Throwing Rocks at the Google Bus - By Douglas Rushkoff

Date read: 
February 17, 2019
See My Collection of 50+ Book Notes

My Thoughts

Radical take on how modern tech companies suppress innovation and economic growth. Rails against public for-profit companies for a bit, but eventually descends into utopian economic plans and proposals.

Summary Notes

Google workers are less the beneficiaries of an expanding company than they are its rapidly consumed resources. The average employee leaves within a year

Twitter wasn’t particularly expensive to create or maintain. It certainly didn’t require a multibillion-dollar cash infusion in order to keep functioning. Having taken in this much new capital, however, Twitter now needs to produce. It must grow.

Once money has been “captured” in a stock price, it tends to just sit there as if in a bank vault. This, in turn, puts pressure on the company to make more money, faster, in order to justify the new total value of all the stock. The disparity between a company’s net worth and its revenues gets even more extreme.

Reducing the bottom line is a great way to create the illusion of top-line growth.

Somehow, growth has become an end in itself—the engine of the economy—and human beings have come to be understood as impediments to its functioning.

An environmental disaster and its resulting cancer rates can still be considered a net positive to the economy. They require more spending on cleanup and chemo, so it’s good for business as we currently define it.

The knowledge that even a single person has streamed a movie makes it more desirable than the one nobody watched yet. Two streams makes it even more popular. The outcome is inevitably winner-takes-all.

A low-cost smartphone that requires workers to dig for rare metals in dangerous mines is not a low-cost smartphone.

For Coke, Pepsi, Exxon, and Citibank, there’s no such thing as “big enough”; every aspect of their operations is geared toward meeting new growth targets perpetually. That’s because, like a shark that must move in order to breathe, corporations must grow in order to survive. This requirement is in their very DNA or, better, the code we programmed into them when we invented them

Digital companies that have grown too wealthy and unwieldy, such as Facebook and Google, now innovate through acquisition of startups—for which they pay a king’s ransom. Google has turned itself into a holding company, Alphabet, as if to better reflect its new role as the purchaser of other firms’ ideas. (Ties in with Peter Thiel's theory that startups only sell when the founders are out of ideas, leading to lackluster acquisitions)

The truly successful scalable company in the digital economy may not be the one that can grow infinitely but the one that can prosper on any scale, large or small.

Great family businesses have understood this for centuries: hire your friends and family, invest in people as if their personal fates matter to you, and think of your business less as a means of extraction than as a sustainable legacy. You can’t “flip” your family, so why try to flip your business, your community, or your planet?

Look to maximize ongoing revenue, stable profits, a healthy workforce, and a satisfied customer base. If anything, CEOs should be suspicious of sudden spikes in business activity and see them as potentially unsustainable growth trajectories.

A steady-state business still makes progress. It still has research and development, but it is motivated by a need to serve better and more efficiently, not to fuel some artificially imposed growth target. The equivalence between growth and progress is not only artificial and unproductive but also unsustainable in a contracting marketplace and on a planet with limited resources.

If we look past all the cryptography, the algorithms, and the buying and selling, the blockchain is simply an open ledger—a collectively produced, publicly accessible record of agreements made between individuals. Additionally, it is verified by an anonymous peer group, then encrypted so that only those involved in the specific transaction know who participated.

In 2013, the value of the derivative market was estimated at approaching $710 trillion—that’s almost ten times the size of the non-derivative global economy and forty-seven times the size of the U.S. stock market. Less conservative estimates put the derivatives market at $1.2 quadrillion, or more than twenty times the world economy. It’s only fitting that in 2013, a derivatives exchange called Intercontinental Exchange ended up purchasing the NYSE itself. The stock market—already an abstraction of commerce—was swallowed by its own abstraction.

Google did a Dutch auction, through which anyone with a brokerage account could bid on any amount of shares, at any price. After the bidding, the highest price at which every available share could be sold became the price for all the shares. Investment bankers called the auction a “disaster” and claimed they could have gotten Google a much higher price had they been allowed to offer the shares to their usual clients in the traditional, closed fashion. Then those clients could have sold shares to the hungry public on the open exchange and reaped even more.

But the only disaster was for investment banking itself. It took the short-term gains away from elite investors who formerly enjoyed exclusive access to IPO shares, and gave a sense of privilege and ownership to the millions of Google users who were actually responsible for the search engine’s rise from dorm-room experiment to technology giant.

Unfortunately, it didn’t set a trend. Facebook, Twitter, and every other major subsequent tech IPO went the traditional route, letting investment bankers handle their sales to the public markets.

Investing locally, in people and companies you know, may sound at first like conflating business and the personal or overweighting just one kind of sector. But it’s actually a form of diversification. We do not just buy a stock with a single benefit of growth; we buy into businesses whose operations benefit us and our communities. We don’t need them to keep growing; we just need them to keep operating, generating revenue and benefits. This is part of what was originally meant by double bottom line: the returns on investment take multiple forms. If we invest in companies that in turn pay us for our products or services, we end up generating a double stream of revenue. It’s not limited so much as self-sustaining.

Related Notes

Sign Up For Friday Favorites!

Join the 500+ people who receive my Friday Favorites newsletter in their inbox every week. It's a mash-up of the most interesting links, books, and ideas I came across that week, as well as my latest articles and book notes. If you're curious and looking for high-quality information, you should definitely join.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.