A couple of days ago another on-demand startup closed its doors. You’ve probably never heard of Washio. It was an on-demand laundry service (yes, really), and only plied its trade in a couple of American cities.
I bring this up because the demise of Washio coincided with the Twitter reemergence of a great Kevin Roose article from back in 2014. Writing at the beginning of the on-demand boom, Roose marvelled at the torrent of service-based start-ups. Many featuring non-existent business models, betting big that these markets were only small because of price sensitivity and “friction”.
This business model is great for consumers. As a result of start-ups’ willingness to lose money for months or years at a time, I get cheap, fast services that come with an effective subsidy that can add up to thousands of dollars a year. But they’re problematic for the businesses themselves. Unlike Amazon or Google (which have profitable core operations that subsidize the money-losing services elsewhere in their business), or Uber (which uses the profits from its high-margin Uber Black and Uber SUV lines to subsidize its low-margin UberX service), many of today’s start-ups have no profitable parent company pouring in money. They’re simply taking millions of dollars in venture capital with the hope of keeping prices low, pushing rivals out of the market, and eventually finding a way to turn a profit.
But there’s another great point buried in the Roose article. Where this money is coming from. It’s just so easy to talk about “venture backed” start-ups without considering where the money in these funds come from. A big source is pension pools. The pensions of many people who have little access to the services they are subsidising – they don’t live in the few big cities these start-ups called home.
while some of the money used to fund money-losing start-ups comes from rich Silicon Valley investors, some large amount of it comes from public pensions, college endowments, and other, more modest sources. Lyft backer Andreessen Horowitz, for example, has gotten investments from the Imperial County, California, Employee Retirement System and the University of Michigan; the Tennessee Consolidated Retirement System invests money with SpoonRocket backer General Catalyst. If you asked them, I’m sure that firefighters in Memphis and public schoolteachers in El Centro would have no idea that their retirement funds are being used to lower the price of my delivery lunches and rides across town. But that’s exactly what’s happening. And when these venture-backed price wars happen in dozens of high-end service sectors all at once, you have a strange cultural phenomenon in which Main Street dollars are being used to finance the lifestyles of cosmopolitan yuppies.
It’s probably wrong to think that rural firefighters are losing money because of the bets placed on on-demand start-ups that never worked out unit economics. Their money is only fraction of a huge pool. The money allocated to VCs would be only part of a diverse portfolio. And these VC funds themselves factor in a certain amount of bad bets.
But as the Internet hollows out the middle, as globalisation rebalances industry away from places like Memphis, it’s worthwhile thinking about where the capital is coming from. And whether they are the ones benefitting. This is a rather weird transfer.
You really should read the entire Roose article.
A couple of weeks ago one of my colleagues had a really interesting interview. He was speaking to a mathematician, Stephen Woodcock at UTS. He’s the kind of mathematician who does modelling of complex systems. Almost in a throway moment the Dr Woodcock started talking about how maths had completely revolutionised the way we design things like bridges. For thousands of years, he said, we built bridges that looked and functioned almost identically. We had no idea why this design worked. But it did. So we were doomed to repeat it.
But advances in maths changed all this. All of a sudden we could mathematically model what was going on. We could “test” on a piece of paper. And so we were able to build marvels like the Golden Gate and Sydney Harbour bridges. And they worked.
This is happening all over again. Except now it’s computers that are providing the breakthrough. Computers, the internet, the cloud etc., allow designers and engineers to “build” virtually, and then “walk” through and test and share their designs. They’re unlocking a whole new world.
It’s this transition that I explored on the latest episode of Thing Digital Futures:
Coding is the literacy of our age. Soon, knowing how to code is not going to be an option. I’ve been thinking about this for a couple of weeks now, as I’ve gone about making my podcast. For instance, talking to primary school children who can already do more with their phones than I can.
This point was really rammed home when I cracked open Program or be Programmed by Douglas Rushkoff.
The entire book is a plea to take control of the devices that have become so enmeshed in our lives. But it’s this bit early on that really makes it plain:
“The people hear while the rabbis read; the people read while those with access to the printing press write; today we write, while our techno-elite programs. As a result, most of society remains one full dimensional leap of awareness and capability behind the few who manage to monopolize access to the real power of any media age.
And this time the stakes are actually higher. Before, failing meant surrendering our agency to a new elite. In a digital age, failure could mean relinquishing our nascent collective agency to the machines themselves. The process appears to have already begun.”
Rushkoff has put coding into a continuum that includes literacy and mass media. Just think of the power that has accumulated to those who could read while the masses were unlettered, who could reach everyone while the rest of us shout in the wind.
And it’s not just that literacy and mass reach bestowed power, they did so in ways that no one could foresee, and that the unempowered didn’t understand.
But what started as superpowers of the rich and initiated, that for a time were specialist jobs (scribes and journalists), have been extended to all of us. Became required of all of us. And we are all richer for it.
