A year of scandals forced a shift in values for the tech industry

They’re trying to explain they’re not the bad guys

The past year was a turbulent one for the tech industry’s image.

Alleged fraud at Theranos has put the company’s CEO, Elizabeth Holmes, and the Valley’s’ ‘fake it ‘till you make it’ culture on trial. A whistle blower at Facebook leaked troves of documents and testified before Congress that the company, now named Meta, allegedly knew about and ignored its own research into how its platforms perpetuated misinformation and violence worldwide. And three Amazon Web Services outages in December disrupted large swaths of the internet.

It’s not the first scandalous year for the tech industry — not even close. But as a new generation of startups rise through the ranks of San Francisco tech, these companies’ leaders are trying to explain to their investors and users that they’re not the bad guys. Buzzwords like “founder-led” and “stealth mode” are being exchanged for “data privacy,” “accountability,” and “community-centric.”

“Consumers want entities they can trust,” summarizes Akul Bali, co-founder of the nascent ad-free social media startup Privee. “That’s something to lean into.”

Prioritizing privacy

Privee was created in the middle of 2020 when its founders were struck by the amount of misinformation about the coronavirus circulating on social media. They believed social media algorithms, informed by the data collected on users, perpetuated this problem. This made them wonder whether they could create social media that didn’t depend on ads and data collection to make a profit.

Over the past year, the public has increasingly caught up to their concerns. For example, when Facebook whistle blower Frances Haugen spoke out this summer about what she sees as the harmful impacts of data collection across several platforms, the public paid more attention than it had before. Now, not only were outsiders criticizing the company, but, people on the inside were reaching a breaking point, too.

Leaks at the same company and LinkedIn also encouraged people to rethink who they trusted with their data. According to December polling from the Washington Post, more than half of Americans distrust major tech companies with their data.

Tech companies recognize this and are switching their language to downplay the benefits of data collection, like personalized content feeds, to language that focuses on how “responsible” and “private” their control of users’ data is.

“In the larger climate, we’ve seen a lot of companies that are specifically telling people in their marketing that they’re not collecting, monetizing and harvesting user data,” says Privee’s other co-founder, Josh Gottesman.

Fading founders

The public’s mistrust of tech has also transferred to an intense distrust of prominent founders. In 2021, the pressure reached high enough levels that some investors began considering an iconic leader a significant liability in certain contexts.

Jack Dorsey of Twitter, seen at a cryptocurrency conference in June, announced he was stepping down as CEO at the end of November. (Alfonso Duran/The New York Times)

Jack Dorsey of Twitter, seen at a cryptocurrency conference in June, announced he was stepping down as CEO at the end of November. (Alfonso Duran/The New York Times)

Grace Gong, host of the Smart Venture Podcast and author of multiple books about tech investing, pointed to Jack Dorsey’s resignation letter to explain the trend. When the Twitter founder stepped down from the role of CEO this year (while, notably, remaining CEO of the financial payments company Block) he noted in a statement how a singular CEO can become a “single point of failure.”

One bad tweet or comment to the press can permanently stain a company’s reputation, says Gong. “This person has to be replaceable.”

Not only did Dorsey step down but so did Jeff Bezos from Amazon. Salesforce also shifted back to having two co-CEOs, Marc Benioff and Bret Taylor. Additionally, people are distrustful of the cult of personality around CEOs, and want adults in the room to make critical decisions — as perhaps suggested by recent Gallup polling that shows 57% of Americans want more tech regulation. To avoid a crackdown, tech companies need to prove they’re relying not on personality but expertise.

Power to the people

The last group of trending buzzwords have been hard to ignore — “blockchain,” “metaverse,” and “Web3.” Blockchain technology has grown exponentially since the start of the pandemic and, in year two, even traditional companies have tried to incorporate some of its values. According to startup founder Sujude Dalieh, everyone wants to be “user-led.” “It shows that users are loyal,” she says.

Gong agrees. “I definitely see people trying to incorporate Web3 trends into their company concept because that’s what’s booming and that’s where the money is — it’s what gets people and their investors excited,” she says. “People have to intentionally walk that into the conversation.”

A collaborative workspace for a decentralized autonomous organization in Coordinape at a blockchain meet up in September. Blockchain technology has grown exponentially since the beginning of the pandemic, leading companies to incorporate its values of being user-led as part of the “Web3” movement. (Kevin N. Hume/The Examiner)

A collaborative workspace for a decentralized autonomous organization in Coordinape at a blockchain meet up in September. Blockchain technology has grown exponentially since the beginning of the pandemic, leading companies to incorporate its values of being user-led as part of the “Web3” movement. (Kevin N. Hume/The Examiner)

In some ways, the trend is no surprise. Most blockchain technology users literally expand the technology’s reach and impact as they use it. In other words, being “user-led” is baked in.

Blockchain has a similar appeal to users as does the creator economy, which refers to the increasingly popular business model in which social media ‘creators’ monetize their own content. Though being an independent contractor increases precarity, individuals have the autonomy to decide their own hours and have ownership over the means of production. According to many analysts, “creator output” is now worth $100 billion.

Gong says the creator economy boom in the past year and a half has given content creators the power to decide, in part, which tech companies succeed. And many of today’s major tech companies are adjusting their practices to actively recruit community input and participation.

Looking ahead

This change emphasises the issue of data privacy and user input while downplaying the role of the individual founder and CEO. And the shift appears to be generational. Startup founders in their 20s and early 30s today grew up alongside the rise of tech titans like Amazon and Facebook. They want to build on that success with an eye toward the problems they’ve seen these companies create. Those values are reflected in the way they pitch their products.

“We’re part of a wave of startups that understand you can build good and profitable business without exploiting people,” says Gottesman. “We have the benefit of hindsight because we’ve seen what happens when you build things unfettered by attention to the consequences.”

virwin@sfexaminer.com

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