It Could Happen Here - The Rot Economy ft Robert Evans

Episode Date: February 24, 2024

Ever wonder why Google results are getting worse, or why you aren't seeing your friends on Instagram? It's all because of the growth-at-all-costs economy that's swallowed the tech industry, where the user experience takes a back seat to monetizing every interaction with the platforms you used to love. Ed Zitron is joined by Cool Zone Media's Robert Evans to walk you through the economic theory that's destroying the tech industry from within.See omnystudio.com/listener for privacy information.

Hey, what's up? This is Ramses Jha. And I go by the name Q Ward. And we'd like you to join us each week for our show, Civic Cipher. That's right. We discuss social issues, especially those that affect black and brown people, but in a way that informs and empowers all people. We discuss everything from prejudice to politics to police violence, and we try to give you the tools to create positive change in your home, workplace, and social circle.

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You can listen to Sniffy's Cruising Confessions, sponsored by Gilead, now on the iHeartRadio app or wherever you get your podcasts. New episodes every Thursday. Welcome to Better Offline. I'm your host, Ed Zitron. I've spent the last 15 years in tech, both as a reporter and a public relations executive. And over that career, I've realized that many see the tech industry as kind of a monolith. It's actually a lot simpler than you'd imagine. And it's my mission with this podcast to cut through the buzzwords and nonsense and explain to you how venture capital and big tech are trying to change the future, for better or for worse. Today, I'm joined by Robert Evans of Cool Zone Media to break down a theory I have that is pretty much core to everything I think about and we'll talk to you about on this podcast.

Thank you for having me, Ed. I love that we're coming on to talk about this because the concept you're about to introduce was like the thing that made me reach out to you about doing this show or at least one of the major ones. Not just feeling excited about new shit that we could buy, but feeling excited about the things that technology was going to bring us, the promise of the new digital age. And that all fell aside to be replaced by this looming sense of doom so quickly that I don't think a lot of us have a good idea about why it happened. And you know what? I think that's actually a great place to start with a very simple question. Why does it feel like the tech we use every day is getting worse? Look, your search results, they're full of sponsored content and articles that don't actually answer any questions or just a big thread of people asking the same question without ever getting an answer. Your friends aren't popping up on Instagram. You're constantly getting product emails, notifications, pop-ups, spam, emails from people you've maybe spoken to once to buy some doodad. But then you look at the news,

and seemingly every tech company is making billions of dollars, growing at this alarming, almost unsustainable rate, all while laying off tens of thousands of people a year. And that's because there is a problem at the center of the tech industry, and actually the markets at large. It's a cancerous problem, and it's at the fabric of how capital is deployed in modern business. Public and private investors, along with the markets themselves, have become entirely decoupled from the concept of what good business truly is, focusing on only one goddamn thing. Only one noxious, shitty metric. Growth.

In the rot economy, products are made worse, customers are abused, labor is disposable, and executives are getting richer every single day. Now, growth in this case is not necessarily just about being bigger or better. It's just about more. It's always more. Everything must be generating more money, must be having a higher headcount even when laying people off. No, the problem here is growth in this case is not necessarily about being bigger

or better. It's just about more. It means the company's generating more revenue, high valuations, and gaining more market share. And then it's looking around and saying, you know, that's just not enough. We must have more. Businesses are expected to be, and in fact they're rewarded for being so, eternal engines of capital. They must continue to create more and more shareholder value, while hopefully at some point providing a service of some kind to a customer. In the public markets, this means that companies like Google, Meta, Microsoft, they're all rewarded for having these unfocused capital intensive businesses that also involve laying off tens of thousands of people over the last few years hundreds of thousands of tech workers have been laid off as multiple tech companies have been worth half to

three quarters to even a trillion dollars it's ridiculous yeah it's uh i, I think one of the really important things to nail in here is that this isn't a question of profitability. The fact that you tie it to growth is so important because the issue is not that these companies are not profitable. Profit has nothing to do with these decisions. It's about, I mean, EBITDA does,

which is basically profit over cost and stuff, but it's this question of like growth, right? That if you're not returning this kind of algorithmically scaling growth, then your company is seen as a failure by a lot of the people who are responsible for like the financial decisions. And so all of these choices that are kind of choking the internet out and making the stuff we use every day work less aren't about, it's not a question of the company can't be profitable

if we don't do this. It's that we won't have the right number on a sheet to show somebody. And Microsoft is actually a really good example. So Microsoft, of course, they bought Activision Blizzard for $68 billion recently. They bought Activision Blizzard for $68 billion recently. They then, even more recently, downsized the gaming division at the cost of about 1,900 jobs. And then they became more valuable than Apple in the process.

In December, shares of Spotify jumped by nearly 7.5% upon the news that it was slashing 17% of its workforce, adding nearly $ 2.6 billion to the company's market cap in the process. None of these companies, of course, were punished for their poor planning or their stagnating products, their mismanagement of human capital, or their general lack of any real innovation.

And it's because the number kept going up. And that is all that seems to matter. Yeah, and when I was a kid kind of questioning why stuff like layoffs happened, why my dad got laid off from his job in tech and stuff, it was always framed to me as like, well, companies aren't charities. They have to do this to turn a profit.

