by Andrew Keen
Along with other startups such as Joe Gebbia’s Airbnb and the labor network TaskRabbit, Uber’s business model is based upon circumventing supposedly archaic twentieth-century regulations to create a “what you want when you want it” twenty-first-century economy. They believe that the Internet, as a hyperefficient and so-called frictionless platform for buyers and sellers, is the solution to what they call the “inefficiencies” of the twentieth-century economy. No matter that much of the business generated at networks like Airbnb is under investigation by US authorities, with many of the fifteen thousand “hosts” in New York not paying tax on their rental income.15 Nor that TaskRabbit’s so-called distributed-workforce model—whose simple goal, according to its CEO, Leah Busque, is to “revolutionize the world’s labor force”16—profits from what Brad Stone calls the “backbreaking” and “soul-draining” nature of low-paying menial labor.17
“This revolutionary work built out of Silicon Valley convenience is not really about technological innovation,” warns the podcaster and writer Sarah Jaffe about the role of labor brokers like TaskRabbit in our increasingly unequal economy. “It’s just the next step in a decades-old trend of fragmenting jobs, isolating workers and driving down wages.”18 And with 7.5 million Americans working in part-time jobs in July 2014 because they didn’t have full-time jobs, Leah Busque’s “revolutionizing” of the world’s workforce is, in truth, a reflection of a new poorly paid class of peer-to-peer project workers, dubbed the “precariat” by the labor economist Guy Standing.19 “With piecemeal gigs easier to obtain than long-term employment,” warns the New York Times’ Natasha Singer, this highly insecure labor model, the dark underbelly of DIY capitalism, is becoming an increasingly important piece of the new networked economy.20
But that’s all beside the point for these self-styled disrupters who, without our permission, are building the distributed capitalist architecture of the early twenty-first century. The market knows best, hard-core libertarians like Travis Kalanick insist. It solves all our problems. “Where lifestyle meets logistics” is how Uber all too innocently describes its mission to become the platform for the way people and things are transported in our electronically networked age. But Uber-style, let-the-market-decide companies are actually building an on-demand superhighway of luxury services and products for members of the new elite. As George Packer argues, companies like Uber have been designed to solve “all the problems of being twenty years old, with cash in hand.”21 Tap your smartphone and these companies deliver whatever you want: an instant limousine, an instant worker, an instant teacher, even an instant currency like Bitcoin. They represent Ayn Rand’s free-market fantasy of radical privatization: everybody’s private jet, everybody’s private hotel room, everybody’s private doctor, everybody’s private employee, everybody’s private charity, everybody’s private economy. In short, everybody’s private society.
Kalanick is no stranger to controversy. Back in the late nineties, he cofounded a peer-to-peer music-sharing startup called Scour, which, like Napster, helped decimate the recorded music industry by enabling consumers to steal the latter’s products. While Kalanick paced relentlessly around the FailCon stage as if he’d just strode out of an Ayn Rand novel, he quantified his own dramatic failure at Scour by explaining that he’d been sued for a quarter of a trillion dollars by some of the world’s most powerful entertainment companies.
“Two hundred and fifty billion dollars!” Kalanick exclaimed, jumping around as if even he didn’t quite believe such a staggering sum. “That’s the GDP of Sweden—the gross national product of a midsized European economy.”22
Among the FailCon audience, these revelations were greeted reverentially, with a collective nodding of heads. Only in Silicon Valley does getting sued for a quarter of a trillion dollars grant rock star status. A number of amateur paparazzi even waved their iPhones in the air to capture Kalanick’s image—the surest sign of approval from a crowd for whom the ontological argument “pix it or it didn’t happen” is gospel and an experience isn’t considered real until it is publicly posted on Instagram or Twitter.
A young, disheveled, and unshaven fellow seated next to me seemed particularly taken with the enormity of Kalanick’s failure. “Awesome,” the guy muttered to his friend. “That’s so totally awesome.”
And his friend, also young, male, and disheveled, was, if anything, even more impressed with Kalanick’s losses. “Epic . . . fucking . . . fail,” he added, iterating these three words so slowly that each was designed to sound like a fully formed sentence.
Epic. Fucking. Fail.
