The Silicon Valley’s four crises

Here you can read this article in German.

The famous mantras “Move fast and break things” and “Ask for forgiveness, not for permission” aren’t sexy anymore. Nowadays they stand as symbols for the Silicon Valley’s multiple crises.

The Silicon Valley is going through its biggest crisis since the Dotcom crash. In fact, it’s engulfed in four different crises at once.

Loss of domestic political support

Some of the Silicon Valley’s biggest firms such as Facebook, Google and Twitter are being used for systematic political manipulation. There is no doubt about that anymore. Only the extend remains unclear. Investigations are ongoing. Meanwhile, tech firms are facing harsh criticism for being both too generous with censorship and restrictions of speech, or too negligent with doing so. Additionally, more people are asking themselves to which extend the tech industry contributes to the increasing wealth inequality in the region. There perhaps is no other place in an economically developed country in which so many millionaires walk or drive by so many homeless people every day, than San Francisco. The consequence of all this: Both the political right as well as the political left are becoming skeptical of the Valley’s biggest players. Without political support or at least leeway, disruption will be a lot harder.

Polarizing cultural transformation

Since its emergence, the Silicon Valley’s technology industry has been dominated by males and has shown a lack of ethnic diversity. Criticism of this structural homogeneity and calls for change have become pretty loud lately. The stereotypical-male mono culture is being confronted with a new reality, in which sexual harassment, unequal treatment and decisions based on homogeneous life experiences and world views are being called out instead of swept under the carpet. This is necessary and important. As these debates easily become heated, emotional and ideological, and as a rapid cultural transformation seldom happens without severe internal tension (Google Memo anyone), the Valley’s focus is now on itself. Instead of disrupting markets, the Silicon Valley is forced to disrupt itself.

Global regulation

The European Union has been trying to limit the tech firm’s tax avoidance practices for a long time. Now the pressure is increasing. Signs of election meddling, monopolist tendencies and systematic rule breaking involving companies such as Google, Facebook and Uber, offer additional motives for regulators in Europe and elsewhere to tighten the screws on the Californian giants (as well as on their competitors from up North the Pacific coast, such as Amazon and Microsoft). The famous Valley mantras “Move fast and break things” and “Ask for forgiveness, not for permission” have lost their positive-rebellious tone. They now rather represent the arrogance and ignorance of the Silicon Valley ideology.

Anti-technology backlash

Every euphoria is succeeded by a period of disillusionment and disappointment. The technology sector has just entered such a period. Critical reports about the negative impact of gadget’s and digital networks’ ubiquity in daily lives aren’t longer being produced by and celebrated among technophobes, but rather by former internet evangelists and early adopters who have been trying out any new device, app and service imaginable, but who are now starting to discover the costs of the digital revolution for their own well-being and for humanity at large. This process is probably a healthy and normal one. First the pendulum swings to one side, then to the opposite one. Eventually, it reaches an equilibrium position. But the fading enthusiasm for a never-ending flood of digital consumer innovation will, at least in the short term, hurt Silicon Valley, as the Valley juggernauts have perfected the creation of this very digital consumer innovation and turned it into a vast and possibly historically unique source of profit.

It’s unclear where this all ends, but it’s clear that the Silicon Valley’s culture and companies are about to change dramatically.

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Facebook, Uber and the outsider’s harsh perspective on Silicon Valley

Two companies based in the Silicon Valley (which not geographically but culturally includes San Francisco) have been making headlines over the past days: Facebook CEO Mark Zuckerberg published his globalization manifesto and Uber was confronted with the extensive, high-profile revelations of a former female engineer about the company’s systematic ignorance of sexism and generally hostile work culture.

