Original take found on another forum.
"I think we’re seeing the beginning of the tech bubble bursting again.
You’ve got the successful companies that provide a case study in tech industry profitability(Google, Amazon, Apple, etc.) which is why you’ve got all these venture capital firms plowing so much money into startups, left and right, because they expect that one of them will be the next Google or Amazon. Now that low interest rates have gone bye-bye, the VC firms are demanding that these startups start showing a profit. However, almost all of these startups have one of the following problems:
1.) They were never profitable and can never be profitable because the fundamental concept of what they do is thoroughly flawed
2.) The service or good they provide could be profitable, but due to being formed during a time of easy money, their current business model is incapable of being profitable, and they are too over leveraged to be able to restructure themselves into a more profitable setup
3.) They are perfectly sustainable/profitable, but their financiers expect far more return on investment than they are capable of providing
The result is the trend of “enshittification” as VC investors force unwanted changes onto these startups in the hopes of increasing revenue. This is stuff like locking previously free features behind a paywall, clogging everything with ads, cutting costs somewhere (payrolls, server space, etc) that negatively affects the user experience, raising prices, or needlessly bolting on something that nobody asked for because it’s one of the only things that VC firms might still blindly throwing money at(AI).
Even the actually profitable companies are doing this shit because they are just addicted to the ridiculous growth they’ve enjoyed in the past."
“enshittication” is actually a term coined by Cory Doctorow in this article: https://pluralistic.net/2023/01/21/potemkin-ai/#hey-guys
It’s a great read.
So this is why I am invested in this. Not really about the aps. I see this as stand against enshitifcation and showing that the precious ipo is not a given if you treat your users as cattle.
the stand against enshittification would be changing corporate governance to reduce the role capital plays in decision making, this is just fun. It’s also, at least for a time, a return to a more interesting internet
Isn’t choosing a platform not driven by capital basically fighting enshitification?
Thanks for sharing it. I somehow made it all the way to an end, and the insights in this article are ingenious, and so very true. It’s also eerie how these companies’ behavior is so similar to a manipulative, narcissistic, controlling sociopath that tricks people into abusive, co-dependent relationships that become very difficult to leave.
I think it’s because the people in charge of them are also narcissistic sociopaths, and that personality affects the company’s culture and works its way down into the product.
I really wish the Sherman anti-trust act were enforced more frequently and harshly nowadays, and the companies weren’t allowed to buy their competitors and become megacorps. I’m glad things like the Fediverse exist to help fight back, because we’re probably already about halfway to becoming a Cyberpunk dystopia. We’re just missing the Cyber, honestly.
The law requires the board and the top executives of any corporation to behave like sociopaths with regard to the business. They have a legal responsibility to their shareholders to maximize profits. That supersedes any responsibilities to their employees, their customers, or the general public.
In 1916 Henry Ford reduced Ford’s dividend payments to shareholders so he could increase the salaries of his employees. Some shareholders successfully sued him for it and won. He was forced to eliminate the raises and pay the higher dividends.
And we have been stuck with the inhumane results of that court decision ever since. Corporations aren’t bad by accident. They are bad by design. They are legally required to be bad. It isn’t surprising that the people who are often the most successful at making sociopathic decisions are themselves sociopaths.
The growth addiction is a major part of the problem, I think. It’s no longer good enough to have a company that makes steady profits year over year, now you’ve got to be increasing that profit margin. You made $50 million last year, and only $45 million this year? Hell, even “only” $50 million this year? You’re failing, investors are pulling out, you’re getting bad mouthed in the business world, etc.
This is a major pet peeve of mine. Constant growth is unsustainable and the pursuit of it ruins so many things.
They were never profitable and can never be profitable because the fundamental concept of what they do is thoroughly flawed
I actually don’t believe this part. Reddit isn’t profitable because they have 2,000 employees on their payroll when they could probably get by with < 500. They hired all these engineers, and then put them on go-nowhere projects like NFTs, rather than improving their core platform.
If Reddit actually put that effort into making their app comparable to something like Apollo, I have no doubt plenty of users wouldn’t have minded shelling out for Premium instead of paying a similar price for a third party product. Hell, if they came out tomorrow and tied third party app API access to Reddit Premium membership, they might even turn profitable overnight.
They could make much more money if they only improved their current ad algorithm. I know a lot of people don’t, but I actually click on ads and enjoy ads that are targeted to me, especially for clothing. I purchase things from ads on every social media site that I use, except for Reddit, because reddit does not show me ads for things that I like, and this despite me using Reddit more than any other site. For instance, Reddit show me ads for internet packages, instead of the latest book or or dress that I would like to buy.
I’m not sure why this is, Reddit should know my interests better than many of these other sites. If their ads are failing, and they aren’t making money, it’s their own fault.
3.) They are perfectly sustainable/profitable, but their financiers expect far more return on investment than they are capable of providing
This is the part that pisses me off. Its not that they’re not making money, its that they’re not making enough money. So, they make short sighted moves to make $100,000 bucks in the short term instead of a stable return of $10,000 in perpetuity.
This mentality will literally kill us.
Yeah and then their employees have to work almost 24/7 and sleep under their desk or get evicted from their workplace.
I don’t think this is a ‘tech bubble burst’, it’s more of an awakening. Big tech will continue to be invested more and more in themselves and find new ways to harvest information and profit what they can from their user base.
People want to find a place to connect, share ideas/experiences without having corporate overlords breathing down their necks. This is one of those places, and it reminds me of the '80’s when BBSs were the place to go.