Growth: What is it Good For?

Growth: What is it Good For?


By Keith Teare • Issue #277 • View online

The Facebook whistleblower accused the company of putting growth and profit before everything. So, is growth bad? Is it incompatible with human good? Or is it the essence of progress?

Contents

Editorial

It’s obvious, right? This week we should focus on Facebook? Well, yes and no. We certainly should focus on the issues raised by the whistleblower Frances Haugen and her testimony to Congress. But that testimony is about a lot more than Facebook. It goes to the heart of ideas that have formed our views of civilization since the enlightenment. Is growth good? Does it serve humanity? Is it compatible with our deepest needs?

At the heart of the testimony was a concern that Facebook put “its own” interests ahead of those of “us”. From 60 Minutes:

“The thing I saw at Facebook over and over again was there were conflicts of interest between what was good for the public and what was good for Facebook,” Haugen told Pelley. “And Facebook, over and over again, chose to optimize for its own interests, like making more money.”

This idea — that a company’s self-interest should not form its modus operandi — is new and strange. Facebook is after all a corporation. Its success is measured in how many people use it, and how much revenue is made after taking all costs into account. That is a function of whether people like it and remain users, or whether they do not.

It seems that all companies are like that. The New York Times has a self-interest that guides its actions, so does Greenpeace and so does FedEx. Those interests, should they deviate from what people want, would lead to declining use. Here are the numbers of users over time:

Facebook Active Users

And its revenue

Facebook Revenue over time

And here is how it compares to other social media giants.

From The Economist(Statista) https://www.economist.com/graphic-detail/2021/10/07/tiktoks-rapid-growth-shows-the-potency-of-video

Clearly, 2.9 billion people do not feel Facebook is a problem. And advertisers seem confident that Facebook is a good place for them to connect with their potential audience.

So if Facebook is not alienating its users, then what is the fuss about?

The fuss is about success and growth. It seems that when a platform gets to 2.9 billion people. And when it gives them ways to connect. Then some people, some of the time, have bad experiences. I suspect the same is true in smaller settings like a bar or a school playground. People can be nasty. And people who are nasty can be hurtful. Other people have social or emotional issues and they can be reinforced through social contact with those who make you aware of them. This, it seems to me, is true in life. And Facebook is just that — life.

Frances Haugen seems well-intentioned. but she is asking Facebook to host “nice” content, and not to try to get us to engage with each other on its platform. She wants children who use it to only find positive or optimistic reflections of themself.

This is not the real world, and it cannot be real Facebook. The ugliness of life has as much of a place as its beauty. That would be like banning nasty mean people from a bar to help the goal of it being a “nice place”. Nice idea but entirely unworkable.

And what about profit as a motivator? Now, I am not a big fan of capitalism. It can certainly be improved upon. But until it is, the pursuit of growth and profit is at its very foundation. It is what determines success. It is the Darwinian mechanic that enables change — the death of the old and the birth of the new. Money is merely symbolic of that success and a way of capturing the value you bring to the world. So what is the recommendation Frances Haugen has that can replace seeking to engage us and make a profit?

“Haugen suggested, essentially, turning off the computer algorithms and making more of the internet gravitate toward designs like those of iMessage or past versions of Facebook and Instagram that showed posts in chronological order.”

This is from The New York Times and is a really good insight into the lack of any real alternative to an engagement algorithm. The idea that a linear chronological list would be better than Facebook’s attempts at relevance is quite laughable, to be honest.

So, after all of this, what is likely to happen? Not a lot. Facebook is not the cause of these societal issues. I suspect its efforts to mitigate bad experiences are as good as is practicable. But if not, it is no different than any social setting in which human beings are gathered in large numbers.

At the top of this week’s newsletter is the video made by Apple to celebrate the life and contribution of Steve Jobs on the 10th anniversary of his death. and Azeem Azhar’s book “Exponential”.

Steve’s commitment to innovation and excellence has produced the world’s most valuable company. We engage with its products and love them. Because they are good. And the 2 trillion dollar value placed on his company is proof that we love it.

And Azeem’s book focuses on the inevitability that change, driven by technology, will produce changes that question every aspect of our current societal structures, and more.

That spirit is one that should guide all discussions of Facebook too. How should a platform of 2.9 billion regular users and many more infrequent users, be leveraged as an asset for our collective connection and interaction. It is a testament to technology that it exists. It is not going away, and if it did something equally big and transformational would replace it. The fact that in humanity there are many imperfect people should not be blamed on technology or change. And it is unrealistic to think that those people should somehow be removed from the digital world. Let’s learn to connect, interact, agree, and disagree, just as we must in real life.

