Underground Tunnels and News Feeds - how the right exploits the parallel worlds we live in

My mom was having trouble with her computer about 4 years ago. I eventually got things restored and launched her Facebook. (She rather charmingly assumed that when a friend posted they had sent her a personal note, so found it exciting.)

Conceptually I knew part of the genius of Facebook is that each one of us has our own Facebook. First of all, everyone has different friends and subjects to follow. Then our comments and likes determine who gets to the top and who we rarely see. In place of the daily newspaper we once shared, we now have a minute by minute privately customized publication - and they're wildly different.

My mind was boggled by how different hers was. First, it had page after page of seemingly random posts. Random as in the URLs they pointed to were literally strings of words. None were Newsweek.com or sandiegouniontribune.com. And the posts were a mix of weird allegations ("Hillary is sick!") to weird "news" ("Melania wears beautiful summer dress" or "The First Lady's dress makes her arms look so masculine!"). None of it was news as I think of it. It was all praise or criticism of outfits or manners and the occasional distortion or outright lie. Through this window on the world, mom saw the Obamas as an embarrassment, Trump as powerful, Melania as beautiful and Hillary as a threat.

Facebook is market driven. One of the many things that I love about markets is that they are driven to create exactly what you want. You want a sandwich made with a croissant? We got you. Rye? Check. English muffin? Fine. You don't like reggae or hard rock but you do like the fusion of those two? Listen to Dread Zeppelin. (Seriously. Listen to Dread Zeppelin.) Markets treat every one of us as unique and the mix of things I consume is different from the things that you do. The same is true of us as producers, as employees. Specialization means that we all bring something different to the market in terms of what we make and take. It's a beautiful thing.

But politics is not about the thousands of ways each one of us is unique. It is about the dozen or so things we share in common. We have to agree on where the road will be built, what we teach in schools and who gets public assistance and who does not. What is brilliant and beautiful in markets is divisive in politics.

Facebook also enables conspiracy theories. Yesterday a friend who is a fan of Trump sent me a link to an article about 35,000 children released from tunnels under New York. As if this were a real story. The link was to a website with the name operationdisclosure1. It is a complete nonsense story, totally fabricated, and easily debunked, offered as proof that Trump is a hero and the world is full of evil from which he will save us. These are posts that only show up in the feed of people who've already shown their willingness to believe such things - so many of us don't even know about them.

QAnon has emerged as a weird amalgam of conspiracy theories. Folks who like or react to stories about 35,000 children coming out of underground tunnels in big cities are likely to get a stream of QAnon conspiracies. One of the common theories is about the deep state, the notion that the government is actually run by nefarious civil servants intent on stealing your money, guns, and freedoms. Just as he has done with the 35,000 children living underground, Trump is intent on freeing us from the imprisonment of this deep state.

If you are not fed a stream of nonsense, deep state means nothing to you. If you are steeped in QAnon, use of the term "deep state" is a sign that "you're one of us." You get it. It is like a random line from a song or video game or movie; meaningless to folks who are not a fan and a sign that "you're one of us!" to the folks who are. And Trump says "deep state" a lot.

Yesterday Trump was asked about QAnon. He said only positive, if vague things. A couple of people on my post about this are now arguing that he didn't really endorse QAnon. Technically they are right. (Trump didn't technically say Obama and Harris were constitutionally unqualified for office ... he just quoted "some people" as claiming they were born elsewhere. Repeatedly. Same with calling COVID a hoax or masks as useless or snake oil a sure cure for the pandemic.)

You have to know that everyone has a different media diet to understand what they hear. One person is being fed continual QAnon nonsense about the "deep state" that is working against Trump. Another hears nothing about this. When Trump says, "Deep State," it just sounds like nonsense to the person whose feed isn't full of QAnon garbage but is confirmation of the veracity of QAnon to the folks who feed on it. Millions of people are fed a steady diet of conspiracies and told that credible sources are fake news. Trump regularly affirms to his fans that this world is the real one, the only one they can trust. And their feed is a daily confirmation of that.

In Praise of Breasts ... and a little commentary on "free" speech on social media

Breasts are wonderful. They feed babies. They're beautiful. And you can't post a picture of breasts on Facebook. You can on Twitter but they warn viewers before one can see them.

