Better Offline - How Growth Is Killing Tech's Innovation, ft. Robert Evans

Episode Date: March 20, 2024

Ever wonder why Silicon Valley stopped making anything new or interesting? It's because of the same growth-at-all-costs mindset that's destroyed the rest of the tech ecosystem. Ed Zitron is joined by Robert Evans to discuss how venture capital demolished tech's ability to innovate by forcing the smartest people in the world to work on the dumbest things ever invented.See omnystudio.com/listener for privacy information.

This is an IHeart podcast. Guaranteed human. Run a business and not thinking about podcasting. Think again. More Americans listen to podcasts than adds supported streaming music from Spotify and Pandora. And as the number one podcaster, IHearts twice as large as the next two combined.

Learn how podcasting can help your business. Call 844-844-I-Hart. Another podcast from some SNL late-night comedy guy, not quite. Unhumor me with Robert Smygel and friends. Me and hilarious guests from Bob Odenkirk to David Letterman help make you funnier. This week, my guest,

SNL's Mikey Day and head writer, Streeter Seidel, help an a cappella band with their between songs banter. Where does your group perform? We do some retirement homes. Those people are starving for banter. Listen to humor me with Robert Smigel and Friends on the I-Heart Radio app, Apple Podcasts, or wherever you get your podcasts.

The story I've told myself can then shape my behavior, and that can lead me to sabotage the possibility of connection. This Mental Health Awareness Month, tune into the podcast Deeply Well with Debbie Brown if you've been searching for a soft place to land while doing the work to become whole. This podcast is for you to hear more. Listen to Deeply Well with Debbie Brown from the Black Effect Podcast Network on the Iheart Radio app, Apple Podcasts, or wherever you get your podcast. Cool Zone Media.

Welcome to Better Offline. I'm your host, Ed Zittron. Today I'm joined by Cool Zone Media's Robert Evans, and he's joining me to talk more about the growth at all cost rot economy. It's the thing that's making your beloved tech products worse to make someone else hundreds of millions of dollars. And it's so good, Robert. We love it, don't we, folks? I'm having a great time. I love that I used to make a living teaching, like, people who would pay to the company I worked for huge amounts of money to be trained in, like, how to use Google. more effectively, all these little dorks and stuff that allow you to really specialize your search

settings. And I love that just in the last couple of years, Google has placed a shotgun to the base of their search engine's skull pulled the trigger. And now a bunch of people are desperately trying to be like, oh, there's this new perplexity AI or this other AI search engine. Like, it's much better. And it's like, no, it's slightly better than Google now. But they're all worse than Google used to be. None of this is a step forward. They're just pains in the ass. So one of the reasons that that's happening isn't just the public markets. The public markets are a big part of the problem, and they're the ones that incentivize this whole growth at all costs phenomenon. But I actually want you to know that this has another cause, and it's private investing and venture capital.

Those are the ones who are pretty much putting a thumb on the head of innovation that is stopping great companies, being built by incentivizing, well, kind of a form of slaughter, fattening up pigs to sell to the market rather than making something innovative. Yeah, like some sort of like a pig sheep hybrid, like a peep. But you could eat the meat from there. Yeah, yeah. I think it would probably be like the clone from the fourth alien movie that just is begging for you to kill it.

But then, you know, you get some sort of fucked up bacon. But instead of getting that fucked up bacon, what you actually get is more like the creature from the thing, the weird spider creature, which is funny, scary, but not particularly useful. Yeah, probably not very tasty. So before companies like Uber reach the public markets, they're fueled by a much more violent and reckless form of funding, venture capital. Venture capitalists can be seed stage investors or regular guy putting 10 grand into a company all the way up to massive firms with hundreds of people like Andreessen Horowitz, who invested early in Facebook and Airbnb. be. Yeah, like, the thing that I've always, that I came to realize about, like, venture capital money, just from studying scams is you have, like, Corey Doctro talks about this a lot, but like in traditional scam terminology, you have this period called like the bezel, right?

Which is the time between starting the scam when everybody else realizes it's a fucking scam. It's the period in which you're making a bunch of money. And like, that's where all of these VC people like make their fortune. You know, some of the companies they back do turn out to be long term profitable, but they don't have to be. If you can just sort of get this IPO where everybody values it super highly for a while and cash out what you have in the company during that period of time, if the company fails a few years after its IPO, if it turns out that it wasn't really a good business, you still get rich. Like the key thing is it's great if you wind up making a successful business in their eyes,

but you don't have to for them to make a lot of money, right? They just have to have to be able to get out before, you know, the scam reaches its conclusion. They have to reach a liquidity event, so either selling their company to someone else or taking it public. And a big thing is that venture capital, yes, like all investment things, is always just evil at its core, but it used to be much smaller. It used to be maybe a billion dollars in a year that would go into tech startups. Now it's in 2022, it's like $240 billion. And I'll get to why that's an obscene number later, specifically around crypto. But when it was smaller, investment wasn't done with these ideas of these 5, 10, 20x multipliers.

It was, I want to put money early into this company because I think they're making a good product that people will buy. The problem was companies like Google and Apple to a lesser extent, but really companies like Facebook getting these massive multi-billion, $100 billion dollar valuations. Suddenly, startup stopped needing 10, 20, 50, 100 grand at seed stage and started needing $2 to $5 to $10 million at the C or even Series A stage. And suddenly venture capitalists started moving away from this idea of good businesses that could last without them. And they started to go into a form of kind of symbolic capital, investing in things that looked value but aren't necessarily valuable at their whole.

as a result, they create this ecosystem where these companies go through this kind of volatile, erosive cycle of growth with the only goal being that they get to a stage when they become someone else's problem, either by listing on the public markets or selling to a much bigger company. Yeah, and the whole crypto industry is essentially taking the, like, it comes out of everyone people who came to expect this and in a lot of cases got rich for the first time through this chunk of the tech industry and then realized, well, if we create a way to utilize some of these psychological

phenomenons and some of these ideas without any kind of regulation, like that's where crypto comes from, right? Like it's purely the scam aspects of this with none of the real businesses. And you're completely right. And I'll shortly get to that as well because... Yeah. Let me set the scene of the current state of the valley. A startup emerges.