Video


Innovation and Growth

Celebrating Steve | October 5 | Apple

10 years later

It has been ten years since Steve Jobs passed. The company he co-founded is worth nearly two trillion dollars. The brand he created is everywhere. The devices he helped conjure are everywhere. And yet, we miss him every day, for there isn’t a Steve Jobs to help us overcome our mediocrities. Don’t get me wrong …

om.coShare

Exponential by Azeem Azhar — tech’s dizzying acceleration | Financial Times

As tech innovation continues to reshape our world, how can we best counter the disruptions it causes?

Life in 2021 feels a bit like riding an aging roller coaster whose brakes are gone. Accelerating climate change, a deadly pandemic, and unraveling global supply chains are the most immediate triggers of our collective sense of vertigo. But what if the peculiar unsteadiness of our times is no temporary bump in the road, but the result of a tectonic shift set in motion generations ago by our own compulsion to innovate? And what if, as Azeem Azhar argues, these tremors will be dwarfed by the shocks to come, forcing humanity to radically rethink and rebuild our political and economic institutions from the ground up? His book Exponential is a sweeping, engaging, nuanced, and ultimately conflicted look at how recent innovations in computing and other emerging technologies have radically transformed human existence, with consequences that we can hardly fathom. For, as Azhar writes, thanks to mutually reinforcing advances in technologies such as AI, renewable energy, and 3D printing, this dizzying acceleration of social, economic, and political change has just begun.

www.ft.comShare


Hot Air

What Facebook should change, according to its whistleblower

The whistleblower behind “bombshell” disclosures that have rocked Facebook in recent weeks spent much of Tuesday’s three-hour hearing explaining to Congress how Facebook could fix itself.

While the hearing was far from the first time a Facebook critic has briefed lawmakers, Frances Haugen’s insider knowledge and expertise in algorithm design made her particularly effective. Her background as part of the company’s civic integrity team meant she was intimately familiar with some of the biggest problems on Facebook.

www.engadget.comShare

Mark Zuckerberg Responds After Facebook Whistleblower Says Company Is ‘Tearing Societies Apart’

Frances Haugen, a former product manager at Facebook, revealed herself as the source of leaked internal documents that were given to the ‘Wall Street Journal’

“Many of the claims don’t make any sense,” he wrote. “If we wanted to ignore research, why would we create an industry-leading research program to understand these important issues in the first place? If we didn’t care about fighting harmful content, then why would we employ so many more people dedicated to this than any other company in our space — even ones larger than us?”

people.comShare

Mark Zuckerberg

I wanted to share a note I wrote to everyone at our company.

— 

Hey everyone: it’s been quite a week, and I wanted to share some thoughts with all of you.

First, the SEV that took down all our services yesterday was the worst outage we’ve had in years. We’ve spent the past 24 hours debriefing how we can strengthen our systems against this kind of failure. This was also a reminder of how much our work matters to people. The deeper concern with an outage like this isn’t how many people switch to competitive services or how much money we lose, but what it means for the people who rely on our services to communicate with loved ones, run their businesses, or support their communities.

Second, now that today’s testimony is over, I wanted to reflect on the public debate we’re in. I’m sure many of you have found the recent coverage hard to read because it just doesn’t reflect the company we know. We care deeply about issues like safety, well-being and mental health. It’s difficult to see coverage that misrepresents our work and our motives. At the most basic level, I think most of us just don’t recognize the false picture of the company that is being painted.

www.facebook.comShare


Regulation Fallout

Whistleblower’s SEC complaint: Facebook knew platform was used to “promote human trafficking and domestic servitude” — CBS News

For the first time, 60 Minutes is publishing whistleblower complaints filed with the Securities and Exchange Commission against Facebook by former employee Frances Haugen.

The filings, submitted by Haugen’s lawyers, state, “Our anonymous client is disclosing original evidence showing that Facebook, Inc. (NASDAQ: FB) has, for years past and ongoing, violated U.S. securities laws by making material misrepresentations and omissions in statements to investors and prospective investors, including, inter alia, through filings with the SEC, testimony to Congress, online statements and media stories.”

Haugen’s attorneys have filed at least eight whistleblower complaints with the SEC based on tens of thousands of internal Facebook documents secretly copied by Haugen before she left the social media company in May. 60 Minutes obtained the SEC letters from a Congressional source.

