where I don't quite know how I should feel about companies like Beyond Meat and Impossible because they are using misleading statistics.
So it feels much more like a convenient crutch, like a smart marketing approach, than sort of a real sincere concern around climate change.
The same is true from a health benefit standpoint as well, right?
So what do you make of the market reaction?
And in particular, I was just fascinated.
I happened to listen to a market report when the very first trade happened, and the very first trade was roughly twice the range of valuations that they had indicated.
He must have been so mad at their investment bankers.
Right. The work of the underwriters.
But I think that's, you know, this is what's tricky about pricing IPOs, which is, you know, underpricing is part of what you want, right?
A little bit. A little bit of underpricing, you're right.
But consider the alternative, right?
So broken IPOs are very difficult.
Some degree of underpricing is actually kind of what you need in these settings.
So to close this out, shouldn't worry us as podcasters the fact that we are always so misaligned with the market reaction?
We're just ahead of the curve, young me.
Just try to think of it as we're ahead of the curve.
We're very, very behind.
OK, Felix, you wanted to talk about Facebook's pivot to privacy.
Yes. So as you know, every year there's a big conference that Facebook puts on where they talk about really the future of the business, the kinds of products that they're thinking about.
And so this time there were these two really big announcements.
One was the pivot to a privacy -focused platform.
So the notion was that rather than making the newsfeed the center of Facebook, the new center of Facebook is groups, where groups is really like a group of people who may or may not know each other but share a similar interest.
And then the other announcement that is, I think, equally important and revealing for how they think about the future is this integration of communication across the three businesses.
So the Facebook Messenger, Instagram and then WhatsApp will have one end -to -end encrypted communication.
And I'm curious to know, young me, what do you think?
What was your impression?
So the way that Facebook defines privacy is, it means that they get to know even more of everything about you except for the actual content of your text messages.
But they get to know where you send them from, who you send them to, what time, from what location, and they're going to combine what they know about you across all three platforms now on the back end, and then they're going to call it privacy.
I know. So the emphasis on messaging in groups was really fascinating to me because it's a real indication of how we have segmented our online behavior.
And we use Facebook now for a really narrow set of things.
And so even though they pioneered the use of the words friends, the truth is when we actually communicate with our friends, we often use, particularly that younger generation uses Snapchat or uses group chats or they use Discord, or they get under Reddit into groups.
And so what you see is Facebook saying, we want a piece of that activity.
And then the other part, you see them wanting a piece of commercial transaction payment activity because they're moving into...
So we can talk about that in a second.
But you see them looking at the landscape of all of our online behavior and saying, oh, we need to own more of this private messaging stuff.
And then on the southern side, they're saying, oh, we're missing out on transactions and payments.
And they're looking at WeChat in China, and they're saying, we could be the next WeChat.
And so they're racing to be the next WeChat.
So I'm very much with you, Yang Mi.
There is this notion that they will try to pursue end -to -end encryption.
But you're right, which is basically, in terms of monetizing your data, the metadata is much more valuable, and they now will have even more metadata than they had before.
And so that's the kind of crazy part.
So it was even kind of in a way sneakier than I think even you implied.
And I think the headline that you're referencing, though, Yang Mi, is the even more interesting one, which is kind of the transition from the town square version of Facebook to the smaller room version of Facebook, where you're talking to groups you already know or maybe are interested in.
But then the question is, to me at least, is what does that do to their model?
So meaning they're still going to be able to target, but can you kind of push the ads in the messaging platform with the same velocity that you were able to do in the newsfeed?
That, to me, is like the open question from the business side.
And by the way, their recent results were fantastic.
I mean, they hit it out of the park.
But what does it all do to their ability to actually monetize advertising in the messaging platform?
The monetization capability isn't there like it was with newsfeed.
What do you think, Felix?
Part of what I found was so interesting was not so much the announcements themselves, but the response is almost like they have lost all credibility.
It's really like every headline you see, every comment is, you've got to be kidding me.
Really? You want us to believe you care one bit about privacy?
But I sort of thought about this, like, let's presume for a moment you're really sincere at Facebook.
It is so difficult for you to do any sort of change that people will believe, because whatever you do...
So, for instance, you do the integration across the three communications platform.
Of course, what do people say?
Well, maybe this is because they're afraid that someone will break up Facebook.
Or say, you say, oh, actually, the worst part about newsfeed is that the toxic messages spread almost uncontrollably.
Putting more life into groups is a reasonable response.
But of course, people just say, well, if anything, some of the groups in all likelihood are going to be more toxic than what you will ever see in newsfeed, because like -minded people with strange views about the world will...
Well, for sure, they will have their own groups.
So, the management challenge that I find interesting is, you can look at each of these things that they propose, and there is some merit in what they're trying to do.