They're considered the next big thing. They ideally reach unicorn status, which refers to them being worth a billion dollars, and they experience unprecedented growth. They explode. And nobody asks the question, hey, you make him more money than you're spending? Open AI is a great example of this right now.

They get these articles saying, oh, we've got over a billion dollars in revenue. No one's saying, are you, how much you're spending to get there? But suddenly, after all of this venture investment, after all of this hype, they're challenging the big dogs at their industry. They're getting in there,

and they raise more and more money, and then they buy up a few more companies, and now they're at this big, fat, nasty penultimate stage. When people begin to ask if it was a good business, and at this point, they either have to sell it to someone else or take it public. So the destination may change, but the journey's always kind of the same. You grow, you grow, you try and find a business model, you grow a bit more, and then you face reality. The ideal state, by the way, for venture capital is before this point.

Reality should not interfere with making money. So venture capital pumps millions and billions of dollars into these ideas that might kind of sell a product or a service, but really just resemble something that was worth something in the past. Perhaps the founder is a white guy who looks kind of like Mark Zuckerberg. This is literally a phenomenon in the 2010s. It was guys who looked like Mark Zuckerberg wearing hoodies. Or maybe it's, hey, Uber's a big company.

What if you're the Uber for something else? Uber for laundry, for example. A lot of those companies die. And what they're trying to do is keep the dance going until someone is dumb enough to buy them or they can convince Morgan Stanley to help them go public. And the real problem with the Valley right now is people are conflating the concept of great ideas

with things they like and things that might sell. And the result is less innovative things are happening. These companies that are getting the money, Open AI getting $10 billion mostly in cloud credits isn't making the world better. It's locking a major startup into being a customer of Microsoft and making a product that has yet to really prove itself. Yeah, I think people are surprised by that. But what we mean is not that you can't do things that are cool or surprising with this stuff,

but that that does not conclude with it being a great business, right? A bunch of people are flipping out about that new, the image, the vivid. generator. We can make a minute-long video that kind of looks like a California boomtown or whatever. And it's like, yeah, it's cool. But like, is this number one something that's realistically going to be used in some things? Yeah, I'm sure it'll be in some things. This is going to like replace actually making movies? Well, probably not. And that kind of means there's probably a pretty limited amount of money that you're going to make with this right now. Like it's, it's something that could potentially be a business that is profitable, but could it be a

that is more profitable than the amount of money they are continuing to shuffle into open AI, that actually is still an open question. And the problem is that I'm not even saying that venture capital shouldn't happen. I do think it is a necessary force to get some ideas off the ground. But the problem is it's controlling the valley now. And as a result, the things that are getting funded are the problem. It's not that there are no good ideas. It's not that there are no good founders.

It's that the funding is coming from an increasingly more centralized group of people. who are pretty much, and I get everyone's profit-seeking, every investor wants a return, but there are venture capitalists out there who just don't care about creating new things. In fact, they're very, very, very focused on keeping the status quo going. And that's where Andresen Horowitz comes in, my absolute favorite venture capital firm. You may remember them from Facebook and Airbnb. We love Mark Andreessen. Yeah.

So, Andresen Horowitz is amazing because they're a fairly large, firm and they have various partners who all walk around making speeches and they do their tweets vaguely saying like, decentralization is the future and it's good because of that. And you're like, what does that mean? And then they don't want to talk to you any further. Chris Dixon being one of the more ugly ones, a partner that is entirely focused on cryptocurrency, which I'm shortly going to get to. And nowhere was Andresen Horowitz more crooked than crypto.

The scam the Andreessen Horowitz pulled on the crypto markets in 2020. and 2022 should be studied as a financial crime, and indeed it should be one. What it actually is is a way that they managed to turn basically money into more money without ever creating anything of value. They pumped billions of dollars into these things called Web3 companies, which were allegedly new companies that were decentralized, but they were really just shells for a cryptocurrency token that someone could then hype and sell before the SEC got aware of the problem. And I really must be clear how few of these companies actually did anything. Let me take a step back.

Let me explain how cryptocurrency companies made their money in like 2021, 2022. They would put out a website for the thing and they would say, we're going to do a decentralized social network and we're going to have this token. This token will reward people for the contributions to the social network. There were like 80 different versions of this idea. That token would then get a financial valuation through trading on various, different crypto exchanges, Binance or Coinbase, in many cases.

And at this point, you'd think, cool, what does the company do? And that was the wrong question to ask. The companies don't really do anything. Or they're just traditional companies that have created a token as a means of monetizing a market. What Andres and Horowitz would do

was invest in these companies and then receive a massive amount of these tokens at this vastly discounted price, kind of like how it works with stock in startups. And then you would hope, in the case of the stock for the startup, that you could sell it on the public markets, or perhaps you could sell to another company. This usually takes about five to ten years, but what was amazing about the crypto scam was Andresen Horowitz only had to wait a few months for these tokens, which they had bought a, to list on, say, Coinbase, a major cryptocurrency exchange where Mark Andreessen has a board seat. This allowed them to dump all of their investment, which they got at this remarkably small price, on to re-eastern. investors believing that they were in the ground floor. They basically invested in the stock market,

invested in Morgan Stanley, invested in every part and just funneled money between places. It was completely insane. And they made billions of dollars doing this. I feel crazy whenever I read about this stuff because it happened in broad daylight. It's, you know, you can say what you will about like the ability of anyone to accumulate that much money, but at least, even, with like, I don't think Zuckerberg certainly wouldn't say he deserves to have billions of dollars. But if you say, if you say, okay,

this guy's crazy rich, he's worth this many billions, what do you do? Well, he made this thing that everybody uses. That is a thing, right? As opposed to like this, which is how did he become a billionaire? Well, he played a really, really fancy version of the shell game. They play on the street in New York and all those movies from the 80s.

