R "Ray" Wang

Principal Analyst and Founder Constellation Research

R “Ray” Wang is the CEO of Silicon Valley-based Constellation Research Inc. He co-hosts DisrupTV, a weekly enterprise tech and leadership webcast that averages 50,000 views per episode and blogs at www.raywang.org. His ground-breaking best-selling book on digital transformation, Disrupting Digital Business, was published by Harvard Business Review Press in 2015. Ray's new book about Digital Giants and the future of business, titled, Everybody Wants to Rule The World was released in July 2021. Wang is well-quoted and frequently interviewed by media outlets such as the Wall Street Journal, Fox Business, CNBC, Yahoo Finance, Cheddar, and Bloomberg. Short Bio R “Ray” Wang (pronounced WAHNG) is the Founder, Chairman, and Principal Analyst of Silicon Valley-based Constellation…...

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Best Two-Day Rally Since 2008

The NASDAQ Composite closed out the week with its biggest two-day rally since 2008. CPI numbers hinted that inflation was subsiding and hope sprung that the Fed would take a less severe stance.  Should the Fed hiking slow down from 75 basis points to 50 basis points, market watchers remain hopeful and some took advantage of the early signals of slowing inflation.

As many astute readers know, the general progression of recession comes down to five major stages:

• Stage 1: Valuation cuts
• Stage 2: Earnings misses
• Stage 3: Credit and liquidity crunches
• Stage 4: Unemployment increases
• Stage 5: Real estate crashes

We've only hit the first stage, while a minority of tech companies have hit the second stage.  In fact, the NASDAQ 100 enterprise value to sales ratios dropped from 5.40 in January 2022 to currently at 3.71.  Over the past 10 years, that average ratio was at 3.35.  As cost of capital continues to drive investors to alternatives other than growth stocks, the market is moving towards more fixed income and energy in this shift.  The 10 year Treasury si now at 3.628 giving folks an alternative to risk assets and growth stocks. Many feel we are at a tectonic shift on tech stocks, yet this is not yet the case.

Why?

For a tectonic shift to occur, massive disruptions at the first principle level must occur. To date, no new disruptive technologies have emerged to displace incumbents.  No new business models have been applied unevenly in the market.  Moreover, the market has not only been consolidating, the market dynamics have led to less competition.  In fact, there are only two to three major competitors in each market segment vying for customer budgets. Subsequently, this leads to not a tectonic shift, but a mini bear market rally. To be clear, this is not a recovery at all in the tech market.

The Bottom Line: More Bear Market Rally Than Tectonic Shift, Bet On MATANA and Dividend Payers

That being said, not all tech stocks are created equal.  The MATANA super set of stocks show resilience.  As investors shift from FAANG to Microsoft, Apple, Tesla, Alphabet, Nvidia, and Amazon, these big bets rest on 5 key elements:

1. Building the largest networks - connecting billions of users, devices, or networks.
2. Disintermediation of customer account control - aggregating networks onto a single platform, portal, or user experience.
3. Compete on data - bringing together the objects, context, actions, and insights into the largest business graph
4. Earn revenue on multiple digital monetization models - monetizing ads, search, goods, services, memberships, and subscriptions
5. Follow a long term mindset - abiding by the rule of 40 and investing for escape velocity

The technology stocks that don't follow these five key elements of digital giants will continue to wither.  Consequently, Facebook and Netflix no longer qualify to win as digital giants.  Alibaba would meet many of these requirements but the CCP China infiltration hampers their ability to win.

One other key category of stocks are the dividend paying tech stocks. Here's five that meet the MATANA profile.

1. Apple
2. IBM
3. Intel
4. Microsoft
5. Oracle

Liz Miller

Vice President & Principal Analyst Constellation Research

About Liz Miller: Liz Miller is Vice President and Principal Analyst at Constellation, focused on the org-wide team sport known as customer experience. While covering CX as an enterprise strategy, Miller spends time zeroing in on the functional demands of Marketing and Service and the evolving role of the Chief Marketing Officer, the rise of the Chief Experience Officer, the evolution of customer engagement, and the rising requirement for a new security posture that accounts for the threat to brand trust in this age of AI. With over 30 years of marketing experience, Miller offers strategic guidance on the leadership, business transformation, and technology requirements to deliver on today’s CX strategies. She has worked with global marketing organizations to transform…...