Lies and conspiracy theories are awful. Being in a pandemic highlights the fact that a distortion of facts can literally kill people. You can post lies and conspiracy theories on Facebook and now - in some instances - Twitter will warn you when you're about see a lie or conspiracy theory.

If you post a snuff video which results in a death, it will be be taken down (and I'm not sure but think there would be criminal charges as well).
If you promote behavior which results in a death, it gets left up.

Weirdly, people are outraged that Twitter now warns when something is a lie but these people are not outraged that they warn you when you're about to see nudity.

Don't pretend that social media isn't already selectively flagging and censoring content on platforms or that such actions don't already reflect judgment calls. Don't pretend that you want to live in a world where there is not a degree of content moderation and / or warning flags on platforms. Don't pretend that even "speech" doesn't have consequences for which you are responsible.

Has Wealth Creation Become More Exclusive?

As managing partner of Andreessen Horowitz, Venture Capitalist Scott Kupor argues that much of the gains from startups have shifted from later-stage, post-IPO to pre-IPO private markets. By the time we normal people get into the market, early investors have already captured a lot of the value.
From Scott Kupor's Secrets of Sand Hill Road (updated with data as of today).

"Consider the following example. Microsoft went public in 1986 at a $350 million market capitalization. Today, Microsoft has a market cap of approximately $1.2 trillion. That's a 3,430x increase in market cap as a public company. [An initial $1,000 investment in MSFT when it went public would now be worth $3.4 million.]
"In contrast, Facebook went public at a $100 billion market cap and now trades around $555 billion.[An initial $1,000 investment would now be worth $5,550.] ... For the public market investors to eventually earn the same multiple on their Facebook holdings as has been the case for their Microsoft holdings, Facebook would have to reach a market of more than $340 trillion. To put that in perspective, US GDP is about $20 trillion and global GDP is about $100 trillion. "

[Ron again, not Scott.]
In other words, folks who bought Facebook stock will never get the returns of folks who bought Microsoft stock.

Two possible explanations - not mutually exclusive.

My notion of the third economy is that finance was democratized (banks and stock markets made tools of us common folks in the same way that the first and second economies made tools of church and state). It seems sad that we've gone backwards on this and so much of the gain on capital has been pushed back into less accessible private markets that fund early stage startups where elite investors can get higher returns.

There may, of course, be another explanation for this. Capital no longer limits but knowledge workers do. Median pay at Facebook is $240k. That's median pay. It might be that the knowledge workers who are the limits to the information economy are now getting the returns that capital used to get.

Freud, Jung, Hidden Impulses, the Collective Unconscious, Hitler, Putin, Conspicuous Consumption and - Finally - Community

Freud's Couch Was Sort of a Bed

About a century ago two competing models for modern media emerged in the U.S. and Germany. Using what they were learning about psychology, the Nazis created state propaganda to sway the masses to serve the interests of the state and advertisers in the U.S. used those same insights to serve the interests of the corporation. (A fascinating documentary, the Century of the Self, makes this argument and can be found here.)

William James published what some argue was the first textbook on psychology - the Principles of Psychology - in 1890 and Freud published The Interpretation of Dreams in 1900 and Civilization and its Discontents in 1930. If you visit the apartment in Vienna where Freud pioneered psychotherapy you don't just see that the Freudian couch was actually a bed. (Freud thought that a bed was a safe and  cozy place from which to free associate but perhaps the preponderance of sexual references would have given way to a preponderance of food references had he instead used a kitchen table.) What you get from the museum that once was his office is this very exciting sense of the mind as a new frontier. Rather than blame spirits or madness for weird thoughts and behavior, these early psychologists were taking a scientific approach to the mind, hoping to better understand the impulses that seemed to lay below the seemingly thin veneer of our civility. Jung's concept of the collective unconscious might be suspect but it gets to the reality that something binds us that is almost mystical and that these impulses could be tapped to sway large groups to do strange things - like drive to the mall on a sunny day or shout angry slogans at political rallies.

These insights were exploited with new and transformative technology of that time. The radio was the first technology to allow people across an entire nation to hear about the wonders of the Third Reich or nylons and electric razors and it was quickly followed by TV.

