How the Social Tech Bubble Is Different 388
theodp writes "Tech bubbles happen, writes BW's Ashlee Vance, but we usually gain from the innovation left behind. But this one — driven by social networking — could leave us empty-handed. Math whiz Jeff Hammerbacher provides a good case study. One year out of Harvard, 23-year-old Hammerbacher arrived at Facebook, was given the lofty title of research scientist and put to work analyzing how people used the social networking service. Over the next two years, Hammerbacher assembled a team that built a new class of analytical technology, one which translated insights into people's relationships, tendencies, and desires into precision advertising and higher sales. But something gnawed at him. Hammerbacher looked around Silicon Valley at companies like his own, Google, and Twitter, and saw his peers wasting their talents. 'The best minds of my generation are thinking about how to make people click ads,' he says. 'That sucks.' Silicon Valley historian Christophe Lecuyer agrees: 'It's clear that the new industry that is building around Internet advertising and these other services doesn't create that many jobs. The loss of manufacturing and design know-how is truly worrisome.'"
Yeah, This Time It's Different (Score:2, Insightful)
Amen. (Score:5, Insightful)
"The best minds of my generation are thinking about how to make people click ads" - Has there ever been a brief description that describes so well the technological time we live in? Hammerbacher should write a book or two.
well no shit. (Score:4, Insightful)
Manufacturing is dirty and nasty and you don't ever want to do it. It's for the dummies. It's buggywhips.
That's what's pounded into the heads of everyone going through school that scores above 100 on IQ. As Mike Rowe said at TED, there's a war on work that's been going on for 40 years.
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BMO
consumer products are price constrained (Score:5, Insightful)
Unless you can manufacture the candy and soda efficiently, no amount of marketing is going to save your ass.
So? Advertising is new? (Score:5, Insightful)
Yes, this guy is in advertising. He is the b-ark but for some reason, he figured it out. Well? Advertising has been around for a long time and has always about getting people to buy more widgets they don't need. There really is no difference between the guy who came up with Soaps to sell soap and the guy who invented the monkey gif ad.
If this guy hates his job, there are plenty others. It is hardly as if the whole world is just working for facebook.
If ANYTHING, this guys attitude "my job is just selling ads, therefor the entire world is about selling ads" is the problem. No, the whole world is NOT you. Don't throw a hissy fit because you found out you work in advertising. Oh and the guy in the example? Now runs a data analysis company. Gosh, he was so upset about this job selling advertising he went into data mining. Two guesses what he mines for.
But there are still countless companies doing real work, just as they have been doing while advertising agencies have been around.
Just accept, most of us lead utterly meaningless lives. The b-ark better be really big.
Re:Yeah, This Time It's Different (Score:5, Insightful)
Yes, but to be clear, they are saying that this one is not only going to bust, it is going to be worse because there is less fundamental real value.
No easy answers (Score:5, Insightful)
I think the real question from TFA is if we all do pointless crap like market analysis, marketing, branding, and search engine optimization like the guy in the article, are we going to someday have a future where these skills can no longer be converted into food and shelter through the magic of the market.
For a while now, I've been wondering what the purpose of the USA economy is.
There are the basics, of course. I work so that I can have food, water, clothing, shelter, free time, fun. But it is through the magic of the world economy that I get those things by writing software specifications and unit tests. The economy somehow figures out how many lines of code I need to write to buy a loaf of bread or a gallon of milk.
I suppose I don't worry too much about the fact that most of the work we do is of dubious importantance, so long as it is still convertible into food and shelter. But there is a tipping point somewhere. If everyone in the USA worked making click-through ads, we'd reach a point where no amount of work could be converted to food and shelter.
There is worth while technology coming out of this (Score:5, Insightful)
AI and natural language processing certainly benefit from this, and the technology invented goes beyond just ad placements (even if it's the primary motive).
Not only that, but innovation has taken place just to handle the sheer volume of data created by the "social web".
the technology and resources to predict trends is something that has come out of this whole social thing, and since this kind of information can be compiled and analyzed by just about anyone, just about anyone can capitalize on that information in many ways that don't involve specifically targeted web ads.
