Zucked: Waking Up to the Facebook Catastrophe

by Roger McNamee

no-brainer. I did not realize then that the technology of Silicon Valley had evolved into uncharted territory, that I should no longer take for granted that it would always make the world a better place. I am pretty certain that Zuck was in the same boat; I had no doubt then of Zuck’s idealism.

From its earliest days, Facebook was a company of people with good intentions. In the years I knew them best, the Facebook team focused on attracting the largest possible audience, not on monetization. Persuasive technology and manipulation never came up. It was all babies and puppies and

sharing with friends.

Then came smartphones, which changed everything. User count and usage exploded, as did the impact of persuasive technologies, enabling widespread addiction. That is when Facebook ran afoul of the law of

unintended consequences. Zuck and his team did not anticipate that the design choices that made Facebook so compelling for users would also enable a wide range of undesirable behaviors.

The notion that massive success by a tech startup could undermine society and democracy did not occur to me or, so far as I know, to anyone in our community. Now the whole world is paying for it.

I think technology really increased human ability. But technology cannot produce compassion. —DALAI LAMA

The history of Silicon Valley can be summed in two “laws.” Moore’s Law, coined by a cofounder of Intel, stated that the number of transistors on an

integrated circuit doubles every year. It was later revised to a more useful formulation: the performance of an integrated circuit doubles every eighteen to twenty-four months. Metcalfe’s Law, named for a founder of 3Com, said that the value of any network would increase as the square of the number of nodes. Bigger networks are geometrically more valuable than small ones. Moore’s Law and Metcalfe’s Law reinforced each other. As the price of computers fell, the benefits of connecting them rose. It took fifty years, but we eventually connected every computer. The result was the

internet we know today, a global network that connects billions of devices and made Facebook and all othe...

Programming still rewarded genius and creativity, but an entrepreneur like Zuck did not need a team of experienced engineers with systems expertise to

execute a business plan. For a founder in his early twenties, this was a lucky break. Zuck could build a team of people his own age and mold them. Unlike Google, Facebook was reluctant to hire people with experience. Inexperience went from being a barrier to being an advantage, as it kept labor costs low and made it possible for a young man in his twenties to be an effective CEO. The people in Zuck’s inner circle bought into his vision without reservation, and they conveyed that vision to the rank-and-file engineers. On its own terms, Facebook’s human resources strategy worked exceptionally well. The

company exceeded its goals year after year, creating massive wealth for its shareholders, but especially for Zuck. The success of Facebook’s strategy had a profound impact on the hu...

The most successful entrepreneurs took a different path. They recognized that the penetration of broadband might enable them to build global consumer

technology brands very quickly, so they opted for maximum scale. To grow as fast as possible, they did everything they could to eliminate friction like purchase prices, criticism, and regulation. Products were free, criticism and privacy norms ignored. Faced with the choice between asking permission or begging forgiveness, entrepreneurs embraced the latter. For some startups, challenging authority was central to their culture. To maximize both engagement and revenues, Web 2.0 startups focused their technology on the weakest elements of human psychology. They set out to create habits, evolved habits

into addictions, and laid the...

for giant fo...

The second important change was philosophical. American business philosophy was becoming more and more proudly libertarian, nowhere more so than in Silicon Valley. The United States had beaten the Depression and won World War II through collective action. As a country, we subordinated the individual to the collective good, and it worked really well. When the Second World War ended, the US economy prospere...

middle class. Tax rates were high, but few people complained. Collective action enabled the country to build the best public education system in the world, as well as the interstate highway system, and to send men to the moon. The average American enjoyed an exceptionally high standard of living. Then came the 1973 oil crisis, when the Organization of Petroleum Exporting Countries initiated a boycott of countries that supported Israel in the Yom Kippur War. The oil e...

sixties, borrowing aggressively to pay for the war in Vietnam and the Great Society social programs, which made it vulnerable. When rising oil prices triggered inflation and economic stagnation, the country transitioned into a new philosophical regime. The winner was libertarianism, which prioritized the individual over the collective good. It might be framed as “you are responsible only for yourself.” As the opposite of collectivism, libertarian...