Haugen revealed her identity on Sunday in an interview with 60 Minutes correspondent Scott Pelley. It was her first recorded interview.

“The thing I saw at Facebook over and over again was there were conflicts of interest between what was good for the public and what was good for Facebook,” Haugen told Pelley. “And Facebook, over and over again, chose to optimize for its own interests, like making more money.”

Among the allegations in the SEC filings are claims that Facebook and Instagram were aware in 2019 that the platforms were being used to “promote human trafficking and domestic servitude.” The filings also allege Facebook “failed to deploy internally-recommended or lasting counter-measures” to combat misinformation and violent extremism related to the 2020 election and January 6 insurrection.

www.cbsnews.comShare

Facebook’s cracks are showing

What happens to Facebook now?

Facebook whistleblower Frances Haugen had her day in Congress yesterday. In the process, she prompted many lawmakers, who have so far failed to rein in the platform, to say they were newly determined to do something about the company.

What lawmakers can actually deliver is up in the air, but Haugen’s testimony went beyond a series of damaging reports on Facebook that she contributed to, adding more details and putting data on existing concerns.

  • Haugen addressed social media addiction, saying Facebook studies a metric called “problematic use,” which occurs when users report they can’t control their use even when it materially hurts their health, school work or other aspects of their lives.
  • “[5%] to 6% of 14-year-olds have the self-awareness to admit [to] both those questions,” Haugen said, adding that the peak of such self-reports occurred at that age. She suggested, however, that those figures underestimate the true scale of the problem.

www.protocol.comShare

Facebook Political Problems

Facebook’s political problems stem directly from its size and drive for growth; they are societal issues, not antitrust ones.

stratechery.comShare

The Internet and the Third Estate

Mark Zuckerberg suggested that social media is a “Fifth Estate”; in fact, social media is a means by which the Third Estate — commoners — can seize political power. Here history matters…

stratechery.comShare

YouTube removes R. Kelly’s official channels

YouTube has taken down R. Kelly’s official channels after the singer was convicted of sex trafficking, and Kelly will not be allowed to create or own any other channel on the platform.

techcrunch.comShare

In a win for the Internet, federal court rejects copyright infringement claim against Cloudflare

In Mon Cheri Bridals, LLC v. Cloudflare, Inc., the United States District Court for the Northern District of California granted Cloudflare’s motion for summary judgment and concluded that no reasonable jury could find Cloudflare liable for the alleged copyright infringement at issue.

blog.cloudflare.comShare


Venture Trends

State Of Venture Q3’21 Report

New records were set in a huge quarter for global & US funding, exits, valuations, and more.

Following a record-breaking Q2 in the world of venture, investments to startups worldwide continued to climb to new highs in Q3’21.

In our State Of Venture Q3’21 Report, we dig into global investment trends to spotlight takeaways like:

  • Another global funding record, up 105% year-over-year
  • The 5+ US metros with billion-dollar quarters
  • The highest-valued new unicorns of Q3’21, and the sector driving 1 in 3 new unicorn births
  • Which investor is doing 1.5 deals a day, and other top-ranked firms
  • The sector reaching nearly $100B in total funding in 2021
  • Which companies are exiting at billion-dollar valuations — and SPAC data galore
  • Asian tech hubs driving the biggest deals — including 195% YoY funding growth for one country

And much more

www.cbinsights.comShare

Global startups raise $158B in Q3, an all-time record

Following a record-breaking second quarter, venture capitalists around the world stayed busy in Q3, investing astronomical sums into global startups.

Since the back half of 2020 kicked off and the venture capital and startup worlds discovered that COVID and its related economic impacts were largely set to miss the upstart technology market, investors have been busy stuffing ever-larger amounts of cash into new companies around the world. The acceleration of capital deployment has generated more unicorns, more mega-rounds and simply more available dollars than ever before in the history of startups.

The deluge of record venture capital data points can be difficult to put into context at times. In the coming weeks, TechCrunch will explore the global Q3 venture capital market’s results in detail, by business genre (fintech, edtech, etc.) and geography, along with notes on stage-by-stage data and more.

techcrunch.comShare

SoftBank’s Prodigal Son Struggles in New Era

On a Wednesday just before the start of summer, SoftBank Group CEO Masayoshi Son gave managers of his company’s venture capital arm a list with thousands of VC-backed startups. Frustrated that SoftBank’s two Vision Funds had missed out on investing in some hot tech companies, he wanted the partners to contact as many of the startups on the list as they could to see if they might take money from SoftBank, said four current and former employees with direct knowledge of the matter.

