The Decade in Review: Business

SOCIAL MEDIA

The Decade Facebook Didn't Get Away With It

When your company goes from being a staple of social interaction to "I can't remember the last time I logged on," you have a problem. Facebook may be the most consequential company of the 2010s, but it's entering the next decade battered by existential threats.

Rewind 10 years. CEO Mark Zuckerberg was Time's Person of the Year. His six-year-old kingdom had 500+ million members. But it was just starting "the process of taking over something even bigger than a market."

The 2010s

Facebook's 2012 listing was the largest U.S. tech IPO yet. But plagued by technical glitches and lawsuits, it was described at the time as "the biggest IPO flop ever."

In subsequent years the company rolled out live streaming, content hosting, chronological timelines, a phone (not saying they all worked), a dating service, a marketplace, payments, and stories. Now, it's even trying to create a cryptocurrency.

It wasn't all from scratch, and Zuck was venturesome:

• Facebook acquired Instagram in 2012 for $1 billion.
• In 2014, Facebook purchased messaging service WhatsApp for $19 billion and virtual reality startup Oculus for $2 billion.

As younger users turn away from the company's tarnished flagship platform, Instagram and WhatsApp have become Facebook's life jackets.

What happened?

Facebook stretched itself further than any social platform before it, and there were indeed growing pains. In 2013, users' biggest concern was "people sharing too much information about themselves." Today, worries include "subverting democracy," "undermining human rights," and "spreading false content."

From Russian interference in the 2016 U.S. election to ethnic cleansing in Myanmar, Facebook's been an unwitting vehicle for bad actors. Its platforms are ground zero for debates around child exploitation, free speech, fake news, and political advertising.

• The 2018 Cambridge Analytica scandal exposed lax data privacy and security practices—and showed how powerful Facebook user data can be in the wrong hands.

Today, Facebook is a social network...and a data broker and content distributor. Tech company, messaging service, artificial intelligence leader, service provider, birthdays reminder.

Why that matters

If you consider Facebook a country, with 2.5 billion monthly active users it's about the size of China, the U.S., Indonesia, Brazil, and Pakistan combined.

Companies make mistakes. But with a user base that large…failures to address the unintended consequences of things like misinformation and microtargeting can expose tens of millions of users or undermine political processes. An algorithm tweak can send businesses that rely on Facebook for distribution spiraling.

Many users (and lawmakers) feel Facebook's leadership has failed to react expediently to the company's real-world impacts and that Zuckerberg's tight-fisted control has staved off needed leadership changes.

Zoom out: Despite record fines, antitrust investigations, and weakness in its core platform, Facebook continues to post steady user and profit growth.

M&A

The Definitive 2010s M&A Hot List

Some deals were ripoffs. Dow Chemical and DuPont announced a $130 billion merger of equals in 2015. In 2017, DowDuPont was born. In 2019, DowDuPont completed its split into three independent chemical companies...down $57 billion in market value from the time the deal was finalized.

One was a giant steal. Facebook bought Instagram for $1 billion in 2012, when it had 30 million users and no revenue. Now, Instagram has over 1 billion monthly active users and an estimated $14+ billion in annual revenue for 2019.

Some deals hired great publicists.

• Amazon bought Whole Foods for $13.7 billion in 2017, but the deal felt like a turning point in Amazon's pivot to everything. In the year after the deal, Amazon added the value of the entire consumer packaged goods industry to its market cap.
• CVS also tapped the right PR manager for its $70 billion acquisition of health insurer Aetna in 2018, a deal that cemented CVS's own pivot to more than a late-night Ben & Jerry's & Midol purveyor.

Some deals never were. Our kids will still be covering chipmaker Broadcom's blocked bid to take over Qualcomm, and we pour one out for Pfizer's failed Allergan and AstraZeneca acquisition attempts. But the biggest letdown had to be Kraft Heinz's $143 billion effort in 2017 to buy Unilever, a deal Unilever execs deemed undervalued.