Otherwise, they can't afford to operate. And I think it's so crucial, but that is not at all what's happening here. Yeah, Microsoft had $22 billion in profit, their last earnings. These companies are fine. Google, when they did mass layoffs last year, and in, yeah, it's 2023, they had like $10 billion in profit. These companies are in the green and they're fine. There's no reason to lay off these people other than the fact that they can and they don't need them anymore. Or perhaps they just ran the company in this big, shitty, messy way. And nowhere is that more obvious than with Meta.

Oh God. Yeah. So back in October of 2022, I said that Mark Zuckerberg was going to kill Meta. Perhaps I was a little bit early on that one. But I genuinely think that they're on the path to death. So my argument is that their user numbers are declining. They will occasionally have a time when they go up by a percent, perhaps, but then they'll drop. But also, the user experience of Facebook and Instagram has just become awful. They spend these insane amounts of money, tens of billions of dollars on

meta's reality division, which is where they stick the horrible VR experiences that everybody hates and the term metaverse. But what was crazy was Mark Zuckerberg didn't get punished for literally lying about the metaverse. The street did not mind the fact that he very clearly misled everybody in the announcement of meta. He played a video of a bunch of stuff that no one can do, is technologically impossible, shit jumping through things all around you with no headset, completely insane. The stock had a little bit of a wobble, but nothing happened. Yet once he fired 11,000 people and claimed that 2023 would be the year of efficiency,

the market loved him. Double digit increases in the price of Meta's shares. Nothing happened to Zuckerberg with the next part though, because he also lost $13.7 billion dollars on the metaverse thing that has never made them any money yeah and for for some reference 13.7 billion dollars is uh about the gdp of rwanda like that that's how much that's a rwanda worth of losses he's lost a rwanda in his in his metaverse bet it's actually a bit more as well because recently it's It is more than a Rwanda, yes. It's actually multiple. It might even be as many as three Rwandas, because an estimate from last year suggested that he's lost nearly $42 billion on the metaverse. Jesus Christ. So yeah, that's almost three and a half Macedonias.

And it doesn't matter to the markets. You'd think a public company that makes its money meta off of social media experiences and selling ads on them you think the markets would care that instagram one of their largest products one of their big money makers an app for sharing and following your friends photos and videos no longer reliably shows you content from those you follow. That's because Meta must simply interrupt your feed with sponsored content based on an actually impossible to define amount of data. It is not obvious how they choose. There are things that have appeared on my Instagram that I've only ever said out loud. It's very strange. And this is because it doesn't matter if the

product sucks, if Meta is growing by double digit percentages, if they're making billions of dollars, even if they're fucking the user in the process. Another great example for you is Google. It doesn't matter that Google's AI powered Gmail plugin literally makes up, it hallucinates email conversations. But because they put AI on Gmail, Google's market cap goes up. Everyone loves Sandor Pichai, despite the fact that he gets paid $280 million and lays off tens of thousands of people seemingly all the time. And it really doesn't matter. And this is one that really bothers me because I think we're all kind of stuck with Amazon.

The Amazon experience is even worse. You go on there and you type spoon or spatula, and there's 87 different knockoffs with names that sound like someone had a seizure while typing that spatula, $11 will deliver in three minutes. But because Amazon is able to show double digit percentages of growth every year, yay, it's fine. It doesn't matter that the product sucks. No, no, no, no. Only a few things really matter when it comes to big tech and their, oh, outsized valuations. Layoffs, growth, and the promise of growth, no matter how faint or how speculative. The markets lack any long-term thinking, and they lack the analysis that

would actually force businesses to become sustainable and maketerm thinking. And they lack the analysis that would actually force businesses to become sustainable and make great products. And when I say sustainable, I don't mean anything about the environment. I mean, and this is a crazy concept, Robert, this one's going to really blow you away, that they make more money than they spend and don't have to fire people all the time. Wow. Yeah. What a concept in business. If the markets actually cared about sustainable companies that could last the test of time without constantly burning capital and firing people, the markets might not have ignored the fact that Meta got a $410 million fine from the EU under the General Data Protection Regulation, which is the laws that govern data use and customer data in Europe. And they also would have probably noticed the fact that European users now have to deliberately opt in to share their data. Now, as a little aside, Facebook makes their money off of using cookies

and various other means of getting your data and then presenting you with ads based on that. Some of it comes from how you use the platform, but a lot of it comes from this very insidious hidden tracking. What's happened here is that European users will no longer have that by default. They will have to choose whether to help Mark Zuckerberg buy another fifth of Hawaii. Hey, just Maui, just Maui. Oh, I'm sorry. Terribly sorry. I wouldn't want to hurt Mr. Zuckerberg by another fifth of Hawaii. Hey, just Maui, just Maui. Oh, I'm sorry. Terribly sorry. I wouldn't want to hurt Mr. Zuckerberg. But what's really bad about this is statistically, users do not like opting into these things. Only about 25% of iOS users have chosen to opt in

