Big Industry Moments of 2019 – Episode Transcript



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Introduction: Welcome to the BBB National Programs Podcast, Better Series, where we will explore top of mind topics and self-regulation with business and industry leaders. Together we seek to understand the leading trends and innovations that continue to push the envelope in today’s marketplace.

James: Thank you for joining us today on the Better Series Podcast. I’m James Lee, and joining me today is the host of another of our BBB National Programs podcasts, Elaine Espinola of The Bistro, our podcast that looks at the relationship between consumers and businesses.

Elaine: James, it is great to be here with you today. Today we’re looking back. We’re taking a break from our usual discussion of the latest trends in business, and we’re going to go ahead and look back at some of the big events and trends this past year. Trends that have impacted businesses and especially those trends driven by, or impacting, consumers.

James: Well, it’s always a pleasure to have you here.

Elaine: Oh, thank you.

James: There’s no shortage of things to discuss. You know, this year was the Internet’s 50th birthday.

Elaine: Well, happy birthday, Internet.

James: Yeah, and there’s always been this love affair between consumers and big tech, but this year we kind of saw that maybe we’re headed toward marriage counseling because the rocky relationship is starting to be exposed. A lot of that has to do with new privacy rules, and those new rules have sent marketers diving under their desks. This was a year when social media helped change not only what we eat because now we’re eating meat that isn’t meat, but also it created a chicken sandwich ad campaign that broke the Internet.

Elaine: Oh, my gosh. We’re going to talk about that.

James: We are, and we’re going to spend time talking about this relationship between businesses and consumers because, really, consumers are starting to flex their muscles, and that’s an area where you spend a lot of time thinking about and talking about.

Elaine: That’s right, James. I think consumers are definitely more vocal now more than ever, and they’re letting businesses know exactly what they want and exactly what they don’t want. A couple examples that came to mind this past year, Beautycounter. Are you familiar, James?

James: Thank goodness that we’re in a podcast because I have a face for radio, so no, I don’t spend a lot of time at the beauty counter.

Elaine: Not true at all, but for anyone that doesn’t know, it’s both a beauty and a skincare company. They focus on toxin-free beauty products. They also do a lot of advocating. I knew their sales reps don’t just sell products. They’re really in the business of educating consumers about toxin-free chemicals and what that looks like and what it doesn’t look like.

Elaine: This past year, they rallied on Capitol Hill. So, it wasn’t just the usual CEOs of a company on Capitol Hill. They rallied, I think it was something like 3,000 consultants that came and marched up on Capitol Hill, and they are kind of demanding and asking for more regulation in the beauty industry.

James: That’s not something you see very often where businesses are asking for more like that.

Elaine: Right.

James: And getting out 3,000 people who are in the day-to-day business — when you work on the Hill, the old adage was, “If you get a letter, that’s interesting. If you get 10 letters, it’s a mandate. If you get 100 letters, you’ve got to get out in front of it.” It’s a wave. If you get 3,000 people to all come to Capitol Hill and talk about something, that’s a really important event.

Elaine: These are passionate — I mean, they’re not just consultants. These are consumers as well. They’re consuming these products, and they’re passionate about it, and you’re right. Historically this industry has fought regulation, and now they’re asking for it. So, that’s really interesting. We had a… Go ahead. What were you going to say?

James: No, I was just going to ask you what are some of the things that you thought were interesting this year?

Elaine: Yeah. AT&T. There was another one there. You’re familiar with that one — $ 60 million fine for basically false advertising. I think the agency I had seen received thousands of consumer complaints that led to the investigation of these allegations misleading consumers over the data plans. But this is another place where consumers are really flexing their voice, and they’re saying, “We’re not okay with this.”

James: And this was all about throttling. Where they would slow down their internet speed on their mobile devices, but they didn’t tell them they were going to do that.

Elaine: Right. Right.

James: So, that’s a no-no.

Elaine: That’s a no-no.

James: You rarely get in trouble if you tell somebody you’re going to do something ahead of time. It’s only when you fail to tell them you tend to get in trouble. They also, AT&T, got into a little bit of trouble with the Federal Communications Commission because they started saying that they had 5G, which is kind of a geeky thing to talk about.

Elaine: Sure.

James: But they actually don’t have 5G.