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“Why can’t MARKETING speak in the language of the BUSINESS”

This has long been the lament shouted from the corporate hilltops as marketing metrics scrambled to find solid ground. In the early days of digital, the cadre of “descriptive metrics” like “views” and “clicks” sought to quantify value in a tit-for-tat “we paid x and got y that only we can understand and define” model that infuriated finance leaders.

But those early earnest desires to articulate impact veered off-course and remained in an odd and largely tactical state of vanity metrics that summarized what marketing could see in the rear-view mirror but did little to tie marketing action to revenue or start to forecast performance models let alone adequately plan for future growth.

Marketing metrics remained locked in a state of advertising-focused measures with a growth-driving mandate. In the financially-driven world of forecasts, annually recurring revenue, total addressable market and, dare I say, gross margins, Marketers were left filling slide after slide with likes, clicks, views, single points of attribution or loosely correlated multi-point attribution models in an attempt to bring analytics and business rigor to a land pock-marked by gut, intuition and tradition.

We have entered an age where the Chief Marketing Officer (CMO) has embraced the role of growth driver. CMOs want to quantify the impact marketing and engagement investments are making on top line acceleration while also mapping operational efficiencies driving down costs and reducing waste and obsolescence. The model has evolved from one of wanting to plan for media mix investments and instead to plan and track performance across the entirety of marketing’s strategy for growth, experience and engagement.

But interestingly, the dynamic between CMO and their finance colleague, the Chief Financial Officer, tends to be less formed and cemented than other relationships across the C-Suite. When asked by Constellation Research about key mandates and imperatives for marketing’s top role, only 2% pointed to fully aligning customer experience strategy plans with finance and operations roles[i].

This is what made Planful’s September 15, 2022 acquisition announcement to buy the marketing planning and budget analysis solution, Plannuh, so interesting.

The Deal

Let’s break down the nuts and bolts of the deal.

The Silicon Valley-based pioneer of financial performance management cloud software, Planful, acquired Plannuh, the brainchild of seasoned CMO Peter Mahoney, who in 2019 launched the company out of his own personal frustrations around marketing performance and reporting solutions. Plannuh focuses on what a CMO might expect from an MPM solution with agile planning, budgeting and performance tracking and management. But Plannuh takes the additional critical step of connecting these established marketing practices with financial outcomes.

As the story goes, Planful’s own Chief Marketing Officer, Rowan Tokin and Peter Mahoney, author of the book, The Next CMO: A Guide to Operational Marketing Excellence, were part of the Exit Five marketing community. Dave Gerhardt, the founder of Exit Five, introduced Tonkin and Mahoney given their backgrounds and mutual love for planning and financial performance management. Upon meeting, Tonkin knew Plannuh would be an easy, complimentary fit to the existing work he and the team were already doing with Planful at Planful.

While other tools have provided marketers with the campaign metrics to report on tactical outcomes and baseline budget tracking, with Plannuh, leaders are armed with deep financial intelligence across all marketing activities. Some highlights into capabilities include:

• Building marketing plans that consolidate goals, campaigns, budget, and performance metrics into one view for a more purposefully agile approach to marketing operations.
• AI-powered marketing budget and expense management automation.
• Easy import of budgets for full alignment and tracking across regions and functions, for an accurate and consolidated single view of marketing performance.
• Real-time calculation and visibility of business-based metrics including cost-per-outcome (CPO), return on investment (ROI), and lifetime value (LTV).
• Rapid deployment that has seen teams up and running within 3 weeks.

Financial details of the deal have not been disclosed. All of Plannuh’s employees join the Planful team, and the Plannuh application will be merged into the Planful platform. Existing Plannuh customers will not experience any disruption and can continue to use the solution as a standalone offering. Plannuh will also be available as part of the comprehensive Planful platform.

Constellation’s Take

On the surface, this is a great move for Marketing executives looking for some true planning firepower that extends beyond the traditional tactical and functionally focused strategy reporting CMOs have become comfortable utilizing. But dig a bit deeper and you find the really big news: that the capabilities represent a bridge between the strategic measurements of running a marketing organization and the tools required to truly run a modern growth machine. In terms of playing with our “alphabet soup”, it brings more financial planning management (FPM) to marketing performance management (MPM) at just the right time in business evolution.