And it's crazy because there was one called DFINITY. They invested in it. It's called it had a token called ICP Internet Computer, I think it stand for. That's not done anything. That company's never made anything. No one's using that. There are no users. But Andreessen Horowitz made so much money off of it. At the beginning of the pandemic, Mark Andreessen did this big bloviating post saying, It's Time to Build. But I think the real fun scam of this, the thing that makes me laugh but also cry, is that there was a prolonged period where Andreessen Horowitz and many venture capitalists

invested in building nothing. They found these shell companies that they then filled full of venture dollars. In exchange, they got a bunch of tokens that they were allowed to dump onto the markets. They conned so many people. They invested in Yuga Labs, who makes the Bored Ape Yacht Club. Ah. That one's going to pay off. That investment's going to pay off. I've seen their board ape world of Warcraft thing that they believe is going to be the future of social networking or whatever. And this is the thing. These companies never really built anything. They invested they got the early ape coin.

I really hate saying this stuff out loud. It's very annoying. Yeah, they got the early ape coins, and they were able to profit off of that. And then they have the temerity to say, Chris Dixon went on Hard Fork, the New York Times podcast, and said, oh, yeah, we don't invest in anyone who has their own tokens. They're just fucking liars. They're just liars lying to us all. I do kind of wonder that one of the things that makes me

believe in some sort of like universal spirit guiding reality is that like Peter Jennings had to die when he did. We simply couldn't have had a world in which Peter Jennings was explaining ape coin to people over the television. Like that wouldn't have been allowed. Like that's simply unimaginable.

And it's just having to sit here and say yeah, ape coin. That's how they made them on an ape chain. Oh yeah. infinity. It's these things that sucked, but also, as funny as this is, this was a prolonged period when nothing was created other than money for already rich guys. The people that were disadvantaged by dumping these tokens were regular investors who in 2021, 2022 believed that the

crypto market was going to make them wildly rich, and it didn't. Coinbase, who Andreessen Horowitz invested in, they helped millions of people lose billions of dollars because they did a Super Bowl commercial in February 2022, which eventually led, well, I think if you invested on that day, if you waited to sell any later than March, you would have lost your shirt, you would have just been at a loss. However, if you'd waited, it's now back up to 67,000, so who the fuck knows? Either way, the big thing with the crypto craze was that it was the most bornographic version of the problem of venture capital today, in that it was entirely symbolic value. It was, oh, a decentralized computer. What a novel idea. Are we building it? Who

knows? But we have a token today. Yay. Let's make some money. And in 2022, crypto start-ups raised $33 billion of venture capital, which is more than 10% of the $241 billion that was invested in that entire year. And none of them have made a real product. Yuga Labs, you laugh at the Bored Ape Yop Club, but that is actually one of the few real products that actually launched. Yeah, they do seem to be making a video game. It looks like shit, but it does seem to be a video game. Another podcast from some SNL late-night comedy guide, not quite. Unhumor me with Robert Smygle and friends, me and hilarious guests from Jim Gaffigan to Bob Odenkirk to David Letterman, help make you funnier. This week, my guest, SNL's Mikey Day and head writer Streeter Seidel, help an Acapella

band with their between songs banter. There's the worst singer in the group. The worst? Yeah. Me. Is there anything to the idea that because you're from Harvard, you only got in because your parents made a huge donation. The group. The yard birds, right?

That's the name. The Harvard yard, but they're open. Do you have a name suggestion? We're open. Since you guys are middle aged, one erection. Listen to humor me with Robert Smigel and Friends. on the IHeart radio app, Apple Podcasts, or wherever you get your podcast.

Human me! I need some jokes to make me seem funny. Run a business and not thinking about podcasting, think again. More Americans listen to podcasts than ads supported streaming music from Spotify and Pandora. And as the number one podcaster, IHearts twice as large as the next two combined. So whatever your customers listen to, they'll hear your message. Plus, only IHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business.

Think I-Hard. Streaming, radio, and podcasting. Call 844-8-4-I-Hart to get started. That's 844-8-4-I-Hart. The story I've told myself about love or relationships can then shape my behavior, and that can lead me to sabotage the possibility of connection. This Mental Health Awareness Month, tune into the podcast deeply well with Debbie Brown

and explore the journey of healing, self-discovery, and returning to yourself. We explore higher consciousness, emotional well-being, and the practices that help you find clarity, peace, and self-mastery in a world that can feel overwhelming. The world is becoming lonelier. We're not becoming more social and connected. We're becoming more individualized, but we actually meet people in connection. If you've been searching for a soft place to land while doing the work to become whole. This podcast is for you to hear more. Listen to deeply well with Debbie Brown from the Black

Effect Podcast Network on the Iheart Radio app, Apple Podcasts, or wherever you get your podcast. And I think that it's a symptom of a much larger problem, both in that they're not investing to actually make cool tech happen, but they're just trying to make as much money in the most lazy way possible. But I also think there's another problem. I don't think these freaks actually know what good looks like anymore. Mm-hmm. And nowhere else is that more obvious than Adam God damn Newman. Yeah, baby.

We love him. So Adam Newman, for those of you who don't know, ran a company called WeWork. WeWork's business model was that they would buy or lease a building and they would sub-lease it to people, allowing them to, like, run their company out of it or use a co-working space. theoretically a good idea until you looked at the financials where it constantly bled money almost immediately because real estate is a terrible investment. Yeah.

And also, it was way too cheap. It was way too cheap from the very beginning. So they were always operating at a loss. Yeah, it's, it's, um, he, Newman, the thing that's interesting about him, because he and Elizabeth Holmes were kind of having their glory days around the same time. And they're both very similar figures. Newman was much smarter because he picked a field where no one was going to vengefully come after him for fucking up. Because everyone in real estate some kind of con artist at that scale, as opposed to trying to get into like blood science.

