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February 24, 2024 48 mins

Ever wonder why Google results are getting worse, or why you aren't seeing your friends on Instagram? It's all because of the growth-at-all-costs economy that's swallowed the tech industry, where the user experience takes a back seat to monetizing every interaction with the platforms you used to love. Ed Zitron is joined by Cool Zone Media's Robert Evans to walk you through the economic theory that's destroying the tech industry from within.

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Episode Transcript

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Speaker 1 (00:02):
All Zone Media.

Speaker 2 (00:05):
Welcome to Better Offline. I'm your host ed Zitron. I've
spent the last fifteen years in tech, both as a
reporter and a public relations executive, and over that career,
I've realized that many see the tech industry as kind
of a monolith. It's actually a lot simpler than you'd imagine.
And it's my mission with this podcast to got through
the buzzwords and nonsense and explain to you how venture
capital and big tech are trying to change the future

for better or for worse. Today, I'm joined by Robert
Evans of Cool Zone Media to break down a theory
I have that is pretty much core to everything I
think about and we'll talk to you about on this podcast.

Speaker 1 (00:48):
Thank you for having me ed. I love that we're
coming on to talk about this because the concept you're
about to introduce was like the thing that made me
reach out to you about doing this show, or at
least one of the major ones. I think everyone has
this feeling that like something is fucked up and wrong.
We can remember this period of like optimism about technology
and the Internet and like not just feeling excited about

like new shit that we could buy, but feeling excited
about the things that technology was going to bring us,
the promise of like the new Digital age, and that
all fell aside to be replaced by this looming sense
of doom so quickly that I don't I don't think
a lot of us have a good idea about like
why it happened.

Speaker 2 (01:30):
And you know what, I think that's actually a great
place to start with a very simple question, why does
it feel like the tech we use every day is
getting worse? Look your search results. They're full of sponsored
content and articles that don't actually answer any questions, or
just a big thread of people asking the same question
without ever getting an answer. Your friends aren't popping up

on Instagram, you constantly gained product emails, notifications pop up,
spam emails, and people you've maybe spoken who wants to
buy some Dodad. But then you look at the news
and seemingly every tech company is making billions of dollars,
growing at this alarming, almost unsustainable rate, all while laying

off tens of thousands of people a year. And that's
because there is a problem at the center of the
tech industry and actually the market's at large. It's a
cancerous problem and it's at the fabric of how capital
is deployed in modern business. Public and private investors, along
with the markets themselves, have become entirely decoupled from the
concept of what good business truly is, focusing on only

one goddamn thing, only one noxious, shitty metric growth In
the row economy, products are made worse, customers are abused,
labor is disposable, and executives are getting richer every single day. Now,
growth in this case is not necessarily just about being

bigger or better. It's just about more. It's always more.
Everything must be generating more money, must be having a
higher headcount, even when laying people off. No, the problem
here is growth in this case is not necessarily about
being bigger or better. It's just about more. It means

the company's generating more revenue, higher valuations, and gaining more
market share. And then it's looking around and saying, you know,
that's just not enough. We must have more. Businesses are
expected to be in fact, they're rewarded for being so
eternal engines of capital. They must continue to create more
and more shareholder value while hopefully at some point providing

a service of some kind to a customer. In the
public markets. This means that companies like Google, Meta, Microsoft,
they're all rewarded for having these unfocused, capital intensive businesses,
they're also involved laying off tens of thousands of people.
Over the last use hundreds of thousands of workers have
been laid off as multiple tech companies have been worth

half to three quarters to even a trillion dollars. It's ridiculous.

Speaker 1 (04:11):
Yeah, it's uh. I think like one of the really
important things to nail in here is that, like this
isn't a question of profitability. The fact that you tie
it to growth is so important because like the issue
is not that these companies are not profitable, Like profit
has nothing to do with these decisions. It's about all
I mean Abida does, which is basically like profit over

costs and stuff. But it's like it's this this question
of like growth, right that if you're not if you're
not returning this kind of algorithmically scaling growth, then your
company is seen as a failure by a lot of
the people who who are responsible for like the financial decisions,
and so all of these choices that are kind of
choking the Internet out and making the stuff we use

every day work less aren't about It's not a question
of the company could can't be profitable if we don't
do this, It's that we won't have the right number
on a sheet to show somebody.

Speaker 2 (05:04):
And Microsoft is actually a really good example. So Microsoft,
of course, they bought Activision Blizzard for sixty eight billion
dollars recently. They then even more recently, downsized the gaming
division at the cost of about nineteen hundred jobs, and
then they became more valuable than Apple in the process.
In December, shares of Spotify jumped by nearly seven point

five percent upon the news that it was slashing seventeen
percent of its workforce, adding nearly two point six billion
to the company's market cap. And the process, none of
these companies, of course, were punished for their poor planning,
or their stagnating products, the mismanagement of human capital, or
their general lack of any real innovation. And it's because
the number kept going up, and that is all that

seems to matter.

