Silicon States

by Lucie Greene

  Generation Z, as an electorate, will be the most ethnically diverse to date. According to a 2017 Nielsen study, Generation Z and millennials are more multicultural in their overall racial and ethnic composition than previous generations. Generation Z holds the largest percentage of Hispanics and non-Hispanic blacks, at 22 percent and 15 percent, respectively. “Compare that to the Greatest Generation (those aged seventy-one and up), whose makeup is overwhelmingly non-Hispanic white at 78 percent, with 9 percent of its population non-Hispanic black and 8 percent Hispanic,” says Nielsen.

  Their agenda is radically progressive. We spotted this early at J. Walter Thompson. In 2015 we ran a nationally representative survey and the majority said they didn’t care about sexual orientation, and 67 percent had a friend of a different sexual orientation. Eighty-eight percent said that people were exploring their sexuality more than in the past. Eighty-one percent agreed that gender doesn’t define a person as much as it used to. And race was also thought of differently, with 77 percent agreeing: “I view race differently than my parents’ generation.” Since then, we’ve continued to dig into it. In 2016 we ran a survey looking specifically at gender identity and sexuality. We found 56 percent of U.S. Gen Z-ers know someone who uses gender-neutral pronouns. Today Gen Z is regarded as one of the most progressive generations to be coming of age, with media zeroing in on its paradigm-shifting attitudes toward gender. Time magazine has run a 2017 cover feature, “Beyond He or She: How a New Generation Is Redefining the Meaning of Gender.” National Geographic also published a special issue: Gender Revolution. Condé Nast has created an entirely new media platform, “them,” aimed at teens but through an LGBTQ community lens.

  It can even be seen in their heroes, all of whom have a progressive agenda. Willow Smith raises awareness about mental health. Amandla Stenberg is an activist with the No Kid Hungry organization. British Gen Z columnist for the UK’s Sunday Times Style magazine, Scarlett Curtis, threw her support behind a nationwide movement raising awareness of period poverty (lack of access to tampons and feminine care).

  The activist thread goes beyond this, though. A subtle distinction between millennials and Generation Z is that while they share superficially similar values—the environment, feminism, social good—the difference in commitment is radical. Millennials have switched their faces to rainbows on Facebook. Shared feelings of dismay at Paris shootings on Instagram by posting visual memes. Generation Z by contrast is more inclined to do something. Malala Yousafzai is most iconic of this, but many Generation Z influencers focus on real action.

  And Gen Z is more likely to get out the vote. An early sign came in 2014, when the voting age for the Scottish referendum was reduced, allowing sixteen- and seventeen-year-olds to take part. Around 100,000 people under eighteen registered to vote, 80 percent of those who were eligible. About 64 percent of registered voters aged 18–24 voted in the 2016 EU referendum.

  In an era of fake news, and the filter bubble, these young people are also more likely to be able to push through the noise. This generation has grown up in a highly scaled marketing landscape bombarded by constant messaging, with mature social networks and smartphones part of their everyday lives. Not only are they able to consume more information than any group before, they have become accustomed to cutting through it. They are perhaps the most brand-critical, bullshit-repellent, questioning group around and will call out any behavior they dislike on social media. (Little wonder brands are quaking in their boots.) For evidence of this, one need only survey the recent viral shaming of fashion designer Marc Jacobs for cultural appropriation in his use of dreadlocks on white models in a fashion show. It was led by teens. Similarly, a political thread runs through all of Teen Vogue’s coverage, from fashion brand inclusivity to representation in marketing.

  The internet has rendered most news and news outlets (seemingly) equal, hard to distinguish between fact and fiction. At least, to older generations. What would have been a scrawled political flyer handed out on a street corner and quickly discarded as propaganda is given new reverence in the internet world. Generation Z, natives of this universe, already have the tools to navigate it.

