The Ultimate Consumer Products: November 19, 2017 Snippets
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This week’s theme: Another kind of tech giants, with another kind of power: drug companies. Plus news from Propeller Health and MeMed.
Two weeks ago in the “Tech Goes to the Principal’s Office” issue of Snippets, we began a series about what happens when the power of tech companies meets the power of the government. What kind of power dynamics are at work? Who has the power to influence behavior, and who has the power to compel behavior — which as we’ve discussed, are two quite different things? Although the tech giants today are certainly unprecedented in their global scale, this is hardly the first time that an industry has held so much power over the way our world works: as we talked about last week, the railroad companies a century ago had the same kind of “Platform Power” that tech giants enjoy today. Since they, and they alone, could move the goods and materials that other industries so desperately needed, attempts to regulate them like the Interstate Commerce Commission were largely toothless in their first few decades. That’s the power of platform businesses: you become a critical cog to an ecosystem larger than yourself.
Of course, today’s tech companies aren’t just platforms for other industries: they’re also innately consumer-facing businesses. Their power comes not only from the fact that we need what they’re selling, but also because we want what they’re selling. So we need to look at a second category of tech giants from the 20th century, who at one point were themselves poised as the most important budding scientific and business powers of the era: drug companies.
It’s not much of a stretch to suggest that pharmaceutical drugs are the ultimate consumer product. Big Pharma sells — or at least used to sell — drugs whose effects range from literally keeping us alive to making us feel alive, and everything in between. We don’t always think of drug companies as being consumer businesses, but they absolutely are; especially back when products like heroin, cocaine and amphetamines were marketed and sold directly to consumers under brand names. A century ago, it seemed like drug companies were at the tip of the spear of human progress, and their (now long-since banned) products like amphetamines and cocaine pushed that narrative a long way with the consumer. If we broaden the tent here to include tobacco and even alcohol producers, it’s pretty fair to think of them as a general category of businesses whose core value proposition is a pharmacologically-induced feeling or mental state. It’s not even that big a leap to suggest that any other discretionary consumer product — whether we’re talking media, entertainment, Likes on Facebook, expensive cars, whatever — is really just an alternate or inferior vehicle for a value proposition that can be administered directly in chemical form. Even today, our sales and marketing campaigns use the language and tactics of neurological response and addictive feedback. This is no accident; at the end of the day, all the products we crave are just different ways of releasing dopamine, serotonin or something similar.
Why bother repeating this point? Because again, in contrast to other industries like last week’s railroads examples, the drug makers’ power comes from the fact that we want what they’re selling. This makes regulation in the name of consumer protection a lot trickier. It’s one thing to regulate an industry in an effort to protect consumers from being price-gouged, but entirely another when “consumer protection” means imposing additional taxes and barriers (or outright prohibition) on something the consumer wants, in the name of their own well-being. And of course there are other products (fast food, for example) that aren’t great for our health either, but we don’t really regulate it at all. Although it isn’t difficult to make the case that many of us ought to be eating fewer french fries, we nonetheless live in a free society where people are free to make their own choices so long as they do not infringe on the rights of others. So how do we draw the line between fast food on the one hand and cocaine on the other, with something like nicotine lying somewhere in the middle? They’re all things we want; where do we draw the line, and then how do the government and the public converge to the same mindset? How does regulation like 1914’s Harrison Tax Act on Narcotics come to be accepted by the consuming public? (You can see where we’re building towards, when we eventually get back to talking about today’s tech dilemma.)
At its core, what we’re really doing when we regulate addictive drugs is saying, “We are regulating these for your own protection because you are not truly free to make this decision for yourself.” Regulation and enforcement typically hinges on two aspects of “non-freedom” here: 1) that if you’re addicted to a substance you’re not actually making a “free” decision as a consumer, and 2) if other people are impacted by your decision in kind (like with secondhand smoke, for instance) then they’re not freely choosing it either. The American public, with all its quirks and habits, is very sensitive to these freedom-related arguments; it’s no surprise therefore that tobacco industry executives (who knew full well how popular their products were) were nonetheless very worried about a shift in public sentiment in a way where “freedom” as a value was no longer on the tobacco companies’ side:
Tobacco Chiefs say cigarettes aren’t addictive (April 14, 1994) | Philip Hilts, NYT
So even though there’s a big difference between when we regulate tech platforms like the railroads (to protect consumers from rising prices) versus when we regulate tech companies like drug makers (to protect consumers by raising prices, or making products unavailable outright), the rationale can be viewed in a more consistent way if we think of it in terms of, “how actually free is the consumer?” It then comes down to a fight to compel (in the case of the railroads) or a fight to influence (in the case of drugs or cigarettes) in a way that makes its best attempt, for better or worse, to free the consumer to the greatest extent possible. Other countries, with different ideas around what freedom is and how it’s valued, may regulate things differently. It looks very different when we’re talking about a railroad platform versus when we’re talking about consumer drugs, and when we’re dealing with certain kinds of national political systems versus others. But we’ll have to keep this entire spectrum in mind for next week, when we talk about media, what “Freedom” means in the context of broadcast news and social media, and then eventually return to our testimony where Google and Facebook’s new powers are under the microscope.