Speaker 1 (05:51):
Yeah, And I like, when I was a kid kind
of questioning why stuff like layoffs hat and you know
where my dad got laid off from his and tech
and stuff. It was always framed to me as like, well,
these are. You know, companies aren't charities. They have to
like do this to turn a profit, otherwise they can't
afford to operate. And I think it's so crucial that

like that is not at all what's happening here.

Speaker 2 (06:14):
Yeah. Microsoft had twenty two billion dollars in profit. Yeah,
their lost learnings. Yeah, these companies are fine. Google when
they did mass layoffs last year and in yes, twenty
twenty three, they had like ten billion dollars in profit.
These companies are in the green and they're fine. There's
no reason to lay off these people other than the

fact that they can and they don't need them anymore.
Or perhaps they just ran the company in this big, shitty,
messy way. And nowhere is that more obvious than with Meta.

Speaker 1 (06:49):
Oh god. Yeah.

Speaker 2 (06:51):
So back in October of twenty twenty two, I said
that Mark Zuckerberg was going to kill Meta. Perhaps I
was a little bit early on that one, but I
genuinely think that they're on the path to death. So
my argument is that their user numbers are declining. They
will occasionally have a time when they go up by
the percent, perhaps, but then they'll drop. But also the
user experience of Facebook and Instagram has just become awful.

They spend these insane amounts of money, tens of billions
of dollars on Meta's reality division, which is where they
stick the horrible VR experiences that everybody hates, and the
term metaverse. But what was crazy was Mark Zuckerbog didn't
get punished for literally lying about the metaverse. The street
did not mind the fact that he very clearly misled everybody.

In the announcement of Meta, he played a video of
a bunch of stuff that no one can do is
technologically impossible, shit jumping through things all around you with
no headset, completely insane. The stock had a little bit
of a wobble, but nothing happened. Yet once he fired
eleven thousand people and claimed that twenty twenty three would
be the year of efficiency, the market loved him, double

digit increases in the price of Meta shares. Nothing happened
to Zuckerberg with the next part, though, because he also
lost thirteen point seven billion dollars on the metaverse thing
that has never made them any money.

Speaker 1 (08:14):
Yeah, and for some reference, thirteen point seven billion dollars
is about the GDP of Rwanda. Like that, that's how much.
That's a rwanda worth of losses. He's lost a rwanda
in his in his metaverse.

Speaker 2 (08:28):
Bet it's actually a bit more as well, because recently.

Speaker 1 (08:31):
It's more than it is more than a rwanda.

Speaker 2 (08:32):
Yes, it's actually multiple. It might even be as many
as three rwandas, because an estima from last year suggested
that he's lost nearly forty two billion dollars on the metaverse.

Speaker 1 (08:45):
Jesus Christ. So yeah, that's that's about. That's almost three
and a half Macedonias.

Speaker 2 (08:50):
And it doesn't matter to the markets. You'd think a
public company that makes his money meta off of social
media experiences and selling ads on them, you think the
markets would care. The Instagram, one of their largest products,
one of their big money makers, an app for sharing
and following your friends photos and videos, no longer reliably

shows you content from those you follow. That's because meta
must simply interrupt your feed with sponsored content based on
and actually impossible to define amount of data. It is
not obvious how they choose. There are things that have
appeared on my Instagram that I've only ever said out loud.
It's very strange. And this is because it doesn't matter
if the product sucks. If meta is growing by double

digit percentages if they're making billions of dollars, even if
they're fucking the user in the process. Another great example
for you is Google. It doesn't matter that Google's aipower
Gmail plugin literally makes up it hallucinates email conversations. But
because they put AI on Gmail, Google's market cap goes up.
Everyone loves Sanda Pishe despite the fact that he gets

paid two hundred and eighty million dollars and layser tens
of thousands of people seemingly all the time. And it
really doesn't matter. And this is one that really bothers
me because I think we're all kind of stuck with Amazon.
The Amazon experience is even worse. You go on there
and you type spoon or spatula, and there's eighty seven

different knockoffs with names that sound like someone had a
seizure while typing that skib spatula eleven dollars will deliver
in three minutes. But because Amazon is able to show
double digit percentages of growth every year, yay, it's fine.
It doesn't matter that the product sucks. No, no, no, no.

Only a few things really matter when it comes to
big tech in their oh outsized valuations, layoffs, growth and
the promise of growth, no matter how faint or how speculative.
The markets lack any long term thinking, and they lack
the analysis that would actually force businesses to become sustainable
and make great products. And when I say sustainable, I

don't mean anything about the environment. I mean and this
is a crazy concept, Robert. This one's going to really
blow you away. That they make more money than they
spend and don't have to fire people all the time.

Speaker 1 (11:09):
Wow. Yeah, what a concept in business.