But what's great about it is he turned a company that was at one point worth $47 billion into one worth $10.65 million. And then the company died. It went into Chapter 11 bankrupt. We all love it. And right now, those cleaning up the mess of WeWork are just desperately trying to like renegotiate its debts and just being like, this company, I'm sorry, I can't pay you due to this business model, which I have inherited. At one point, WeWork traded at $500 or something dollars a share. And I believe right now it's like 0.05 cents. So you think, you think.

Now, there's been a show about WeWork with Jared Leto in it. Morbius fame and this is one of the more legendary startups. And I tend to, I choose to believe, by the way, that it is within the Morbius canon, that this is what he's doing when his character is not unshowered in a hoodie. Fighting crime? Fighting Matt Smith from Doctor Who. So, as we've established, Adam Newman, aka Morbius, he'd think, okay, this guy famously TV show about how bad he was at business.

This guy would be run out of town, right? Wrong! Adam Newman managed to raise in August 22 $350 million for his new company Flow. Great. I love how people learn lessons. And what's great about Flow is when you go and look about actually what it is, no one can really tell you. It appears to be a rent-to-own apartment company,

but it isn't obvious what the actual difference is between it and, I don't know what BlackRock's been doing for years. what the asset management firms will be doing. Nevertheless, Mark Andreessen absolutely busted is not everywhere to get $350 million into this company. They claim that there will be community-oriented features and that there will be something special about being involved in flow. Now, you think that I'm just being vague.

It's been like a year and a half since this company went out, and there's really nothing that, like, out there for it. And I think it's because Adam Newman just was someone that Mark Andreessen remembered. I'm not, I still cannot work out why this happened. He's always been full of shit, just to be clear, because there was this, Andresen Horowitz actually released a video, an interview with Adam Newman. He was describing home ownership and why home ownership was very special. He was saying it's the difference between calling

your own building super to unclog the toilet or unclogging it yourself. And he was saying that doing so, and I quote, shifts your thinking from being transactional to actually being part of a community and feeling like you own something. But you don't want them to own anything. You just want them to have to do shit that the landlord is supposed to do. But also, if I have to unclog my shitter, I'm not sitting there being like, yeah, damn, I love being part of the community. I'm like, what the fuck did I eat?

Well, it's also like, it's fucked up because like one of the, I mean, this is actually unclogging your toilet is always on the person using the toilet. That's not really a thing that, that involves change. based on whether or not you're the landlord. But one of like the bit, like renting, there's a lot of things that suck about renting, namely the fact that like it keeps getting more and more expensive.

But one of the benefits of renting is that if something breaks, you're supposed to just be able to call the owner and they have to fix it. It's not on you. If your fucking AC breaks, it's on them to make it work. And he's saying that like, no, if you are responsible for fixing things,

but have absolutely no ownership of them, it's fine because that makes you part of a community. And that's nuts. But also, that just to be clear, that quote is from an interview he gave at Andresen Horowitz, at his investor.

If I was watching that as an investor, unless I was completely disconnected from humanity, I'd be like, this guy's never unclogged a toilet. Yeah. This guy's never on-clog, this guy's never done home maintenance.

Also, why would you call your super to unclog your toilet? Just have a plunger. Unless you really back that bad boy up, you have to have done a lot more damage than that. Yeah, you're literally shitting bricks in this case. But I think it's more indicative of the fact that I don't think Adam Newman has had a normal human experience in quite some time.

And I don't think Mark Andreessen has either. And yet he just got this insane amount of money to address problems allegedly related to a thing he does not understand. Yeah, love to see. Which is also something he's been proven to be bad at. Adam Newman lost billions of dollars of SoftBanks money, which is really funny when you think about. And actually, do you want to hear a fund scam? He took a loan out on his stock at WeWork and actually had to put his stock from WeWork out

to SoftBank, took real money from them and leveraged his stock, and then SoftBank was like, hey, if you don't pay this back, we're going to take your stock and he was like, yeah, sure, fuck you. I'll just, I'll, like, that stock's worth like $30 now. I'll just keep the real money and never repay you. See you, bitch. But this is the thing.

This is why, and I think, Situations like this are where people are going to start really getting blackpilled with the tech industry. Because I think that you see things like this happening and you think, are they laughing at us? Yeah. Like, is this, in a same world, Adam Newman wouldn't see a single dollar for the rest of his life. Yet he got 350 million goddamn dollars. It was immediately a billion dollar company before it had done anything. And all they have to show for it is a 639 unit apartment building in 4.5.

Lorderdale. Yeah. And when you see a guy with the record that Newman has get a company valued at that, what that means is that investors, investors are not valuing it that much because they think it will actually make that much money. They're valuing it that high because they think this guy is good at spin enough that we'll be able to flip this shit and get some money out of it before the company collapses, right? We can do an IPO, our shares will be worth money, and then we cash the fuck out. That's what they're seeing. And they may be right. It may wind up being, like, we work made some people a lot of money. But that's the thing. I actually wonder if that system works anymore. Yeah. I don't know whether they're going to be able to get liquidity on this,

because real estate is a fairly, well, it can be a variable asset, but it's also kind of an annoyingly real one. You can't really go to someone and be like, actually, this apartment building's worth $50 million more because of the future of it. innovation. No, no, it's a fucking apartment. Yeah. And I just think that venture capital has completely lost the plot and has lost its ability to say what good is. They just, it's almost like there are some of them who are con artists feeding con artists. Yeah. And some of the largest investment rounds the last few years have just gone into systems like this, gone into things that when you look at them,

you're like, this, this doesn't need this much money. Why are you doing this? And I think it's because they just are gamblers. I just think they're gambling and they're gambling based on an increasingly small amount of information because it's been 20 years since they'd done something. No, there was a company called Noom, which was a weight loss app that connected to with coaches and various things. They raised $540 million in 2022. Not sustainable and not profitable either, but also the entire weight loss industry is worth about $4 billion. So you're saying they are worth that much of Like an eighth of the whole industry. Yeah.