Coding will be the same. It’s not going to remain a specialist activity, the purview of unseen developers, but will become as common as writing.
The other day I met a girl who had created an app so she could share the books she had read with her friends. A boy had been given an assignment to learn his school timetable, and so had created an app to automatically give himself reminders in the morning. These are primary school students.
Yes, these are really banal problems. But that’s exactly why they’re proof of how important coding will be. Technology is ubiquitous. Offline and online are being melded. Coding isn’t just about creating the next Google, but about fully realising something that is everywhere. Those of us who can’t, will be the unlettered of the modern age.
I’ve written about the power of diversity on a number of occasions. Here, for example, I argued for increased immigration, as cross-pollinating cultures has historically proven to be a driver of dynamism. And here I argued for individuals to expose themselves to a wide variety of ideas, as this increases your ability to connect and remix your way to something new.
Put simply, when you’re trying to create something, diversity is an unbelievable boon. In all it’s forms — diversity of thought, gender, race, experience, history, age etc. etc.
It’s such an easy win.
It’s unbelievable that a segment as ambitious, dynamic and creative as startups has such a gigantic gender imbalance. But what if we flipped this? What would an industry full of women do? What businesses would they create? What problems would they solve?
On the latest episode of Think Digital Futures I went into a womens-only hackathon to have a look:
Can’t see the audio player? You can take a listen on Soundcloud.
I am a big fan of partisan media. Being “objective” is all well and good, and there are some spectacular journalists who walk that line. But there’s really nothing as potent as a journalist with an agenda.
Especially when they’re on offense. When their “opponent” is in power and they have a point to prove. It’s for this reason I was a devoted subscriber to The Australian when Labor was in power.
The paper really took the government to task. Hardly relenting. Analysing anything and everything with thorough scepticism. For someone mistrustful of power, our incentives were aligned.
The problem arises when it’s time to play defense. The Australian with a Liberal government in power is, frankly, more than a little pathetic. Scepticism now is largely relegated to keeping the team in line. They’ve turned sycophant. Scrambling to explain away missteps or misdeeds, bending reality to suit their narrative (of course this happens on offense too, but there’s less flop sweat).
For whatever reason, this appears to be less of a problem over in America. I follow American politics like a sport – my lack of real skin in the game makes it rather enjoyable. And so, I consume a lot of partisan American media too.
But unlike in Australia, America boasts a lot of partisans as concerned with critiquing their side as the “enemy”.
Take Andrew Sullivan, for example. He’s a conservative writer who has long been one of my favourites. The reason – he criticises his own team a lot, and it’s always informative. He initially supported the war in Iraq, for example, but then turned against it. Excoriating his “side” for their stance on torture, same sex marriage, and a host of other issues. Sullivan is a Burkean conservative, and, so, his loyalty is to this set of ideas and principles, not the team that (wrongly, in my opinion) claims to represent them.
Sullivan became so disillusioned with the Republican Party, and their abandonment of their principles, that he endorsed Obama in 08 and 12. Covering this week’s Trumpaganza, he freely vented at the party:
"Just mulling over the events tonight, there’s one obvious stand-out. I didn’t hear any specific policy proposals to tackle clearly stated public problems. It is almost as if governing, for the Republican right, is fundamentally about an attitude, rather than about experience or practicality or reasoning. The degeneracy of conservatism – its descent into literally mindless appeals to tribalism and fear and hatred – was on full display. You might also say the same about the religious right, the members of whom have eagerly embraced a racist, a nativist, a believer in war crimes, and a lover of the tyrants that conservatism once defined itself against. Their movement long lost any claim to a serious Christian conscience. But that they would so readily embrace such an unreconstructed pagan is indeed a revelation.
If you think of the conservative movement as beginning in 1964 and climaxing in the 1990s, then the era we are now in is suffering from a cancer of the mind and the soul. That the GOP has finally found a creature that can personify these urges to purge, a man for whom the word “shameless” could have been invented, a bully and a creep, a liar and cheat, a con man and wannabe tyrant, a dedicated loather of individual liberty, and an opponent of the pricelessly important conventions of liberal democracy is perhaps a fitting end.
This is the gutter, ladies and gentlemen, and it runs into a sewer. May what’s left of conservatism be carried out to sea."
This is a voice we’re missing in Australia. There are plenty of great voices of criticism – Peter Van Onsolen and Waleed Aly among them. But they feign neutrality, and so their punches are pulled, their refrains easily ignored.
The likes of Onsolen and Aly can’t really get away with a screed like the above. Even if they wanted to, their positions wouldn’t allow it. Only an outed true believer can get away with it. Unfortunately, all our true believers appear to have sold out.
We need more writers and journalists with obvious bias, but one that does not include slavish devotion to a team. Rather, to ideas.