Today’s CMO is laser focused on identifying, facilitating and empowering growth. Most of today’s broad marketing technology platforms come with natively built (or at minimum natively integrated) marketing analytics tools to help unify marketing campaign performance. And there are a growing number of business intelligence solutions on the market that empower marketers to interrogate engagement and campaign data very differently. But truth be told, few fully integrate into the CFOs vision of planning or forecasting…and this is where this combined vantage point of Plannuh and Planful come to play.

Marketing, for far too long, has tried the most ancient of tools to manage budgeting, planning and revenue-based strategy: spreadsheets. These endless line item ladened ledgers are weights around leaders looks to accelerate their decision velocity with forecasting that is more predictable and reliable. Guessing hasn’t gotten marketing very far when being asked to build a case for spend, let alone when forced to defend budgets. In as much as guessing isn’t a strategy, spreadsheets are not a plan.

Let’s also revisit a data point that may have been easy to skim past at the top of this post: when asked about top priorities, only 2% of marketing leaders had more closely aligning with finance on their dance card. Yet the overwhelming majority believe their top priority is to drive growth across existing market segments and customers. Yes…marketers believe their top job is to drive growth for their organizations, but they don’t intend to align with finance as part of that forward moving financial progression. Yes…it is easy to push this aside and say that marketing, like finance, have a length list of priorities and not everything can rank at the top of the list. Here’s the problem: something as important as CFO alignment shouldn’t be the priority that is listed dead last.

For any of this to truly work, it will require a shift in mindset (read: elimination of cynicism) on the part of the finance. Often seen by marketers as a roadblock-by-trade, finance has earned the reputation of naysayer of innovation, despite the mandate to serve more as protector of transformation. While leaders from IT, Digital, Commerce and even Marketing are charged with lofty, evolutionary and, yes, even “sexy” aspirations such as transformation, it is typically the finance leaders who must serve as the earth-bound anchor to those dreams. But today’s CFO can no longer just rely on serving as the data analyst that can outline what has happened to the bottom line of a business. Finance leaders are being asked to leverage data to answer the question of WHY and to deliver a business strategy that looks more creatively at HOW.

Now, more than ever, CMOs and CFOs are being asked similar questions and need to interrogate data and accelerate their capacity to make decisive decisions towards action. This will require common strategies and “north stars” for growth in margin and profit. It will require shared visibility that lends itself to collaboration and partnership instead of approvals and apologies. If the dynamic between CMO and CFO requires change, it also requires common tools, not just speaking a common language. It will require that both marketing and finance stop clinging to a raft of spreadsheets and instead evolve, perhaps, together.

For more about the acquisition, be sure to check out the official announcement here.

[i] Source: CMO 2022 Survey, Constellation Research, November 2022

Steve Wilson

Former Vice President and Principal Analyst Constellation Research

Steve Wilson is former VP and Principal Analyst at Constellation Research, leading the business theme Digital Safety and Privacy. His coverage includes digital identity, data protection, data privacy, cryptography, and trust. His advisory services to CIOs, CISOs, CPOs and IT architects include identity product strategy, security practice benchmarking, Privacy by Design (PbD), privacy engineering and Privacy [or Data Protection] Impact Assessments (PIA, DPIA). Coverage Areas: -  Identity management, frameworks & governance-  Digital identity technologies-  Privacy by Design -  Big Data; “Big Privacy”-  Identity & privacy innovation Previous experience: Wilson has worked in ICT innovation, research, development and analysis for over 25 years. With double…...

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Breaking news

Verifiable credential innovator Indicio has joined the Google Cloud Partner Advantage program, a partnership that gives Google Cloud customers access to a proven family of open-source solutions and software components for authenticating and sharing high-value information.  This enhancement to the Google Cloud will make digital verifiable credentials easier to issue and easier to verify. 

By extending verifiable credentials as a service, Google and Indicio will make this critical technology more accessible to enterprises.  In particular, any organisation will be able to build verifiable credential solutions within existing technology and business infrastructure. 