to app tracking, which was a feature that was actually added a few versions of iOS ago to your iPhone, your iPad, and so on and so forth. And by the way, this means that basically every app is kind of on notice if it's an Apple device. Now users know when they might be sharing their data. And it's genuinely a threat to a lot of the tech ecosystem that a lot of people don't know. In fact, Meta's business model is intrinsically linked to the repurposing of customer data into ad targeting. threat to a lot of the tech ecosystem that a lot of people don't know. In fact, Meta's business model is intrinsically linked to the repurposing of customer data into ad targeting. But the markets don't seem to care. And I get it. It might seem unthinkable that Mr. Zuckerberg's fancy party could come to an end, but we really need to be clear about something. Meta's core advertising models depend heavily on things that,

in the next decade, will likely become impossible to do legally. They might not even be possible technically, because now Apple is adding app tracking transparency, which I've kind of mentioned with the iOS update. And this means that people are, first of all, aware of when their data is being shared, and they're probably going to tell them to pound sand. There are other different changes that are happening as well. Alphabet, which is Google, of course, they're going to be retiring third-party tracking cookies.

Meta is kind of at a point where if anyone was paying attention, they'd be a little bit more worried, and that existential threat is why Mark zuckerberg is so desperate to distract you with dreams of the metaverse so desperate to make you think that meta will be the thing that builds the artificial general intelligence which is just a buzzword for an ai that can have kind of human level intellect despite the fact that most generative AI right now just makes shit up. And when you really look at it, and this is what confuses me about how much this company is worth,

hundreds of billions of dollars, their other products don't make that much money. And Zuckerberg's last big idea, the one that he changed his goddamn company name for, lost them billions of dollars. 42 billion. Probably be 60 billion next year. God, isn't that like... Yeah, the street loves him.

Six or seven Macedonias, yeah. Multiple Macedonias there. Since I published my original thoughts on the rot economy, their share prices more than doubled. It was $177 then, and it's now $400 right now. It's despicable. with some of the biggest names in the game. If you love hearing real conversations with your favorite Latin celebrities, artists, and culture shifters, this is the podcast for you.

We're talking real conversations with our Latin stars, from actors and artists to musicians and creators sharing their stories, struggles, and successes. You know it's going to be filled with chisme laughs and all the vibes that you love. Each week, we'll explore everything from music and pop culture to deeper topics like identity, community, and breaking down barriers in all sorts of industries. Don't miss out on the fun, el té caliente, and life stories.

Join me for Gracias Come Again, a podcast by Honey German, where we get into todo lo actual y viral. Listen to Gracias Come Again on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. come again on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Hi, I'm Dani Shapiro, host of the hit podcast, Family Secrets. How would you feel if when you met your biological father for the first time, he didn't even say hello? And how would you feel if your doctor advised you to keep your life-altering medical procedure a secret from everyone? And what if your past itself was a secret and the time had suddenly come to share that past with your child? These are just a few of the powerful and profound questions we'll be asking on our 11th season of Family Secrets.

Some of you have been with us since season one, and others are just tuning in. Whatever the case, and wherever you are, thank you for being part of our Family Secrets family, where every week we explore the secrets that are kept from us, the secrets we keep from others, and the secrets we keep from ourselves. Listen to season 11 of Family Secrets on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Hey, what's up? This is Ramses Jha. And I go by the name Q Ward. And we'd like you to join us each week for our show Civic Cipher.

That's right. We're going to discuss social issues, especially those that affect black and brown people, but in a way that informs and empowers all people to hopefully create better allies. Think of it as a black show for non-black people. We discuss everything from prejudice to politics to police violence, and we try to give you the tools to create positive change in your home, workplace, and social circle. Exactly. Whether you're black, Asian, white, Latinx, indigenous, LGBTQIA+, you name it.

If you stand with us, then we stand with you. Let's discuss the stories and conduct the interviews that will help us create a more empathetic, accountable, and equitable America. You are all our brothers and sisters, and we're inviting you to join us for Civic Cipher each and every Saturday with myself, Ramses Jha, Q Ward, and some of the greatest minds in America. Listen to Civic Cipher every Saturday on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Yeah, I think the thing you have to understand when you look at like, how can a company be burning money at this rate and their stock price increase as much as Facebook's

has or Meta's has, I guess we have to call it. I don't, I still don't like calling it that. I feel like that's giving him a win. Yeah. It's not fair. It's not fair. But, um, I, I, I think part of what you have to understand is that like the, the, the, the people buying the stock, like their vested financial interest is in it continuing to like, this is not all that different from what was happening with NFTs. Right.

Um, in that, like there is this, there is very much a group of people with a vested interest and that stock price raising well above what could actually be justified by the performance of the business and the people who are making a fortune on that right now understand that it is a limited time frame that this game will work and i don't know that Mark fully does. He may be, to some extent, a little deranged himself at this point. But I think there are a lot of people who absolutely do understand and are heavily invested in Facebook now, trying to get as much of that as they can while it lasts.

But they understand that it's not going to last forever. And I think there is a big Fall of Rome style story coming for tech. And I think the rot economy is behind it because so much of tech has become engineered to growth at all costs. It's a phenomenon that controls everything. And I think the place where it hits the most people, because Instagram's annoying, Facebook's annoying, but you can kind of get around it. But I think the place that hits home the most is. Because you know what? Instagram's annoying. Facebook's annoying. But you can kind of get around it.

