I’m not sure how many people think consciously about the business plans of the service providers that they start using, or at least relying upon. I don’t do it terribly often, but I do sometimes, and I thought I would share some words on the topic, because I do think that the world would be a better place if we did think about the effect of our choices to the wide world.
I have for instance wondered aloud, over the years, on Twitter and even on this blog, about the fintech company Curve. Their services are actually interesting and valid… but they do not offer any interesting value at a premium — I would never pay for their “Curve Metal” tiers, because it just doesn’t add up. I couldn’t just figure out how they were expecting to keep running, given I expect the majority of their “customers” are consumer end-users that would follow the same procedure I followed: sign-up for the service, using the £5 offer, use it for the 90 days of free cashback, possibly use it a time or two while traveling, and otherwise just keeping it as a backup card. Before the pandemic I also wrote how they were giving out more free money, but more recently they decided to start crowdfunding. And they became very loud when they did. Which is what reminded me I had a half-drafted post on the topic (this post), which I should probably resurrect (which I did, since you’re reading this now).
Before going back to Curve and their crowdfunding, I want to point at two sayings that you’ll keep finding around you, when you discuss businesses, products, Internet, and privacy: «If it sounds too good to be true, it probably is» and «If you are not paying for it, you’re not the customer, you’re the product». These are good places to start a discussion, although I think there is a lot of nuance that is lost when trying to (over) simplify with these.
Full disclosure: I work for a big company that, primarily, offers services to end users free with ads, though the product I personally work on not only does not relate to ads, but does not even have ads in it. And while my previous employer was another big company that is part of the “AdTech” business (and in there I did work on ads systems for a long while), I have discussed ads in the past, and I even ran ads on this blog (back in the days before stable employment), so you can imagine that what I’m going to be writing about is my personal opinion and does not represent that of my current, past, or future employers.
So why do I think it’s important to figure out the sustainability of service providers? Well, because it becomes a problem for the whole of society when a fraudulent or scammy provider gets a certain about of market share, even if sometimes not evenly and not in a way that most people would be able to connect together. For instance you can take the examples of Enron, Bernie Madoff, Theranos, or Wirecard — organizations that promised too-good-to-be-true services and profits, and ended up bust, with different blast radiuses. For the last one we don’t even quite know yet what the blast radius will be once things settle down: the German financial services environment is likely going to be reshaped by last year’s scandal, and so it appears will be EY.
Though this is clearly not limited to financial services (VPN providers seem to be pretty much in the same position), it does look like the likes of Curve and Revolut are easily the most visible cases where a company apparently lacked a sustainable business plan, and decided to turn to a crowdfunding campaign — Curve just had one this past May, and it was so noisy that I know a couple of people who went on to find a way to delete their account (and the app) simply because they got tired of their pushy notifications (not a typo).
Now, that might sound not too bad — after all, crowdfunding for the most part just means someone is willingly going to pay to subsidise other people’s “free money”. But the next thing that Curve did after that was to increase referral bonuses for new users to £20, from the previous £5, and that smells to me even more fishy — because that sounds like trying to bring in a mass of users hoping that enough of them can’t figure out that the premium options of Curve are not worth the money.
On the other side of the tracks, Revolut has been pushing more and more for cryptocurrencies, which I’m not going to even pretend is a neutral thing. I care enough about the environment that their consumption alone makes me angry, but even more so, I find that the amount of scams related to cryptocurrencies at this point are wide enough to show that the whole concept is hostile to society. I do not support nor recommend Revolut to new users unless they live in countries like Ireland where there is no other option – in London, using Revolut feels like subsidizing scammers by lending respectability to cryptocurrencies.
But at this point, neither of those appear to have reached the full consumer scams, so it should be fine, right?
Well, let’s take a different example with the VPN market. I have complained over on Twitter a few times how I blame us geeks for the amount of VPN scams that are out there. Privacy maximalists tend to scare people with the idea that your ISP, the Starbucks, or the airport lounge you’re using can see everything you do — and while it is definitely the case that there’s a lot more data going around than you may think, ads such as those ExpressVPN pays the otherwise excellent No Such Thing As A Fish podcast to air, that suggests that your ISP would be able to tell what you’re Googling are not just falsehoods, but proper FUD.
