Startup Stagnation

This is an excerpt from my essay in the second issue of Distance, a nice, quarterly publication full of essays on design and technology. If you enjoy thoughtful and smart writing, and being a part of a meaningful conversation, then get it here.

We are in an era of planned obsolescence. Factories work feverishly to produce the latest hardware, with a human cost that we’ve inadvertently built in. And if you aren’t involved in a startup of some sort, then what are you doing with your life? The rewards seem within easy reach. Some are even investing in nothing—funding teams without a product in mind yet—in the slim chance it will actually become something. It’s the lottery for the technologically savvy—but if played right, whole industries can be redefined, and genuine value can be created for everyone.

Right now, many disruptive companies are just beginning their life. We look to startups because when corporations grow to a certain point, it’s hard for them to adapt to customers’ needs. With the Innovator’s Dilemma we find many established companies that reach the top of their game and then suddenly fall flat on their face; finding out the hard way that there is indeed a difference in drive for profit and growth versus creating value or meaning. They are unable to catch up with other companies that have embraced a market or technology that they never saw as profitable, and by proxy, a threat.

However, many startups pursue disruption and profit, only to find the same fate as their failed peers. Dave Kashen describes the process:

In the startup world, thousands of entrepreneurs focus their ingenuity on finding ways to make millions of dollars. They look for market inefficiencies and focus on questions like: “Will consumers pay for this?” without asking “Will this make people’s lives meaningfully better?” It’s not that we shouldn’t try to make money, it’s just that money should be merely one of many factors we strive for, and it’s played far too central a role for far too long.

Amy Hoy looks at the cost of burnout for those involved:

Every fucking time you see somebody using glory to hagiographize young men & women who are doing something clearly stupid, you must ask:

What is this raft of shit, and why are they trying to get me to paddle it?

And make no mistake, bartering away your “one and only youth” working 100-hour weeks on a web site for the promise of a big fat carrot on the end of a stick 80 million lines long, dangled by a fat statesm–venture capitalist, who will make 3x or 10x or 100x more than you, in the vanishingly unlikely scenario that you “succeed”… is clearly stupid.

With the explosion of aspirational “startup porn” like Pinterest and a continuous flow of new iThings, we have bought into the illusion—“artificially created demand”—that consuming products and rampant innovation is propelling us toward a better life. And creating digital wares is appealing because it seems like creating new jobs would be good for our economy—but digital landfills are problematic, too, with issues arising around archiving and longevity.

Even if there are young companies with meaningful intentions, not all investors are biting. They’re looking for ideas that fit existing trends, and they push for a quick exit via acquisition or further funding. Entrepreneur and investor Chris Dixon explains:

The problem I encounter is that many of these “meaningful” startups have trouble raising money from VCs. An entrepreneur working on groundbreaking robot technology recently joked to me that he’d have an easier time raising money if his robots were virtual and existed only on Facebook.

The truth is, we may well be in the largest slowdown of technological growth in human history. Economist Tyler Cowen calls this the “great stagnation.” Take our modern-day kitchen, for example. The 19th-century kitchen was built around a live fireplace, but then we rapidly benefited from electricity, water, and gas stoves. Then the past fifty years brought no major technological changes.

Silicon Valley investor and web browser inventor Marc Andreessen famously said, “Software is eating the world.” He thinks our economy is being revolutionized by computing; our most favored jobs are shifting from the industrial age to the information age:

This is the great sweep of economic history. When the vast majority of the workforce was in agriculture, it was impossible to imagine what all those people would do if they didn’t have agricultural jobs. Then a hundred years later the vast majority of the workforce was in industrial jobs, and we were similarly blind: It was impossible to imagine what workers would do without those jobs.

Even if Andreessen’s prediction is right, our current technological trajectory is still far from perfect. From Cowen’s perspective, personal computing hasn’t broadly improved society’s standard of living. He says we’ve “plucked all the low-hanging fruit.” Today, innovation takes more effort. Some of the most successful technology companies haven’t done much for job growth: “Take the ubiquitous iPod. It’s created less than 14,000 jobs in the U.S., Internet giant Google, 20,000 employees, Twitter, a mere 300” (Author’s note: Cowen’s figures have obviously changed since that quote.) In fact, the net creation rate of jobs has been on the decline since the 1970’s.

We’re now faced with consumption-biased technological change: “technology that benefits mainly the highly skilled workers, but hurts the less-skilled, average person.” For those in information jobs, it’s an exciting time. Growth and jobs are plentiful. For those outside, though, their quality of life isn’t near as great, and it hasn’t improved much over the past few decades. The median income has stagnated, we’re mainly adding “McJobs” to the economy, and close to half of US is in a very fragile financial state—which is a “visible symptom of Great Depression–era level inequality.” We’re also seeing a “dumbification” of society, where media misinforms and more people seem to be aware of what’s happening on reality TV, than in reality.

Yet, exciting new products are released every day that promise to improve our lives. Are they fulfilling that promise? Are we? We make outlandish claims—like one brand of chewing gum will help you get a kiss from a beautiful woman—in order to differentiate. Umair Haque says this is an industrial age model of product creation: “We have to move from differentiation, to actually making a difference—to people, communities, and societies. Mattering in human terms. I think the key words, when it comes to making a difference, are: human potential.”

In short, if software is truly eating the world, then it needs to be more meaningful.

Cover image: Brent Knepper