But I think the place that hits home the most is Google. Yeah. So the thing that everyone knows Google for is, of course, Google search. Used to be a place where, crazy idea, you go and you type in a thing, dip, tap, tap, search, and then a bunch of results come up that are actually useful. Now it's a labyrinth full of optimized garbage. Search engine optimization is an important thing to remember here,

which is companies have worked out how to trick Google into making you see their link rather than Google finding a useful thing. This has partially ruined Google search, but the other problem is ads, sponsored content, and of course, artificial intelligence crap. So Charlie Walsall over the Atlantic, he argued a couple of years back, he said, Google search, what many consider an indispensable tool of modern life is dead or dying. And I agree. Users have to effectively find a way to cheat and con Google into giving them what they want. They add things

like, I don't know, you put PC repair error, put the error in plus Reddit to get anything approaching a reliable answer. If you go and type a regular tech problem in, as I mentioned earlier, you just get a lot of shit. You just get a bunch of things that it will seem right. You'll say, oh, this is how to fix error 42 on my iPhone. Cool. And then you click through and there's not actually really much useful content. It's have you tried resetting your iPhone? Is your iPhone broken? Is something wrong? Have you tried restarting your iPhone? Useless garbage, but nevertheless pushing traffic towards media outlets that are kind of cretinous. Yeah, and that's like, I think it's important both, as you noted, a lot of the fucking worst

shit in tech can be strangled by stuff like what the EU has done to force the companies to not allow you to be opted in on stuff that's directly against your interests. And likewise, if that were to be, if that were the kind of thing that we if that were to be if that were the kind of thing that we could like make more moves like that in the united states you're not just strangling the worst parts of big tech with that you're strangling a lot of really predatory toxic media with that that all of their money comes from that kind of shit one way or the other that like they are an integral part of this and and can be harmed by like doing damage to this fundamentally dishonest way of doing business and google spent decades they claim

trying to improve the quality of organic results but it's over a decade has been easily gamed by anyone who knows how to create an algorithmic headline, a headline that will make the Google spider that looks over all the websites say, this is the thing, this is the answer. I personally don't know whether Google does this deliberately or whether they've simply lost track of everything, whether the evil parties are winning. But you mentioned media companies and these predatory ones. The problem is it's not just predatory ones. A large chunk of modern media is obsessed with affiliate marketing, which is, you'll see these things, which is like best apps for blah, blah. And those will be affiliate links, which give them a little bit of money or best Superbowl deals. Again, a little bit of cash, a little bit of money

every time you buy something through it. And it's turned a large chunk of the web, but especially Google search, into this complete slop. And without finding a way to negotiate with it, you're offered this kind of fragmented buffet of content based on what Google kind of thinks you want to see, but it's more based on how much money Google has paid and how often Google has been tricked, let's be honest. And I think it's fair to argue that Google no longer provides the best results to any query. It provides an answer that it believes is most beneficial or profitable,

which can sometimes be the thing you want. It isn't always. I think one of the problems is that I don't know of a search engine that I would say is better than Google in the way that Google used to be better than anything else, right? And we're talking 10 years ago. I do know there are search engines and options that are better than Google at certain things. I've come to learn that if I use perplexity AI, it'll be worse than Google at a bunch of stuff, but there are a few specific things it's better at. And that has increasingly become how I use search, right? Is that I cycle through different options with the same question to try

to figure out like, well, who's going to fuck me least on trying to get this information? And it sucks as well, because sure, we all know that any free service online isn't free. There is some way they're making money and that's fine. You've got to service cost money, whatever. But at some point, how much profit is too much? And also, how can you justify this much profit while making things so much worse? can you justify this much profit while making things so much worse and i mean the result is that it just sucks it sucks googling sucks now it's an exercise in pain it leads you to a bunch of content that is so obviously engineered to get your clicks rather than actually provide any service the the web is slower this makes makes the internet slower. It makes the flow of information

between people and countries worse. And what's worse is Google loves this monopoly and they pay a pretty penny to keep it. They pay Apple $18 billion a year. And this came out in a recent US versus Google antitrust case. $18 billion a year to be on your iPhone, to be on Apple devices. It's not because they're better. It's not because Apple even thinks that they couldn't do better. This is specifically to stop Apple trying and to make your lives worse so that Google can make their search worse to make more money and give Sundar Pichai $280 million. And it's depressing. It's something that makes me, I have to fight the cynicism every time I use Google. This is a problem that hits billions of people. This is a real thing thing and this isn't an attack on any

journalistic outlet but where the fuck is the horror here this is a horrifying thing yeah this would be like if certain freeways just randomly led you to a different place because someone paid the dot money it would be like if we had a i i don't want to oversell this but like what we're talking about is there was a brief period that for the first time in human existence all knowledge ever collected or and earned by human beings was easily accessible to the vast majority of people if they had an internet connection and that is becoming no longer the case with with rapidity and it is it is a problem akin to like if we had a cure for cancer and then we decided to start like breaking it if you didn't buy like the pancreatic cancer bonus pack like it was like

it is it is that big a problem like when you think about like what it means for all human knowledge to be accessible and then to throw that away so that Sundar Pichai can get $280 million a year. It is an obscenity. And then you have the level up from that as well as think about it from those of us who spend, I don't know, 22 of our 24 hours a day online. We're aware of what SEO content looks like, search engine optimization there, content that is built just to rank highly on Google to send money to an outlet and traffic to an outlet. We know what that looks like.

