Hello Gobbledeers,
How’s it going? I don’t know about you, but me taking time off from writing new editions of this newsletter has been a great idea. Thanks for letting me do it. Plus, I’ve been trying to send columns from a few years back so many of you haven’t seen these at all. And yes, I’m just trying to make myself feel better.
I did want to share something new (so you don’t skip these rerun issues thinking there’s nothing new in them).
This is from a Wall Street Journal article about Jersey Mike’s getting ready to go public:
Y’know how as software marketers it’s incredibly challenging to do just about anything in marketing? And then measuring its success? And connecting all the systems you need together so you can run marketing campaigns and measure them and then collect leads and score them and get them into Salesforce and on and on and on and on?
And then I saw that article about how Jersey Mike’s has been on a tear since a private equity firm bought them, and one of the examples they shared about their brilliant product and marketing expertise is that they now sell chicken salad.
We all chose the wrong business.
Moving on….
Today we’ve got one story in several parts (it’s best if you read that in the Ira Glass This American Life voice):
Why do I keep reading the same story about fintech darling Klarna? The answer involves Mott the Hoople, IPOs and a lesson about what makes for good PR. Also a theory I have about life.
And someone wrote in the comments last week that if I stop asking people to share Gobbledy that will make it more likely that they’ll share Gobbledy (from the movie Swingers: “If you act like you don’t need the shit, then you get the shit for free.”). So…
Part 1: A Theory & Mott the Hoople
I have this theory that has nothing at all to do with marketing. Would you like to hear it?
No? Hm, Substack doesn’t offer a “please skip ahead past the blabbering” feature (yet).
Yes? Oh good.
Back in high school, way before Internet times, when you couldn’t find the answer to every single question that popped in your head, my friend Matt and I had an ongoing discussion about the song “All the Young Dudes.”
Specifically, we often heard the song on 92.3 K-Rock (New York’s “Classic Rock” station, which is funny because the songs they played were from maybe 15 years earlier, which would be like if today a “classic rock” station referred to songs written in 2010).
And for whatever reason, whenever it was played the DJ would not say the name of the song or the band (I blame The Greaseman.)
It wasn’t clear from listening that Ian Hunter (it turns out) of Mott the Hoople (it turns out) was even singing the words “all” “the” “young” and “dudes.” I heard something more like, “Aldyun dooz.”
I sort of assumed it was David Bowie (who, again - it turns out - actually wrote the song, but is not the person singing it), because it sounded like Bowie (not a crazy idea). But because I couldn’t understand “all” “the” “young” and “dudes,” there was nobody I could ask, “Who sings that song called “All the Young Dudes.”
It was, entirely, a mystery to me.
Until some point later, a DJ (probably at that point in my life at Detroit’s Classic Rock 94.7) said, “And before Bob Seeger we heard ‘All the Young Dudes’ by Mott the Hoople.”
So here is my theory (the one from 8 paragraphs ago): every open question in your life will one day be answered.
I don’t mean the big questions (why are we here? why do bad things happen to good people?), I mean the very small questions: Who sang that song Matt and I heard on the radio? Why did the girl who worked in the video store next to the grocery store where I worked in high school look so familiar? Why was there one random episode of The Brady Bunch about some other family adopting kids?
I believe that by the time we’re all done here, we will have found out the answers to all the tiny open questions we have. Not the big questions, just the little ones.
Part 2: A Small Mystery about AI Hype Might Be Answered with a Conspiracy Theory
Similarly (but also really not similarly at all) last June I wrote a Gobbledy column asking this question:
Who has the incentive to push the narrative that generative AI will change everything and everyone’s jobs are screwed?
I then asked this question about buy-now-pay-later company Klarna, to which I did not then have an answer:
Why was Klarna’s CMO telling the Wall Street Journal that it saved $1.5 million by having Dall-e and Midjourney create marketing images? And why did he say, “I don’t have a vision where we replace all humans. I do think that the best marketeers are going to 10X [multiply] their impact and efficiency because they have these tools.”
The broader question I had was - what’s really driving the hype around Generative AI. Because there’s a difference between there being a new technology that will change the world and ABSOLUTELY MASSIVE HYPE around a new technology.
[Nerdy Conspiracy Theory Alert]
Earlier this week I read a conspiracy theory in the fantastic newsletter Garbage Day that I thought could be an answer to that question:
“You remember the big crypto boom in 2021? You know how the bottom fell out on the whole industry and a bunch of crypto evangelists were left with massive server farms and suddenly converted into AI boosters? Huh, it’s almost as if there’s a connection there.”
In other words, the people who invested in servers to power the crypto boom (and then bust…and then later boom) suddenly pivoted to hyping AI because they were stuck with massive server farms that had to be used for something. Hm.
[End of Nerdy Conspiracy Theory Alert]
Part 3: A Small Question about Klarna Is Answered
Like I said, all open questions in your life will one day be answered, and after asking the earlier question about why Klarna’s head of marketing was talking up their use of Gen AI, I started to notice that Klarna’s CEO was always in the press talking about how they’re using AI tools to reduce spending and cut staffing. I noticed this quite a bit: Lots of outlets wrote about this. (Sample headline: “Klarna’s plan to swap workers with AI…”)
And I started to wonder - Why is Klarna’s CEO constantly talking about using AI to cut costs and fire people?
Well, that question was answered this week in a NY Times article titled, “Why Is This C.E.O. Bragging About Replacing Humans With A.I.?”
That was (basically) my question! Thanks NY Times!
If you haven’t followed any of this (I’m jealous), the CEO of Klarna has gone on podcasts and such (I don’t know what I mean by “and such”) and talked variously about using AI to (I’m quoting the article here):
Save $10 million in marketing costs by using fewer photographers (?). (Is $10 million a lot? I’m not sure.)