Obviously it made an enormous difference whether a community used these powerful new media technology to promote the interests of the state or the corporation. Someone once said that the book most likely to change minds in the Soviet Union would be the Sears Catalog. Magazines, newspapers, radio and TV shaped minds - and thus communities - as only churches and sacred texts had before. And it was no coincidence that the state and corporation undermined the dominance of the church last century.

This century's transformative media is the internet and the social media it has enabled. The shift in advertising revenue from newspapers to the internet has shattered old business models and forced a scramble to discover new audiences and sources of revenue for reporting and commentary.

And curiously, the choice about whether this model will be funded by the state or the corporation, by advertising for political interest and shared values or great values on products you'll love, is still in question. This week's senate hearings with the social media giants Facebook, Twitter, and Google gets to the question of how social media has been used to manipulate voters and thus American policy rather than merely focus on getting us to buy more goods.

It's worth noting that this is social media.

About the same time as the emergence of the radio and television, a third really powerful technology emerged: the telephone. This was intimate and personal and allowed two people to communicate and in the process strengthen relationships. I think it's telling that so much of the internet is experienced on a phone. Even though actual talking on the phone is not even in the top ten activities people do with their phones, what they're doing is closer to what was done on the phone last century than what was done with TV and radio. They're creating and feeling part of a community.

Community is a third goal, different from the goals of consumption and propaganda. I think one thing we're seeing in the success of Twitter and Facebook is the strong impulse to belong. You can dismiss this as tribalism but I think it speaks to communities of the mind and shared values, to what it means to be human and feel the part of something larger. It's worth noting that the strength and vulnerability of these brands is that they are platforms. Zuckerberg doesn't make editorial decisions about what posts your Aunt Leola or cousin Curt should make on Facebook. They do. Your friends are rarely selling goods or trying to win votes for the political party they are starting. (Although I admit I would be interested in seeing the posts of someone who was starting a new party; that sounds like an interesting person.) They are simply connecting, sharing what they are proud of, what impresses them, what they are worried about and what made them laugh. The third way beyond media as a tool for conspicuous consumption or political propaganda is media a tool for creating communities of the mind, of shared interests and simple friendships. It's not novel that people would do that; it is novel that people could do that across distances, with a tool more inclusive than the phone or the kitchen table.

Bot Puppets

In the 2016 election, bots were busily posting and reposting weird memes to people who confused cynicism with sophistication, people who found credible claims like, "the Pope endorses Trump!" and "Clinton has used the Clinton Foundation to make Millions!" Millions of bots on Facebook and Twitter were busily forwarding fake news to gullible users who still didn't understand that a brand new site labeled "TrumpWillMakeAGreatPresident.com" or "MelaniaWillBeAMoreBeautifulFirstLadyThanBill.com"  is less likely to be offering objective news than the New York Times. Given they had already believed that the New York Times and other "mainstream media" sites were not to be believed, they actually found this put up overnight sites more credible than the mainstream media that still practiced journalism according to standards that predated the internet.

These bots were particularly busy swaying what the social media algorithms had identified as "soft Clinton" supporters. While they couldn't hope to win many black voters in Philadelphia over to Trump, they could feed rumors to voters likely to vote Clinton and thus convince them there wasn't enough difference between Clinton and Trump to justify voting. Just getting Clinton voters to stay home was enough to tip the election in the three states that gave Trump the national victory while only giving him the edge of 80,000 votes in Pennsylvania, Wisconsin, and Michigan. It was as if someone had concluded that a car salesman and a car thief were no different but it worked.

My elderly mother was having trouble with her computer during the election. After a lot of finagling I got her back online and signed into her Facebook account. This was either late October or early November.  I was aghast at the sheer volume of "news" articles posted to her Facebook feed. Obviously bogus news sites that looked credible to her were decrying Michelle Obama's lack of fashion sense and lauding Melania, showing Trump's promise to restore America or Hillary in an angry face. I honestly scrolled through about 50 of these posts while seeing only a couple of personal posts from her friends or family. And each post seemed to be from yet another fabricated site. It was absurd.

I don't know how many people will ever admit they were swayed by bots. It's not flattering to be duped by computer code. (Although I imagine that by 2017 we all have been at least once.)

My term for the folks who were swayed by bots? Either to believe that Trump somehow cared for them or that Hillary was just as bad? Bot puppets.

If you are a regular reader of this blog I expect you to incorporate the term into your daily vocabulary. Here is how you use it.