Elaine: Ah. Well, you know what? Consumers are not only more vocal; they’re more knowledgeable. There’s a lot of stuff on the Internet. People are doing their homework. They’re understanding what they’re trying to get when they pay for something, and then when it’s not what it says it was, I know the big cry from consumers regarding this AT&T thing was that unlimited is unlimited. If you’re offering unlimited, that’s what we want to get. And that’s not what they got. So, they’re flexing their voice there.

Elaine: And there was another one, well, across retail in general, but thinking of businesses like Forever 21 going bankrupt, right? You know, it’s the consumer saying we want more transparency from the businesses that we are going to shop from. They’re more socially responsible consumers. And that was just another place where you see the result of consumers flexing their voice and also using their dollars or not using their dollars and the consequences that it’s having.

James: That’s where they voted with their wallets.

Elaine: Yes. They voted with their wallet.

James: Yeah, because in that case, it was all about sustainability, which we did this podcast series earlier in the year all around retail. And one of the consistent themes that everybody told us, and there were two themes. One was there is no retail apocalypse despite what you may see in news headlines. There are a lot of opportunities. There’s a lot of growth in retail, but it’s in specific areas, and one of those is sustainability. The whole idea of fast fashion that you wear once or twice, I remember when my daughter was that age, and she was — I mean, I stopped looking at the receipts from Forever 21 because I was going, “Ah, I don’t want …”

Elaine: Yeah.

James: But the clothes wouldn’t last.

Elaine: Right.

James: And they weren’t designed to.

Elaine: They were cheaply made and also inexpensive.

James: Right.

Elaine: Yeah. Cheap and cheaply made.

James: But now, people are realizing that has an environmental impact, and they’re wanting to match their lifestyle and their purchases. So, that’s a very interesting trend.

Elaine: Yeah. Some consumer surveys are estimating up to over $25 billion in the secondhand clothing market. They’re expecting this to grow based on exactly what you’re talking about — the sustainability.

James: That also relates to another consumer trend, and that is people want to eat more healthily. And now, despite the fact that cows are probably happy that we’re not eating as much beef, but there’s this idea that now you can have meat that’s not meat. It’s from plants. It looks like beef. It smells like beef. It bleeds like beef, but it’s not beef. It’s made from plants.

Elaine: Yeah. It’s interesting, James. I’ve seen it in the grocery store, and I’m not there yet. I’m not there yet, but it’s in the frozen food area where the other meat is, but it’s not the meat. Have you tried it yet?

James: I have tried it. I’ve tried two of the different varieties, and if you close your eyes and you think that, “Oh, I’m not really eating a plant, I’m eating …” It actually does taste like a grilled burger.

Elaine: Okay.

James: And I was shocked. Now, some of the other things they’ve spun off into, so the chicken that’s not chicken. The sausage it’s not sausage. I don’t think they’re there yet. But for what looks like a hamburger? Very, very close. One of the hottest sellers for Burger King that was another thing that sort of broke the Internet for a while was people wanting their version of this plant-based burger, and it sort of spun out from there.

James: And a side note from a business perspective, one of the most successful initial public offerings, IPOs, this year is Beyond Meat.

Elaine: Oh.

James: A lot of the other big names where people were expecting to do really well, like Uber and WeWork, which actually didn’t go IPO because everything collapsed ahead of it.

Elaine: Sure.

James: Yep — didn’t perform well.

Elaine: Yeah.

James: But here’s little Beyond Meat, and they’re knocking it out of the park on the stock market and in the marketplace. So, it’s an interesting thing.

Elaine: Consumers want it. Clearly, consumers want it. There’s a demand, and consumers are kind of push this industry into other products.

James: They have pushed it. They also pushed. As a marketer, I just love the whole idea of the Great Chicken Wars of 2019. So now we’re talking about real chicken, not fake chicken. Real chicken.

Elaine: James, push is the operative word because, I mean, it has gotten physical. Now we have altercations regarding this chicken war. So what started with this, the number one trending topic on Twitter, lines out the doors. This sandwich went viral, if you will, and they saw unprecedented sales, Popeye’s versus Chick-fil-A, and this whole thing, and it’s created quite a frenzy. But yes, a marketing genius, if you will.

