[NOTE: this is a long one, workshopping some ideas that are eventually intended for the book manuscript.]

I have this old friend, Jon. He’s one of my buddies from my student activist days. We spent the late ‘90s and early ‘00s running training events together. It was intense work. Hard. Complex. Filled with personal meaning and, we hoped, meaningful on some larger scale as well.

I haven’t spoken to Jon in over a decade. There’s no story there. Nothing happened except the passage of time. We got older, moved to different cities, got busy with other things.

One of the ways I know I am clearly “middle-aged” today is that more of my deep friendships reside in memory than in daily life. Today my in-person social interactions are mostly with other parents of small children (my bored-at-the-playground banter is top notch, let me tell you) and with academic colleagues. Those are the things that I do as a 43-year-old with little kids.

I don’t use Facebook much anymore. Twitter is more my speed. But I logged on a few months ago and the algorithm surfaced a picture that Jon had posted, grinning on his couch, with his wife and kid. It’s the same damn grin that I remember from our youth – a full-force “I’m exactly where I ought to be” smile. It made my day a little better. It’s nice to have an occasional, lightweight reminder of the good people I’ve known through the years.

It left me thinking, this is what Facebook is actually good for. It’s what Facebook barely is anymore.

(There was another time, about a year ago, when I logged onto Facebook and the algorithm surfaced a post from another of my old activist friends, Karen. The cancer was terminal. She was saying goodbye. That’s another thing that Facebook is actually good for. It’s not just happy reminders. It’s the other stuff too.)

Strip the company down to its essence – to the actual thing that it does better than any of the other tech companies out there – and what you’re left with is a social network built on bidirectional personal ties. (You “friend” someone on Facebook; you “follow” someone on Twitter.) It replaces the rolodex or the address book. It does a much better version of what those technologies did.

A system of bidirectional ties accrues value as you age, same as a rolodex or address book. It makes it easier to maintain connections. I didn’t reach out to Jon to say “hey! Glad to see you’re doing well.” But I did make note of where he’s living these days. If I find myself visiting the area, I’ll see if we can grab a beer and catch up.

The thing is, that core functionality is hard to find in Facebook these days. It’s been barely visible for years.

The trouble with Facebook is, more broadly, the trouble with the entirety of Silicon Valley and its particular version of techno-capitalism. You could imagine a profitable company that does what Facebook is actually good for. Create a free social network with a newsfeed optimized for personal life updates and conversations within your extended social graph. Pare things back, revert it to the place where people keep in touch and organize dinner parties. Sell advertisements against the page views. There’s money in such a company.

But it’s not a trillion-dollar company. Its founder doesn’t buy a mansion and then buy all the houses on adjacent lots to ensure privacy. Its early investors don’t carve out entire career paths on the basis of having been an early-investor-in-Facebook. It’s ultimately a small-money company. And Silicon Valley doesn’t do small-money companies.

Facebook in its early years basically was this company. Zuckerberg had grand ambitions, which Peter Thiel gleefully stoked. But the company’s core product was just a souped-up rolodex with a bit of extra functionality on top.

The company got worse – dramatically worse, after it went public in 2012. That was when it became clear that the advertising system was garbage. And upgrading the advertising system required not just aggressively mining user data (they’d been doing that all along), but also aggressively handing out that data, effectively for free, to any company that might help to create a market for it. (Hence, the Cambridge Analytica scandal. Cambridge Analytica overpromised and underdelivered on its claims that it could bend the will of the nation through psychographic targeting. But it acquired a massive pile of user data back when Facebook made it far-too-easy to obtain massive piles of user data.)

The big money comes from dominating the entire Internet. Instead of just being the best social network for maintaining personal connections, the company has tried to outflank Google and become the primary filtration network for digital news and information. It has attempted to become essential to brands and celebrities and advertisers, to be home to streaming video uploads and civic participation. To live up to its stock valuation and reward its investors, the company must be a monopolist, a hegemon.

