Silicon Valley needs to dump its revenge-of-the-nerds culture and engage with the world
- Since the results of the Brexit vote came out on June 24th, commentators everywhere have emphasized the growing popular anger in the UK and elsewhere against immigration, open borders, international trade, and technology-enabled globalization in general.
- If the tech industry doesn’t wake up and take notice of this geo-political and socio-economic instability, it may well be seen as a new Public Enemy number one, becoming vulnerable to widespread populist rage and increasingly stringent regulation by national, regional and city governments as well as by the supra-national EU.
- Working in concert, industry and government have both a need and an opportunity to produce a new model of collaboration leading to greater integration to counter the deepening political polarization in western economies. Failing this, major regions of the world may give way to the divisiveness – or disintegration – that populist leaders love to feast on.
“Today’s challenges include economic stagnation and disruptions in the labor markets — driven to a large extent by technological advances moving at warp speed — that are widening income disparity, destroying jobs and hollowing out the middle class.”
– Henry Paulson, former U.S. Treasury Secretary, to some degree pointing a finger at the tech industry, quoted in an article in the Washington Post, June 24, 2016
Among other sources that I’ll be quoting in this article, I want to credit a timely article by journalist Kevin Maney in a recent Newsweek article, “Tech waits for no man: why the world loves Silicon Valley… and fears it.” The magazine cover expresses the gist of the article more succinctly: “Why the world hates Silicon Valley”. Maney affirms, as I think few would refute, that we have two Americas today: Atoms America and Bits America. Atoms America is, as he explains, manufacturing, retail, services, restaurants – “old-school businesses you can see and touch”. Bits America consists of the companies that “write code, analyze data, sell apps, and invest in startups”, and Silicon Valley is the nexus of this world. As analyst Mary Meeker recently revealed in her sought-after annual analysis of the tech industry, 12 of the top twenty most valuable tech companies in 2015 were American, and only one of these (Priceline) is not based in Silicon Valley (or to be precise, the West Coast, if you include Microsoft). The U.S. companies represented 76% of the market cap and 87% of the revenue among the top twenty.
Maney warns that the tech industry could become public enemy number one of “governments, activists, and the frustrated masses” left behind as companies such as Apple, Google, Facebook, Amazon, Alibaba, Uber and Airbnb continue to “disrupt” the music, media, advertising, telecommunications, retail, IT, transportation, and hospitality industries so provocatively and unapologetically, as they continue to increase their economic power around the globe. I translate this concern to mean that tech needs to discard its mindset of what Tom Braithwaite in a July 2 Financial Times column refers to as the Silicon Valley bubble “snugly and smugly inventing the future”, in favor of a more humble and thoughtful approach. This would involve engaging those constituencies of the global community that feel they are threatened or marginalized by technology-powered globalization, which itself has been so markedly enabled by outsourced manufacturing and services enabled by supply chain optimization, by cloud computing, smartphone apps, self-referencing online communities (social networks such as Facebook and Twitter), and big data analytics enabling behavioral ad targeting, among other technologies. And all of this, before the full impact of new investments in artificial intelligence (including deep learning), robotics (in automated cars and planes and elsewhere), and 3-D printing reach their full potential to “disrupt” current ways of leading our lives or producing goods and services.
An increasingly likely outcome from continuing to adopt an uppity attitude toward the industries and workers whose livelihooods tech companies are disrupting will be a backlash against tech that could cause new anti-trust style regulations and other legal constraints on tech companies’ ability to dominate certain industries the way Google does today in advertising (gobbling up 12% of all advertising spend globally, according to a recent ad industry report), or mobile phones (almost all mobile phones in India operate on either Google’s Android or Apple’s iOs S operating system, and the top 3 apps in India are all owned by Facebook – Facebook itself, WhatsApp, and Facebook Messenger), e-commerce (Amazon and/or Alibaba are dominant in most major countries), or urban transportation (Uber’s rapid and voracious rise has spooked many city and state governments into restricting its operations or banning it altogether).
Brexit, Trump, and today’s wave of Populism in Politics
What do Brexit, Trump, and the wave of populism raging throughout the western economies have in common, and what do they have to do with the “Stop Disrupting, Start Engaging” imperative we are discussing here? In short, everything. Just as Donald Trump is, as most experts agree, shrewdly exploiting the discontent of masses of Americans who feel that they’ve been left behind by globalization, free-flowing international trade, and the resulting educational, business and financial inequalities that prevent them from improving their lot in life, the June 23 Brexit vote to leave the EU is now widely acknowledged to have won the day due largely though not exclusively to fears around immigrants stealing the jobs of British workers. New York Times columnist Tom Friedman states the case eloquently:
“A major European power, a longtime defender of liberal democracy, pluralism, and free markets, falls under the sway of a few cynical politicians who see a chance to exploit public fears of immigration to advance their careers. They create a stark binary choice on an incredibly complex issue, of which few people understand the full scope – stay in or quit the EU. These politicians assume that the dog will never catch the car and they will have the best of all worlds – opposing something unpopular but not having to deal with the implications of the public actually voting to get rid of it. But they so dumb down the debate with lies, fear-mongering and misdirection, and with only a simple majority required to win, that the Leave crowd carries the day by a small margin. Presto: the dog catches the car. And, of course, it has no idea now what to do with the car. There is no plan. There is just barking.”