Power “the company’s chatbot [that] does the work of 700 customer service agents.”
Prompt the company to slow or pause hiring for the roughly 10 percent of its jobs involving back-office roles like human resources.
Allow his company to largely stop hiring entirely as of September 2023, which he said reduced its overall head count to under 4,000 from about 5,000. He said he expected Klarna’s work force to eventually fall to about 2,000 as a result of its A.I. adoption.
Let’s put aside whether any of that is true, and whether AI is capable of doing what he says they’re doing with it.
One other thing you should know: Klarna’s valuation has dropped by more than 80%. They had to lay people off. They were trying to IPO, but the market for IPOs was terrible, and post-pandemic, when people slowed their use of buy-now-pay-later tools like Klarna, their growth had slowed.
If you’re the CEO in that situation, and you’re trying to go public, what do you do?
Part 4: The Moral Imperative of Self Promotion
You have lots of options, of course. But one kinda fun option is to go out to the tech community and business press and talk nonstop about how far ahead you are in the use of AI to cut costs and improve efficiency. Even if none of that is exactly true.
Said one former employee in that Times article: “…the rhetorical emphasis on A.I. was no accident. According to the manager, there was a sense within the company that Klarna had lost its sheen in the media and among investors, and that [CEO] Mr. Siemiatkowski was desperate to get it back.”
And maybe you couch the whole thing as a MORAL responsibility? Quoting the CEO:
“We have a moral responsibility to share that we are actually seeing real results and that that’s actually having implications on society today,” he said. “To encourage people, specifically politicians in society, to actually treating this as a serious change that’s coming.”
Then he acknowledged that another part of the motivation was “self-promotion, for sure.” He added, “We’re regarded as a thought leader.”
So the CEO of Klarna had a moral obligation to tell politicians (?) about the power of AI and also, aside from that moral obligation, he was talking about AI because it was good for self-promotion. But also don’t forget about the moral obligation.
But also also, the CEO needed to get investors and the tech community excited about Klarna as an IPO prospect, and one way to do that was to say that you’ve embraced AI like nobody else, and you’re already seeing a massive financial impact on the business. Which, of course, would make your company a great IPO candidate. Obviously.
Part 5: What If This Was Actually a Truly Brilliant PR Strategy?
We don’t talk all that much here about PR and how companies can use it as part of their marketing strategy.
I think that every software company I’ve ever worked for has hired a PR firm. And every software company I’ve ever worked for (except 1) has ended up complaining about their PR firm not getting them the press they believe they deserve.
The issue is, generally, that the company has nothing press-worthy to say. “We got a new client” or “We think AI chatbots are going to be important” are not press-worthy. “Our CEO is happy to comment on some piece of news” is not press-worthy. No press outlet that you care about will write about your CEO, and no press outlet will care about what your CEO thinks.
Unless.
If you want to have a successful PR strategy for your software company, there are two things you will want to keep in mind:
“Getting press” is not a PR strategy. “Getting the CEO quoted in an article” is not a PR strategy. I think I’ve written this here before (maybe?) but back when I worked at Hilfiger, the head of marketing told a story about when she worked for Giorgio Armani. She was in a meeting with Mr. Armani when she showed a spread from GQ where they had included Armani socks. As a young person working in marketing she was beaming when she showed Mr. Armani the credit from the magazine mentioning the Armani socks. He replied, “That is not a credit. That is a sock.” Meaning - just because you’re in the media doesn’t mean it’s accomplishing anything. A great PR strategy involves deciding which 1 or 2 audiences you want to speak to, and which 1 or 2 messages will be interesting enough that press will want to write about it, and will resonate enough with those audiences such that they will take action.
Last week I quoted someone saying, “Shamelessness is the most durable moat.” Glomming onto a trend, and then making outrageous claims about it is the foundation of a great PR strategy. You ever read about Ryanair CEO Michael O’Leary telling a reporter how they’re considering charging to use the bathrooms on their planes? Or having airplanes without seats? Why was that good PR? Because their message is “we are trying to save every penny so we can offer you the lowest fares.” They’re speaking to consumers. And they take that idea and then 100X it - “you’ll have to pay to use the toilet!” And they have a CEO who has no shame (in O’Leary’s case, I mean that in a good way.) Suddenly the story is - can you believe how far they’re willing to go to make the flights cheap?
Klarna’s PR strategy was brilliant: They had a clear target audience: investors. They had a goal: have a successful IPO in the face of a terrible IPO market for companies likes theirs. They had shameless CEO who won’t let the facts get in the way of the story. And they took a trend (AI) and 100X’d it (1 chatbot was better than 700 workers and we’re not hiring them back!).
And it worked - at least it worked inasmuch as it got tons of media outlets to print the exact story Klarna wanted them to print. Let’s see how the IPO goes.
If you’re running marketing and you’ve had the annoying conversation with your CEO where that person is asking you why you’re not getting more press, ask them: “Are you willing to be shameless?” If your CEO asks any follow-up questions, then they are not willing to be shameless, and you should stop bothering trying to get press.
Epilogue: I Lied, If You Have Enough Shamlessness Then You Don’t Really Even Need a Message
Gobbledy is a politics-free zone, but sometimes politics, messaging and tech intersect. From last week:
“TikTok, we’re going to be doing something perhaps … and we might put that in the sovereign wealth fund, whatever we make, or if we do a partnership with very wealthy people — a lot of options, but we could put that as an example in the fund…”
Exactly.
As always, thanks for reading to the end. The end is the best part.
If you’d like to spend 30 minutes chatting about marketing stuff, I’d enjoy that. You can set up a time here. And it’s free! I mean, what’s free anymore?
FYI: When singing, if you subtlety make “dudes” sound like “dooz” it will rhyme better with “news”… 😂