The version of Facebook that would still be good is a less ambitious company, a less wealthy company, a more sustainable company. But that version of Facebook is buried deep, only visible on the rare occasion when the algorithm surfaces a picture-of-your-buddy-on-his-couch instead of the latest ragebait and click controversies. The impetus to be a multi-billion or trillion-dollar company makes the good version of Facebook effectively impossible. If the profit expectations of the little-college-social-network-that-could had been less ambitious from the outset, then we would have a better company and a better internet today.

And this is emblematic of a pattern that I have noticed during my work on the WIRED archive/History of the Digital Future project. The story of the past thirty years of Internet history is, in part, one where the money just got too big, and the incentives got skewed, and things got shittier as a result. The name I’ve given to this pattern is “Big Money Ruins Everything.”

Subscribe now

The simple conclusion is that the problem isn’t the technology; the problem is capitalism. But I don’t think that’s quite right. The problem isn’t capitalism writ large, but the specific version of capitalism that has taken hold within Silicon Valley.

This point dawned on me while reading a WIRED article that Clive Thompson wrote in 2010, called “peer-to-peer renting.” 2010 was right around the start of the “sharing economy,” which we now look back on as the precursor to today’s gig economy. Thompson’s article talks about a company called Zilok that was making it easier for people to post their unused household goods online and offer them for rent. (Need a power drill? Borrow mine for $5. That sort of thing.)

Zilok was… nice? Quaint? I can see the appeal. The whole thing has a very Web 2.0 vibe about it. The Internet has lowered the costs of collaboration. People have closets full of stuff they rarely use. They could make a little money and also be kinda neighborly by making their stuff available. Zilok is a capitalist project — the platform makes money, the users make money — but it’s small-scale capitalism. The money just isn’t very big.

Of course, excitement about Zilok and the “sharing economy” was transferred onto AirBnB and Uber. The first time WIRED covered Uber was in 2012, and it cast the company as an example of the bright potential of the sharing economy: “If [Uber] succeeds, it won’t just put extra money in the pockets of everyday people (…). It will also change the way we think about work and consumption, with every purchase becoming a potential investment, every idle hour a potential paycheck.”

In 2022, it isn’t easy to feel good about companies like Uber. There’s nothing quaint about the gig economy. Companies like Zilok floundered and failed, sidelined as venture capitalists and angel investors lined up behind Uber and AirBnB instead. And this wasn’t because Uber’s initial pitch was much better than Zilok’s. Read Mike Isaac’s book, Super Pumped: The Battle for Uber — Kalanick’s original pitch was for a black car service, for people who craved a “baller lifestyle.” It sucked. But what Travis Kalanick really had unicorn ambitions. Silicon Valley investors believed he could take his startup and turn it into a company with a billion-dollar valuation. A company like Zilok could maybe be profitable, but it seems like it had zero unicorn potential.

In retrospect, it’s clear that the big money — the unicorn potential — wasn’t in sharing. It was in finding an existing, heavily-regulated industry (taxis or hotels) and scooping the profits out by launching an unregulated competitor. Early investors subsidized the “disruptors,” helping them grow by operating at a loss while ignoring regulation. And, though Uber has never turned a profit (and Cory Doctorow argues it possibly never will), it paid off phenomenally well for the VCs and angel investors who got in on the ground floor.

The institutional structure of Silicon Valley is biased not just toward growth and profit (that’s all capitalism, everywhere), but specifically toward phenomenal growth, “disruption” and monopoly power. Venture capitalists aren’t interested in funding new companies that will provide a modest, positive return on investment. They invest in a hundred wild ideas, expecting ninety-eight of them to crash-and-burn, betting that the remaining two will attain unicorn status. Venture funds and angel investors only give seed funding to companies with the potential for astronomical growth – unicorn ambitions. And without support from these early investors, potential start-ups wither on the vine.