Friedman’s description introduces key elements of populist politics when it goes badly wrong, such as when one or both sides construct such massive fabrications – or appear to the other side to have done – that, they stop believing official reports and warnings of the consequences of, in this case, leaving or remaining in the EU. As, Michael Gove, one of the prominent Leave leaders, famously stated several weeks before the vote: “People in this country have had enough of experts.” As Friedman goes on to say: “It’s the story of our time: the pace of change in technology, globalization and climate have started to outrun the ability of our political systems to build the social, educational, community, workplace, and political innovations needed for some citizens to keep up. We have globalized trade and manufacturing, and we have introduced robots and artificial intelligent systems, far faster than we have designed the social safety nets, trade surge protectors and educational advancement options that would allow people caught in this transition to have the time, space, and tools to thrive. It’s left a lot of people dizzy and dislocated.”
I’ll comment below on what I think Tech needs to do to make friends with the “dizzy and dislocated” workers and consumers. First, let’s hear at a high level what Friedman and Nader Mousavizadeh, a London-based political strategy consultant, recommend at a high level. Essentially, they argue that the key issue in the case of Brexit is integration, not immigration. In other words, they argue, the experience of pluralistic, multi-ethnic cities has produced significant benefits. Friedman argues that because technology “is integrating us more tightly together and delivering tremendous flows of innovation, knowledge, connectivity and commerce, the future belongs to those who build webs not walls, who can integrate not separate, to get the most out of these flows.” In his view, this is why Britain leaving the EU is a lose-lose proposition.
Just as Trump is achieving prominence, and despite all predictions to the contrary, may surprise many of us by winning the U.S. presidency in November, so the recent successes of Michael Gove and Boris Johnson in the Brexit vote, Marine le Pen’s increasing popularity in France, and the growth of support for populist parties such as Syriza in Greece and Podemos in Spain, indicate that we are in for a surge in popular revolt against establishment elites everywhere and a rejection of experts and authorities in favor of the new figures who promise easy answers to complex issues and stray into xenophobia and nativism, to accentuate divisions rather than soften or eliminate them.
In summary, more than three decades of globalized commerce operating on inconsistent regulations and practices, poorly resolved economic and financial crises such as the almost-Armageddon of 2008, the increasing digital divide caused by advances in information technology unaccompanied by advances in education or governance, have resulted in increased inequality between nations, sectors of society, employees and business leaders, haves and have-nots, knows and know-nots – all of these factors have led us to where we are today. Let it be no surprise then that, aided and abetted by the echo chamber of social media, disadvantaged and aggrieved individuals and groups resort to mob behavior, becoming increasingly vulnerable to the appearance of populist, and even fascist, individuals who offer to lead them out of the wilderness to the promised land. What is fascism but the cult of personality around one charismatic figure who promotes themselves as the source of all solutions, promising to vanquish the enemy within and without and in the process prolonging and accentuating divisions in order to preserve their hold over the masses. Make no mistake, the British were captivated by the UK’s Donald Trump, ex-London mayor Boris Johnson, until he “caught the car” and didn’t know what to do with it. Hence his ‘surprising’ decision to not run for election as prime minister last Thursday may not after all have been so surprising. Michael Gove, Brutus to Johnson’s Caesar in this latest maneuver, is a different case, because he is a deadly serious radical. In the case of Trump, the Guy Fawkes of the Republican Party, the U.S. electorate may not be so fortunate as to see him flee the scene at the first sign of serious challenges if he looks like prevailing over Hillary Clinton – this remains to be seen.
Remedy for the Populist Threat – Technology as an Engine of Equality, not Elitism
So what should the public and private sectors (and especially tech in the latter case) do to counter the effects of today’s populist, nativist, xenophobic wave, in light of technology’s critical role in aggravating the divide between socio-economic and national classes?
To exemplify what governments can imagine doing, let me cite as an example the comprehensive technology policy initiative that the Clinton campaign announced last week – this is not to advocate for one presidential candidate against another, simply to report an example of a detailed policy initiative, something that we should expect in some form from the presumptive Republican nominee at some point before the election (or not, based on Trump’s performance thus far). The overriding theme of the Clinton initiative, as reported in the Bits section in a the New York Times (July 2), is that “technology should be an engine of equality rather than of elitism”. To encourage the creation of the jobs of the future, Clinton’s agenda includes having the federal government help to fill the finance gap, as banks have cut their loans to small businesses and since VC funding is concentrated in just a few regions, particularly Silicon Valley. She also wants to “support incubators, accelerators, mentoring and training for 50,000 entrepreneurs in under-served areas”, and increase funding for existing programs that offer tax credits and financing for community development and small businesses. Clinton also wants to help young entrepreneurs and early employees of startups to defer payments on federal student loans for up to three years.