  Millennials were late to engage in politics, and some would say they have only done so in the U.S. and UK in the wake of Brexit and the presidential election. But they are engaging as the reality of decades ahead in the shadow of baby boomer policies, and their impact on their adult lives, become more real. Influencers like Mark Zuckerberg are more actively involved. As the older ones reach age thirty-five (Zuckerberg is thirty-three), they may yet jump in to replace the combed-over, fusty, suited boomers who currently reside in office.

  What will Millennial Washington look like? Will they do a better job? Will they combine business with social good as they are doing in their work and consumption habits? Will social-good commerce be applied within the state? Can the state and private sector find new ways to work together?

  The cliché goes that this generation does not handle criticism well, and is narcissistic and self-involved, but they’ll be held to account by a very vocal Gen Z. Millennials have also had to endure some hard knocks: Student debt. The reality of a stagnant job market after the global economic crisis. Like Zuckerberg, they are motivated by solving problems and seek meaning in their work. Though, unlike Zuckerberg, they are living the reality of not out-achieving their parents. In cities like London and New York, they are not buying properties and are not seeing the same financial security or prosperity. They will most likely be working until they’re ninety. It’s a slightly grim future, potentially, so it’s surprising that until now millennials have been so politically apathetic in trying to shape it.

  The United States of GAFA

  The way Silicon Valley leaders would tell it, unlike any industry, any institution, or government—dare it be said—they have cracked the code to the future. They’re skimming Yuval Noah Harari’s Homo Deus: A Brief History of Tomorrow. They are still reading The Innovator’s Dilemma by Clayton Christensen. They are attending Burning Man for spiritual refreshment (chemically induced or not); clad as extras from Mad Max, they are stumbling inadvertently onto the next big idea. They are turning to The Black Swan: The Impact of the Highly Improbable by philosopher and scholar Nassim Nicholas Taleb, about anomalies of history and how to spot these in the future (and either circumnavigate them or take advantage of them) by obsessing about what you don’t know, not what you do. (All history, Taleb argues, is retrospective logic applied to random events.)

  The Black Swan is one of Jeff Bezos’s favorite books. He is also obsessive about long-term thinking as a means to future-proof yourself—a future where Amazon owns every potential purchase one might make. This means making counterintuitive moves, such as forgoing immediate profit and being radically consumer-centric, the idea being that this will eventually pay off as Amazon becomes a 360-degree personal commerce and entertainment ecosystem. To borrow a perfect line from New York Times journalist David Streitfeld: “Amazon wants to be so deeply embedded in a customer’s life that buying happens as naturally as breathing, and nearly as often.”

  The methods espoused by Silicon Valley leaders have had far-reaching influence on the entire theory of work and remaining relevant in the future. We all seek to live in Beta: “Move fast and break things.” “Iterate.” “Pivot.” “Done is better than perfect.”

  Entire industries are trying to replicate Silicon Valley’s behavior—the behavior of a group of businesses that, if it hasn’t already eaten into their territory, may well do so very soon.

  Yet again, strategic genius can be retrofitted. “We all talk about Facebook, but we don’t talk about Myspace,” says Ian Stewart. “On average, if you’ve bought the entire tech index you’ve done pretty well in the last ten years. But there’s a survivorship bias because all the companies that fail just come out of the index.”

  But might Silicon Valley’s hype itself become obsolete? Can it really predict the future?

 
“They might be forced to align if they all got nationalized,” futurist Bruce Sterling predicts to me. Like the United States of GAFA. Or, he says, they could all get obliterated by cheaper and more effective Asian platforms.

  “I don’t think that they’re really that important in the span of things,” says Kevin Kelly. “They’re all susceptible to being displaced, and I don’t think they’re going to be around in ten years. I don’t think they represent anything different than thousands and thousands of others who form the second tier. They are celebrity companies in the same sense as Kim Kardashian, where everybody’s focused on what they do.”

  “How durable is the lead that any technology company has enjoyed in the last seventy years?” asks Stewart. “What proportion of the dominant tech companies in the United States that exist now, existed twenty years ago? I suppose Apple’s one, but a high proportion of them didn’t . . . My view would be that the tech sector is very creative but it’s also a big destroyer of capital, so it is pretty Darwinistic.” So what does this mean if they take over public services? If Uber eats all public transport and eradicates all the profitable taxi companies, becoming our dominant mode of transport, but continues not to turn a profit, and eventually runs out of backers, will it eventually need to be nationalized?