"Oh don't be just a bot puppet Justin. You've got to be smarter than three lines of code. Your argument doesn't even make sense."

"Did you just forward that argument from a bot? What are you, a bot puppet now? Just doing whatever the computers tell you? Think for yourself Justin."

"Well, Shelley is such a bot puppet that she doesn't know the difference between nytimes.com and notyourtime.com. Seriously, that woman will forward anything from anywhere as long as it blames Bill Clinton for whatever she's upset about today."

The goal is to make it shameful to rely on memes to do your thinking, to make bot puppet have all the stigma of racist.

Wait. That might not be enough to sway some of Trump's base that it's a bad thing to be a bot puppet.

There is no Bubble in Venture Capital for Tech Firms.

In 2010

• Residential mortgages were $11 trillion, down $700 billion from the previous year.
• Consumer credit was $2.5 trillion, down $200 billion from 2009.
• Venture Capital Financing for technical companies was $17 billion, up $4 billion.

Mortgage financing is 647X as much as what we plow into tech startups. Outstanding consumer credit is 147X as much as the VC community puts into technology startups.

Since the start of the year, Facebook has spent more than $21 billion acquiring startups and Google has spent $4 billion. That's $25 billion in acquisitions for just two of the more prominent names in tech in just the first 5 months of this year. Meanwhile, VCs put only $24 billion into startups all of last year.

My own sense is that the venture capital market is still far from mature, perhaps where consumer credit was in the 1970s when the modern credit card was just emerging. 

There is a question about whether Venture Capital is fueling another bubble, akin to 2000. Based on this data, I don't think so. Not even close. It seems to me - given the importance and potential of new ventures - the ratio of financing for new ventures is - if anything - too low compared to mortgages and consumer credit. In a decade we might find talk of bubble in 2014 comical.

What if Twitter & Facebook Were Revolutionary?

When we listened to just a few, we listened a long time. Politicians and pundits were expected to go on at length - speeches and programs of 30 to 60 minutes, essays and books that were hundreds of - or even a hundred thousand - words.

But today's model is less about spending time with a few respected voices than spending time with lots and lots of friends and friendly - or not so friendly - voices. Even if we double the time we spend collecting news and opinion, we have to fragment it over more and more people. This necessarily forces concision, forces us to condense our thoughts into fewer words. 

Brain cells continually communicate with each other, but they are very efficient at it. These cells tend to communicate by exception, minimizing the "I'm here" signal. The brain already burns an enormous amount of energy even with this minimalist model. This efficiency is the only way to allow billions of cells to be connected. 

Facebook status comments, tweets, and texts seem to be moving us towards this model of communication over a broader net of people - a truly distributed model that doesn't dispense long messages outwards from some central point (like radio or TV) but instead sends lots and lots of short messages between nodes, or people. This model is not about hierarchy; it is about connection. 

For centuries, the progression in the West has been towards dispersing power outwards rather than concentrating it in a few. It seems as though we are now rapidly evolving a communication and reporting model that supports this more than ever. 

Stay tuned: power follows the flow of information and communication. Our old institutions that place power at the top - from church and schools to governments and corporations - are going to rapidly evolve as the communication structures that hold them in place shift. In fact, they used to call this kind of thing revolutionary. This could get really interesting. 

Maddie on Socialist Networking Sites and Bernard on Republican Drug Dealers

It had been too long since I'd met my favorite senior citizen siblings for lunch. Maddie was the closest thing I knew to an idiot savant in the social realm: she seemed profoundly insightful about love and tragically misinformed about politics. Bernard, by contrast, was a deep (if sometimes unorthodox) thinker when it came to politics but seemed perpetually baffled by relationships. And yet they were delightfully fond of each other, and I of them.

Maddie shook her head, “And now these socialist networking sites are all over the Internets.”

“What?”

“These sites like myface,” she said. “I heard Glen Beck call them socialist networking sites.”

“Um,” I began, hardly knowing where to begin. “You mean facebook and my space?”

“Whatever,” Maddie said. “I just think it’s awful. They’re indoctrinating all these young kids who spend so much time on the computer.”

Bernard scoffed. “Maddie, you have to stop watching nut jobs like Bleck.”

“You mean Beck,” Maddie corrected him.

“Yes,” Bernard said unrepentantly. “Bleck.”

