Lead From the Front
Lead Generation
Only seriously long-time readers of this newsletter will be aware that in a past life I worked in lead generation. My job, for a couple years, was to run ads to encourage people to fill out forms or call into call centers seeking quotes for health or car insurance, or other financial services.
This may sound suspiciously like regular old marketing, and it is! The difference between a company running ads to drive customers to its products or services and what I did was that my employer was a third-party, and we then sold those customers to the actual service providers, for a fee. If all went well, my advertising costs did not exceed our commission, and the company made money.
If you’re thinking ‘this sounds kind of like an advertising agency’ you’d be partially correct, but the crucial distinction is that we did not have exclusive relationships with buyers, and were not guaranteed a commission on every lead we generated. The idea behind this system was to allow buyers to pick and choose which leads they wanted, and to give sellers the opportunity to seek better prices among multiple buyers.
The de-risking of the lead generation ecosystem created massive auction-style marketplaces, with a variety of incentive structures and mechanisms to shuffle consumer data around. The most common model we worked with was a ‘ping-post’ system, which involved sending a truncated version of a customer’s data to an automated script that would either reject or ‘bid’ on the lead. Our system would ‘ping’ multiple buyers, saying “I’ve got a 54-year-old Male, from ZIP code 90210, with Brown Hair and a 650 Credit Score” and they might offer anywhere from one penny to some number of dollars for the lead. If the bid was accepted, our system would ‘post’ the full consumer data to the buyer.
Sometimes, leads would be considered ‘non-exclusive’ meaning they’d be posted to multiple buyers, typically for significantly less money. Alternatively, unscrupulous sellers could simply sell leads as many times as they wanted, because there was no centralized marketplace to monitor such behavior - there are quite a few companies offering ‘lead fraud’ prevention products, but this requires both buyer and seller to opt in, and represents a small percentage of the lead gen industry writ large.
For leads that couldn’t be sold for an up-front profit, or older ‘aged’ leads that hadn’t been sold recently, another option was to give them to companies, who would pay a commission for any sales they made off the data. Some were end clients (the companies who actually provided the good or services) and some were third-party marketing companies who specialized in getting in contact with leads to sell to upstream buyers.
I’ve simplified this explanation, but the end result is that millions of Americans fill out forms online each day, and what happens to their data is, at best, a crap shoot. What happens to their phones is much, much worse.
‘Time to Call’ is an industry metric for how quickly a new lead is contacted, and all research points to faster being better. If a lead is generated and sold in a matter of seconds, a consumer’s phone may ring within seconds or minutes of that invisible transaction.
If that call fails or goes to voicemail, automated ‘drip marketing’ campaigns kick into gear, queueing up future call and text attempts. Sophisticated dialing software packages choose from a variety of toll-free or local outbound numbers to improve answer rates, or schedule calls at certain times of day when people are more likely to answer. Some companies send a reminder or ‘warm-up’ text before a call.
What this means for the hapless human beings caught in this diabolical apparatus is any online interaction, any innocent request for details on a product or service can result in a days or weekslong barrage of unwanted texts and calls. From a consumer standpoint this is a nightmare, one that we’ve lived as Americans for decades, as our lawmakers mostly refused to take any meaningful action to regulate the lead generation industry.
In 1991, Congress passed the Telephone Consumer Protection Act, intended to combat unwanted telephone solicitations, in the days when anyone could find your home number in a phone book and bombard you during dinner time. Since then, the TCPA has been shoehorned into an enforcement tool against robocallers and others, though enforcement typically occurs via private lawsuits against lawbreakers, since violations carry a monetary value. The FCC is in charge of interpreting the TCPA, and for years consumer privacy groups begged the agency to issue stronger, clear guidance on exactly what lead generators are allowed to do with your information once it’s collected.
Well, there is finally some good news. The FCC has released a notice of proposed rulemaking and it is…very good! Specifically, it will close the ‘lead generator loophole’ which allowed companies who collect your data to bury language in the terms saying they could sell it to essentially whomever they wanted.
How did this work? In a standard TCPA disclosure on a marketing site, a consumer might see text saying they consent to be contacted by the company whose website they were currently on, and other ‘marketing partners’. In one infamous complaint against a company called Urth Access, the robocallers listed five thousand entities on their marketing partners page. At my old job we might have twenty or thirty companies on the page, any of the potential buyers for our leads.
