Sunday Snapshots (01/10/20) – If Then, Rhinos, and Nostalgia brought to me by Starbucks

In which I write about the failed history of Simulmatics

Hey everyone,
Greetings from Washington, D.C.!

This week’s events in the city reminded me of a particular chapter in Robert Caro’s The Master of the Senate titled The General and The Senator. In it, General Douglas MacArthur who had just been fired by Truman comes to Washington, D.C. to give a speech and defend his policies. After he’s done, he started going down Pennsylvania Avenue in an open-car in a full uniform along with motorcycles and armored personnel carriers in front of him. As Caro writes, “It was a parade more fitting for the capital of a South American republic ruled by a junta than the capital of a democracy.” George Reedy, who would later become Press Secretary for Lyndon Johnson, said about that day:

The only time in my life that I ever felt my government to be fragile. I’ll never forget watching him go up Pennsylvania Avenue. I had a very strong feeling that had he said ‘Come on, let’s take it.’ and had started to charge towards the White House… [T]he adoring crowds that thronged the streets would have gone with him."

Eventually, a Senate committee under the Chairmanship of the Senator from Georgia, Richard Russell Jr., would cool down these populist passions over the course of months.

I hope that that anecdote provided one example of how even though things can seem to be at a breaking point, they could end up being lost to the footnotes of history in the long arc of events. Maybe that’s too hopeful. But at the very least, I hope you can spend this Sunday evening (or whatever time it is when you are reading this) being a little bit distracted from the doom scrolling.

In this issue of Snapshots, I want to explore:

  • A history of the Simulmatics Corporation

  • The last Northern White Rhinos

  • Nostalgia and Starbucks

  • Turning wood bowls, Money Stuff, and Oat Milk

Book of the week

In the postmortem of the 2016 Presidential elections, millions of Americans and hundreds of millions worldwide first found out about a nondescript company named Cambridge Analytica. That name and how it scrapped Facebook data to influence the undecided voters in the election became a core case study in the rallying cry for increase regulation of internet platforms over the last few years.

And it seems that postmortem has never really ended. While Google Trends (the graph above roughly look at search volumes by time) shows a peak in mid-2018, Google Ngram (which is approximately a measure of the number of times a given word appears in published books) has a growth chart that would be the envy of even the hottest Silicon Valley startups.

There is something deeply upsetting about the ability of an algorithm to predict human behavior. And the idea that voters were being manipulated in order to win an election seems sacrilegious to many in 2020.

Think about how it would have played out when computers occupied entire rooms and required days to run a regression model. Think about how it would have played when most Americans had only interacted with a computer through pictures. Think about how it would have played out in 1960.

That’s where I picked up If Then by Jill Lepore after last week’s introduction. In the run-up to seemingly contested but eventually one sided affair of the 1960 Presidential Election, John F Kennedy’s Presidential Campaign asked for a few reports from the Simulmatics Corporation – the first predictive analytics consulting firm in the world of substantial reputation – about how the African-American vote in certain states would spit between Democrats and Republicans (the parties were much less polarized back then.)

That started a decade-long partnership between successive Democratic and Republican administrations where the Simulmatics Corporation provided everything from data journalism, dynamic modeling of population planning in Vietnam, riot prediction algorithms in the shadow of the Civil Rights Movement, and the primordial ooze for the internet.

Almost everything it tried to do was unsuccessful. Actually, nothing that Simulmatics ever did ever had potential for success. They were simply ahead of their time. Lackluster data – both in terms of quantity and quality – combined with a lack of rigorous methodology meant that the mad scientists were often just using data to justify preconceived notions of what their government counterparts wanted to hear without clear causal mechanisms.

Lackluster still was the government’s credibility. Lyndon Johnson’s campaigns in Vietnam led to a deep skepticism about anything that was associated with the military establishment. While Eisenhower just a few years ago had coined the term “military-industrial complex,” the university-defense-corporation complex was also being scrutinized by liberal politicians and public. And almost all of Simulmatics’ projects for the government were funded by the Department of Defense.