“So you think that Obama is a socialist,” I asked.

“Don’t,” Bernard rose his hand at me, looking disgusted, “get her started” he finished in a whisper.

Fortunately, Maddie did not say much. She just touched my arm and leaned in to say, “Oh honey. Everybody knows that.”

“If only Joe McCarthy had known is was so easy to spot a socialist," Bernard shook his head. "The new definition of socialist is someone who wants to increase government spending on something other than aircraft carriers. You know what’s really wrong with this country,” he asked.

“Country music station in every town and not a single folk station to be found anywhere,” I asked.

“What does he mean by that,” Maddie asked, turning to Bernard with a look of confusion.

“Nothing Maddie. He’s just talking nonsense.”

I almost protested but realized that until the waiter came with his food, Bernard was going to be cantankerous. His blood sugar was low.

“What’s wrong with this country, Bernard?”

“Politics have been hijacked by the drug dealers.”

“What?”

“Nobody can raise taxes. Not Obama and certainly no Republican will do it.”

“As if Republicans want to raise taxes.”

“You’re too young to remember that under Eisenhower, a Republican president, marginal income tax rates were 91%. Republicans didn’t use to be just about lower taxes. We liked balanced budgets and social responsibility too.”

“We?” I was shocked. “You were a Republican?”

“Well, sure. Any thinking person was. But now Republicans don’t even have an ideology. They just have a mantra. And it’s worked to hypnotize the masses. Nobody even questions the inane premise behind it now.”

“Republicans are not ideological?” This threw me even more than his claim to have been a Republican.

“They don’t have an ideology. They have a chant: lower taxes! Lower taxes!” Bernard pounded the table like a soccer hooligan as he chanted.

“Finally,” Maddie said, “you are on board.”

Without missing a beat, Bernard asked, “So Maddie, what level of taxes would be ideal?”

“Well you just said it, Bernie: lower.”

“And there you have it,” Bernard announced with a flourish. “Chanting ‘lower taxes’ regardless of whether your marginal rate is 91% like it was under Eisenhower or 28% like it was under Reagan – without regard for policy needs or deficits – is not an ideology. It is political Tourette’s – a vocal tic that means nothing.”

“I’m lost, Bernard.” And I really was lost. I was trying to make sense of the jump from drug dealers hijacking politics to the lower taxes mantra. “What does this have to do with drug dealers?”

“Well, who benefits if we underfund government to the point that it can’t be sustained? Where else do we see low taxes and weak government?”

“Well, there is Mexico just over the border.”

“Exactly!” Bernard jumped up. He always seemed so relieved when I caught up to him. “Taxes there are about 18% of GDP – about half of ours. And the government is, like Colombia’s, essentially at the mercy of drug dealers. They own the country. And the government is too weak to fight back.”

“So you think that the guys behind the anti-tax movement are the drug dealers?”

“Yes! With a weak government, the drug dealers are like Machiavellian princes. They live in luxury and without constraints.”

I paused. “That’s a crazy idea, Bernard.” He waited me out. “But I have to admit it makes sense.”

Bernard was looking more calm now, halfway through his turkey and avocado sandwich. “And really, what better example of the ideal of unregulated markets than the drug trade,” he asked.

“So you think that the Republican Party has been hijacked by drug dealers?”

“Who better to hypnotize a population past the point of thinking?” Bernard shook his head. “This is not your grandfather’s GOP.”

The Universal Digital Port - the next killer app

Years back, I remember reading about a couple of sisters who were trying to get their older mother to use the Internet.

"It's great, mom. Here look," they said, pointing her to a search engine. "You can ask it anything you want."

"Oh, I don't know," their mother said hesitantly.

"Come on. Ask a question."

"Okay. Ask, How is Aunt Helen doing?"

Of course, in this stage of the Internet before social networking sites, this was quite funny. But now, given that Aunt Helen might well have a Facebook account, this is a perfectly valid question and one that could be answered in Aunt Helen's latest status comment.

Facebook made Mark Zuckerberg the world's youngest billionaire when it became the latest killer app. Social networking sites followed on the heels of search engines and online news and online stores and email as the Internet application that changed lifestyles and created billions in wealth.

The more an application personalizes the vast amount of information on the Internet, the more value it creates for users and the entrepreneur who creates it.