Speaker 2 (11:12):
If the markets actually cared about sustainable companies that could
last the test of time without constantly burning capital and
firing people, the markets might not have ignored the fact
that Meta got a four hundred and ten million dollar
fine from the EU under the General Data Protection Regulation,
which is the laws that govern data use and customer

data in Europe. And they also would have probably noticed
the fact that European users now have to deliberately opt
in to share their data. Now. As a little aside,
Facebook makes their money off of using cookies and various
other means of getting your data and then presenting you
with ads based on that. Some of it comes from

how you use the platform, but a lot of it
comes from this very insidious hidden tracking. What's happened here
is that European users will no longer have that by default.
They will have to choose whether to help Mark Zuckerberg
by another fifth of Hawaii.

Speaker 1 (12:13):
Hey, just MAUI just MAUI.

Speaker 2 (12:15):
Oh, I'm sorry, terribly sorry. I wouldn't want to hurt
mister Zuckerberg. But what's really bad about this is statistically
users do not like opting into these things. Only about
twenty five percent of iOS users have chosen to opt
in to app tracking, which was a feature that was
actually added a few versions of iOS Ago to your iPhone,
your iPad and so on and so forth. And by

the way, this means that basically every app is kind
of on notice if it's an Apple device. Now users
know when they might be sharing their data, and it's
genuinely a threat to a lot of the tech ecosystem
that a lot of people don't know. In fact, Meta's
business model is intrinsically linked to the repurposing of customer
data into ad targeting. But the markets don't seem to care.

And I get it. It might seem unthinkable that mister
Zuckerberg's fancy party could come to an end, but we
really need to be clear about something. Meta's core advertising
models depend heavily on things that in the next decade
will likely become impossible to do legally. They might not
even be possible technically, because now Apple is adding apptracking transparency,

which I've kind of mentioned with the iOS update, and
this means that people are first of all aware of
when their date is being shared, and they're probably going
to tell them to pound sand. There are other different
changes that are happening as well, alphabet which Google of
course they're going to be retiring third party tracking cookies.
Meta is kind of a point where if anyone was

paying attention, they'd be a little bit more worried. And
that existential threat is why Mark Zuckerberg is so desperate
to distract you with dreams of the metaverse. It's so
desperate to make you think that Meta will be the
thing that builds the artificial general intelligence, which is just
the buzzword for an AI that can have kind of

human level intellect, despite the fact that most generative AI
right now just makes shit up and when you really
look at it, And this is what confuses me about
how much this company is worth hundreds of billions of dollars.
Their other products don't make that much money. And Zuckerberg's
last big idea, the one that he changed his goddamn

company name for, lost them billions of dollars. Forty two billion,
probably be sixty billion next year.

Speaker 1 (14:37):
God. Yeah, why Street loves six seven Macedonias.

Speaker 2 (14:40):
Yeah, multiple Macedonias there. Since I published my original thoughts
on the row economy, their share process is more than doubled.
It was one hundred and seventy seven dollars then and
it's now four hundred dollars right now. It's despicable.

Speaker 1 (15:02):
Yeah, I think the thing you have to understand when
you look at like, how can a company be burning
money at this rate and their stock price increase as
much as Facebooks has, or Metas has. I guess we
have to call it. I don't. I still don't like
calling it that. I feel like that's giving him a win.

Speaker 2 (15:19):
Yeah, it's it's not fair.

Speaker 1 (15:20):
It's not fair. But I think part of what you
have to understand is that like the people buying the stock,
like their vested financial interest is in it, continuing to like,
this is not all that different from what was happening
with n FTS right in that like there is this,
there is very much a group of people with a

vested interest in that stock price raising well above what
can actually be justified by the performance of the business,
and the people who are making a fortune on that
right now understand that it is a limited timeframe that
this game will work in. I don't know that Mark
fully does. He may he's he maybe to some extent
a little deranged himself at this point. But I think

there are a lot of people who absolutely do understand
and are heavily invested in Facebook now trying to get
as much of that as they can while it lasts,
but they understand that it's not going to last forever.

Speaker 2 (16:16):
And I think there is a big fall of Rome
style story coming for tech, and I think the rot
economy is behind it because so much of tech has
become engineered to growth at all costs. It's a phenomenon
that controls everything. And I think the place where it
hits the most people because you know, Instagram's annoying, Facebook's annoying,

but you can kind of get around it. But I
think the place that hits home the most is Google. Yeah,
so the thing that everyone knows Google for is. Of course,
Google search used to be a place where crazy idea.
You go and you type in a thing, tip tap
tap search, and then a bunch of results come up
that are actually useful. Now it's a labyrinth full of

optimized garbage. Search engine optimization is an important thing to
remember here, which is companies have worked out how to
trick Google into making you see their link rather than
Google finding a useful thing. This is partially ruined Google Search,
but the other problem is adds sponsored content and of

course artificial intelligence crap. So Charlie Wazel over the Atlantic,
he argued a couple of years back, he said, Google Search,
what many consider an indispensable tool of modern life, is
dead or dying. And I agree. Users have to effectively
find a way to cheat and con Google into giving
them what they want. They add things like I don't
know you put PC repair error, put the error in

plus reddit To get anything approaching a reliable answer, If
you go and type a regular tech problem in as
I mentioned earlier, you just get a lot of shit.
You just get a bunch of things that it will
seem right. You'll say, oh, this is how to fix
forty two on my iPhone. Cool, and then you click
through and there's not actually really much useful content. It's

have you tried resetting your iPhone? Is your iPhone broken?
Is something wrong? Have you tried restarting your iPhone? Useless garbage?
But nevertheless, pushing traffic towards media outlet's the kind of cretinous.