Indico CEO Heather Dahl was recently awarded the 2022 Constellation Supernova Award for Digital Safety, Governance, and Privacy.  While the Google parrtnship was still under wraps, Heather spoke about decentralisation of identity information on a panel at Constellation’s Connected Enterprise #CCE2022 innovation summit on October 26. This blog picks up some of her points.

Taming the technology

Cryptographic containers will become the norm for conveying almost any important facts and figures about ourselves, from driver licences and passports through financial services and healthcare accounts, to loyalty programs and gym memberships.  But the technology seems daunting. It calls out for outsourcing. 

Businesses, governments, universities, libraries and clubs have for decades been ordering membership tokens (usually plastic cards) from specialist bureaus. In the digital economy, these physical tokens will pivot to verifiable credentials. And I believe the outsourced business model for procuring them will remain much the same as they have been for cards.

The key is to get verifiable credentials technology into the cloud.

Verifiable credentials are allabout context. To issue them without friction and to impart the greatest meaning, VCs need to be published direct from the source of truth. 

The best way to prove yourself digitally

Verifiable credentials are becoming a uniform way of proving important facts about people and also machines (i.e. non-human actors). In a huge range of applications, if you want the ability to prove something about users or about devices, then verifiable credentials provide an “authenticity layer”.

A verifiable credential is a digital statement about a specific fact about a subject, signed by a recognised issuer, and bound to the subject, usually through a key pair controlled by the subject. Verifiable credentials allow the subject to present the credential cryptographically whenever they need to prove the fact to another party.

The basic pattern is well established.  Chip-and-PIN cards are one of the earliest verifiable credentials. The international e-passport has similar functions and benefits.  But these examples operate within proprietary and rigid public key infrastructures. 

For broader adoption and wider accessibility of the verified information, new digital credentials standards are emerging from industry groups such as Hyperledger Indy and open standards bodies, especially right now the World Wide Web Consortium.  There has been enormous interest in this technology to convey COVID results and vaccination status. After a great many pilots, a few stable solutions have emerged, including Indicio’s Digital Travel Credential.

Beyond human subjects to the IoT

On the Internet of Things, autonomous agents are communicating with one another, making increasingly automatic decisions in real time. For security and reliability, precise information about devices is required; it must be machine readable, verifiable instantly, endorsed, and reliable.  Verifiable credentials are perfect for delivering these properties.

So verifiable credentials are not just for humans. Indeed, Heather Dahl told as at #CCE2022 that around fifty percent of Indicio’s verifiable credentials are issued to non-human subjects; that is, IoT devices. And she expects the share going to device credentials will keep increasing.

Beyond identity to data

Indicio is on a mission to extend verifiable credential patterns to verify data in general.  Heather describes the Indicio Proven platform as a technology for “managing devices and machines and accelerating digital transformation across every sector.”  The platform embodies a philosophy of machine readable governance, which I take to mean that the vital metadata about how a system has been designed, tested and audited is also in scope for cryptographic verification.

Heather reported that very few of Indicio’s customers ever call the company “asking for an identity solution”. Identity is not the way that they frame their authenticity and data quality objectives.  

Indicio in my opinion is on the leading edge of a movement to treat data as a critical utility and deliver it at scale with machine readable verifiable quality metrics.

Liz Miller

Vice President & Principal Analyst Constellation Research

About Liz Miller: Liz Miller is Vice President and Principal Analyst at Constellation, focused on the org-wide team sport known as customer experience. While covering CX as an enterprise strategy, Miller spends time zeroing in on the functional demands of Marketing and Service and the evolving role of the Chief Marketing Officer, the rise of the Chief Experience Officer, the evolution of customer engagement, and the rising requirement for a new security posture that accounts for the threat to brand trust in this age of AI. With over 30 years of marketing experience, Miller offers strategic guidance on the leadership, business transformation, and technology requirements to deliver on today’s CX strategies. She has worked with global marketing organizations to transform…...

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The campground for business reopened for the first time since the pandemic in September welcoming business leaders, MVPs, Trailblazers, developers and yes, even us analysts back to the familiar embrace of the forest. Truth be told I was expecting more of a “first day of camp” excitement vibe running through the crowd. Instead, what I felt was an intense desire to get back to the work of running a business on Salesforce.