Interviews with masters of the craft:
Qi Lu, COO of Baidu, discusses AI with Daniel Gross (podcast) | Y Combinator
A conversation with David Swensen | Council on Foreign Relations
Expensive land and its social consequences:
The staggering value of urban land | Richard Florida, CityLab
Richard Florida now sees the downside of urban revival | Noah Smith, Bloomberg
Working homeless forced to move in East Palo Alto | Louis Hansen, San Jose Mercury News
The art of information retrieval:
In the age of Google, reference librarians are busier than ever | James Hagerty, WSJ
Remove the legend to become one | Eugene Wei
On Unread Books | Umberto Eco, The Paris Review
Memories of early computer gaming:
Stewart Brand recalls first “Spacewar” video game tournament in 1972 | Chris Baker, Rolling Stone
The enduring legacy of Zork, forty years after its creation | Elizabeth Woyke, MIT Technology Review
The new tax bill — tax upon vesting is out, but taxing student benefits still in:
Update on stock options / RSUs issue | Fred Wilson
House GOP tax writers take aim at college tuition benefits | Erica Green, NYT
Other reading from around the Internet:
Your reckoning, and mine | Rebecca Traister, The Cut
Why sales quotas ruined Wells Fargo | Matt Levine, Bloomberg
RIP CompuServe Forums (wait, they were still a thing?) | Sean Gallagher, Ars Technica
In this week’s news and notes from Social Capital, in keeping with our theme of drug companies this week, we have a few announcements from the health care side of the family:
First, ExpressScripts and Propeller Health announced a big deal on Wednesday that will bring together Propeller’s technology and software expertise with Express Script’s size and patient base as we transform the way we care for asthma and COPD.
You probably already know Propeller: their physical inhaler technology and user-friendly app helps patients understand and track their asthma and other respiratory systems, and their research and data science capability has been put to work by cities like Louisville, Kentucky to better understand regional factors like air quality. But in order to take the next step in caring for patients’ respiratory conditions, Propeller needs something else: specialized humans who can help patients with their ongoing health progress. Pharmacists are the perfect people to provide this care: they’re highly trained, trusted members of the community who already have relationships with patients and who are already closely involved in dispensing medication. That’s where Express Scripts comes in: as the largest pharmaceutical benefit manager (PBM) in the United States, Express Scripts is a transformative partner for Propeller Health: as CEO David Van Sickle put it, “Through this partnership we’re getting to a size and scale we haven’t before.” We can expect Propeller Health’s products to first get rolled out to Express Scripts’ Pulmonary Care Value Program early next year, with an initial target audience in this group of likely over a half a million people. As their growth picks up, Propeller Health is hiring for a number of roles in both San Francisco and Madison, Wisconsin: if you know someone who might want to join the team, please send them Propeller’s way.
Across the ocean, MeMed is continuing to make incredible progress in their pursuit of one of the true Holy Grails of medicine: a blood test that can distinguish between bacterial and viral infections, and therefore help us conserve antibiotics to delay or prevent the emergence of antibiotic-resistant superbugs:
Since embarking on this challenge ten years ago, MeMed has made great strides towards solving this problem: from identifying the new biomarkers that can be used to discriminate between infections, to building a preliminary product that can be brought to test markets, to conducting the rigorous clinical trials that need to be undertaken, and now finally towards making this new superpower available to the world’s medical systems. As Eran Edan and the team write, “It takes years of work and thousands of patients to reliably establish the diagnostic performance of a new test, particularly one that can help revolutionize patient care. The findings of these three clinical studies enrolling over 2,000 patients, together with additional data emerging from early access medical centers that have already used the CE-IVD certified test to support management of over 10,000 patients, have generated exceptional high quality clinical evidence.” The hard work is finally paying off: with their three clinical trials now completed and their scientific claims validated, the next phase of hard work now begins.
You can read about MeMed’s contribution to solving the antibiotic resistance challenge, along with those of many other determined and inspirational scientists tackling this same problem, at the Longitude Prize’s website. It’s a good reminder that there’s a great purpose behind a lot of what we do: not just building businesses, but trying to solve some of the very hard problems in the world that could cause us great harm down the road. If MeMed has it their way, it’ll be a problem we never have to face.
Have a great week, and a wonderful and safe Thanksgiving holiday for everyone travelling to see loved ones,
Alex & the team from Social Capital