More controversially, in the current xenophobia characterizing the debate on immigration, she intends to automatically issue permanent resident status to people who earn graduate degrees in science, engineering or mathematics from accredited universities. It would also expand Obama administration policies for building broadband networks in rural areas, encouraging computer science education for elementary and high-school students, and job training in technology fields. My take on this latter aspect of the announced initiative is that I would expand it to include people with academic performance beyond technical computer-related studies, including biology, chemistry, and liberal arts degrees as well as technical-college qualifications, in order to be more inclusive. To my mind, we need to educate and train the computer and smartphone users, workers and managers of the future, not just the coders.
As for what tech companies can or should do, I have a list of what I’ll call Imperatives. To illustrate my arguments I’ll refer to what today’s major U.S. tech companies – notably, Apple, Google, Microsoft, Amazon and Salesforce, plus the relative startups Uber and Airbnb – should consider doing in the civic sphere beyond the government lobbying that they’ve rapidly learned to assimilate in their own interest, to neutralize what they see as excessive government interference preventing them from growing their businesses.
Here is the list of my so-called Imperatives:
- Start by eliminating the Disrupt mantra from your rhetoric, and start embracing the concept of Engaging with all users, workers and customers within your global universe, as well as with government and other authorities. It should be easy enough to appeal to the self-interest of tech entrepreneurs and management teams by reminding them of the massive inconvenience caused when they make government their enemy. War veterans are another group that needs help in re-integrating into the workforce, and programs such as Uber’s program to certify vets as drivers is one example of a step in the right direction. Leaders such as the Big Four internet companies – Apple, Google, Amazon and Facebook – need to forsake their customary secretiveness for a much more open approach to all their users, customers, (potential) partners, competitors, and government agencies. One could argue that Google would be experiencing less scrutiny from the EU today if it adopted a more trusting and trustworthy attitude to its competitors as well as to authorities.
- Think about all of the implications of major technology innovations, and seek to increase their benefits while also neutralizing their possible downsides. Examples might include for starters eliminating online anonymity in all social or professional interactions online, thus beginning the process of discouraging radical, anti-social rhetoric and behavior. It’s no accident that today’s fastest-growing major internet players insist on authentic identities – notably Amazon (in e-commerce), Facebook, LinkedIn, Salesforce, Uber, and Airbnb – because they realize that without individual accountability. Sites that rely significantly on peer reviews, including Amazon (reader reviews, for example), Netflix, Yelp, and others should no longer permit user participation without authentic identities. Another positive move would be for Google and Facebook, two of the principal players in desktop and mobile advertising, to produce training courses for new users on how to build demand in their new or small business, how to service customers successfully, and how to maximize customer retention and engagement.
- Align your programs closely with those of the government, setting up matching programs and funds wherever feasible. Obviously, government agencies don’t have all of the answers and their technology-related initiatives can be clumsy and ineffective, but this is where tech companies can play an important role beyond the self-interest of selling their products and services.
- Reduce cost-based outsourcing offshore to an absolute minimum, substituting it with a focus on productivity. Instead, expand alumni networks and company university training programs to maximize the productivity of your employees. Productivity matters more than cost reduction because it improves the effectiveness of employees and the growth of the business.
- Establish scholarships in community and technical colleges for operational roles as well as engineering or marketing roles. Besides operational roles, fund apprenticeships in trades and crafts. The beneficiaries are either your users today or will become users, or even employees in the future. On the same theme, establish company internships for operational, support, and administrative roles.
- Collaborate with government and police initiatives in cybersecurity. Yes, we had the Snowden episode, but everyone learned from the resulting scandal. Negotiate reasonable terms of engagement with government agencies for ceding metadata to them in any area that can deter extremism of any kind, from terrorism to online bullying. Apple’s resistance a few months ago to aiding the FBI in its request to open up a dead terrorist’s iPhone in order to gain information into a possible ISIS cell was understandable on one level, but poorly handled by the company. Leading companies need to set a more collaborative tone in these situations.
There’s a lot of scope for tech companies of all sizes to give back instead of just taking. It’s not only people who feel disenfranchised when they lose their jobs to “technology” who at times feel hostile towards the tech world. People in other industries that don’t experience the same rapid growth envy tech’s success. This is natural. But it doesn’t need to be aggravated by thoughtlessness or even adolescent behavior on the part of tech entrepreneurs – Travis Kalanick, take note. As an industry tech has a massive obligation to contribute more to improved awareness, education, and training to equip workers to acquire new job skills. Government can help but as in prior eras private enterprise needs to step up too.