Showing posts with label Silicon Valley. Show all posts
Showing posts with label Silicon Valley. Show all posts

Monday, October 29, 2018

Saudi Arabia and Silicon Valley’s Crisis of Conscience

 
Mark Zuckerberg meets with Mohammad bin Salman (Reuters)


“There is a higher court than courts of justice and that is the court of conscience. It supersedes all other courts.”
-Mahatma Gandhi

Governments routinely do business with oppressive regimes based on geopolitical, intelligence-sharing and counter-terrorism requirements. I am not absolving governments, but merely stating the realities of operating in a complex and increasingly inter-connected world where it is harder to be black and white about these choices. However the same constraints do not hold true for private corporations. There is nothing preventing them from boycotting or refusing to take money from bad actors and brutally oppressive regimes, particularly when they go against the stated values of the company.

I think we can also make a distinction between older generation of companies and the new ones in the digital age. The Exxon Mobiles and Goldman Sachs’s of the world never claimed to be ‘do-gooders’ or touted the inherent social values of their business models. They were clear about focusing on the bottom line, profits and increasing shareholder value above all else and did not care if they were profiting from Mother Theresa or Nicolas Maduro.

However, Silicon Valley startups have always claimed to have a strong moral compass and repeatedly tout the social good they do and stand for. They have corporate motto's that say things like “Don’t be Evil” and spend much on PR touting all the good they do in the world. Yet the vast majority of these same companies have found ways to rationalize and do business with Saudi Arabia. Uber justified its launch in Saudi Arabia in 2014 by saying it would help women who were not allowed to drive, even though Saudi women were against Uber launching.

While it is true that Saudi rulers have always ruled with an iron fist, most limited their brutality to within their own borders and also took pains to manage the optics for their democratic and freedom-loving allies. However, with the appointment of Mohammed bin Salman, or MBS as he is known, the Kingdom’s transgressions have not only grown bolder but now go well beyond their borders.

The Prince began his reign by extra-judicially imprisoning elite businessmen and ruling family members, reportedly torturing and coercing them to hand over billions in cash and properties, publicizing his actions as a ‘crackdown on corruption'. He also purged the security services and other high ranking government officials, filling key posts with loyalists. He has placed his mother under house arrest to keep her from advising her husband, the King, whose health is dwindling and his moments of lucidity said to be fleeting.

The thirty-three year old Prince has a record of acting impulsively, as he has shown with an ill-conceived blockade of Qatar, the brazen abduction of Lebanon’s prime minister, and an unrestrained war in Yemen which has resulted in a quagmire that the UN calls the worst humanitarian crisis on the planet

It is true that MBS has opened a few movie theaters and has finally given Saudi women the right to drive, but at the same time he has jailed and exiled leading women activists, purged the clerical ranks and ruthlessly suppressed all dissent. Yet, Silicon Valley has been championing MBS as a great reformer. It seems that the billions invested in cash-starved Unicorns have washed away all of MBS’s sins and Silicon Valley’s corporate ethics along with them.

Companies ranging from Google and Facebook to Blackrock have all been clamoring to shake MBS's hand and strike lucrative deals with the Kingdom. It is no surprise then that MBS grows more reckless, as companies continue to pat him on the back, and felt emboldened enough to brazenly murder a journalist who was a US permanent resident, and expected to face no consequences for this heinous crime.

Here is a list of some of the US companies awash in Saudi money:
· Saudis own 5% of Tesla, 5% of Uber (making them the largest shareholder), 5% of Lyft, 5.2% of Twitter (which is more than Jack Dorsey owns) and 2.3% of Snapchat.
· They invested $461 million in Magic Leap, the hottest US virtual reality company.
· They have committed $20 billion to Blackstone Group’s infrastructure fund.
· Through the Softbank Vision Fund, in which Saudi Arabia is the principle investor, they have invested:
o   $4.4 billion in WeWork
o   $2.25 billion in GM Cruise Holdings
o   They own shares in WAG, Slack, Door Dash and SoFi.
It is true that the Saudi’s have also invested in UK, French, Indian and Chinese companies but the bulk is US based companies.