The FCC has finally put its foot down, and is now requiring opt-in, one-to-one consent for each company who wishes to use automated systems to call or text someone who’s filled out a form online. This is a big deal for lead generators and brokers, who have coasted for years on loose consent and disclosure requirements.
Another hammer blow comes in the form of restricting said calls and texts to ‘topically related’ content - signing up for information on a car loan does not mean the same company can call you about other, unrelated financial products or services like loan refinancing or an extended warranty. Lead generators often sell or remarket lead lists to companies (‘marketing partners’) in different industries for additional revenue.
Lastly, the FCC is requiring that the companies calling and texting consumers have proof of consent for any data they’re using in their marketing systems. This helps break up the indemnity loops many lead generators had with their buyers; if a leadgen company insists they have proof of consent for all the data they’re selling, buyers can ignore compliance with the law, assuming they can dump any legal liability on the often fly-by-night brokers they buy it from. TCPA lawsuits don’t do much good if the company you’re trying to sue has no money, or has gone out of business.
Despite industry protestations, what this rule change will not do is impact normal businesses trying to generate leads online. TCPA does not cover ‘manually’ dialed outbound calls, like when your doctor’s office calls to remind you of an appointment or a car dealer returns a request for a quote. It preserves the right of whatever company the consumer signed up with to call and text them as much as they want (about the specific thing they requested) until the person opts out. What it does not allow that company to do is sell that information to partners, brokers, or give it to marketing companies to monetize when they’re done with it.
It is hard to overstate just how unregulated the lead generation industry has been for decades, and while these TCPA changes will have to be enforced mostly by private citizens and lawyers, the clear guidance makes it much easier for anyone to sue, and will therefore require wholesale changes to the industry lest its biggest beneficiaries - megacorps like Quicken Loans are huge lead buyers - get hit with massive class actions.
The rule change takes effect in 6 months, and it will be interesting to see whether the industry takes it seriously, or mounts legal challenges in the hopes our corrupt Supreme Court will gut the FCC’s oversight authority, or simply ignores it and sets the banquet table for hordes of hungry lawyers to feast.
Water
We talk a lot about groundwater in these pages, specifically the American capitalistic desire to drain it from our rivers and aquifers, depleting a potentially nonrenewable resource with unknown long-term consequences.
Much of the water siphoned from the Colorado River does not grow food or enter municipal water supplies for drinking and bathing - it irrigates alfalfa and hay to feed livestock. This is ridiculous on its face, the idea that we’re rapidly depleting our limited natural resources to subsidize a predatory meat industry that reaps windfall profits via price gouging while abusing its workers. It’s easy to get mad at Big Ag, but it turns out the federal government is largely responsible for the situation.
California’s Imperial Irrigation District, is over a hundred years old and situated in a dry stretch of southern California desert. Average temperatures in the area top a hundred in the summer, with zero days of rain. But! The feds give the district hundreds of billions of gallons of free water from the Colorado, much of which ends up on the farms of only twenty families:
They used about 1 in every 7 drops that flowed through the Lower Basin of the Colorado River in 2022, or about 387 billion gallons.
[…]
Farmers in one family, the Abattis, used an estimated 260,000 acre-feet, more water than the entire Las Vegas metropolitan area uses. One acre-foot is about 326,000 gallons.
The district sells water to these families for $20 an acre-foot, cheap enough to make growing hay profitable - farmers in the region produce half a billion dollars’ worth a year. With easy access to the feed crop, over 400,000 cows are raised in the area, sucking down more imported water. Some of the hay is shipped cross country or internationally, racking up an even bigger carbon footprint.
Unlike Vegas and Phoenix which have undertaken serious conservation measures and cut back water usage, the Imperial District hasn’t been asked to cut back at all in the last two decades. The District is so secretive - despite depending entirely on government largesse - they refused to disclose any information to journalists, who used satellite and public record data to unravel the mystery.
A small number of families with farming and water rights going back decades get cheap water under a veil of secrecy, and use it to grow hay in a desert. Even now, with residents and cities in the Southwest being told to make do with less, those famers could be paid hundreds of millions by the government to cut back on their usage.