Right? If I'm mathing right. Yeah, I was also failing to do the math in real time there, but whatever. People know, people know I don't math good. Clubhouse is one of my favorites, though. I'm not sure if you remember Clubhouse. It was this audio app that grew during the pandemic. And everyone said, this is the future.

And what it was was it would be, it's basically Twitter spaces. It's what we know as Twitter spaces now. A live audio room where you can go in and have, in this case, extremely vacuum. tech conversations. It was big during the pandemic because everyone was at home, and you had people on Mark Andreessen who, of course, had invested going on there and saying stuff like, oh, the future of technology is the future. And everyone, wow, Mark, thank you. And there was this weird period where almost every other, almost every week there was some kind of valuation story that would quote unquote league. And it would be like, oh, it's worth $2 billion. Oh, it's worth $4 billion now.

And then they started disappearing and nothing was really happening. And as people, started leaving their houses again after the lockdowns ended, Clubhouse just kind of faded to black. The thing that pissed me off about that was the amount of stories in major media outlets claiming that Clubhouse was the future, the future specifically of radio, which is a $12 billion industry total, that constantly has trouble making money. Not that we know anything about that, But I mean, you know, the fun thing about that to me is that like, we know really well what, like, the issues that radio has with making money are like due in part to, you know, ways in which advertising and stuff has changed. But like pretty durably, the things that people want out of radio are like people they like talking about things they're interested in. Right. Initially, that was like people, DJs. they liked talking about the cool music, but it's expanded now beyond that. But it's never just been like random unscripted conversations between people who have mics of varying quality. Like,

that's not particularly a thing that folks have ever, like, expressed a desire for. And it's weird to be that anyone thought that, like, Clubhouse was going to be interesting beyond a very specific subset of people that wanted to suck these people's proverbial dicks. And it felt like a on in real time as well, because they were pushing, Andrice Norowitz was pushing every partner they could to use it. They were paying celebrities to go on there. They were getting anyone they could

to get on the platform and they were very clearly behind the scenes trying to get someone to buy it. And then Twitter just built Twitter spaces and everyone was like, oh, we can just use this on a network that we use. Clubhouse now, by the way, is really funny. It's 90% scams

or 90% people doing manifestation stuff. It's amazing. but there was a brief period where the venture capital elite had spread around enough journalists and enough people on Twitter that they truly believed this was the future. But if you sat there and really thought about it, there was never a point where it could make money. Like you said, unscripted stuff, unscripted stuff's difficult. It's very difficult. Even when you have really great chemistry with someone, you can trip over stuff as I just did.

There are numerous things that can go wrong. And let's just be honest, none of these tech people were particularly eloquent to begin with. Yet, based on everyone's conversations, everyone's saying this is the future, this is how, what's our clubhouse strategy? What are we going to do on clubhouse? Nothing. Nothing, because you're so boring. But it raised so much money. I think it raised over a billion. It was ridiculous. And yet, this is what venture has become, pumping up these very shitty businesses, these non-entities, these features rather than products. And the result is that the money is not going to actually innovative things. And I get it, the venture takes risks. The whole point of venture capital is

its risky money. That's why you buy a half percent or a percent of a company for, I don't know, a million dollars, just choosing random numbers there. There is a risk to it. And capital is required to get a company off the ground. But the massive, massive amounts of money going into these non-entities, into these, in the case of flow, Adam Newman's thing, very boring remakes of already boring and kind of not profitable businesses to begin with. The result is that you get a venture capital industry that makes startups require their existence. You get companies that cannot function without venture capital.

You get lossy companies like Uber who get bigger and bigger without ever finding a business model because venture capital keeps them alive until they've completed the dance that lets them go public or get sold to someone else. And companies like Uber are actually, actually a great example. They take in public and they get these massive windfalls for VCs, yet they immediately find themselves in this horrible position where they have to start

dancing for the real public markets. That's why Uber has become much harder to get an Uber in some markets and it's much more expensive, yet the drivers are making less money. It's because we're in a situation where Uber now has to become a growth at all cost startup rather than just a venture-backed welfare recipient. And it's just, it's a deeply depressing time. because people making real companies, people making new ideas, people, young people in the tech space are now going into this and seeing that the people getting money are just people that look like other people that have made money before, that have ideas that aren't even particularly good, but they sound like something you can flog. The amount of money going to AI right now for

companies that have no business model at all, let alone a path to revenue, they just don't, they're just trying to grow and grow and grow. It's just a deeply depressing time. VCs, they put, I think, $41 billion into crypto between January 2021 and 2022. And that was all without crypto ever having done anything. It's what, 2024 now, like how I just had to ask that. And crypto is still not doing anything. There's still nothing. There's still Bitcoin's worth $67,000 and there's still no crypto use case. The Metaverse, which you would by now have heard an episode about, did absolutely nothing other than rebrand something we'd had for upwards of 15 years, and they raised $120 billion in 2022. These concepts are what are getting money. Innovation isn't. Innovation is not enough to get you investment these days from venture capitalists. No, the thing that you want to do to a VC is find a way to get them in on a scam that you invented. And that's not. going to help this world. It's going to destroy the tech ecosystem if we're not careful.

And quite honestly, I have no idea what changes the tide on this other than a major start-up dying. Another podcast from some SNL late-night comedy guide, not quite. Unhumor me with Robert Smygel and friends, me and hilarious guests from Jim Gaffigan to Bob Odenkirk to David Letterman, help make you funnier. This week, my guest, SNL's Mikey Day and head writer Streeter Seidel, help an a cappella band with their between songs banter. There's the worst singer in the group. The worst?

Yeah. Me. Is there anything to the idea that because you're from Harvard, you only got in because your parents made a huge donation. The group. The yard birds, right? That's the name. The Harvard yard, but they're open.