Re:Amen. (Score:5, Insightful)
And the easily annoyed minds are finding ways to turn the ads off.
Re:consumer products are price constrained (Score:5, Insightful)
I just went to an event yesterday sponsored by Monster Energy. I imagine the profit margins on a $5 can of non-carbonated pop is *at least* 500%.
There is a *LOT* of room for manufacturing inefficiency in such a product. But the marketing which produced literally thousands of people paying money to wear a hat or sweater emblazoned with your logo is by far the greater accomplishment than the product.
It's a product that tastes like shit, is grossly over priced and really only exists because of its successful marketing campaign and lifestyle association.
Re:Amen. (Score:5, Insightful)
The best minds of his generation are not, in fact, thinking about how to make people click ads. He's just so far from that tier that he doesn't even know a single person in it.
Re:Amen. (Score:5, Insightful)
Or a poem. You know...
"I saw the best minds of my generation destroyed by Facebook, intellectually starving hysterical,
dragging themselves through the focus groups at dawn looking for a fiscal algorithm,
angelheaded codesters burning for the ancient heavenly connection to the starry cache in the motherboard of night,
who wealth and splendid raiment and hollow-eyed and high sat up smoking in the supernatural darkness of luxury flats floating across the tops of cities contemplating more..."
Re:So? Advertising is new? (Score:5, Insightful)
Advertising has alway existed, but it's never existed on this scale. We're seeing a type of advertising now that dwarfs even the insane propoganda put out during rival governments during war time. You can't go anywhere, do anything without ads everywhere. In movies, buses, signs, TV, radio. Hell even my place of employment covers the walls with ads for products because they get kick backs from the vendors. I walk down a hallway every day with coca cola and apple plastered over the walls.
To say it's always existed is like saying viruses always existed while everyone around you is dying of AIDS. At no other time in history have we been so over come with bullshit. That is the point.
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Re:Amen. (Score:2, Insightful)
The best minds of his generation are not, in fact, thinking about how to make people click ads. He's just so far from that tier that he doesn't even know a single person in it.
The only way to survive a job where one has to study the clicking of ads (with the intend to get more clicks), is by thinking that one must be among the finest minds of this generation.
Re:Yeah, This Time It's Different (Score:5, Insightful)
Re:Amen. (Score:4, Insightful)
"The best minds of my generation are thinking about how to make people click ads" - Has there ever been a brief description that describes so well the technological time we live in? Hammerbacher should write a book or two.
His statement might be flawed: Maybe so that many bright minds of our generation work for these companies, but these companies don't just "make people click ads". It might be at their business's core, however, they provide services which many of us embrace while they last and it helps us be more productive (exceptions exist), which in turn contributes to the overall achievements we will see in the following years. That is only that. Many of these companies also have people in employment who work, full time, on open-source software, do research and publish academic papers, etc. If ads fund these, by all means, go ahead. His argument can be somewhat justified if the business's ONLY operations surround "making people click ads".
Re:Yeah, This Time It's Different (Score:4, Insightful)
Less fundamental value than pets.com and drkoop.com? That's quite a bar to meet.
Re:Amen. (Score:4, Insightful)
Re:What about investment banking? (Score:5, Insightful)
I think that banking is actually a little more honorable than click ads.
Really? Because I don't anticipate having to spend hundreds of billions of dollars of our money to bail out Google and Facebook in order to prevent a global catastrophe. And yet, not only have I had to do that once already in my lifetime for the banking industry, I expect to have to do that again because little has changed since the last time we did it. So, fuck the banks. We're lucky that this bubble is in an industry that is not "too big to fail."