We know when we are being misled. We know when the flow of our information is being interfered with. I don't argue that most people do, and this isn't their fault. This is a nuanced topic, but this is horrifying. Google has, like every major tech company, focused entirely on what will make revenues and market share increase, even if the cost of doing so is just destroying its entire legacy and interrupting the free flow of information around the world. Last year, they launched their own BARD AI to compete with Bing, Microsoft's search engine,

and their ChatGPT integration. By the way, ChatGPT, all these generative AI things, yeah, they make stuff up. They hallucinate it. Oh, yeah. No, they hallucinate more than I do. And I did permanent damage to my brain by experimenting with Shulgin chemicals. And what was crazy was Bing AI came out and immediately started hallucinating things.

BART AI, Google did a media day and they showed a demo of BART AI and you thought for a second, oh shit, this might replace search engines. This might be a moment

where they sell us back an experience we had before and then literally in the demo it made a factual error. Yeah. Google attempted to sell us back search engine results and then provided us just another broken google kind of like chat gpt is just a broken form of knowledge well and didn't didn't they also or was that microsoft that

absolutely like lied in the demo and like it pretended that they were showing live results when it was really something they'd curated I'm not sure which one it was but seemingly every company does some sort of con like this it sucks and it just it doesn't help anyone and you'd think and we're describing what is a big shitty mess

we're describing something that affects billions of people that was decayed a very important product. You'd think the markets would respond negatively, and you would be wrong. There was a couple percentage points that got shaved off Google when they had that initial wobble with BARD AI, and then it went right back up. The markets, they bloody love that Microsoft is invested in chat GPT. invested in ChatGPT. They love that OpenAI is partially being meddled with by Microsoft, despite the fact that that company does not make any profit. And that's because the markets do not prioritize innovation. They don't prioritize sustainable growth. Companies that can last

on their own without screwing over customers, they don't care about stability. The result is that companies don't function with the intent of making good businesses anymore. They want businesses that kind of seem right, they kind of feel good and they sell a product and they make money, but they don't really care about anything else as long as it keeps growing exponentially. 10, 11, 15, 20% every quarter. It's disgraceful. Hola mi gente, it's Honey German and I'm bringing you Gracias, Come Again,

the podcast where we dive deep into the world of Latin culture, musica, peliculas, and entertainment with some of the biggest names in the game. If you love hearing real conversations with your favorite Latin celebrities, artists, and culture shifters, this is the podcast for you. We're talking real conversations with our Latin stars, from actors and artists to musicians and creators, sharing their stories, struggles, and successes. You know it's going to be filled with chisme laughs and all the vibes that you love.

Each week, we'll explore everything from music and pop culture to deeper topics like identity, community, and breaking down barriers in all sorts of industries. Don't miss out on the fun, el té caliente, and life stories. Join me for Gracias Come Again, a podcast by Honey German,

where we get into todo lo actual y viral. Listen to Gracias Come Again on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Hi, I'm Dani Shapiro, host of the hit podcast, Family Secrets. How would you feel if when you met your biological father for the first time, he didn't even say hello? And how would you feel if your doctor advised you to keep your life-altering medical procedure

a secret from everyone? And what if your past itself was a secret and the time had suddenly come to share that past with your child? These are just a few of the powerful and profound questions we'll be asking on our 11th season of Family Secrets. Some of you have been with us since season one, and others are just tuning in. Whatever the case, and wherever you are, thank you for being part of our Family Secrets family,

where every week we explore the secrets that are kept from us, the secrets we keep from others, and the secrets we keep from ourselves. kept from us, the secrets we keep from others, and the secrets we keep from ourselves. Listen to Season 11 of Family Secrets on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Hey, what's up? This is Ramses Jha. And I go by the name Q Ward. And we'd like you to join us each week for our show Civic Cipher.

That's right. We're going to discuss social issues, especially those that affect Black and Brown people, but in a way that informs and empowers all people to hopefully create better allies. Think of it as a black show for non-black people. We discuss everything from prejudice to politics to police violence, and we try to give you the tools to create positive change in your home, workplace, and social circle. Exactly. Whether you're black, Asian, white, Latinx, indigenous, LGBTQIA+, you name it. If you stand with us, then we stand with you. Let's discuss the stories and conduct the interviews that will help us create a more empathetic, accountable, and equitable America. You are all our brothers

and sisters, and we're inviting you to join us for Civic Cipher each and every Saturday with myself, Ramses Jha, Q Ward, and some of the greatest minds in America. Listen to Civic Cipher every Saturday on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Sadly, the raw economy and its growth at all costs, fuck the customer mentality, isn't limited to big tech. Startups, so private companies that are invested in by venture capital firms private equity firms they're regularly pumped full of venture capital dollars enticing users with a