  So far acquisitions, expensive ones, have kept many Silicon Valley giants in business. Facebook acquired WhatsApp for $22 billion in 2014. It bought Instagram for $1 billion in 2012—though thank god it did. According to iStrategyLabs, eleven million teens left Facebook between 2011 and 2014, though Instagram continues to post double-digit growth year after year.

  More recently, each has begun cannibalizing and copying each other. Fighting over driverless cars, smartphones, home speaker hubs, deliveries, business messaging, and payments, each attempting to become dominant, self-contained ecosystems. Amazon and Google are each trying to own home hubs, search, shipping, and shopping; Google and Uber, driverless cars; Uber and Amazon, urban deliveries. The list goes on.

  Many are investing in augmented reality (AR), virtual reality (VR), mixed reality, and beyond (augmented reality is layering digital imagery over real-life spaces). Shipments of AR and VR headsets will grow at a compound annual growth rate of 108 percent from 2015 to 2020, reaching 76 million units, predicts IDC, a technology consultancy. Facebook, Samsung, Google, Apple, Amazon, and Alibaba are investing heavily in VR—and making the technology more social is a logical way forward.

  While much attention was given to VR initially, AR seems to be the tech that has really gone viral. The Pokémon GO phenomenon was perhaps a precursor, but today Silicon Valley brands and many retailers are rushing to put AR in the pockets of millions. Alibaba created its own AR character and mobile shopping game for its annual Singles’ Day shopping bonanza in late 2016. In 2017 augmented reality officially went from niche technology to must-have function, setting tech giants in a battle to own the space, introducing a host of tools that incorporate the function into mobile devices. Apple unveiled ARKit, a toolkit that lets software developers build AR experiences for the iPhone. Google launched its own ARCore, the competitor version for Android. “I don’t think there is any sector or industry that will be untouched by AR,” Apple CEO Tim Cook told Vogue in October 2017. This could have considerable runway. The possibilities with AR are endless for retail, entertainment, and ad revenue. People walking the street can call up a digital layer of information about bars, or hover it over a supermarket shelf to see the nutritional content of a chocolate bar. They can virtually see sofas in their home, the images layered over reality, before buying them. Expect more to come.

  “The thing about virtual reality currently is that it is not very social and limited to gaming. That, ultimately, will stop it from reaching mass adoption. Until you make it social, it won’t have as big an impact,” says Rowland Manthorpe, then associate editor at Wired UK, betting that social VR will be the way it reaches bigger audiences. Mark Zuckerberg clearly thinks so too. At its much-vaunted 2017 V8 conference, Facebook unveiled a “spaces” feature in which users can create 3-D avatars for video calls on Facebook and on its VR headset in far-off locations.

  Gaming companies such as The Void have sought to socialize it with interactive multiplayer games. But this is just the beginning. Companies such as High Fidelity, founded by Philip Rosedale, who also founded virtual world Second Life, are experimenting with VR to create limitless 3-D social landscapes. There are even VR theme parks emerging. VR World now entertains Manhattan revelers and tourists from its location just south of Times Square. (It’s able to occupy a fraction of the size of an actual theme park because its wild mystical worlds are virtual.)

  Hype, albeit waning, has been nothing short of breathless about the potential of virtual reality. “It’s an empathy machine!” is a tagline often used, describing VR’s immersive properties, which lend it special emotional powers. “It’s a great soundbite to grab on to. But even if it puts you in someone else’s shoes for twenty minutes, empathy has to have a lasting effect,” says VR artist and pioneer Jacquelyn Ford Morie. “It’s not ‘I had empathy for five minutes! Oh boy!’ It’s not that. Empathy is something that changes you internally.”