PRIVATE EQUITY

Private Equity's Not Looking Back

U.S. private equity deals have climbed steadily upward in both quantity and value, according to PitchBook. IT, healthcare, and B2B sectors made up the majority of deals.

From 2006 to 2017, the number of PE-backed companies increased 106% while the number of publicly traded companies fell 16%. In 2018, the number of private equity deals finally rose to pre-recession levels. It's just one indicator that private markets are "mainstream," according to McKinsey.

ENVIRONMENT

Silent Spring Got Louder This Decade

From 2010 to 2019, scientific reports on climate change went from "that iceberg looks close" to "is that door big enough for Leo?"

• A U.S. report in 2010 outlined the potential threats—rising seas, droughts, and disruption to agriculture.
• In 2018, the Intergovernmental Panel on Climate Change (IPCC) reported a wake-up call with a foghorn. It said the worst effects of climate change were likely to happen soon—as early as 2040.

Now activists, especially young people led by one well-traveled Swede, are calling for radical decarbonization.

What's biz got to do with it?

Everything. Since 1988, 71% of heat-trapping greenhouse gas emissions have come from 100 fossil fuel producers, according to a CDP report. And both consumers and experts have turned to the biz world for solutions when government fails to take action.

• Some businesses have had to answer for their pollution. ExxonMobil shareholders pushed the company to adopt reduction targets in line with the Paris Agreement. It also played defense over its campaign of climate change denial in the 1990s and 2000s.
• Others have embraced environmentalism. Companies like Unilever, Tesla, Ikea, and Google adopted sustainability targets, but have struggled meeting all of their ambitious goals.

Bottom line: The IPCC says we need to transform the global economy if we're going to avoid widespread catastrophe.

CORPORATE GOVERNANCE

Businesses Just Want to Play Nice

Consumers are unhappy about a lot of things: executive compensation, dire climate change forecasts, Green Book winning the Oscar. And they've been marching right into the c-suite to tell big corporations to get a new rulebook.

Some CEOs responded over the summer

The Business Roundtable, a nonprofit whose members are CEOs of major American companies, said good corporate governance should address "all stakeholders"—including society at large.

How the role of a corporation evolved:

• A 24/7 news cycle and social media made it easy for concerned customers to apply pressure on executives.
• In the last few years, that pressure's gotten companies to stop sales of assault-style weapons, phase antibiotics out of chicken, reduce plastic waste, offset carbon emissions, encourage sustainable consumption, and retire elephants from the circus.

It's a brave new world for CEOs. Some have taken public stands on hot-button issues like immigration, LGBTQ rights, racial equality, and gun control.

Zoom out: The Business Roundtable's announcement reflects a growing understanding that companies can have outsized effects on the cities and communities that support them. But it's a mission statement, not a regulation, and businesses need to get internal stakeholders on board to make structural changes.

C-SUITE

Their Words, Not Ours

If you want to know what executives are really thinking 1) read their Evernote diary entries and 2) look closely at what they tell investors, courtesy of CB Insights's earnings call tracker.

Mentions of "diversity" started rising in mid-2011, but over the last few years they've plateaued (with a peak of 498 in Q1 2019).

Mentions of "automation" (blue) have crept steadily upward since 2011. Mentions of "artificial intelligence" (purple) increased starting in 2016.

Executives have been increasingly worried about trade (blue) and tariffs (purple). In the spring of 2018, Presidents Donald Trump and Xi Jinping started trading tariffs like Pokémon cards.

Companies are thinking about China (blue) a lot. India (purple), you're up and coming but still have a bit to go.

IPO

The IPO Draft Classes of the 2010s

There have been over 1,600 U.S. IPOs this decade. Some lived up to their private market potential...others went the way of Ryan Leaf. Here’s our evaluation of each draft class.