The Real Failure
At the FailCon cocktail party later that evening, I ran into Kalanick, whom, as a fellow startup Web entrepreneur, I had known for almost twenty years. Back in the nineties, while he was failing with Scour, I was also failing with my own music startup, AudioCafe. We had shared some of the same investors and appeared on the same panels to argue about the value of disruption. He’d even spoken at an event I’d produced in 2000 about the future of music. But, compared with his, my failure was pathetic. I’d only lost a paltry few million dollars of other people’s money. And nobody, I’m ashamed to admit, has ever sued me for the GDP of a midsized European country.
“Hey, Travis, here’s to failure,” I toasted, raising a glass to the paper billionaire, who, in his hyperkinetic way, was conducting several conversations simultaneously with an entourage of admirers.
“Yo, dude, success is failure,” Kalanick said, stopping momentarily and bumping his fist against my glass. “He who fails most—wins.”
“Yo, dude, doesn’t that make you the big winner,” I replied, with a thin smile.
No wonder FailCon had been held at the Kabuki. It was bizarre theater. Here we were, at an exclusive San Francisco hotel, surrounded by some of the most successful, the most powerful, and the wealthiest people on earth. And what was this elite doing? They were toasting failure. Yes, the Ministry of Truth really had relocated to Silicon Valley. FailCon is building an entire media company around the failure meme. It has introduced another event called FailChat, which instructs entrepreneurs to “come prepared with your own personal stories of struggle, confusion or doubt.”23 And it is going international, too, holding FailCon conferences in Germany, Singapore, France, Norway, Brazil, India, and, most absurdly, in recession-ravaged Spain—where there’s certainly no scarcity of people with personal stories of struggle, confusion, or doubt.
But the truth, the real truth about failure, is the opposite of the glossy version choreographed by Silicon Valley’s slick apologists of disruption. Real failure is a $36 billion industry that in a decade shrank to $16 billion because libertarian badasses like Travis Kalanick invented products that destroyed its core value. Real failure is the $12.5 billion in annual sales, the more than 71,000 jobs, and the $2.7 billion in annual earnings estimated to have been lost just in the United States’ music industry because of “innovative” products like Napster and Scour.24 Real failure is the 55% drop in Spanish music sales between 2005 and 2010 because of online theft.25 Real failure is such a decimation of Spanish musical talent that a country that had historically produced international stars like Julio Iglesias hasn’t had an artist selling a million copies of an album in Europe since 2008.26 No wonder FailCon is coming to Spain.
FailCon is coming everywhere soon. While it’s amusing to satirize libertarian clowns like Travis Kalanick with their pathetic boasts about $250 billion lawsuits and their adolescent Ayn Rand fetishes, this really is no laughing matter. Behind many of today’s hyperefficient network companies like Google, Facebook, Amazon, Airbnb, and Uber—with their assault on traditional market regulations, their “free” business models, their “disintermediation” of paid human labor by artificial algorithms, and their “transparent” big data factories in which we all unknowingly work—there is failure. Traumatic failure. Indeed, the real failure, the thing that nobody at FailCon ever dreamed of associating with failure, is the digital upheaval it
self.
Rather than the answer to our contemporary problems, the Internet, that human-computer symbiosis that J. C. R. Licklider believed “would save humanity,” is actually diminishing most aspects of our lives. Instead of creating more transparency, we have devices that make the invisible visible. Instead of a globally connected online citizen, we now have the selfie. Instead of the village pub, we have the Battery. Instead of a cultural cornucopia, we have a post–“Golden Mile of Vinyl” Berwick Street. Instead of a thriving economy, we have downtown Rochester, New York.
The Ministry of Truth is back in business. In Silicon Valley, everything is the opposite of what is claimed. The sharing economy is really the selfish economy; social media is, fact, antisocial; the “long tail” of cultural democracy is actually a long tale; “free” content is turning out to be shatteringly expensive; and the success of the Internet is, in truth, a huge failure.
Epic. Fucking. Fail.
At the FailCon cocktail party, I shared a drink with the two disheveled guys who’d been sitting next to me during Kalanick’s speech. “So, the Internet, is it working?” I asked them about the intergalactic computer network created by J. C. R. Licklider, Paul Baran, Bob Kahn, and Vint Cerf. “Has it been an unqualified success?”
“A success?” one of them of them repeated, glancing at me as if I’d just been whisked down to earth by an UberCHOPPER.