I am not naïve and understand that business cannot succeed based on purely moral decision-making; profit motives will always collide with doing what is right. For the most part companies manage to find a reasonable balance between these two competing forces, but my issue is that Silicon Valley pretends to wear morals and principles on its sleeve, preaching that their growing monopolies are forces for good. How do they justify being owned and increasingly funded by entities that make no bones about having neither morals nor principles?

A large part of the problem lies not in capitalism itself, but in the broken system of capitalism Silicon Valley has engineered and vigorously championed in the last few decades. It is a system that encourages a winner-take-all mentality and even rewards companies that are not profitable.

It is quite normal today for a company to have an IPO long before it is profitable, like Twitter and Snapchat both did. In fact Snapchat, in it its IPO disclosure, stated, "We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability," and yet this did nothing to discourage institutional and individual investors who flocked to participate in its initial offering.

Instead of using sound business metrics like earnings, sales or revenue to measure companies, Silicon Valley has made it dangerous and fashionable to look purely at things like ‘stickiness,’ in terms of how often users interact with a service or app on a daily basis. As a result, companies are being incentivized to make long-term losses and thus need constant infusions of cash to grow artificially and rapidly expand their base of users.

Some of the most highly valued startups today even lack real competitive differentiation and barriers to entry like Uber and WeWork, so the only thing fueling their competitiveness is infusions of cash. The issue with this winner-take-all model of capitalism, one devoid of business fundamentals, is that it encourages companies to cut corners, act in cut-throat ways, and ignore the most basic principles of ethical behaviour - simply to stay ahead of competitors.

Ultimately, this model leads to running out of ‘good’ money and avenues for hyper-growth, and startups are forced to compromise on their stated ideals and acquiesce to any suitor with deep pockets.

The truth is that this discussion around Saudi Arabia’s behaviour should have taken place a long time ago. To some extent one can understand why governments need to deal countries whose values conflict with our own, but it is harder to make a case for why companies, especially those who claim to cherish ‘values’ as a primary reason for their own existence, are in bed with them.

While it is true that many CEO’s like Jamie Dimon of JP Morgan Chase, Dara Khosrowshahi of Uber, and Larry Fink of Blackrock dropped out of the recent Saudi investment conference, the BBC reported the majority of these companies still sent junior executives to represent them. Not one of them has cut business ties with Saudi Arabia, and I suspect that no matter what the outcome of the Khashoggi murder investigation is, most of them will not sever ties, as Larry Fink stated on CNBC.

Irrespective of whether MBS is directly implicated or not, I hope that Mr. Khashoggi’s brazen and brutal pre-meditated murder will serve as a wake up for the rest of us. While I do not expect Tesla, Uber or WeWork to be returning the billions they have received anytime soon, I do hope we will begin to hold these companies more accountable for their actions and stop being swayed by their words alone.

Thursday, November 30, 2017

Why You Should #DeleteFacebook from Your Phone

(Image: steptohealth.com)

“Happiness is not something ready made. It comes from your own actions.”
Dalai Lama

Larry Page the CEO of Google’s parent company, Alphabet, famously told the New York Times that when he looks to purchase a company, he asks whether it passes the toothbrush test; Is it something you will use once or twice a day, and does it make your life better? 

At first glance the statement seems perfectly innocuous and almost noble when you think about technology making your life better, but the reality is far more pernicious. Unlike brushing your teeth, something we are taught to do from early child hood, in order to preserve our gums and have healthy teeth, for internet companies the equivalent is finding ways to ensure we get fixated with and completely addicted to their products.

This type of addiction to Facebook, Google, Amazon, LinkedIn or Netflix has nothing to do with making us healthier or better human beings; in fact it is having exactly the opposite effect on our brains, mental well-being and state of happiness.

Merriam-Webster describes addiction as;
1: the quality or state of being addicted
2: compulsive need for and use of a habit-forming substance (such as heroin, nicotine, or alcohol) characterized by tolerance and by well-defined physiological symptoms upon withdrawal; broadly: persistent compulsive use of a substance known by the user to be harmful

There is a reason Silicon Valley does not use traditional business metrics like earnings, sales or revenue to measure an acquisition target, instead they look at ‘stickiness’ or addiction in terms of how often users interact with the app on a daily basis.