Both stories have led to widespread criticism. In the case of Uber, it’s obvious why. But even Facebook’s manifesto, despite having been an active PR effort, was not received too well in the media. When the leader of the arguably most powerful company in the world outlines how he wants to use that power to shape the world, few are getting enthusiastic. Two of the negative responses to these stories stuck out though: They didn’t come from the usual suspects who professionally cover or comment on technology but from representatives of other firms. They also didn’t only focus on the specific matter, but used the occasion for a direct attack on the Silicon Valley way of doing things. Continue Reading

Secret and why the first users of a social app should not be (male) thirty-somethings who work in tech

Tech Crowd

Secret, an anonymous gossip app that once was considered quite a big deal within the U.S tech community, is closing down due to lack of user activity, as announced some days ago by its founder.

I was never a fan of Secret and I did not like how heavily it was pushed by some American tech outlets. As I documented here, TechCrunch’s Secret coverage was ridiculously excessive considering the comparatively tiny group of users that was devoted to the service.

The exaggerated hype and the problematic ethics behind a service that lets anybody anonymously say anything about others aside, I am not very surprised about the end of Secret. Despite the heavy press and the short but intense hysteria about Secret within tech circles, I did not find it likely that Secret would be able to significantly increase its reach beyond industry geeks. While this is always easy to say in hindsight, I have a mental rule of thumb when judging the potential of a social app, which guided my evaluation: Continue Reading

China and the Silicon Valley are getting closer, and that may have major consequences

China2014 was the year in which China gave its official debut as major player within the global digital economy. The rise and increasing strength of the country’s technology industry did not only show in incredible growth numbers of local giants such as Tencent (which owns 3 of the world’s 5 biggest social networks), “China’s Google” Baidu (which, like Google, even wants to built a self-driving car) and the e-commerce juggernaut Alibaba, but also in attempts to expand and invest internationally and to form partnerships with Western companies.

The controversial and rapidly growing Californian transport company Uber raised significant funds from Baidu. Its competitor Lyft welcomed Alibaba as a new shareholder. Snapchat, the very successful L.A.-based app for sending self-destructing photos and videos, was in funding talks with Alibaba (and already counts Tencent as an investor). Let’s not forget the IPO of Alibaba, which did not take place in China but at the New York Stock Exchange – and became the biggest IPO in history. Also, Facebook almost invested in Xiaomi, China’s leading smartphone manufacturer (and the world’s number 3). And Facebook’s CEO Mark Zuckerberg famously showed off his newly acquired Mandarin skills.

For 2015, one must expect this trend to continue and to intensify. China’s tech giants will want to gain a foothold in foreign markets, while the leading U.S. firms search for ways to enter the difficult and highly regulated Chinese market. The synergies of closer networks between both country’s technology sectors are obvious. Already because of cultural and political barriers, both parties need each other at least to some extend, whether they like that or not.

But with the attempts to form closer ties comes a potentially critical conflict: The leading U.S. Internet companies such as Facebook, Google and Twitter have traditionally tried to defend the values of free speech and democracy (with a host of disputable exceptions due to law enforcement, moral and pragmatic business reasons). As is widely known, these values are not especially appreciated in China, a country with an autocratic political system and a censorship-based approach to “problem-solving”. As Western and Chinese tech companies join forces, invest in each other and create partnerships, a clash of values is inevitable. The likely result with be the usual business pragmatism. That could mean diminishing effort by the U.S. tech giants to defend those basic civil rights that are essential to democracies.

In October during the Hongkong demonstrations, TechCrunch pointed out that Snapchat chose not to publish a special photo story of the protests, quoting CEO Evan Spiegel with the following words: “One of my pet peeves over time is how the technology industry has tried to sell counterculture. It’s tried to sell the revolution. We’ve been really resistant to doing this. We didn’t feel like pushing these photos and videos out would turn that attention into action that would be helpful in Hong Kong.”

The article ended with a rhetorical question that will most likely receive increasing relevancy in the months and years ahead: “How will an influx of Chinese capital influence the sensibilities of U.S. startups around public discourse and free speech?”

We should pay good attention to how the rising international power and influence of China’s technology and Internet sector impacts the West’s big player’s overall stance towards defending certain democratic values. There is a risk of compromises that are good for the companies involved, but less so for the people using their services.

Photo: Flickr/ Jakob Montrasio, CC BY 2.0