Bill Davidow has a great essay over at Atlantic Wire, the electronic version of the 155-year-old magazine, that should be required reading for every would-be entrepreneur and venture capitalist on the planet. Really, for anyone in the tech game.
Davidow has quite the resume. He started with GE, moved to Hewlett Packard in 1965, and then Intel. He’s a consultant, executive, book author, and venture capitalist with a PhD in electrical engineering from Stanford. He was making multi-million-dollar deals when Mark Zuckerberg was still making poopy in his Pampers.
So yes, he’s a graybeard, schooled at the feet of giants, who’s seen quite a bit of Silicon Valley history in his day. And what he sees today appalls him. In the essay titled “What Happened to Silicon Values?” Davidow takes today’s tech giants to the woodshed for treating their customers like dirt. He writes:
Over the past five decades… I’ve become increasingly concerned about one thing that is seldom discussed: the valley is no longer as concerned about serving the customer, and even sees great opportunity in exploitation. We are beginning to act like the bankers who sold subprime mortgages to naïve consumers.
Ouch. And yet, not entirely undeserved. Davidow scolds nearly all of the big boys — Amazon, Apple, Comcast, Facebook, Google, Microsoft, Twitter, Zynga – for treating us like so much natural gas buried in the shale just waiting to get fracked.
Davidow blames greed, of course, as well as a two-tiered stock ownership system that allows the founders (and their VC benefactors) far too much control over the company. He also notes a sea change in how Silicon Valley operates. Back in his early days, tech companies sold mostly to industrial firms who spent millions of dollars with each vendor and had an equivalent amount of influence.
Today many Valley firms market to individuals, who have much less sway. Collectively, high tech companies need us; individually, not so much.
It gets worse. Because tech markets crave standardization, they tend to create monopolies, which in turn lock consumers into a product or a company. Disgruntled customers find it harder and harder to walk away. Per Davidow:
Lock-in creates dominant players — witness Google, Facebook, Microsoft. And in this monopoly-driven environment, customers get exploited. Microsoft forces them to upgrade to expensive, overly complex, and bug-ridden software.
Apple controls our virtual landscape, bounded by iTunes to the north, the iPhone to the south, the iPad to the east, and the iPod to the west, giving it increasing power to deprive customers of choice. It exercises that power aggressively. Google appears to have a culture that condones shamelessly violating consumer privacy.
I know this first hand; I recently decided to try using Bing as my browser home page instead of Google, but quickly abandoned that idea. Why? Because nearly everything else I use every day in my work life – email, calendar, blogs, etc – are all Google products. I wasn’t willing to switch wholesale, but it was too much hassle to get from Bing to all those services starting with the letter G.
But mostly, it’s a failure of attitude in the minds of Valley CEOs. It’s the notion that customers are simply natural resources to be mined and then discarded, an approach that borders on contempt. Davidow writes:
It is hard to believe that Dave Packard or Andy Grove would ever tell a group of entrepreneurs that he did "every horrible thing in the book to just get revenues right away," or brag to trade publications that his company used behavioral psychologists to design "compulsion loops" into products to keep customers engaged. But Mark Pincus, the founder of Internet gaming giant Zynga, has done just that.
Solutions? Davidow has none. As long as the market rewards this kind of behavior, it will continue. But I think companies can learn. We’ve seen it with Microsoft. Humbled by its continued failures in the mobile arena, it’s no longer the haughty our way-or-the-highway company it used to be back in the late 90s. We’ve seen it with Facebook, which has gotten backhanded by its customers (and the FTC) on several occasions where it took a few too many liberties with our data. Apple isn’t quite the closed-wall company it used to be, though that transition is slow in coming. Google, on the other hand, seems to be getting worse.
(And as for Zynga, personally I hope it and its CEO go down hard and don’t get back up. It’s hateful in every way. But I digress.)
Overall I think Davidow nails it. The question now is, what can we as consumers do about it?
Originally published at InfoWorld