The culture of today’s tech industry is infused with this systemic bias – not just towards profit-making, but towards big money. It’s the reason we hear so much talk of “disruption,” (despite significant problems with the underlying research). It explains their approach to risk, the ethos of “move fast and break things,” the hostility toward regulation, the hostility toward unions.

Paul Graham @paulg

Any industry that still has unions has potential energy that could be released by startups.

Union-busting isn’t innovation. It’s antiquated.

There was an interesting Twitter thread a few months back by WhatsApp’s former CFO, Neeraj Arora:

neeraj arora @neerajarora

In 2014, I was the Chief Business Officer of WhatsApp. And I helped negotiate the $22 billion sale to Facebook. Today, I regret it. Here’s where things went wrong:

(…)

neeraj arora @neerajarora

How WhatsApp made money was by charging users $1 to download the app. And Facebook (said they) supported our mission & vision. Brian even wrote this famous note:

Arora has come to regret the WhatsApp sale. Most of the rest of the original WhatsApp team regrets it as well. They made huge money, but the product got worse. He concludes, “In order for the Tech ecosystem to evolve, we need to talk about how perverse business models cause well-intentioned products, services, and ideas to go wrong.”

Arora is referring here to the problems with surveillance capitalism. (The Boston Review just posted an essay by Matthew Crain on this topic, based on his book. It’s quite good.) And, yes, I generally think Arora and Crain and Shoshana Zuboff and Cory Doctorow and Cathy O’Neil and their peers are right in their critiques of the present-day internet economy.

But it occurs to me that surveillance capitalism would be a lot less destructive if the money was just… smaller. Sure, run advertisements against people’s content. Gather some data so the ads can be targeted better than tv ads. Regulate the hell out of the data brokers, and set reasonable guardrails on the types of targeting that is permitted, plus some truth-in-advertising content restrictions. That would decimate the existing, wildly underregulated online advertising ecosystem. But after the dust settled, it would basically be fine.

This post has already gotten too long, and I have a lot more to write on this subject. I’ll likely make the first in a recurring series of posts.

So let me just end by sketching out three points. I’ll elaborate on each one in the future:

(1) The Netscape IPO in 1995 was, I suspect, where thing started going wrong. That’s when the money got transformatively big, and when Wall Street decided the Web was the new new thing, and when a lot of the culture and expectations of VC firms got cemented in place. “Big Money Ruins Everything” ends up doing a lot of explanatory work when making sense of the history of the Internet.

(2) If you think about the parts of the Internet that you like the most, they are often going to be the parts that aren’t great at monetization. Wikipedia, Reddit, Twitter… The each have serious problems, but my hunch is that every one of those problems would be made worse by aggressive monetization. My very-first-take about the Elon-tries-to-buy-Twitter saga was that he would ruin the company while making a series of bone-headed moves in an attempt to make it more profitable.

(3) The biggest red flag I see in all the chatter about the Internet’s next chapter (Web 3! The Metaverse!) is that the money has just gotten too big for things not to turn out terribly. Crypto makes big claims about the coming decentralized internet, but it's actually a financialized internet. As Ian Bogost wrote earlier this year, “The Internet Is Just Investment Banking Now.” Of course a financialized internet is going to be full of scams and ponzis and rugpulls. The money is too big for the system not to get divied up into predators and prey. Metaverse proponents talk about how the system will need to settle on interoperability standards, and hearken back to the days of good-natured engineers developing internet protocols in the 1970s and 1980s. That all sounds nice, but also fantastically improbable when potentially trillions of dollars are on the line.

Kim Stanley Robinson is fond of saying that it is “easier to imagine the end of the world than the end of capitalism.” One of the things I loved in his book The Ministry for the Future was that he lays out what a different, more sustainable type of capitalism might one day look like.

I think we need to engage in some similar thought experiments about the past, present, and future of the Internet. We can have nice things under capitalism. It just can’t be this capitalism that is dominant right now.

The Future, Now and Then

What Facebook Is Good For, and Why It Can't…