In a sense, perhaps, I had. It was a question so taken for granted at evangelical events like FailCon that, amid this technology crowd, I might as well have been speaking Sanskrit or Swahili. In Silicon Valley, everyone knows the answer. Their answer is an unregulated, hyperefficient platform like Airbnb for buyers and sellers. Their answer is the distributed system of capitalism being built, unregulated cab by cab, by Travis Kalanick. Their answer is a “lean startup” like WhatsApp that employs fifty-five people and sells for $19 billion. Their answer is data factories that turn us all into human billboards. Their answer is the Internet.
“It’s obviously been a success for all of us,” I explained, sweeping my hand around the room packed with fabulously wealthy failures. “But is the network the answer for everyone else? Is it making the world a better place?”
My question triggered a couple of lies that, while not quite in the same league as the FAILURE IS SUCCESS whopper, could still have been coined at the Ministry of Truth. Yes, they both affirmed, nodding their heads vigorously, the Internet is the answer.
“The Net gives power to the people,” one said, smiling broadly. “For the first time in history, anyone can produce, say, or buy anything.”
“Yeah, it’s the platform for equality,” the other added. “It allows everyone an equal share in our new abundance.”
The Internet gives power to the people? The Internet is the platform for equality? Neither of these disheveled guys knew anything about “the people” or “the platforms” outside Silicon Valley. They were the very kind of twenty-year-olds with cash in hand for whom Uber’s expensive private black limousine service was designed. Both had recently graduated from Stanford. Both worked at big data startups with insatiable appetites for collecting other people’s private information. Both were engineers of an increasingly unequal future, in which ordinary people will experience a scarcity, rather than an abundance of economic, political, and cultural power.
“That’s not true,” I said. “The Internet is a winner-take-all economy. It’s creating a two-tiered society.”
“Where’s the evidence?” one engineer responded. He wasn’t smiling anymore.
“Yeah, I’d like to see your data,” the other chimed in.
“Open your eyes,” I said, pointing at the bustling San Francisco street outside the hotel window. “There’s your data.”
The Alien Overlord Spaceships
Outside the San Francisco hotel, the future had arrived and, to paraphrase William Gibson, it was distributed most unequally. Uber limousines lined up outside the club to whisk Silicon Valley’s successful young failures around town. Cars from rival transportation networks hovered hopefully around the hotel, too—companies like Lyft, Sidecar, and the fleet of me-too mobile-ride-hailing startups trying to out-Uber Travis Kalanick’s $18 billion market leader. Some of the people scrambling for a living as networked drivers were themselves aspiring entrepreneurs with billion-dollar startup ideas of their own.27 So even in these unlicensed cabs, it was impossible to get away from the pitches for the next WhatsApp, Airbnb, or Uber, which pitches, sadly, were mostly just a glorified form of begging. “San Francisco,” as one observer about the digital gold rush dryly noted, is “full of people walking around with 1.2% of nothing.”28
The streets of San Francisco were also full of buses. Some were open-topped, red double-deckers filled with tourists snapping their Instagram moments of what appeared, to the naked eye, at least, to be a city with splendidly panoramic views of the Bay. A less romantic but equally vital feature of San Francisco was its public buses. These were the traditional municipal vehicles, with bright orange Muni logos painted on their sides, a service financed by San Francisco’s transit authority, which, for a small fee, allows anyone to ride on them. Their windows were entirely transparent. These Muni buses are what Silicon Valley entrepreneurs and investors would probably dismiss as “legacy products.” They now seem like a relic of mass labor’s “golden age,” a halcyon time when paid workers traveled to their jobs on publicly subsidized vehicles.
“I don’t know why old people ride Muni. If I were old, I’d just take Uber,” the Los Angeles Times reports one San Francisco techie saying to his friends after reluctantly giving up his seat to an old lady on a Muni bus.29 Perhaps old ladies take Muni, I would have explained, because they can afford the $0.75 senior’s fare, whereas Travis Kalanick’s Uber service, with its surge pricing, could cost them $94 for a two-mile ride.