Speaker 1 (18:19):
Yeah, And that's like, I think it's important both as
you noted, a lot of the fucking worst shit in
tech can be strangled by stuff like what the EU
has done to force the companies to not allow you
to be opted in on stuff that's directly against your interests.
And likewise, if that were to be, if that were
the kind of thing that we could like make more

moves like that in the United States. You're not just
strangling the worst parts of big tech with that, You're
strangling a lot of really predatory, toxic media with that
that all of their money comes from that kind of
shit one way or the other. That like, they are
an integral part of this and can be harmed by
like doing damage to this fundamentally dishonest way of doing business.

Speaker 2 (19:03):
And Google spends decades, they claim trying to improve the
quality of organic results, but it's for over a decade,
has been easily gained by anyone who knows how to
create an algorithmic headline, a headline that will make the
Google spider that looks over all the websites say this
is the thing, this is the answer. I personally don't

know whether Google does this deliberately or whether they've simply
lost track of everything, whether the evil parties are winning.
But you mention media companies and these predatory ones. The
problem is it's not just predatory ones. A large chunk
of modern media is obsessed with affiliate marketing, which is
you'll see these things, which is like best apps for

blah blah, and those would be affiliate links, yeah, which
give them a little bit of little bit of money,
or best super Bowl deals again a little bit of cash,
little bit of money every time you buy something through it.
And it's turned a large chunk of the web, but
especially Google Search, into this complete slot, and without finding

a way to negotiate with it, you're offered this kind
of fragmented buffet of content based on what Google kind
of thinks you want to see, but it's more based
on how much money Google is paid and how often
Google has been trigged. Let's be honest, and I think
it's fair to argue that Google no longer provides the
best results to any query. It provides an answer that

it believes is most beneficial or profitable, which can sometimes
be the thing you want, isn't always.

Speaker 1 (20:38):
I think one of the problems is that I don't
know of a search engine that I would say is
better than Google in the way that Google used to
be better than anything else, right, and I'm talking ten
years ago. I do know there are search engines and
options that are better than Google at certain things. I've
come to learn that, like, if I use Perplexity AI,
it'll be worse than Google at a bunch of stuff,

but there are a few specific things it's better at,
and like that has increasingly become how I use search, right,
is that I cycle through different options with the same
question to try to figure out, like, well, who's gonna
fuck me least on trying to get this information?

Speaker 2 (21:14):
And it sucks as well, because sure we all know
that any free service online isn't free. There is some
way they're making money, and that's fine, you've got it,
service cost money, whatever, But at some point, how much
profit is too much and also how can you justify
this much profit while making things so much worse? And

I mean, the result is that it just sucks. It sucks.
Googling sucks now, it's an exercise in pain. It leads
you to a bunch of content that is so obviously
engineered to get your clicks rather than actually provide any service.
That the web is slower. This makes the Internet slower,

It makes the flow of information between people and countries worse.
And what's worse is Google loves this monopoly and they
pay a pretty penny to keep it. They pay Apple
eighteen billion dollars a year. And this came out in
a recent US versus Google antitrust case. Eighteen billion dollars

a year to be on your iPhone, to be on
Apple devices. It's not because they're better, it's not because
Apple even thinks that they couldn't do better. This is
specifically to stop Apple trying and to make your lives
worse so that Google can make their search worse to
make more money and give some Dharkashi two hundred and

eighty million dollars. And it's depressing. It's something that makes
me I have to fight the cynicism every time I
use Google. This is a problem that hits billions of people.
This is a real thing, and this isn't an attack
on any journalistic outlet, But why the fuck is the

horror head. This is a horrifying thing. Yeah, this would
be like if certain freeways just randomly led you to
a different place because someone paid the the ot money.

Speaker 1 (23:14):
It would be like if we had a I don't
want to oversell this, but like what we're talking about
is there was a brief period that, for the first
time in human existence, all knowledge ever collected and earned
by human beings was easily accessible to the vast majority
of people if they had an Internet connection, and that

is becoming no longer the case with rapidity, and it
is it is a problem. It kin to like if
we had a cure for cancer and then we decided
to start like breaking it if you didn't buy like
the pancreatic cancer bonus pack, like like it is it
is that big a problem, Like when you think about,
like what it means for all human knowledge to be

accessible and then to throw that away so that Sundar
pat I can get two hundred and eighty million dollars
a year.