closely tied to the belief that markets are always the best way to allocate resources. Under libertarianism, no one needs to feel guilty about ambition or greed. Disruption can be a strategy, not just a consequence. You can imagine how attractive a philosophy that absolves practitioners of responsibility for the impact of their actions on others would be to entrepreneurs and investors in Silicon Valley. They embraced it. You could be a hacker, a rebel against authority, and people would reward you for it. Unstated was the leverage the philosophy conferred on those who started with advantages. The well-born and lucky could attribute their success to hard work and talent, while blaming the less advanta...

practice there are serious issues with Silicon Valley’s version of it. If contributions to corporate success define merit when a company is small and has a homogeneous employee base, then meritocracy will encourage the hiring of people...

careful, this will lead to a homogeneous workforce as the company grows. For internet platforms, this means an employee base consisting overwhelmingly of white and Asian males in their twenties and thirties. This can have an impact on product design. For example, Google’s facial-recognition software had problems recogniz...

Homogeneity narrows the range of acceptable ideas and, in the case of Facebook, may have contributed to a work environment that emphasize...

diversity in Silicon Valley may reflect the pervasive embrace of libertarian philosophy. Zuck’s early investor and mentor Peter Thiel is an ou...

The third big change was economic, and it was a natural extension of libertarian philosophy. Neoliberalism stipulated that markets should replace government as the rule setter for economic activity. President Ronald Reagan framed neoliberalism with his assertion that “government is not the solution to our proble...

regulati...

business. He restored confidence, which unleashed a big increase in investment and economic activity. By 1982, Wall Street bought into the idea, and stocks began to rise. Reagan called it Morning in America. The problems—stagnant wages, income inequality, and a decline in startup activity outside of tech—did not emerge until the late nineties. Deregulation generally favored incumbents at the expense of startups. New company formation, which h...

to keep up with rapidly evolving technologies, creating opportunities for startups. The startup economy in the early eighties was tiny but vibrant. It grew with the PC industry, exploded in the nineties, and peaked in 2000 at...

The bros were different, though perhaps more in terms of style than

substance. Ambitious, aggressive, and exceptionally self-confident, they embodied libertarian values. Symptoms included a lack of empathy or concern for consequences to others.

There were women in tech, too, more than in past gene...

Valley, but the culture continued to be dominated by men who failed to appreciate the obvious benefit...

Too many in Silicon Valley missed the lesson that treating others as equals is what good people do. For them, I make a simple economic case: wo...

Women who succeed

often do so by beating the boys at their own game, something that Silicon Valley women do with ever greater frequency.

With the biggest influx of young people since the Summer of Love, the tech migration after 2000 had a visible impact on the city, precipitating a backlash that began quietly but grew steadily. The new kids boosted the economy with tea shops and co-working spaces that sprung up like mushrooms after a summer rain in the forest. But they seemed not to appreciate that their

lifestyle might disturb

the quiet equilibrium that had preceded their arrival. With a range of new services catering to their needs, delivered by startups of their peers, the hipsters and bros eventually provoked a reaction. Tangible manifestations of their presence, like the luxury buses that took them to jobs at Google, Facebook, Ap...

An explosion of Uber and Lyft vehicles jammed the city’s streets, dramatically increasing commute times. Insensitive blog posts, inapp...

housing costs ensured that locals would neither forg...

he could build a team of people his age—many of whom had never before had a full-time job—and mold them. This allowed Facebook to accomplish things that had never been done before.

For Zuck

The company maintained a laser focus on Zuck’s priorities, never considering the possibility that there

might be flaws in this approach, even when the evidence of such flaws became overwhelming. From all appearances, Zuck and his executive team did not anticipate that people would use Facebook differently than Zuck had envisioned, that putting more than two billion people on the same network would

lead to tribalism, that Facebook Groups would amplify that tribalism, that bad actors would take advantage to harm innocent people. They failed to imagine unintended consequences from an advertising business based on behavior mo...

to take responsibility when the reputational cost would have been low. When called to task, they protected their business model and prerogatives, making only small changes to their business practices. T...

Try not to become a man of success, but rather try to become a man of value. —ALBERT EINSTEIN

With Sheryl on board as chief operating officer in charge of delivering revenues, Facebook quickly developed its infrastructure to enable rapid growth. This simplified Zuck’s life so he could focus on strategic issues. Facebook had transitioned from startup to serious business. This coming-of-age had implications for me, too. Effectively, Zuck had graduated. With Sheryl as his partner, I did not think Zuck would need mentoring from me any longer.

Like most successful entrepreneurs and executives, Zuck is brilliant (and ruthless) about upgrading his closest advisors as he goes along.