And then there’s what the San Francisco–based writer Rebecca Solnit dubs, collectively, “the Google Bus.”30 These are sleeker and more powerful buses, menacingly anonymous in their absence of any identifying marks, with the same kind of opaque, tinted windows that masked the Battery from the prying eyes of the outside world. Unlike the Muni’s legacy buses, the Google Bus isn’t for everyone. It is a private bus designed to transport tech workers from their expensive San Francisco homes down to the offices of Google, Facebook, and Apple. Google alone runs more than one hundred of these daily buses, which make 380 trips to its Googleplex office in Mountain View.31 These luxurious, Wi-Fi-enabled private buses—which, in total, make around four thousand daily scheduled pickups at public Bay Area bus stops—have been superimposed on top of San Francisco’s public transit grid by tech companies that have even begun to employ private security guards to protect their worker-passengers from irate local residents.32
The Google Bus has sparked such animosity from locals that, in December 2013, protesters in West Oakland attacked one of them, smashing a rear window and so outraging Tom Perkins that he compared the glass breaking to Kristallnacht in Nazi Germany.33 And, as if to mark the twenty-fifth anniversary of the Web, 2014 is the year that these demonstrations have become more politically organized and coherent. They are even spreading outside the Bay Area, with antigentrification protests taking place in February 2014 in Seattle against private Microsoft buses.34
Kristallnacht it certainly isn’t. Rather than racial genocide, the Bay Area’s problem is the ever-widening economic inequality between tech workers and everyone else. In many ways, failure is as endemic here as it is in Rochester. “After decades in which the country has become less and less equal,” mourns the Palo Alto–born-and-bred George Packer, “Silicon Valley is one of the most unequal places on earth.”35 Figures from the Chapman University geographer Joel Kotkin suggest that the Valley has actually hemorrhaged jobs since the dot-com crash of 2000, losing some forty thousand jobs over the last twelve years.36 A 2013 report by Joint Venture Silicon Valley confirms Kotkin’s findings, adding that homelessness in Silicon Valley has increased by
20% between 2011 and 2013 and reliance on food stamps has reached a ten-year high.37 In Santa Clara County, the geographical heart of Silicon Valley, the poverty rate shot up from 8% in 2001 to 14% in 2013, with the food stamp population jumping from 25,000 in 2001 to 125,000 in 2013.
Even those lucky enough to get jobs at tech startups are likely to lose them again very quickly. According to research by the US Bureau of Labor Statistics, which tracked changes in employment between 2012 and 2013, new companies fired 25% of their staff in their first year. This contrasts with an average annual rate of 6.6% at established companies.38 This cult of the so-called lean startup39 created by the FailCon speaker Eric Ries, with its brutal churn of employees, makes it particularly risky for older people with kids to feed and mortgages to pay to work in such a casino-style economy. No wonder, then, that Silicon Valley’s demographic is radically different from the rest of America. In a US economy where, according again to the Bureau of Labor Statistics, the overall median age of workers is 42.3 years old, the median age of workers is 28 at Facebook and 29 at Google.40 And even at supposedly “mature” technology companies like Oracle or Hewlett-Packard, the average age of workers is significantly less than the US average.
Just as Silicon Valley is biased against older workers, it also discriminates against women. “Women are no longer welcome on the Internet,” the feminist writer Amanda Hess says. And they certainly don’t seem to be welcome, either, in the offices of Silicon Valley’s venture capitalists. Even though, as the entrepreneur and academic Vivek Wadhwa reminds us, female-founded startups are more capital-efficient than those founded by men and have lower failure rates and higher annual revenues, women are still radically underrepresented in Silicon Valley.41 The numbers on this are disturbing. Fewer than one in ten venture-funded startups in Silicon Valley are led by women, with only 3% of that venture money going to all-female teams.42 An estimated 2–4% of engineers at tech companies are women,43 and, according to Measure of America, these Silicon Valley women earn less than half of what Silicon Valley men do.44 Equally troubling, there is a persistent sexist culture among many of the young male programmers, the so-called tech bros, who openly treat women as sexual objects and unashamedly develop pornographic products such as the “Titshare” app introduced at the 2013 TechCrunch Disrupt show in San Francisco,45 designed to humiliate their female colleagues. This misogynistic culture extends throughout the Valley, with bias claims surging in 2013 against the male-dominated tech industry46 and even a blue-chip venture capital firm like John Doerr and Tom Perkins’s KPCB becoming embroiled in a discrimination suit with a former female investment partner.47