Speaker 2 (24:02):
It is an obscenity, and then you have the level
up from that as well as think about it from
those of us who spend I don't know, twenty two
of our twenty four hours a day online, we're aware
of what SEO content looks like. Search engine optimization. There,
content that is built just to rank highly on Google,
to send money to an out there and traffic to

an out there. We know what that looks like. We
know when we are being misled. We know when the
flow of our information is being interfered with. I don't
argue that most people do, and this isn't their fault.
This is a nuanced topic, but this is horrifying. Google has,
like every major tech company, focused entirely on what will

make revenues and market share increase, even if the cost
of doing so is just destroying its entire legacy and
interrupting the free flow of information around the world. Last year,
they launched their own bard ai to compete with being
Microsoft Search Engine and their Chat GPT integration. By the way,
Chat GPT, all these generative AI things. Yeah, they make

stuff up. They hallucinate it.

Speaker 1 (25:06):
Oh yeah, no, they hallucinate more than I do, and
I did permanent damage to my brain by experimenting with
sugaran chemicals.

Speaker 2 (25:14):
And what was crazy was bing Ai came out and
immediately started hallucinating things bart Ai. Google did a media
day and they showed a demo of Bartii and you thought,
for a second, oh shit, this might replace search engines.
This might be a moment where they sell us back
an experience we had before. And then literally in the
demo it made a factual error. Yeah, Google attempted to

sell us back search engine results and then provided us
just another broken Google kind of like chat GPT is
just a broken form of knowledge.

Speaker 1 (25:48):
Well, and didn't they also or was that Microsoft that
absolutely like lied in the demo and like it pretended
that they were showing live results when it was really
something they'd curated.

Speaker 2 (25:59):
I'm not sure which one it was, but seemingly every
company does some sort of con like this. It sucks
and it just it doesn't help anyone. And you'd think,
and we're describing what is a big shitty mess, We're
describing something that takes billions of people, that was decayed
a very important product. You think the markets would respond negatively,

and you would be wrong. There was a couple percentage
points that got shaved off Google when they had that
initial wobble with barred Ai, and then it went right
back up. The markets they bloody love that Microsoft is
invested in chat GPT. They love the open Ai is
partially being meddled with by Microsoft, despite the fact that
that company does not make any profit. And that's because

the markets do not prioritize innovation. They don't prioritize sustainable growth,
companies that can last on their own without screwing over customers.
They don't care about stability. The result is that companies
don't function with the intent of making good businesses anymore.

They want businesses that kind of seem right there, kind
of feel good, and they sell a product and they
make money. But I don't really care about anything else
as long as it keeps growing exponentially ten eleven, fifteen,
twenty percent every quarter. It's disgraceful. Sadly, the rock economy

and its growth at all costs fuck with customer mentality
isn't limited to big tech startups, so private companies that
invested in by venture capital firms, private equity firms. They're
regularly pumped full of venture capital dollars enticing users with
a subsidized product, meaning that they basically sell something at
a massive loss to pump up their user numbers. That

gradually becomes worse and worse and more expensive over time
as they attempt to reach some sort of vague stability.

Speaker 1 (28:04):
I think really crucially too, like they pump up the
price after they've killed everyone who provided maybe a better product,
but yeah, charged more money for it. Like it's the
uber effect, right.

Speaker 2 (28:19):
Oh, and I will get to uber because a big
part of this, and it's what Corey doctor O calls
in shitification, which is a painful neologism that actually pretty
accurate in describing the startup ecosystem. A big part of
that is they get pumped full of these ventured dollars
and they become these horrifying companies that are not good companies.

They burn capital, they barely make anything, but they destroy
businesses that say run based on offering a product that
users paid for that is priced higher than the cost
of the product, making the company something known as profit.

Speaker 1 (28:53):
Yeah, and I think that's I think that's so im important,
especially for like the younger people who maybe you never
fell for it. I did for a little while in
the early two thousands fall for some of Google's shtick. Yeah,
because the the thing that they delivered for a while
was miraculous, like using Google before it exists, like when

it like when it first came out, Like the degree
to which it was superior to any other way to
access knowledge that it ever existed was wild, and like
you wanted to believe, maybe these people are not a
bunch of fucking demons.

Speaker 2 (29:30):
And it was don't be evil? That used to be
that tagline, Yeah anymore, no zoop, How don'd you go?
Now it's don't comma be evil with an exclamation.

Speaker 1 (29:42):
They did a lot of a lot of and I
don't know that's it's a it's a fooling wance sort
of situation. I'll never I'll never love again.

Speaker 2 (29:51):
Yeah, it is enough. And seeing Google decay, by the way,
really has That's what's jokified me. That's what's driven me
a little insane. But then when you look up the
startup side, and now that when you're aware of the
rot economy, you're aware of incitification, you can kind of
watch it in real time, and it drives you a
little crazier still because there is a very abusive cycle. Here,

companies are born, they're funded, and they're grown in this
unnatural way where they're subsidized on It's funny a lot
of these right leaning venture catalysts they hate welfare, but
they love putting startups on it because venture capital exists
in many ways at times in the tech industry to
keep companies alive that should be left to die. And

they would have that same attitude to a regular person
who could not meet their bills through unsustainable spending or
even sustainable spending. Nevertheless, they're fucking hypogrites. But the problem
is with these companies as well is their services. Because
they are not sustainable, eventually have to become worse. They
grow the dependence of the market, they kill everything else

in the market, and then they make them worse in
shitifying them again. Corey, love you, buddy, but no terrible term.