That’s not to say the feeling wasn’t celebratory…it’s simply to say that the Salesforce community was ready to get back to it. As the theme of Dreamforce 2022 stated: it was a family reunion. And this family WORKS. The pared down footprint allowed the community to rally and gather, but also allowed for a more focused experience where live attendees could really dive into areas of interest, get knee deep into demos and have more time with subject matter experts in core solutions across the Salesforce portfolio. Thanks to the ongoing content being streamed on Salesforce+, virtual attendees were pulled into the campground with special features and behind the scenes views exclusive to the audience at home. (If you missed it, of course, you can still check out Dreamforce 2022 on Salesforce+.)

One thing that was exactly as expected was the opening keynote from the familiar Hawaiian blessing to the star-studded special guests (let’s just get this out of the way…Nobody but NOBODY will ever say no to a Lenny Kravitz moment to start the day.) What stood out was the dynamic between the co-CEOs, Marc Benioff with his larger-than-life exuberance and Bret Taylor with his pragmatic, steadying presence.

In 2020, I tweeted that I was exceedingly concerned that Marc Benioff needed a hug. He was there, standing alone in Salesforce Park looking glum and repeatedly saying “this isn’t the Dreamforce we wanted” with no audience and only Bret to keep him company. If he needed a hug, he got it in 2022, walking around the stage celebrating the growth of Salesforce while even taking a moment to deliver kudos to SAP on reaching their 50th anniversary.

The keynote exemplified the balance that the co-CEOs seem to bring to the overarching leadership of Salesforce itself: dreams of massive, unfettered innovation and the steady pragmatic knowledge that takes those dreams and turns them into reality. The ultimate display of this partnership was when Benioff playfully slapped bunny ears on himself to joyously herald the entry of Genie to the Salesforce fold. Without missing a beat, laughing and rolling with the fun, Taylor proceeded to interview the digital leader of Ford Motors about their capacity to transform their driver and customer experience with Salesforce. Nothing to see here folks…just another day at the office. Moments later, Taylor had his own bunny ears, willing to join the fun to the thrill of the MVPs sitting one section away. Yes, there is a playfulness. But through the entire keynote, you didn’t just see the co-respect of these co-CEOs, you could feel it.

Now to the meat of Dreamforce: the announcements. Genie was the big magical reveal. Salesforce more directly calls this data service a hyperscale real-time data platform. Genie extends the power of traditionally siloed Marketing CDP to the entirety of the customer experience (CX) front line. Intended as a shared service across all clouds, Genie, as one would expect from a CDP, unifies and harmonizes a broad and complex array of customer data into a persistent record of a customer, available to power personalization and focused, relevant engagement regardless of function.

This is, as I have often argued, the true value of a CDP. There is a reason the CDP is NOT called a Marketing Data Platform…its value will never be fully realized if relegated to being a marketing toy for marketing things.

Genie focuses on what can be learned about the customer and shares that with any user. Think of this as bi-directional context: based on the context of the Salesforce user (eg: Marketing Cloud, Sales Cloud or Service Cloud user) Genie unearths and uplevels insights, automated actions and engagement optimization recommendations specific to the context of a customer or customer segment. It takes the context of the customer and binds that to the context of the business user to make…well…magic.

What elicited cheers from the Dreamforce audience was Genie’s capacity to help normalize and harmonize data…cleaning up the pathways that turn random stacks of data into individual, more comprehensive and complete customer records. The reality of customer records is that for every one customer, there are 900+ systems that collect data from or about that customer. So instead of Liz…you have Lizx900. Personalization occurs by accident in this scenario. Thanks to Genie’s capacity to reconcile data and identifiers, the haze and exhaust surrounding a persona turns crystal clear and becomes a person that can be engaged with regardless of where that person has engaged.

This is just the beginning of the Genie journey. Yes, Genie is battle-tested…both by Salesforce using Genie to run Dreamforce and as the CDP unleashed in the Marketing cloud use case since October 2020. Genie is generally available today, applied within the specific clouds (as in Service Genie, Sales Genie and Marketing Genie) but expect to see those use case applications start to evolve into cross cloud opportunities.