The best minds of his generation? (Score:4, Insightful)
The best minds of my generation are creating bio-tech startups in Bangalore
The best minds of my generation design oil rigs for the Santos basin offshore Brazil
The best minds of my generation can't afford education in Nairobi
The best minds of my generation divert rivers in China to power cities not yet built
The best minds of my generation uncover the workings of the brain in a town near the pole
The best minds of my generation overthrew a dictator in Kairo
The best minds of my generation enrolled in a militia in Afghanistan
The best minds of my generation does not read businessweek.com
The best minds of every generation are wasted (Score:5, Insightful)
The best minds in the 1860s wasted their lives coming up with new colours of synthetic dyes to allow fabric manufacturers to sell more fabric. The best minds of the 1920s wasted their lives in the new(ish) field of advertising. The best minds of.. The vast majority of the 'best minds' of any generation have ended up taking the stable and well paid jobs associated with working for commercial interests, usually on stuff that won't exactly change the world or make it a better place or anything of the sort. The only thing more depressing is when there's a large war and the best minds of the generation spend years of their lives trying to come up with more efficient ways to kill other human beings. However, in any generation some bright people through accident or design work on things that decades later, in hindsight, are seen to have changed the world in some positive way.
And sometimes people who do useful things with their lives started off doing something like helping facebook sell ads, and had a sudden realization one day that this was a waste of their life. I hope this guy now goes and has a go at something he thinks will make the world a better place instead of just whining about how facebook is ruining the world.
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Re:Yeah, This Time It's Different (Score:4, Insightful)
Yes, but to be clear, they are saying that this one is not only going to bust, it is going to be worse because there is less fundamental real value.
From what are you deriving your analysis that the tech industry of today has less fundamental real value than in the first dot com era? Given that it's /., I'm guessing your statement is rectally-originated, but I'll give you the benefit of the doubt.
The real difference of today is that a lot of these companies actually DO have real value. 9- or 10-figure IPOs in 1999 were not unheard of, and they were happening for businesses that not only had no revenue streams, but had no plans for making revenue. The scale on which these companies operated could not be justified with the size of the potential customer base -- the number of millions of people online at the time could be counted on two hands, which makes selling a billion dollars of pet supplies in a year a rather daunting feat. The industry has changed, drastically, since then. Most of the money is around online marketing, which has a good reach, now that potential audiences are measured in billions, not millions. Microtransactions are now capable of supporting a multi-billion dollar operation. This was unheard of over 10 years ago.
This is not to say there won't be another tech bubble. It is legitimately scary when you consider the exuberance around a handful of companies whose path to money is sketchy at best. However, we'll see how severe the bubble is -- there is less investment money to go around, IPOs aren't popping out of thin air, and a very healthy portion of the companies in the general sector are at a minimum cash-positive.
Re:Disturbing Trend? (Score:4, Insightful)
This is the new America. It's the perfect cesspit for breeding Zuckerbergs.
Zuckerbergs wouldn't exist in this dystopia. He didn't start with all that wealth and power. He'd merely be another would-be upsurper shutout of capital, subject to onerous, regulatory burden, and whatever other ploys your dystopia has to keep wealth with the wealthy.
Great wealth only came to him as the result of creating something of value (sure, I think Facebook is overvalued in the markets, but it still has considerable inherent value).
Re:Amen. (Score:2, Insightful)
You can make that argument only if you oversimplify everything to the point of uselessness - at which point you can make just about any argument you want if you're clever enough.
Re:Amen. (Score:5, Insightful)
Indeed. As we all well know, the best minds of his generation are thinking about how to do HFT faster than competitors. Which is an even more meaningless (if not downright harmful) thing than making people click ads.
Re:Yeah, This Time It's Different (Score:5, Insightful)
In a sensible economic system, if all the work could be done by machines, we'd live in abundance. Alan Watts had an interesting idea about how each citizen ought to get a share in the wealth created the machines.
Re-read science fiction stories from the 50s: they already thought about plenty of variations of that. What they didn't think about would be that the investors of those machines would get 90% of the profits and leave the others to rot. Why wouldn't they, they have the money, the political influence and the power, so why would they share any of it, short of plenty of heads on spikes like in 1789.
Re:Yeah, This Time It's Different (Score:4, Insightful)
Not zero, basically nothing in an interlinked economy can be, but there is a relatively clean collapse vector, where a few VCs lose their shirts, a bunch of companies learn that 80% of their "value" was in pretend internet money, the ones that offer a service people actually want start charging modest monthly fees, the others go out of business and their coders are reduced to designing IE6 compatible 'enterprise portals'(may god have mercy upon their souls).
Bubbles are always bad; but, as bubbles go, I'd take 'social' over a lot of other things.