Speaker 1 (31:06):
Great idea, I like, Yeah, I think we could all
agree he's got the idea right. It is really hard
to get, like your mom to buy into using that term.

Speaker 2 (31:16):
Yeah, a little bit epic bacon for my taste. Look,
if these stars were held to real standards, crazy ideas
that a business should make more money that it spends
and be able to survive independent of investor capital. There
are a lot of starts that would just die. In fact,
that's kind of happened in twenty twenty three. There was
a phenomenon known as the zero interest free period, when

it was just easy for venture capitalists to get a
bunch of money at low interest or zero percent interests.
That went away into late twenty twenty two early twenty
twenty three. As a result, venture capitals suddenly realized, oh,
are we just spending money on bullshit? So they killed
the startups. They just pulled the plug. They didn't send
them any more money. There were no more venture rounds

and real companies, good companies died because no one got investment.
And it's sad, But don't worry. I'm major a promise
and I'm keeping to it. We've got to talk about Uber.
Uber is the ultimate rot economy startup.

Speaker 1 (32:15):
Yeah, it was like that. It was the thing where
you know, unlike with Google, there was no like trade off, right,
like nothing was getting harmed with Uber. You always knew
the company was evil. But also it was so much
easier to get a fucking ride when you were like hammered, right,
Like it did make a problem go away for a lot.

Speaker 2 (32:32):
Of people, and at first it wasn't. When Uber launched
in twenty eleven, it was mostly with like town cars,
black cab services. So when we call them back home,
I guess you'll just live. I don't know there's an
American term, I'm sure. But nevertheless, you were getting these
Lincoln town cars and you were able to call them,
and it was kind of magical and you were like, oh, wow,

we could do this. Eventually, they'd launch Uber X. Anyone
can pick up a phone and start driving their car
from mine with Uber. The press at the time, because
everyone was kind of still thinking that tech was the
good guys, kind of let it go by that these
people were paid below minimum wage, they had questionable insurance policies,
and absolutely no goddamn profit. They were screwing the drivers

while also not actually building a sustainable company. Very confusing
to me. Uber only became profitable last year. They had
a three hundred and twenty six million dollar operating profit
in August of twenty twenty three. To get there, it
had to burn thirty two billion dollars.

Speaker 1 (33:32):
Hey, you gotta spend money to make money.

Speaker 2 (33:35):
Yeah, what an incredible return just but for the sake
of clarity, it's also worth noting that Uber had previously
reported profitable quarters, but they didn't come from actually providing
rides or delivering food or any kind of business. They
were just selling stuff they'd bore. It's just Uber frustrates me.

Their business model is just incredibly precarious and relies seedingly
heavily on governments failing to impose labor laws. So much
of their existence is predicated on being able to screw
general contractors. Its continued existence would not have happened without
bullying local authorities, without local authorities seeding ground to these

companies because at the time they were like, yeah, taxis
kind of suck. Taxis are bad. Sure, And of course
Uber needed a bunch of money, with the largest amount
of that coming from the Saudi Sovereign Wealth Fund three
point five billion dollars.

Speaker 1 (34:34):

Speaker 2 (34:35):
And also Uber just burns capital. They burned billions of dollars,
and their share prices doubled in the last year and
now has a larger market cap than Forward and Stilantis combined.
The markets are on crack.

Speaker 1 (34:50):
It's it's so fucking frustrating. It's like if it's like
if there were a network of guys running those shell
games where you put like a dollar in worth three cups, right,
and some VC guys were like, hey, just give someone
money every time they pick a cup, no matter what
cup it is, and then we'll also buy up all
of the ATMs and shut them down. So this is

the only way to get cash, right, Like that that's
almost the way that it works, right, Like it is
replacing something that, like cabs needed to be. I hate
to say this disrupted, right, like it was a business
that existed. System is not working exactly exactly. There needed
to be a way for you to get one wherever
you happen to be or whatever, and do it through

your phone and not have to like fucking call a
cab company. Like there was a degree to which innovation
needed to happen. But one of the side effects that
I mean, in addition to the stuff you've brought up,
is that, like it's so much less safe. You have
no way of knowing if your driver is either qualified
or going to like sexually assault you, like, which is
the thing that happens a lot.

Speaker 2 (35:53):
I had an Uber driver last year when my parents
were here in beautiful Las Vegas, Nevada, who was very
clearly drunk and just mumbling swear words the entire time.
I reported to Uber and I'm like, yeah, that sucks,
so we'll make sure you're not paired with him again. Thanks.
I hope he doesn't crash his car.