While Genie was Dreamforce’s big clap of thunder, I couldn’t help but lean in and take note of some of the “smaller” yet equally important announcements including the updates and upgrades coming to Slack. It would be hard to argue that the demand for collaboration tools has quieted in the last year. In fact, leaders are daring their teams and their tech to enable and empower collaboration in new and more visual ways. This is what makes Slack’s new features in Slack huddles a welcome addition. While huddles have always simulated that group meeting concept of popping into a conference room for a quick meeting at the office into the digital HQ by including groups to spontaneously huddle, react, send an Astley or 10, white board, take notes and share screens, now you can include video into that mix while staying in one familiar place where ever that physical place might be. Once that meeting is over, the newly launched canvas becomes the digital surface that captures all of the output and resulting actions and notes that came out of that huddle.

If canvas feels familiar…it should for Salesforce’s Quip faithful. Quip has been fully integrated with Slack giving you an interactive content repository and space for background, key information, content and notes.

It wouldn’t be a Dreamforce wrap up without making mention of Einstein. While the little fellow didn’t make too many virtual pop ins, you could sense that unlike previous years where Einstein was talked about almost like an application that turned on or off….2022 was the year that Einstein started being spoken about as a unifying shared service…a service that was now being unleashed into a massive new pool of data being harmonized thanks to Genie. This eclectic pair are poised to truly reshape how intelligence is gathered and served across the Salesforce ecosystem. Also watch for a LOT more with the combination of Genie, Einstein and flow. This won't just be a matter of more AI or even about AI having access to more data. This is about automating a broad array of possible actions (and reactions) based on the insights and understanding of that data.

Yes. It was nice to head back to camp. But it was even better to see just how energized and ready to work all the campers were. Dare I say it…everyone was ready for a little magic…and with products in GA and teams ready to run…Dreamforce delivered.

Steve Wilson

Former Vice President and Principal Analyst Constellation Research

Steve Wilson is former VP and Principal Analyst at Constellation Research, leading the business theme Digital Safety and Privacy. His coverage includes digital identity, data protection, data privacy, cryptography, and trust. His advisory services to CIOs, CISOs, CPOs and IT architects include identity product strategy, security practice benchmarking, Privacy by Design (PbD), privacy engineering and Privacy [or Data Protection] Impact Assessments (PIA, DPIA). Coverage Areas: -  Identity management, frameworks & governance-  Digital identity technologies-  Privacy by Design -  Big Data; “Big Privacy”-  Identity & privacy innovation Previous experience: Wilson has worked in ICT innovation, research, development and analysis for over 25 years. With double…...

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In the next few years, the soaring demand for customised verifiable credentials (VCs) means we’ll see the emergence of managed services to deliver them. How might these managed services work? There’s a solid precedent.

VCs are increasingly being used for everything from digitised vaccination certificates to records of educational achievements. As they come to be used for more applications at a variety of scales, economies of scale will make it inevitable that the management of the VCs themselves, and all the associated security measures, will be provided as a service.

There’s a clear precedent for this type of managed service: the magnetic stripe card industry.

All sorts of organisations use plastic card bureaus to produce a huge variety of customised licences, employee badges, membership cards, student cards, tickets, and so on.

All magnetic stripe cards work in a near-identical fashion, yet each one is distinct, clearly branded, and readily identified for its particular purpose without any special knowledge.

The plastic card could be the greatest user interface standard of all time. People all over the world are habituated to presenting plastic cards to other people to prove their bona fides, and to terminals for automatic recognition.

Plastic cards are most commonly read by terminals via the magnetic stripe, but several other electronic interfaces are available, including 1D and 2D bar codes, contactless radio frequency identification (RFID) and direct contact chip readers. Most customers have become comfortable with this range of interfaces, and they’ll switch between modes without much thought at all.

The card industry ecosystem is mature. The commercial bureaus can provide a wide variety of customised cards. They handle certified secure production and distribution of the cards. There are well-understood demarcations in liability between the bureaus and their customers, who are usually the sources of the credentials .

The plastic card paradigm has some powerful features which are instructive for the emerging VCs-as-a-service industry.