I think that the next killer app is the universal digital port - the one place you go for a prioritized look at everything you care about - from Aunt Helen's health to Albert Pujols' latest game stats to the email from your client to the YouTube video that is going to become your favorite movie for all time - or at least for this week.

Right now you have to toggle through a couple of email in boxes, look at a few news sites, check in on one (or two or three or ...) social networking sites. And as the digitization of all things is complete - from TV shows to your phone calls and everything in between - the real value will come from a personal google that filters and prioritizes everything that competes for your time.

People will have to train this - just as they would a pet. And they will train it mostly by the choices they make. And the universal digital port is trained, you could even set it up to filter things you would not choose in the moment. It might limit you to 15 minutes of YouTube or Facebook a day but give you unlimited access to your e-textbooks for your classes. It might even seize up and give you no new digital data until the heart monitor you wear lets it know that you have engaged in 30 minutes of aerobic exercise.

It is well known that our long term aspirations are inevitably loftier than our short term choices. We want to be trim but we choose the ice cream over the evening jog. We want to learn French but we watch a rerun of Star Trek instead. A universal digital port might make it harder for us to putz around and easier to improve ourselves.

But ultimately, the game of life in a digital world is a zero sum game. If we watch the movie we don't call our mom. If we work on the presentation, we don't work on our back stroke in the pool. It might be that the next killer app doesn't just make it easier for us to access what matters to us but - by juxtaposing it against everything else that matters - makes us more aware of the opportunity costs involved in each action. And that might do as much to change lifestyles as anything the Internet has yet done.

Technology - the Opposite of Romance

From Yahoo:

A hacker attack Thursday shut down the fast-growing messaging service Twitter for hours, while Facebook experienced intermittent access problems.

According to comScore, Twitter had 20.1 million unique visitors in the United States in June, some 34 times the 593,000 a year earlier.

For Twitter users, the outage meant no tweeting about lunch plans, the weather or the fact that Twitter is down.

"I had to Google search Twitter to find out what was going on, when normally my Twitter feed gives me all the breaking news I need," said Alison Koski, a New York public-relations manager. She added she felt "completely lost" without Twitter.

Now that is a rapid move from obscurity to "can't live without it." Technology adoption patterns may be moving in an opposite direction of romance over the course of a life: we are moving from long-term commitments to fleeting, intense relationships with our technology. Of course technology is not left heartbroken when we leave it behind - only the investors in it.

I'll Take the de-scrambled eggs - Separating Self and Society

It is a wonderful thing that we’re unable to predict. If we could, it would suggest a lack of control over events, a lack of autonomy for the human race. Prediction suggests determinism; unpredictability suggests freedom.

I’ve previously made the distinction between social and technological innovation. The more I try to make this distinction operational, the more it seems to me that dissecting the two is like trying to put a wedge between heads and tails.

A car is clearly a technological innovation. It has moving parts and relies on inventions as diverse as rubber tires and steel ball bearings.

Of course, a car is also clearly a social innovation. It changes the range a person can travel in a day and greatly multiplies the number of people who can be grouped daily to work on tasks like building cars. It creates a huge separation between work and home.

Any successful social innovation introduces some new technology – even if it is as silly as the dance moves in the Macarena. Any successful technological innovation moves with or drives social innovation. If 150 million people had not agreed to turn over their network of friends to Facebook, the software (the technological innovation) would have been a curiosity. If people never dared to climb into a car (social innovation), the horseless carriage would have been an historical footnote of less importance than any given outbreak of influenza.

Progress depends on the play between these two. An innovation has to enable people to do something – has to have a technological component. To matter, it has to change behavior – has to have a social component.

One of the things that I don’t know about this is how the dance works. Is technology gradually changing to allow us to express our true selves? Or is humanity - human nature itself - changing, led in new and unpredictable directions by technology? And even if it is true that the technology and humanity are now co-evolving, which is the lead in this strange dance? Does this question even make sense in a world where we’re now engaged in genetic engineering?

Has the question of human nature always been bound up in questions of culture and technology? Or are those merely manifestations of human nature? Are technology and society as intrinsic to being human as fingernails and sleep cycles?

Is it not just that it is not possible to drive a distinction between social and technological progress. Perhaps it is not even possible to drive a wedge between self and society.

Just wondering.