Do you have a name suggestion? We're open. Since you guys are middle aged. One erection. Listen to here. Humor me with Robert Smigel and Friends on the IHart Radio app, Apple Podcasts, or wherever you get your podcast. Humor me. I need some jokes to make me seem funny.

Run a business and not thinking about podcasting, think again. More Americans listen to podcasts than ad-supported streaming music from Spotify and Pandora. And as the number one podcaster, IHearts twice as large as the next two combined. So whatever your customers listen to, they'll hear your message. Plus only IHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business. Think IHeart. Streaming, radio, and podcasting.

Call 844-844-I-Hart to get started. That's 844-8-4-4-I-Hart. Hey, I'm Jared Adano. You might know me as that loud guy who yells out, help on the internet. Help! Somebody! Please! But there's so much more to me than that. I'm an actor.

I'm a comedian, and recently I've become quite the helper myself. And on my new podcast, Hope from a Hippocrat, I'll be changing lives, helping people in need with my sage advice and thoughtful solutions. Sike, I'm a comedian. I'm not qualified to give good advice. Join me and my comedian friends as we riff rant and recommend some of the most legally dubious advice known to man. If I'm calling you, even if you're on your phone, let it ring twice. One ring is too scary. Oh, cream of chicken suit.

Hey, cream. Cream of chicken soup. This is Help from a Hypocrite, the worst advice from the dumbest people you know. Listen to Help from Hypocrite as part of the Mike Coutura podcast network available on the I-Hart Radio app, Apple Podcasts, or wherever you get your podcasts. So when right in the rot economy originally, my mate Casey and I were talking about fire and how growth is like a fire. If you build a nice, sustainable fire, it will keep you warm, cook your food, sustain your life.

But if the only thing you care about is how big your fire is, then all it's going to do is set fire to everything around it, and it's going to require so much more to keep it burning. Eventually, you'll have nothing left. But if you desperately desire that fire, you'll constantly have to find new things to burn, no matter what the cost is. And that's kind of where the markets are at this point. We've kind of turned the private and public markets over to arsonists. We've created the conditions where we celebrate people like Mark Andreessen for making these big investments, these big bets, these big, nasty companies that don't do anything, or the even bigger firms like Google and Meta,

who are just turning against their users and frankly turning against the people, the tens of thousands of people, that they regularly fire. Venture capital and the public markets are no longer rewarding good businesses or good CEOs that run good sustainable companies. They're rewarding arsonists, people that can steer the kind of growth that raises the value of an asset, even if that value isn't even,

even attached to the value it provides to humanity. Elon Musk's success, everything he's done with Tesla, didn't come from his love of science or that he ended the monopoly of the internal combustion engine. It came from his ability to manipulate symbolic value, his hyperman mentality. He worked out in as early as 2013 that anyone in the world in a media outlet

would cover the fact that he spoke about anything. He's made so much money, for him and people buying Tesla stock pretty much through lies and half-truths. There's always a good reason to buy Tesla for an idiot in the market, because Elon Musk is always saying, oh yes, now Tesla's will now drive side to side. It doesn't matter if it's true. Doesn't matter if it never happens. Elon Musk promised autopilot for years and years and years until it actually arrived and then it would arrive in these little bits and chunks and then it started killing people. Tesla isn't a good company. It's a good stock to buy. It's a good stock to

and that is a problem. That is where we are right now with the public markets. And with the private markets, we're not far behind. So Google's Sundar Pashai, he hasn't paid $200-od million a year because he's a good CEO. Google's destroyed search. We've been over that ad nauseum. And it sucks. You'd think that someone who destroyed the most beloved tech product used by billions of people that has changed people's lives and will continue to do so. This is empirical fact, the damage he has done to the tech ecosystem and his core product, yet he's rewarded, he's paid this obscene amount of money. The fact that Google's core product is getting worse doesn't matter at all,

because Peshai's paid because he finds new, innovative ways to increase the growth of the company, even if doing so makes the product suck. And the consequences are that these companies will continue to invest in things that grow the overall revenue of the company or their market share over everything else. They will mass hire. They will mass fire. And they'll do so because there are no consequences from the market. They don't care.

All they want to know is that the company will continue growing. Venture capitalists are just as bad. They don't mind. As long as you have enough money to keep going to the next funding round, as long as you can keep growing this symbolic value. It doesn't matter if you hire and fire people at random. It doesn't matter if your product's kind of wonky. as long as it's good enough to flog to someone else.

Look at the AI industry. Look how bad chatGBT is at certain things. Look at how bad clawed, Anthropics one is. It doesn't really matter because AI's the future. We can make money off of that at some point. And I think that this is really the problem, and it's the thing that unites the private and the public markets. We're not building things for humans anymore.

We're building things for humans that invest money. We're building symbolic capital. And when you do that, you will strangle innovation and you'll do it at scale. You will build tech for nobody. You will build tech that sucks and doesn't do things and burns money. And in the case of AI, probably rainforests. And the result is just a shittier, worse world. Until we see a seismic shift in how investors treat the companies they invest in, both private

and public, this cycle is going to continue and it's going to make us dumber. I guarantee you that we're going to see every single one of the companies that you've recently see layoff thousands of people do mass hiring in a year or two. They don't care. They're not punished for this. The labor markets in America don't punish them. The government don't punish them. They will keep fucking with human capital as much as they can because they don't want to get punished for it.