But even accepting that ExpressVPN has no ulterior motive and are totally legit – I have no idea about that, I only used them before while in China – and leaving aside the fact that VPNs have huge targets painted on their backs, there’s still the matter that you need to trust your VPN provider. Which may or may not be more trustworthy than your home ISP — the two of of them having pretty much the same power. Most of the review websites seem to be talking more about commissions than trust, because the worst part is that there is nothing that allows you to verify their statement that they are not logging your traffic in the same way they keep insisting your ISP is doing.
So how do you trust a VPN provider? Well, for a start you may want to start considering who their founders are and how they get their money. And you’d be surprised how many dots you can connect this way. For instance, last year CNET wrote about Kape Technologies, a company that bought a Romanian VPN service called CyberGhots. In that article, they also noted that in addition to CyberGhost, the same parent company bought two more VPNs:
After buying CyberGhost, Kape then bought VPN ZenMate in 2018 and more recently Private Internet Access, a US-based VPN, in a move which Erlichman said in a press release would allow Kape to “aggressively expand our footprint in North America.”
Now, the problem is less about a single parent company owning multiple VPN services as they were different brands — this happen all the time in many other fields. Just look at the relationship between Tesco Mobile and O2, or banks such as Halifax and Lloyds. But the rest of the article does make for a good build up for why the whole situation is a bit suspect.
But more importantly, you may have heard of Private Internet Access before — they are the company that started heavily sponsoring Freenode a few years ago. And if you have been paying attention to Free Software projects’ communication in the past few months, you probably know by now that Freenode is a trash fire now. So given those connections, would you trust anything that has connections to these organizations and people? I clearly wouldn’t.
This same problem with trust and business sense applies to other businesses. With the exception of B Corporations, most companies out there are intended to make money. If nothing else, they need to make money so that they can pay the wages of the people working there. So I don’t generally trust companies that appear to be giving everything away — and rather prefer those that, if they are making money with ads, say so out right.
In the case of Fintech services — Wise (formerly known as TransferWise) is my example of choice for a company that is transparent when it comes to the cost associated with their services, and makes a good case for why they charge you, and how much so. I really wish more of them did the same because it would make it easier for people to choose how much trust to put in a company. Unfortunately it appears that the current trend in the market is to push as much grown as possible for companies to grab a captive audience before turning on the monetization screw.
Important note: this blog post was written before Wise announced they intend to go public (it was previously rumored, but I didn’t spot that). I guess I should now disclose that I will most likely consider buying some stock of the company, though probably not on the IPO day. We shall see. As I said, I do like their business sense.
Going back to a moment to that «if you’re not paying for it, you’re the product» as well — well, I don’t agree in full, but this is something that people do need to be keyed in to look out for. In particular, I don’t think that ad-supported businesses should disappear, and that everything should be hidden behind a paywall, because I do think that having wider access to information without making it costly is a good thing. But also I do think that there are services that are often crossing the line into being creepily interested in your data rather than “trade it” for useful information.
But I also think the scrutiny is often placed more on the big, established companies rather than the “scrappy” startups, or the more consulting-like companies. Heck, a few of you reading this are probably already ready to complain that both my current and past employers are seen as data hungry — but I can tell you that both companies, at least during my tenure, would never have someone state on a stage that collecting data from IoT sensors and just throwing it to a ML pipeline to gather unexpected insights, as it would go against every one of the privacy and data handling trainings and commitments…
And yet John Roese from Dell EMC stated that in his opening thoughts for LISA 16 (go to minute 44 in the open access video) in what sounds terribly like an advice to startups. To be honest, that’s not the only cringey thing in that opening talk — from a technical point of view, his insisting that persistent memory means you can’t just reboot a computer to reset the state of memory (as if re-loading the data in memory from scratch wouldn’t happen on request, whether this is persistent or not) is probably a worst phrase.
What I’m trying to say is that you need to be sure who your friends are, and it’s not as easy as to expect that all small players are ethical and all big ones are not. And asking yourself “how are they making money, if at all?” is not just allowed — it should sometimes be considered a necessity.