Speaker 1 (36:10):

Speaker 2 (36:11):
Cool. And the thing is the punishment should come from
the markets. It really should the markets. If the free
markets actually functioned in the way that guys with Grecian
statue avatars claimed it did on Twitter, then the market
would deal with this. But it doesn't. But there is
actually another culprit, and that's the media. They kind of
fuel the growth mongering. C NBC, for example. I generally

like CNBC, but the way they report earnings and many
people do. Lots of different media companies do this. They
don't acknowledge the fact that Uber just burns money, that
they spent fifteen goddamn years burning money, that they have
an unsustainable business. The Travis Kalanick, who's long since departed,
obviously was running a very mob esque thing where he'd

sidle in with Bradley Goddamn Tusk, a form of lobbyist
pr creature that he found in More Door and just
bullying local markets until they agreed. He would just launch
Uber places and be like, what you're gonna do about it?
And then the local box would say, uh, yeah, we're
gonna gonna do something, and then nothing would happen and

would be made legal and local. And just to be clear,
if you don't know this about your Uber driver, every
time you take Uber and you think, oh, I've paid
twenty bucks for that, the driver gets like less than
half I believe, Oh yeah, get they get screwed and
they don't have insurance in many cases, or they're not insured.
And this is a very technical thing, but this is
important to know. When your Uber driver has you in

the car, oftentimes they're insured. When they don't. When they're
just driving around, they oftentimes need different insurance because they're
not running a business while they're driving around. These are
the kind of things that happen when you don't have
strong labor laws, when you don't have the government protecting workers.
It's just it's frustrating, and like I can understand where

the media probably doesn't want to cover this because otherwise
the markets would be varying levels of yeah, this company sucks,
this one sucks. Also this one's bad. Uber. They really
just don't make enough money to really make sense. And
if they had, I don't know, ten twenty percent drop
in writing, I mean, they probably fall apart. They don't

want to say that, so they just want to just
look at it. They just want to go, Okay, here's
what's happening today. Uber also really cannot be killed now.
And that's a horrifying future we live in and a
horrifying present, I guess. And because people keep buying the stock,
it's a valuable company, and it's valuable in the eyes
of markets that seemingly have cataracts. And look, the raw

economy is why you see these oscillations of hiring and firing.
It's why you see Google or Microsoft making billions tens
of billions of dollars each quarter, then fire in ten
fifteen thousand people while the executives get rich. It's because
these companies are never actually punished for failing to operate
their business is in a sustainable way. There is no
punishment for them. There's not really a punishment for them

missing something. There's no CEO seems to be fired for, say,
over hiring by tens of thousands of people, that's fine,
you know what, Easy come, easy go. Not for the
people who got laid off, though, And when it comes
to the startup industry, when it comes to startups in general,
the rot economy is probably a much bigger deal than

you realize. Because startups got used to getting venture capital
whenever they needed it. Businesses like Uber were predicated on
an endless supply of cheap money, even though the FED
steadily ratcheted up interest rates in the years leading up
to the COVID pandemic, only slashing them to mitigate the
pain of COVID and to a lesser extent, the US

China trade war. They were trying to incentivize investment. They
were trying to incentivize putting money into companies that allegedly
would create jobs. But once the specter of inflation reared
its head, well things got kind of nasty. And then
there was the war in Ukraine. It's the collateral damage
of China zero COVID policy, the labor shortage. Things started

to unravel and now there isn't really any free money
to go around. We're in an illogical point in economic history,
and it's scary to me. It's scary when I look
at how many companies that just should not exist, and
it scares me. It scares me that the markets don't
react when they see like mass hiring of people to

capture consumer demand. They don't think, oh, what if consumer
demand goes down? They just don't think in that way.
They don't react when Microsoft, just an example, lays off
people almost every year and then makes billions of dollars,
makes giant acquisitions that don't even make sense.

Speaker 1 (40:56):
Yeah, it's this enshraining of instability as a sign of virtue,
and like, yeah, like that is that is really dangerous
because like the more instability you accept and the more
you like reward the people running these companies for creating
situations that make the lives of their employees unstable and
our economy unstable, Like, the more you incentivize that, and eventually,

like it's going to oscillate too much for balance to
be regained, you know.

Speaker 2 (41:27):
And I fear them, Yeah, and I fear the fact
that the market also has no memory. In twenty twenty,
sach An Adella, CEO of Microsoft, he called for a
and I'm serious here I referendum on capitalism, telling businesses
to start grading themselves on the wider economic benefits that
they bring to society rather than profits. To be clear,

this was four months after Microsoft laid off one thousand
people and one year before they hired twenty three thousand people,
and then in early twenty twenty three they laid off
a further ten thousand people to and I quote, deliver
results on an ongoing base while investing in their long
term opportunity. And these savage job cuts have continued into
twenty twenty four as well. As I mentioned, they laid

off nineteen hundred people from Activision Blizzard and their Xbox
division as well, and that's like eight percent of the
overall Microsoft gaming team. To be clear, Bobby Kotik, the
horrible pervert freak who used to run Activision Blizzard, he
got a several hundred million dollar payoff while all of
these people got fired. And then a week after laying