subsidized product meaning that they basically sell something at a massive loss to pump up their user numbers yeah that gradually becomes worse and worse and more expensive over time as they attempt to reach some sort of vague stability. I think really crucially too, they pump up the price after they've killed everyone who provided maybe a better product, but they charged more money for it. It's the Uber effect, right? Oh, and I will get to Uber,

because a big part of this, and it's what Corey Doctorow calls in shitification, which is a painful neologism that actually pretty accurate in describing the startup ecosystem. A big part of that is they get pumped full of these venture dollars and they become these horrifying companies that are not good companies. They burn capital. They barely make anything, but they destroy businesses that, say,

run based on offering a product that users pay for that is priced higher than the cost of the product, making the company something known as profit. Yeah, and I think that's so important, especially for the younger people who, maybe you never fell for it. I did, for a little while in the early two thousands fall for some of Google shtick.

Yeah. Because the, the thing that they delivered for a while was miraculous. It was great. Using Google before it exists. Like when it, like when it first came out, like the degree to which it was superior to any other way to,

to access knowledge that had ever existed was wild and like you wanted to believe maybe these people are not a bunch of fucking demons and it was don't be evil that used to be their tagline yeah yeah that shit anymore no of course not zoop how'd you go now it's don, be evil, with an exclamation mark like Lionel Hutt. They did a Lionel Hutt study. I don't know. It's a fool me once sort of situation. I'll never love again.

Yeah, it is enough. And seeing Google decay, by the way, really has. That's what's jokified me. That's what's driven me a little insane. chokified me. That's what's driven me a little insane. But then when you look up the startup side and now that you, when you're aware of the rot economy and you're aware of insurification, you can kind of watch it in real time and it drives you a little crazier still because there is a very abusive cycle here. Companies are born, they're funded, and they're grown in this unnatural way where they're subsidized.

It's funny, a lot of these right-leaning venture capitalists, they hate welfare, but they love putting startups on it. Because venture capital exists in many ways at times in the tech industry to keep companies alive that should be left to die. And they would have that same attitude to a regular person who could not meet their bills through unsustainable spending or even sustainable spending. Nevertheless, they're fucking hypocrites. But the problem is with these companies as well is their services, because they are not sustainable, eventually have to become worse.

They grow the dependence of the market, they kill everything else in the market, and then they make them worse in shitifying them. Again, Corey, love you, buddy, but no. Terrible term, great idea. Yeah, I think we could all agree he's got the idea right. It is really hard to get your mom to buy into using that term. Yeah, a little bit epic bacon for my tastes. But look, if these startups were held to real standards, crazy

ideas that a business should make more money than it spends and be able to survive independent of investor capital, there are a lot of startups that would just die. In fact, that's kind of happened in 2023. There was a phenomenon known as the zero interest free period when it was just easy for venture capitalists to get a bunch of money at low interest or 0% interest. That went away into late 2022, early 2023. As a result, venture capital suddenly realized, oh, are we just spending money on bullshit? So they killed the startups. They just pulled the plug. They didn't send them any more money. There were no more venture rounds and real companies, good companies died because no one got investment.

And it's sad. But don't worry. I made you a promise and I'm keeping to it. We've got to talk about Uber. Uber is the ultimate rot economy startup. Yeah, it was the thing where, unlike with Google, there was no trade-off, right? Nothing was getting harmed. where you know unlike with google there was no like trade-off right like nothing was was getting harmed with uber you always knew the company was evil but also it was so much easier to get a

fucking ride when you were like hammered right like it did make a problem go away for a lot of people and at first it wasn't when uber launched in 2011 it was mostly with like town cars black cab services so when we call them back home, I guess you could just live. I don't know. There's an American term, I'm sure. But nevertheless, you were getting these Lincoln town cars and you were able to call them and it was kind of magical. And you were like, oh, wow, we could do this. Eventually they'd launch Uber X. Anyone can pick up a phone and start driving their car for money with Uber. The press at the time, because everyone was kind of still thinking that tech was the good guys,

kind of let it go by that these people were paid below minimum wage. They had questionable insurance policies and absolutely no goddamn profit. They were screwing the drivers while also not actually building a sustainable company. Very confusing to me. Uber only became profitable last year. They had a $326 million operating profit in August of 2023. To get there, it had to burn $32 billion. Hey, you got to spend money to make money. Yeah. What an incredible return.

But for the sake of clarity, it's also worth noting that Uber had previously reported profitable quarters, but they didn't come from actually providing rides or delivering food or any kind of business. They were just selling stuff they'd bought. It's just, Uber frustrates me. Their business model is just incredibly precarious and relies exceedingly heavily on governments failing to impose labor laws. So much of their existence is predicated on being able to screw general contractors. Its continued existence would not have happened without bullying local authorities, without local authorities ceding ground to these companies. Because at the time they were like, yeah, taxis kind of suck. Taxis are bad.

