A family buys a house they can’t afford. They can’t make their monthly mortgage payments, so they borrow money from the Mob. Now they’re in debt to the bank and the Mob, live in fear of losing their home, and must do whatever their creditors tell them to do.
Welcome to the internet, 2019.
Buying something you can’t afford, and borrowing from organizations that don’t have your (or your customers’) best interest at heart, is the business plan of most internet startups. It’s why our digital services and social networks in 2019 are a garbage fire of lies, distortions, hate speech, tribalism, privacy violations, snake oil, dangerous idiocy, deflected responsibility, and whole new categories of unpunished ethical breaches and crimes.
From optimistically conceived origins and message statements about making the world a better place, too many websites and startups have become the leading edge of bias and trauma, especially for marginalized and at-risk groups.
Why (almost) everything sucks
Twitter, for instance, needs a lot of views for advertising to pay at the massive scale its investors demand. A lot of views means you can’t be too picky about what people share. If it’s misogynists or racists inspiring others who share their heinous beliefs to bring back the 1930s, hey, it’s measurable. If a powerful elected official’s out-of-control tweeting reduces churn and increases views, not only can you pay your investors, you can even take home a bonus. Maybe it can pay for that next meditation retreat.
You can cloak this basic economic trade-off in fifty layers of bullshit—say you believe in freedom of speech, or that the antidote to bad speech is more speech—but the fact is, hate speech is profitable. It’s killing our society and our planet, but it’s profitable. And the remaining makers of Twitter—the ones whose consciences didn’t send them packing years ago—no longer have a choice. The guy from the Mob is on his way over, and the vig is due.
Not to single out Twitter, but this is clearly the root cause of its seeming indifference to the destruction hate speech is doing to society…and will ultimately do to the platform. (But by then Jack will be able to afford to meditate full-time.)
Other companies do other evil things to pay their vig. When you owe the Mob, you have no choice. Like sell our data. Or lie about medical research.
There are internet companies (like Basecamp, or like Automattic, makers of WordPress.com, where I work) that charge money for their products and services, and use that money to grow their business. I wish more internet companies could follow that model, but it’s hard to retrofit a legitimate business model to a product that started its life as free.
And there are even some high-end news publications, such as The New York Times, The Washington Post, and The Guardian, that survive on a combination of advertising and flexible paywalls. But these options are not available to most digital publications and businesses.
Return with me to those Halcyon days…
Websites and internet startups used to be you and your friends making cool stuff for your other friends, and maybe building new friendships and even small communities in the process. (Even in 2019, that’s still how some websites and startups begin—as labors of love, fashioned by idealists in their spare time.)
Because they are labors of love; because we’ve spent 25 years training people to believe that websites, and news, and apps, and services should be free; because, when we begin a project, we can scarcely believe anyone will ever notice or care about it—for these reasons and more, the things we make digitally, especially on the web, are offered free of charge. We labor on, excited by positive feedback, and delighted to discover that, if we keep at it, our little community will grow.
Most such labors of love disappear after a year or two, as the creators drift out of touch with each other, get “real” jobs, fall in love, start families, or simply lose interest due to lack of attention from the public or the frustrations of spending weekends and holidays grinding away at an underappreciated site or app while their non-internet friends spend those same hours either having fun or earning money.
Along came money
But some of these startup projects catch on. And when they do, a certain class of investor smells ROI. And the naive cofounders, who never expected their product or service to really get anywhere, can suddenly envision themselves rich and Zuckerberg-famous. Or maybe they like the idea of quitting their day job, believing in themselves, and really going for it. After all, that is an empowering and righteous vision.
Maybe they believe that by taking the initial investment, they can do more good—that their product, if developed further, can actually help people. This is often the motivation behind agreeing to an initial investment deal, especially in categories like healthcare.
Or maybe the founders are problem solvers. Existing products or services in a given category have a big weakness. The problem solvers are sure that their idea is better. With enough capital, and a slightly bigger team, they can show the world how to do it right. Most inventions that have moved humankind forward followed exactly this path. It should lead to a better world (and it sometimes does). It shouldn’t produce privacy breaches and fake medicine and election-influencing bots and all the other plagues of our emerging digital civilization. So why does it?
Content wants to be paid
Primarily it is because these businesses have no business model. They were made and given away free. Now investors come along who can pay the founders, buy them an office, give them the money to staff up, and even help with PR and advertising to help them grow faster.
Now there are salaries and insurance and taxes and office space and travel and lecture tours and sales booths at SXSW, but there is still no charge for the product.
And the investor seeks a big return.
And when the initial investment is no longer enough to get the free-product company to scale to the big leagues, that’s when the really big investors come in with the really big bucks. And the company is suddenly famous overnight, and “everybody” is using the product, and it’s still free, and the investors are still expecting a giant payday.
Like I said—a house you can’t afford, so you go into debt to the bank and the Mob.
The money trap
Here it would be easy to blame capitalism, or at least untrammeled, under-regulated capitalism, which has often been a source of human suffering—not that capitalism, properly regulated, can’t also be a force for innovation which ameliorates suffering. That’s the dilemma for our society, and where you come down on free markets versus governmental regulation of businesses should be an intellectual decision, but these days it is a label, and we hate our neighbors for coming down a few degrees to the left or right of us. But I digress and oversimplify, and this isn’t a complaint about late stage capitalism per se, although it may smell like one.
No, the reason small companies created by idealists too frequently turn into consumer-defrauding forces for evil has to do with the amount of profit each new phase of investor expects to receive, and how quickly they expect to receive it, and the fact that the products and services are still free. And you know what they say about free products.