No one's going to hold it against any startup that's done massive layoffs, even if the CEOs are incredibly well paid and ran the company into the company into the company. ground. Companies aren't structured anymore to evaluate whether a business is sustainable or good or make something useful. The only thing that they're interested in is making something they can flog. Yeah. One of the important things to understand about how all of this fits together is that the actual business for most of these tech guys has very little, if not nothing to do with producing a product or getting people to adopt a product or having any kind of impact on the way people act. actually use technology. The actual business is in conning other people to think that a business

has a value, right? Yeah. Like that that's become the game, which is, you know, we're doing our episodes on Steve Jobs these next two weeks. A lot of bad things we'll have to say about him, but he actually did care about like making a thing and convincing a lot of people to use that thing. And he was good at that. And it's become so abstracted and so much about just the bezel, about tricking people so that you can make money before everyone realizes that it's a fucking gone. I don't think it's, I think it's probably bad for society that that's the best way to make money. And I think that you're exactly right. The way we look at companies, the way we value businesses, the way we value startups, public companies, it doesn't really matter, is just

fundamentally broken. It's creating these really nasty cycles where humans are hired and fired at scale, where companies make products worse so that we use them more. Things become more difficult to enrich someone and make our lives worse. And it really is, it goes further than tech as well. It's at the center of everything. Look, why are so many bosses mad about you not coming back to the office? It's because they bought a bunch of real estate that they never need it, or they've leased it, I guess. And then they were like, well, I don't do any real work. And I think what business looks like is when someone's at an office. Yeah.

And it's because we don't really, as a society, understand what executives do, because we've never asked. We've never really sat and thought, why does an executive get paid so much more than others? What is it that they do? And I think the pandemic and the mass remote work we saw really highlighted that. I think it really showed everyone exactly how big that con was. But I think that we're on the verge of an awakening to this kind of thing.

I think as the labor market becomes so much worse, as so many game studios, for example, lay off so many people, they're going to start realizing the executives are making all the money while everyone does all the work and none of these people are connected to the product. And we're going to keep building things for nobody other than investors until we're at a point where we have entire business ecosystems building for nobody. Just look at the crypto industry. There's billions of dollars into crypto. But look at that. Look at the crypto industry. Look how big that con was. Look how much money went into nothing, went into creating nothing. Because that's where we are as a society. That's where innovation is today. In a real ecosystem, in a real tech ecosystem, the heads of the industry wouldn't be trying to find ways to grow up AI or crypto or Metaverse into it because the markets like it, they would be saying, I'm not sure that this is a thing, let alone a business model. none of these companies get blamed for these bad decisions and as long as they don't, they're going to keep making them. And I think it's going to, and I have a wider theory I have there,

it's going to take one of the major tech firms dying to change something. And I think it's possible. I think Facebook is weirdly enough the one that I would call first just because the ad models die. Yeah. But until that happens, we're just going to keep having these cycles where the markets don't blame anyone for anything. other than the consumer. The consumer is made to almost apologize to the vendor. It really

sickens me. I think that this is really what, this is the jocifying in real time that I get, because I've been in the tech industry since 2008, and I've been writing about games since like 2004. So I've seen tech as a blob go from something that was, oh, you have nerds who like tech and people use laptops to everyone has a phone, to everyone is on some level connected to the tech industry now. It's impossible to remove from our lives. But now I look around and the things that are being created and the things that are being hyped up, they're not for people anymore. Yeah. And then the actions of the CEOs don't seem to actually mesh with reality.

Why did nobody get fired for overhiring in 2022? So many companies, hundreds of thousands of tech workers were laid off. How did nobody get fired for just hoarding human capital? How did nobody get fired for that? Yeah, or for like, I mean, if you want to see it for the way that these people do, how did nobody get fired for wasting tens of millions, hundreds of millions, billions of dollars in like stockholders' money, right? Like stuff that should have gone the way that they see things out in dividend payments,

like was instead spent on people the company apparently didn't need? How does no one lose their job over that? If that's the way you're looking at things, that seems like the real problem. And the amount of layoffs that happened and the amount of, well, I think it was Google spent, what, a billion, two billion on severance alone? Yeah. How did Sundar Pashai not get fired for that? Why did he get so much money? And I hate to say, I think the answer is, people are not people in the eyes of the markets.

They don't give a shit. It's just a fuel. This is just the cost of fuel. This is like oil to them, except there are sometimes annoying laws that stop me getting rid of the oil quite as fast. And I think what the tech industry really needs to realize is nothing lasts forever. Nothing lasts forever and nothing grows forever other than a cancer. And at some point, this whole growth at all costs economy is working pretty well for now. But at some point, the markets will turn on them.

Because at some point, someone has to notice, somebody who is investing has to notice, wait, are these actually good companies or are they just growing and then, like, contracting and then growing and contracting and just never really making anything within the process. It's just deeply worrying. I actually worry about the health of the tech ecosystem long term if we keep pursuing this. We have private companies that are building things to sell to large companies and large companies that are building things to market their own stock to investors. And at some point a consumer gets served somewhere within that equation, but nowhere near to the level that it should dictate anyone's choices. A product may be profitable for a while,

but there's a line at which profitability comes at the cost of functionality, and your company may simply not be able to grow anymore. Look, a business that can't generate profit isn't a good business, and a business that can never generate a profit deserves to die. These seem like obvious things, but they just don't apply to anyone other than regular people. And the net result of this rotten economy, this broken thing that rewards people that create symbolic capital, is that it kills innovation. If capital isn't invested in providing a good service, by a say a profitable business, it will never sustain things that are actually useful to society. Companies aren't incentivized at the moment to provide better services or improve lives

outside of the ways in which they can drain more and more blood and revenue and growth from customers. And right now, the street doesn't care. Just look at Facebook and Instagram, two beloved products that have now grown exceedingly profitable while not providing the basic function that made them big. And frankly, look, if capital wishes to call labor entitled, as they have so many times, if they wish to treat people like shit, as it stands, the private and public markets are not working for you. They're not building things for you. they're not building things for anyone. Google as it stands is forcing Gemini, the generative AI,

into every corner of their company, not because it's going to make your life better, but because it's going to make them seem more futuristic. As long as private businesses are funded by venture capitalists that are not interested in funding innovation and just want to find more ways to flog money to larger entities,