• A competitive market of card personalisation bureaus, providing custom production, magnetic stripe encoding, and card distribution and activation, all in commercial bundles which can be purchased by government agencies, banks, professional associations, universities, driver licence bureaus, and so on. On the rear of many plastic cards, the card manufacturer is indicated in fine print. It may well be that the same manufacturer produced your credit cards and government cards.
• The production process is highly technical but hidden entirely by the outsourcer. Consider for example the critical composition and quality of the ferrite powders that constitute the stripe. Those powders and the rolls of bulk stripes are provided by specialist upstream manufacturers. As with the secure printing of cheque books, prescription pads, and lottery tickets, the production of plastic cards entails strict controls over inventory, shipping, and personnel security. The facilities are generally audited and may even be subject to government licensing.
• Within the business model there was a built-in upgrade path for data carrier technology. Cards evolved over time, from mag stripe to microprocessor (i.e. smartcards) and to NFC (tap-and-go) with little or no change to the user experience, and no change at all to the user agreements.
• A highly uniform user experience. Most automatic teller machines, point of sale terminals, ticketing machines, and self-service kiosks work in nearly identical ways.
• Most importantly, plastic cards are not identities. Most cards are simply treated as evidence of specific memberships or other attributes.

While “digital identity” designers and policymakers often fret about “interoperability”, they usually mean equivalence. Yet that question just doesn’t come up with plastic card credentials. There is rarely any question of “equivalence” between the many different cards, even if they happen to be manufactured by the one bureau.

The possibility doesn’t even arise in one’s mind that a bank card could be equivalent to a student card, company ID badge, or sports club entry token.

Every issuer of the respective base credential is free to set its own membership rules. The gory details of those rules, including legal liabilities, are set out somewhere for verifiers to understand as they need. But it is no business of the card bureau. To a card bureau, a platinum card with a $100,000 limit is no different from the entry level credit card.  

So the plastic card market shows us how to keep things simple. 

Businesses use card bureau services in a mature and uncomplicated way. No one really thinks a plastic card is an “identity” (moreover the World Health Organisation has been clear that COVID certificates should not be treated as identities). Certain cards can be used as elements of identification in some scenarios but strict limits apply. 

And even when a special card does conform identity, no one thinks of the card printer as an “identity provider”.

Organisations don’t wrap themselves up in a tangle of philosophical or legal issues when engaging card printers to provide credit cards, Medicare cards, employee badges, or sports club memberships. They simply send files of their members’ names and details to a bureau, and the bureau manufactures cards in bulk and sends them back, or in many cases also handles the distribution to the end users.

It’s a nice clean supply chain and outsourced service model. The responsibilities and liabilities are clear every step of the way. The same principles need to be replicated for cryptographic verifiable credentials as a service.  The detailed custoization, production and distribution of these precise cryptographic bundles should be left to experts and the end-product procured in bulk.  

Liz Miller

Vice President & Principal Analyst Constellation Research

About Liz Miller: Liz Miller is Vice President and Principal Analyst at Constellation, focused on the org-wide team sport known as customer experience. While covering CX as an enterprise strategy, Miller spends time zeroing in on the functional demands of Marketing and Service and the evolving role of the Chief Marketing Officer, the rise of the Chief Experience Officer, the evolution of customer engagement, and the rising requirement for a new security posture that accounts for the threat to brand trust in this age of AI. With over 30 years of marketing experience, Miller offers strategic guidance on the leadership, business transformation, and technology requirements to deliver on today’s CX strategies. She has worked with global marketing organizations to transform…...

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On October 28, 2019, Elon Musk's tweet read: “I hate advertising.” On October 27, 2022, Elon Musk completed his much ballyhooed and debated acquisition of Twitter.

Musk’s loathing of advertising has been well documented. In May of 2019, he tweeted a clarification on Tesla’s advertising-free marketing strategy saying “Tesla does not advertise or pay for endorsements. Instead, we use that money to make the product great.”

For the purpose of this post, I’m going to set aside the pages I could write on the irony of the “great product” statement… we can talk about why the Tesla service department has repeatedly told me that our car’s AC system just naturally smells like feet, and we shouldn’t be so focused on how the car smells at a later date. Musk has been abundantly clear that in the balance between paid, earned and owned media, paid media is the value-less leg of the stool.