But the response is just like, no one believes anything.
OK. So, Felix, the problem is, they bring it on themselves.
It would be one thing if he had framed everything he was doing as the next stage in the evolution of Facebook, and this is how we're going to grow the business.
Because really what you're saying is they are positioning Facebook from being, I know this sounds crazy for a billion -plus platform, but it's from being a relatively narrow platform to being sort of a multi -use platform.
Everything from private messaging to getting your news to purchasing, transactions, payment, it's essentially WeChat.
So, it would be one thing if he positioned it, is that here's our business strategy, and one of the benefits of doing this is we're going to be able to put in encryption, and we're going to be able to do all of these things.
But that's not what he said.
He framed this as the rationale for this, is because we know you want privacy, which is just not believable.
Yeah, yeah. I mean, in a way, this has always been a little bit the issue of Facebook, that every change in product, every new product comes with these big messages about how the company is going to make humanity, life on the planet will be better with Facebook.
And so, it just feels, I completely agree, it always feels completely overblown, and you don't actually need it.
I mean, this last year, you could look at Facebook, and you could say, oh my God, this has been like the worst year in the history of the company ever.
This last year, they gained 200 million users, and advertising revenue climbed by $4 billion.
You cannot find another company with a bigger disconnect between the utter devastation in their brand reputation and the utter success of the business.
It's amazing, right?
It's unbelievable. So, one of the pivots is toward commercial transactions and payments.
In previous episodes, we've talked about the purchase funnel and how Amazon has the advantage of being right at the sweet spot.
Now, Facebook is trying to move.
Is it going to work?
Are we going to blink in a couple years, wake up, and find out?
Lo and behold, they are a competitor now to Pinterest and Amazon and eBay, and it's just another place where people transact.
What do you think? Yes, I think the real game is transactions and payments, and they've signaled that with WhatsApp.
And so, I think that's the only real long -term game for them.
Will they succeed? I think there's a whole bunch of questions there about their added value relative to other potential networks that I don't see a clear answer to.
So, I think it's where they have to go, but I actually am dubious whether they're going to be able to do it well.
To me, I think there's almost no doubt that the sale of products will work beautifully.
I mean, you see it like the whole influencer phenomenon is all around the promotion of products, and now there's always this issue that you see something really interesting.
I remember the other day I saw like a fabulous t -shirt that I absolutely loved, and then the purchasing process is incredible.
I had to do some crazy step to actually buy this t -shirt that I gave up even though I really loved what I saw.
And so, if you make that easier, of course that's going to be super valuable.
What I don't know is these two things, like the e -commerce part of the Facebook universe and the social communication, those feel quite divorced.
And what I don't know is whether they'll be in a good position to keep that balance or whether a more specialized platform.
And we talked about some of these in a previous episode where if you do only social or if you do only e -commerce, whether that's not a more powerful platform.
Yeah, okay, I can't let us go before asking you about this Facebook dating.
So, the Facebook dating service, they have tested in a couple of countries now, and they are ready to roll it out.
So, they're going to begin to roll it out in a bunch of other countries.
So, did it work? Well, they're rolling it out, so they must be happy.
So, it's going to roll out in the U .S.
by the end of this year.
One of the features, this is not the actual dating app, but one of the features is something they're calling secret crush.
And a secret crush is you can identify nine people among your friends or friends of friends that you secretly have a crush on.
And Facebook promises that they won't tell anyone.
Unless one of those people identifies you as being one of their secret crushes, in which case they'll reveal it to both of you.
First of all, who has nine crushes?
Well, can you rank order?
Can you say, like, she is the crush of my life, she's the crush of the week.
I'm going to stop you before you get in trouble.
But what do you think about this whole dating thing?
And then what do you think about the secret crush thing?
Because I find it so creepy, you guys.
If you have a teenage daughter, do you like the idea of some creepy dudes being able to identify your daughter as being their secret crush?
I think that's super creepy, just to put my cards on the table.
But to me this signaled how Facebook is trying to reach young people, but in fact is like old people.
I just can't imagine this is something that young people want.
Because old people have secret crushes?
Well, but I think it's a Match .com thing or something.
To me, it was like a pitiful thing, and it was a pitiful effort, and it just struck me as kind of like a company who's lost its way.
And it felt like they were reaching for young people in the most awkward, creepy way that is not going to work.
So I don't know, that was my basic instinct.
This is why I asked, did it work or not?
My biggest surprise is that anyone would tell Facebook, if you have a secret crush, maybe you tell your very best friend.
But you definitely don't tell Facebook.
I mean, it's one of the big puzzles in this whole privacy conversation that in the abstract we value privacy and we think it's so important, and then the next opportunity comes along.
And we give a network the most private information you can think of.