  For all the hype attached to virtual reality, it’s also difficult to imagine how such a chronically isolating device will become a mainstream staple in the home. Recall the now-defunct Google Glass, which layered information and imagery onto the environment, and it was still a dud. In fact, think back to pretty much any consumer technology becoming mainstream that has involved wearing a device to consume entertainment, and you’ll struggle. Even glasses themselves have, in many instances, been replaced with contact lenses (save for the Brooklynites clad in Warby Parker frames). Maybe that’s next.

  But still. A vision of that future is not one that many consumers might desire when confronted with it. One where augmented reality ads spontaneously pop up in their vision as they navigate the streetscape, prompting them to “like” or “check in” wherever they go. A smartphone, at least, can be put inside a pocket. The inescapable human fact is that, when it comes to our environments, people don’t want them to be mediated by a glass screen.

  Specialist applications of VR are more compelling. It’s been used as a therapeutic tool for soldiers suffering post traumatic stress disorder. Björk has created spectacular, immersive, artistic music videos. Jon Favreau has made a cognitive, nonlinear, gamified magical virtual reality movie Gnomes and Goblins, in which participants have to earn the trust of miniature animals by feeding them snacks amid a glowing mythic forest by night. Experiencing VR is still incredibly intense, not casual like television or movies. Experts such as Ford Morie have also expressed health concerns about using such immersive technology for long periods of time.

  When technology can shape not only your life and actions but your sense of self and even memories, there’s little else left to disrupt.

  The Deflating Balloon?

  But the tide has certainly turned for Silicon Valley. The decline in private-market valuations suggests a peak in the boom passed in 2014–2015. Valuations for the hot tech companies are down by about 40 percent. Uber continues to grow, but endures staggering losses.

  For how long? Is there going to be a bubble?

  The soaring heights of many Silicon Valley companies, where scale is prized over profit in valuations, suggests that there might be. “The last time we had a bubble, the fundamentals were very different,” says Margit Wennmachers. “When Netscape went public, there were about fifty million people on the internet, and they were on dial-up connections. Now you have two and a half or three billion permanently on the internet. It walks with them wherever they go, so the market size has grown in a way that’s hard to grasp. Ideas that didn’t work out, like Webvan, were not bad ideas.”

  The culture of high valuations even if you don’t make a profit also continues. “It’s almost discouraged,” says Amber Atherton.

  The current climate is worse than
the dot-com boom, says Debra Cleaver. “Myspace was expected to actually generate profit, so we made all of these decisions that would increase ad revenue. So many startups now are never profitable. They run entirely on venture capital. In today’s funding climate it’s possible Myspace would still exist,” she says. “The other thing which everyone forgets is that when Myspace was huge in 2006, the government was threatening to shut it down to make the internet safe for children. Myspace had to spend millions of dollars to comply with these requirements that the government imposed on us, which was a big part of driving Myspace out of business. Total free-for-all.”

  So far many Silicon Valley business models are predicated on algorithms for scale—exponential growth without bodies on the factory floor—to achieve their outsized status and profit. But recently there’s been pressure on them to take a greater, more grown-up responsibility for their impact and the abuses therein. Through Jigsaw, Google parent company Alphabet is using Conversation Artificial Intelligence to attempt to filter abusive speech. “I want to use the best technology we have at our disposal to begin to take on trolling and other nefarious tactics that give hostile voices disproportionate weight,” Jigsaw founder and president Jared Cohen told Wired. But there are still flaws. Tensions will continue to mount as Silicon Valley supplants traditional industries such as media companies and hospitality but seeks to avoid responsibility.

  The cultural cache of this group seems to be slipping. Beyond the dystopias that are flowing thick and fast about surveillance culture, the things that made this group novel have become so outsized they’re at best corporate, and today—at least a decade old—normalized. The shouts about diversity are getting louder. The treatment of women becoming more contentious—ditto the pay grades.

  More recently there has been greater emphasis on female founders and investors, not just female leadership in Silicon Valley. And, as the market expands for women-centric consumer tech products, there may be more to come. As the crueler side of the gig economy and the Wild West landscape of low-income contractors become more widely reported, we may see more pressure on companies like Uber.