Nothing fails like success
A friend who’s a serial entrepreneur has started maybe a dozen internet businesses over the span of his career. They’ve all met a need in the marketplace. As a consequence, they’ve all found customers, and they’ve all made a profit. Yet his investors are rarely happy.
“Most of my startups have the decency to fail in the first year,” one investor told him. My friend’s business was taking in several million dollars a year and was slowly growing in staff and customers. It was profitable. Just not obscenely so.
And internet investors don’t want a modest return on their investment. They want an obscene profit right away, or a brutal loss, which they can write off their taxes. Making them a hundred million for the ten million they lent you is good. Losing their ten million is also good—they pay a lower tax bill that way, or they use the loss to fold a company, or they make a profit on the furniture while writing off the business as a loss…whatever rich people can legally do under our tax system, which is quite a lot.
What these folks don’t want is to lend you ten million dollars and get twelve million back.
You and I might go, “Wow! I just made two million dollars just for being privileged enough to have money to lend somebody else.” And that’s why you and I will never have ten million dollars to lend anybody. Because we would be grateful for it. And we would see a free two million dollars as a life-changing gift from God. But investors don’t think this way.
We didn’t start the fire, but we roasted our weenies in it
As much as we pretend to be a religious nation, our society worships these investors and their profits, worships companies that turn these profits, worships above all the myth of overnight success, which we use to motivate the hundreds of thousands of workers who will work nights and weekends for the owners in hopes of cashing in when the stock goes big.
Most times, even if the stock does go big, the owner has found a way to devalue it by the time it does. Owners have brilliant advisers they pay to figure out how to do those things. You and I don’t.
A Christmas memory
I remember visiting San Francisco years ago and scoring an invitation to Twitter’s Christmas party through a friend who worked there at the time. Twitter was, at the time, an app that worked via SMS and also via a website. Period.
Some third-party companies, starting with my friends at Iconfactory, had built iPhone apps for people who wanted to navigate Twitter via their newfangled iPhones instead of the web. Twitter itself hadn’t publicly addressed mobile and might not even have been thinking about it.
Although Twitter was transitioning from a fun cult thing—used by bloggers who attended SXSW Interactive in 2007—to an emerging cultural phenomenon, it was still quite basic in its interface and limited in its abilities. Which was not a bad thing. There is art in constraint, value in doing one thing well. As an outsider, if I’d thought about it, I would have guessed that Twitter’s entire team consisted of no more than 10 or 12 wild-eyed, sleep-deprived true believers.
Imagine my surprise, then, when I showed up at the Christmas party and discovered I’d be sharing dinner with hundreds of designers, developers, salespeople, and executives instead of the handful I’d naively anticipated meeting. (By now, of course, Twitter employs many thousands. It’s still not clear to an outsider why so many workers are needed.)
But one thing is clear: somebody has to pay for it all.
Freemium isn’t free
Employees, let alone thousands of them, on inflated Silicon Valley engineer salaries, aren’t free. Health insurance and parking and meals and HR and travel and expense accounts and meetups and software and hardware and office space and amenities aren’t free. Paying for all that while striving to repay investors tenfold means making a buck any way you can.
Since the product was born free and a paywall isn’t feasible, Twitter must rely on that old standby: advertising. Advertising may not generate enough revenue to keep your hometown newspaper (or most podcasts and content sites) in business, but at Twitter’s scale, it pays.
It pays because Twitter has so many active users. And what keeps those users coming back? Too often, it’s the dopamine of relentless tribalism—folks whose political beliefs match and reinforce mine in a constant unwinnable war of words with folks whose beliefs differ.
Of course, half the antagonists in a given brawl may be bots, paid for in secret by an organization that wants to make it appear that most citizens are against Net Neutrality, or that most Americans oppose even the most basic gun laws, or that our elected officials work for lizard people. The whole system is broken and dangerous, but it’s also addictive, and we can’t look away. From our naive belief that content wants to be free, and our inability to create businesses that pay for themselves, we are turning our era’s greatest inventions into engines of doom and despair.
So here we are. Now what do we do about it?
It’s too late for current internet businesses (victims of their own success) that are mortgaged to the hilt in investor gelt. But could the next generation of internet startups learn from older, stable companies like Basecamp, and design products that pay for themselves via customer income—products that profit slowly and sustainably, allowing them to scale up in a similarly slow, sustainable fashion?
The self-payment model may not work for apps and sites that are designed as modest amusements or communities, but maybe those kinds of startups don’t need to make a buck—maybe they can simply be labors of love, like the websites we loved in the 1990s and early 2000s.
Along those same lines, can the IndieWeb, and products of IndieWeb thinking like Micro.blog, save us? Might they at least provide an alternative to the toxic aspects of our current social web, and restore the ownership of our data and content? And before you answer, RTFM.
On an individual and small collective basis, the IndieWeb already works. But does an IndieWeb approach scale to the general public? If it doesn’t scale yet, can we, who envision and design and build, create a new generation of tools that will help give birth to a flourishing, independent web? One that is as accessible to ordinary internet users as Twitter and Facebook and Instagram? Tantek Çelik thinks so, and he’s been right about the web for nearly 30 years. (For more about what Tantek thinks, listen to our conversation in Episode № 186 of The Big Web Show.)Are these approaches mere whistling against a hurricane? Are most web and internet users content with how things are? What do you think? Share your thoughts on your personal website (dust yours off!) or (irony ahoy!) on your indie or mainstream social networks of choice using hashtag #LetsFixThis. I can’t wait to see what you have to say.
Great ideas for you