The prophecy of the decline of Silicon Valley

Silicon Valley is an HBO series (2014-2020) that narrates the adventures of a Mark Zuckerberg apprentice in the valley that bears the name of the series (as Josep Lluís Núñez would say).

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23 November 2022 Wednesday 18:36
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The prophecy of the decline of Silicon Valley

Silicon Valley is an HBO series (2014-2020) that narrates the adventures of a Mark Zuckerberg apprentice in the valley that bears the name of the series (as Josep Lluís Núñez would say). His vision is that the internet is a fundamental right and therefore it should be decentralized, secure and accessible to all. His mission, like that of 99.9% of Silicon Valley companies, is to "make the world a better place." To do it, he creates with his group of friends an emerging company called Pied Piper (the Pied Piper of Hamelin).

The series is the work of American cartoonist, writer, musician, actor and director Mike Judge. Judge applies the same formula of corrosive humor and social criticism to the Silicon Valley ecosystem that he applied to television in the eighties and nineties with the MTV animated series Beavis

The Silicon Valley series is revealing in the apocalyptic sense of the term. The likeable Pied Piper goes through all the phases of "making the world a better place" in six seasons: four friends in the dining room at home, an invincible algorithm, exponential user acquisition, million-dollar funding rounds, hiring workers, going out to stock market, start-up acquisition, double-digit growth, privacy concerns, deposition in front of Congress, firing workers, creating an AI system that can destroy the world, and final bankruptcy for the good of humanity. Seeing what happened to the protagonists of the series and comparing it with what is happening these months in Silicon Valley, perhaps we should reformulate that "comedy equals tragedy plus time" and change it to "tragedy equals comedy plus time". .

The first warning that comedy was beginning to turn into tragedy came in March. Meta, the parent company of Facebook, Instagram and WhatsApp, canceled the free laundry service, delayed dinner time, also free, from 6:00 p.m. to 6:30 p.m. and prohibited taking lunch boxes to work; workers filled them with dinner for the family. Then came the hiring freeze and finally this week the dismissal of 11,000 workers, 13% of its workforce.

It is not necessary to elaborate on the chaos caused by Elon Musk on Twitter and the dismissal of 3,500 workers, almost 50% of the workforce. The latest news is the exodus of workers and the closure of the headquarters, which has led to his ultimatum that those who stay will have to "work long and very intense hours." In his defense, it should be said that Twitter would have had to make layoffs anyway due to the general drop in advertising revenue.

Looking at the quarterly reports from Meta, Twitter, Alphabet (Google's parent company) and Amazon we see that either they are stopping making money, or they are not growing at the expected rate, or all of it. And since this makes investors very nervous, it ends up having an impact on the valuations of these giants. Special mention again for Meta, which in the third quarter of this year has had half the benefits of the same quarter last year and that in one year it has lost a third of its value, some 700,000 million dollars, the equivalent of GDP from Sweden. Mark Zuckerberg's forecast of investing a hundred million over the next ten years in a metaverse that doesn't exist and perhaps won't exist helps much either. A scenario that just a year ago was unthinkable, if you weren't Mike Judge, of course.

There are three reasons that explain it. The first is the drop in advertising. Except for Amazon, the companies mentioned depend on advertising; of an advertising model based on the indiscriminate collection of data from its users. The economic, energy and inflation crises have made advertisers cut back on advertising. Special mention also for Elon Musk, who has scared them all on Twitter. The model is so weak that a simple button on Apple's iOS that prevents brands from following users from app to app will lose Facebook $10 billion in advertising this year. The house of cards begins to crumble.

The second is stagnant growth. If you present a project to a Silicon Valley investor, you will only ask for two things: exponential growth and that it be for everyone. The business model is secondary; once you have a large enough number of users, the money (from advertisers) comes by itself. It is clear that with almost two thirds of the global population connected and the fatigue of 15 years of old social networks, growth is stagnating. The irruption of a new network like TikTok, which already has 1,500 million users who spend an average of 96 minutes on it, adds to the tragedy.

And the third is the digital space distortion caused by covid. With people stuck at home, the use of digital services has skyrocketed. Remember Zoom, a video conferencing app for businesses that no one knew about? In 2020 it was worth 4.880 million, more than the seven largest airlines! Too bad the planes didn't fly. Today Zoom is worth half.

In the Silicon Valley series you will find reminiscences of the Beavis scoundrels

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