Be Careful What You Wish For: Disruption Blowback

Image by sfbaywalk via Creative Commons

Image by sfbaywalk via Creative Commons

For every action there is an equal and opposite reaction.

We have all seen their smiling faces on-line and on TV. People like Mark Zuckerberg, co-founder of Facebook, who at age 29 is estimated to have a net worth of close to $28 billion. He charmingly earns only a $1 salary. The world isn’t fawning over these boy geniuses anymore.

Has the Silicon Valley version of American dream gone sour? The process of creating a start-up, making it big and raking in tons of cash has created a societal backlash where those who don’t buy into this dream are getting angry. How angry? How about Silicon Valley bus shuttles being vandalized and protesters appearing at the home of a Google engineer?

Turf Wars

Some of the backlash is the typical “who stole my cheese?” reaction. Take Airbnb for example. The company is a classic disruptor. Airbnb is basically a platform where people can rent out their home or apartment (or even their igloo) to other Airbnb members. It is a Facebook for couch-surfers. But wouldn’t you have guessed it that the idea caught on, and now Airbnb is garnering big investments from Y Combinator, Greylock Partners, Sequoia Capital, Andreessen Horowitz and even Ashton Kutcher.

This is not a new industry; it is just taking the place of the hotel industry. Don’t think that the hoteliers are taking things lightly though. The American Hotel & Lodging Association is putting up fight, and there are many sticky legal questions to be sorted out. For example, if you rent out your home do you have to register it as a hotel?

Another example is Uber, which has acquired $3.5 billion in investments on an app that connects passengers with drivers for ridesharing. Taxi drivers aren’t exactly giddy about the deal, and there have even been reports of violent attacks against Uber cars.

Airbnb and Uber meet the requirements for classic disruptors since they make things easier and put power in the hands of the people. The flip side is that disruption potentially cuts into another person’s livelihood. The deeper problem is that a wealthy cyber-subculture has evolved, and some believe this tech elite is disconnected from reality and societal concerns.

Let Them Eat Cake

When Google employees began to have trouble with commuting, the company did what seemed logical. They set up their own fleet of Wi-Fi equipped shuttle busses. Now, the shuttles are being perceived as an icon of inequality. And the roots of the problem run deep. Danny Crichton at TechCrunch puts it this way: 

“The kerfuffles over housing, company shuttles, and arrogant techies pale in comparison to the much more fundamental issue facing Silicon Valley today – people across the country are starting to hate us, and that is not going to change anytime soon.”

Why the hate? The problem is that the number of Silicon Valley employees is growing and this growth displaces people from the San Francisco area which already has a tumultuous history of housing shortage. Kim-Mai Cutler of TechCrunch says:

“The bus protests during the last several months are a symptom of San Francisco’s perennial housing shortage, which has become especially pronounced with 75,000 people moving here over the last decade. Supply just hasn’t kept up with the city’s growth; San Francisco has added an average of 1,500 units every year for the last two decades.”

The inequality crisis seems to be reaching critical proportions worldwide. When 85 people control as much wealth as 50% of the global population, something is bound to give. Unfortunately, the Valley can’t just develop an app to solve the problem.

When the workers at companies like Google, Facebook and Apple go to work on their campuses, they have access to a world of exclusivity. They can throw Frisbee, use free bikes and electric cars, eat sushi and burritos, get a haircut, workout and even visit the dentist. This type of segregation has a price, however, when the rest of the world starts to equate these people to nothing much different than a rich Wall Street stock broker.

High Cost Of Disruption

We like to throw around the term “creative destruction” but the cabbie losing clients or the hotel manager with vacant rooms sees nothing creative at all. Perhaps society as whole benefits, or maybe things just get a bit easier for the masses while one really smart guy gets really rich. The problem is that too many companies want to change the world, but they don’t seem to want to be a part of it. So even while we take advantage of the convenience that Google and Amazon provide us, we, as a people, resent them.

Not Just An Uneasy Feeling

The backlash is not just a few people jealous of the rich kids on the block. The opposition is organized and sometimes even borders on being militant. According to Ars Technica, the group Counterforce distributes pamphlets with comments such as:

“The proposed project is a testament to the arrogance, disconnection, and luxury of the ruling class. Growing their own vegetables in a rooftop garden and selling them to other wealthy people allows them, somehow, to pretend that the planet is not being ravaged by the same economy they depend on for their wealth, comfort, and safety.”

These are strong words; words upon which revolutions have been built upon in the past.

Nothing New Under The Sun

Disruption is not a new concept. When cars first started to become popular, horse carriage owners certainly protested, and they eventually went out of business. Any new innovation will inevitably cut into the profits of an already entrenched industry.

The deeper question we are facing is the societal ill being expressed from all of this. There are many efforts by the tech industry towards meeting their social responsibility. Google has a whole list of projects and activities. But when tech segregates itself, recruits Washington lobbyists and buys media outlets, these community efforts seem to lose their value in the eyes of the populace. Remarks, like those made by Silicon Valley mega-investor Thomas J. Perkins don’t help much. Perkins equated criticism of the wealthy to be like the Nazis attacking the Jews. According to the New York Times, the analogy didn’t make much sense to anyone and only adds fuel to an already growing fire. As The Economist recently quoted:

“We live in a bubble,” says Eric Schmidt, the chairman of Google (and a member of The Economist Group’s board of directors), “and I don’t mean a tech bubble or a valuation bubble. I mean a bubble as in our own little world.” This little world has been protected from popular anger about inequality. The popping of the bubble will be one of the biggest changes in the political economy of capitalism…”

Dream Come True?

A person’s dream come true can sometimes transform into a nightmare. The irony here is that success itself is the curse which brings to light these societal ills. When a startup makes it big, it naturally wants to protect itself. However, as soon as success is achieved, you are set apart from the world. And anything that stands out becomes an easy target.

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