off these people, Microsoft would report solid second quarter earnings.
They beat expectations in both revenue and profit, and they
became the most valuable company in the world. And the
process human capital used as food and fuel for the rich.
And I hate to get that kind of alarmist, preachery feeling,
but that is what is happening, and it's something that

people need to realize and look at and scream at
because it's disgraceful. Real people with real problems lose their jobs,
and I know, tech workers get paid or whatever. There's
still people with mortgages, with rent, with families with children.
Satch Nadella has billions of dollars. He's fine. Bobby Kotik,

who was a reprehensible guy oversaw a period of multiple
alleged sexual harassment things over at Activision, paid off unfathomably rich.
Why did that asshole get money, Well, these people got
laid off. It's because the street doesn't care. It's because
the street doesn't see that as a problem. They don't

see moral problems or even logical problems like, huh, we
could have saved a bunch of money. No, they want
to reward the people that buy into their wretched, rotten system.
It's a scummy way of running a business that society
in the market seem to deeply appreciate, and it's actually
killing innovation. It rewards bad ideas that make lots of money.

It rewards shitty businesses that fail their customers but make
tons of money, And it rewards abusing customers in a
way that I find wretched.

Speaker 1 (44:10):
Yeah, it is. It is disgusting the degree to which
the wealth of the billionaire class, and I guess even
to be even more specific, the CEO class, hinges upon
the regular human sacrifice, Like that is what they're doing.
Like part of why they hire people is so that

you can do these big layoffs when you need to
do them in order to increase stock value enough to
hit whatever your bonus target for that year or that
quarter is. Like it is very much, it is very
much just human sacrifice so that they can get an
extra however many million dollars a year that fucking bonus
provision in their contract give them.

Speaker 2 (44:51):
What's crazy is there are guys like Mark Benioff, who
runs Salesforce again, another company that burns billions to make millions.
That guy has laid off ten thousands of peace all
while getting these glossy cover stories that talk about his
o'hanna philosophy where everybody is important up until the point
that they're not. And also, listeners, if you want to
email me easy at better offline dot com, do you

know what Salesforce does? Because I know multiple people who
pay for it.

Speaker 1 (45:17):
Who don't they have their big tower with a shitty
screen on top of it.

Speaker 2 (45:22):
Yeah, it's it's a way for Mark Benioff to make
a bunch of money, and that does not flow down
laying off tens of thousands of people. It's just it's disgraceful.
But you know what, it does begin somewhere, and I've
kind of hinted this with Uber, but it's important to
realize how much of this comes from this much more reckless, ugly,

and violent form of funding. I'm talking, of course, about
venture capital. Venture capitalists are sometimes firms who get money
from something called a limited partner, so they get a
pool of money that they invest in startups, using their
alleged smarts to pick the winners of the future. And
then when they put that money into these companies, they
hope that this company will either go public much like

Uber did and Facebook did, or be sold to another company.
And when you look at many of the problems that
you find in the tech industry, when you search for something,
you think you've said the right thing and just eleven
lines of nonsense pop up, or you go to look
at your grandmother's pictures on Facebook, but someone tries to
sell you a fitness supplement. This is what's happening. The

rot economy is working against you. The CEOs of the
companies of the products you're using, they don't care. They
care as much as they need to monetize you. But
deep down they're going to choose themselves and their shareholders
and their board members way before you, and they currently
have all the power and the web. I'm scared, but

I don't want you to be. I want to inform
you about how this is happening. I want the Better
Offline podcast to be a place where you can understand,
where you can be educated about how you are being
conned about how they are monetizing your digital lives. And
I very much look forward to telling you more about
this in the future. Thank you for listening. Please check

out Better Offline dot com and email me at easy
at better Offline dot com if you've got any thoughts.
Thank you Robert so much for joining me. By the way,
I very much appreciate the coosone Media rocks. I've very
much enjoyed building this with you.

Speaker 1 (47:26):
Yeah, I'm excited to hear what you come up with
next and continue this conversation because I think you're putting
like a name to a demon that has been like
haunting all of our nightmares for a while now. And
that's not you know, the only thing that you need
to do to beat it, but it's certainly where like
turning back the tide starts.

Speaker 2 (47:45):
And I really look forward to walking through these problems
with you and many other incredibly smart people in the future.
And of course, Better Offline is a weekly podcast. You
can find us every Wednesday on the iHeartRadio app and
wherever else you find your podcasts. The editor and composer
of the Better Offline theme song is Matasowski. You can
check out more of his music and audio projects at

Matasowski dot com, M A T T O S O
W s ki dot com. More information, Got a Better
Offline dot com or email me at easy at better
offline dot com. Thank you for listening everyone.

Speaker 1 (48:27):
Better Offline is a production of cool Zone Media.

Speaker 2 (48:30):
For more from cool Zone.

Speaker 1 (48:31):
Media, visit our website cool.

Speaker 2 (48:32):
Zonemedia dot com, or check us out on the iHeartRadio app,
Apple Podcasts, or wherever you get your podcasts that's off


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