1. 2010: Still rebounding from the recession, but China’s sending more players over.
2. 2011: A sophomore slump, though LinkedIn, Nielsen, and Kinder Morgan played their hearts out.
   2012: Facebook was the most exciting prospect since John Wall...until the company tore its ACL right out of the gate. It recovered just fine.
3. 2013: The strongest cohort since the decade started, featuring world-class talent across tech, health care, and consumer.
4. 2014: Alibaba’s $22 billion public initiation lifted all boats. It was the biggest year of the decade for IPOs, both by money raised and deal count.
5. 2015: Health care accounted for half the spots, but Shake Shack, GoDaddy, and Fitbit will be the names most consumers remember.
6. 2016: A complete bust.
7. 2017: As Snap goes, so goes this draft class. You also remember Blue Apron, right?
8. 2018: A four-year high despite a rough fourth quarter. Different sport, but Spotify got MVP anyway for its direct listing. Runners-up: Axa Equitable, ADT, Dropbox, Eventbrite.
9. 2019: The biggest unicorns finally traded (Uber, Lyft, Peloton, WeWork) but none will win Rookie of the Year.

VENTURE CAPITAL

Venture This


In 2019, U.S. venture capital deals are expected to top $100 billion for the second straight year, according to PitchBook, with 185 deals above $100 million already recorded. The number of deals above $50 million has increased since 2012, though angel and seed rounds have been slowly declining since 2015.

VC deals (by size and number) have remained concentrated in the West and Northeast regions, according to Crunchbase. But exits in the South and Midwest have delivered better multiples.

PHARMA

Opioid Crisis Went From Bad to Worse and Then Court

We usually try to make business news fun. But with this decade's opioid crisis...there's really no way.

• The U.S. had a serious overdose problem in 2010, but it accelerated quickly. In 2014, the rate of opioid-related overdoses was 200% over 2000 levels.
• More recently, those deaths have been caused by illicit substances like fentanyl. But earlier in the crisis, they were caused by prescription opioids.

That's led to thousands of lawsuits this decade targeting companies that manufacture and distribute opioid drugs.

1. Lawsuits against manufacturers like Purdue and Johnson & Johnson argue these companies misled the public by claiming in ads that products were safer and more effective than they were.
2. Lawsuits against distributors like Walgreens and CVS claim that these companies didn't do enough to prevent prescription opioids from being used for illicit purposes. One commonly used piece of evidence is that at certain points, some counties and states had more opioid prescriptions than they had people.

Bottom line: Both manufacturers and distributors have paid fines and settlements in the hundreds of millions. But that's little comfort to the families of the 702,000 Americans who have died from drug overdoses between 1990 and 2017.

DESIGN

Design in the 2010s: Complexity Through Simplicity

Remember when your apps used to look like the picture on the right? One of the most prominent shifts in company branding this decade was to "flat" design.

In the early 2000s, illustrations more closely resembled real-life objects. Post-recession, flat design (which uses simple shapes, 2D elements, and bright colors) took off.

• In 2012, Microsoft debuted a flat Windows 8 interface. A year later, Apple released its then-polarizing redesign (pictured above).
• The trend spilled over from technology to advertising and company branding.

For tech companies, flat design is practical and makes it easier for app icons to look the same across devices like smartphones, tablets, and smartwatches. Plus, it embodies the culture of startup minimalism.

COMEDY

Top 5 Business Clichés of 2010–2020

1. "Define your brand." You’ll never be Texas’s biggest cattle rancher if people from here to Reno don’t know who your heifers belong to. What you need is more heat on the iron before you brand your livestock.
2. "Pick a lane and stick to it." You can be a majority stakeholder in Lane Bryant or in The Lane Company, but not both. Divest one.
3. "Think outside the box." I know you’ve had this dream since your college entrepreneurship class, but there is absolutely no way to monetize a penalty box. Let it
4. "Do more with less." Andrew Sean Greer's novel, Less, is very insightful. Do more with it. You could have your employees read it or order a bunch of copies for use as furniture.
5. "We can’t boil the ocean." And boy have we tried.