we're not going to see a better world, we're not going to see cooler tech things. We're going to get increasingly more expensive and convoluted versions of things we're already paying for. I hope things can change. I really do. But with the current crop of venture capitalists, I'm not holding my breath. So thank you for listening to today's episode, Robert. Thank you for joining me as well. Yeah, yeah. Thanks for having me on. This wonderful, happy episode we've done. It's funny. It's in my day job, my PR firm, I do run into decent companies that are doing well that actually

make more money than they're spending that actually have business plans. But occasionally I'll talk to someone who just throws like eight buzzwords at me and they'll have raised this crazy amount of money and you look at them and you're like, am I in the wrong game? Should I be part of? There is this weird sense. You're like, am I, what am I missing here? And I think that that's what fuels a lot of this, that there are these people getting so

rich on nothing that people like, they must, they can't be lying. There has to be something. I have to be missing something. And it's like, no, you're not. the business is entirely, it's a confidence game. It's like, pretend you have the confidence that this is such a world-changing product, even though it's really just Uber for dry cleaning or whatever, that like if you don't get in on the ground floor, you're going to be left behind. Or like, you know, with crypto, this is the way all money is going to work. You have to get in now or have

fun being poor or saying basically the same shit about AI, right? It's always And honestly, whether or not there's actually a good product, it's always the same thing, right? Like, you, yeah, it's all FOMO. And it sucks because it can be better. There is a way, the thing that I always talk about is there is an alternate universe where Uber actually could have been probably the most disruptive company of all time. Had Uber tried to scale slower and charged more and had real employees. benefits and a paycheck that they gave people, it would have had to grow very slowly and would have cost more in venture dollars. But I think that company would have been worth trillions and actually

change the world. Like truly, had they used it as a way to actually create a bulwark for labor versus a way to screw workers again and again so venture capitalists can get rich, it could have been amazing. But that's not how these people are thinking. They're not thinking 10, 20, 30, 40 years. they're thinking five to ten years so I can get the fuck out of this. And it's so depressing because the better world is possible. These people, because of the amount of money they made in large part in tech, they've taken over everything. And so they're applying this law.

I mean, we could talk about journalism, right? They're applying this logic to the media properties they buy, which like, that's not why you have a newspaper, right? Like, that's not, the value of a newspaper is not its ability to, like, get a bunch of hype around And like we saw this with Vice, where it was valued at billions and billions of dollars and then it collapsed because, no, that's not how newspapers work, right? That's essentially what Vice was trying to be. And that's not the way they're not worth money in that way. It doesn't mean you can't make money off of them.

There's a number of papers like the New York Times that are very profitable institutions. It's just you can't, it's not going to give you that kind of like astronomical return on investment that you do when somebody invents a fucking iPhone. It shouldn't have to. But what's crazy is like inventing the iPhone was very profitable, but Apple also did something with it. It's actually useful. Yes, yes. I had an understanding about what people wanted, you know. And I think that that's the ultimate problem. I don't think the people running tech companies actually experience real people. They don't have real problems, but also they don't speak to real people. Adam Newman think, Oh, my toilet's clogged.

I will now call someone else to unclog it. I would never use a plunger. What's that? What is a plunger? I would actually love to ask him if he knows what a plunger looks like. I bet he doesn't know. But that's the thing. These people are...

He feels like the kind of guy who just moves. That happens? Yeah, he can't use a toilet anymore. Go to get rid of it. But I think to wrap it up, it's... There is this genuine sense throughout all of this, through the original rot economy piece, through everything I'm talking about,

that these people don't experience real life, that they've made so much money and that they think they've found a way to con money out of the world that they just don't think about human beings and human problems anymore. And as long as these people are in power, techs at risk. Yeah, and so is everything else. Well, this was fun.

Yep, there we go. Robert, thank you so much for joining me. Yeah, thanks for having me on. And thanks for being, you know, the shy hallood of content. You know, just like the sandworm excrete spice, which allows the navigators to live forever and navigate through faster than light travel. You also produce spice. I'm trying to shovel in Dune references here. Yeah, there we go.

Sponsored by Jim. Thank you so much. Thank you so much for listening, everyone. Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Matt Osowski. You can check out more of his music and audio projects at Mattersowski.com. M-A-T-T-T-O-S-O-S-K-I.com. You can email me at easy at Better Offline.com or check out Better Offline.com to find my newsletter and more links to this podcast.

Thank you so much for listening. Better Offline is a production of Cool Zone Media. For more from Cool Zone Media, visit our web website. site, Coolzonemedia.com, or check us out on the IHeartRadio app, Apple Podcasts, or wherever you get your podcast. Another podcast from some SNL, late-night comedy guy, not quite. Unhumor me with Robert Smygel and friends. Me and hilarious guests from Bob Odenkirk to David Letterman help make you funnier.

This week, my guest, SNL's Mikey Day and head writer Streeter Seidel, help an Acapella band with their between songs banter. Where does your group perform? We do some retirement homes. Those people are starving. for banter. Listen to humor me with Robert Smigel and friends on the IHeart Radio app, Apple podcasts, or wherever you get your podcasts. If you're watching the latest season of the Real House Wies of Atlanta, you already know there's a lot to break down.

Gorsha accusing Kelly of sleeping with a merry man. They hold and Kay Michelle back from fighting Drew. Pinky has financial issues. On the podcast, Reality with the King, I, Carlos King, Recap the biggest moments from your favorite reality shows, including the Real Housewives franchise, the drama, the alliances, and the T, everybody's talking about. To hear this and more, listen to Reality with the King on the IHeart Radio app, Apple Podcasts, or wherever you get your podcast.

This is Saigon, the story of my family and of the country that shaped us. From IHeart Podcast, Saigon. You don't think I'm serious about a free Vietnam? One city, a divine. country and the war that tore America apart. They're pouring patril all over here. Freedom for Vietnam!

There's a fire coming to this country and it's going to burn out everything. Listen to Saigon on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. This is an IHeart podcast. Guaranteed Human.