Why social media went woke

When Elon Musk took over twitter recently, one of the “drain the swamp” things he did was to get rid of the platform’s overt bias towards political correctness and “wokeness”. Out went most of the “trust and safety” team. In came Donald Trump (though he hasn’t tweeted since) and the guy who stupidly got himself arrested in Romania.

As some people in my office have never tired of saying, Musk let go of 70% of the company, and the app still largely runs fine (apart from some weird bugs that creep in once in a while). One part of twitter that is NOT running fine, though, is advertising – you might be able to guess that from the quality of ads you are getting served on your timeline nowadays. There are two theories behind this – one is that Musk got rid of most of the ad sales team, and the other is that advertisers don’t want to advertise on twitter given it is more prone to free speech now.

The latter was a bit of a surprising theory to me, since my assumption had always been that what advertisers largely care for is audiences, and relevance of the audiences to their products; and as long as the audiences were there, the advertisers would come.

However, something I heard on a podcast this morning on my way to work made me question this assumption. Listen to this (the link is from the approximate point I want you to listen):

So in this conversation, Jeff Green talks about “brand safety” in the context of advertising. What he effectively says is that advertisers are finicky about what kind of content their ads come next to. He says “right now I would say the value of user generated content has actually gone down dramatically because of brand safety”.

Back in IIMB, there were a couple of fellows who formed a quiz team called “Mary Magdalenes: The Reformed Prostitutes”. During our annual fest Unmaad, they conducted a quiz, which (I think) was sponsored by IBM. I I remember right, the title slide of the quiz said “Unmaad Open Quiz, brought to you by Mary Magdalenes: The Reformed Prostitutes”, with the logo of IBM (or whoever the sponsor was) somewhere on the slide.

The sponsors did not take to it too kindly – I was doing a quiz the following day and the sponsorship coordinators demanded to inspect my deck so that there were no such potentially embarrassing juxtapositions.

As it happens, one, or maybe both, of Mary Magdalenes: The Reformed Prostitutes, went into a career in marketing. However, contrary to the image you get by looking at advertising “creatives”, advertisers are fundamentally boring people. They are insanely risk averse, and very very loathe to bring even the slightest hint of controversy to their brands.

So, this is why social media goes woke. They don’t care about “misinformation” and “fake news” and porn and slander for the sake of you or me – as long as we are visiting their sites and looking at the ads there, they are happy. The reason they clamp down on free speech in the name of “trust and safety” is for the sake of the (normally rather boring) advertisers, who want certainty on the sort of content next to which their ads are shown.

And so, driven by risk-averse advertisers, social media platforms censor free speech and “go woke”, much to the chagrin of people like Musk and me.

Recently I read this fantastic essay by Robin Hanson on why most people are boring. Only a very long quote will do justice, but that too partially. You should read the whole essay.

If we act interesting, passionate, and opinionated in public, we are likely to seem to claim high status for ourselves, and to touch on sacred subjects, either by word or deed. And this makes us quite vulnerable to accusations of arrogance and violating the sacred. Because: a) the sacred is full of contradictions, so that saying truths clearly does not protect you, b) observers feel free to use complex codings to attribute to you intentions that you did not literally say (or have), and c) observers are much more willing to accept unfair and unproven accusations if they are seen as “punching up” at presumed dominant or evil races, genders, ages, professions, or political factions.

The degree of this danger is made clear, I think by the reaction of the “gods” among us. The public tone of huge powerful firms and other orgs is consistently “officious”, i.e., mild boring supplication.

Mild boring supplication is all okay. Just that they impose upon you and me with their ad dollars, meaning that places where their ad dollars go also tend to mild boring supplication. And thus for us, it is death by a thousand bores.

Finance is boring, once again

So IIMB goes to placements this week. Two months back, though, in the first class I taught there, in an attempt to “understand the class”, I asked my students to tell me their “most preferred employer”. The intention was to tailor the course in a way that would be more suitable for their prospective careers.

Thinking back at that class, there is one thing that hits me – very few want to do finance (again that’s no indication of how many of them will end up in finance jobs this week). I initially thought it was a biased sample – there was a course of the same name offered to the same batch in an earlier term, and those that had taken the course then were not eligible to take the course now. Given the primacy of spreadsheets in finance, I thought students more inclined towards finance would have taken the course in the earlier offering. But then thinking about it (without data to back me), that so few want to do finance doesn’t surprise me at all.

When I tried putting myself in the shoes of my students and thought of what jobs I wanted to take, I realised that there weren’t any finance jobs that I could think of. With the derivatives world having undergone several downturns in the last decade, no one recruits for derivative sales and trading from IIMs any more (if my information sources are right – they could be wrong). And if you were to take out derivatives sales and trading, there is very little that excites about the other finance jobs that recruit MBAs.

There is investment banking (M&A, Equity/Debt Capital Markets) of course, but the job is insanely fighter, and while it is ultimately a finance job, finance forms a small portion of your day-to-day activities there (secondhand information again). Venture capital and private equity are again ostensibly finance but again there is very little finance you use in decision-making there – other “softer” stuff (such as evaluating “quality of founding team”, etc.) dominate.

Then there is commercial banking, which is finance only in name, for most jobs for which they recruit MBAs (data from a decade back) are in the realm of sales or business development. There is the odd treasury or risk management job, but those jobs are small in number compared to the others. And corporate finance jobs see excitement very rarely (when there is M&A or related activity). You have asset management and research roles, but they are again not the kind that you would call as “exciting”.

In short, finance has become boring, again. Most jobs on offer to fresh MBAs nowadays are for roles that are fairly routine and “boring” for the most part, and while finance still pays well, there are no adrenaline-pumping jobs on offer there as there used to be a decade ago. And from the macro point of view, that is a good thing.

Because finance is fundamentally a boring job, and is supposed to be a boring job. If finance had become “exciting”, it was because finance people were doing stuff that they were not supposed to be doing! Like taking highly levered bets for example, or concocting derivatives so complicated that nobody – not even most traders – would be able to understand it.

I had written recently that people have stopped considering coding “cool”, and that we should do something about it. A similar thing is happening to finance, where MBA students are not finding it “cool” any more (but people will take up the profession since it pays well). However, this is not a problem, and nothing needs to be done about it. This is how things ought to be. Finance is supposed to be boring!

Anyway, this might be biased opinion since if I could roll back nine years and were asked to pick a job, I couldn’t see myself working at ANY of the companies that had come to recruit from IIMB back when I graduated! So perhaps my hypothesis about finance jobs being boring now is a result of all typical post-MBA jobs being boring! Perhaps that explains why I’m doing what I’m doing now – a “job” so atypical it takes a lot of effort to explain to people what I’m doing.

Oh, and coming back to finance, I’m four weeks though with my Asset Pricing MOOC, and have been totally enjoying it so far!