James: Oh, and the fact that they ran through — they being Popeye’s, ran through their entire three-month supply of chicken in two weeks. That tells you that they’re on to something. There is pent-up demand, and then the social media aspect of it was huge.

Elaine: That was huge. I think for a period of time, this sandwich competition was the top trending topic on Twitter in the US and worldwide. So this was like this viral social media thing, and it’s getting consumers in the doors. They want to know what it’s all about. I mean, I myself, this is where I’m seeing this. It’s all over Twitter, the back and forth, and now it makes me curious. I want to go, and I want to check it out. So, you know, that’s how that works.

James: Yeah. Well, after this is over, we may run by Popeye’s.

Elaine: Let’s check it out.

James: So, if they were not happy because they couldn’t get their chicken, they weren’t happy with Silicon Valley either. And that’s something that’s kind of new. Consumers have loved technology and technology companies for years, but for the first time ever, you’re really seeing consumers press for changes in how the big five, they’re known as the FAAMG companies. F-A-A-M-G, FAAMG, and that’s Facebook, Apple, Amazon, Google, and Facebook.

Elaine: Got it. Well, let’s walk through them. Let’s walk through some of the issues that each company faced this year. Let’s start with Facebook, James.

James: Okay. We’ll start with Facebook. So, the 800-pound gorilla, or the elephant in the room, pick your analogy, is the $5 billion settlement with the FTC for privacy violations. That’s the largest fine the FTC has ever negotiated. They wanted more, but they took the 5 billion, but that’s not the end of it for Facebook. And that was for privacy violations around allowing third-party companies to come in and have access to Facebook users’ data.

Elaine: Sure.

James: But now, they’re also being investigated for antitrust over their advertising practices, and they’re facing billions of fines, too. In Europe, over the same kinds of issues around how they target individuals with advertising, how that advertising is priced, how they gather permission if they gave gather permission.

James: So there’s a lot of things that are swirling around Facebook, and that’s going to go on for at least through 2020 and maybe longer.

Elaine: Absolutely. I was just going to say; it’ll be very interesting to see what unfolds in 2020 and particularly what regulations will come into play based on all of this. It’ll just be very interesting to watch.

James: Yeah, and they also wanted to get into cryptocurrency. They wanted to have their own currency, and that went over like the proverbial lead balloon. It took about two nanoseconds for Congress to go, “Wait a minute, we just had hearings with you people, and now you want to have your own currency? No.”

James: So, there is no small amount of the analogy of, “It’s not that we shoot ourselves in the foot that surprises us. It’s how fast we reload.”

Elaine: Oh, great analogy. Hey, let’s move on to Amazon.

James: Amazon has been one of these companies that everybody loves, and they forget that when they first started out in the late ’90s, all they did was sell books.

Elaine: Exactly.

James: And now there are very few things they don’t sell. You can buy a house on Amazon at this point. Literally.

Elaine: You can buy — okay, my kid is in school, and they’re doing a dissection of owl pellets, and I thought, surely we must have gone to some veterinarian, I don’t know, in the sticks, but no, James, they bought them on Amazon.

James: Of course, they did. Of course, it did. So Amazon, this year, it was about Alexa.

Elaine: Yes.

James: And the fact that Alexa was listening, and it wasn’t so much Alexa was listening because everybody sort of assumed that, but it was, Alexa was recording. And it wasn’t even that much except that people were listening to those recordings, and Amazon’s story about that was, “Well, it helps us make Alexa better.”

James: But, again, as we said earlier, it’s not the fact that you did it sometimes it gets you in trouble. It’s the fact you didn’t tell anyone, and that’s what happened with Alexa that also followed on to Apple. That’s also followed onto Microsoft and any of the other groups that have these smart speakers. They also got in a little bit of trouble with trying to figure out where they’re going to put their new HQ2 headquarters.

Elaine: That’s right. That’s going to be a very big deal here in this area.

James: Yep.

Elaine: So, we talked a little bit about Apple, a little bit about Microsoft. Google. Google was fined for violating COPPA, the Children’s Online Privacy Protection Act, and this prompted the FTC to look at updating the laws, and they have also been fined by the EU for their privacy and data practices. So, that’s another big thing that happened this past year. And it’ll be very interesting to see what updates will come with COPPA in the year ahead.

James: Yeah, and the other big issue with all of these groups is privacy.