It is also worthwhile to take a step back and think about what Twitter actually IS to best determine what impact this Musk-era Twitter might mean.

Some say that Twitter is a media company that must subsidize its capacity to host a broad, global, democratized media destination that holds professional accounts (from journalists and their publications to marketers and their brands) in equal footing to citizen creators. In this construct, the value proposition of a “universal town square for all” could draw larger audiences willing to accept and consider new subscription models, especially those models where advertising and promoted content is removed.

If this new massive recurring revenue base became predictable and stable over time, Musk could easily show advertising the door and instead charge a heftier fee to allow brands permission to even HAVE accounts. This model has been batted around in the days prior to the acquisition and Musk himself has noted that this could be an attractive path forward.

Others believe Twitter is an advertising business that leverages citizen creators, brands and media accounts to attract more users hungry for quick snippets of information or engagement. This audience would, in turn, represent a massive potential audience for targeted promoted content and advertising.

In this construct, quantity should theoretically win out over quality, requiring a constant stream of new users and accounts to flood into the community to constantly keep the waters full of prospective customers for advertisers hungry for clicks and views. This becomes a model where advertising pays the whole tab. “Cherry on top” revenue like subscriptions and priority access options like Twitter blue become important for bigger numbers but are not the primary focus of revenue projections. The revenue possibilities in this model could be endless when you consider the data Twitter can aggregate and “share” across an advertising network made up of…I don’t know…a global car company perhaps? Does SpaceX join the party and leverage the systems behind Twitter Spaces for pay-per-journey virtual trips into space or even ad-supported free virtual views? An interstellar ad network could make the Metaverse feel small.

Basically, Musk should get over his hatred of advertising. Quickly.

Regardless of how Musk views the platform, the immediate risk to his bottom line lies squarely in his own hands…more specifically his own Twitter account. Alienating users OR advertisers in week one is quite literally risky business. Musk, while audacious and bombastic, has the business sense to understand this. In fact, by Thursday’s take-over, he had already tweeted an “open” message to advertisers noting that his altruistic intentions to create a safe, free and vast space for all conversations will benefit advertisers. By Friday, Musk was making public statements indicating that accounts that had once been banned will NOT return until a broad coalition committee is formed to review policies and accounts. Despite all this, misinformation exploded including lots of celebration that Kanye West's account had been reinstated despite it never being banned.

Ironically, Musk isn’t Twitter’s biggest problem when it comes to advertisers. Twitter’s faltering value proposition has been YEARS old dating back to Dorsey-era Twitter where everything from weak content moderation policies, questionable measurement and fraudulent reporting repeatedly haunted the brand. While Musk will have to clearly articulate a value proposition to users intent on using Twitter as a content-forward social platform, he will ALSO have to clearly articulate a business vision and proposition that goes beyond the current (and often politicized) hype cycles.

Musk acknowledges the risk, joking he doesn’t intend to allow Twitter to become a free-for-all hell-scape. Yet we all understand human behavior…slowing down on the digital highway to watch the spectacle of a free-for-all hell-scape is akin to rubbernecks and a multi-car pileup…sometimes you can’t help but slow down and let curiosity take over. The descent could be fascinating to watch…but it won’t create the stickiness any durable business plan will require.

At this stage of the game, brand advertisers are in let’s see how this plays out mode…and I’m right there with them. Top leaders have been shown the door, including the Head of Legal Policy…as of penning this, the CMO and Head of People are still in the building. People will continue to do what people do…self-select what information and signals they allow into their world. On a personal level, my own Twitter experience will remain the same as I’ve seen professional engagement lessen over the last several years and more robust conversations transition to other networks like LinkedIn. But when there is an earthquake, Twitter is my first stop to see if Dr. Lucy has confirmed (if you know...you know.) Increasingly, users like me have started to think of Twitter as a source of “infotainment” to check what one-liners Steak-Umms has churned out today.

In the end, we will all have to wait to see and hear Musk’s business vision and see how that vision is turned into action by the leaders he installs to run the day to day. But I’ll just say this now…if Twitter starts to smell like the odor that comes from my Tesla’s AC, we are gonna be in for a bumpy ride.