In meetings over the following months, Son regularly asked how many startups the partners had contacted, sometimes singling out specific individuals for not making enough calls, one of the people said. The increased pressure led to more deals, but some of Son’s subordinates decided the potential payoff wasn’t worth waiting for. A wave of senior investment partners and other personnel have left or plan to leave, in part because they were dissatisfied with what they privately said was a spray and pray strategy, said two of the people with direct knowledge of the situation.

www.theinformation.comShare

Family Offices Raise Bets on Startups in $418 Billion Market — Bloomberg

www.bloomberg.comShare

How Network Effects Rule the World (with James Currier)

Entrepreneur and investor James Currier joins Azeem Azhar to discuss the power and future of networks.

hbr.orgShare

VC Daily: NFX Adds to Seed Arms Race With $450 Million Fund — Morningstar.com

Good day. The arms race to raise larger war chests to target young startups has intensified.

San Francisco-based venture firm NFX Capital Management said Tuesday in a blog post that it raised a $450 million fund that will exclusively target pre-seed and seed startups. It is the firm’s largest fund raised.

The fund will focus on businesses in sectors including crypto, fintech and gaming, according to the post. NFX invests in startups based in the U.S., Israel, Latin America and Europe. NFX made seed investments into companies including DoorDash Inc. and Lyft Inc.

The fund comes as venture firms are doubling down on seed investing amid increasing competition in the venture-capital industry. Seed investing, which is oftentimes a startup’s first infusion of outside capital, can offer huge payouts along with the additional risk of investing in nascent and unproven businesses.

Andreessen Horowitz said in August it raised a $400 million seed fund and last month Greylock Partners raised a $500 million seed fund.

www.morningstar.comShare


Innovation for Employees & Creators

Uber, Google, Stripe, Coinbase, and other tech firms are radically changing the way they pay employees in stock. It could mean the end of Silicon Valley’s ‘rest and vest.’

Silicon Valley is loosening the golden handcuffs as tech companies rethink their approach to compensation by letting employees get equity faster.

www.businessinsider.comShare

YouTube study: ‘Creator economy’ supports equivalent of 394,000 full-time US jobs

YouTube has more than 2 billion monthly users.

CNET

YouTube released a study Wednesday saying that the “creator economy” spurred by its massive video service supports the equivalent of 394,000 full-time jobs in the US and contributed $20.5 billion to the US gross domestic product last year. The study, conducted by independent advisory firm Oxford Economics, was commissioned and paid for by YouTube.

For context, the entire US workforce had 124 million actual full-time workers at the end of 2020, according to the US government’s Bureau of Labor Statistics. The US total gross domestic product in 2020 was about $21 trillion, according to the US government’s Bureau of Economic Analysis.

Google-owned YouTube, which has at least 2 billion monthly users, is the world’s biggest online video operation.

The study also disclosed internal YouTube data that more than 38,000 US channels had at least 100,000 subscribers and that more than 5,000 channels had at least 1 million subscribers as of the end of last year.

Video: How to cut the cord: 7 questions you need to answer

www.cnet.comShare


Africa Rises

Google is Africa’s latest big-name investor with $50 million fund — Quartz Africa

qz.comShare

Impact Africa Network launches From Here, a $25 million VC fund focused on Africa startups — ZDNet

www.zdnet.comShare


Startup of the Week

Green castles in the sky Vertical farms are growing more and more vegetables in urban areas

They don’t need soil or sunlight | Technology Quarterly

The best basil in the world is grown in a small village on the Ligurian coast just west of Genoa. Picked at the height of ripeness, after just the right number of sunny days and temperate nights, the delicate basil is perfect in the pesto for which Liguria is justly famed.

Unfortunately, many more people use fresh basil than live within driving distance of Genoa. And even on the Ligurian coast, nature does not always provide perfect weather. But a close approximation — crisp and recognisably peppery with the right anise undernotes, perhaps not quite vibrant enough to make a Genoese chef do cartwheels, but better than the limp stuff in plastic sachets sold in supermarkets — can be found in a few shipping containers at the back of a car park in north Brooklyn, just down the block from a synagogue and around the corner from a petrol station.

Those containers house a vertical farm — a farm in which crops grow on top of each other, rather than just next to each other, as they do in a field, allowing growth at far higher density.

www.economist.comShare


Tweet of the Week


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