Until now we thought about harmful addictions primarily in terms of substance abuse because it is easier to see the visible and physical effects on someone addicted to drugs, alcohol or sex; with the internet and social media, the addiction is more disarming and harder to see. We can all agree that most addictions are bad for human beings, and scientists and researchers are just now starting to see the detrimental effect smart phones are having on our intelligence, social skills and declining levels of happiness.

I understand that this is a hard thing to get your head around because few people will be able to imagine navigating daily life without a smartphone. It is how we stay in touch with friends, share kid’s milestones with family, communicate with co-workers, stay on top of breaking news, search for answers and even solve complex work problems, as well as what we turn to for entertainment during commutes and down-time. Nobody is suggesting we power down our phones and move back into caves, but it is important to understand the harm of constant use and without conscious boundaries.

A recent Wall Street Journal article cites a number of independent research studies reaching the same dangerous conclusion that the “integration of smartphones into daily life” appears to cause a “brain drain” that can diminish such vital mental skills as “learning, logical reasoning, abstract thought, problem solving, and creativity.”

To keep us addicted, each service needs to constantly invent new ways to get us to spend time within their apps and to do it many times a day. This is how Facebook, BuzzFeed, Instagram, Reditt and every other similar service make money - the more often we use it, the more likely we are to see an ad, and thus the more valuable their service becomes to an advertiser.

There are only so many baby pictures and cat videos one can watch. After a while the bit of content vying for our attention needs to become more and more outrageous and sensational to command our repeated attention. It is this vicious cycle in a race to become the most addictive that is driving all their content into the gutter, as we saw with the mass proliferation of fake news across all news and social media platforms in the last US election.

People will argue that we have dealt with many captive and unhealthy mediums over the centuries and mankind has not only survived, but thrived, and this is true; but unlike cinema, radio, television or computers, we have never before been able to immerse ourselves in these things twenty-four hours a day, seven days a week and have them within our reach from the moment we wake up to when we sleep.

The same WSJ article explains this fundamental difference with a mobile phone in this way: “Imagine combining a mailbox, a newspaper, a TV, a radio, a photo album, a public library and a boisterous party attended by everyone you know, and then compressing them all into a single, small, radiant object. That is what a smartphone represents to us. No wonder we can’t take our minds off it.”

Another study, published in the American Journal of Epidemiology, found a direct connection between increased Facebook usage and decreased well-being; “And the team says their findings show that "well-being declines are also a matter of quantity of use rather than only quality of use." Even if we were to argue that adults are generally more capable of dealing with this type of addiction, which the data says is not true, we must consider the devastating effect it is having on younger minds.

Jean M. Twenge, a professor of psychology at San Diego State University who has been studying generational differences for 25 years, recently wrote an article in The Atlantic on this issue. She found that “there is compelling evidence that the devices we’ve placed in young people’s hands are having profound effects on their lives—and making them seriously unhappy.” She concludes that “there’s not a single exception. All screen activities are linked to less happiness, and all non-screen activities are linked to more happiness.”

I am not suggesting that Facebook, LinkedIn or Google are evil; in fact in the grand scheme of life they have done much more good than bad. The issue is the frequency with which we engage with our apps based on having our mobile phones tethered to us 24x7, and the incessant and constant need to consume information via the built in alerts and notifications, which are designed to distract us from life and encroach on our minds in unhealthy ways.

I understand that it is not possible to live without Facebook and Google or a mobile phone today, but there is no reason why we need to have access to and distraction by these services twenty-four hours a day. My suggestion (and this is what I have done) is to delete Facebook from your phone, because it is the MOST distracting and harmful social platform of the lot and then turn OFF your notifications on all the other apps barring maybe two or three news sites.

This way you will still have access to everything but will be in total command of when and where you do, and no longer be a slave to their alerts and notifications.

I promise you that you will be much happier and science says your mind will be much healthier.