That is not to say they’ll necessarily grow less hay - cheap water means some farms use ‘flood’ irrigation which is wildly inefficient compared to sprayers which, by the way, the government also gives them subsidies to install. The Imperial farmers could very well take a massive government handout, use a bit less water, and still grow their hay with better water management, which they also get paid for. Cool!
At some point we will have to reckon with the perversities threaded through our agricultural economy - we grow our crops and raise our livestock in hot, arid places to make it easier for farmers to make money with little climate risk (other than fires, which are now endemic in California). The fact the government is fully complicit in the wholesale extraction of valuable resources, literally giving it away to unaccountable multigenerational agriculture cartels on leases signed a century ago, while expecting residents in nearby cities to take fewer showers. Cutting back what we take from the Colorado is a good start to replenishing a river we’ve spent a hundred years draining, but doing so without revisiting water rights claims is barely a half measure.
Binance
It was almost exactly a year ago we last discussed Binance, and its discussions with the DoJ to potentially avoid a lengthy criminal prosecution against the offshore crypto exchange. Now, we’ve got an update:
Changpeng Zhao, the founder of Binance, the largest cryptocurrency exchange in the world, pleaded guilty to money laundering violations, the government said on Tuesday, a stunning blow to the most powerful and influential figure in the global crypto industry.
Binance itself also pleaded guilty and agreed to pay $4.3 billion in fines and restitution to the government, according to federal authorities. Under the agreement, Binance reached settlements with the Justice Department, the Treasury Department and the Commodity Futures Trading Commission, which have all been investigating the company for years.
The second paragraph of that quote reads normal - a company pleads guilty to wrongdoing, pays a fine, agrees to improve its practices and submits to some government oversight, blah blah. It’s the level of accountability we’ve come to expect from large companies with access to billions - an effective slap on the wrist, but no major disruption to its actual business.
However! The twist in this case is that ‘CZ’, the founder of Binance, pled guilty and is going to…jail? Maybe? Huh:
Binance founder and former CEO Changpeng "CZ" Zhao has been released from custody on a $175 million personal recognizance bond.
He’s due to be sentenced in February, but there are clues he might not actually spend any time behind bars:
Because Zhao pleaded guilty pursuant to an agreement, he waived his right to appeal any sentence over 18 months, Magistrate Judge Brian Tsuchida said in court Tuesday. According to another court filing, the DOJ and Zhao agreed to a $50 million fine, but no prison time was mentioned.
This would make sense, because Zhao is a citizen of UAE, where he lives, and could have simply gone (or stayed there) with no real fear of extradition. It does not seem like a wise legal strategy to travel to the country where you’re being charged with crimes, plead guilty to those crimes, and then stick around to be sentenced, if you think you’re going to spend years in prison and have other options.
Anyhow, Binance has a new CEO, though CZ will still control a significant portion of the company via his equity stake. Binance has promised changes, blah blah, but what realistically has happened here is the company has recognized the fact that when the US government wants to go after a financial company, no matter where they are in the world or whether they do business here, they will find a way. As SBF and others have learned the hard way, it’s better to fess up, take the L, and live to scheme another day. You might even skate on jail time.
The UK
When we talk about Britain it is often in the context of the island nation’s ongoing economic decay. Honestly, sometimes it’s nice to be able to point to at least one peer country and say ‘see, they’re just as fucked up as we are. maybe even worse!’ Plus, the Financial Times does some of the best data and chart work on the subject, so really they bring it on themselves.
Another organization released an inequality report recently, and its findings continue to paint the UK in a bad light:
The UK spends more than anywhere else in Europe subsidising the cost of structural inequality in favour of the rich, according to an analysis of 23 OECD countries.
Inequalities of income, wealth and power cost the UK £106.2bn a year compared with the average developed country…
This is an interesting metric, measuring what the UK’s structural support of elite privilege costs the country as a whole. Somewhat surprisingly, the UK used to be far more egalitarian:
Britain in the 1970s was one of the most equal of rich countries. Today, it is the second most unequal, after the US.
We’re still safe in the top spot. One policy researcher had some rather on-the-nose language about the phenomenon:
Lansley blames the way the gains from growth have been increasingly colonised by a small group of financial and business magnates – a process he says is facilitated by state policy.
When the Brits could no longer subsidize their ultrawealthy via colonial riches, they simply took it from their own people instead. How fitting.