Elaine: Right.

James: You know, we’ve used that word a lot. We’re going to hear a lot about it in 2020 as well. A lot of it has to do with the data that’s being collected and used about consumers, and it’s also about data breaches.

Elaine: You know, speaking of data breaches, it almost seems like, James, we do have this conversation every year. There’s data breaches. Looking at your watch, it’s that time again.

James: Like clockwork. Yes.

Elaine: Yeah. But every year, there are a string of large data breaches and more cyberattacks and, I don’t know, it just doesn’t seem like it’s getting any better.

James: You know, there was a great question at the end of 2018. So, just for a quick little bit of context, for the first time in more than five years, in 2018, we actually saw a drop in the number of data breaches. And so, there was this outstanding question, it was, “Well, in 2019, will we see that trend continue or was 2018 a blip?” And we now know the answer. It’s a blip because we, in October, passed the same number of data breaches in 2019 for all of 2018.

Elaine: Wow.

James: So, we will end 2019 here in a few days with more breaches than the year before, and possibly a new record in terms of the number of breaches. We may not have as many records breached, but we’re going to have a lot of breaches. And that just says something about how this issue continues to move.

Elaine: Right.

James: And it’s something that’s hard to solve.

Elaine: Yeah. And speaking of privacy, there was a report that went out from the FBI that said, “Businesses paid more than $2 billion to scammers,” something known as the business email compromise. James, can you just tell us a little bit about that, and who should worry about this?

James: Well, that’s part of a trend — because large organizations are really beefing up their cybersecurity protections. So, the scammers are moving downstream. They’re moving to the medium and small businesses. And even a medium business can still be $1 billion business these days. 

James: So, business email compromise is just a new way of doing an old thing. They send an email into an organization, they probably have broken into it, they’ve hacked it, and they are able to convince somebody that that email is real. It looks so real. It may have even come from within their own email system, but it looks so real, and that email says, “Pay Bob $250,000, and here’s the bank account number,” and it comes from the CEO, or it comes from the CFO. It comes from somebody that would say, “Pay somebody,” and they do.

Elaine: Right. Right.

James: And then, Bob calls two weeks later and says, “Where’s my money?” And that’s the only time they realize, “Wait, I’ve been scammed, and my system has been hacked.”

Elaine: Compromised.

James: And this year was the first time we really saw that take off in the small and medium business world and that’s going to continue.

Elaine: Got it. So it’s small and medium-sized businesses that should kind of take a look at that and then worry about that.

James: Yeah. Well, everybody should. All businesses should, but those in particular because they don’t have the same resources as a Fortune 500 company.

Elaine: Got it. Well, earlier we talked about meatless meat. We talked about chicken. Let’s talk about cookies, James. And I’m not talking about the kind you eat, though, here.

James: Yeah, yeah. Okay. Well, cookies are how we track people when you move around the Internet. And so, if you’re a marketer, you’d depend on cookies to give you the data necessary to help you build your ad campaigns. The European Union last year adopted a new privacy law, and this year it really became effective. And what we’ve seen is a loss of data because you can’t use cookies without getting permission. And now, we’re getting ready to see the same thing in California with a loss of data. But that’s a topic for our next episode.

Elaine: Yes, we’re going to get there in a minute, but yeah, it would appear, though, because businesses don’t want to play by two sets of rules. Larger US companies are adopting the European rules for their US operations.

James: They are.

Elaine: So, that’ll be interesting.

James: They are. Microsoft, in fact, just announced that they are going to make the California privacy law corporate policy nationwide.

Elaine: Okay. Can you repeat that one more time?

James: Microsoft-

Elaine: Got it.

James: … is going to make the California privacy law corporate policy nationwide.

Elaine: Got it.

James: And we’ll talk about that.

Elaine: We’ll talk about that.

James: — on our next episode, which will air on January 1st. A look ahead at what to expect in 2020. So, Elaine, thanks for coming out to play on Christmas Day.

Elaine: James, thank you so much for having me.

James: And thank you for listening to the BBB National Programs Better Series. Don’t miss an episode by subscribing to the Better Series by visiting our website, bbbprograms.org, then click on the podcast tab. You’ll find all of our podcasts there where you can listen on your Apple Podcast app or your favorite streaming platform.

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