Sure. And of course Uber needed a bunch of money with the largest amount of that coming from the Saudi sovereign wealth fund, $3.5 billion. And also Uber just burns capital. They burn billions of dollars and their share prices doubled in the last year and now has a larger market cap than Ford and Stellantis combined. The markets

are on crack. It's so fucking frustrating. It's like if there were a network of guys running those shell games where you put like a dollar in one of three cups, right? And some VC guys were like, hey hey just give someone money every

time they pick a cup no matter what cup it is and then we'll also buy up all of the atms and shut them down so this is the only way to get cash right like that that's almost the way that it works right like it it is uh replacing something that like cabs needed to be, I hate to say this disrupted, right? Like it was a, it was a business that existed. The system was not working. Exactly.

Exactly. There needed to be a way for you to like get one, wherever you happen to be or whatever, and do it through your phone and not have to like fucking call a cab company. Like there, there was a degree to which innovation needed to happen. But one of the,

the side effects that, I mean, in addition to the stuff you've brought up is that like, it's so much less safe. You have no way of knowing if your driver is either qualified or going to like sexually assault you. Like, which is the thing that happens a lot. I had an Uber driver last year

when my parents were here in beautiful Las Vegas, Nevada, who was very clearly drunk and just mumbling swear words the entire time. I reported to Uber and they were like, yeah, that sucks. We'll make sure you're not paired with him again. Thanks. I hope he doesn't crash his car. Yeah, cool. And the thing is, the punishment should come from the markets. It really should. The markets, if the free markets actually functioned in the way that guys with Grecian statue avatars claimed it did on Twitter, then the market would deal with this, but it doesn't. But there is actually another culprit, and that's the media.

They kind of fuel the growth mongering. CNBC, for example. I generally like CNBC, but the way they report earnings, and many people do, lots of different media companies do this. and many people do lots of different media companies do this they don't acknowledge the fact that uber just burns money that they spent 15 goddamn years burning money that they have an unsustainable business that travis kalanick who's long since departed obviously was running a very mob-esque thing where he'd sidle in with bradley goddamnk, a form of lobbyist PR creature that he found in Mordor, and just bullying local markets until they agreed. He would just launch Uber places and be like,

what are you going to do about it? And then the local markets would say, yeah, we're going to do something, and then nothing would happen and Uber would be made legal. And just to be clear, if you don't know this about your Uber driver, every time you take Uber and you think, oh, I've paid 20 bucks for that, the driver gets like less than half, I believe. They get screwed and they don't have insurance in many cases or they're not insured. And this is a very technical thing, but this is important to know. When your Uber driver has you in the car, oftentimes they're

insured. When they don't, when they're just driving around, they oftentimes need different insurance because they're not running a business while they're driving around. These are the kind of things that happen when you don't have strong labor laws, when you don't have the government protecting workers. It's just, it's frustrating. And like, I can understand why the media probably doesn't want to cover this because otherwise the markets would be varying levels of, yeah, this company sucks. This one sucks. Also, this one's bad. Uber, they really just don't make enough money to really make sense. And if they had, I don't know, 10, 20% drop in writing, I mean,

they'd probably fall apart. They don't want to say that. So they just want to just look at it. They just want to go, okay, here is what's happening today. Uber also really cannot be killed now. And that's a horrifying future we live in and a horrifying present, I guess. And because people keep buying the stock, it's a valuable company. And it's valuable in the eyes of markets

that seemingly have cataracts. And look, the raw economy is why you see these oscillations of hiring and firing. It's why you see Google and Microsoft making billions, tens of billions of dollars each quarter, then firing 10, 15,000 people while the executives get rich. It's because these companies are never actually punished for failing to operate their businesses in a sustainable way. There is no punishment for them. There's not really a punishment for them missing something. No CEO seems to be fired for, say, over-hiring by tens of thousands of people. That's fine. You know what? Easy come, easy go. Tens of thousands of people.

That's fine. You know what? Easy come, easy go. Not for the people who got laid off, though. And when it comes to the startup industry, when it comes to startups in general, the economy is probably a much bigger deal than you realize because startups got used to getting venture capital whenever they needed it. Businesses like Uber were predicated on an endless supply of cheap money, even though the Fed steadily ratcheted up interest rates in the years leading up to the COVID pandemic,

only slashing them to mitigate the pain of COVID and, to a lesser extent, the US-China trade war. They were trying to incentivize investment. They were trying to incentivize putting money into companies that allegedly would create jobs. But once the specter of inflation reared its head well things got kind of nasty and then there was the war in ukraine it's the collateral damage of china's zero covid policy the labor shortage things started to unravel and now there isn't really any free money to go around. We're in an illogical point in economic history and it's scary to me. It's scary when I look at how many companies that just should

not exist. And it scares me. It scares me that the markets don't react when they see like mass hiring of people to capture consumer demand. They don't think, oh, what if consumer demand goes down? They just don't think in that way. They don't react when Microsoft, just an example, lays off people almost every year and then makes billions of dollars and makes giant acquisitions that don't even make sense. Yeah. It's this enshrining of instability as a sign of virtue. Yeah, it's this enshrining of instability as a sign of virtue. And like, yeah, like that is that is really dangerous because like the more instability you accept and the more you like reward the people running these companies for creating situations that make the lives of their employees unstable and our economy unstable. Like the more you incentivize that and eventually like it's going to oscillate too much for balance to be regained. And I fear that. And I fear the fact that