One prominent British family profits from the misery of the working classes in ways that can be uh, quite literal:
The king is profiting from the deaths of thousands of people in the north-west of England whose assets are secretly being used to upgrade a commercial property empire managed by his hereditary estate, the Guardian can reveal.
Sure. Stealing money from dead people. Who says the monarchy has fallen off? They’re getting positively medieval!
Financial assets known as bona vacantia, owned by people who died without a will or known next of kin, are collected by the duchy. Over the last 10 years, it has collected more than £60m in the funds.
[…]
The duchy essentially inherits bona vacantia funds from people whose last known address was in a territory that in the middle ages was known as Lancashire county palatine and ruled by a duke.
The king’s estate has long claimed it donates the revenues to charity, but it turns out it’s using most of the money to renovate and rent out properties he owns.
We often talk about quasi-legal shenanigans the American superrich use to steal, hide, or keep inordinate amounts of their money, but I think we can agree ‘stealing it from dead peasantry based on 13th Century county lines to fix up your castles so you can rent them out’ is a quintessentially British way to maintain the wealth and class gap.
Eggs
General Mills Inc., a Kraft Heinz Co. unit, Kellogg Co., and Nestle SA for years likely overpaid for eggs because the nation’s largest producers and two trade groups conspired to restrict the supply, an Illinois federal jury decided on Tuesday.
Greedflation, specifically food greedflation (foodflation?) is a favorite topic around these parts, and during the Egg Freakouts of 2022 many - myself included - suspected much of it was driven by producers simply driving up prices because they could.
This particular lawsuit has been in court for over a decade (!) and apparently this is the third (!) major egg lawsuit, the prior two resulting in wins for the defendants. But, by God, the plaintiffs finally prevailed, even though foodflation happened almost twenty years ago.
It was not a complete win for the food companies:
The jury didn’t conclude, however, that every egg producer aligned with the industry trade groups participated in the conspiracy. The jury also found the companies weren’t injured between 2009 to 2012, as they alleged.
Apparently the trial itself was well-argued:
Before he read the verdict, Seeger commended lawyers from both sides for what he said was some of the finest advocacy he’s seen in his time on the bench. The day arguments ended he passed out trays of egg-containing brownies to them.
“I told you at the outset of the case that I wanted to see Major League Baseball, and you all delivered an All-Star game,” he told the lawyers.
I am glad that everyone had a good time, and ate some brownies, and hope that maybe this will set some sort of legal precedent or put egg companies on notice that they can’t collude and price fix quite so aggressively, but we’ll see. When the consequences of your actions can take decades to play out in court but the quarterly earnings call is a month or two away, it’s hard to view that as deterrence.
Short Cons
ProPublica - “Hoeft is one of dozens of investment managers at hedge funds and mutual funds who personally traded the same securities that their organizations were buying and selling, ProPublica found.”
Bloomberg - “Trammell Crow Jr., a Texas philanthropist and the brother of Republican mega-donor Harlan Crow, must face a lawsuit that accuses him of running and participating in a sex trafficking ring, a judge ruled.”
The Verge - “In the complaint, the NLRB alleges Apple didn’t extend enhanced benefits to Towson workers with the goal of “discouraging” other employees from unionizing. Some of those new benefits include new healthcare options, a free Coursera subscription, and prepaid tuition at some colleges.”
NY Mag - “On October 3, 2019, while they were visiting the Taj Mahal, the senator sang “Never Enough” to her before he asked her to marry him.”
Bolts - “Head says she started changing the way she voted on cases because of pressure from Ivey and Marshall. “There were cases where I did not vote to parole even though I knew I needed to because I was afraid of losing my job,””
SF Chronicle - “When Cloud Kitchens came to Charter Oak, around 2019, Koral said there were guards who helped direct traffic. But they were only in place for a short while. Today, she said, tensions regularly boil over.”
ABC 11 - “After weeks of silence, the company has acknowledged to passengers that it has no ship, and has canceled the departure, vowing to refund those who'd signed up for cruises costing up to hundreds of thousands of dollars.”
The Verge - “After 151 years, Popular Science will no longer be available to purchase as a magazine.”
CBC - “In early 2020, the Canada Revenue Agency came to believe it had made a $63-million mistake.”
Know someone whose family is draining billions of gallons of groundwater to grow livestock feed? Send them this newsletter!