For all purposes, the company was stillborn. But it still functioned in theory like a zombie going the motions for more than a decade.

And then it died. But what did not die was the ever-tantalizing temptation to predict human behavior. The Simulmatics Corporation is the spiritual predecessor of that continued search for that elusive key to the most elusive lock in the world – the human mind.

Long read of the week

The Last Two Northern White Rhinos On Earth: A gut wrenching story about how humans continue to wreck the biodiversity of the planet under the spell of superstition. The latest victim? Northern White Rhinos, of which only two remain in the wild. Since both of them are female, they will be the last of their subspecies. These most silent yet salient stakeholders of our planet have been poached to the single-digit populations.

Business move of the week

Last week, I had my first wave of college nostalgia from a most unlikely source. The Starbucks app on my phone reminded me that I had points or “stars” that I were going to expire. I have not been to a Starbucks for almost a year. These stars were the remnants of that delicious cold, black drink that fueled late night library sessions that I would spend studying for midterms and finals and working on projects (including this newsletter.) But it fueled much more than that, the Starbucks next to the library was a place of solace and connection. A place where people gossiped between hours that at least in part crafted their futures. A place where you could forget about 124% you needed to get an B+ in a class or an impending midnight deadline for a group project where you had to do all the work at the very last minute. It was a fleeting solace, but it was solace nonetheless.

That reminded me of Starbucks and college and so much more. So for this week’s business move, I’m featuring the most popular post that I have ever written. It’s about Starbucks’ Rewards program and how it is tightly integrated with its app.

From the September 20th, 2020 issue of Snapshots:

If you’ve been a Snapshots reader for a while, you’ll know that I have a bit of a hobby of following merchant-specific rewards programs. Uber Rewards has particularly received a lot of attention from me. But my favorite is the Starbucks rewards program.

Why?

Because there is no other program that is so tightly integrated with the broader business strategy.

Here’s an example of this that I noticed this week:

  1. When you log into the Starbucks app, you see that rewards, not purchases are at the center of the Starbucks app. This is driven by the intuition that app purchases are driven by repeat customers so they will be willingly to go through a couple of taps to make a purchase. It also offers them the chance to highlight the most important things – this week, this was how the rewards program is changing.

  2. They are changing the program so that pre-loading a card gives you 2x the reward points for purchases compared to 1x for all other payment methods. Incentivizing customers to preload a card to pay for their daily coffee by offering 2x baseline rewards seems like a win for customers with no upside for Starbucks. But according to their 2019 annual report, they hold $1.6 billion in these cards with an average of 10% breakage – that’s value that will never be redeemed. So effectively, Starbucks is borrowing from its customers at a -10% interest rate.

Every one who works on any type of rewards program should stop everything they are doing and deconstruct the Starbucks rewards program. It will make you so much better at your job.

Odds and the ends of the week

A mixed bag of a video and two articles this week:

🥣 How a Woodworking Master Makes Bowls: Mesmerizing. I could watch this all day.

✍️ A Columnist Makes Sense of Wall Street Like None Other: During the second half of my freshman year of college – the first half of 2017 – one of my mentors mentioned that he had read a particularly funny article about the recent Bitcoin rally on a newsletter named Money Stuff. A great profile on one of the best online writers of our time.

🥛 Oatly, The New Coke by Nat Eliason for Divinations: If you think Oat milk is healthy and it’s a part of your health-oriented New Year Resolutions, think again.


That wraps up this week’s newsletter. You can check out the previous issues here.

If you want to discuss any of the ideas mentioned above or have any books/papers/links you think would be interesting to share on a future edition of Sunday Snapshots, please reach out to me by replying to this email or sending me a direct message on Twitter at @sidharthajha.

Until next Sunday,
Sid