the market also has no memory. In 2020, Satya Nadella, CEO of Microsoft, he called for a, and I'm serious here, a referendum on capitalism, telling businesses to start grading themselves on the wider economic benefits that they bring to society rather than profits. To be clear, this was four months after Microsoft laid off 1,000 people and one year before they hired 23,000 people. And then in early 2023, they laid off a further 10,000 people to, and I quote, deliver results on an ongoing basis while investing in their long-term opportunity. And these savage job cuts have continued into 2024 as well. As I mentioned, they laid off 1,900 people from Activision Blizzard and their Xbox division as well. And that's like 8% of the overall Microsoft gaming team. To be clear, Bobby Kotick, the horrible pervert freak who used to run Activision Blizzard,

he got a $700 million payoff while all of these people got fired. And then a week after laying off these people, Microsoft would report solid second quarter earnings. They beat expectations in both revenue and profit, and they became the most valuable company in the world in the process. And they became the most valuable company in the world in the process. Human capital used as food and fuel for the rich. And I hate to get that kind of alarmist, preachery feeling, but that is what is happening. And it's something that people need to realize and look at and scream at. Because it's disgraceful.

Real people with real problems lose their jobs. And I know tech workers get paid or whatever. They're still people with mortgages, with rent, with families, with children. Satya Nadella has billions of dollars. He's fine. Bobby Kotick, who was a reprehensible guy, oversaw a period of multiple alleged sexual harassment things over at Activision. Paid off. Unfathomably rich. Why did that asshole get money while all these people got laid off? It's because the street doesn't care.

It's because the street doesn't see that as a problem. They don't see moral problems or even logical problems like, Huh, we could have saved a bunch of money. No, they want to reward the people that buy into their wretched, rotten system. It's a scummy way of running a business that society and the market seem to deeply appreciate, and it's actually killing innovation. It rewards bad ideas that make lots of money. It rewards shitty businesses that fail their customers but make tons of money and it rewards abusing customers in a way that i find wretched yeah it is it it is

disgusting the degree to which the wealth of the billionaire class and i guess even to be even more specific the ceo class hinges upon the regular human sacrifice like that is what they're doing like part of why they hire people is so that you can do these big layoffs when you need to do them in order to increase stock value enough to hit whatever your bonus target for that year or that quarter is. Like, it is very much just human sacrifice so that they can get an extra however many million dollars a year that fucking bonus provision in their contract gives them. What's crazy is there are guys like Mark Benioff who runs Salesforce, again, another company that burns billions to make millions.

That guy has laid off tens of thousands of people all while getting these glossy cover stories that talk about his Ohana philosophy, where everybody's important up until the point that they're not. And also, listeners, if you want to email me, easy at betteroffline.com, do you know what Salesforce does? Because I know multiple people who pay for it who don't. They have that big tower with a shitty screen on top of it. Yeah. It's a way for Mark Benioff to make a bunch of money and that does not flow down laying off tens of thousands of people. It's disgraceful. But you know what? It does begin

somewhere. And I've kind of hinted at this with Uber, but it's important to realize how much of this comes from this much more reckless, ugly, and violent form of funding. I'm talking, of course, about venture capital. Venture capitalists are sometimes firms who get money from something called a limited partner. So they get a pool of money that they invest in startups using their alleged smarts to pick the winners of the future. And then when they put that money into these companies, they hope that this company will either go public, much like Uber did and Facebook did, or be sold to another company. And when you look at many of the problems that you find in the tech

industry, when you search for something, you think you've said the right thing and just 11 lines of nonsense pop up, or you go to look at your grandmother's pictures on Facebook, but someone tries to sell you a fitness supplement, this is what's happening. The rot economy is working against you. The CEOs of the companies, of the products you're using, they don't care. They care as much as they need to monetize you, but deep down, they're going to choose themselves and their shareholders and their board members way before you. And they currently have all the power in the web. I'm scared, but I don't want you to be. I want to inform you about how this is happening.

I want the Better Offline podcast to be a place where you can understand, where you can be educated about how you are being conned, about how they are monetizing your digital lives. And I very much look forward to telling you more about this in the future. Thank you for listening. Please check out betteroffline.com and email me at easy at betteroffline.com

if you've got any thoughts. Thank you, Robert, so much for joining me, by the way. I very much appreciate it. The Cool Zone Media rocks. I've very much enjoyed building this with you. Yeah, I'm excited to hear what you come up with next and continue this conversation because I think you're putting a name to a

demon that has been haunting all of our nightmares for a while now and that's not the only thing that you need to do to beat it but it's certainly where turning back the tide starts. And I really look forward to walking through these problems with you and many other incredibly smart people in the future. And of course, Better Offline is a weekly podcast. You can find us every Wednesday on the iHeartRadio app and wherever else you find your podcasts.

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 mattosowski.com. M-A-T-T-O-S-O-W-S-K-I.com. For more information, go to betteroffline.com or email me at ez at betteroffline.com. Thank you for listening everyone better offline is a production of cool zone media for more from cool zone media visit our website coolzonemedia.com or check us out on the iheart radio app apple podcasts or wherever you get your podcasts. That's all I'll say. Hey, what's up? This is Ramses Jha.

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