A Blog by Jonathan Low


Jan 22, 2015

Beyond Disruption: Technology Redefines Progress

Supplanting the status quo has always been one of the aspects of technological development that its participants - and especially its leaders - appear to enjoy the most.

It presumes that change is beneficial, that the new is invariably better than the old and it demonstrates - so its proponents claim - that improvement is inherent in technological solutions to vexing social or economic challenges.

The danger is that even if true, such thinking encourages complacency. And in this economy, no one can afford to assume that they are always going to be on the winning side.

From smartphones to smart homes to smart cars, roads, and 'smart' everything else, there is growing evidence that too many in tech think that it is sufficient to disrupt existing models and that adding the word 'smart,' which implies some sort of technological implant, will both improve performance and convince consumers to pay more.

But the implicit assumption that technology invariably brings positive change is being challenged. The grand bargain that sustained the industry - indulge our intelligence, imagination and innovative instincts and we will, in turn, provide wondrous improvements in your humdrum lives - can no longer garner unswerving support. Questions are being raised about who is benefiting beyond a small coterie of entitled gatekeepers. Mighty enterprises with vast resources - Amazon, Google, Uber, et al - are being successfully thwarted by mere minnows like book publishers, consumers and - gasp! - those underpaid servlings in public sector.

The fact is that technology will continue to improve and sustain our lives. It is intrinsically bound up with our existence. But the people and institutions demanding something more have needs and wants that technologists ignore at their peril. Because they are not just obstructionists or undeserving succubi: they are customers. JL

John Gapper comments in the Financial Times:

An economy cannot turn its back on progress. Still, as Uber is realising, nor can tech companies set up a service platform on which workers and customers interact, bank their money and take no responsibility for the result.
Nicolas Brusson, the founder of BlaBlaCar, the French ride-sharing start-up that in June raised $100m to expand across Europe, got the biggest laugh of the week at the DLD technology conference in Munich. Asked about operating in a “single market” with 28 sets of laws and regulations, he replied: “When you start from France, everything looks simple.”
DLD is where tech entrepreneurs and venture capitalists from the US and Europe gather to discuss their industry before they shuttle to Davos for the World Economic Forum. In Munich, they chew over the contrasts between the two continents: risk-taking versus safety nets, the free market versus regulations, start-ups versus incumbents.
The notable thing about this year’s event, though, was that this no longer felt like the biggest issue. Instead of the main question being whether Europe can get its act together to take on Silicon Valley, it was whether technological progress will swallow us all, no matter where we live and work.
Travis Kalanick, the combative founder of the cab-hailing network Uber, embodied the shift. He turned up in Munich with an emollient speech, carefully crafted by David Plouffe, the former campaign strategist for US President Barack Obama, who heads strategy at Uber. The new Uber pitch is all about co-operation, not confrontation.
Mr Kalanick’s claim that Uber can simultaneously create jobs, raise local taxes, save citizens from needing to own cars and reduce carbon emissions was intended not only for European cities. He has to convince a global audience that his platform is progress.
The Uber question is part of a bigger one facing the global economy. More and more people work for virtual platforms instead of companies; work is auctioned to pools of contractors; median wages stagnate while returns on capital rise; some duties of doctors and lawyers may soon be done by machines. Is this what we want?
One notable absentee from Munich was the word “disruption”, which has become a mantra of the tech industry in recent years. Venture capitalists have preached that every industry is ripe for disruption of the kind Uber brings to cabs and Amazon brings to retailing.
It has just occurred to them that promising to arrive in town and cause trouble is not the best way to make yourself popular, even if you genuinely believe that creative destruction is good for consumers, and ultimately for society as a whole. Disruption, after all, disrupts people’s lives.
If we have a world in which there are drones flying around delivering packages, but no one is talking to each other, that is really sad - Chad Dickerson, chief executive, Etsy
As workers, people in advanced industrial economies have not gained a lot from free trade and technological progress. As consumers, they have: Amazon has made buying things cheaper and easier. And in developing economies, workers have seen their wages rise sharply. But the median American and western European employee, no. Nor is the outlook very reassuring for employees in the upper half of the income scale. Artificial intelligence, on which many start-ups are working, could allow machines to do at least some of the work of professionals such as doctors and accountants.
“We ain’t seen nothing yet. The amount of turbulence will not decrease. It will go like that,” Andrew McAfee, the Massachusetts Institute of Technology economist and co-author of The Second Machine Age, told the DLD audience, pointing at the ceiling.
There is still a gap between US and European attitudes to risk-taking, with all that it implies. One striking moment at DLD was when Axelle Lemaire, the French minister for digital affairs, praised the start-up culture while carefully avoiding admitting that it could mean failure and people being laid off.
But the gap is narrower than it was. The start-up generation in cities such as Stockholm and Berlin has more in common culturally with those in Silicon Valley than with conservative politicians, and many including Mr Brusson of BlaBlaCar have worked there. Europe is spawning its own disrupters.
I share the view of Ben Horowitz, co-founder of Andreessen Horowitz, the Silicon Valley venture capital fund, that technological change is “largely inevitable and impossible to stop”. Short of closing borders and halting communications, like North Korea, an economy cannot turn its back on progress.
Still, as Uber is realising, nor can tech companies set up a service platform on which workers and customers interact, bank their money and take no responsibility for the result. An Uber driver who attacks a passenger is not contractually its employee, but the distinction does not matter much to the victim.
Some companies are already taking a gentler approach. One example is Etsy, an online marketplace for craft goods such as pottery and fashion, which is a B Corporation under US law. That means it tries to do good for society as well as reward shareholders.
“If we have a world in which there are drones flying around delivering packages, but no one is talking to each other, that is really sad,” Chad Dickerson, Etsy’s chief executive, said in Munich. That is a change from tech companies for which drones replacing drivers is the next frontier of efficiency.
Silicon Valley and the global cities in which start-ups thrive are full of clever people. Their brainpower could be applied to augmenting jobs rather than eliminating them, or to countering the long stagnation of wages. Now that really would be disruptive.


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