It's just bizarre. I fear it will work.
I do. You might. I hope you guys are right.
Okay, all right, one more to come.
Good. Okay, guys, I have a really good pick for you.
It's a documentary on Netflix called Knock Down the House.
And it just came out, and it follows four upstart women who decide to mount primary challenges against Democratic incumbents in the last election.
And one of them is Alexandria Ocasio -Cortez.
Just by chance, she happened to be one of the four that this filmmaker followed.
Oh, before even knowing that she would become famous.
Oh, interesting. So she just selected four, and all four of them are fascinating.
Oh, that sounds good.
AOC is the only one that ended up winning.
So we have talked about AOC briefly on this podcast.
She is someone with whom I disagree on many things, but her authenticity, there is zero doubt that she's in it for the right reasons.
And one of the most powerful moments, I think, is this moment when she actually breaks down in tears.
And the reason I find this to be so interesting, in fact, several of the women do at different points, is because one of the knocks on women being in Congress or any position of leadership is their emotionality.
And so tears have always historically been viewed as a sign of real weakness.
And so you're supposed to never, ever show those emotions.
And the moment when she breaks down, in fact, for all of these women, they kind of reclaim that emotionality as a source of power, as a poster's manifestation of weakness.
That sounds good. So I encourage you, even people who are cynical or disagree with all four of these women running, watch this documentary.
So it's called Knock Down the House.
That sounds great. Part of why I find these stories so interesting is because that, in a sense, that's sort of the story of our time, that people come into politics from unexpected directions, including the president, including the former president.
So there's sort of this search, because we're not happy with the political outcomes.
There's the search for maybe a different type of person with a different kind of background.
I think it's super interesting to think about.
It made me realize how hungry I am to see anybody that just seems like a real human being.
We're just so used to seeing...
No, really, we're just so used to being presented with politicians that are so scripted in how they interact with the public.
But, okay, so Felix, what you got?
So I would like to recommend, and I know you guys are going to laugh, I would like to recommend someone's Twitter account.
What? What? Are you serious?
No. So the person...
The person is Brian Drewson.
He's a law professor in Hong Kong, and he is fabulous at finding visualizations of data.
Felix loves maps and charts just for our business.
I love maps and charts.
I'll just give you...
Are these the ones where it's like the slow motion, like to see how things have changed over time?
Yes, yeah, exactly.
So, for instance, the biggest cities in the world.
Between 1500 and 2018.
And then you see for more than 100 years, Beijing and Istanbul are much bigger than anything else.
And then you have this miraculous collapse in the size of Beijing where it really becomes not exactly a village, but so different.
And what I love about him is any sort of topic that has cool data visualization.
How do people meet when they...
Couples, how do they meet over time, from the 1920s until now?
Most effective ways to cool your coffee.
Should you stir with a spoon, should you blow, should you...
How did you discover this?
If you're not on Twitter, did you come across him, what, through his blog or something?
I found him on LinkedIn.
Actually, he posts on LinkedIn.
Oh, he do post... Yeah, but he's much more active on Twitter than on LinkedIn.
So, I knew there's like a bigger universe of things to discover.
Wow. And how do people meet now?
Now at work. Work is like completely, completely dominant, which was not, traditionally wasn't so important, right?
Wow, okay. Because remember, women didn't work.
So, it was so hard to meet.
Okay, we're here. Larissa MacFarquhar is a writer for The New Yorker, and she had a piece in The New Yorker late last year called The Comforting Fictions of Dementia Care.
And it is this great story about how we take care of people who have dementia and how it has become routine to lie to them, you know, which is a way of saying when they go off on one of their kind of disassociative memories, people have now started lying to them and just telling them things that they
want to hear. And so, it's like this deep exploration of whether that's okay and what happens when you start lying.
And the alternative to lying, by the way, is terrible, which is if you tell them the truth, you know, so for example, they're looking for somebody who has passed away and you have to tell them that they're dead, it's terrible.
And the alternative is, oh yeah, they're fine, but, you know, then they get distracted and five minutes later they're onto something else.
So, lying is a compassionate thing, huh?
Lying is compassionate, but then it's not so simple because actually lying turns out to be really complicated as well because sometimes they'll not be so disassociated from their memories and they'll ask you why you're lying.
Anyway, she is so good as a writer.
She's so good, yeah.
And dementia is such a hard issue and I think this is kind of like the ethics of lying is so interesting in that setting.
So, it's the comforting fictions of dementia care and it's Larissa McFarquhar and she's an amazing writer and so yeah, that's my pick for the week.
Great. Almost anything she writes in The New Yorker is very good.
It is so rock solid.
She's so rock solid.
Okay, that's it for the week.
Thanks everyone for listening.
This is After Hours from the HBR Podcast Network.
